New details released about decades of Ontario government spending

Ontario’s Financial Accountability Office (FAO) is providing a clearer look into the province’s finances over the past 34 years.

On Wednesday, the FAO released a new report that analyzes trends in government spending from 1990 to 2024, as well as federal transfers for health and social services.

In Ontario’s 2023-24 budget, the province spent a total of $206.6 billion. According to the latest FAO report, that’s up from $57.6 billion in 1990-91 and represents an average annual increase of 3.9 per cent without adjusting for inflation.

After accounting for factors like inflation and population growth, which drive up demand and increase the cost of goods and services, the province’s real per capita spending increased at an average annual rate of 0.5 per cent.

That means the province went from spending $11,185 per person in 1990-91 to $13,118 per person in 2023-24.

Over that 34-year period, the FAO says government spending accounted for an average 18.6 per cent of Ontario’s GDP. That figure peaked during the following three periods: the 1990s recession (22.5 per cent in 1992-93), the 2008 global financial crisis (20.2 per cent in 2009-10) and the COVID-19 pandemic (20.2 per cent in 2020-21).

According to the report, Ontario spent more on sectors like health care, justice and education for children and youth during the 34-year period that was analyzed. Meanwhile, the province spent less on post-secondary education, social services and interest on debt. 

Health care was the largest spending sector and has steadily increased from 29.3 per cent in 1990-91 to 41.4 per cent in 2023-24.

TRANSFER PAYMENTS FROM THE FEDERAL GOVERNMENT

Federal transfer payments for health care and social services are a critical source of revenue for many provinces and territories across the country, including Ontario.

Over that 34-year period, the FAO says the majority of federal funds were provided to pay for things like health care, social assistance and post-secondary education.

“In real per capita terms, federal transfers increased at an average annual rate of 2.0 per cent, from $1,124 per person in 1990-91 to $2,180 per person in 2023-24,” the report said.

The office found that federal transfers accounted for an average 13.4 per cent of provincial spending during the 34-year period and reached 16.6 per cent in 2023-24. The lowest that figure has ever been was in 1998-99 when federal transfers represented 6.8 per cent during “a period of federal fiscal restraint.”

However, that number shot up to 18.7 per cent in 2020-21 during the COVID-19 pandemic.

Click here to read the full report.