Lots for Construction in 2024-25 Budget BUT the $9.8 B Deficit is Headline

Ontario’s Minister of Finance, Peter Bethlenfalvy, rose in the legislature yesterday afternoon to deliver his budget address and introduce his 2024-25 Budget Bill, Bill 180, Building a Better Ontario Act (Budget Measures), 2024.  Here are the highlights related to the economics, fiscal situation and programs relevant to the construction industry:

Economics

• Ontario’s economy is experiencing a significant decline due to high interest rates and international economic forces.
• Real GDP is forecast to grow by only 0.3% this year, down from 1.3% cent in 2023 and 3.9% in 2022.
• 183,000 jobs were created in 2023, but only 63,00 are projected to be created in 2024.   
• Inflation is forecast to be 2.6% in 2024-25 and decline to 2.0% (the Bank of Canada’s target range for inflation) in 2025-26.
• The Bank of Canada is not expected to reduce the key interest rate in the near term.
• Ontario is expected to avoid an economic recession, and the economy will begin an upward swing in 2025.

Fiscal Situation

• In the 2024-24 fiscal year, revenues are forecast to increase by only $1.3 billion, down from increases approaching $10 billion in the each of the two previous fiscals.
• Revenue from personal income taxes is forecast to increase by 2.5% to $51.9 billion.
• Revenue from corporate taxes will show a slight increase to $24.9 billion.
• Revenue from sales taxes is expected to decline by about 2.5% to $38.8 billion.
• Program spending is budgeted at $214.5 billion for 2024-25, the highest program spend in Ontario’s history.
• Borrowing by the provincial government is planned at around $38 billion this year and next.
• The 2024-25 budget plans for a $9.8 billion deficit, a massive variance from the 2023-24 budget’s forecast for a $500 million surplus.
• The deficit for 2025-26 is expected to come in at $4.6 billion.
• Ontario’s budget is forecast to return to balance in 2026-27 with a $500 million surplus.

 Program Spending Highlights 

• Healthcare spending will increase by $500 million.
• Education spending will increase by $1 billion.
• Other program spending will increase by $4.7 billion.
• The cost of retroactive pay increases from Bill 124 are $6 billion.
• $4.7 billion more on Other Programs.
• The contingency reserve has been reduced to $500 million as a result of withdrawals for settlements relating to Bill 124.
• The extension of the gas tax relief, infrastructure spending and higher public sector salaries contributed to the deficit.

Construction Industry Related Spending

• The government plans to invest more than $190 billion over the next 10 years to expand and build highways, transit, homes, high speed internet and other critical infrastructure to support economic growth.

• $1 billion is earmarked for housing-enabling municipal infrastructure projects.
• The Housing Enabling Water Systems Fund will be increased to $825 million.
• Municipalities will continue to be rewarded for achieving their targets for new homes from the $1.2 billion Building Faster Fund
• The budget includes funding for highway projects, including Highway 413 and Bradford Bypass.
• Highway expansion projects, including Highway 401 and Highway 7, are included in the 2024-25 budget blueprint.
• New interchanges such as the Banwell Road and E.C. Row Expressway in Windsor, and Highway 416 and Barnsdale Road in Ottawa are provided for.
• The budget also plans for transit expansion projects including improving GO train and GO bus services, connecting light rail transit, advancing four priority subway projects, including the Ontario Line, and bringing back the Northlander, restoring passenger rail service to Northern Ontario.
• $200 million is budgeted for the Community Sport and Recreation Infrastructure Fund for new and upgraded sport, recreation and community facilities.
• $50 billion over the next 10 years will be invested in health infrastructure, including almost $36 billion in capital grants.
• $620 million over 10 years is allocated to allowing healthcare system partners to address urgent infrastructure renewal needs to extend the life of hospital and community infrastructure.
• $155 million is earmarked in 2024–25 to increase funding to fast-track construction of the next tranche of long-term care homes by November 30, 2024.
• $23 billion over 10 years is allocated to building, expanding and renewing schools and childcare spaces, including about $16 billion in capital grants.
• The Skills Development Fund Training Stream will receive an additional allocation of $100 million in 2024–25.

The $224 million Skills Development Fund Capital Stream will continue to fund projects.