Matthew Lau: Ontario’s fiscal news is bad all around

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeFP CommentMatthew Lau: Ontario’s fiscal news is bad all aroundYes, last year's deficit was lower than budgeted but the improvement was mainly due to luck and the budgeted deficit was too high by farLast updated 17 minutes ago Ontario Premier Doug Ford outside of his office at Queen's Park in Toronto on Sept. 25, 2026. Photo by Peter Power/Postmedia filesLast week, the Ontario government finally released its 2025-26 Public Accounts, nearly six months after its fiscal year ended on March 31. The government put a cheerful spin on its fiscal performance, but the truth is in the numbers and the news is bad all around.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe government said its $13-billion deficit — $1.6 billion less than the $14.6-billion deficit initially budgeted — was “a result of a responsible financial approach and solid financial discipline.” Nonsense. Recall that back in 2018 Doug Ford called then-premier Kathleen Wynne’s spending “reckless” — which it was. But the deficit that year was $3.7 billion, not $13 billion. If the previous Liberal government’s $3.7-billion deficit was reckless, how the current government’s $13-billion deficit can be responsible is a mystery Premier Ford and his finance minister have left unexplained.This advertisement has not loaded yet, but your article continues below.The government boasts of “its proven track record of protecting taxpayer dollars” and “cutting taxes and fees” but its outsized deficit is primarily driven by higher spending, not lower taxes. When Kathleen Wynne ran that $3.7-billion deficit in 2017-18, she spent just under 17.3 per cent of Ontario’s GDP on government programs. The public accounts show the Ford government spent just over 17.7 per cent of GDP in 2025-26. Even if Ford simply maintained his reckless Liberal predecessor’s spending-to-GDP ratio, he would have spent $5.6 billion less of taxpayers’ money last year.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe $13-billion deficit is better than the $14.6 billion budgeted, but there is no reason to celebrate. The budget included a $2-billion “reserve.” If the government deficit was $1.6 billion lower than a budget that had a $2-billion sandbag, it could be argued that in reality the government missed its target by $0.4 billion, rather than beating it by $1.6 billion.The causes of this $0.4-billion miss are yet more bad news for taxpayers. Program spending for the year was fully $5.8 billion above budget. The reason the deficit was not larger was that revenue was $4.7 billion higher and debt servicing charges $0.7 billion lower. In other words, the provincial government benefited from higher tax, fee, and other revenues than budgeted but then spent it all and more.This advertisement has not loaded yet, but your article continues below.Where did the higher spending go? The $5.8 billion in overspending was driven by $6.9 billion higher health spending, $1 billion higher postsecondary education spending, $1 billion higher children’s and social services spending and $0.6 billion higher justice-sector spending. This was partly offset by lower spending of $0.3 billion on education and $3.3 billion on other programs.Even in the two areas with savings relative to budget the improvements were not achieved by better financial discipline or intentional savings. The $0.3 billion in lower education spending was driven by student enrolment that fell below expectations. The $3.3 billion in lower spending on other programs was because of “updated” schedules for construction, industrial land development and other projects. In other words, spending in the fiscal year was lower because some projects were delayed. The $3.3 billion in savings also reflected a $3-billion “contingency fund” to fund expenses “in various sectors” — a separate bag of money from the other $2-billion “reserve.”As a result of the government’s $13-billion deficit, net debt per Ontarian increased to $27,985, up 5.8 per cent year over year. Relative to GDP, net debt increased to 36.5 per cent from 35.7 per cent. The “Key Financial Ratios” section of the public accounts point to these negative trends as an indication of worsening financial sustainability. Other key ratios suggest the government’s financial flexibility decreased and its vulnerability rose in 2025-26.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Ontario’s net debt, which has reached $455 billion, represents total liabilities of $599.9 billion minus financial assets of $144.9 billion. The increase in net debt to $455 billion as at March 31, 2026 from $427.1 billion a year earlier was driven by increasing total liabilities. Financial assets were approximately flat. Unfortunately, the reason financial assets were flat year over year is that while cash and bonds went down, investments in government business enterprises went up. In other words, government essentially increased taxpayers’ investments in government businesses such as Hydro One and the LCBO.To sum up: the public accounts show bad news on all counts: a $13-billion deficit, with spending both above budget and higher as a percentage of GDP than under the previous “reckless” Liberal government. If student enrolment had not fallen short of expectations, the deficit and spending would be even higher. Net debt continues rising and metrics measuring financial sustainability, flexibility and vulnerability have worsened. Government enterprises have gotten bigger. All the while, the government continues wearing rose-coloured glasses and insists its fiscal management is producing excellent results for Ontarians.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.