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Matthew Lau: Ontario needs better budgets than it has been getting

With taxes and spending high and the budget still not balanced, it's hard to tell the Ford government from Liberal predecessors

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As last Thursday’s provincial budget confirmed, Ontario is now entering the 23rd year of the McGuinty-Wynne government. True, both Dalton McGuinty and Kathleen Wynne are long gone from politics, and their Ontario Liberal Party is out of power. But their tax, borrow and spend policies — which impoverished Ontario and made the province an economic laggard — remain. In fact, under Doug Ford, they have gotten worse.

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The last fiscal year under the Ontario Liberals was 2017-18, when Kathleen Wynne was premier and program spending was 17.3 per cent of GDP. The interim numbers for the fiscal year just ending show the Ford government spent 17.9 per cent of GDP. For the year just starting, the budget calls for spending 17.6 per cent of GDP. These are not small differences: if Doug Ford’s Ontario PC government simply maintained Wynne’s 17.3-per cent spending-to-GDP ratio, Ontario taxpayers would have saved about $7.6 billion last year and $4.8 billion this coming year.

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Back in 2018, Doug Ford called Wynne’s spending plan reckless. But though his own spending is about $7.6 billion more reckless than Wynne’s, the budget claims “Ontario has a strong track record of prudent financial management and continues work to protect the path to balance by 2028-29.” How spending 17.3 per cent of GDP is reckless but spending billions of dollars more than that is prudent, the budget document does not explain.

The claim about working towards a balanced budget is another laugh. In 2023, the Ford government projected the  budget would be in surplus by 2024-25. In 2024, it pushed the balanced budget back to 2026-27. In 2025, it delayed it to 2027-28. And now it’s saying 2028-29. Does anyone believe that this time the annually delayed target is finally real? Even if the Ford government really does balance its budget by 2028-29, in the four-year delay from its original timeline it will have run cumulative deficits totalling a projected $33.4 billion.

Like its spending record, the Ford government’s budget balancing compares unfavourably to the Liberal regimes that preceded it. The government is in its ninth fiscal year and it has only balanced the budget once, in 2021-22. The Ontario Liberals did it twice in 14 years, in 2006-07 and 2007-08. That’s a higher batting average than one in nine. In 2018, the “reckless” Liberals ran a $3.7-billion deficit. Ford’s budget for this year projects a $13.8-billion deficit. Again, how a $3.7-billion deficit is reckless but a $13.8-billion deficit prudent, the government does not say.

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In addition to spending and deficits, the Ford government gets a failing grade on taxes. Not only has it not delivered on past promises to cut personal and business taxes, it has actually made personal income taxes more onerous. In 2012 the McGuinty government introduced two new tax brackets, at $150,000 and $220,000, that it did not index to inflation. That effectively imposes an annual tax hike on anyone earning at or above those levels. The Ford government has maintained this annual silent tax hike since coming to power in 2018.

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Beyond the summary numbers, the specific policies changed or introduced in the 2026 budget leave much to be desired. In its budget news release, the government highlights a small-business tax cut from 3.2 per cent to 2.2 per cent. At the same time, however, it hiked the “non-eligible dividend” tax rate (the personal tax rate on dividends paid by small businesses). Moreover, widening the gap between tax rates paid by small and large businesses increases what is effectively a penalty on growth that encourages businesses to stay small, harming productivity and efficiency.

The government news release also highlights its establishment of “the Protect Ontario Account Investment Fund,” in which it “will invest up to $4 billion to attract investment from pension funds and other private capital to advance Ontario’s long-term economic and strategic priorities.” But if the province is having trouble attracting private investment, the solution is to lighten taxes and regulation. Announcing $4 billion in increased government spending does the opposite. And it wastes $4 billion.

If nothing else, Ontario’s fiscal plans and policies, which have been awful for more than two decades, have at least become predictable. So here are some predictions for next year’s Ontario budget: in 2027-28, the province will enter its 24th year of McGuinty-Wynne economic policies, though its tenth without McGuinty or Wynne; there will be no material improvement in its economic competitiveness; and the balanced budget date will be delayed by at least another year.

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