Ontario’s budget watchdog predicts lower deficit due to lower-than-expected spending

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Ontario’s budget watchdog is projecting a deficit $5.4 billion lower than the government’s most recent projection due to lower-than-expected program spending.

In a report released Tuesday, the Financial Accountability Office said it arrived at its $8.1 billion deficit figure after finding the province spent less than planned on all programs in the past fiscal year.

The Progressive Conservative government projected a deficit of $13.5 billion in its last budget.

Higher-than-expected revenues also contributed to the lower deficit projection. The watchdog report said its estimated revenue for the 2021-22 fiscal year was $1.6 billion higher than the government.

Financial accountability chief Peter Weltman said the difference in the deficit figures can likely be attributed to the unpredictable nature of the pandemic, as economic forecasts have been “up and down” over the past two years.

“Given the huge uncertainty due to COVID, I think that explains why there is such a discrepancy,” he said.

But while the pandemic may explain this year’s findings, Weltman noted that significant underspending by a government would bear scrutiny if it becomes a lasting trend.

“If we’re starting to see this stuff as a regular feature, then it’s worth taking a closer look,” he said.

The watchdog’s report found the province spent $7.2 billion less than planned in the past fiscal year.

The FAO reviewed changes to the Province’s spending plan, unaudited spending results, and assessed the Province’s year-end status of unallocated funds, as well as its updated budget deficit projection.

He revealed that the government had spent $4.2 billion more on health than the previous year, but spending was still $1.8 billion below plan.

More was spent than the previous year on public health, doctor payments and the operation of long-term care homes, as well as major hospital projects, the report said. These expenses were offset by lower government spending on small hospital projects and hospital operations.

In education, the report found the government spent nearly $1 billion less than the previous year, largely due to lower spending on pandemic-related programs.

There was also less COVID-19-related spending in the area of ​​“other programs” compared to the previous year, an area that includes transit funds for municipalities, homeless support and support for businesses and workers.

There also remained a balance of $1.8 billion in unallocated contingency funds from the last fiscal year – the FAO said the savings would be used to reduce the province’s budget deficit and net debt.

Opposition parties were quick to criticize the lower-than-expected spending results and drew links to reported emergency room closures across the province.

“Today’s report from the Financial Accountability Office confirms what we expected: the government (Prime Minister Doug Ford) has underspent on essential services like health care,” the Greens leader said. Mike Schreiner in a written statement. “If keeping emergency rooms open doesn’t justify the expense – what does?”

NDP health critic France Gélinas said it was “dangerous and ruthless” for the government to have “sacrificed” health care as the system struggles.

Catherine Fife, NDP finance critic, described a $7.2 billion underspend as ‘stealth cuts’ as people needed help, especially in health care and education.

A spokesperson for the President of the Treasury Board pointed to “record investments” by the Progressive Conservative government, such as infrastructure projects in health and education, and noted that actual spending will be reported later in the public accounts.

“The nature of the FAO report means it is a snapshot in time and does not accurately reflect government spending,” Richard Mullins said in a written statement.

“We have a plan to get there by building Ontario up while supporting those who need help the most.

This report from The Canadian Press was first published on July 19, 2022.

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