Ontario’s 2022-2023 deficit will be $1.1 billion smaller than forecast three months ago as tax revenue grew faster than rising interest costs on the province’s mounting debt.
The province’s latest release of its finances shows the deficit for the year is now $18.8 billion, $1.1 billion below Ford’s pre-election estimate.
Tax revenues are up $1.2 billion, while the cost of servicing the province’s $427 billion net debt rose $105 million due to higher interest rates.
Finance Minister Peter Bethlenfalvy said all of the net new revenue would go against the deficit, with no new funding so far to overcome the hospital closure crisis.
“I think it’s important that we have a prudent and flexible plan going forward and we’ve done that in this budget,” Bethlenfalvy said.
All spending is unchanged from the April 28 budget that was formally re-submitted to the legislature Tuesday afternoon, except for a five percent increase in monthly Disability Support Program payments of Ontario (ODSP) promised during the election campaign and a new cash offer to parents.
Also included in the Speech from the Throne was a promise of more cash to parents of school-age children.
The province is earmarking $225 million to give parents as a means to “help their children catch up” with learning affected by extended school closures during the COVID-19 pandemic.
Using 2021 spending estimates for similar programs, the money amounts to between $90 and $100 per child.
A finance ministry spokesman said the government was not yet sure whether the money would be passed on to parents in the form of a tax credit or direct transfer, but Bethlenfalvy described it as a “direct payment”.
Both new commitments will be funded from a $1 billion reserve and other contingency funds.
“Parents who know their children best can provide the mentoring support their children need,” Bethlenfalvy said.
He answered repeated questions from reporters about why ODSP rates could not be increased further given the improving fiscal picture, given that the rate increase will still leave recipients in poverty.
“I understand that the environment is difficult and challenging, and that’s why we committed to increase it by five percent, that’s why we committed to adjust it for inflation, and we’re one of three provinces that do that. “
The slump in the once-hot housing market is also taking a toll on the province’s revenue, with land transfer tax revenue forecast to be $787 million less this year than expected by the end of ‘April.
This decline is more than offset by increased sales tax, income tax and corporate tax revenues.
Interim NDP Leader Peter Tabuns said the hospital situation and rampant inflation were bad enough that the province should have amended its budget.
“Given that inflation has skyrocketed since they were previously introduced, given the depth of the hospital (hospital) we are facing, they should have substantially modified the budget, they needed a course correction as said by my mate”.