2021 Ontario Budget: Deep Deficits as Province Prepares for COVID-19 Recovery

2021 Ontario Budget: Deep Deficits as Province Prepares for COVID-19 Recovery

It will likely take Ontario until at least 2029 to balance its books, the province said on Wednesday, as the economic fallout from the COVID-19 pandemic forced the government to spend record amounts of money.
The long road back to black is part of Ontario’s $ 186 billion 2021 budget tabled today by Finance Minister Peter Bethlenfalvy. He is the third treasurer to present the financial outlook for the province in as many years.

Ontario’s economy has shrunk by about 5.7% in the past year, and a Progressive Conservative government that was elected after restraining spending has admitted with this budget that it will take years of red ink to finally recover from the pandemic.

“I’m betting on the people of Ontario,” Bethlenfalvy said at an afternoon press conference. “We will beat this virus, then we will come back stronger. ”

You can read the full budget at the bottom of this story.

The 231-page plan has two main themes: health and economic recovery. It revives benefits, grants and tax credits for families and businesses and includes significant cash injections for the health sector and the tourism industry.

It is setting money aside for skills training for Ontarians, especially those looking for work in the skilled trades. Due to the pandemic, women’s employment fell 5% province-wide and 3.1% for men, according to the finance ministry.

In a speech to the legislature, Bethlenfalvy underscored the disproportionate impact of the pandemic on women, referring to the current economic climate as a “demise”. He promised a task force that will examine the obstacles women face in the labor market.

Note also what is missing from the budget. There is no provincial program for paid sick leave, despite advice from health experts and advocacy groups that it could help curb the spread of the coronavirus. There is also no money specifically earmarked for the controversial 413 Highway project in the Greater Toronto Area, nor ongoing pandemic funding for school boards.

Half a trillion dollars in debt by 2024

After posting a record deficit of $ 38.5 billion through 2020, the ministry forecasts a deficit of around $ 33.1 billion for fiscal year 2021-2022 based on a 4% growth in the economy.

The ministry says it anticipates “pent-up consumer demand” this year as more people get vaccinated against COVID-19. There was a significant drop in household spending last year, according to the ministry, allowing Ontarians to collectively save $ 148 billion in the second quarter alone.

Deep deficits are then expected to continue for several years, and Ontario will face about half a trillion dollars in total debt by 2024.

“As Minister of Finance and President of the Treasury Board, my job is to make sure that all resources are available to win our battle against the virus,” Bethlenfalvy said during her speech.

“And while this is neither sustainable nor desirable forever, I am absolutely and unequivocally convinced that there is a need to weather the pandemic and recover stronger. ”

The next provincial election is slated for June 5, 2022, when the government estimates it will run a deficit of nearly $ 28 billion.

Based on modest economic growth projections, the government expects the deficit to continue to decline each year before eventually breaking even in 2029-30. Before COVID-19 arrived in Ontario, the government aspired to restore balance by 2023.

Due to the economic uncertainty fueled by the pandemic, the ministry has also proposed alternative pathways based on slower-than-expected and faster-than-expected growth in Ontario.

In the faster growth scenario, the province could potentially turn black two years earlier, by 2027. In the slower growth scenario, it could take until fiscal year 2031-2032.

Money for families

The budget includes a third round of payments through the Ontario COVID-19 Child Benefit.

This time, however, the amounts will be doubled to reach $ 400 per child and $ 500 per child with special needs. Families who received the last direct payment will not need to reapply, the finance ministry says.

Likewise, the government will offer a one-time 20% increase in the tax credit for child access and expense relief (CARE). That’s about $ 250 more per child, at a cost of about $ 75 million to the province.

According to the government, this temporary help is expected to help approximately 300,000 families in Ontario.

Money for small business and tourism

The province also plans to offer a second round of payments to small businesses whose revenues have been hit hard by the pandemic.

Up to $ 20,000 each for some 120,000 qualifying businesses across Ontario will be available. Those who received a payment in the first round will automatically qualify for a second, says the finance ministry.

A spokesperson for the Canadian Federation of Independent Business said the group applauded the government’s decision to double funding for small businesses, but called for amendments.

“Thousands of hard-hit small businesses across the province remain ineligible,” says Ryan Mallough. “CFIB urges the Ontario government to expand eligibility for this important program. ”

There is also funding for the tourism industry, including a $ 100 million fund to help operators and major attractions recover from the financial blow from COVID-19. Over the past year, approximately 140,000 jobs have been lost in Ontario’s tourism sector.

In addition, there will be a new one-time tourism and hospitality small business support grant of up to $ 20,000 for small tourism operators (100 employees or less) who were not eligible for the General Small Business Grant. , but who saw their income fall by at least 20. percent.

The COVID-19 pandemic has been particularly deadly for Ontario’s struggling long-term care sector. Bethlenfalvy called the current situation in the sector “a tragedy in the making for decades.” (Michael Charles Cole / CBC)

Health care financing

No sector in Ontario has been more affected by the pandemic than health care. More than 7,260 people have died from the disease, and many public health units and hospitals across the province have been pushed to their limits.

This year’s budget contains a total of $ 6.7 billion in pandemic-related spending, including $ 1 billion for Ontario’s current immunization campaign – including $ 50 million for immunization of people. Rural and urban First Nations. There is an additional $ 2.3 billion, to be spent this fiscal year, on extensive COVID-19 testing and contact tracing efforts.

An additional $ 1.8 billion will go to hospitals this year to help them treat COVID-19 patients and clear the long surgical backlog resulting from pandemic health measures.

The government has also pledged to help fund a new inpatient wing at William Osler Health System’s Peel Memorial in Brampton. Local advocacy groups and politicians have long called for new hospital facilities in the region, where overcrowding and “hallway health care” are common experiences for patients. However, no timetable for the start of construction has been provided.

Speaking to reporters, NDP Leader Andrea Horwath said if she were premier the budget would include funding for a new hospital in Brampton.

“Instead, this government continues to ignore the people of Brampton who are desperate, desperate for improvements and for that additional hospital that they have needed for years now,” she said.

Horwath also said that an NDP government has reportedly funded paid sick days and offered paid time off for workers to get vaccinated against COVID-19. Premier Doug Ford and Bethlenfalvy have not “invested in people,” she said.

“Doug Ford just doesn’t believe in workers, he doesn’t want to spend money to help workers get through,” Horwath told media.

Overall, health funding is increased to $ 69.8 billion from $ 66.7 billion the previous year.

Ontario Liberal Leader Steven Del Duca welcomed the increase in health care spending, but said the commitment was “woefully short of what Ontarians need.”

“This budget falls short of the time Ontarians face,” said Del Duca.

Long-term care expenses

The province says it is also accelerating its plan to build new long-term care spaces, hoping to add more than 20,000 beds in just four years. The budget allocates an additional $ 933 million over four years to fulfill its previously announced promise to provide four hours of direct care per day to long-term care residents.

This plan was first introduced in the government budget of November 2020 but its cost has not been detailed. The government says the funds will help recruit 27,000 personal support workers (PSWs) to help reach the new standard.

In addition, the province will also offer some sort of signing bonus for PSWs and nursing home nurses. PSWs can get $ 5,000 for a six-month engagement, while nurses can get $ 10,000 for a one-year engagement. This measure aims to facilitate the turnover of staff in retirement homes.

No such bonus will be offered to current PSWs and nurses in the long-term care sector, according to the government. However, a $ 3 per hour wage increase that went into effect for most PSWs last year will continue until June of this year.

The future of Highway 413 is uncertain

While the budget includes spending for a host of transportation capital projects, it specifically mentions the proposed Highway 413, which would cross the northwest of the GTA.

The proposal met with fierce opposition from environmental groups and a number of municipalities who had initially expressed support for the 400 series highway. have since reversed course.

Bethlenfalvy says the proposal is currently undergoing an environmental assessment and no decision has been made on its fate.

For his part, Del Duca said he was disappointed that the budget did not include a “rock-solid” commitment to abandon the project.

Environmental Defense, an organization that opposes Highway 413, said in an email that it was encouraged that no money was earmarked for the proposal, but criticized what it called a lack of spending related to climate change in the budget.

Read the full 2021 Ontario Budget:


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