Ontario spending up but provincial bottom line unchanged from forecast

Ontario Finance Minister Peter Bethlenfalvy’s quarterly update on the Province’s finances was lukewarm, though any positive message was drowned out at the Queen’s Park news conference with questions about the Greenbelt and the fallout from the Auditor General’s scathing report on the issue.

Ontario spent about $766 million more than planned in the first quarter of this fiscal year, but the province’s bottom line is the same since nearly all of that new spending came from contingency funds. The deficit projection for 2023-24 remains at the $1.3 billion set out in the spring budget.

Revenues and expenses are largely unchanged from the budget forecast, except for the new program spending. About half of that is to develop industrial land for large-scale manufacturing, with money also going toward policing and anti-crime initiatives, the municipal infrastructure and Ontario’s wine sector.

In the first calendar quarter of 2023, Ontario’s real gross domestic product (GDP) increased by one per cent, supported by growth in exports and household spending. This follows a slight decline of 0.2 per cent in the fourth quarter of 2022.

As of the first quarter, Ontario’s real GDP stood 4.9 per cent higher than the pre-pandemic level in the final quarter of 2019, reflecting “better-than-expected” economic performance so far this year, Bethlenfalvy noted. Expectations for GDP growth have declined for 2024, with the Province citing the impact of Bank of Canada’s rapid policy interest rate increases — the fastest rise in the key policy interest rate since 1981 — and continued economic uncertainty.

Revenues in 2023–24 are projected to be $204.4 billion, and expenses are projected to be $204.7 billion.

“Ontario’s population is growing, jobs are being created and we are attracting investments in communities across the province,” Bethlenfalvy said. “To support these growing communities, our government will continue with its plan to build critical infrastructure, train and recruit skilled workers and provide people with the services they need.”

Bethlenfalvy noted that despite the resiliency of Ontario’s economy so far in 2023, the province is not immune to any potential economic slowdown.

“The first quarter finances report shows that our government’s targeted, responsible approach is the right plan to build and support growing communities across Ontario,” the Pickering-Uxbridge MPP said. “The people of Ontario can have confidence that this government is making responsible decisions to deliver on our Plan to Build by supporting people and businesses today while laying a strong fiscal foundation for future generations.

Most of the questions from the assembled media, however, were about the report on the Greenbelt, a story that has dominated the news cycle this week and is expected to continue to do so for the forseeable future.

Standard & Poor’s, Moody’s and DBRS Morningstar have all placed Ontario’s credit ratings on positive outlook, while Fitch confirmed Ontario’s credit rating with a stable outlook.

The next economic and fiscal update is expected by November 15.

With files from Canadian Press