TORONTO - Slower-than-expected growth means the Ontario government will take in $778 million less this year than it forecast in last spring's budget.
Finance Minister Dwight Duncan's fall economic update confirms Ontario will post a $16-billion deficit for 2011-12.
Duncan also says the government will consider a recommendation to limit overall spending increases to one per cent a year until the deficit is eliminated by 2017-18.
However, he's not saying which programs or services could be cut to meet that target, with details not expected until next spring's provincial budget.
Duncan's economic update echoes the gloomy outlook highlighted in Tuesday's throne speech, but also says Ontario has fared well compared with other jurisdictions.
Gross domestic product is projected to grow at 2.0 per cent this year, down from 2.6 per cent forecast in the spring budget.
"Since our budget was based on those earlier predictions, we will be facing some additional pressure as we protect the gains we have made in our schools and hospitals while also reducing the deficit," Duncan said in a prepared text.
The ministry of finance predicts real GDP will grow at only 1.8 per cent next year, rebounding to 2.5 per cent in 2013 and 2.6 per cent in 2014.
"Over the last eight months, private-sector economists have lowered their projections for Ontario's economic growth by about 25 per cent for this year and next," Duncan said.
"Our economy is still growing, but neither as quickly as earlier forecasts predicted, nor as quickly as we would like."
Ontario created 266,800 net new jobs in the past two years, and employment now is 10,000 jobs above the province's pre-recession peak in 2008, said Duncan.
Total government spending of $124 billion will actually be $264 million less than budgeted, primarily due to lower interest rates on the province's debt, which continues to rise.
Ontario's net debt will grow from $214.5 billion in 2011-12 to $281.8 billion by 2013-14.
Duncan set the stage for a report due in January from economist Don Drummond, who is reviewing government services and spending and is recommending a one per cent cap on spending increases until the deficit is eliminated.
"That is something we will be consulting Ontarians and the legislature about when the commission's report is finalized," said Duncan.
The Liberal government also moved Wednesday to introduce legislation to give seniors a $1,500 tax credit for renovations that help them stay in their homes longer.
The $136-million-a-year Healthy Homes Renovation Tax Credit would create about $800 million in economic activity, said Duncan.
"Given the need to balance new spending with the need to lower spending growth, the cost of this program will be offset by savings in other areas," he said.
