Skip to main content

Santis Memo: Ontario Government Underspends on Health, Education and Municipal Infrastructure

On March 1, 2023, the Financial Accountability Office of Ontario released a report on the province’s spending for the first three quarters of the 2022-23 fiscal year. The report highlighted the Ontario government’s under-spending on municipal infrastructure, education, and health.

Overall, the Government of Ontario spent $6.4 billion less than expected in the first three quarters of fiscal 2022-23, with the health sector receiving $1.251 billion less than expected. Although spending accelerates within the fourth quarter (Q4), it is difficult to anticipate whether and to what extent the government will underspend for the year.

Annually, the PC government has increased their health spending by 2.2%. If this rate of increase remains in Q4, the government will underspend their health budget by approximately $4 billion. To hit their total budget this fiscal year, they must increase their health spending annually by 10%. As this percentage will be almost impossible to reach, the government is likely to see an underspend in health, resulting in either a small deficit or a small surplus for the overall budget.

The two main areas of underspending within the health sector are public health and hospital/long-term care capital spending. The underspending in public health is due to COVID-19 pandemic preparedness, as the government budgeted a significant sum in case the pandemic worsened. As COVID-19 restrictions continue to lift and there is less frequent testing and a smaller percentage of the population receiving vaccines, there is less spending on COVID-19 related public health measures. Overall, the government spent $605 million less than expected on Population and Public Health.

The lack of hospital/long-term care capital spending, totalling $361 million less than expected, can be partially attributed to the broader construction slowdown which has also resulted in large underspends in infrastructure projects outside of health. This is significant as the current underspending on capital could see the government falling short of high profile, long-term infrastructure targets for both hospital and long-term care beds if it continues.

The Minister of Finance recently announced that the 2023-2024 Ontario budget will be tabled on Thursday, March 23, 2023. Six months following the budget, there will be a final report on spending for the 2022-23 fiscal year. Santis predicts the final figures will continue to show an underspend over the entire fiscal year. Therefore, if the 2023-24 budget indicates that a small deficit in 2022-23, it may disappear when the final figures are released. Similarly, if the budget says spending in 2022-23 was balanced, this may end as a surplus when the underspend is accounted for.