This afternoon, Ontario Minister of Finance Peter Bethlenfalvy delivered his first budget since assuming the role late last year.
The Ford Government’s priorities are evident in the title of the 2021-22 Ontario Budget: Ontario’s Action Plan: Protecting People’s Health and Our Economy.
To meet these objectives, the Budget continues a massive COVID-19 response, as well as providing a panoply of pocket book relief for families and support for businesses and regions.
“The necessary public health measures have come at a cost for workers, families and business owners, but there is no question that they have saved lives. We recognize the sacrifices that have been made,” said Minister Bethlenfalvy.
“We are taking further steps to provide additional relief and support to those who have been most impacted by the pandemic, including providing a third round of direct payments to parents, doubling the Ontario Small Business Support Grant, and helping workers with their training expenses.”
New spending in this year’s Budget, combined with slow recovery of tax revenues to pre-pandemic levels, will see Ontario’s deficit hit $33.1 billion. Though down by a respectable $5 billion from last year’s unprecedented deficit, it is still more than five times higher than the government’s pre-pandemic targets.
The centrepiece of the budget, understandably, is the continuing effort to contain and recover from the impact of COVID-19. Building on last year’s massive spending, the budget projects a four-year, $51 billion program to combat the pandemic and help fuel the anticipated economic recovery. Overall, the provincial government intends to spend a total of $16.3 billion on people’s health and $23.6 billion on economic recovery.
Featured in the 2021-22 Ontario Budget are major new investments related to ongoing pandemic relief and recovery, including several announced in the days leading up to the Budget. Significant new expenditures include:
Protecting Health
Supporting vaccination and pandemic response:
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- $1 billion to support the province’s vaccination rollout plan
- $2.3 billion to support contact tracing and testing
- $1.4 billion for PPE for health care settings, including long-term care
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Specific initiatives for the hard-hit long term care sector:
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- An additional $650 million for long-term care pandemic response, including funding to help stabilize homes that have experienced significant financial impacts
- $4.9 billion over four years to increase level of care to an average four hours of direct care daily
- The government will hire 27,000 new positions in long-term care including PSWs and nurses
- $933 million more to help build long-term care beds and meet the government’s commitment of 30,000 beds in ten years
- $239 million in additional funding to extend temporary wage enhancements for Personal Support Workers through June 30, 2021 (including in home care and hospital settings as well as LTC)
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Hospital funding:
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- $1.8 billion in additional funding for hospitals for unprecedented costs for pandemic response
- Investing in a new inpatient wing at William Osler Health System’s Peel Memorial in Brampton
- Planning support for a new regional hospital in Windsor-Essex.
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Mental health:
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- $175 million more this year into mental health and addictions supports
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Supporting Families and Individuals
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- $260 million for a new Ontario jobs tax credit that will provide up to 230,000 people with a $2,000 tax credit to help cover the cost of training
- Providing parents with the third round of the COVID-19 Child Benefit and doubling it from $200 to $400 per child and $500 for special needs
- $240 million over four years, beginning in 2021–22, to support children and youth with special needs with access to critical services and additional capacity in early intervention rehab and Preschool Speech and Language Program services
- An additional $2.1 million over three years to support domestic violence survivors
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Promoting Economic Recovery
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- A massive increase to $2.8 billion in support of broadband infrastructure to ensure that every region in Ontario has reliable broadband services by 2025
- $1.7 billion for a second round of the Ontario Small Business Support Grant supporting approximately 120,000 small businesses with automatic grants of $10,000 to $20,000
- Establish a task force to advise the government on how to address the unique and disproportionate economic barriers women face
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Regional and Sectoral Support
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- An additional $400 million over four years for the tourism sector, including direct supports to businesses and attractions as well as sector assistance
- Doubling the Indigenous Community Capital Grants Program to $6 million annually
- $106.4 million for publicly-funded colleges and universities to help those institutions dealing with severe financial impacts
- $56.4 million over four years for electric and autonomous vehicle manufacturing
- Allocating more than $21 billion in funding over the next 10 years, including about $2.6 billion in 2021–22, to expand and repair highways and bridges (much of this previously budgeted)
- No funding for controversial Highway 413, though no specific commitment to cancel it
- $10 million for small wineries and cideries and to support agriculture for those businesses hard hit by the crisis
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Economic and Fiscal Forecast
Despite having released a full provincial budget and corresponding economic forecast in November, today’s budget reveals how rapidly the pandemic has continued to add to the provincial fiscal burden.
Adding in the Budget 2021 deficit of $33.1 billion, net provincial debt is forecast to hit a record $439 billion this year, rising further to over $503 billion by 2023-24.
Net debt as a percentage of GDP will hit 48.8% this year, up a full ten points from a decade ago.
An avowed anti-deficit hawk, Bethlenfalvy has criticized past Ontario governments for failing to control spending. Now, in step with finance ministers across Canada and around the world, he says the unprecedented pandemic and resulting economic crisis necessitates more government stimulus.
The Budget does not forecast a return to a balanced budget until 2029-30.
The Budget also confirms the sobering impact of the pandemic on employment. As reported by the Financial Accountability Office (FAO) in late February, Ontario set an all-time record for annual job losses with 355,300 in 2020.
Ontario’s unemployment rate, which soared to 9.6 per cent in 2020 due to the pandemic, is forecast to improve somewhat to 8.2 per cent in 2020, then drop to 6.9 percent in 2022. It is not expected to return to pre-pandemic levels under 6.0 per cent in the four-year window of the Budget’s medium range forecast.
What Comes Next?
The Minister of Finance introduced Bill 269, Protecting the People of Ontario Act (Budget Measures), 2021. The complete text of the Bill can be found here. As always, these measures are still subject to debate and passage by the Legislature.
With the next Ontario election required to take place no later than June 2022, it can be reasonably anticipated that the Ford Government will maintain a sharp focus on the two most critical issues ahead of the impending vote: completing its population-wide vaccination campaign and underpinning a robust economic rebound. Political observers will be closely watching for any indications of a snap election prior to the statutory date, as well as an expected major Cabinet shuffle as the Premier solidifies his team heading into his first re-election campaign.
Counsel will keep you updated on important news and matters coming out of Queen’s Park and share further updates as the Ontario Government continues to address the ongoing fallout of the COVID-19 pandemic and economic recovery.