What Doug Ford's new cabinet faces: inflation, housing crisis, union talks

Ontario Premier Doug Ford will unveil his new cabinet on Friday morning in what is forecast to be glorious sunshine outside of Queen's Park.

But after that, stormy economic and political weather looms for Ford's second-term government. 

Ontario confronts the highest rate of inflation in nearly 40 years, an economic reality that will have a strong influence on everything from the amount of tax revenue the government brings in to the amount of pressure public sector unions exert for higher wage increases. 

The new cabinet also faces a housing affordability crisis that has spread to all corners of the province, an overburdened health-care system weakened by more than two years of dealing with the COVID-19 pandemic, and a long list of promises to be kept.   

Ford and his newly appointed ministers are scheduled to be sworn in at 11:15 a.m. in an outdoor ceremony in front of the legislature. 

As previously reported by CBC News, observers expect the new cabinet to be larger and more diverse than Ford's first in 2018. 

Here's a look at the five biggest issues facing Ford and his ministers: 

The rapid rise in the cost of living is a far-reaching economic problem that no provincial government can be expected to solve, yet it's a problem that stands to have a profound effect on much of what the Ontario government does.

The Progressive Conservatives' measures to make life more affordable have so far focused primarily on making driving more affordable: scrapping Ontario's $120 vehicle registration fee, ending tolls on provincially owned highways, and promising to reduce the gasoline tax by 5.7 cents a litre for six months, effective July 1.

Inflation will in many ways help the government's coffers: when consumer goods cost more, sales tax revenue increases. Inflation doesn't seem to be hurting corporate profits so far, so the province can also expect its corporate tax revenues to rise accordingly. 

Of course, inflation also makes it more expensive for the government to buy stuff and to build stuff, so expect to see the price tags for the government's big construction projects balloon past their budgets.

But the biggest inflationary concern for the government will be what it does to public sector wages. Salaries account for roughly half of the province's annual operating budget.

Whether it's teachers, nurses, hydro workers, police officers, road maintenance crews or Service Ontario staff, they're all seeing inflation eat into their take-home pay. That is bound to lead to public sector unions asking for higher wages whenever their next round of bargaining begins, the argument being that any annual wage increase of less than the rate of inflation amounts to a pay cut.

An annual inflation rate of 7.7 per cent sets a dramatically higher bar for pay increases than the public sector has seen for decades.