Ontario’s budget deficit doubled in size last year due to mostly to “policy choices by both the previous and current governments,” says the province’s independent fiscal watchdog.

The Financial Accountability Office says the $3.7-billion deficit in former premier Kathleen Wynne’s final full year in office ballooned to $7.4 billion under Premier Doug Ford due in part to cancelled climate-change initiatives and subsidizing hydro bills.

“This sharp rise was largely the result of policy choices by both the previous and current governments — including the cancellation of the cap-and-trade program and higher spending on electricity subsidies,” the FAO said Thursday.

That’s a reference to Ford’s decision to withdraw Ontario from its carbon-pricing alliance with Quebec and California, which cost the treasury $1.9 billion in revenues that were earmarked for environmental programs.

The FAO also noted the previous Liberal government’s sell-off of the majority share in Hydro One “temporarily” bolstered the bottom line in 2017-18.

“Fewer asset sales in 2018-19 resulted in a $900-million reduction in sales and rentals revenue when compared to 2017-18,” the watchdog said.

“A further consequence of Hydro One’s partial sale was an Ontario Energy Board ruling that resulted in a one-time, $400-million reduction in the province’s revenue received from the corporation in 2018-19,” the office added.

“In addition, the debt retirement charge was removed from non-residential electricity bills on March 31, 2018, which permanently lowered non-tax revenue by $600 million beginning in 2018-19.”

The fiscal office said “Ministry of Energy expenditures increased at the fastest rate, largely due to the sharply higher cost of electricity subsidies.

“The government spent $4.2 billion subsidizing electricity prices in 2018-19, an increase of almost 50 per cent from $2.8 billion in 2017-18.”

While Ford’s government has promised to decrease hydro bills by an additional 12 per cent, the government has yet to determine how to reduce rates.

Touting that campaign pledge in a column he penned for the Toronto Sun in July, Energy Minister Greg Rickford would only say “we will continue to take necessary steps toward keeping that promise.”

In Kenora on Wednesday, the premier stressed his focus is on “putting money back into people’s pockets.”

At Queen’s Park, Liberal MPP Mitzie Hunter (Scarborough-Guildwood) noted that Ford had claimed until recently that the 2018-19 deficit was $15 billion.

“The Ford government continues to paint a bleak picture of Ontario’s finances when in fact, they inherited a strong economy. Ontario needs to know that the $15-billion deficit never existed and Ford will continue to use this figure to justify cuts to essential services across Ontario,” said Hunter.

Green Leader Mike Schreiner charged that “Ford is inflating deficit numbers to justify his cuts to essential public services” while retaining the unsustainable hydro subsidies that Tories used to rail against when the Liberals were in power.

“Instead of a blanket subsidy scheme that disproportionately benefits the wealthy, we need targeted support to help the most vulnerable keep the lights on,” said Schreiner.

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Finance Minister Rod Phillips, who will table the fall economic statement on Nov. 6, has said the 2019-20 deficit will be lower than the $10.3 billion forecast by his predecessor, Vic Fedeli.

Ford shuffled Fedeli to Economic Development just 10 weeks after the Tories’ first budget was tabled in April.

Robert Benzie is the Star's Queen's Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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