2022 Ontario budget proposes major infrastructure investments, targeted tax credits
After more than two years of pandemic-related bad news, massive deficits and dire fiscal predictions, the Progressive Conservatives were clearly eager to drive home a message with the 2022 Ontario budget: We plan to build. That includes highways, schools, hospitals—you name it. The pre-election budget is not short on spending. In fact, it proposes a whopping $198.6 billion in new expenditures.
It also projects an increase in the provincial deficit to $19.9 billion in 2022-23 from $13.5 billion this year, before dropping to $12.3 billion in 2023-24 and $7.6 billion in 2024-25. While these forecasts are better than those tabled mid-pandemic, Ontarians still face a long and winding path to budgetary balance, which is currently projected for 2027-28. It’s too early to tell whether the province will, indeed, manage to balance its books before the close of the decade. Widespread economic and geopolitical uncertainty are already complicating most government’s fiscal projections, making them aspirational at best.
Program spending—mainly in support of individual Ontarians with minor relief for businesses— will be enhanced as the Tories make their pitch to remain in power. The question is: Will this budget ever be passed in its current form? It won’t become law before the election, so speculation is already rife that the Ford government will introduce a modified version this summer if they win re-election in June. While that remains to be seen, the Tories are betting that voters will reward their heavy-spending ways as we emerge from the pandemic and look to maintain robust growth, all while grappling with challenges such as rampant inflation.
Here are some of the key highlights from the 2022 Ontario budget:
- An enhancement to the Low-income Individuals and Families Tax Credit. The change would increase the net income limit to qualify for the credit, to $50,000 from the current $38,500 for individuals, and to $82,500 from $68,500 for families. The government says the enhancement would deliver an additional $300 in tax relief, on average, for low- to middle-income earners.
- A new refundable personal income tax credit for seniors that would allow eligible recipients to “receive up to 25 per cent of their claimable medical expenses up to $6,000, for a maximum credit of $1,500”
- A previously-announced reduction of the provincial gas tax by 5.7 cents per litre and the fuel tax by 5.3 cents per litre for six months, effective July 1st, 2022
- $25.1 billion over 10 years for highway construction, including funding for Highway 413 and the new Bradford Bypass project
- $61.6 billion over 10 years for public transit projects, including subway construction and GO Transit upgrades
- $316.2 million for municipal transit enhancements
- An increase in the provincial minimum wage to $15.50 on October 1st, 2022
- $268.5 million over three years in additional funding through Employment Ontario to fund training and employment programs
- An additional $114.4 million over three years for the Skilled Trades Strategy
- An additional $15.8 million in 2022–23 for the Skills Development Fund
- An extension of time-limited relief for the electricity distribution sector, until December 31st, 2024
- An extension of the temporary enhancement of the Regional Opportunities Investment Tax Credit by one year
- Up to $1 billion in funding to upgrade infrastructure across the Ring of Fire critical mineral development region
- $14 billion in capital grants over 10 years to support school infrastructure, along with $1.4 billion for public school upgrades and maintenance for the 2022–23 school year
- An additional $3.3 billion in 2022–23 for hospital construction
- $1 billion over three years for home care
- $1.5 billion to fund acute and post-acute hospital beds
- $827 million to fund hospital operating expenses
- $300 million for surgical and diagnostic imaging recovery
- $250 million for health care HR enhancements
- $764 million over two years to fund a nurse retention incentive totalling as much as $5,000 per person
- $230 million in 2022–23 to enhance hospital staffing
- $300 million in 2022–23 for the Surgical Recovery Strategy to increase surgical capacity across the health care system
The 2022 Ontario budget reads much like a campaign platform—complete with a laundry list of recent spending highlights and tax reductions—because it largely is. The Tories will use it to position their party as the best fiscal manager for the province.
It will be up to voters to decide whether the government’s record spending and lingering deficits satisfy that criteria.
Armando Iannuzzi, Co-Managing Partner
For more information on the 2022 Ontario budget, contact a member of our team.