Ontario Budget Analysis 2023

Amidst the backdrop of a cost-of-living crisis, record-high inflation and a housing supply crunch– Ontario’s 2023 budget was released by the PC government yesterday as the largest spending budget in Ontario history. The $204.7 billion budget was made partly possible due to inflation-driven tax revenues. Despite the budget expenditures, the government promised to balance the budget by 2025, one year before the next scheduled election.

With no imminent election threat in sight, the Ford government’s majority status in the Ontario Legislature allowed them to comfortably pen a budget that is likely to find favour in the business community. Budget 2023 is chock-full of capital investments and corporate incentives. The new budget is a departure from the previous 3 years of COVID relief spending targeting families and small businesses.

The government will invest $184.4 billion over 10 years in major capital projects like new highways and roads, EV manufacturing facilities, subway line expansions, hospitals and schools. The government has positioned itself to invest in legacy initiatives thereby ensuring they will be visible in the run up to the next election.

Who’s Happy?

The Ontario Chamber of Commerce, the Toronto Region Board of Trade, the Canadian Mental Health Association.

Who’s Not?

The Ontario NDP, the Ontario Green Party, the Ontario Secondary School Teachers’ Federation (OSSTF), the Ontario Public Service Employees Union (OPSEU), the Canadian Union of Public Employees (CUPE).

Major themes

Green and Clean

The Ontario government is attempting to remain competitive with the US Inflation Reduction Act, by making significant investments in clean energy and green initiatives. 

They have allocated $16B for EV investments, $2.5 billion for clean steel, $1 billion for unlocking critical minerals in Ontario’s north and $342 million more for the IESO’s energy-efficiency programs. This represents a shift from the Ford government’s inaugural 2018-2019 mandate when it cut EV incentives for consumers. 

Healthcare

The government has faced ongoing criticism for a lack of spending on healthcare, especially following the 2020 pandemic. The healthcare sector saw significant attrition leading to increased wait times for emergency rooms, critical surgeries, and mental health treatment and inadequate support and sub-optimal conditions in long-term care facilities. Budget 2023 responded with $48 billion for new hospitals over the next ten years, $72 million to surgical clinics to cover OHIP fees and $425 million over three years for mental health and addictions.

Education

Given the somewhat rocky relationship with some in the education sector, it might be surprising that Premier Ford’s government directed $34.7 billion in funding to the creation of new schools, expanded child-care facilities/spaces and the distribution of post-secondary grants with a priority on workforce readiness programs.

The government will also allocate $224 million to expand workforce training centres, and $75 million in enhancements to the Skills Development Program. 

Made in Ontario 

To boost the manufacturing sector, the government announced the Ontario Made Manufacturing Investment Tax Credit, a 10% refundable Corporate Income Tax Credit on qualifying investments in manufacturing related capital. Under the program, a corporation could receive a tax credit of up to $2 million a year.

Honourable Mention

Technology

The government is investing $107 million in what it calls new critical technology areas including 5G and AI. This marks an attitude shift from the government’s early mandates which saw cuts to these areas.

Ontario Immigrant Nominee Program

Labour shortages are a major impediment to attracting new business. Ontario has responded with a $25 million investment over three years designed to attract skilled labour through the Ontario Immigrant Nominee Program.

Who didn’t get funding?

The City of Toronto

The province’s capital and economic engine received little love from the Ontario budget especially after requesting a $510 million COVID bailout. It instead received $48 million for housing to support the homeless. This relative lack of attention comes at a difficult time for the fiscally troubled, mayor-less city.

School Boards

School boards that requested provincial support to cover pandemic-related operational costs will not see any new funding.

Individual Taxpayers

There were no notable or direct measures aimed at individual taxpayers in this year’s budget.

What are key stakeholders saying?

The opposition to the 2023 Ontario budget has been swift and strong. The Ontario NDP, CUPE, OSSTF and Ontario Green Party are united in their critiques of this budget, accusing the government of falling short to meet the needs and realities of Ontarians and teachers. When pressed for suggestions, the groups argued that the budget fell short on investments in climate, housing, education, healthcare and social services. The Ontario NDP has stressed that this budget is detached from current realities facing the average Ontarian.

The business community has largely applauded budget measures designed to promote economic activity, address labour shortages, attract talent and reduce red-tape.

Concluding Insights

• The Ford government has demonstrated an openness to change course with changing circumstances and they remain open to input from a variety of stakeholders. Several priorities highlighted in the budget are in response to the US Inflation Reduction Act.

• This is a historic spending budget, with the bulk of spending devoted to capital projects as opposed to program spending.

• This budget is business-friendly but will also find favour with those seeking investments in healthcare, education and training.

The full Ontario 2023 budget can be found here.