The Ontario deficit is not really up $3 billion

Despite the headlines, the Ontario deficit is not truly up $3 billion over the Budget plan -- or at least not yet. What is true is that, despite slower growth in the economy than planned, government revenue is up $2 billion higher than planned in the spring Budget.

Program spending is not really up. Instead the government has merely set aside more money into its reserve and contingency funds -- it added in the Fall Economic Statement $4.5 billion to these funds. The government has come to rely more and more on these non-transparent funds. We don't really know how they will be spent -- and it is entirely possible that none of it will be spent. But if the money in these funds is spent at all, it will mostly go to corporations.

The $700 million they added to the reserve brings it to a whopping $2.2 billion. The government justifies this with reference to economic uncertainty and the impact of the proposed federal "productivity mega deduction". But much of it it may just come off the deficit at the end of the fiscal year -- which is only five months away.

The Contingency fund now has a balance of an incredible $4.9 billion. Here, they at least make some more reference to how they might spend it: [1] to deal with compensation pressures, and [2] to provide flexibility to respond to unforeseen risks. The government has flagged that it wants to give money to businesses to find alternate trade partners, stabilize business operations, and to keep businesses liquid.

The government would only need a small fraction of $3.8 billion to deal with any unexpected compensation pressures, even if the public sector unions break the existing wage and staffing pattern wide open. The main bargaining issues the government is dealing with have been known about for a long time -- school board bargaining and Ontario Public Service bargaining. So there can't be much surprise there. What is clear is that the government has got way more than enough in its new budget plan to settle collective agreements fairly. But that sounds unlikely.

There's certainly more at play with "unforeseen risks". There's a lot of that about right now, thanks to our "ally" down south. But, again the fiscal year is more than half over, Trump has already taken a lot of hostile steps since the spring Budget and yet the economy has kept on going -- albeit at a slower pace of growth.

So will the Ford government really rush billions of dollars out the door and give it to corporations? Five billion dollars is a lot to get out the door in five months.

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