The
Financial Accountability Office (FAO) Budget and Economic review has identified
planned government spending savings that come via [1] announced program changes
(program cuts like the government’s cut to OHIP+), [2] announced efficiency
targets (identified areas where the government hopes it will find savings
without service cuts), and [3] cuts that have not yet been announced by the
government.
While the government has identified some spending cuts of type 1 or 2 above, the government’s spending plan needs billions
of dollars in extra, unidentified and unannounced cuts to meet
its savings targets according to the FAO (type 3 cuts, as above). For health
care, this amounts to $5.2 billion in
unidentified and unannounced cost savings needed for the government’s health
spending plan to work in 2023-24. Even though the cuts identified to date
have been major and painful, $5.2 billion is many times more than the cuts
announced and implemented to date. [1]
The unidentified and unannounced health cuts exist
even for this fiscal year – but they become a much bigger issue as the
years go along until they account for $5.2 billion out of $8 billion in total
health care cuts required by the government’s fiscal plan in 2023-24:
The FAO notes the cuts are [a] similar to the level of cuts in the 1990s, and [b] equal to about 10% in real terms for all program spending – about a $1,100 per person cut (in constant dollars) for all program spending.
Ontario already has the lowest provincial government program spending, over $2,000 less per person than the Canadian average:
Source: FAO, February 2019, Comparing Ontario’s Fiscal Position with Other Provinces
While the cuts imposed by the Mike Harris Progressive Conservative government were particularly painful in its first Budget, they lasted only a couple of years before that government was required to reverse its policy in its third year, when it recognised reality and increased program spending by 8%. The new Progressive Conservative government plans at least five years of austerity (there are no reports from the government yet about what it plans to do in years six and beyond).
The FAO also reveals that the government’s plan also has some unannounced tax changes that will reduce revenue by $0.2 billion in 2020-21, and by $3.6 billion in 2023-24. So, not only has the PC government introduced billions in tax cuts this year, we will also get more, as yet unannounced, tax cuts in the years ahead. These revenue cuts delay the achievement of a balanced budget, deepen the provincial debt, and require more cuts to social programs. And these tax cuts are planned even as the government continues to claim -- with shameless hypocrisy -- that the program cuts it is imposing are required by the province's fiscal situation.
Revenue Impact of Unannounced Tax Policy
Changes
Bottom line – The government
must identify and implement very major cuts for health care (and all social
programs) over the next five years if it keeps to its Budget plan.
Local communities
need to speak out and require this government to change direction—just as the
previous PC government did.
[1] Much
of the rest of the savings ($2.7 billion in 2023-24) are simply government ‘efficiency
targets’ – i.e. savings where the government has identified an area where they
wish to reduce spending. But these
efficiency targets may not be much more than wishful thinking (like their claim
that they will save a billion dollars annually by taking over the health care
supply chain, or their claim they will cut health agency spending by $350
million with the creation of Ontario Health, or their plan to cut $250 million
in health worker overtime, sick leave, premium payment, and etc. by 2021-22).
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