National Post (National Edition)
U.S.-dependent Ontario fears second viral wave
PROVINCE HAS PLAYED IT SMART, BUT MINISTER SEES MUCH OUT OF ITS CONTROL
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.