Ontario's 2024 Budget: Insights and Analysis

Ontario’s 2024 Budget: Insights and Analysis

Kelly Mitchell

The Ontario government released its 2024 Budget, ‘Building a Better Ontario’ which keeps the theme from last year’s budget, ‘Building a Strong Ontario’. This is the fourth budget tabled by Finance Minister Peter Bethlenfalvy.

Minister Bethlenfalvy’s first two budgets focused on the management of the COVID-19 pandemic, sustaining the healthcare system, and supporting businesses and economic recovery.

In the last two years, affordability has risen to the top of issues Ontarians are concerned with given ongoing inflation, the housing shortage, and nearly two years of interest rate hikes.

While the economic situation remains challenging, Ontario continues to invest in key public services and lay out a path to a balanced budget without raising taxes or fees.

Doug Ford’s PC Party remains strong at 41% and is viewed by Ontarians as strongest to manage the province’s economy, jobs and cost of living.

The Numbers

This is the first budget for Bonnie Crombie as Leader of the Ontario Liberal Party.

Overall Budget: $207.3 billion, an increase of $2.6 billion from 2023. The total expense outlook is projected to grow from $207.3 billion in 2023-2024 to $224.1 billion in 2026-2027. This includes interest on debt expense, projected to increase from $12.8 billion in 2023-2024 to $15.2 billion in 2026-2027.

Revenue: The government is projecting $204.3 billion in revenues for 2023-2024. This is nearly on the mark of its projection in the 2023 budget, which pegged revenue at $204.4 billion. Since the 2023 budget, however, revenue projections have fallen by $7.3 billion for 2024-2025 and $8.5 billion for 2025-2026.This is due to a slower economic outlook and lower actual tax assessment information from the federal government.

Deficit: For 2023–24, the government is projecting a deficit of $3.0 billion. As part of its path to balance, the government is projecting deficits of $9.8 billion in 2024–25 and $4.6 billion in 2025–26, before reaching a surplus of $0.5 billion in 2026–27.In last year’s budget, the government projected a modest surplus starting 2024-2025.

Debt-to-GDP: The government projects the 2023-2024 ratio to be 38.0%, The medium-term outlook projects the net debt-to-GDP ratio is forecast to stay below the debt burden reduction strategy target of 40 per cent.

Top 5 Ministry Spending:

Health – $75.6 billion
Education – $39.3 billion
Children, Community & Social Services – $19.9 billion
Colleges and Universities – $12.1 billion
Transportation – $7.0 billion
Interest on debt: $13.9 billion

Healthcare

Health spending increased by 1.3% in the 2024 budget. Liberal leader Bonnie Crombie said the increase is below inflation at a time when hospitals are struggling. Budget initiatives include a new medical school with York U, capital investments for hospitals and measures to increase staffing and nurse enrollment.

On top of the $1 billion announced in the 2023 Budget, the government is investing an additional $2 billion over three years to stabilize the home and community care workforce and to support the expansion of home care services, to support earlier investments to increase compensation for personal support workers, nurses and other frontline care providers, and to stabilize expanded services.

Nearly $50 billion will be invested over the next 10 years for health infrastructure, including close to $36 billion in capital grants. This includes supporting more than 50 hospital projects that would add approximately 3,000 new beds over 10 years to improve access to reliable quality care.

$743 million over three years will address immediate health care staffing needs. The investment includes $128 million over the next three years to support the sustained enrolment increases of nursing spaces at colleges and universities, stabilizing emergency department staffing, and making the Extern Program permanent.

The budget contains $965 million in 2024–25 for total base hospital funding, a four per cent increase for a second year in a row.

The government is investing $50 million over three years to enhance health care capacity within Northern and rural communities. This investment will support education, recruitment, retention, scope of practice and care models for residents of Northern Ontario and those in remote areas.

Rebuilding’s Ontario’s Economy

In a slow economy, the government is looking to attract more jobs and investment, build infrastructure projects faster, and lower costs. Budget 2024 includes:

An additional $100 million for the Invest Ontario Fund, bringing the fund total to $600 million. The fund was established in July 2020 to help attract major investments from around the world and support businesses to expand their operations in Ontario
Ontario Made Manufacturing Investment Tax Credit: a 10 per cent refundable corporate income tax credit for eligible investments in buildings, machinery and equipment for use in manufacturing or processing in Ontario. Over the first four years of the incentive, from 2023–24 to 2026–27, the credit will provide Ontario businesses with estimated income tax relief of approximately $1.1 billion.
An additional $86 million over three years to the Northern Energy Advantage Program, which helps eligible large mining, forestry and steel operators better manage electricity costs as well as create and sustain good jobs in Northern Ontario. The total annual program amount will be $167 million in 2024–25 and $206 million for 2025–26 and 2026–27.
Enhancing the Critical Minerals Innovation Fund with $15 million over three years. The fund supports increased exploration, mining, development, production and processing of critical minerals in Ontario.

Housing

The government is currently behind its ambitious goal of building 1.5 million homes by 2031. Budget 2024 focuses on initiatives that will help increase supply and lower taxes on new purpose-built rental housing.

The budget calls for an enhanced HST New Residential Rental Property Rebate to remove the full eight per cent provincial portion of the HST on qualifying new purpose-built rental housing. However, achieving this enhancement will require federal regulatory changes.
To further encourage the development of purpose-built rental properties, Ontario is providing municipalities with the flexibility to offer a reduced municipal property tax rate on new multi-residential rental properties.
The government is consulting with the construction sector and municipalities on the use of modular construction.
The budget includes an additional $152 million over the next three years to support individuals facing unstable housing conditions and dealing with mental health and addictions challenges.
The government is developing an attainable housing program that will help make homeownership a reality for more Ontario families.

Afforability

The government recognizes that a higher cost province is a less competitive province. With ongoing inflation, soaring housing costs and persistent high interest rates, Budget 2024 attempts to provide some relief for Ontarians.

The government is extending the tuition fee freeze for Ontario students in publicly assisted colleges and universities for at least three more years.

Transit riders who use the recently announced One Fare program will save an average of $1,600 each year on participating systems. Riders will only pay once to transfer between transit systems in the Greater Toronto Area (GTA).
As stated in previous budgets, the government pledged to move forward with auto insurance reforms that would provide Ontario drivers with more affordable options and improved access to benefits. It will also introduce reforms that will provide drivers with an opportunity to lower their insurance premiums through a wider range of coverage options.
The budget includes changes to the Guaranteed Annual Income System and increases the annual private income eligibility threshold. This will allow approximately 100,000 more low-income seniors to receive payments, which is a 50% increase in recipients.
Ontario is investing an additional $152 million over the next three years to support individuals facing unstable housing conditions and dealing with mental health and addictions challenges.

Infrastructure

The government says Budget 2024 includes the most ambitious capital plan in Ontario’s history, at more than $190.2 billion over the next 10 years for highways, transit, broadband, housing-enabling and other infrastructure.

$1 billion for the new Municipal Housing Infrastructure Program that will largely support core infrastructure projects, such as roads and water infrastructure to enable housing for growing and developing communities.
Housing-Enabling Water Systems Fund increased to $825 million to help municipalities repair, rehabilitate and expand drinking water, wastewater and stormwater infrastructure.
Ontario’s new infrastructure bank, the Building Ontario Fund, will support the financing and building of critical infrastructure projects across the province. As the government moves forward with Ontario’s Plan to Build, the fund will act as a tool to attract capital in order to help meet the infrastructure needs of a growing Ontario. The government has allocated an initial $3 billion to the fund.
Improving cellular access to numerous rural communities in Eastern Ontario with a provincial investment of $71 million in the Eastern Ontario Regional Network.
Building highways: in addition to the much-debated Highway 413, the budget includes highway construction projects in Ottawa, York region, Windsor, and a Highway 7 corridor from Kitchener to Guelph.

Supporting Ontario Businesses

Ontario’s small businesses account for more than 97 per cent of all businesses in the province, helping to drive the economy and create good‐paying jobs for workers in growing communities across Ontario. In 2024, the government will enable an estimated $8.0 billion in cost savings and support for Ontario businesses, of which $3.7 billion would go to small businesses.

The government will extend the temporarily cut to the gas tax by 5.7 cents per litre and the fuel tax by 5.3 cents per litre beginning to December 31, 2024.

The budget includes a reduction in the high Business Education Tax (BET) rates, providing $450 million in annual savings for over 200,000 employers, or 95 per cent of all business properties in Ontario.
The small business corporate income tax rate will be reduced to 3.2 per cent and access to this preferential rate will be expanded to more businesses.
The government will increase the Employer Health Tax (EHT) exemption from $490,000 to $1 million. The EHT exemption increase helps businesses by reducing the tax for eligible private-sector employers on their total Ontario payroll.
Businesses will be permitted to accelerate write-offs of capital investments for income tax purposes.

Working For Workers

This government’s support of the skilled trades and worker-friendly policies has been attributed as a big factor in the PC’s last election win. Not surprisingly, Budget 2024 continues previous programs and introduces new initiatives in pursuit of providing Ontarians with ‘better jobs and bigger paychecks’:

$100 million will be invested in 2024–2025 to help workers, apprentices, and job seekers get the skills they need to advance in their careers. This is in addition to the over $860 million that has been invested since its launch in 2021. To date, the government has delivered close to 600 training projects to help more than 500,000 workers, including those in the skilled trades and health care, take the next step in their careers.
The budget includes an investment of $224 million to expand access to bricks-and-mortar training centres through the Skills Development Fund Capital Stream. The funding will help unions, Indigenous centres, and industry associations build new training centres, or upgrade and convert existing facilities.
The government has been engaging with the sector over the past year on a permanent target benefit framework that builds on best practices for plan funding and governance and enhances communication with plan members.
Ontario is investing over $62.9 million in two of the province’s foundational programs to help more than 18,000 young people explore careers in the skilled trades, including the Ontario Youth Apprenticeship Program and the launch of approximately 100 pre‑apprenticeship training projects around the province.