Expenditure Monitor 2021-22: Q4

Highlights

• This report provides information on unaudited spending by the Province through the end of the 2021-22 fiscal year (March 31, 2022).

Changes to the 2021-22 Spending Plan

• The Province started the 2021-22 fiscal year with a spending plan of $178.3 billion.[1] By the end of the fiscal year, the spending plan had increased by $6.8 billion to $185.1 billion. Key fourth quarter changes include:
  • The health sector spending plan increased by $4.0 billion, primarily for the Operation of Hospitals ($3.0 billion increase), the Long-Term Care Homes Program ($0.5 billion increase), and Population and Public Health ($0.4 billion increase).
  • The ‘other programs’ sector received a $1.1 billion spending plan increase in the fourth quarter, including liability adjustments for solid waste landfills and contaminated mine sites ($0.4 billion increase) and for the Ontario Small Business Relief Grant ($0.3 billion increase).
  • The children’s and social services sector spending plan decreased by $0.7 billion, due to a decrease in planned spending for Ontario Works (-$0.4 billion decrease), the Ontario Disability Support Program (-$0.2 billion decrease) and the Ontario Drug Benefit Plan (-$0.1 billion decrease).

2021-22 Spending (Unaudited)

• Although the Province increased its 2021-22 spending plan during the year by $6.8 billion to $185.1 billion, by the end of 2021-22 unaudited spending was only $177.9 billion. Overall, this was $7.2 billion (3.9 per cent) less than planned.
  • All sectors spent less than planned, led by ‘other programs’ ($2.4 billion or 7.2 per cent under plan), health ($1.8 billion or 2.4 per cent under plan) and interest on debt ($0.6 billion or 5.0 per cent under plan). Also, an unspent $1.8 billion end-of-year balance remained in the Contingency Fund.
  • Spending information for all of the Province’s programs by ministry is available on the FAO’s website at:https://tinyurl.com/3tfejdp5.
• Compared to the previous year (2020-21), unaudited spending in 2021-22 was down $0.8 billion (0.4 per cent).
  • Health ($4.3 billion), interest on debt ($0.5 billion) and justice ($0.2 billion) all spent more in 2021-22 compared to 2020-21. Health spending was up, year-over-year, largely due to higher COVID-19-related spending and higher spending on payments to physicians.
  • ‘Other programs’ (-$4.4 billion), education (-$0.9 billion) and children’s and social services (-$0.5 billion) all spent less in 2021-22 compared to 2020-21. Spending on ‘other programs’ and education was down year-over-year, largely due to lower net spending on COVID-19-related programs.

2021-22 Budget Deficit Projection

• The FAO projects the 2021-22 budget deficit will be $8.1 billion. This is an improvement of $5.4 billion compared to the Province’s 2021-22 budget deficit projection of $13.5 billion in the 2022 Ontario Budget, presented on April 28, 2022.
  • The FAO estimates that 2021-22 total revenue will be $1.6 billion higher and total spending will be $3.8 billion lower than forecast by the Province in the 2022 budget.

Status of Unallocated Funds

• The Province started the 2021-22 fiscal year with $2.1 billion in unallocated funds in the Contingency Fund. In the third quarter, the Province created the Time-Limited COVID-19 Fund, with a balance of $2.7 billion, and topped up the Contingency Fund by $0.3 billion, for total available unallocated funds of $5.1 billion. After accounting for net transfers to various programs during the year of $3.3 billion, the remaining balances at the end of 2021-22 were $1.8 billion in the Contingency Fund and zero in the Time-Limited COVID-19 Fund.

Introduction

This report provides information on unaudited spending by the Government of Ontario (the Province) through the end of the 2021-22 fiscal year (March 31, 2022). The report:

• identifies changes to the Province’s 2021-22 spending plan;
• reviews unaudited actual spending in 2021-22 against both planned spending and actual spending in 2020-21;
• projects the 2021-22 budget deficit; and
• tracks transfers from, and top-ups to, the Province’s two unallocated funds: the Contingency Fund and the Time-Limited COVID-19 Fund.

The information in this report is based on the FAO’s analysis of the 2021-22 Expenditure Estimates, the Supplementary Estimates, 2021-22 (1^st, 2^nd and 3^rd editions), the 2022 Ontario Budget, and transactions recorded in the Province’s Integrated Financial Information System (IFIS) as of April 22, 2022.

The closing date for spending transactions related to the 2021-22 fiscal year, which ended on March 31, 2022, was April 22, 2022. However, there will still be 2021-22 spending transactions that are recorded between April 22, 2022 and when the 2021-22 Public Accounts of Ontario are released. Depending on the nature of these transactions, the 2021-22 Public Accounts of Ontario may contain material changes from the information presented in this report.

Changes to the 2021-22 Spending Plan

Overview

The Province began the 2021-22 fiscal year with a spending plan of $178.3 billion.[2] By the end of the fiscal year, the spending plan had increased by $6.8 billion (3.8 per cent) to $185.1 billion. In the third and fourth quarters, the Province added $4.1 billion and $2.7 billion in planned spending, respectively, largely through the tabling of three editions of supplementary estimates.

By sector, the largest spending plan increase during the fiscal year went to health, at $4,110 million, followed by ‘other programs’ ($3,766 million) and justice ($417 million). The remaining program sectors experienced spending plan decreases during the 2021-22 fiscal year: children’s and social services (-$652 million), postsecondary education (-$289 million) and education (-$284 million).

The Province started the 2021-22 fiscal year with a total of $2.1 billion in unallocated funds in the Contingency Fund. In the third quarter, the Province created the $2.7 billion Time-Limited COVID-19 Fund and topped up the Contingency Fund by $0.3 billion, for total available unallocated funds of $5.1 billion. After accounting for net transfers to various programs during the year of $3.3 billion, the remaining balances at the end of 2021-22 were $1.8 billion in the Contingency Fund and zero in the Time-Limited COVID-19 Fund. (The final section of this report provides more information on the two unallocated funds.) The remaining funds in the Contingency Fund will reduce both the budget deficit and Ontario’s net debt.

Fourth Quarter Analysis[3]

This section highlights key fourth quarter spending plan changes by sector and vote-item. For information on all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://tinyurl.com/3tfejdp5.

Health: $3,972 million increase. Notable changes include:

• $3,081 million increase for Health Services (Vote-Item 1416-1), including a $2,989 million increase for the Operation of Hospitals, a $222 million increase for Community Support Services and a $274 million decrease for Community Mental Health.
• $489 million increase for the Long-Term Care Homes Program (Operating) (Vote-Item 4502-1).
• $376 million increase for Population and Public Health (Vote-Item 1406-4), including a $332 million increase for services.
• $275 million increase for Programs and Administration (Vote-Item 1416-2), including a $164 million increase for Digital Health and a $144 million increase for Cancer Treatment Services.
• $260 million decrease for Ontario Health Insurance (Vote-Item 1405-1), largely for payments to physicians (-$246 million).

Education: $373 million decrease. Notable changes include:

• $215 million increase for Elementary and Secondary Education Program – Policy and Program Delivery (Vote-Item 1002-1), including spending plan increases for Priorities and Partnerships Funding – School Boards ($95 million), services ($79 million) and Priorities and Partnerships Funding – Third Parties ($34 million).
• $52 million decrease for Child Care and Early Years Programs – Policy Development and Program Delivery (Vote-Item 1004-1), including a spending plan increase for Child Care and Early Years ($175 million) and a spending plan decrease for the Ontario Child Care Tax Credit[4] (-$228 million).
• $533 million decrease for Support for Elementary and Secondary Education (Capital) (Vote-Item 1002-3), including School Board Capital Grants (-$280 million) and the Investing in Canada Infrastructure Program (-$227 million).

Postsecondary Education: $301 million decrease. Notable changes include:

• $303 million decrease for Colleges, Universities and Student Support (Vote-Item 3002-1), largely for the Student Financial Assistance Programs (-$368 million).

Children’s and Social Services: $662 million decrease. Notable changes include:

• $109 million increase for Supports to Individuals and Families (Vote-Item 702-21), including a $176 million increase for Residential Services and a $59 million decrease for Supportive Services.
• $133 million decrease for the Ontario Child Benefit (Vote-Item 702-22).
• $735 million decrease for Financial and Employment Supports (Vote-Item 702-3), including spending plan decreases for Ontario Works – Financial Assistance (-$434 million), Ontario Disability Support Program – Financial Assistance (-$192 million) and the Ontario Drug Benefit Plan (-$137 million).

Justice: $317 million increase. Notable changes include:

• $235 million increase for the Ministry of the Attorney General, including a $66 million increase for Ministry Administration (Vote-Item 301-1) and a $54 million increase for Legal Aid Ontario (Vote-Item 303-2).
• $82 million increase for the Ministry of the Solicitor General, including a $79 million increase for Ministry Administration (Vote-Item 2601-1).

Other Programs: $1,067 million increase. Notable changes include:

• $202 million increase for Infrastructure for Natural Resource Management (Vote-Item 2103-3) in the Ministry of Natural Resources and Forestry, to adjust for a solid waste landfill liability first reported in the 2020-21 Public Accounts of Ontario.
• $183 million increase for Environmental Remediation (Vote-Item 2203-5) in the Ministry of Energy, Northern Development and Mines, to adjust the Province’s contaminated mine sites liability based on completed environmental assessments in 2021-22.
• $177 million increase for Economic Development, Job Creation and Trade (Vote-Item 902-13), including a $293 million increase for the Ontario Small Business Relief Grant.
• $175 million increase for Ontario Cultural Media Tax Credits (Vote-Item 3808-1), which provides subsidies to Ontario-based companies in film, television, interactive digital media or publishing industries.
• $171 million increase for the Ministry of Transportation – Agency Oversight and Partnerships (Vote-Item 2702-3), mostly for capital funding to Metrolinx ($172 million).
• $134 million increase for the Mercury Disability Fund – Trustee, English and Wabigoon River Systems Mercury Contamination Settlement Agreement Act, 1986 (Vote 2001; statutory) in the Ministry of Indigenous Affairs, which provides benefits to Indigenous people who are affected by mercury contamination from the English and Wabigoon river systems.
• $125 million increase for Community and Market Housing Capital (Vote-Item 1904-4), including a $108 million increase for the Housing Lands – Sale program, which supports the sale of surplus provincial land for affordable housing.
• $256 million decrease for Infrastructure Programs (Capital) (Vote-Item 4003-2) in the Ministry of Infrastructure, including a $179 million decrease for Broadband and Cellular Infrastructure.
• A net $155 million increase for 144 additional vote-items in the ‘other programs’ sector. For more information, visit the FAO’s website at: https://tinyurl.com/3tfejdp5.

2021-22 Spending (Unaudited)

Unaudited Actual Spending vs. Planned Spending

The Province spent $177.9 billion in 2021-22, which was $7.2 billion (3.9 per cent) less than planned. All sectors spent less than planned in 2021-22, led by ‘other programs’ ($2,406 million), health ($1,817 million), interest on debt ($618 million), children’s and social services ($173 million), postsecondary education ($134 million), education ($124 million) and justice ($80 million). Also, an unspent $1.8 billion end-of-year balance remained in the Contingency Fund. The $7.2 billion in below-plan spending (or net savings) will be used to reduce both the budget deficit and Ontario’s net debt.

The $7.2 billion (3.9 per cent) in net savings for 2021-22 is less than the net savings recorded in 2020-21 of $10.3 billion (5.5 per cent) but higher than the pre-COVID-19 historical annual average of $3.8 billion (2.7 per cent) between 2010-11 and 2019-20.

The rest of this section highlights key vote-item spending that was above and below plan in 2021-22. For information on spending by all of the Province’s transfer payment programs and ministries, visit the FAO’s website at: https://tinyurl.com/3tfejdp5.

Health sector spending: $1,817 million (2.4 per cent) below plan. Highlights include:

• $104 million below plan in Drug Programs (Vote-Item 1405-2), which funds a number of provincial drug programs, the largest of which is the Ontario Drug Benefit program.
• $159 million below plan in Ontario Health Insurance (Vote-Item 1405-1), which administers payments to physicians.
• $196 million below plan in the Long-Term Care Homes Program (Operating) (Vote-Item 4502-1), which funds the operation and development of long-term care homes.
• $322 million below plan in Health Services (Vote-Item 1416-1), which funds the operation of hospitals, home care, community services (mental health, health centres and support) and other services.
• $878 million below plan in Population and Public Health (Vote-Item 1406-4), which is mainly driven by $1.1 billion in below-planned spending for the COVID-19 Response program[5] and $320 million in above-planned spending for supplies. (Note: Ministry of Health staff reported to the FAO that additional 2021-22 spending will be reported in the 2021-22 Public Accounts of Ontario that may materially change the final year-end position for this vote-item.)

Other Programs sector spending: $2,406 million (7.2 per cent) below plan. Highlights include:

• $123 million above plan in Ontario Shared Services (Vote-Item 1811-5), largely for the procurement of personal protective equipment (PPE) and other COVID-19-related supplies.
• $114 million below plan in Economic Development, Job Creation and Trade (Vote-Item 902-13), which funds a number of business support programs.
• $125 million below plan in Ministry of Transportation, Agency Oversight and Partnerships (Vote-Item 2702-2), largely due to $100 million in below-planned spending for Metrolinx Operating Subsidies.
• $178 million below plan in Tax and Benefits Administration (Vote-Item 1209-1), largely due to $164 million in below-planned spending for the property tax component of the Property Tax and Energy Costs Rebate Grants program.
• $530 million below plan in Treasury Board Secretariat, Employee and Pensioner Benefits (Vote 3403).
• $1,087 million below plan in Ministry of Transportation, Agency Oversight and Partnerships (Capital) (Vote-Item 2702-3), including $1,021 million in below-planned spending for Metrolinx (Capital) transit infrastructure investments. (Note: Ministry of Transportation staff reported to the FAO that additional 2021-22 spending will be reported in the 2021-22 Public Accounts of Ontario that may materially change the final year-end position for this vote-item.)
• A net $495 million below plan in the remaining 280 vote-items in the ‘other programs’ sector. For more information, visit the FAO’s website at: https://tinyurl.com/3tfejdp5.

2021-22 Spending vs. 2020-21 Spending

In 2021-22, the Province spent $177.9 billion, which was $0.8 billion (0.4 per cent) less than was spent in 2020-21. The largest year-over-year spending decrease was in ‘other programs’ (-$4,421 million), followed by education (-$907 million) and children’s and social services (-$446 million). Conversely, health ($4,329 million), interest on debt ($496 million), justice ($171 million) and postsecondary education ($1 million) all spent more in 2021-22 compared to 2020-21.

• The health sector spent $4,329 million (6.3 per cent) more in 2021-22 compared to 2020-21, largely due to higher spending for:
  • Population and Public Health ($2,199 million);
  • payments to physicians ($1,551 million);
  • the operation of long-term care homes ($843 million) and capital investments ($324 million);
  • Home Care ($276 million)
  • Ontario Drug Programs ($230 million);
  • Major Hospital Projects ($141 million);
  • the Assistive Devices Program ($96 million);
  • Community and Priority Services ($85 million);
  • Cancer Treatment Services ($78 million); and
  • Canadian Blood Services ($73 million);
  offset by lower spending on:
  • Small Hospital Projects (-$210 million);
  • Regional Coordination Operations Support (-$443 million); and
  • the Operation of Hospitals (-$1,221 million).
• The education sector spent $907 million (2.7 per cent) less in 2021-22 compared to 2020-21, largely due to lower spending on:
  • the Childcare Access and Relief from Expenses (CARE) Tax Credit (-$101 million);
  • Priorities and Partnerships Funding – School Boards grants (-$227 million); and
  • Priorities and Partnerships Funding – Third Parties grants (-$1,488 million), largely due to the temporary in 2020-21 Support for Learners and Ontario COVID-19 Child Benefit programs;
  offset by higher spending on:
  • school board infrastructure through School Board Capital Grants ($320 million) and the Investing in Canada Infrastructure Program ($434 million); and
  • School Board Operating Grants and Education Property Tax Non-Cash Expense, which combined fund the Grants for Student Needs ($143 million).
• The children’s and social services sector spent $446 million (2.5 per cent) less in 2021-22 compared to 2020-21, largely due to lower spending for Ontario Works (-$414 million), the Ontario Disability Support Program (-$124 million) and bad debt expense (-$159 million), which was partially offset by higher spending on the Ontario Drug Benefit Plan ($240 million).
• The justice sector spent $171 million (3.2 per cent) more in 2021-22 compared to 2020-21, due to an increase in spending across a variety of programs, including Legal Aid Ontario, and Ontario Provincial Police – Field and Traffic Services.
• The ‘other programs’ sector spent $4,421 million (12.5 per cent) less in 2021-22 compared to 2020-21, largely due to lower net spending for COVID-19-related programs, including:
  • the procurement of PPE and other supplies through Ontario Shared Services (-$192 million);
  • the 2020-21 Canada Emergency Commercial Rent Assistance for small businesses program (-$241 million);
  • temporary funding for Homelessness Programs in 2020-21 (-$490 million);
  • temporary electricity subsidies (-$697 million);
  • COVID-19-related business and worker support programs (-$2,201 million); and
  • COVID-19-related support for municipalities and municipal transit (-$3,722 million);
  offset by higher spending in 2021-22 on:
  • electricity subsidy programs ($775 million), largely due to the introduction of the Renewable Cost Shift program in January 2021 (the fourth quarter of 2020-21);
  • Metrolinx transit infrastructure projects ($647 million);
  • municipal infrastructure projects with the Ministry of Infrastructure ($202 million);
  • liability adjustments for solid waste landfills and contaminated mine sites through Infrastructure for Natural Resource Management in the Ministry of Natural Resources and Forestry ($207 million) and Environmental Remediation in the Ministry of Energy, Northern Development and Mines ($183 million);
  • Treasury Board Secretariat, Employee and Pensioner Benefits (Employer Share) (Vote 3403) ($189 million);
  • the Ontario Production Services Tax Credit ($162 million);
  • the Mercury Disability Fund – Trustee, English and Wabigoon River Systems Mercury Contamination Settlement Agreement Act, 1986 in the Ministry of Indigenous Affairs ($127 million), which provides benefits to Indigenous people who are affected by mercury contamination from the English and Wabigoon river systems;
  • Public Protection programs ($127 million), such as fighting forest fires in Northern Ontario;
  • Housing Lands – Sale program ($108 million), which supports the sale of surplus provincial land for affordable housing;
  • Grants in Support of Tourism Investment Development ($99 million); and
  • Employment and Training program with the Ministry of Labour, Training and Skills Development ($87 million).

2021-22 Budget Deficit Projection

Based on the spending information presented in this report and the FAO’s most recent revenue forecast,[6] the FAO has updated its 2021-22 budget deficit projection to $8.1 billion.[7] In comparison, in the 2022 Ontario Budget,[8] the Province projected a 2021-22 budget deficit of $13.5 billion. The difference between the FAO’s and the Province’s 2021-22 budget deficit projections is $5.4 billion.[9]

The FAO estimates that 2021-22 total revenue will be $1.6 billion higher and total consolidated expense will be $3.8 billion lower than forecast by the Province in the 2022 budget. The difference between the two forecasts largely reflects more up-to-date information available to the FAO, which includes updated spending transactions.[10]

Status of Unallocated Funds

The Province started the 2021-22 fiscal year with a total of $2.1 billion in unallocated funds in the Contingency Fund. In the third quarter, the Province created the Time-Limited COVID-19 Fund, with a balance of $2.7 billion, and topped up the Contingency Fund by $0.3 billion, for total available unallocated funds of $5.1 billion.

Unallocated funds cannot be spent directly by the Province but must be transferred to government programs through Treasury Board Orders. Through the first three quarters, the Province transferred a net $2.0 billion from the two unallocated funds to various programs. In the fourth quarter, the Province transferred a net $1,865 million from the Time-Limited COVID-19 Fund to various programs, completely drawing down the fund. In contrast, the Province transferred a net $554 million to the Contingency Fund from various programs, resulting in a year-end balance in the Contingency Fund of $1,826 million. The remaining funds in the Contingency Fund will reduce both the budget deficit and Ontario’s net debt.

The following tables provide information on fourth quarter transfers from the Time-Limited COVID-19 Fund and the Contingency Fund.

About this Document

Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario.

This report has been prepared with the benefit of publicly available information and information provided by Treasury Board Secretariat.

All dollar amounts are in Canadian, current dollars (i.e., not adjusted for inflation) unless otherwise noted.

Prepared by:
Michelle Gordon (Senior Financial Analyst), Jacob Kim (Senior Financial Analyst) and Matthew Stephenson (Manager, Financial Analysis) under the direction of Luan Ngo (Director, Financial Analysis) and Jeffrey Novak (Chief Financial Analyst).

Footnotes