Second Ontario pandemic budget tops $38.5B deficit

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Ontario’s gross domestic product dropped 5.7 percent in 2020

QUEEN’S PARK – Like jurisdictions around the globe the Ontario economy has been hammered by the fallout from the COVID-19 pandemic, resulting in a 5.7 percent retraction in provincial gross domestic product (GDP) while, at the same time, the additional costs piled onto the health, education and social safety net sectors have been legion.

In releasing his 2021 budget entitled ‘Ontario’s Action Plan: Protecting People’s Health and Our Economy,’ Minister of Finance and President of the Treasury Board Peter Bethlenfalvy has focussed on shoring up both sides of the ledger. 

“You can’t have a healthy economy without healthy people,” said Minister Bethlenfalvy. “For the past year, we have been focused on protecting people from COVID-19. Many challenges lie ahead. But with vaccines being distributed in every corner of the province, hope is on the horizon. We are ready to finish the job we started one year ago.”

Minister Bethlenfalvy pointed to the budget, the second delivered during the pandemic, as building on government investments in response to the global pandemic, which tip out at $16.3 billion and $23.3 billion in supports aimed at shoring up the economy, bringing the total for the government’s COVID-19 action plan support to an eye-watering $51 billion. 

“Eventually the pandemic will be behind us. It is months, not years away,” said Minister Bethlenfalvy. “We will get to that day through the hard work and sacrifice of Team Ontario. Our government is going to be there every step of the way to make good on our commitment to protect people’s health and jobs. When this chapter is finally closed, I’m confident that the people of Ontario are going to unleash the economic growth that is necessary for job creation, prosperity and a stronger province.”

Although between May 2020 and February 2021, employment in Ontario rose by 829,400 in net jobs, the economy remained stubbornly 305,300 below its pre-pandemic level. The budget predicts employment and real GDP will surpass pre-pandemic levels sometime in 2022.

Top of mind, the budget allocates $1 billion for the province’s vaccination efforts, as well as additional funds for new hospital beds (3,100), increased testing and personal protective equipment (PPE).

The budget also aims $2.6 billion at the long-term care crisis to build 30,000 long-term care beds, while upgrading nearly 16,000 spaces—with $4.9 billion allocated over four years to increase the average daily direct care for long-term care residents from 2.75 hours to four hours.

On the jobs side of the ledger, the budget is proposing $260 million for a new jobs training tax credit that will offset 50 percent of eligible training costs up to $2,000. 

For families the budget is offering a third round of the COVID-19 child benefit, this time doubled to $400 per child and $500 for each child with special needs. Parents who have not applied for the previous payments will be able to submit an application for this third payment round, those who applied for the previous rounds will automatically be registered for the third round.

The Ontario Small Business Support Grant, with an estimated total of $1.7 billion, will go to eligible employers impacted by the provincial public health restrictions, bringing the grant to an estimated $3.4 billion. The grant is anticipated to attract approximately 120,000 small businesses and remains set at the same level as the first installment—a minimum of $10,000 to a maximum of $20,000.

A $100 million Ontario tourism and hospitality small business support grant will provide one-time payments between $10,000 and $20,000 to hospitality-related businesses that don’t qualify for the Ontario small business support grant. The program is aimed at hotels, motels, travel agencies, amusement parks, hunting and fishing camps, overnight summer camps and other recreational and vacation camps that the industry employed between 200,000 and 400,000 people before the pandemic hit.

Arts organizations have not been left out, as they will be able to access part of the $10 million allocated to the Ontario Arts Council in order to offset the loss of venue rentals and box office drops.

Another $100 million has been allocated for tourism operators and signature attraction businesses, but details on how that money would be accessed were missing from the budget document.

A previously announced $150 million program that will provide a tax credit to residents for up to 20 percent of eligible Ontario tourism expenses is also in the mix, while the province’s regional tourism organizations will receive up to $15 million to help promote travel within the province.

Planned infrastructure spending over the next 10 years will total $145.4 billion, with $16.9 billion taking place in 2021–22. Those investments include transit, highways, schools, hospitals and broadband.

Faith-based and cultural organizations could be eligible to apply to a pot of $50 million to offset costs associated with additional costs associated with COVID-19.

A $2.8 billion investment aimed at having everyone in Ontario connected to strong internet service by 2025 is also contained in the budget.

The budget also heralds the development of a new government-issued electronic ID.

While the Ford government was fulsome in its praise of its own efforts, the opposition wasn’t as impressed.

Algoma-Manitoulin MPP Mike Mantha slammed the government for providing fine words while reverting back to the agenda of deep cuts to vital government services evident in the 2019 budget. “These announcements are under what they were spending before,” he said, noting the Ford government’s penchant for announcing “record investments” that actually reduce the real-dollar inputs in past years. “Hospitals, the education system, the government’s fine words are not what is actually happening,” the MPP added.

The MPP noted that, although the government is touting investments in personal support workers and other front line staff, the temporary $3 an hour bump up initially put forward by the province during the height of the pandemic is not being made permanent.

He cited increasing backlogs of surgery wait times and hallway medicine that the premier committed to reducing before he was elected. Most damning, he added, is the refusal of the government to bring in paid sick days—something vital to helping stem the skyrocketing infection levels in the province according to the government’s own advisors.

Liberal leader Stephen Del Duca also weighed in on the budget’s shortcomings. “Today’s budget shows that Doug Ford has decided the pandemic is already behind him, abandoning every Ontario family still in crisis,” he said. “I’m furious to see that this budget proposes a devastating cut to publicly-funded education, leaving our kids and teachers falling behind in crumbling classrooms. Ontario Liberals are choosing to stand up for families instead, with plans to invest to make sure our children and their educators can learn and work in the best schools imaginable.”

He went on to add that the budget “doesn’t offer adequate support for women, young people and racialized Ontarians who have lost work during the pandemic.”

“This budget is just classic trickle-down economics and it’s the last thing communities need,” responded CUPE Ontario President Fred Hahn, who also pointed to the lack of paid sick days.

The advocacy group People for Education said the budget made no mention of the critical need to address the effect of the pandemic on schools, students and staff, noting that instead the government is sending “small cheques” to parents through its Ontario COVID-19 Child Benefit.

“It would be more efficient (and) effective to spend that amount collectively on resources and programs in schools to address long-term impacts of COVID,” Annie Kidder, People for Education executive director, posted on social media.

Others criticized the lack of environmental considerations in the economic recovery plan. Keith Brooks, programs director of Environmental Defence, said his organization was disappointed the budget didn’t include plans for a green recovery that focused on climate change.

“We were hopeful that the Ontario government would take this opportunity to revisit and reset its hostile approach to the environment. Sadly, that’s not the case,” Mr. Brooks said in a released statement.

“The women and men serving on the frontline of our healthcare system are experiencing an economic and emotional depression, yet today’s budget fails to deliver the supports required to stabilize the workforce,” said Sharleen Stewart, president of SEIU Healthcare, the union representing 40,000 Ontario health care workers, in a release. “Healthcare workers have been calling on Premier Ford to make the initial $4 per hour pandemic pay available to all frontline heroes fighting COVID and to make it permanent, yet his budget ignores their demand for respect and economic security.”

Ms. Stewart notes that “67 percent of our union members report a decline in their take home pay, yet Premier Ford’s budget fails to provide low-wage workers, like personal support workers, a living wage of at least $25 per hour.”

On the other hand, business, health-care and industry groups welcomed the relief laid out for their sectors.

Anthony Dale, CEO of the Ontario Hospital Association, said the group appreciates new funding as hospitals he represents work to “maintain stability during this ongoing crisis.”

Ontario Long Term Care Association CEO Donna Duncan said long-term care spending around staffing and expansion of available beds “will make a meaningful difference in the lives of Ontario’s seniors now and in the future.”

The Ontario Chamber of Commerce welcomed supports for businesses and funding specifically geared toward the tourism sector, jobs training and broadband internet.

What is missing from the budget are a significant number for action items near and dear to the heart of the North. The budget doesn’t include a plan for sharing tax revenue from mining and forestry with Northern cities, towns and First Nations, something the Conservatives promised in the 2018 election, and the return of passenger rail is only mentioned tangentally in the budget as “potential,” although there is $5 million for planning and study by Ontario Northland.

North Bay Deputy Mayor Tanya Vrebosch said she was hoping for a stronger commitment. 

“That one, the word to ‘re-examine’ kind of worried me a little bit, because I thought it would be to ‘re-establish,’” she said during a media interview. 

There was also no mention of the Ring of Fire, despite Premier Ford’s commitment during the election to jump on a bulldozer himself to move the project forward.