Budget 2021: Key takeaways for the provinces

The federal government presented its first budget in over two years yesterday in Ottawa. Because of the impacts of the COVID-19 pandemic that is still severe in most parts of the country, Canadian provinces had many requests. When reviewing the budget, provincial governments were sometimes pleasantly surprised, and very disappointed at other times. Here is a recap of the key takeaways by province prepared by our team of Public Affairs and Government Relations experts.

British Columbia

• Childcare: The commitment of $30B over the next five years for childcare will significantly help the BC NDP fulfill its previous promise of $10 per day childcare.
• Hospitality sector: The new Canada Recovery Hiring Program (CRHP) will provide much-needed assistance to help the tourism industry, which has been disproportionately impacted compared to the rest of the province’s economy. The sectoral struggles are likely to worsen as B.C. also announced new restrictions today on interprovincial travel.
• Green economy: The federal budget earmarks $17.6B into a clean economy, and British Columbia will be keenly interested in delving deeper into analyzing how these new programs and funding can supplement the specific priorities of its CleanBC plan.

Alberta

• Vaccine supply: The Pfizer supply appears solid, but Moderna deliveries seem to be a problem. Provinces need a predictable supply, and the suggestion Friday that allocations could be redistributed is unlikely to see “consensus” support from Alberta.
• Income supports and reopening the economy: Alberta welcomes the extension of COVID-19 rent and wage subsidies to September to provide some relief to small businesses. However, the province was hoping for more of a focus on direct support to retail and hospitality businesses which may not survive until the recovery phase.
• Health transfers: Increase from 22% to 35% was skipped in this budget. In fact, the budget was disappointingly silent on this multi-province request.
• Spending: There is concern in Alberta that Deputy Prime Minister and Minister of Finance Freeland continues to spend to stimulate an economic recovery that appears to already be underway. $101B of new spending creates an historic deficit to “invest in growth.”
• Airlines: We are still waiting for the outcome of negotiations to aid the survival of WestJet and Flair. Some airlines may think that this is the wrong time to institute a minimum wage of $15/hour.

Ontario

• Small business support: Keeping in line with Ontario's commitment to help and support small businesses through the financial impacts of COVID-19, the federal government extended the Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support by extending each program until September 25, 2021. The feds also introduced a new Canada Recovery Hiring Program which will help offset a portion of the extra costs employers take on when reopening, as well as an enhanced Canada Small Business Financing Program to help businesses access necessary capital.
• Health transfers: Even with multiple calls from Premier Ford and some of his cabinet ministers, the federal government did not propose a permanent increase to Ontario's portion of the CHT. The federal government did however provide a one-time top up of $4B to provinces and territories, indicating its willingness to consider reviewing the CHT program but only after COVID-19 has subsided.
• Vaccine supply: Premier Ford will have to continue pleading with the federal government for an increase in vaccine supply as there was no increase of what's already been promised. Last week, the Premier shot down PM Trudeau's offer for support with the administration of vaccines, citing a need for supply over capacity.

Quebec

• National childcare program: The federal government explicitly recognizes the success of Quebec's low-cost childcare model and offers to support other provinces to reduce childcare costs to an average of $10 per day within 5 years. For Quebec, the federal government would provide compensation of approximately $2B annually once the plan takes effect.
• Infrastructure and recovery: The federal government unveils a $100B recovery plan that involves building a wide range of infrastructure, helping businesses go green, and supporting individuals. The budget allocates $15B for the permanent public transit fund and additional money for the Community Building Fund.
• High-frequency rail service from Québec City to Toronto: The Freeland budget will provide $491.2M over six years, starting this year, to VIA Rail Canada for infrastructure investments that would support the overall success of the High Frequency Rail project. This will be complemented by $4.4M in funding for Transport Canada and VIA to work with the joint project office to, among other things, mitigate project risks.
• Digital Services Tax: The federal government announced the implementation of a 3% digital services tax on large businesses related to the Canadian operations of those businesses. The Quebec government has also put in place additional measures in the 2021 budget to ensure that QST is collected in the context of the digital economy.

Atlantic

• Health transfers: The Atlantic provinces, like other jurisdictions across the country, were hoping to see an increase in provincial health transfers in this budget. Although there was no long-term increase allocated in Budget 2021, leaders in this region will welcome the $3B over five years earmarked to help improve long-term care.
• National childcare program: In recent years, and especially in the wake of the pandemic, access to affordable childcare spaces has been a hot topic for many Atlantic Canadians. They will likely be happy, then, to see that this budget lays out a plan for a national childcare program with the goal of delivering $10 per day childcare over the next few years.
• Renewable energy projects: Many provincial governments in Atlantic Canada are focused on investing in renewable energy projects, from the Atlantic Loop to Muskrat Falls. Federal support in the form of Budget 2021’s allocations to cut emissions and help homeowners with green retrofits will likely be well received in the region.
• Tourism: With tourism such a substantial contributor to Atlantic economies, the provinces will likely be glad to see the federal government pledging $1B in support for the tourism sector, including festivals and cultural events.

As always, our team of Public Affairs and Government Relations experts is available at your disposal.