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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:

Primary Themes

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

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. 

Peter Seemann

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!

Footage from Tuesday’s parliamentary proceedings seemed more like a day at the Coliseum than a house of peace, order and good government.

Minister of Finance Bill Morneau attempted to read aloud the 2019 federal budget as he has done for the last three years. In a spectacle like no other, he was met with deafening chants of “COVER UP! COVER UP!” from opposition members. The chanting was so loud that the parliamentary services translator was unable to hear the minister’s speech.

These chants were part of an overall strategy for the Conservatives to delay and obstruct the Liberal budget – retribution for the Liberal majority-ruled Justice Committee and their handling of the SNC-Lavalin Affair early yesterday morning. A number of parliamentary and procedural ruses (“POINT OF ORDER!”) were employed in the house – chanting (“LET HER SPEAK!”) being the most notable (and audible).

Seemingly unphased, Minister Bill Morneau delivered what he believed to be a budget that would invest in the middle class, pledging $22.8 billion in new spending.

While the speech was inaudible in the house, it was available online. Here are some of the major takeaways from Budget 2019:


Home Sweet Home

Budget 2019 pledges to make home ownership within greater reach for young Canadians. The government has promised to make housing more affordable by reducing barriers to homeownership for first-time home buyers, boost supply in Canada’s housing and rental markets as well as increase fairness in the real estate sector.

The Golden Years

The government pledged $1.8 billion over four years to enhance the guaranteed income supplement for low-income seniors. It would appear that the government also took some lessons away from the Sears bankruptcy: the budget will introduce safeguards to protect pensions in the event of company bankruptcies – a consequence largely felt among seniors and older Canadians.

Over the Counter

Although the government did not announce funding for a national pharmacare program, the budget pledged to set aside $35 million to establish a Canadian Drug Agency that will enhance work already done by provinces and territories on bulk drug purchases and negotiate better prices for prescription medicine. The government additionally stated that as of 2022, $1B will be made available to help Canadians with rare diseases access the high-cost drugs they need.

Talking Turkey – The Fiscal Outlook

It appears that the budget did not, in fact, balance itself. A significant promise of the 2015 Liberal campaign was to post annual deficits of no more than $10 billion and to balance by 2019. As of yesterday, the government announced its intention to run $20B deficits for the foreseeable future.  Although the budget is forecasting the deficit will shrink to $9.8 billion by 2023-24, there is little-to-no mention as to when the government intends to balance the budget.  Some experts are saying Budget 2019 may have painted the government into a cornerif a recession hits.

Despite criticism the government may face for their use of deficits, it’s not all bad news for Trudeau. The Ministry of Finance confirms 850,000 more Canadians are employed today than in 2015, and the unemployment rate is near a 40-year low. If the government can maintain this trend, it’ll make for excellent campaign advertising.


Opposition Reaction

It appears Andrew Scheer has been able to consume most of the media’s attention in his response to the government’s budget. On Tuesday, Scheer delivered a speech to his caucus and the media regarding the Liberals’ budget. Jagmeet Singh chose to focus on housing as his major sticking point to the government. Singh mentioned that RRSP measures will have little-to-no impact on millennials given the fact that many millennials’ RRSPs are in fairly precarious positions.

Both opposition leaders, most notably Scheer, are trying to use the SNC-Lavalin Affair as a means to discredit Trudeau’s budget. They’re trying to broadcast the image of a government that will use unethical means to influence policy to help well-connected friends. Their strategy has potential given the fact that one could promise the moon itself, but if there is no credibility, those promises will fall on deaf ears.

It should also be noted that both the NDP and the Tories have a stake in the two demographics most targeted in the budget: millennials and baby-boomers. The Liberal strategy is to grow the tent as much as possible to bring these key voter groups into a winning coalition. However, both opposition parties will do what they can to convince their respective bases that they’re being sold fool’s gold.

Media Reaction

Much of the post-budget reporting highlighted Minister Morneau’s emphasis on the middle class – a focus that was widely anticipated going into budget day. A Globe and Mail opinion piece by Rob Carrick outlined key demographic groups affected by Budget 2019 changes including homebuyers, postsecondary students, low-income seniors, “procrastinating retirees,” and Canadians interested in longevity insurance.

Paul Wells of Maclean’s contended that Budget 2019 is “sprinkled with what money TruMorn could scrape together” with many gestures that are “strikingly modest in scope.”  Wells suggested that, despite clear preoccupation with election-year concerns, the Liberals’ reticence to spend too much money has forced them to come up with novel funding solutions, such as investments by the Canada Infrastructure Bank for universal high-speed internet provision.

Andrew Coyne’s piece in The National Post argued that the Liberals’ deficits are “deficits of choice, rather than necessity,” though he argues that deficits of this size will not ruin us (as the opposition claims), but neither would eliminating them.  In his eyes, the quantity of spending isn’t so much the issue as the quality: in the rush to get all that “revenue-gusher” spending out the door, he argues that little thought has been given to whether the money is being spent in the best way, or whether it should be spent at all.  Coyne also called into question a past Liberal promise that one dollar in three of new spending would go to infrastructure, as he pointed out that the reality is now closer to one in eight.


The View from the Grassroots

This budget is of critical importance for Trudeau. The media beast can only chew on one ankle at a time and right now it’s slowly gnawing at Justin Trudeau and his network of advisors. As a means to reduce the media’s hyper-focus on the ongoing SNC-Lavalin Affair, the Prime Minister needed to announce what exactly his government has accomplished in their past four years and where they intend to take the country in the future. On Tuesday, they needed to let each voter know: “you’re better off today than you were before.” The power of the pulpit allows the Liberals to announce a fully-costed campaign platform that can be repeated in sound bites over time in addition to changing the channel.

It’s not uncommon to see an incumbent government lose support over time. However, Trudeau’s Liberals have experienced quite a notable drop in support and are far from their “sunny ways” narrative when first elected.  2019 has seen support for the Liberal party decrease slightly. The most recent wave of polling from different firms has shown the party obtaining ~30% support. Considering the Liberals obtained 50% support in 2016, Trudeau and the Liberals have their work cut out for them this fall. 

But wait, there’s more.

Whatever electoral impact Justin Trudeau intends to make, he must take the Ontario provincial budget (to be released April 11th) into account. Seeing as the Ford government was not exactly pleased with their federal counterparts, there is a chance that they may use their last word for reprisal. The carbon tax or other environmental policies could well be where that reprisal takes place. Both Trudeau and Ford defined much of their political capital around environmental issues. Whatever the provincial government choses to do with its last word, it will undoubtedly result in discomfort for Trudeau’s Liberals on the hustings.

Despite the media attention the SNC-Lavalin Affair is receiving, there is a chance that the electorate may be SNC-fatigued and are willing to hear what the government has in store for them. Remember: politics is “what have you done for me lately.” 

As of today, it is possible for Trudeau to pull together a winning (albeit minority) government come election day, but it is doubtful as to whether Budget 2019 will make things any easier for the foreseeable future.

Tiberius was on to something when he said that ruling the Roman Empire was like “like holding a wolf by the ears.”

Adrian Macaulay, Director of Research & Polling
and Liz Gross, Campaign Support Specialist

This afternoon, Ontario Finance Minister Vic Fedeli rose in the Ontario Legislature with his iconic gold tie and delivered the 2018 Fall Economic Statement (FES) named An Act to Enact, Amend and Repeal Various Statutes. To examine the Economic Statement in greater detail, click hereThe FES usually takes place during the months of October or November and is somewhat like a mini-budget or a smaller fiscal equivalent of the State-of-the-Union address that the US President delivers to Congress. The FES is traditionally delivered by the Finance Minister and puts forth the status of the province’s fiscal health. There are a number of similarities between the FES delivered in the fall, and the provincial government’s budget that gets tabled in the spring.While both the FES and the provincial budget examine what the government of the day has accomplished, and what obstacles remain in place, the major difference between the two is that the FES looks in the rear-view mirror, and assesses what the government has done, as opposed to the provincial budget, which looks ahead to what the government of the day will do.

The first FES tabled by the new PC government was rather unique this time around, in that, journalists and members of the Press Gallery underwent a media lockup and embargo. They were forbidden to publish content in the statement before it was read in the house. Media lockups are very common during federal and provincial budgets, but it is hard to recall a time when a lockup took place for a FES.

It may  be argued that the broad overall theme of the FES could be distilled into the concept of “fiscal discipline and belt-tightening”, an about-face from the previous Liberal government’s provincial budget, tabled earlier this year, that focused on “care not cuts”. The Finance Minister was not shy to say that the new PC government will approach the province’s finances the same way a household would manage their budget.

Since elected, the PCs have spent a great deal of political capital pointing out the fiscal mismanagement of the previous Liberal government, and have pledged  to reverse many incumbent policies.  This will not come as a surprise to many, considering Doug Ford announced during his  campaign that he would be cutting $6bn in provincial expenditures.

The FES is also an important time for the government to influence the media channel. Polling has shown that while the PCs maintain the greatest share of public support in the province, many of the announcements and actions have reduced support for the government.

Here are some of the major announcements in this year’s Fall Economic Statement:
  • Minister Fedeli announced that the actions of the government have created $3.2bn in savings while reducing the province’s deficit to $14.5B (a reduction of $500m).
  • The government announced it will be implementing the Low-income Individuals and Families Tax (LIFT) Credit that will affect 1.1m low-income earners in the province. Starting in 2019, workers earning <$30,000.00 will be exempt from paying provincial income tax while those earning up to $38,000.00 will be taxed at a lower rate.
  • In addition to shutting down the College of Trades, the PC government has also axed funding for 3 post-secondary campus Expansions in the GTA.
  • In an attempt to make efficiencies in government, the PCs will merge the independent offices of the Ontario Child Advocate (established in 2007) with the Ombudsman and merge the office of the Environmental Commissioner (established in 1993) with the Auditor General.
  • Twice during his speech, Minister Fedeli stated that the Green Energy Act is being repealed – a statement that drew both cheers and jeers across the aisles.
  • The government announced $90M in funding for 1,100 hospital beds across the province.
  • According to Minister Fedeli, home heating bills have been lowered and gas prices are down 4 cents a litre.
  • As part of the Open for Business Act, the PCs plan to eliminate red tape by 25% by 2022 (no clear definition of ‘red tape’ was provided).
  • Although not much was mentioned on the policy area, Minister Fedeli announced that the PC gov will implement a housing supply action plan to help address the problems in the province’s housing market.
  • The government also announced that it will take a laissez-faire approach to cross-provincial energy infrastructure.
Both the opposition NDP and third party OLP chose to focus on the negative impacts that the proposed $1.4B in cuts will have on those who are already experiencing difficulties. The NDP focused on the government’s labour policies which propose reductions in sick days and removal of the minimum wage. Additionally, the NDP chose to highlight the fact that Indigenous communities and reconciliation were not mentioned in the FES.  OLP Interim Leader John Fraser focused on the lack of support for the Franco-Ontarian community with the closure of a new Franco Ontarian University proposed by the previous government. Both the NDP and the OLP chose to focus on the lack of oversight and accountability the government will experience as a result of the removal of independent legislative offices.It should be noted that a number of media outlets received an advanced copy of former PC Leader Patrick Brown’s new book Takedown. Excerpts from the book show that Fedeli had “dodged a bullet” with respect to an allegation of “inappropriate behavior” by a female PC staffer. In the following hours, numerous current and former PC staffers and MPPs came to the aid of Minister Fedeli. The allegations do not appear to have hurt the Minister, despite the NDP calling for Premier Ford to usher a third-party investigation, and remove Minister Fedeli from Cabinet until such  investigation is concluded. Members of the PC Caucus demonstrated their support for the Finance Minister by wearing yellow/gold ties and scarves.Despite criticism, the PCs are well within their electoral mandate to change or reverse the policies of the previous government. 80% of Ontario voters believed that it was time for change, and the PCs are using this time to implement their own policies “for the people”.

Grassroots will be continuously monitoring the hustle and bustle taking place at the Ontario Legislature in the months to come. Stay tuned for more information and analysis!

Adrian Macaulay, Director of Research & Polling