Economic and Budget Outlook Assessing Ontarios Medium-term Budget - - PowerPoint PPT Presentation

Economic and Budget Outlook

Assessing Ontario’s Medium-term Budget Plan Fall 2019

Overview

• Government released the 2019

Economic Outlook and Fiscal Review on November 6th.

• The FAO’s Economic and Budget

Outlook (EBO) provides an independent assessment of Ontario’s economic performance and budget outlook.

2 Financial Accountability Office of Ontario | fao-on.org

• Real GDP growth projected to average 1.7 per cent

annually over the outlook, reflecting weaker gains in household spending, investment, exports and government spending

Ontario’s economic growth has slowed

Source: Statistics Canada and FAO.

2.4 1.7 4.3 3.6 0.0 1.0 2.0 3.0 4.0 5.0 2014-2018 2019-2023 Historical Projection Ontario Average Annual GDP Growth (Per Cent) Real Nominal

Financial Accountability Office of Ontario | fao-on.org 3

• Revenue growth has been weak over the past two years –

averaging just 1.4 per cent annually

• Reflects policy changes by previous and current governments,

combined with more moderate economic growth

• Revenue growth improves to 3.7 per cent over next four years

Moderate revenue growth expected

Source: Ontario Public Accounts, 2019 Ontario Economic Outlook and Fiscal Review and FAO.

0.0 2.0 4.0 6.0 8.0 10.0

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Historical FAO Projection

Total Revenue Growth (Per Cent) 4.6 per cent average growth 3.7 per cent average growth 1.4 per cent average growth

Financial Accountability Office of Ontario | fao-on.org 4

• Fall Economic Statement increased program spending growth over next

two years, compared to 2019 budget outlook

• Spending growth in 2021-22 is unchanged from budget
• Program spending expected to grow at average annual rate of 1.4 per

cent over full five-year outlook

Program spending restraint continues

0.1 1.2 1.2 1.3 1.1 1.4 2.1 1.2 0.0 0.5 1.0 1.5 2.0 2.5 2019-20 2020-21 2021-22 2022-23 2023-24 Annual Program Spending Growth (Per Cent) 2019 Budget 2019 Fall Economic Statement

Note: Estimates for program spending in 2022-23 and 2023-24 are based on program spending growth rates from the 2019 Ontario Budget. Source: 2019 Ontario Budget and 2019 Ontario Economic Outlook and Fiscal Review and FAO. Financial Accountability Office of Ontario | fao-on.org 5

FAO baseline projection: budget balanced by 2021-22

• Under FAO’s baseline projection, the budget is effectively balanced in 2021-22

and improves to a large surplus by 2023-24

• Government’s budget plan includes provisions for unannounced tax cuts and

spending measures

• Unannounced policies would delay balanced budget to 2023-24 and increase net debt by

$13.5 billion

Source: Ontario Public Accounts, 2019 Ontario Economic Outlook and Fiscal Review and FAO. * Budget balance is presented before the reserve.

• 2.4
• 3.7
• 8.0
• 5.7
• 4.4
• 7.4
• 8.5
• 5.5
• 0.6

3.7 8.7

• 10
• 8
• 6
• 4
• 2

2 4 6 8 10 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 History Medium-term Outlook Recovery Plan

Budget Balance ($ Billions) 2019 FES* FAO baseline projection

Unannounced measures incorporated beginning 2021-22

Financial Accountability Office of Ontario | fao-on.org 6

Government’s plan would reduce spending per person by $1,070 over five years

Note: Estimates for program spending in 2022-23 and 2023-24 are based on program spending growth rates from the 2019 Ontario Budget. Source: Ontario Public Accounts, 2019 Ontario Budget, 2019 Ontario Economic Outlook and Fiscal Review and FAO. Financial Accountability Office of Ontario | fao-on.org 7

10,410 9,340 8,000 8,500 9,000 9,500 10,000 10,500 11,000 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Historical Medium -Term Outlook Recovery Plan Program Spending Per Person (2018 dollars) $1,070 Spending Decrease per Ontarian

• FAO analysis suggests demand for public services by 2021-22

could exceed government’s planned spending by $5 billion, after accounting for government’s cost cutting measures.

• Additional actions likely needed to achieve the government’s

spending plan

Demand for public services likely to exceed planned spending

Source: FAO analysis of data from Treasury Board Secretariat. Numbers may not add due to rounding.

6.6 4.8 155.9 148.8 167.3 145 150 155 160 165 170 2018-19 2019-20 2020-21 2021-22 Historical Medium-Term Outlook Total Program Expenses ($ Billions) Unmet Demand Program Changes & Efficiency Targets

Financial Accountability Office of Ontario | fao-on.org 8

2 Bloor Street West Suite 900 Toronto, Ontario M4W 3E2 416.644.0702 fao-on.org info@fao-on.org

Thank you