Ontario Faces Fiscal Challenges

Here are the highlights copied from the Financial Accountability Office’s report titled “2022-23 Interprovincial Budget Comparison – Comparing Ontario’s Revenues, Spending, Budget Balance and Net Debt with Other Provinces” which was published on April 10, 2024:

Ontario’s total revenue per capita was the lowest in Canada

• In 2022, Ontario received $12,643 in total revenue per capita, the lowest among the provinces and $4,034 (24.2 per cent) below the average for the rest of Canada ($16,676), reflecting slightly lower tax revenue per capita and much lower federal transfers and other non-tax revenues per capita.
• Ontario collected $9,687 in tax revenue per capita, $92 (0.9 per cent) below the rest of Canada average of $9,779. Measured against economic activity, Ontario’s tax revenue (14.0 per cent of GDP) was also below the average of the other provinces (14.5 per cent of GDP).
• Ontario received $1,984 per capita in federal transfers, the lowest among the provinces and $1,927 (49.3 per cent) below the rest of Canada average ($3,911).
• Ontario collected $971 per capita in other non-tax revenue, the lowest among the provinces and $2,015 (67.5 per cent) below the rest of Canada average ($2,987).
• Since 2008, Ontario has consistently collected the lowest or second-lowest revenue per capita among the provinces.

Ontario’s total spending per capita was the lowest in Canada

• In 2022, Ontario’s total spending per capita of $13,065 was the lowest among the provinces and $3,338 (20.4 per cent) below the rest of Canada average ($16,403).
• Ontario’s program spending of $12,138 per capita in 2022 was the lowest among the provinces and $3,251 (21.1 per cent) lower than the rest of Canada average ($15,389), reflecting relatively low spending on health and all other programs per capita.
• Health spending per capita in Ontario was $4,889 in 2022, the lowest in Canada and $876 (15.2 per cent) below the average of the other provinces.
• Education spending in Ontario, which includes spending on primary, secondary and postsecondary education programs, was $2,843 per capita in 2022, the fifth highest among the provinces and $71 (2.6 per cent) above the average of the other provinces.
• All other program spending per capita in Ontario was $4,406 in 2022, the lowest among the provinces and $2,446 (35.7 per cent) below the average in the rest of Canada.
• Interest on debt payments were $927 per capita in 2022, the fourth highest among the provinces but $88 (8.6 per cent) below the rest of Canada average ($1,014), reflecting Ontario’s below-average effective interest rate on its debt.
• Since 2008, Ontario’s total spending per capita has consistently ranked at or near the lowest among the provinces.

Ontario was one of five provinces to record a deficit in 2022

• According to the GFS, Ontario recorded a budget deficit of $422 per capita in 2022. Excluding Ontario, the average budget position of the other provinces was a $273 per capita surplus.
• Alberta, Saskatchewan, Prince Edward Island, New Brunswick, and Newfoundland and Labrador recorded budget surpluses in 2022, while Manitoba, Nova Scotia, Ontario, Quebec and British Columbia recorded budget deficits.

Ontario’s debt burden per capita was the highest in Canada

• Ontario’s net debt per capita was $19,436 in 2022, the highest among the provinces and $9,997 (105.9 per cent) above the rest of Canada average ($9,439). Ontario’s higher relative net debt results from its frequent budget deficits, which have typically been larger than the average budget deficit in the rest of Canada.
• Despite its high debt burden, Ontario had a below-average effective interest rate of 3.5 per cent in 2022, which helped limit the impact of the province’s relatively high debt levels on the size of its interest on debt payments.