TORONTO – Ontario is lagging behind on the funding required to meet demands in health care, education, and post-secondary institutions, warns the province’s budget watchdog, despite Queen’s Park celebrating a deficit that’s smaller than initially forecasted from its most recent budget year.
On Thursday, the Ford government released figures detailing actual spending for the 2025-26 fiscal year – which concluded on March 31 – compared to what was estimated in the annual provincial budget.
Finance Minister Peter Bethlenfalvy pointed out that Ontario’s deficit for this year was $13 billion, which is $1.6 billion lower than what was predicted in the 2025 provincial budget.
“That’s a good news story,” Bethlenfalvy told reporters at Queen’s Park.
“While deficits aren’t ideal over time, they reflect our current reality. The world has changed.”
The reduced deficit comes from higher-than-expected revenues flowing into government funds from various sources, including provincially owned enterprises like Ontario Power Generation and i Gaming, along with decreased borrowing costs.
However, it remains significantly larger than the deficit recorded in the 2024-25 fiscal year, which stood at just $1.1 billion. Bethlenfalvy emphasized that today’s geopolitical uncertainties necessitate government spending to safeguard the economy.
“This presents a unique chance to bolster our economic resilience long-term through investments in essential infrastructure like subways, housing, nuclear energy, critical minerals, pipelines and more,” stated the finance minister.
Nevertheless, Ontario’s independent budget watchdog, the Financial Accountability Office (FAO), issued reports Wednesday cautioning that spending on health care, education systems and other social services isn’t increasing quickly enough to sustain current service levels.
According to projections from the FAO:
Ontario needs to raise health-care expenditures by 4.4 percent annually until 2029 to maintain existing service levels but is currently projected to increase it by only 3.2 percent per year. Education funding requires an annual increase of 2.1 percent but is only expected to rise by 0.6 percent. Funding for colleges and universities should increase by 3.2 percent each year instead of just 2.2 percent. Other social services need yearly increases of 3.2 percent but are anticipated to receive only about 0.5 percent.
Interim Liberal leader John Fraser argued these services are ones that “families depend on” and shouldn’t be funded below maintenance levels.
“They won’t even meet (the funds needed for maintaining) the status quo right now; that’s not acceptable,” Fraser said.
“What the FAO is saying is: if you think it’s bad now, it’s going to get worse.”
Bethlenfalvy dismissed the FAO’s projections as being based on limited data from “one point in time.”
“They don’t have the full picture,” he said while promising more details about spending plans in his fall economic statement once parliament resumes late next month.
However, he noted that public service levels might face cuts-not due to insufficient provincial funding but rather inadequate federal support.
Bethlenfalvy urged Ottawa to abandon plans reducing annual increases in federal health-care funding for provinces from five percent down to three percent.
Temporary federal support for mental health programs and housing initiatives will also be coming to an end soon.
“Now isn’t a good time for them to reduce these transfers because if they do cuts in services would be inevitable.”
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