The Top Line
Today, Finance Minister Peter Bethlenfalvy tabled his first budget after becoming Ontario’s Finance Minister in December 2020. The previous budget, delayed due to the COVID-19 pandemic, was delivered by then-Finance Minister Rod Phillips on November 24, 2020, so this is Ontario’s second full budget in short order.
Leading up to the budget, the Ford government signalled clearly that the budget would focus on recovery from the COVID-19 pandemic, meaning an emphasis on health care funding and measures to support economic recovery. “The budget is designed to finish the job started one year ago”, said Minister Bethlenfalvy.
In that context and as expected, Budget 2021 contains no new taxes or spending cuts. The Government is focussed on supporting individuals and businesses that have been hurt by the pandemic or impacted by related public health measures.
The Ontario government is projected to spend $173 billion in 2021–22, compared to pre-pandemic spending in 2018-2019 of $148.8 billion. On the other hand, over the fiscal window of the budget, government revenues are forecast to increase from $156.1 billion in 2019–20 to $167.0 billion in 2023–24.
Additional pandemic spending has resulted in record deficits. For 2020–21, the government is projecting a deficit of $38.5 billion. Beyond 2020-21, the government is forecasting deficits of $33.1 billion in 2021–22, $27.7 billion in 2022–23, and $20.2 billion in 2023–24. A return to a balanced budget is not expected until 2029.
Following two consecutive quarterly declines of 1.8 per cent and 12.2 per cent in the first half of 2020, Ontario’s real gross domestic product (GDP) increased by 9.4 per cent in the third quarter. Despite that growth, GDP remained at its Q4 2019 level and Ontario’s GDP is estimated to have declined by 5.7 per cent in 2020. Going forward, the GDP is expected to rise 4.0 per cent in 2021, 4.3 per cent in 2022, 2.5 per cent in 2023, and 2.0 per cent in 2024.
Ontario employment has increased by 829,400 net jobs this year but remains 305,300 (−4.1 per cent) below its pre‑pandemic level.
The centrepiece of Budget 2021 is health care spending totalling $16.3 billion in new and previously announced investments to combat COVID-19. Spending is targeted at ongoing needs and at specific areas that, as highlighted by the pandemic, may have been neglected over time. For example, Premier Ford promised that Ontario would never again be caught without its own personal protective equipment (PPE) production facilities. Newly announced funding includes:
- $1.4 billion for PPE, enabling the Province to purchase equipment and expand domestic production.
- $1.8 billion to hospitals, to resolve surgical backlogs and address ongoing needs.
- $650 million in 2021-22 for long-term care and $933 million over next four years to add more long-term care beds.
- Extending the wage enhancement for over 147,000 personal support workers until June 30, 2021.
- Over $500 million to support research at post-secondary education institutions and academic hospitals.
- $50 million in 2021-22 to ensure that infection prevention and control resources and expertise are available across the health care system.
- Support for First Nations, Metis, and Inuit, minority, newcomer, and low-income communities that are disproportionately impacted by COVID-19.
- $175 million in 2021-22 for mental health and addiction supports.
The other focus of Budget 2021 is supporting economic resilience and recovery from COVID-19. To that end, the Government created or extended the eligibility for several tax credits, including:
- A new Ontario Jobs Training Tax Credit for 2021 that would provide up to $2,000 per recipient for 50 per cent of eligible expenses. The credit is estimated to provide $260 million in support to about 230,000 workers in 2021.
- A third round of payments to support parents through the Ontario COVID-19 Child Benefit, totalling $1.8 billion in such payments since last March. The payment will be doubled to $400 per child for this round and $500 for each child with special needs.
- A 20 per cent enhancement of the CARE tax credit for 2021, to help parents with the cost of child care and help them get back into the workforce. The credit will increase from $1,250 to $1,500, on average, providing about $75 million in additional support for approximately 300,000 families.
Small Businesses and Tourism
To help small businesses impacted by COVID-19, the Government will double the Ontario Small Business Support Grant payments. The money will be automatically deposited in the accounts of those who received monies in the first round of the payments.
To aid the recovery of Ontario’s tourism, hospitality and cultural industries, the Government will invest an additional $400 million over the next three years in new initiatives to support those sectors. The Budget also dedicated $150 million for a planned 2021 tax credit (pending legislation) to encourage residents to explore Ontario (when it is safe to do so).
Additional supports for small businesses and tourism in the budget include:
- An additional $320 million in relief in 2021-22 through off-peak electricity pricing.
- $10 million for wineries and cideries and $1.2 million for small distillers, to support the recovery of the wine and agri-tourism industry, and an additional $10 million in 2021-22 to do the same for the arts community.
Supporting Digital Education and Jobs
As with all businesses and jurisdictions, Ontario is increasingly orienting itself to online modes of learning and work. To support that reality, the Government will invest an additional $2.8 billion to connect homes, businesses and communities to broadband. The government will also invest over $60 million in improving remote learning technology and enhancing Virtual Learning.
For businesses, the Government will allocate $10 million to the Digital Main Street Program.
The budget also announces the Government’s intention to develop iGaming, a legal gaming market.
Andrea Horwath, Leader, NDP and of the Official Opposition
“Doug Ford just doesn’t believe in investing in workers. He doesn’t want to spend the money in helping working people get through,” she said in an interview with the Globe and Mail. Horwath further said that the Ford government is sticking with the same failed programs and neglect that allowed countless entrepreneurs during COVID-19.
Steve Del Duca, Leader of the Liberal Party
Del Duca spoke after the budget, stating that Premier Ford did not address the major issues in the biggest economic crisis in a generation. He said: “Today’s budget shows that Doug Ford has decided that the pandemic is already behind him, abandoning every Ontario family still in crisis”.
Michael Schreiner, Leader, Green Party
“With this budget, the government missed an opportunity to kickstart economic recovery and climate action with a green building program to create jobs and lower energy costs for people and businesses while reducing climate pollution.”
What This Means to You
Budget 2021 maintains the Government’s pronounced focus on the key Ford priorities during the pandemic, specifically funding for health care and efforts to kickstart the economy with a specific focus on small businesses.
Looking ahead, there appears to be a vision for long-term deficit elimination as the Ford government prepares to outline its priorities for the post pandemic period.