Budget 2024 - Building a Better Ontario

The Ontario Government released their third budget of their second mandate today titled Building a Better Ontario, Budget 2024. This year's budget places an emphasis on fiscal realities, noting throughout the impact that inflation, interest rates and the federal carbon tax are having on both personal and government finances. Despite lower revenues, the Government has put forward a plan with increased spending focusing primarily on the infrastructure needs of a province whose population has grown by a million people over the last two years. 

The Ford Government insists that they will continue on their plan to balance the budget by 2026/27, but will do so by continuing to make investments in the province without increasing or introducing any new taxes, a theme they made quite clear throughout the budget.

“In the face of global economic uncertainty and high interest rates that continue to put pressure on Ontario families, our government is taking a responsible approach by investing to rebuild Ontario’s economy without raising taxes,” said Minister of Finance Peter Bethlenfalvy. 

The Ontario Government has been signalling for some time now that the province is not and can not be immune from global economic pressures. The province is not in a recession by definition, but Finance Minister Peter Bethlenfalvy alluded to the reality that it might feel like one to families who are facing tough times whether it be paying their mortgage, filling their gas tank, or buying their groceries. Budget 2024 laid key steps to address affordability issues while continuing to build on the government’s ambitious long-term infrastructure agenda. 

Budget 2024, like many of its predecessors, is broken down into two major themes that guide the investments being made by the Ford Government, Building Ontario and Working for You. Minister Bethlenfalvy made it clear throughout his budget speech this afternoon that the government will continue to build in Ontario by making record investments in critical infrastructure projects like Highway 413, while ensuring municipalities have the tools they need to meet Ontario's ambitious goal of 1.5 million new homes by 2031. Minister Bethlenfalvy also reiterated what he and the government have been saying for several weeks now that they will not balance the budget by raising taxes or fees. 

These themes had been highlighted in the lead-up today’s budget, with the government having announced several of the key planks to their plan over the past few weeks. Minister Bethlenfalvy and Premier Ford last week announced their intention to maintain the gas tax cut until the end of 2024, providing Ontarians further relief at the pump. They also teased out last week a key request from municipalities across the province, announcing a $1.8 Billion investment in the new Municipal Housing Infrastructure Program and the new Housing-Enabled Water Systems Fund. 

Ontario's Fiscal Situation

Budget 2024 has made it clear that while Ontario is beginning to feel an economic pinch, it’s positioned itself modestly compared to both the federal government and other provinces. Ontario remains one of the few jurisdictions in Canada that has maintained a path to a balanced budget, even if this year’s fiscal plan is delayed in reaching that goal.

This year's budget saw Ontario’s deficit come in higher than was anticipated out of both last year’s fiscal plan and this past fall's fiscal update, with the province expecting a deficit for 2024/25 of $9.8 Billion, up from the forecasted $200 Million surplus in Budget 2023 or the forecasted $5.3 Billion deficit in the 2023 Economic Outlook and Fiscal Review released last fall 

Due to increased spending and lower revenues, as well as a notable impact from the compensation payouts from Bill 124 negotiations, the province is projecting another deficit of $4.6 Billion in 2025/26, meaning Ontario isn’t on track to balance the budget until fiscal year 2026/27 where they anticipate a $500 Million surplus.

Building Ontario

The Government continues its focus on “Building Ontario” with a slate of infrastructure programs announced in Budget 2024. A $1 Billion fund, the Municipal Housing Infrastructure Program, will be created to help municipalities deal with the infrastructure costs associated with new housing. The Housing-Enabling Water Systems Fund gets an additional $625 Million injection from the Budget. The previously announced Building Faster Fund, which rewards municipalities for meeting or exceeding their housing targets set by the Province, has also been included. The Ontario Community Infrastructure Fund saw a further investment from the Province, growing to $2 Billion over five years. Budget 2024 also introduced a new Community Sport and Recreation Infrastructure Fund, a $200 Million program over the next three years, to support Ontario’s ever-growing population by investing in new and revitalized sport, recreation, and community facilities for youth and families. Finally, municipalities will soon be allowed to deal with vacant homes with the expansion of a Vacant Home Tax. Ontario’s Non-Resident Speculation Tax will also see further measures to strengthen fairness and compliance.  

Budget 2024 provides an update to Ontario’s new infrastructure bank, announced in the 2023 Fall Economic Statement. The bank, renamed the Building Ontario Fund, will support the financing and construction of critical infrastructure projects across the province. It has an initial allocation of $3 Billion. The Province is proposing legislation to further support the Building Ontario Fund’s mandate.

An entire section of Budget 2024 is reserved for highway expansion, such as the Government’s signature Highway 413. It is expected to add 3,500 jobs each year and generate up to $350 Million in annual real GDP during its construction. Other notable highlights include expanding Highway 7 in the York-Durham region, a few new interchanges in Windsor, and a new interchange at Highway 416 in Ottawa. 

Building more transit remains a major government priority. Budget 2024 provides updates on many of the Government’s ongoing projects, including the ongoing construction of the Ontario Line. Milton and Mississauga residents will soon enjoy more GO Transit trips on the Milton Line, with the Province adding an additional two train trips every weekday and advancing the planning and design work for future two-way, all-day service. The Province has called upon its Federal counterparts in Ottawa to agree on a cost-sharing partnership to build a fully separated passenger rail line along the Milton GO rail corridor.  

Working for You 

While Budget 2024 makes record investments in infrastructure across Ontario, the Ford Government has also focused on its continued efforts to invest in Ontario’s workforce and the services that Ontarians rely on. 

The Government continues to make record investments in health care spending, with the province’s annual health budget projected at $85 Billion for this fiscal year. These record investments include an additional $2 Billion for investments in home and community care over the next three years, building on the previously announced accelerated $1 Billion from last year's fiscal plan. Today’s budget also includes a four percent increase to hospital budgets for the second consecutive year, with an annual investment of $965 Million in 2024/25. The fiscal plan also includes an additional $396 Million investment for mental health and addictions services and programs, including $124 Million over three years to support the continuation of the Addictions Recovery Fund. Additional investments in health care include $546 Million over three years for primary care health teams as well as the creation of a new medical school at York University focusing on training more family doctors, a first in Canada.

As Ontarians continue to deal with rising interest rates and inflation pressures, Budget 2024 formally included what the Premier and Finance Minister had announced last week, an extension of the gas tax cut to December 31, 2024. The government has stated that the gas tax cut has saved households on average $320 since it was first introduced, amounting to a total of a $2.1 Billion tax cut, one of the largest in Ontario’s history. These savings, along with other measures such as eliminating the licence plate renewal fee, ending the drive clean program, banning road tolls, are part of a slew of initiatives the government says have saved Ontarians $8.4 Billion in the past year alone. 

Budget 2024 sees the purchase of four helicopters to help with rapid response times, supporting police patrols, including locating and apprehending high-risk suspects, and search-and-rescue operations. $13.5 Million over three years has been allocated to initiatives that help support survivors of gender-based violence, building on existing investments of $1.4 Billion over four years. The Province hopes to tackle the illegal cannabis market with a $31 Million investment over the next three years to support the OPP-led Provincial Joint Forces Cannabis Enforcement Teams. New measures, including strengthening fines, will be coming soon in future changes to the Tobacco Tax Act.

Upstream's Analysis

While Budget 2023 built off the themes and planks of the election year budget that preceded it, this year's fiscal plan tabled by Minister Bethlenfalvy was far more cautious. The government has chosen to paint a very clear picture of their intentions in contrast to the opposition parties at Queen’s Park. The budget and the Minister’s speech laid much of the blame of a slowing economy at the federal level, blaming the carbon tax and high interest rates for their respective impacts on Ontario’s fiscal state. The Minister insisted that the province would forge ahead with investments, without tightening their fiscal belts nor raising taxes, something they continue to suggest their opponents intend to do. But he also cautioned that with the federal government intending to once again increase the carbon tax in the weeks ahead, families just like governments will continue to face difficult budgetary decisions.

The province’s answer to these challenges is quite clear, they intend to continue to build on top of their record infrastructure investments. The government believes with its continued, rapid population growth compared to the rest of North America, they have no choice but to invest now in the services and infrastructure of tomorrow, such as hospitals, schools, new roads and public transit. While the government’s plans are ambitious, the challenge ahead will be their ability to demonstrate to the Ontario electorate over the next two years that they’re actually able to “get it done,” infamously their campaign slogan from the 2022 election. 

Despite the warnings by the Finance Minister and his colleagues over the past few months, Ontario’s updated fiscal situation was undoubtedly the most surprising, seeing the province’s deficit shift back in the red rather than the surplus that was forecasted in last year’s budget. Much of the government’s ability over the past several years to maintain spending increases has been buoyed by increased revenues into the provincial coffers. The province clearly believes that their continued ability to attract record economic investment will offset the external economic pressures facing the province, and allow Ontario to continue to invest at record levels in infrastructure, health care and education. 

If you would like to discuss how Ontario’s 2024 budget may impact your public affairs goals please reach out to info@upstreamgroup.ca to book a consultation.