Skip to main content

Ontario fastest growing province. But public services get zip

Ontario's economy bounds to first among the provinces
Four of the big Canadian banks have come out with new forecasts for the Ontario economy and they all indicate the economy is improving.  

The fall in the price of oil (and, with it, the Canadian dollar) is paying off for Ontario.   

All four banks predict that Ontario will have the fastest growing provincial economy in 2015. 

 And all implicitly suggest that the Ontario government's Fall Economic and Fiscal Review is now out of date. (See the chart  below comparing bank and government forecasts.)

On average the banks predict that the economy will grow 0.3% more more quickly in 2014 than the Ontario government predicted in its Fall Economic Outlook and Fiscal Review. Nominal growth (real growth and changes in market prices due to inflation) is predicted to grow half a percent faster.  Similarly, growth is predicted to exceed the government's forecast for 2015 as well, with real growth reaching 2.7% and nominal growth reaching 4.7%.  

By 2015, the new bank forecasts suggest nominal growth will be a little under one percent more than the government's older, fall forecast.

That would mean significant extra revenue for the Ontario government. One percent growth in nominal GDP could mean another $850 million dollars in revenue for Ontario government coffers.  

The recently announced federal government transfer payments to Ontario for 2015/16 (for equalization, health and social transfers) are also much higher than expected.  In fact,  about $450 million more than the $800 million increase the provincial government anticipated for all federal transfers to the province.

With the new growth, the banks are forecasting a significant increase in Ontario employment in 2015, with employment increasing 1.4%, up from just a 0.8% increase in 2014.  Consumer inflation (CPI) is also forecast to fall to 1.4% (down from the government projection of 2% consumer inflation).

 The improved outlook from the banks is actually consistent with the government's thinking-- they too have suggested a significant upside for Ontario to lower oil prices and a lower Canadian dollar value.

Who will benefit? It won't be those who benefit from public services.  Despite an improving economy and extra federal cash, the Liberals are sticking to their hard talk on public services.    

Far from real growth, the plan is to cut public services. Indeed, the Liberal government's official plan is to make even sharper cuts in real public services, with 0.6% increase in program spending planned for 2015/16 ($700 million), about a quarter of the cost pressures from inflation and population growth.   

 After that it only gets worse, with a minuscule 0.08% increase planned for 2016/17 ($100 million) and minus 0.7% in 2017/18 (minus $800 million).

 And there are no signs of any move away from that plan - yet. 
2014
2015
2016
GDP Real
                           %
            %
           %
TD
2.3
2.6
2.3
Royal Bank
2.3
3.1
2.3
CIBC
2.1
2.8
2.9
BMO
2.1
2.4
2.2
Bank Average
2.20
2.73
2.43
Ontario Gov.
1.9
2.4
2.4




GDP Nominal



TD
4.2
4.1
4.4
Royal Bank
4.1
5.2
3.9
CIBC
3.8
4.9
5.1
BMO



Bank Average
4.03
4.73
4.47
Ontario Gov.
3.5
4.4
4.4




CPI



TD
2.3
1.7
2
Royal Bank
2.2
1.4
2.2
CIBC



BMO
2.3
1.2
2.2
Bank Average
2.27
1.43
2.13
Ontario Gov.
2.1
2
2




Employment



TD
0.8
1.3
1.1
Royal Bank
0.8
1.4
1.1
CIBC



BMO
0.8
1.5
1.1
Bank Average
0.80
1.40
1.10
Ontario Gov.
0.8
1.3
1.4

[Photo credit: Lending Memo]
Labels:

Comments

Post a Comment

Popular posts from this blog

Ford government fails to respond to 72% increase in COVID inpatient days, deepening the capacity crisis

COVID infections continue to drive up hospital costs and inpatient hospitalizations in Ontario. For the most recent fiscal year (April 1, 2022- March 31, 2023) hospital stays related to COVID cost $1.221 billion, according to new CIHI data.   This is about 4% of total hospital spending, creating a very significant new cost pressure beyond the usual pressures of population growth, aging, inflation, and rising utilization.   Costs for COVID related hospitalizations increased 22.2% in Ontario in 2022/23 from the previous fiscal year, rising from $999 million to $1.221 billion.  That rise is particularly notable as the OMICRON spike of late 2021 and early 2022 had passed by the the 2022/23 fiscal year.   The $222 million increase in COVID hospitalization costs came in the same year as the Ford government cut special COVID funding and, in fact, cut total hospital funding by $156 million.     In total, there were 60,653 COVID hospitalizations...
Post a Comment
Read more

The long series of failures of private clinics in Ontario

For many years, OCHU/CUPE has been concerned the Ontario government would transfer public hospital surgeries, procedures and diagnostic tests to private clinics. CUPE began campaigning in earnest against this possibility in the spring of 2007 with a tour of the province by former British Health Secretary, Frank Dobson, who talked about the disastrous British experience with private surgical clinics. The door opened years ago with the introduction of fee-for-service hospital funding (sometimes called Quality Based Funding). Then in the fall of 2013 the government announced regulatory changes to facilitate this privatization. The government announced Request for Proposals for the summer of 2014 to expand the role of "Independent Health Facilities" (IHFs).  With mass campaigns to stop the private clinic expansion by the Ontario Health Coalition the process slowed.   But it seems the provincial Liberal government continues to push the idea.  Following a recent second...
Post a Comment
Read more

The hospital crisis: No capacity, no plan, no end

While Canada has achieved universal public healthcare coverage, that does not mean conservative forces have given up trying to erode that coverage and expand corporate care where it does not currently exist. The battle has become particularly intense in Ontario under the Ford Progressive Conservative government, which is implementing serious cuts to the level of care and moving to bring in for-profit mini-hospitals. Inadequate Staffing.   Less and less of hospital spending is on staff.   Employee compensation as a share of hospital expenditures has consistently shrunk in Ontario. This is not some immutable law of hospital development.  It is in stark contrast with the rest of Canada, where compensation has become a larger share and now accounts for 67.1%. Hospitals in provinces other than Ontario now have 18 percent more staff per capita than hospitals in Ontario. Overall, if Ontario had the same staffing capacity as the other provinces and territories, there would be another...
Post a Comment
Read more