National Post (National Edition)
Ontario budget projects record $38.5 billion deficit
COVID support totals $45B over three years
TORONTO • The Ontario government will run a record-setting $38.5 billion budget deficit this year, as measures intended to curb and recover from the coronavirus pandemic will drive expenses in Canada's most-populous province to previously unseen levels.
Premier Doug Ford's government revealed the deficit figure in its 2020 budget, which was tabled on Thursday after being delayed by months due to COVID-19. The budget includes plans for $187 billion in spending over the fiscal year that began in April.
The deficit matches an estimate the province provided in August, but it is now expected to shrink only to $33.1 billion in 2021-22, and then to $28.2 billion in 202223. Meanwhile, a path back to a balanced budget won't be tabled until next year's fiscal plan at the earliest, the government said, due to uncertainty caused by the pandemic.
“As time goes on, and the impacts of COVID-19 begin to recede, so will the uncertainty,” Finance Minister Rod Phillips told reporters.
Ontario's budgets are typically tabled in the spring, but the onset of the pandemic and the turmoil it caused prompted the province to instead publish a one-year snapshot of its expected finances in March. It also forced the province's Progressive Conservative government to set aside its previous projection for a balanced budget by 2023-24.
“Our government is sparing absolutely no expense in the fight against COVID-19,” Ford said.
The province's anticipation of a record shortfall now comes as it and other parts of Canada have been hit by a second wave of the virus, forcing them to reimpose restrictions on businesses such as bars and restaurants, and straining provincial heathcare systems.
Phillips' budget also includes the province's latest steps to combat COVID-19 and its effects, which the Ford government said will total $45 billion in proposed support over three years, including approximately $15 billion in spending outlined on Thursday. That three-pillar approach will see the province take aim at protecting against the pandemic, supporting those affected by it and then laying the groundwork for a successful recovery.
For the “protect” pillar, the province says $7.5 billion in new funding has been earmarked, including money to increase the average daily direct care provided to longterm-care residents to four hours a day, a change that will come into effect over a four-year period. That move (while still without a pricetag) was recently recommended by an independent commission into long-term care during the pandemic.
There is also $2.4 billion in new funding under the “support” pillar, such as $380 million that will go towards another round of $200 support payments to parents with children and $250 to those with children with special needs. Also proposed is a new 25-per-cent tax credit for 2021, which would apply to home-renovation expenses of up to $10,000 that are intended to help seniors stay in those homes longer.
The final pillar, “recover,” has $4.8 billion in new support, including $680 million over four years for broadband infrastructure. Another $1.3 billion over three years would bankroll a plan to reduce electricity costs by an average of around 14 per cent and 16 per cent for medium- and large-scale industrial and commercial employers.
“Someday, hopefully soon, COVID-19 will fade, and every government in the world will be focused on recovering from the economic crisis caused by the pandemic,” Phillips told reporters.
“We need to start working on recovery now.”
The provincial government projected Ontario's economy to shrink by around 6.5 per cent this year, followed by growth of 4.9 per cent in 2021 and 3.5 per cent in 2022.
Yet those figures are subject to the uncertainty that's been created by COVID-19. Ontario's Ministry of Finance has also laid out two other “plausible alternative paths” the province's economy could take, in which the economy would grow faster or slower, with real gross domestic product expanding by 7.5 per cent or 3.3 per cent next year.
The faster or slower levels of growth would affect the province's budget deficit, potentially improving it to $27.7 billion in 2021-22 in the fast-growth scenario, or widening it to $35.6 billion if the slow-growth situation comes to pass.
The wide range of outcomes will prompt the Ontario PC government to amend financial transparency legislation to pause the requirement to include a plan to return to a balanced budget. Ontario will also keep a $2.5 billion reserve in place this year to guard against any major hits to its revenue or expenses.
However, Ontario NDP Leader Andrea Horwath said that the Ford government's budget offers little when it comes to keeping people healthy or small businesses operating.
“Mr. Ford is waving a white flag in the battle against COVID-19,” she said.
WE NEED TO START WORKING ON RECOVERY
NOW.