Last week, Ontarians gained further insight into the government’s allocation of their finances. Peter Bethlenfalvy, Ontario’s Finance Minister, presented the Fall Economic Statement (FES) to provide an update on the province’s fiscal status, serving as an interim update as the province prepare’s its budget for the spring of 2024.
Bethlenfalvy expressed optimism about the province’s growth and its unwavering commitment to infrastructure and housing development. However, despite his positive outlook, he cautioned that impending challenges could hinder that progress.
During his address, Bethlenfalvy highlighted a decline in revenues attributable to a sluggish economy and geopolitical factors affecting Ontario’s financial position. The government’s fiscal health is currently in the red, with a projected deficit of $5.6 billion for this year, while a balanced budget is anticipated for 2025/2026. This marks a departure from Bethlenfalvy’s previous presentation in the spring, where he had projected a balanced budget for the coming year and a deficit of $1.3 billion for the current year.
While a balanced budget seems to be farther out than anticipated, the Ford government has devised plans to increase funding for construction projects, address taxation issues, and tackle the housing crisis.
Ontario Infrastructure Bank
The government is earmarking $3 billion to establish a new agency dedicated to financing major public infrastructure projects, particularly for transportation, energy and housing. The bank’s objective is to enable pension plans and other institutional investors to contribute toward addressing the province’s infrastructure deficit.
By mitigating the risks typically associated with complex, long-term projects, the government aspires to attract increased private sector investment with the creation of the bank. This new agency will also offer more flexible financing terms to investors, facilitating greater capital flow into the province. Premier Ford believes that leveraging private investment will reduce the government’s borrowing requirements for these projects, ultimately alleviating debt servicing costs.
Gas Tax Pause 2.0
While announced prior to the FES, the Ford government has fulfilled its commitment to extend the gas tax reduction for an additional six months. Originally introduced in July 2022, the government has extended this reduction multiple times, affording Ontarians a relief of 5.7 cents per liter at the pumps.
Despite an increase in the number of new housing projects this year, the figures fall short of meeting the provincial government’s target of 1.5 million new homes by 2031. To address this issue, the FES outlines plans to enhance the Ontario Harmonized Sales Tax Rebate for purpose-built rental housing, ensuring it equals 100% of the provincial portion of the HST paid.
With a renewed assessment of the province’s financial situation and a revitalized strategy for Ontario, the Ford government is hoping Ontarians buy into their ability to weather forthcoming economic challenges. It is evident that Premier Ford and his government regard infrastructure spending as the linchpin for Ontario’s growth, and a key factor in their political success.