Photo credit: THE CANADIAN PRESS/Frank Gunn
Photo credit: THE CANADIAN PRESS/Frank Gunn
The Ontario Progressive Conservative government released its delayed 2020 budget at Queen’s Park Thursday afternoon, the second under Premier Doug Ford.
COVID-19 has remained top of mind for the Ontario government as seen by the three core pillars of Thursday’s budget: protect, support and recover. To that end, the government is dedicating $15.2 billion to protecting Ontario during the pandemic, $13.5 billion in support for Ontario’s businesses and workers surviving the pandemic and $4.8 billion in funds to spur economic growth.
In stark contrast to the Ford government’s first budget in April 2019 that outlined spending cuts, this budget prioritizes investment, including $7.5 billion in new healthcare funding. An additional $4 billion in COVID-19 funding will be made available to the healthcare sector in 2021-2022, and another $2 billion in 2022-2023.
The budget includes no tax increases, and the deficit is expected to increase to $38.5 billion, the largest deficit in Ontario’s history. There is no commitment as to when the deficit would be eliminated, though the government has said that it will include a path to eliminating the deficit in next year’s budget and is projecting that the deficit will shrink by $5 billion in each of the following years (2021-2022 and 2022-2023).
Given the COVID-19 pandemic, the province is projecting the economy to shrink by 6.5 per cent in 2020, though it is projecting growth rates of 4.9 per cent in 2021, 3.5 per cent in 2022, and 2 per cent in 2023, which are slightly below private-sector projections for the same period.
NATIONAL’s first take
Our immediate analysis is as follows:
The biggest takeaway from the budget is that the effects of the pandemic will remain for some time. The government is dedicating a substantial amount of funding to help blunt the long-term impact of this spring’s economic shutdown, and the potential for future public health restrictions as the province’s case counts remain high. Given the unforeseen pandemic, this budget also marks a departure from the platform Premier Ford campaigned on.
The budget also indicates that Ontario is gearing up to pressure the federal government to increase the Canadian Health Transfer, calling for Ottawa to provide 35 per cent of provincial and territorial healthcare costs. In 2020, that would amount to $28 billion more than is already provided. The Ford government had pushed for a similar commitment ahead of October’s Throne Speech.
While recent polls show that Premier Ford and his government still enjoy high approval ratings, they have begun to slip following the reopening of the economy. The province’s outlook paints an optimistic picture that the economy can recover in 2021, though this is highly contingent on the course of the pandemic.
Ontarians won’t have to wait long for another budget. The Ford government plans to table its 2021 budget in March, building on the commitments and projections outlined today. Pre-budget consultations for the 2021 budget have already begun.
Core budget themes
Echoing Prime Minister Justin Trudeau’s statement from the Throne Speech earlier this year that “now is not the time for austerity,” Premier Ford’s government has signalled its commitment to provide much needed relief to Ontario’s hard-hit economy, especially toward healthcare and small business, to foster a rapid and durable recovery over the next three years.
Protect: Urgent COVID-19 response
As a part of its commitment to the healthcare sector, Ontario has dedicated $1.4 billion for additional COVID-19 testing and case and contact management, $351 million for the creation of 2,250 hospital beds, and $52.5 million to recruit, retain and support 3,700 frontline healthcare workers. An additional $283.7 million will be dedicated to addressing the surgical backlog currently facing Ontario’s hospitals.
The budget also provides $1.75 billion to increase long-term care capacity by 30,000 beds through an accelerated build pilot program, as well as $461 million in temporary wage increases for personal support workers and funding for a new standard of four hours of direct care a day for residents in long-term care, up from the current 2.75 hours a day.
In addition to hospital and healthcare funding, the province has earmarked $3.8 billion over the next 10 years as part of its Mental Health and Addictions Roadmap to Wellness, which has prioritized funding for mobile crisis teams and mental health and addictions support for vulnerable populations, including youth and children, Indigenous peoples and first responders.
Support: Supporting people and jobs
The government has also outlined specific supports for businesses and workers that have been affected by the pandemic, including $300 million to cover the property taxes and energy bills of businesses in modified Stage 2, control and lockdown-classified areas and $100 million in skills training.
The province has also made education funding a cornerstone of its budget, with $1.3 billion being made available to school boards to fund COVID-19 measures and $13 billion over the next ten years in capital grants to build and retrofit schools.
Through the Better for People, Smarter for Business Act, the Ontario government is also projecting to achieve $331 million in regulatory compliance savings for small businesses.
Recover: Creating the conditions for growth
The Ford government committed to subsidizing the price of electricity with $1.3 billion over three years. The government claims this will reduce the price of electricity to below the U.S. average, increasing competition and saving businesses an average of 14 to 16 per cent in electricity costs.
In addition, the province will give municipalities the ability to cut the property taxes for small businesses and has committed to considering matching those property tax reductions, for up to $385 million in property tax relief by 2022-2023.
About 94 per cent of businesses will see also see a reduction in their payroll taxes as the province makes the Employer Health Tax exemption increase from $490,00 to $1 million permanent. Under this exemption, 90 per cent of employers will not pay an Employer Health Tax.
Further, the province will standardize the Business Education Tax to 0.88 per cent, instead of the regional approach currently in place. The province has also committed to stepping in to ensure school boards do not lose funding as a part of this standardization, to a total cost of $360 million.
In addition to increased spending to combat the immediate impacts of COVID-19, the government has earmarked an additional $680 million in funds for improved broadband and mobile service as more Ontarians work from home.
Ontario will also dedicate $500 million over four years through the Ontario Onwards Acceleration Fund to ensure that government services can continue be delivered reliably and accessibly through digital channels.
The continued stress on Ontario’s healthcare system, coupled with unprecedented economic uncertainty and a fundamentally different manner in which work and education are conducted, represent unique challenges that Premier Ford and his government have sought to address—but the coming winter season could pose increased challenges for the government and its budget plan.
Opposition parties have already accused Premier Ford of doing too little, too late to protect and support the economy and Ontarians.
The Ontario Liberal Party accused the government of doing “nothing” to protect nursing home patients and students and of providing no support to BIPOC individuals who have been hit hardest by the pandemic and recession.
The Ontario NDP have specifically called for paid sick days for all workers, the hiring of an “army” of public health staff and an additional 10,000 personal support workers, along with direct financial supports for businesses and workers who have lost their income due to the pandemic.
The Green Party of Ontario likewise attacked Premier Ford for not doing enough to fix long-term care and public health, and said that the provincial government’s recovery plan ignores Ontario’s environment, especially Indigenous rights and wetland protections.
NATIONAL will continue to monitor and provide updates on the budget’s release, especially as climbing COVID-19 cases and a continued economic downturn place pressure on the province’s healthcare system and economy.
Our experienced team of public affairs and government relations experts remain available to provide political commentary and insights on today’s budget and its impact, as well as the opportunity to participate in the 2021 pre-budget consultation process.