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Ontario budget 2021: Deep deficits as province plots COVID-19 recovery

 

Ontario budget 2021-Deep deficits as province plots COVID-19 recovery-Milenio Stadium-Ontario
Ontario Finance Minister Peter Bethlenfalvy delivered his first provincial budget today. Bethlenfalvy stepped into the role of finance minister after MPP Rod Phillips resigned in January following a holiday to the Caribbean despite COVID-19 travel warnings. (Frank Gunn/The Canadian Press)

It will likely take Ontario until at least 2029 to balance its books, the province said Wednesday, as the economic fallout of the COVID-19 pandemic has forced the government to spend record amounts of money. 

Ontario projects $2.6 billion more in pandemic spending since fall budget

The long path back to black is part of the $186-billion 2021 Ontario budget tabled today by Finance Minister Peter Bethlenfalvy. He is the third treasurer to present a fiscal outlook for the province in as many years.

Ontario’s economy shrunk about 5.7 per cent over the last year, and a Progressive Conservative government that was elected on reining-in spending conceded with this budget that it will take years of red ink to ultimately recover from the pandemic.

“I’m betting on the people of Ontario,” Bethlenfalvy said at an afternoon news conference. “We are going to defeat this virus, and then we are going to come back stronger.

The 231-page plan has two main themes: health and economic recovery. It revives benefits, grants and tax credits for families and businesses and includes considerable funding injections for the health-care sector and tourism industry.

It sets aside money for job training for Ontarians, particularly those looking for work in the skilled trades. As a result of the pandemic, employment among women is down five per cent provincewide and 3.1 per cent among men, the Ministry of Finance says.

In a speech to the legislature, Bethlenfalvy stressed the disproportionate impact the pandemic has had on women, referring to the current economic climate as a “she-cession.” He promised a task force that will examine the barriers women face in the workforce.

Also notable is what is missing from the budget. There is no provincial program for paid sick leave, despite advice from health experts and advocacy groups that it could help curb the spread of the coronavirus. Nor is there any money specifically earmarked for the controversial Highway 413 project in the Greater Toronto Area, or continued pandemic-specific funding for school boards.

Half-trillion dollars of debt by 2024

After running a record $38.5-billion deficit through 2020, the ministry forecasts a deficit of about $33.1 billion for the 2021-22 fiscal year based on four per cent growth in the economy.

The ministry says it anticipates “pent-up consumer demand” this year as more people get vaccinated against COVID-19. There was a significant drop in household spending last year, the ministry says, allowing Ontarians to collectively save $148 billion in the second quarter alone.

Deep deficits are then expected to continue for several subsequent years, and Ontario will be facing about a half-trillion dollars of total debt by 2024.

“As the minister of finance and president of the treasury board, my job is to ensure we make every resource available to win our battle against the virus,” Bethlenfalvy said during his speech.

“And while this is neither sustainable nor desirable forever, I am absolutely, unequivocally convinced it is necessary to get through the pandemic and to recover stronger.”

The next provincial election is scheduled for June 5, 2022, a year in which government estimates it will be running a deficit of nearly $28 billion.

Based on modest projections of economic growth, the government expects the deficit to keep shrinking each year before eventually breaking even in 2029-30. Before COVID-19 arrived in Ontario, the government had aspired to get back to balance by 2023.

Because of the economic uncertainty fuelled by the pandemic, the ministry also offered alternative paths to balance based on slower-than-expected and faster-than-anticipated growth in Ontario.

In the faster growth scenario, the province could potentially reach the black two years earlier, by 2027. Under the slower growth scenario, it could take until the 2031-32 fiscal year.

Money for families

Included in the budget is a third round of payments through the Ontario COVID-19 child benefit.

This time, however, amounts will be doubled to $400 per child and $500 per child with special needs. Families that received the last direct payment will not need to apply again, the Ministry of Finance says.

Similarly, the government will offer a one-time, 20 per cent enhancement of the child access and relief from expenses (CARE) tax credit. That amounts to about $250 more per child, at a cost of about $75 million to the province.

The temporary relief is expected to provide assistance to about 300,000 families across Ontario, according to the government.

Money for small businesses and tourism

The province also plans to offer a second round of payments to small businesses whose revenues were hard-hit by the pandemic.

Up to $20,000 each for some 120,000 eligible businesses throughout Ontario will be available. Those that received a payment during the first round will automatically qualify for a second, the Ministry of Finance says.

A spokesman for the Canadian Federation of Independent Business says the group applauded the government’s move to double grant funding for small businesses, but asked for some amendments.

“Thousands of hard-hit small businesses across the province remain ineligible,” says Ryan Mallough. “CFIB urges the Ontario government to expand eligibility for this important program.”

There is also funding for the tourism industry, including a $100-million fund to help operators and major attractions recover from the financial blow dealt by COVID-19. In the last year, about 140,000 jobs have been lost in Ontario’s tourism sector.

Further, there will be a new, one-time tourism and hospitality small business support grant of up to $20,000 for small tourism operators (100 employees or fewer) that did not qualify for the general small businesses grant but saw revenues drop by at least 20 per cent.

COVID-19-Milenio Stadium-Ontario
The COVID-19 pandemic has been especially deadly for Ontario’s beleagured long-term care sector. Bethlenfalvy called the current situation in the sector a ‘tragedy decades in the making.’ (Michael Charles Cole/CBC)

Health-care funding

No sector in Ontario has been more impacted by the pandemic than health care. More than 7,260 people have died with the illness, and many public health units and hospitals in the province have been pushed to the limits of their capacity.

This year’s budget contains a total of $6.7 billion in pandemic-related spending, including $1 billion for Ontario’s ongoing vaccination campaign — with $50 million targeted toward immunizations for rural and urban First Nations people. There is another $2.3 billion, to be spent this fiscal year, for expanded COVID-19 testing and contact tracing efforts.

An additional $1.8 billion will go to hospitals this year to help them care for COVID-19 patients and clear the lengthy surgical backlog that resulted from pandemic health measures.

The government also committed to help fund a new in-patient wing at William Osler Health System’s Peel Memorial in Brampton. Local advocacy groups and politicians have long called for new hospital facilities in the region, where overcrowding and “hallway health care” are common experiences for patients. No timeline on when construction could begin was provided, however.

Speaking to reporters, NDP Leader Andrea Horwath said that, if she were premier, the budget would include funding for a new hospital in Brampton.

“Instead, this government is continuing to ignore the people in Brampton who are desperate, desperate for improvements and for that extra hospital that they have needed for years now,” she said.

Horwath also said an NDP government would have funded paid sick days and offered paid leave for workers to get a COVID-19 vaccination. Premier Doug Ford and Bethlenfalvy failed to “invest in people,” she said.

“Doug Ford just doesn’t believe in workers, he doesn’t want to spend the money to help working people get through,” Horwath told media.

Overall, health funding is being hiked to $69.8 billion, up from $66.7 billion the previous fiscal year.

Ontario Liberal Leader Steven Del Duca welcomed increased spending on health care, but said the commitment falls “woefully short of what Ontarians need.

“This budget does not rise to the moment that Ontarians are facing,” Del Duca said.

Long-term care spending

The province says it is also accelerating its plan to build new spaces in long-term care, with the hope of adding more than 20,000 beds in just four years. The budget earmarks an additional $933 million over four years to fulfil its previously announced promise of providing four hours of direct care every day to residents of long-term care.

That plan was first introduced in the government’s November 2020 budget but its cost was not detailed. The government says the funds will help recruit 27,000 personal support workers (PSWs) to help achieve the new standard.

Additionally, the province will also offer a sort of signing bonus for PSWs and nurses in retirement homes. PSWs can get $5,000 for a six-month commitment, while nurses can get $10,000 for a one-year commitment. The measure is intended to help ease turnover of staff in retirement homes.

No such bonuses will be offered to current PSWs and nurses in the long-term care sector, the government says. However, a $3 per hour wage increase that went into effect for most PSWs last year will continue through June of this year.

Future of Highway 413 uncertain

While the budget contains spending for a host of transportation capital projects, it does not specifically mention the proposed Highway 413, which would run through the northwest of the GTA.

The proposal has garnered fierce opposition from environmental groups, and a number of municipalities that had initially signalled support for the 400-series highway have since reversed course.

Bethlenfalvy says the proposal is currently undergoing an environmental assessment and no decision has been made on its fate.

For his part, Del Duca said he was disappointed that the budget didn’t include an “ironclad” commitment to scrap the project.

Environmental Defence, an organization that opposes Highway 413, said in an email that it is encouraged that no money was earmarked for the proposal, but criticized what it called a lack of climate change-related spending in the budget.

CBC

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