Fiscal Governance in a Pandemic: Ontario’s Provincial Budget

Peter is the Principal & Senior Consultant at Grassroots Public Affairs and is based in Toronto. Peter can be contacted at peter@grassrootspa.ca.

On Thursday, in a sparsely populated legislature, Ontario Finance Minister Rod Phillips rose to deliver the government’s provincial budget, almost eight months after originally scheduled. The incumbent PC budget features a record $187B in spending and forecasts a record $38B annual deficit. In a year like no other, fallout from the pandemic and a struggling economy has forced this government to bury their fiscally conservative tendencies in favour of increased spending to support Ontarians. 2020 continues to generate unanticipated events almost every day.

Budget themes

The budget is themed around 3 main pillars: Protect, Support, Recover, and the overall focus is supporting Ontarians through these tough times. Spending commitments include an additional $7.5B for healthcare to protect Ontarians. $2.4B in new money is allocated to support individuals and businesses negatively impacted by the pandemic. Another $4.8B targets recovery funding, including significant infrastructure investments such as $680M for rural broadband. Billions more are committed long-term and beyond this government’s current mandate to help businesses, and to better protect the healthcare system from future pandemics. Visit the Government of Ontario’s budget website to read the budget in its entirety.

Governing in troubled times

Overall this budget has been positively received; however, opposition parties still managed to criticize the government for not spending enough. In a week dominated by the U.S. election, Minister Phillips delivered his first budget in the midst of a crippling pandemic with comparatively little attention and/or criticism. This in itself is a good thing for a government now in the unfortunate position of power during the worst economic crisis since the Great Depression.

Governments across Canada and the world are dealing with an unprecedented sea of red ink. While Ontario’s deficit of $38B smashes previous records, it is dwarfed by the projected federal deficit likely to exceed $400B. Despite conservative government’s usual approach of reigning in spending, now is not the time and there is no benefit, not economically nor politically, for spending cuts right now. There are, however, some important budget aspects for business groups and organizations to consider as we look towards 2021.

Looking ahead

Like other incumbent governments across Canada, the Ontario PCs led by Premier Ford have enjoyed strong support from voters since the pandemic started last spring. Governments have been called upon to provide relief and support for people in times of crisis and that is exactly what Ford’s government has done. While it may seem like a long way off, people on all sides of the political spectrum are starting to look ahead to the 2022 provincial election. The PC government may have abandoned their short-term focus on balancing budgets and restoring Ontario’s finances, but we can expect a heavy focus on measures to promote economic growth in 2021, and a strategy to balance healthcare concerns with economic growth and job creation.

By all accounts this budget is a temporary stop-gap measure. Ontarians need and expect more government relief during this crippling second wave of the pandemic, and the government delivered. Finance Minister Phillips reiterated his commitment to see Ontario return to a spring budget cycle in 2021, and consultations for the next budget will start in a matter of weeks.

What does this mean for advocacy?

Governments have committed unprecedented amounts towards COVID relief, but there will be a limit to how much they can give. When that happens, the focus will be on the private sector to drive economic growth and create jobs. This is important to remember as your organization advocates for support moving forward.

Successful lobbying efforts must be accompanied by strong economic growth plans. More than ever, organizations and business groups must frame their government “asks” around the economic return they can provide. Governments employ a lot of people, but they themselves do not generate wealth, so it will be up to the private sector to help Ontario recover from the financial crater of COVID-19. Ensuring your message is developed with clarity, that it is communicated consistently across all channels, and delivered collaboratively by as many stakeholders as possible can greatly improve your chances of success. An effective grassroots approach to advocacy always pays dividends.

The legislature at Queen’s Park breaks next week for Remembrance Day. Expect government Ministers and MPPs to fan out across the province to sell this budget to Ontarians. With its majority status, the Ford government will pass this budget bill quickly and then focus its attention on what is anticipated to be a more detailed, and less generous, 2021 spring budget. There is work to do on all sides. Let’s just be thankful that the crazy year of 2020 has only a few weeks left!