Fiscal watchdog finds Ontario spent $7.2B less than planned, projects smaller deficit

A report by the Financial Accountability Office found the province spent $7.2 billion less than it budgeted for in the last fiscal year and could have a deficit $5.4 billion smaller than planned.

If government underspending becomes a trend, it'll be worth a 'deeper look,' FAO says

Toronto, Ontario,(David Donnelly/CBC), June 2014, Queen's Park, Summer, Exterior, Ontario Legislative Building,
A new report by Ontario's fiscal watchdog found the province spent $7.2 billion less than planned in the last fiscal year, leading to a projected smaller deficit. (David Donnelly/CBC)

Ontario's fiscal watchdog is projecting a deficit $5.4 billion smaller than the most recent figure projected by the government because of lower-than-anticipated program spending.

In a report issued Tuesday, the Financial Accountability Office (FAO) said it arrived at its deficit figure of $8.1 billion after reviewing government spending and finding that the province spent $7.2 billion less than planned across all programs.

The Progressive Conservative government, led by Premier Doug Ford, had projected a deficit of $13.5 billion in its most recent budget tabled in April. 

Higher-than-projected revenue partly contributed to the lower deficit projection. The watchdog said its estimated revenue for the 2021-22 fiscal year was $1.6 billion higher than the government's. 

There was also a $1.8-billion balance left in unallocated contingency funds from the last fiscal year. The FAO said that would go to reducing the province's budget deficit and net debt.

Financial Accountability Officer Peter Weltman said the difference in the deficit figures can probably be attributed to the unpredictable nature of the pandemic, as economic forecasts have been "up and down" over the last two years.

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"Given the huge uncertainty because of COVID, I think that explains why there is such a discrepancy," he said.

Ontario Financial Accountability Officer Peter Weltman said while the pandemic may explain the underspending and projected smaller deficit figure, significant underspending by a government would be worth looking into if it becomes a lasting trend. (Frank Gunn/Canadian Press)

But while the pandemic may explain this year's finding, Weltman noted that significant underspending by a government would be worth looking into if it becomes a lasting trend.

"If we're starting to see these sorts of things as a regular feature, then it's worth having a deeper look," he said.

Opposing parties call out Ford government

In education, the report found the government spent almost $1 billion less than the previous year, largely due to less spending on pandemic-related programs.

There was also less COVID-19-related spending in the "other programs" area — which includes transit money for municipalities, homelessness support and support for businesses and workers — compared with the year before.

NDP finance critic Catherine Fife said the $7.2 billion that went unspent amount to "cuts by stealth".

"In health care and education, people are begging for investment to attract, train, hire and retain the staff we desperately need," said Fife. 

"It's time to invest to rebuild and improve the public services we all count on. Instead, the Ford Conservative government has found a way to keep the cuts coming all year long."

The report says the government spent $4.2 billion more in health than in the previous year, but spending was still $1.8 billion under what was originally earmarked. 

More was spent than the previous year on public health, physician payments and long-term care home operation, as well as major hospital projects, the report said. That spending was offset by lower government spending on small hospital projects and hospital operations.

A nurse in a personal protective equipment walks down a hospital corridor.
A new report by the Financial Accountability Office of Ontario found that while the provincial government spent $4.2 billion more in health than in the previous year, total spending was still was $1.8 billion under what was planned. (Evan Mitsui/CBC)

The official opposition NDP called the move "unbelievably callous and dangerous" amid ER closures across Ontario, on top of an ongoing staffing crisis.

Ontario Green Party Leader Mike Schreiner agreed, and said the report confirms the Ford government is underspending on critical services.

"It's shameful and inexcusable to underspend on health care while nurses and other health care workers are burnt out, emergency rooms are overflowing if not closing outright."

"If keeping emergency rooms open doesn't warrant spending — what does?"

Ivana Yelich, a spokesperson for Ontario Premier Doug Ford, said in a tweet that FAO reports numbers based on "outdated" figures that don't reflect actual government spending.

"Just because money wasn't recorded as spent by the time the requested the FAO requested the data, doesn't mean the money hasn't been or won't be spent," said Yelich.

Richard Mullin, a spokesman for the Treasury Board president, echoed Yelich and also pointed to "record investments" by the Progressive Conservative government, such as infrastructure projects in both health and education.

"We have a plan to get it done by building Ontario while supporting those who need the help the most."

With files from The Canadian Press