U.S.-de­pen­dent On­tario fears second vi­ral wave


National Post (National Edition) - - FINANCIAL POST - THEOPHILOS ARGITIS

More than a year into his term as On­tario’s fi­nance min­is­ter, Rod Phillips still hasn’t had his big mo­ment.

Fi­nance chiefs in Canada typ­i­cally de­liver bud­gets in first half of the year that lay out their fis­cal and eco­nomic pri­or­i­ties. But these are hardly typ­i­cal times, so Phillips can­celled his maiden budget speech.

In­stead, he and other min­is­ters in Premier Doug Ford’s gov­ern­ment have been fan­ning out across the prov­ince, do­ing so­cially dis­tanced events, “show­ing peo­ple that the econ­omy is open­ing” and try­ing to bol­ster con­fi­dence that has been shaken by a deep re­ces­sion and the resur­gence of COVID-19 cases in the U.S.

As the U.S. econ­omy goes, so goes On­tario’s. The prov­ince did $397 bil­lion in two-way trade in goods with the U.S. last year — more than Amer­ica’s goods trade with Ja­pan — and sends 80 per cent of its ex­ports to its southern neigh­bour.

The pan­demic has slowed trade, forced the clos­ing of the U.S. bor­der to most trav­ellers, crushed the prov­ince’s tourism in­dus­try and caused politi­cians to take a cau­tious ap­proach to re­open­ing. In Toronto, for ex­am­ple, movie the­atres, bars and other indoor venues were forced to stay closed un­til July 31, long after many U.S. states had al­lowed those to open.

“From the out­set we un­der­stood that shut­ting down the econ­omy — as dif­fi­cult as that was — was go­ing to be eas­ier than re­open­ing it,” Phillips said. The key is “mak­ing sure that both cit­i­zens and busi­nesses have the con­fi­dence to return to the econ­omy as ac­tively as they can,” he said.

As a second wave of cases threat­ens the re­cov­ery in the U.S., in­fec­tions in Canada re­main largely in check. The coun­try has recorded 3,100 virus cases per mil­lion peo­ple, as of Aug 2; the U.S. in­fec­tion rate is about 4.5 times greater. It’s a val­i­da­tion, in a way, of the un­der­ly­ing de­sign of Canada’s re­sponse to the cri­sis: strict lock­down mea­sures, fol­lowed by grad­ual, phased restarts.

The ap­proach ap­pears to be pay­ing off in data that sug­gest Canada’s re­cov­ery has avoided the stall that hit some U.S. states when virus cases surged in the early sum­mer. Yet Phillips is hardly in a smug mood.

He is wor­ried there will be last­ing im­pacts of the cri­sis on con­sumer spend­ing and that “fewer busi­nesses open than could, fewer em­ploy­ees come back than could and fewer con­sumers and cit­i­zens come back than could, at least ini­tially,” he said. The eco­nomic dam­age to On­tario is se­vere: the prov­ince lost nearly 800,000 jobs from Fe­bru­ary to June and the un­em­ploy­ment rate of 12.2 per cent is near Second World War records.

“We can do well, and I think On­tario is on track to do well, but it’s well in the con­text of a very chal­leng­ing global eco­nomic sit­u­a­tion,” Phillips said. It’s “po­ten­tially even a big­ger chal­lenge in terms of the North Amer­i­can regional econ­omy when you see the sta­tus of the out­breaks in the U.S. and Mex­ico.”

There is no more talk of cutting spend­ing or balancing the budget any time soon. In March, “we sig­nalled we were go­ing to be mov­ing from a fo­cus on bal­anced budget to a fo­cus on investing in peo­ple and com­mu­ni­ties, at least for the pe­riod of this cri­sis,” he said.


On­tario Fi­nance Min­is­ter Rod Phillips, left, and Premier Doug Ford have been out and about the prov­ince lately, preach­ing op­ti­mism and try­ing to bol­ster pub­lic con­fi­dence that was shaken to its core by the COVID-19 pan­demic.

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