Ontario Budget 2021

Due to the announcement of the Ontario 2021 Budget, today’s daily update has been delayed.

Ontario Budget 2021 highlights

• Total spending is $173 billion.
• A $33.1 billion deficit is projected this year (compared to $38.5 billion last year and $27.7 billion next year; $20.2 billion is forecast for 2023-24). The provincial budget will be balanced in 2029-30.A budgetary surplus could be seen as early as 2027-2028 if economic growth is faster than forecast; if growth is slower than expected, the budget may not be balanced until 2031-32.
  
• No tax hikes or major program cuts are planned.
  
• The Ontario Small Business Grant will see a second round of funding. The 120,000 businesses that received grants in the first round will receive a second payment of between $10,000 and $20,000. Business owners do not need to re-apply for the grant. An additional $1.7 billion will be allocated to the Grant program to fund this.
• A $100 million program similar to the Small Business Grant will also assist tourism and hospitality businesses badly affected by the pandemic, which will be eligible for one-time payments of between $10,000 and $20,000.
• A Ontario Tourism Recovery Program will help “historically successful businesses” get back on their feet, with $100 million in funding allocated.
• $150 million will go to a local tourism tax credit to encourage people to travel within Ontario. Provincial parks will be free-to-enter from May to September, Monday-Thursday. A total of $400 million is allocated to the tourism sector.
  
• The Jobs Training Tax Credit will be allocated $260 million for 2021 only, supporting 230,000 people. Each recipient can get up to $2,000, or up to 50% of eligible expenses for e.g. college tuition. Recipients must be residents between 26 and 65 years of age.
• $1 billion is allocated to the provincial vaccination program, along with $2.3 billion to fund COVID-19 testing and contact tracing in 2021 and 2022. $1.8 billion will fund care for COVID-19 patients and tackle surgical backlogs.
• Child benefit payments will double to $400 for grades 0-12, or $500 for children with special needs. The CARE tax credit will temporarily increase from $1250 to $1500 per family for 2021, to assist with childcare, school programs, and summer camps. These payments are projected to cost $980 million.
• $14 billion will be spent over the next decade to build and upgrade schools.
• $2.8 billion will be spent to build more broadband infrastructure. The goal is to have broadband access for all regions of Ontario by 2025.

GNCC welcomes Ontario investment in business recovery, but expresses concern over growing provincial debt

Today, Minister Bethlenfalvy delivered the Government of Ontario’s 2021 Budget. As widely expected, it contained significant investment in healthcare and funded the fight against the pandemic through testing and vaccination.

The budget also saw significant investment in the future of Ontario’s businesses. Those businesses have struggled under the pandemic and its fallout for over a year, with almost half indicating they cannot take on any additional debts, and a similar proportion reporting uncertainty as to whether they will even still be in business by the fall.

A second round of funding for the Ontario Small Business Grant will be welcomed by Ontario’s small enterprises. The program, which offered a non-repayable grant of $10,000 to $20,000 for affected small businesses, was a welcome boost as reserves and loans ran dry. An additional grant will help nurse many hard-hit firms through the months to come before widespread vaccination allows the country to turn the corner.

“The small business grant made a big difference to businesses, and the 120,000 recipients really needed it. We were especially pleased to see it being made available to startups as well, which, along with seasonal businesses, had often fallen through the cracks of the federal programs,” said GNCC CEO Mishka Balsom.

Before the pandemic, over 12-and-a-half million visitors to the region injected almost $2 billion into our economy, supporting over 36,000 jobs. The pandemic brought tourism almost to a halt. Traffic from international destinations was down almost 90%.

Additional direct funding programs to help affected tourism and hospitality businesses will be very helpful to the Niagara firms who were dependent on that traffic, as will tax credits to encourage tourism in Ontario once it becomes safe.

“We had over 2,500 tourism businesses in Niagara before the pandemic,” said Balsom. “We know better times are coming – vaccination is happening, and there is pent-up demand for travel and entertainment. We welcome these efforts to bring our tourism industry over the finish line of this crisis.”

The pandemic also shone a spotlight on the uneven distribution of broadband access in Canada. As everyone moved online, regions without broadband, including many communities in Niagara, were at a distinct disadvantage. The investment into broadband development, and the goal to deliver broadband to every region in the province by mid-decade, will help those communities remain economically competitive.

However, this spending – delivered without significant tax increases or program cuts – obviously comes at a cost. That cost is continued deficits, which will be run until 2029-30. Net debt will reach $440 billion this year and will be fully 50% of provincial GDP by 2023-24.

If growth is slower than projected, paying down the debt may not begin for a full ten years.

Provincial debt began to accrue in significant amounts during the 1990s and is now fully a generation old. The current debt may not be paid off for another generation or more, meaning this is a problem we are effectively leaving to our children.

The choice between program cuts and tax increases is never an easy one, and neither represents a good outcome. Nevertheless, prolonging that choice only exacerbates the problem. A new recession precipitated by a public debt crisis in ten years will not serve the interests of Ontario’s businesses or its people. A plan to tackle the mounting debt sooner would go some way to restoring the confidence in Ontario’s economy shaken by the pandemic.

Budget 2021 means supports to confront current health crisis and those hardest hit while laying the foundation for an inclusive economic recovery

Today, Rocco Rossi, President and CEO of the Ontario Chamber of Commerce (OCC), released the following statement in response to the Government of Ontario’s 2021 Budget, Ontario’s Action Plan: Protecting People’s Health and Our Economy.

“Ontario’s business community welcomes the 2021 Budget, which gives businesses much-needed supports to confront the current health crisis while laying the foundation for a strong and inclusive economic recovery,” said Rocco Rossi, President and CEO of the OCC. “Ontario’s 2021 Budget contains new funding for the hardest-hit sectors and communities, much-needed aid for women who have been deeply impacted by the pandemic, and initiatives related to tourism, training, and broadband infrastructure that will enable a strong economic rebound.”

Leading up to Budget 2021, the OCC was calling for policies that mitigate the immediate impacts of the crisis and lay the groundwork for a robust and inclusive economic recovery. Resources need to be focused on those hit hardest by the pandemic, where they will have the greatest impact. Some of the things called for in the OCC’s pre-Budget Submission included:

• Targeted support for the hardest-hit sectors and communities;
• Demand-driven skills programming;
• Enhanced access to capital for small businesses and entrepreneurs;
• Bold action on interprovincial trade;
• Strengthening of municipalities’ fiscal capacity; and
• A sensible path to getting Ontario’s finances on track post-pandemic.

“Women’s fulsome participation in the labour market is a precondition to our economic recovery and future prosperity. We greatly appreciate the new supports for women, as they have been among those disproportionately impacted by the crisis,” said the report’s author Claudia Dessanti, Senior Policy Analyst, Ontario Chamber of Commerce. “A taskforce for inclusive economic growth, further supports for child care, a job training tax credit, relief for the tourism industry, and support for survivors of domestic violence are all welcome initiatives that will help turn the tides on the impacts that were so severe and immediate for women in Ontario. Budget 2021 addresses many of the supports we called for in our recent report, The She-Covery Project: Confronting the Gendered Economic Impacts of COVID-19 in Ontario.”

Some of the measures welcomed by the OCC in the 2021 Budget are:

Support for inclusive growth:

• A taskforce for inclusive economic growth. The COVID-19 crisis has disproportionately affected women, racialized individuals, Indigenous people, people with disabilities, and other communities in the province. The new taskforce will examine how to increase women’s participation in the workforce, which will support economic recovery.
• Temporary Job Training Tax Credit. Studies suggest about half a million jobs are not expected to return in Canada after the pandemic, the majority of which are occupied by women. Financial support for underemployed individuals to access training and reskilling will be particularly important for lower-income workers, new immigrants, and Ontarians living in Indigenous, rural, remote, and northern communities.
• Child care support. Access to affordable child care is a long-standing issue that has been exacerbated by the pandemic. Enhancing the CARE tax credit for 2021, extending financial support for virtual learning costs, and investing in new child care spots will help ease the burden for Ontario families and allow more women to re-enter the workforce.
• Supports for women fleeing domestic violence. The increase in domestic violence incidences during the pandemic has forced many women to leave their homes and communities, jeopardizing their safety and livelihood. Support for women in transitional housing and underserved areas will help provide safety for women in vulnerable situations.

Supports for business:

• Doubling of the Ontario Small Business Support Grant. The grant has helped many organizations survive the crisis thus far and making this an automatic top-up instead of asking businesses to re-apply will reduce the administrative burden on both businesses and government.
• Additional resources for the Digital Main Street Grant. Many small businesses, particularly in rural and remote regions, have benefited from the supports of this grant to get their business online. Expanding the program will help more businesses digitize and prepare for the economy of tomorrow.
• Invest Ontario Fund. Additional funding in Invest Ontario over the next four years will be important to create jobs and investment across the province.

Support for tourism:

• Tourism and Hospitality Small Business Support Grant. The OCC recently wrote to the Ontario government about how the tourism industry is not eligible for the Ontario Small Business Support Grant. This new grant is welcome news for hotels, travel agencies, hunting and fishing camps, and other organizations that did not qualify for the original grant.
• Local Tourism Tax Credit and Tourism Recovery Program. Many of the chambers of commerce and boards of trade are active in the tourism industries within their local communities. These additional supports will be critical to support a revival of tourism after the pandemic.
• Support for alcohol producers & local distilleries. Ontario’s vineyards, cideries, and small distillers have been greatly impacted by the pandemic as tourism stalled this year.

Support for communities and municipalities:

• Broadband investments. The pandemic has put the spotlight on the digital divide for people and businesses, particularly in remote and rural communities. Additional funding to connect all Ontarians, including businesses, to reliable broadband by 2025 is welcome news.
• Regional Opportunities Tax Credit. Additional resources towards this program will allow rural and remote communities to invest in projects that create local jobs and economic growth.
• Property reassessment for municipalities. Pausing the property tax reassessment gives municipalities and businesses more capacity and time to adjust to the economic uncertainty and challenges caused by the pandemic.
• Expansion of the Ontario Together Fund. The Ontario Together Fund has successfully leveraged Ontario’s business community to address pandemic-related challenges and support relief efforts.
• Access to vaccination appointments. The OCC welcomes support to help seniors and people with disabilities get to their vaccination appointments. The faster the population is inoculated, the sooner we can focus on recovery.
• Strategic Priorities and Infrastructure Fund. Renovations to local buildings and sports facilities will also be integral to local economic growth and recovery initiatives.

Ontario Chamber of Commerce Pre-Budget Submission (PDF link)

In its pre-budget submission, the Ontario Chamber of Commerce had asked for policies along the following lines:

RECOVERY

• Minimize the impact of business closures.
• Target funding towards the hardest-hit sectors.
• Strengthen municipalities’ fiscal sustainability.
• Enhance access to capital for small businesses and entrepreneurs.

GROWTH

• Develop demand-driven skills programming.
• Strengthen labour market information.
• Accelerate broadband expansion.
• Encourage and support regional collaboration.
• Decarbonize Ontario’s transportation systems.
• Give energy customers more payment flexibility.
• Support farmers and local producers with the transition to online sales.

MODERNIZATION

• Be bold on interprovincial trade.
• Use regulatory modernization to support economic recovery.
• Realize the full potential of virtual care in Ontario.
• Make Ontario a leader in ‘smart government’.
• Improve procurement outcomes.
• Take a measured approach to centralized procurement.

Ontario Budget 2021 in the news

Ontario budget 2021: Deep deficits for years to come as part of COVID-19 recovery

CBC News

It will likely take Ontario until at least 2029 to balance its books, the province said Wednesday, as the economic fallout of the COVID-19 pandemic has forced the government to spend record amounts of money.

The tentative path back to black was part of the $186-billion 2021 Ontario budget tabled in the legislature today by Finance Minister Peter Bethlenfalvy. He is the third treasurer to present a fiscal outlook for the province in as many years.

Ontario’s economy shrunk about 5.7 per cent over the last year, and a Progressive Conservative government that was elected on reigning-in spending conceded with this year’s budget that it will take years of red ink to ultimately recover from the pandemic.

“I’m betting on the people of Ontario,” Bethlenfalvy said at an afternoon news conference. “We are going to defeat this virus, and then we are going to come back stronger.”

The 231-page plan has two main themes: protecting people and protecting the economy. It revives benefits, grants and tax credits for families and businesses and includes considerable funding injections for the health-care sector and tourism industry.

It also sets aside money for job training for Ontarians, particularly those looking for work in the skilled trades. As a result of the pandemic, employment among women is down five per cent provincewide and 3.1 per cent among men, according to the Ministry of Finance.

Also notable is 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. Nor is there any money specifically earmarked for the controversial Highway 413 project in the Greater Toronto Area, or continued pandemic-specific funding for school boards.

After running a record-high $38.5 deficit through 2020, the ministry forecasts a deficit of about $33.1 billion for the 2021-22 fiscal year based on four per cent growth in the economy.

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

Deep deficits are then expected to continue for several subsequent years, and Ontario will be facing about a half-trillion dollars of total debt by 2024.

Ontario budget 2021: New cash handouts for businesses, parents and deficits until 2029

Chris Herhalt, CTV News

The Ford government is continuing with increased healthcare spending and cash grants to businesses and parents as its pathway out of the pandemic will be paved with more than $100 billion in new debt and deficits that are not likely to end before 2029.

The deficit for 2021-2022 is projected at $33.1 billion, down from $38.5 billion last year, with deficits of $27.7 billion and $20.2 billion projected for 2022-23 and 2023-24.

The province will spend $186.1 billion this year, down from $190 billion last year, with net debt expected to hit $440 billion this year, and debt to GDP to exceed 50 per cent by 2023-24.

Using its most realistic scenario, this year’s budget does not predict a return to balanced budgets until 2029, as many as three elections from now.

Niagara COVID status tracker

Niagara’s most up-to-date COVID statistics, measured against the targets for the various stages of the Ontario COVID-19 Response Framework, are presented below. This does not predict government policy, but is offered to give you an idea of where Niagara is situated and how likely a relaxation (or further restrictions) may be. These data are drawn daily from Niagara Region. The Grey-Lockdown level does not have its own metrics, but is triggered when the COVID-specific measurements in a Red-Control region have continued to deteriorate.

Definitions:

• Weekly Incidence Rate: the number of new COVID-19 cases per 100,000 people per week
• Percent Positivity: the number of positive COVID-19 tests as a percentage of all COVID-19 tests performed
• Rt: the reproductive rate, or the number of people infected by each case of the virus