Underspending at Queen’s Park should set off alarms

At no time in the last decade has an Ontario government underspent its annual targets by 6.6%.

September 15, 2021

1-minute read

Ontario government spending for the first quarter of the 2021-22 fiscal year (April to June) was 6.6% less than planned in the provincial budget, the Financial Accountability Office (FAO) reported today.

Back in March, Queen’s Park laid out plans to spend $39.5 billion in the first quarter. Instead, the FAO says, it spent $36.9 billion. That’s a full $2.6 billion less than planned. At that rate, total spending over the entire year could be more than $10 billion below budget. That would dramatically lower the 2021-22 deficit, recently pegged at $32.4 billion by the government.

To be fair, some of the underspending, detailed by the FAO here, may simply be the result of how hard it is to estimate spending during the pandemic. However, program areas like hospitals and home care, which spent less than budgeted, need vastly more investment, not less. The same goes for autism services, children’s treatment and rehabilitation services, the Ontario Disability Support Program, and Ontario Works. Spending $691 million less than budgeted on “population and public health” during a pandemic just seems bizarre.

So what’s going on?

It’s no secret that finance ministers like to exceed their fiscal targets. When spending is less than projected, it looks like the government is being careful with our money. When budget revenues are higher than forecast, it looks like the government is doing a good job of stewarding the economy.

It’s an old trick: Set a target. Exceed the target. Give yourself a medal.

That said, this year’s underspending is in a league of its own. At no time in the last decade has an Ontario government underspent its annual targets by 6.6%. It doesn’t look accidental.

The government’s long-term fiscal plan calls for spending to increase by an average of 2.1% over 10 years. That’s too low as it is: it won’t keep up with inflation, population growth, or the health needs of an aging population. If implemented, the government’s plan will reduce program spending in Ontario (in 2020 dollars) by $1,281 per person, the FAO says. That’s a huge reduction: it’s roughly 15% less than per capita program spending last year.

Based on today’s FAO report, it looks like the government wants to reach that terrifying target well ahead of schedule. At a time when government is failing to meet the challenges of our time—think housing, long-term care, child poverty, the climate crisis, economic recovery—dramatic cuts to in-year spending are nothing short of dangerous.

Today’s FAO report should set off alarm bells across Ontario.

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