Ontario will cut spending, reduce taxes for low-income workers and exempt new housing units from rent controls as the world’s largest largest sub-sovereign borrower moves to bring its finances in order.
Finance Minister Victor Fedeli projected a deficit of C$14.5 billion ($11 billion) for the fiscal year ending March 31, C$500 million less than forecast by an independent commission in September. Spending is being cut by C$3.2 billion, while revenue will drop by C$2.7 billion from previous projections as the government scraps a carbon trading plan and offers relief to families and businesses.
The government gave no fiscal projections for future years and no target for when it would return to budget balance.
“We will restore fiscal balance on a timetable that is reasonable, modest and pragmatic,” Fedeli said, according to the text of his speech in the provincial legislature in Toronto on Thursday. “We will put in place a meaningful debt reduction strategy.”
Premier Doug Ford swept to power in June on a pledge to bring the finances in Canada’s most populous province into balance over time. The deficit for this year is more than double the previous government’s forecast, while net debt stands at about C$347 billion, the highest of any sub-sovereign borrower rated by Moody’s Investors Service.
Borrowing this year will be C$33.2 billion, down from C$35.1 billion estimated in the commission of inquiry, yet up from C$31.7 billion in the previous government’s budget.
As of Oct. 31, C$25.8 billion, or about 78 percent of this year’s borrowing, was completed. The net debt-to-gross domestic product ratio is seen at 40.5 percent this year.
The economy is projected to grow 1.8 percent in 2019 and 1.7 percent in 2020, down from 2 percent in 2018.
Canceling the cap-and-trade system will cost C$1.5 billion this year. A tax break for 1.1 million low-income workers will cost about C$495 million in the 2019 tax year. The minimum wage will be kept at C$14 an hour until 2020 and tied to inflation thereafter.
The government will launch a program to boost housing supply, plans to cancel a development-charges rebate program -- saving C$100 million over four years -- and exempt new rental units from rent control.
The government will also allow beer and liquor stores to be open from 9 a.m. to 11 p.m. seven days a week.