FAO RELEASES REPORT ON GOVERNMENT SPENDING TRENDS
TORONTO, April 9, 2025 – Today, the Financial Accountability Office of Ontario (FAO) released a report that reviews Government of Ontario spending trends from 1990-91 to 2023-24. The report also reviews trends in federal government transfers to Ontario and analyzes federal transfers as a share of provincial spending.
The Province spent a total of $206.6 billion in 2023-24, up from $57.6 billion in 1990-91. This represents an average annual increase of 3.9 per cent in nominal dollars (not adjusted for inflation).
The FAO also reviewed government spending after adjusting for inflation, which increases the cost of providing public goods and services, and population growth, which drives up the demand for public services. This allows for a better comparison of the impact that government spending has on service levels over time. After accounting for inflation and population growth, the Province’s real per capita spending increased at an average annual rate of 0.5 per cent, from spending of $11,185 per person in 1990-91 to $13,118 per person in 2023-24.
Another approach to analyzing government spending trends is to compare nominal government spending to nominal gross domestic product (GDP). As nominal GDP is the broadest measure of the tax base, this comparison provides insight into the size of government spending relative to the economy’s ability to pay. Over the 34-year period, spending as a share of Ontario’s GDP averaged 18.6 per cent and was 18.2 per cent in 2023-24. Spending as a share of GDP peaked during the 1990s recession (22.5 per cent in 1992-93), the 2008-2009 global financial crisis (20.2 per cent in 2009-10) and the COVID-19 pandemic (20.2 per cent in 2020-21). Spending as a share of GDP reached a low of 15.7 per cent in 2002-03, reflecting a period of spending restraint combined with a pickup in economic growth.
The FAO also reviewed spending by sector adjusted for sector specific cost drivers. These cost drivers include inflation, population growth in the demographic served by the sector and, in the health sector, population aging. When adjusted for these cost drivers, from 1990-91 to 2023-24, four sectors experienced spending growth: health (0.9 per cent age-standardized real per capita average annual growth), education (0.7 per cent real per child/youth average annual growth), justice (0.5 per cent real per capita average annual growth) and ‘other programs’ (0.4 per cent real per capita average annual growth). Three sectors experienced spending declines: postsecondary education (-0.3 per cent real per student average annual decline), children, community and social services (-0.4 per cent real per capita average annual decline) and interest on debt (-0.8 per cent real per capita average annual decline).
Transfers from the Government of Canada are an important source of provincial revenue that supports the Province in funding programs and services. Over the 34-year period, the majority of federal transfers to Ontario were provided under programs intended to help finance provincially run health care, social assistance and postsecondary education programs. In nominal dollars, transfers from the federal government grew at an average annual rate of 5.5 per cent, from $5.8 billion in 1990-91 to $34.3 billion in 2023-24. In real per capita terms, federal transfers increased at an average annual rate of 2.0 per cent, from $1,124 per person in 1990-91 to $2,180 per person in 2023-24.
Comparing total federal transfers to total provincial spending provides insight on the portion of provincial spending that was supported by federal transfers compared to the Province’s own-source revenue. Total federal transfers as a share of provincial spending averaged 13.4 per cent over the 34-year period and was 16.6 per cent in 2023-24. Federal transfers as a share of provincial spending reached a low of 6.8 per cent in 1998-99 during a period of federal fiscal restraint and a high of 18.7 per cent in 2020-21 due to federal government support in response to the COVID-19 pandemic.
For more information, read the full report here.
Quick Facts:
- Over the 34-year period, total nominal Government of Ontario spending increased every year except for five years: 1993-94, 1996-97, 1997-98, 2000-01 and 2012-13.
- Although real per capita spending increased by an average annual rate of 0.5 per cent over the 34-year period, the FAO identified three periods of spending growth: one year from 1990-91 to 1991-92, eight years from 2002-03 to 2010-11 and four years from 2016-17 to 2020-21, and three periods of spending declines: 11 years from 1991-92 to 2002-03, six years from 2010-11 to 2016-17 and three years from 2020-21 to 2023-24.
- The health sector has been the largest spending sector throughout the 34-year period, while its share of total spending has steadily increased, from 29.3 per cent in 1990-91 to 41.4 per cent in 2023-24.
About the FAO:
Under the Financial Accountability Officer Act, 2013, the Financial Accountability Office of Ontario (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 and follow us on X and LinkedIn.
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For further information, please contact:
Sophia Zhu | 416 931 5498 | SZhu@fao-on.org | fao-on.org