[La version française suit le texte anglais.]
PROVINCE ADDS $15.2 BILLION TO ITS HEALTH SECTOR SPENDING PLAN
TORONTO, May 31, 2023 – Today, the Financial Accountability Office of Ontario (FAO) released a report that reviews the Province’s health sector spending plan in the 2023 Ontario Budget and the 2023-24 Expenditure Estimates. The FAO produced this report to support the Standing Committee on Social Policy’s consideration of the 2023-24 Expenditure Estimates for the Ministries of Health and Long-Term Care.
Based on the FAO’s estimate of the cost of current health sector programs and announced commitments, the FAO projects that the Province has allocated a total of $4.4 billion more than what is required to fund health sector programs from 2022-23 to 2025-26. The $4.4 billion in excess funds is a significant change from the FAO’s previous estimate of a $10.0 billion funding shortfall over the same period. This reversal is due to $15.2 billion in new funding added to the Province’s health sector spending plan in the 2023 Ontario Budget.
Of the $15.2 billion in new health sector funding added in the 2023 Ontario Budget, the FAO estimates that $9.4 billion is required to address the funding shortfall for existing programs and announced commitments previously identified by the FAO; $0.9 billion is for higher compensation spending resulting from retroactive wage increases awarded to some health sector workers that were subject to wage restraint under Bill 124; $0.5 billion is for new program changes; and $4.4 billion is excess funds that are not currently required.
The FAO also reviewed federal government transfer revenue that supports Ontario health sector spending. In February 2023, Ontario reached new agreements in principle with the federal government that the FAO estimates will increase federal health transfers to the Province by $7.7 billion over five years from 2023-24 to 2027-28. After accounting for the estimated increases to federal health transfers, the FAO projects that the federal share of Ontario’s health sector spending will reach 27.4 per cent in 2023-24, followed by a gradual decline to 26.1 per cent in 2027-28, due to the expiry of some time-limited funding agreements.
To learn more, read the full report here.
Spending growth in the FAO’s forecast is driven by the Province’s significant commitments to expand capacity in long-term care, home care and hospitals. From 2019-20 to 2027-28, which excludes time-limited COVID-19-related spending, the FAO estimates that base health sector spending will grow at an average annual rate of 5.1 per cent.
Going forward, the Province could use the $4.4 billion in excess funds to introduce new programs, enhance existing programs or address spending pressures that could materialize, such as higher than expected wage settlements. Alternatively, if the Province decides not to use the $4.4 billion in excess funds, then these funds would be applied to improve the budget balance and reduce the Province’s net debt.
The Ontario government previously requested an increase in federal funding so that 35 per cent of all annual provincial-territorial health spending would be supported by federal health transfers. To reach the 35 per cent funding target request from 2023-24 to 2027-28, the federal government would need to provide Ontario with an additional $35.6 billion over the five-year period.
About the FAO:
Under the Financial Accountability Officer Act, 2013, the Officer 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 and follow us on Twitter and LinkedIn.