On Wednesday afternoon, Ontario Finance Minister Peter Bethlenfalvy delivered the much-anticipated 2021 Ontario budget. After the COVID-19 pandemic delayed last year’s budget until the fall, the government is likely eager to get back on track as it moves towards the 2022 provincial election. Here are the highlights:
As was leaked last week, the primary themes of the budget were “Protecting People’s Health” and “Protecting our Economy”. While the Ford government campaigned in the last election on a promise the eliminate the $15B annual deficit inherited from the previous Liberal government, any plan to do that has been dismissed due to pandemic impacts on the provincial economy.
Minister Bethlenfalvy remarked that this year’s budget was similar to the one delivered by P.C. Finance Minister Leslie Frost in 1943, when Canada was in the midst of fighting the Second World War:
“COVID‐19 arrived on Canadian shores one year ago. At the time, few could have anticipated the devastating consequences, here at home and across the globe. Our loved ones, our economy, our education system, our main streets and our communities have all been impacted by the global pandemic. But from the first moments of this crisis, Premier Ford made clear that our government would protect the people of this province.”
Protecting People’s Heath – Commitments Announced
- Setting aside $16.3B over 4 years to battle COVID-related health care costs.
- $1B for the ongoing vaccination of Ontarians.
- Funding for existing and new hospitals across Ontario including Brampton, London, Mississauga, Windsor and Moosonee.
- Almost $5B in funding to support Long-Term Care facilities and staff.
- Additional funding to help and recruit Personal Support Workers by offering bonuses ranging between $5-10K.
Protecting our Economy – Commitments Announced
Normally, economic priorities take precedence when it comes to conservative government budgets. This year, however, the budget will play a necessary supporting role in protecting the health and well-being of Ontarians. That said, the government did announce a significant round of investments to assist Ontario businesses to rebound from what has been a very difficult year.
- $3.4B in new funding for businesses through the province’s small business grant program. This program previously allotted up to $20K grants to eligible businesses due to pandemic-related disruption.
- A new $260M job training tax credit. In line with the Ford government’s promotion of post-secondary trade programs, it grants $2K to workers looking to improve their skills for new career opportunities.
- A commitment of $400M in new funds for Ontario’s beleaguered tourism industry over the next 3 years.
- A commitment of $2.8B for rural broadband in communities lacking proper high-speed internet connectivity.
- $117M in funding to support women and minority groups via training programs for those most impacted by pandemic-related job loss.
- Another round of child benefit payments to parents of children under the age of 18. The government is estimating this will cost upwards of another $1B.
Assessing the Numbers
While not surprising given the circumstances, the bottom line for this budget, and all budgets in the foreseeable future, is not pretty. As most people expected – Ontario’s budget deficit of $32B is much higher than the government would have anticipated when it was first elected in 2018. The good news is, that it’s estimated to be almost $5B lower than last year and progressively lower in years to come.
Interest on the province’s debt, despite all time low interest rates, will cost the government approximately $13B and the total debt will rise to $439B in the upcoming fiscal year, and as high as half a trillion by 2023-24.
Looking much further into the future, the government’s long-term projections suggest that balancing the provincial books won’t be achievable until the end of the decade; 7 years later than the PCs were aiming for in their 2019 pre-COVID budget.
Despite the rebound from the economic collapse a year ago when Ontarians were faced with the first lockdown, there are still more than 300,000 fewer full-time jobs in the province than before the pandemic hit.
And a final staggering metric is the province’s debt-to-GDP ratio, which is currently projected to be over 50% within 3 years.
Reaction to the budget was mixed, with traditional allies to the PC government expressing support and those ideologically opposed to the government expressing disappointment in yesterday’s budget.
Business groups including the Ontario Chamber of Commerce, the Canadian Federation of Independent Business and the Ontario Real Estate Association applauded the investments towards supporting business and making important infrastructure investments.
Official Opposition Leader Andrea Horwath was critical of what the NDP viewed as spending cuts in public education, long term care facilities and healthcare. Liberal leader Stephen Del Duca expressed his party’s outrage towards the government on reduced support for Ontario students compared to increased funding last year when the pandemic first arrived.
What This All Means
While the fundamentals of Ontario’s economy are still extremely shaky, the general public has largely supported the Ford government’s handling of COVID. There has been some concern and frustration over perceived mismanagement around vaccine distribution, but the PC government is giving Ontarians what they want and need in this budget: a path and plan that the government will support the province on the road back to recovery. Expect to see government ministers fan out across the province and engage in some significant PR to sell the benefits of the budget to Ontarians in the coming weeks. Moreover, expect opposition parties to continue hammering the government to do more in support of Ontarians.
For more information on budget details, visit the full 2021 Ontario Budget document.
Grassroots will continue to monitor government plans as we head into the summer months. The ongoing fight against the pandemic will remain the focus for some time, but it won’t be long until we see clear signs of electioneering in anticipation of next year’s scheduled provincial vote.