RAPID POLICY UPDATE: ONTARIO BUDGET 2023
On March 23rd, the Hon. Peter Bethlenfalvy, Ontario’s Minister of Finance, delivered the Government’ of Ontario’s 2023 Budget, titled, “Building a Strong Ontario”. This is the second budget of the Provincial Government’s second mandate but should be viewed as their first real fiscal plan and in many respects the first post-pandemic focused budget. The budget stresses “fiscal prudence” and would look to bring program spending under control now that the worst of the pandemic has passed.
The budget takes a hybrid approach, committing new funding for healthcare and addressing labour shortages, and supporting businesses through a new Ontario-made manufacturing investment tax credit as well as targeted support in priority areas such as EV battery manufacturing, critical minerals, and “green steel”. The budget also sets aside large contingency funds for the uncertain economic times.
The government pledges to achieve a balanced budget by 2024-2025 (three years earlier than previously forecast). With $204.7 billion committed, this budget represents the largest fiscal plan in Ontario’s history.
Housing:
The government's dedication to increasing housing affordability and accessibility in Ontario is emphasised in the budget. This year's budget primarily highlights the progress the Ford administration has made over the course of 2022 by making reference to the policies introduced in last year's budget, the province's 2022 Housing Supply Action Plan, and The More Homes Built Faster Act, 2022 – a bill which streamlined planning and approval processes to accelerate homebuilding in the province and ultimately cut costs. These changes are anticipated to result in a $116,900 decrease in the price of building a single-family home, providing assistance to more Ontarians in their quest to become home owners.
The Ontario government is also using Budget 2023 as an opportunity to call on the federal government to defer the Harmonized Sales Tax (HST) on all new large scale purpose-built rental housing projects to tackle the ongoing housing affordability crisis. The Government is supportive of this measure as it believes it would help spur the construction of more rental housing units while helping to create jobs, encourage economic development, and support growth within the province.
Workers, Small Business & Taxation:
In order to address labour shortages, enhance skill development, and create the workforce required for the construction of new infrastructure projects, the government has launched a number of initiatives under the slogan "Working for Workers" (some initiatives were unveiled in the run-up to the budget):
$224 million in 2023–24 (as announced on March 21, 2023) for a new capital stream of the Skills Development Fund to leverage private-sector expertise and expand training centres, including union training halls to train more workers for careers in the skilled trades and other in-demand jobs.
Additional investment in $75 million more over the next three years to support new and existing centres to prepare workers for careers like electricians, welders and mechanics.
$25 million in additional funding to enhance the Ontario Immigrant Nominee Program with an additional $25 million over three years to attract more skilled workers, including in-demand professionals in the skilled trades to the province.
$15 million in additional funding over the next three years for Better Jobs Ontario which helps eligible applicants cover expenses including child care and tuition.
$3 million in 2023–24 to expand the Ontario Bridge Training Program to help internationally trained immigrants find employment in their fields and get faster access to training towards a license or certificate.
$3.5 million in additional funding over three years to continue to support the Abilities Centre in Whitby to provide employment supports and programs to help people with disabilities participate in the workforce.
Infrastructure & Transportation:
The Government's plans for Ontario's economy continue to place a strong emphasis on the province's capital plan. The total capital plan investment over the next ten years is $184.4 billion (an increase of $25.6 billion from the 2022 Budget), of which $20.6 billion (an increase of $0.6 billion from 2022-2023) will be spent in 2023–2024. According to this breakdown of the 10-year capital plan:
$27.9 billion over 10 years for highway planning, construction, expansion and rehabilitation. There are more than 600 expansion and rehabilitation projects that are either underway or planned over the next four years (with a heavy focus on Highway 413 and the Bradford Bypass).
$70.5 billion over 10 years for transit projects and planning.
More than $48 billion over 10 years to hospital infrastructure, including over $32 billion in hospital capital grants.
$22 billion over 10 years for education and postsecondary education, including about $15 billion in capital grants over the next 10 years.
$2.6 billion over 10 years to social infrastructure.
The government also noted steps being taken to quicken project construction and lessen project delays, such as:
Using a variety of delivery models and procurement strategies that enable collaboration with builders on project requirements, design and pricing.
Separating the scope of large complex projects into smaller projects so that more bids can be generated.
Continuing to use modular builds and promoting design standardization.
Leveraging new technology, such as digital twins (virtual representations of physical assets, systems or networks), that improve infrastructure planning and enable data-driven decision-making.
$139.5 million for three new trainsets that will bring back passenger rail service between Timmins and Toronto. An investment that will not only work to unlock the economic potential of Northern industries, resources and minerals, but will also support tourism in the region by connecting the North and the South.
Healthcare:
Budget 2023 includes significant spending on healthcare to repair the overburdened system, shorten surgical wait times, and maintain investment in large infrastructure projects.
Key highlights include:
Starting in the fall, expanding the program allowing local pharmacists to prescribe medication for more common ailments
$48 billion to support 50 hospital projects that would add 3,000 new beds over 10 years to increase access to reliable, quality care.
$72 million in 2023–24 to make more surgeries available at community surgical and diagnostic centres to connect people to care faster.
$569 million in the 2023-24 fiscal year as part of the $1 billion announced in the 2022 Budget spent towards contract rate increases to stabilize the home and community care workforce.
$60 million over two years to expand existing teams and create up to 18 new primary care teams in communities with the greatest need.
$15 million to keep 100 mid‐to‐late career nurses in the workforce.
$4.3 million to help at least 50 internationally trained physicians get licensed in Ontario.
Our Analysis:
With several brand-new projects and sizable contingency funding to help better navigate an uncertain future, the 2023 Budget is in many respects a strategy to keep the course. One way to think of the new programs, like the Ontario Made Manufacturing Investment Tax Credit, is as course corrections to keep Ontario on a path of expansion. The new Investment Tax Credit is anticipated to result in more success stories. The Ford administration has made it clear that they would take whatever steps are necessary to increase investment and employment creation in Ontario. There are already achievements to be proud of, such the backing for a new Stellantis-LG EV battery manufacturing facility in Windsor and Volkswagen's recent announcement to put their first North American EV battery plant in Ontario.
Our Province is not immune to the inflation and instability that are threatening economies around the world. Concerns relating to affordability continue to be the top priorities for voters. Each time we've faced difficulties like these, Ontarians have looked to their governments for financial assistance or other stimulative policies to aid in the recovery of the economy and support those who are trying to keep up with the rising cost of living. The government may have put itself in a position to be able to achieve these objectives, as the estimated deficit is expected to be around one-fourth the size of what was predicted in the 2022 Budget.
