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April 12, 2019ONTARIO BUDGET 2019-20 Ontario has released its 2019-20 Budget, the first after a change in government. Ontario's budget deficit for 2019-20 is projected to be $10.3 billion, following on an interim forecast of $11.7 billion deficit for 2018-19. Ontario is expected to remain in deficit (after contingency reserve) for the following three fiscal years, returning to surplus in 2023-24. From 2018-19 through 2023-24, Ontario's revenues are projected to grow by an annual average pace of 3.0 per cent while expenditures rise more slowly at 1.3 per cent.
Ontario's deficit for 2018-19 was wider than estimated at the time of the 2018-19 Budget. The new government has implemented changes to revenues through elimination of carbon permits and introduction of personal and corporate tax reductions. Ontario's government has also planned for slower growth in expenditures, even though there are new expenditure initiatives. After both slower revenue and expenditure growth, Ontario's return to surplus is now projected to be one year earlier than planned in the 2018-19 Budget.
Compared with the previous government's 2018-19 fiscal plan, Ontario's Budget deficits are projected to be larger in the current and upcoming fiscal years. The deficits projected for 2020-21 though 2022-23 are similar to whose anticipated at this time last year. The surplus projected for 2023-24 arrives a year earlier than planned at this time last year.
Ontario's return to balance assumes that revenues maintain a roughly stable portion of the province's GDP - falling slowly from 17.5 per cent in 2019-20 to 17.3 per cent by 2023-24. Slower expenditure growth is projected to result in a decline in provincial spending as a share of GDP, falling from 18.5 per ent in 2019-20 to 17.1 per cent by 2023-24.
Ontario's deficit is projected at 1.2 per cent of GDP for 2019-20 and subsequent deficits decline as a share of GDP.
Ontario's net debt to GDP ratio is projected to be rise from 40.2 per cent in 2018-19 to 40.7 per cent by the end of FY2019-20. The net debt to GDP ratio is projected to remain stable for the next two years before declining in 2022-23 and 2023-24.
Ontario's economic growth lagged behind the national average throughout much of the period of high energy prices/investment from 2002-2014. Ontario's growth has re-emerged in the last four years, however the projections for growth are expected to slow in the next 3-4 years. Despite favourable labour market conditions, Ontario's growth is expected to slow as residential investment cools and household consumption growth slows due to rising interest rates. Ontario's main source of growth is expected to pivot to business investment as Ontario's production capacity is at its limit. New capacity would allow Ontario to take advantage of stable international markets, but export growth may be affected by slower economic growth among the province's major trading partners.
Key Measures and Initiatives
Ontario's new government has identified new priorities and a different direction for the province. The 2019-20 Budget includes a number of new measures to advance the government's new priorities, notably:
- introducing a Childcare Access and Relief from Expenses tax credit
- reducing postsecondary tuition by 10 per cent
- giving low income seniors access to dental care.
In the days before the Budget, the Ontario government also announced plans for substantial transit expansions around Toronto.
Several new initiatives were also unveiled in Ontario's Fall economic statement, including:
- a low income tax credit
- extension of the Federal accelerated writeoff of manufacturing/processing and other equipment to reduce
Ontario Budget 2019-20
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