TORONTO, May 2, 2018 – Today, the Financial Accountability Office of Ontario released the Spring 2018 Economic and Budget Outlook, which provides the FAO’s latest assessment of Ontario’s economy and the government’s fiscal outlook.
The FAO projects Ontario’s deficit will increase sharply to almost $12 billion in 2018, the result of higher spending from the 2018 Budget combined with only a weak gain in revenue. The measures announced in the Budget will add about $4 billion to the deficit this year. The Honourable J. David Wake, Temporary Financial Accountability Officer, says that “the deficit will increase sharply this year because the 2018 Budget introduced significant new spending without adequate new revenues to pay for them.”
The government plans to balance the budget by 2024 through a dramatic cut in spending growth - from about 4 per cent per year to just 2 per cent beginning in 2021. The government’s plan provides few specifics but implies that the Province would have to find about $15 billion in spending reductions by 2025, equivalent to about 8 per cent of program spending.
Under the budget plan, Ontario’s net debt would increase by roughly $70 billion, reaching almost $400 billion in 2020-21. Even with the significant spending restraint planned by the government, Ontario’s debt burden would remain elevated. Wake says that the government’s plan “shifts the burden of stabilizing Ontario’s public finances from current taxpayers to younger Ontarians and leaves the Province with less flexibility to respond to future crises, including recessions.”
Click here for Spring 2018 EBO.
About the FAO
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit our website at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.