Ontario has $4.4-billion more for health care programs than required: report

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Ontario’s fiscal watchdog says the provincial government has allocated $4.4-billion more than it needs to pay for health care programs over the next three years, a “significant change” from a previous estimate that said the province would be facing a $10-billion shortfall.

A new report released Wednesday from Ontario’s Financial Accountability Office found the government now has $4.4-billion in “excess funds” budgeted for its health care programs until 2026, although more than half of that money might be needed to pay back public-sector workers who are challenging the government’s wage-stamp law.

A previous report in March said Ontario needs to spend $21.3-billion more on health care to meet its own expansion targets and will be short about 33,000 nurses and personal support workers by 2027-2028.

“That $4.4-billion is a significant change from the FAO’s previous estimate of a $10-billion funding shortfall over the same period,” said Jeffrey Novak, Ontario’s acting financial accountability officer.

The reason for the change, Mr. Novak said, is that Ontario added $15.2-billion to its spending plan in the 2023 budget, “which effectively covered the shortfalls we had previously identified.” The new funding is targeted primarily toward expanding capacity in long-term care, home care and hospitals, the report said, as well as a plan to shift some surgeries to private clinics. It also includes almost $1-billion for Bill 124-related retroactive wage increases.

Total health sector spending is expected to rise from almost $80-billion in 2022-2023 to $87-billion in 2025-2026, the report said, bolstered by an increase to federal health transfers.

Federal transfers to Ontario are estimated to total $19.2-billion this year, with transfers expected to increase by $7.7-billion over the next five years. The increase means federal transfers will cover 27.4 per cent of Ontario’s health spending by 2023-2024, but gradually decline to 26.1 per cent by 2027-2028 after some time-limited agreements expire.

The FAO said an additional $4.4-billion could be used for new programs, to enhance existing health programs, to reduce debt or for “settlement agreements” related to the legal challenges of the government’s 2019 wage-cap law, known as Bill 124.

Bill’s 124 capped wage increases for nurses and other public-sector workers at 1 per cent a year for three years. It was ruled unconstitutional by the Ontario Superior Court in November, 2022. Though the government is appealing that, the Ontario Nurses’ Association seeks retroactive pay through an arbitrator, since the contracts were subject to be reopened if Bill 124 was repeated or declared invalid.

In April, Ontario hospital nurses were awarded retroactive pay for three years during which they were subject to the wage-restraint law.

The report said if the government was unsuccessful in its appeal of Bill 124 and all hospital employees were awarded retroactive compensation, the FAO estimates that hospital spending could increase by an additional $2.7-billion over six years.

“If they lose this court case, they could use the $4.4-billion to address that spending pressure. There’s also health-sector worker shortages that we’ve identified before. The government may need to increase wages to attract or retain workers,” Mr. Novak said.

Ontario NDP Leader Marit Stiles said she believes the government is saving money in order to pay for the future court decisions relating to the wage-cap law. Her party is also calling on the government to intervene in a decision to close the emergency room at a hospital in Minden, about two hours northeast of Toronto.

“It would be great if they would just be honest about that and just say, ‘You know what? We’re just going to raise those people’s wages the way we should have, so we could stop health care workers from leaving the system,’” Ms. Stiles said.

Interim Liberal leader John Fraser said he doesn’t think the government will spend all of the money it has allocated for health care.

“The government needs to be open and transparent and spend the money that they need to right now to ensure that we have the staffing and support in our ER rooms in our hospitals and in long-term care homes,” he said.

Health Minister Sylvia Jones didn’t respond specifically to questions about the FAO report. But she said the decision to close the Minden emergency room and consolidate it with an ER in another community was made by the leadership of the local hospital. “Hospitals are more than just an emergency department,” she told the legislature.