Social Policy in Ontario

The Ford government is bad at budgeting — or it isn’t being straight with Ontarians

Posted on June 15, 2023 in Governance Debates

Source: TVO.org — Authors: David Moscrop

TVO.org – Opinion/Politics
Jun 14, 2023.   Written by David Moscrop

A recent report says the province is going to end up with way more money than anticipated between 2022 and 2026. But that doesn’t say anything good about the government

The Ontario government is going to end up with way, way more money than it expected. That’s what a recent report from the Financial Accountability Office says. The spring 2023 Economic and Budget Outlook projects that, despite a coming economic slowdown and lower tax revenue, the province will come out ahead with $22.6 billion in “excess funds” between 2022 and 2026. It sure beats finding a $10 bill in an old pair of jeans. But it says nothing good about the Ford government.

Finance Minister Peter Bethlenfalvy’s office says the report is merely opinion, a “snapshot in time” that is “not representative of actual government spending.” That claim strains credulity. For one, it’s a good base rule to distrust politicians when they talk about spending: wait for the evidence to materialize. For another, you might expect the numbers to be off a little here or there — you know, 5 million over in that corner, a couple hundred grand behind the couch cushion. Chump change. But nearly $23 billion? Based on comprehensive projections of revenue and spending, interest rates, and the government’s own budget? No, that’s not a snapshot in time.

Whenever the FAO finds the government is projected to end up with more money than it budgeted for (as in 2021, for example), media, opposition parties, and civil-society advocates frame it as the government “sitting on” the money and then proceed to explain where it should be spent. That’s not exactly accurate. The government hasn’t allocated the money, but it also hasn’t collected it. The $22.6 billion is mostly a future number — and a projected one at that.

In fairness to those using the “sitting on” frame, Doug Ford in March projected a $1.3 billion deficit ahead of a modest surplus of $200 million in 2024-25. The government then projected a 2025-26 boost, a surplus of $4.4 billion. In contrast, the FAO predicts that this year will see a surplus of $500 million, a big swing from Ford’s projected deficit. By 2025-26, it expects the surplus that year to be $10.6 billion. That is a huge discrepancy.

The FAO report cites these contributing factors to the budget boost in 2022-2023: lower program spending — to the tune of $5.5 billion — on the back of $3.4 billion in lower revenue and $500 million less in debt-interest payments. The top excess-fund sectors are projected to be health (at $4.4 billion), postsecondary education (at $1.1 billion), and other programs ($17.9 billion), driven mostly by the province’s contingency fund. This indicates that the government has overallocated funds compared to program spending. That’s not to say the government is spending too much in these areas, though you could make that argument. Instead, I suggest it hasn’t built up sufficient programing or coordinated and executed funding releases in existing programs. That’s an important distinction the Ford team will surely not make.

The charitable assessment of the FAO’s projections is that they reveal a government that is bad at budgeting. Budgets are predictions of what money is going to come in and what’s going to be spent: they look forward. On this evaluation, the Ford government was bad at predicting revenue and spending and bad at allocating money to programs or sufficiently building out programs to match their funding allocation. Had the projected surplus been smaller, you might conclude the government was just being cautious — building in some wiggle room, a small rainy-day pile. But at $22.6 billion in surplus, you start to think it’s incompetent; it simply has no idea what it’s doing. That’s the charitable take.

The uncharitable assessment is that the government isn’t being straight with Ontarians. It knew it’d have more money than expected — much more — and instead of just saying that, it misled everyone and projected a deficit and smaller future surpluses so it could starve programs, limit new spending, and divert that future money elsewhere to big tax cuts, corporate giveaways (hello, Stellantis), pre-election voter inducements, or paying down the debt. For what it’s worth, the FAO notes that the government could indeed use these projected excess funds to lower the province’s debt burden.

On paying down the debt, the report goes so far as to note that, “if these projected surpluses were used to pay down public debt, Ontario’s debt burden (as measured by the net debt-to-GDP ratio) would decline for an unprecedented seven consecutive years to 31.8 per cent by 2027-28, and the lowest ratio since 2008-09.” I’m surprised the Ford government isn’t pasting this line everywhere and throwing itself a parade. But, again, see the assessments above. It may not know what it’s doing, or it may be keeping its surplus powder dry.

Whatever is going on, the FAO report doesn’t say anything good about the Ford government, despite its projections that the province will end up in better fiscal shape than expected. That might seem counter-intuitive, but it boils down to this: the government is either incompetent or dishonest. We don’t have enough information to draw a firm conclusion either way. But, as an optimist, I like to think it’s a bit of both.

David Moscrop is a political theorist, a contributing columnist for the Washington Post, and the author of “Too Dumb for Democracy? Why We Make Bad Political Decisions and How We Can Make Better Ones.”

https://www.tvo.org/article/the-ford-government-is-bad-at-budgeting-or-it-isnt-being-straight-with-ontarians?utm_source=TVO&utm_campaign=f7af27515d-TVO-Today-Newsletter-THURS_COPY_01&utm_medium=email&utm_term=0_eadf6a4c78-f7af27515d-68105177

Tags: budget, economy, ideology, jurisdiction

This entry was posted on Thursday, June 15th, 2023 at 9:41 am and is filed under Governance Debates. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.