How the new Ontario budget will significantly impact Toronto

A challenging economic future for Ontario

The Ontario budget recently tabled by the Ford government is poised to have a significant impact on Toronto, the province’s economic powerhouse. This historic $214.5-billion spending package, while introducing new programs, signals a potentially challenging economic future for Ontario.

Economic Slowdown

Of particular concern for Toronto is the forecasted economic slowdown within the province, with growth expected to grind to a near-stop. This slowdown can have ripple effects throughout Toronto’s diverse economic sectors, potentially impacting job creation, investment opportunities, and overall economic vitality.

Moreover, the budget’s deeper-than-expected deficit for this year raises concerns about fiscal sustainability, which could prompt austerity measures or shifts in spending priorities. Toronto, as the financial and commercial hub of Ontario, may experience the effects of these fiscal adjustments more acutely than other regions.

Deficits

The continuation of deficits until the eve of the next election also suggests prolonged economic challenges that Toronto businesses and residents may need to navigate. Uncertainty surrounding government spending and economic policies could influence consumer confidence and business investment decisions, further shaping Toronto’s economic landscape.

A new medical school and police helicopters

Among the notable announcements in the budget are plans for a new medical school in Vaughan aimed at training family doctors, a substantial allocation of half a billion dollars to improve access to primary care, and the acquisition of four new helicopters for Ontario police forces. These initiatives, while addressing specific needs, reflect broader shifts in budgetary priorities that can impact Toronto directly.

Finance Minister Peter Bethlenfalvy

Ontario Finance Minister Peter Bethlenfalvy’s assurances of “temporary” deficits are juxtaposed against promises of sustainable results from government spending. The budget emphasizes responsible investment to stimulate Ontario’s economy without resorting to tax hikes, with a focus on enhancing public services, infrastructure, and transit expansion—areas crucial to Toronto’s growth and development.

Criticism from opposition parties

Critiques from provincial opposition leaders like Marit Stiles (Ontario NDP), Bonnie Crombie (Ontario Liberal Leader), and Mike Schreiner (Ontario Green Party Leader) highlight concerns about the budget’s scope and impact on Toronto. Stiles critiques the budget as lacking innovation and responsiveness to societal needs, Crombie criticizes its perceived lack of ambition in addressing family struggles, and Schreiner points out gaps in investments related to climate change and affordable housing—areas of increasing importance for Toronto’s sustainable development and livability.

9.8 billion Dollar Deficit

The 2024 Ontario budget projects a whopping $9.8-billion deficit this year, despite the government promising it would post a surplus of $200 million in its last budget, released just a year ago.

The finance minister says the deficit projection considers nearly all private sector forecasts, which show “slower growth in 2024,” something the province blames on high inflation, high interest rates and rapid population growth.

Economic growth in the province is predicted to slow to a crawl in the budget document.

Tax Revenues

The economy grew by an estimated 1.2 per cent in 2023 and will drop to just 0.3 per cent growth in 2024. The budget predicts that, by the election in 2026, Ontario’s economy will be growing at a rate of 2.2 per cent.

The province’s balance sheet shows how a slowing economy could impact tax revenues flowing up to Queen’s Park. Tax revenue is expected to grow by just $1.4 billion from 2023, a far cry from the $12-billion revenue increase projected for 2025.

A Massive $4.6 Billion Deficit

Despite a better picture for 2025, the Ford government is still planning to run a massive deficit next year as well. Instead of the $4.4-billion surplus it once expected for 2025, the government now projects a $4.6-billion deficit.

Looking ahead, the deficit situation remains bleak for several years until the 2026-27 financial year. Projections have worsened since last year, with even the most optimistic growth scenario resulting in a $6.1-billion deficit in 2024, while the worst-case scenario could lead to a $13.3-billion deficit—a situation that could have substantial ramifications for Toronto’s economic landscape.

A Balanced Budget

Toronto’s economic prospects are intertwined with Ontario’s plan to achieve a balanced budget in 2026, just ahead of the next provincial election, with a projected $500-million surplus. This financial milestone, while provincial, has significant implications for Toronto’s fiscal health and policy priorities.

The Ford government’s strategy includes efforts to reduce debt costs, benefitting from slightly lower interest rates compared to previous forecasts. The 2024 budget anticipates interest on debt to be $12.8 billion, down from the estimated $14.1 billion last year. These savings could free up resources for critical investments and initiatives that directly impact Toronto’s infrastructure, public services, and economic development.

Improvement In New Home Construction

Amidst the economic challenges, there are positive indicators for Toronto’s housing sector and municipal landscape. Private sector forecasts suggest improvements in both new home construction and the resale market, offering a glimmer of hope amidst the prevailing economic uncertainties.

The budget outlines a significant uptick in housing starts, projecting a total of 274,000 starts over the next three years, a notable increase from the 245,000 forecasted in the previous year’s budget—an uplift of 12%. This surge in housing activity not only stimulates economic growth but also addresses Toronto’s ongoing housing needs, supporting population growth and urban development initiatives.

During economic challenges, Toronto shines as a beacon of hope within the Ontario government’s budgetary plans, particularly in the realms of housing and municipalities.

The Private Sector

Specifically for Toronto, the government anticipates 87,900 housing starts in 2024, followed by 90,000 starts in 2025 and 94,000 starts in 2026, based on private sector projections. While these numbers signal progress, they still fall short of Ontario’s overarching goal of 300,000 new homes over the projected years, underscoring ongoing challenges and opportunities for growth in the housing sector.

The Ford government’s commitment to addressing the housing crisis is evident in its ambitious plan to build 1.5 million homes by 2031, aligning with Toronto’s evolving needs and demands for affordable housing and urban development.

Toronto Mayor is happy about housing being addressed

Toronto Mayor Olivia Chow took to “X” to say she is “Pleased to see the provincial government making housing and infrastructure a priority in their budget. The only way out of our housing crisis is to build more affordable housing and complete communities, with good roads, parks and community centres.”

“The City of Toronto has a great partnership with the provincial government,” said Mayor Chow. “We will continue to work together on shared priorities and get Toronto back on track.”

Beyond housing, the budget earmarks a new $200-million fund for cities, including Toronto, to seek sports and recreation infrastructure funding, demonstrating a holistic approach to enhancing community well-being and livability. Additionally, measures such as the expansion of the vacant home tax and tightening of rules reflect ongoing efforts to optimize housing utilization and affordability within the city.

Healthcare

Toronto stands at the forefront of critical healthcare investments as highlighted by the Ford government’s commitment to addressing key healthcare challenges within the city.

A significant portion of the budget, exceeding half a billion dollars, is allocated to support hundreds of thousands of Toronto residents in finding a family doctor. This initiative is crucial not only for individual health outcomes but also to alleviate the strain on overloaded emergency rooms, a concern voiced by healthcare advocates.

Ontario’s Ministry of Health is actively working to establish more primary care teams across Toronto, integrating doctors, nurse practitioners, registered nurses, physiotherapists, social workers, and dieticians into comprehensive healthcare hubs. Over the next three years, an additional $546 million will be invested to help 600,000 Toronto residents connect with primary care services, fostering a more proactive and accessible healthcare environment in the city.

While overall healthcare spending across Ontario is set to increase marginally, Toronto stands to benefit significantly from the province’s commitment to enhancing healthcare infrastructure. The allocation of $50 billion (about $150 per person in the US) over the next decade towards new hospital projects, including a new 17-storey hospital tower in Toronto, underscores the city’s importance in Ontario’s healthcare landscape.

Long-term Care

Furthermore, the government’s strategic investments in long-term care, such as the Accelerated Build Pilot Program resulting in new long-term care homes and additional beds across Toronto, reflect a holistic approach to address the evolving healthcare needs of Toronto’s aging population. Initiatives like funding behavioral specialized unit beds and creating a new medical school in Vaughan specifically focused on training family doctors demonstrate a forward-thinking approach to bolstering Toronto’s healthcare workforce and service delivery capabilities.

Roads & Transit

The impact of Ontario’s budget on Toronto’s roads and transit infrastructure is a focal point of concern and anticipation, with significant implications for the city’s mobility and connectivity.

While the budget, titled “Building a Better Ontario,” emphasizes construction projects, details regarding key highway and transit initiatives remain elusive. Toronto, a major hub for transportation and commerce, eagerly awaits clarity on critical projects that could shape its future infrastructure landscape.

Notably, the budget lacks specific cost details for major initiatives such as Highway 413 and the Bradford Bypass, both of which hold strategic importance for easing congestion and improving connectivity between Toronto, Milton, Vaughan, and beyond. The status of these projects, including timelines for construction and completion, remains uncertain, impacting Toronto’s long-term transportation planning and development strategies.

The LRT

However, there are positive signals for transit expansion within Toronto, as the budget confirms ongoing planning and design work for extensions to the Hazel McCallion LRT in Mississauga and Brampton. These extensions, albeit without specific cost estimates in the budget, represent crucial steps towards enhancing public transit accessibility and connectivity within the Greater Toronto Area (GTA).

The budget also highlights a significant increase in infrastructure spending on transit, with investments directed towards the Hazel McCallion LRT extensions and proposed changes to the Milton Line, underscoring Toronto’s importance in Ontario’s transit development agenda.

For Toronto drivers, the continuation of the gas tax cut and proposed changes to auto insurance administration signal potential shifts in transportation costs and regulations, impacting residents and commuters across the city.

Furthermore, initiatives to expand police enforcement against auto thefts, including new public awareness campaigns and additional police resources, aim to enhance safety and security on Toronto’s roads, addressing concerns relevant to the city’s residents and businesses.

Education

The impact of Ontario’s budget on education in Toronto is significant, particularly in the realms of post-secondary institutions and K-12 schools, with notable shifts in funding priorities and strategies.

The budget discloses that universities and colleges in Toronto are poised to experience a slight decrease in costs, attributed in part to a cap on international student enrollments. While this measure aims to manage expenses, it is expected to result in a substantial revenue decline, posing financial challenges for educational institutions in the city.

Recent government announcements of $1.3 billion to assist colleges and universities in mitigating revenue losses from international students highlight ongoing efforts to stabilize the post-secondary education sector. However, the allocated amount falls short of the recommended $2.5 billion by an expert panel, signaling potential gaps in funding adequacy.

The budget also outlines a decrease in base funding for post-secondary institutions, a reflection of reduced costs associated with fewer students, particularly international enrollments. This shift may prompt institutions to streamline operations, potentially affecting staffing levels and in-person educational experiences such as labs, impacting the overall quality of education offered.

On the K-12 education front, the budget allocates $30 million over three years for enhancing school security measures, including the installation of security cameras, improved lighting, and vape detectors. These investments aim to create safer learning environments for students and staff across Toronto schools.

The Ontario Autism Program

Additionally, the government’s commitment to doubling spending on the Ontario Autism Program by increasing funding by $120 million underscores efforts to support vulnerable student populations and address diverse educational needs within Toronto’s educational landscape.

Bill 124

Toronto faces significant financial impacts from Bill 124, the now-repealed wage restraint legislation, particularly affecting sectors such as education, health, and justice.

The province’s increased spending in the 2023-24 fiscal year reflects the consequences of Bill 124 remedies and compensation settlements:

• Health sector: Experiences a $1.58 billion increase primarily due to compensation and Bill 124 remedy settlements.
• Education sector: Sees a $1.88 billion increase mainly attributed to compensation, Bill 124 remedy settlements, and arbitration awards.
• Children, Community, and Social Services: Witness a $44 million rise, partly due to Bill 124 settlements.
• Justice system: Faces a $638 million hike largely due to compensation costs and Bill 124 remedies.

Although Ministry of Finance officials suggest that Bill 124 won’t have ongoing costs since most payments were one-time, the immediate financial strain is evident. To cover these escalated expenses, the Ford government drew $2.8 billion from the provincial contingency fund in the final quarter of the previous fiscal year, impacting budget allocation strategies for Toronto and other regions.

Mental Health

Beyond Bill 124, notable highlights from the budget impacting Toronto include investments in mental health and addiction support, with the establishment of three mobile mental health clinics for underserved communities and a $124 million Addictions Recovery Fund. These initiatives aim to enhance access to crucial services and resources within Toronto’s mental health landscape, addressing pressing community needs.

Additionally, Toronto benefits from increased investments in advanced computing and artificial intelligence (AI), with an additional $18 million allocated to the province’s research computing facilities. This funding ensures that Toronto’s research institutions, such as the University of Toronto and the University of Waterloo, have state-of-the-art computing resources to drive innovations in AI and other advanced technologies, contributing to the city’s reputation as a hub for cutting-edge research and development.

Final thoughts

These budgetary measures reflect Toronto’s pivotal role in Ontario’s economic and innovation ecosystem, emphasizing the importance of strategic investments and targeted interventions to address key challenges and foster sustainable growth in the city and its surrounding communities.

by Myles Shane

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