Ontario may have to pay $2.7B in retroactive wages if they lose Bill 124 appeal

Ontario has allocated $4.4 billion more than what is needed to fund the provincial health-care system, according to the Financial Accountability Office (FAO), but if the province loses its appeal of Bill 124, it could be paying back more than half of that to workers in the public sector.

In a review of expenditures for the next three years, the FAO says the excess funds are due to the province’s decision to add $15.2 billion in funding to the health sector in the 2023 budget.

It also represents “a significant change” from the office’s previous estimate of a $10 billion shortfall over the same period.

The FAO says the majority of the additional $15.2 billion is being used to address funding gaps for existing programs and new commitments.

About $900 million is being used to pay for retroactive wage increases awarded to some health-sector workers while another $500 million is needed to fund new program changes.

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The FAO says the $4.4 billion in unallocated funds could be used to introduce new programs, enhance existing programs or address other spending pressures, “such as higher than expected wage settlements.”

“Alternatively, if the Province decides not to use the $4.4 billion in excess funds, then these funds would be applied to improve the budget balance and reduce the Province’s net debt,” the report notes.

However, the office warns that health-sector spending could be influenced by “above-historical increases to health sector wages” and the ongoing legal challenge of Bill 124.

The legislation, which went into effect in 2019, capped wage increases for those in public service to one per cent a year for three years. At the time, the government said the bill was a time-limited approach to eliminating the deficit.

In November 2022, Justice Markus Koehnen found the bill infringed on the workers’ rights to freedom of association and collective bargaining.

The provincial government is appealing the decision, and the court case is expected to be heard in mid-June.

Arbitrators have awarded Ontario nurses with retroactive pay increases despite the province’s appeal of Bill 124. They have already been awarded an additional 0.75 per cent wage increase for 2020 with an additional one per cent the following year and two per cent in the final year. This has been covered in the provincial spending plans.

However, the FAO report says this number could increase significantly if the government is unsuccessful in its appeal of the court decision.

In that case, officials say hospital spending would go up by an additional $2.7 billion from 2022-23 to 2027-28.

PRIVATE FACILITES GETTING MORE HEALTH DOLLARS

The report also found that up to $62 million is being allocated to so-called independent health facilities in 2023-24. This represents more than a 106 per cent increase over the last year and is “largely due to the province’s plan to expand the number of surgeries performed at community surgical and diagnostic centres,” the report said.

The FAO says that about $200 million—taken from the $500 million set aside for new programs—is being allocated for these facilities.

Officials noted that very little information has been provided on this expenditure as the program remains relatively new.

Private clinics are now being allowed to conduct more procedures covered under the Ontario Health Insurance Plan, including cataract surgeries, MRI and CT scans, and minimally invasive gynecological surgeries.

The Ontario Health Coalition, which advocates for publicly-funded health care while representing more than 500 member organizations and individuals, has heavily criticized the new legislation and argued it will promote “manipulative upselling.”

An informal referendum, conducted by the coalition, showed that the majority of people who participated were against the privatization of hospital services.

When asked if they wanted “public hospital services to be privatized to for-profit hospitals and clinics,” 99 per cent of the more than 386,000 respondents said no.

The Ontario government has said repeatedly said no patient will pay for OHIP-covered services with their credit cards, regardless of where they have a procedure done.

They will also be designating “expert organizations” to work with Ontario Health and the Ministry of Health to ensure quality and safety standards at all clinics.