Ontario Budget Analysis 2024
PC Budget Doubles Down - Headwinds be Damned!
Ontario’s Finance Minister Peter Bethlenfalvy presented the province’s 2024 budget today, offering a blueprint for the year ahead in the face of an uncertain global economic landscape. Despite headwinds affecting debt, the economy, and jobs, the province has doubled down on existing plans to build more housing, expand infrastructure, and attract more investment in the manufacturing and critical minerals sectors. Even with fiscal constraints imposed by slower growth, the government has chosen to invest in the priorities of today, with less concern for balanced budgets than a more traditional conservative government may have otherwise adopted.
Perhaps the most important feature of Budget 2024 is the continuation of Premier Ford’s Plan to Build. Throwing ideology out the window, it is the most ambitious capital plan in the province’s history, with $190.2 billion of planned spending over the next decade. The PCs public emphasis on significant infrastructure investments may also reveal some concern over the federal government’s recent threat to limit provincial housing funding. It may also explain Premier Ford’s amped-up attention on federal taxation, specifically the carbon tax, and the weight that now falls on the province to deter its effects on the average Ontarian. While support for clean tech, health care, or innovation initiatives may attract the lion’s share of the commentariat’s attention, the housing issue is most acutely felt by the average Ontarian. The success of Premier Ford on growing supply and driving lower prices will be key to his re-election prospects in 2026 – and keeping the centrist lane to himself over the Bonnie Crombie-led Liberals.
Below is New West’s analysis on the areas of note from Ontario’s 2024 budget.
Let's get fiscal
This ending fiscal year, the government projects a deficit of $3.0 billion. Deficits of $9.8 billion in 2024-25 and $4.6 billion in 2025-26 are projected before reaching a surplus of $500 million in 2026-27 as part of the path to balance. Ontario's real GDP is estimated to have grown by 1.2 percent in 2023 and is projected to increase by just 0.3 percent in 2024, followed by growth rates of 1.9 percent in 2025, 2.2 percent in 2026, and 2.2 percent in 2027.
You gotta spend money to make money
The government continues course on attracting investments in the industries of tomorrow, with the objective of positioning Ontario as a leader in a multitude of global high-demand areas. After attracting a historic $28 billion in automotive and EV battery related investments, the government is hyper-focused on developing the vital critical minerals supply chain. $15 million from the budget goes towards the government’s Critical Minerals Innovation Fund to support research development and commercialization in the mining sector. This bolsters the province’s previous $1 billion commitment to support critical infrastructure to develop the Ring of Fire. And to keep the ball rolling on attracting new investments to the province, the government is investing an additional $100 million to the Invest Ontario Fund.
The government is also focused on growing research and entrepreneurship by investing an additional $18 million over three years in Ontario’s advanced research computing systems, an additional $6.8 million over two years to support the Smaller Business Enterprise Centres network, and proposing amendments to the Ontario Computer Animation and Special Effects tax credit.
Will the investments in the economy of tomorrow help to drive future growth? Time will tell.
Let’s get you a doctor (or at least a primary care practitioner)
Healthcare funding and service delivery are focal points of the budget, particularly in the aftermath of the pandemic where healthcare systems across the country are dealing with labour shortages and high demands. The provincial strategy involves supporting over 50 hospital initiatives, generating around 3,000 new beds through a $50 billion investment, including $36 billion in capital grants, over a span of 10 years. These are BIG numbers.
Organizations including the Ontario Medical Association have called for urgent measures to address the crisis in primary care, advocating for increased spending. Ontario’s budget has allocated an additional investment of $546 million over three years to address primary care with the aim to connect 600,000 more people to primary care.
To strengthen the healthcare workforce, the government is allocating $128 million over a period of three years to facilitate an increase in enrolment in nursing at public colleges and universities, investing an additional $2 billion over three years to expand home care services, and $743 million over three years to address immediate health care staffing needs. Finally, a $155 million additional investment in increased long-term care construction and redevelopment.
To address the ongoing mental health, addictions, and public safety crisis in communities across Ontario, the government is intensifying efforts to support the most vulnerable individuals and reduce crime rates, with an extra $152 million over three years earmarked for supportive housing projects targeting vulnerable individuals. Combined, these measures aim to improve access to essential services for Ontarians - and may inoculate against opposition criticism that the PCs do not care about healthcare.
Sticking with the plan for K-12, calling audibles in post-secondary
The Ford Government has taken a back-to-basics approach to K-12 education in the province, emphasizing investments in foundational skills like reading, writing, and math. In line with Budget 2024’s larger theme of programmatically continuing on paths previously laid out, the PC Government has elected to reinforce this approach by investing an additional $65 million for the coming school year to support foundational learning between kindergarten and Grade 3.
Meanwhile, the province’s post-secondary system will see the creation of a Postsecondary Education Sustainability Fund – a $903 million investment over three years aimed at filling large budget gaps created by the federal government’s cap on the number of international students in the country. The reduction in the number of international students and other factors have hit the ledgers of several Ontario institutions hard, as those students (who are often charged tuition and fees much higher than those paid by their domestic peers) had become vital sources of income following the Government’s decision to place a hard cap on tuition fees charged to Canadian students. With an estimated $175 million deficit across at least 10 universities according to the Council of Ontario Universities the system needed significant investment, though critics are pointing out that the large investment doesn’t meet the estimated $2.5 billion in additional supports that the province’s expert panel suggested would be needed.
Infrastructure: Build it, and build it fast
The housing crisis remains a pressing issue, with affordability concerns plaguing many Ontarians that are in the market for a new home. Budget 2024 highlights the $1.2 billion Building Faster Fund, providing direct support to municipalities to accelerate home construction. The government has also pledged additional funding for municipal infrastructure projects aimed at supporting new home builds. This includes allocating $1 billion towards the new municipal housing infrastructure program and quadrupling the Housing-Enabling Water Systems Fund to $825 million. A new $200 million Community Sport and Recreation Infrastructure Fund will be established to ensure access to recreational opportunities, while the Ontario Community Infrastructure Fund will undergo a doubling to nearly $2 billion over five years, aimed at bolstering support for small, rural, and Northern communities throughout the province.
The historic capital spend is about more than just housing, though, as Premier Ford has emphasized the importance of infrastructure spending in attracting manufacturing and driving economic development. The budget allocates significant funding to support the construction of roads, bridges, and public transit systems in a push to stimulate job creation and economic growth. Despite opposition pushback, this includes building Highway 413 and the Bradford Bypass, and continuing work on Highway 7 in Markham to Brock Road in Pickering.
The province is also embarking on the largest public transit expansion in North America which includes expanding the Hazel McCallion LRT, the Ontario Line, and extensions to the Scarborough, Yonge North, and Eglington Crosstown subway lines, plus a planned connection to Pearson International Airport and bringing back the Northlander. To support the financing and building of projects like these and to attract additional capital, the government has established the new Building Ontario Fund, allocating an initial $3 billion to get it off the ground.
Enforcement in the sky, trauma-informed care on the ground
Doubling down on Premier Ford’s tough-on-crime approach, the budget also allocates $49 million over three years to combat auto theft and a $46 million investment over three years to enhance community safety in the Greater Toronto Area, including acquiring four police helicopters for strengthened patrols and swift responses to major incidents and serious offenses. In addition to these investments geared toward increasing the effectiveness of law enforcement, the government has earmarked significant amounts of new money to support marginalized communities including children at risk of exploitation, victims of human trafficking, and survivors of gendered violence. In addition to these targeted investments, the Ford government has also committed $30 million in funds to support security at Ontario’s schools, as well as a $31 million commitment to combat illegal cannabis markets.
A little help for seniors, a break at the pump, and (slightly) cheaper drinks
A goodie for many in this budget is the government’s proposed extension of temporary cuts to the gasoline tax rate by 5.7 cents per litre and the diesel tax rate by 5.3 cents per litre until December 31, 2024. This measure is intended to keep costs down for households and businesses – and remind commuters that the PCs are in their corner compared to the Liberals in Ottawa. Other areas of savings for Ontarians include the continuation of the province’s post-secondary tuition freeze, the introduction of One Fare to save costs for transit riders across jurisdictions, banning tolls on 400 series highways, freezing driver’s licence and photo card fees, eliminating license plate and plate sticker renewal fees and modernizing the province’s auto insurance system to unlock cost-savings. To support the province’s seniors, the government has also indexed the Guaranteed Annual Income System (GAINS) benefit to the rate of inflation for the first time in Ontario’s history. The budget also mentions the proposal to scrap the 6.1 percent on-site wine basic tax, not to mention, freezing the beer tax indexation and the LCBO mark-up rates for another two years.
Some have said this budget does nothing on affordability. These initiatives are not nothing. And when it comes to wine and beer – Ontarians will cheers to that.
Clean energy, clear future, can’t lose
The government has spent the last year ramping up it’s clear support for clean energy, with a strengthened focus on nuclear through the Powering Ontario’s Growth strategy. The province’s bet on nuclear ties well with the government’s plan to entice new investment through cheaper electricity rates for businesses. Highlighted in the budget are plans for the publicly announced refurbishment of the Darlington, Bruce, and Pickering Nuclear generation plants, alongside backing for a new large-scale plant at Bruce, underscoring the province's dedication to enhancing Ontario's nuclear capabilities.
Training today to create jobs tomorrow
Investing in skills remains an essential priority as part of the government’s plan to ensure Ontario’s future competitiveness and innovation. The budget highlights the continuation of the government’s Working for Workers plan, allocating resources to create the climate to support job creation. Organizations like the Ontario Chamber of Commerce and other industry association, unions and institutions have called for increased funding for the province's postsecondary sector, emphasizing the importance of skilled graduates in driving economic growth.
This year’s budget allocates an extra $100 million investment in 2024-25, as emphasized in the Skills Development Fund Training Stream, aimed at aiding workers and job seekers, including apprentices, in acquiring career-advancing skills. Additionally, $62 million is designated for bolstering the province's foundational skills trades programs, comprising $21 million for expanding the Ontario Youth Apprenticeship Program and $42 million for launching 100 pre-apprenticeship training projects to provide young individuals with valuable on-the-job experience.
Is the horizon bright?
The budget's implications are complicated by continued economic challenges and global instability. The looming 2026 election must be taken into account when examining the government's commitment to a “steady as it goes” fiscal approach. Premier Ford's Ontario remains steadfast in its stance against raising taxes, a stance that means more debt with all this spending. This, coupled with ambitious infrastructure budget promises, presents a challenging task to accomplish in the next three years. Nonetheless, by attracting continued investment, fostering consistent economic growth, and strategically investing in high-demand sectors, the Premier, his cabinet, and caucus are endeavouring to meet fiscal objectives while trying to kickstart the economy. The government's ability in navigating these obstacles will be closely monitored as it endeavours to maintain the trust and backing of Ontarians.
One thing is for sure: the Ford government has a plan and they’re sticking to it.