What to expect from Ontario's budget as COVID-19 ravages the economy

Thursday's Ontario budget will pose a test for Premier Doug Ford: how willing is he to spend the kind of money needed to protect people from COVID-19 and spur economic recovery from the ongoing pandemic? 

In arguably the clearest sign of how vastly the pandemic has changed the political landscape in Ontario, a government led by Ford — elected on a crusade to cut spending — is about to table the biggest budget deficit in the province's history. 

"This is going to be a great budget," Ford said Wednesday during his daily COVID-19 briefing.

This is just the second budget of Ford's mandate. The first, delivered in April 2019 by then-minister of finance Vic Fedeli, spurred outrage for its wide swath of spending cuts — including a proposal to slash funding to public health units that was eventually reversed.

It's a safe bet that Finance Minister Rod Phillips will not propose cutting public health spending in the midst of a second wave of COVID-19, with an average of nearly 1,000 new cases a day. Nor will there be any new taxes or fees, according to both Ford and Phillips.  

So what will be in the budget? Phillips dropped some hints on Wednesday. 

The budget "will begin to remove the biggest barriers to growth for communities across the province," said Phillips, who joined Ford for the news briefing.

"We need to be making sure we're dealing with the structural challenges that will get in the way of [economic recovery] and, quite frankly, were getting in the way of Ontario's potential even before the pandemic." 

Phillips did not specify what "barriers to growth" are to be removed, but it's clearly something to watch for. 

"We cannot expect our economy just to bounce back or for the lost jobs to return on their own," he said.

"We will make available every necessary resource to continue to protect people's health, and [the budget] will expand on the support our government has provided for those still facing financial hardship due to the pandemic." 

Keeping businesses open 'is not going far enough'

There are those who question whether the government has truly thrown every necessary resource at the pandemic, whether in supports to the private or public sector. 

"We're hoping the government will step up and really open their wallet for small businesses," said Julie Kwiecinski, director of provincial affairs for the Canadian Federation of Independent Business (CFIB). 

"Just letting businesses open is not going far enough," said Kwiecinski.     

Only one quarter of Ontario small businesses are seeing normal sales revenues, according to a CFIB survey. 

"How are they going to pay their bills?" said Kwiecinski. "We've seen the premier in news conferences saying he understands, that it breaks his heart. So we want to see him transfer that emotion into some tangible results and programs for small business." 

Among the CFIB's hopes for the budget: some relief on employers' provincial health tax contributions, funding to buy personal protective equipment, a top-up to the federal commercial rent subsidy and making good on Ford's campaign promise to cut hydro rates by 12 per cent.  

Ontarians support pandemic spending: poll

A new poll shows plenty of support in Ontario for pandemic spending, and limited concern about red ink.  

The survey by Abacus Data found 82 per cent of respondents want the government to "do what needs to be done to protect people impacted by the pandemic and public services," even if it means big deficits. Only 18 per cent of respondents want the government to aggressively limit the size of the deficit. 

The polling results suggest people and businesses are counting on the government for support to get through the pandemic, said Abacus Data CEO David Coletto. 

"When people are feeling vulnerable, when they don't know how long this is going to go on for, now is not the time in their mind to be pulling back, to be cutting services, to be looking for any efficiencies or cuts," Coletto said in an interview.  

"This is the moment where this government really needs to put its money where its mouth is," said Sheila Block, senior economist with the Canadian Centre for Policy Alternatives, a non-partisan research agency with links to organized labour.

"We need to see funds flowing quickly and funds flowing in a way that's consistent with the plan to support essential public services," said Block. "We really need the Ford government to take a larger role in the economy through this crisis. And we haven't seen either of those things."

Federal government main source of support

Research by Ontario's Financial Accountability Office found that provincial government spending accounts for just three per cent of the $110 billion in direct pandemic-related support to people, businesses and the public sector in Ontario. The federal government is the source of the other 97 per cent. 

Block is calling for big investments in the public sector — such things as school renovations and increased staffing in long-term care — as a way of stimulating the recovery. 

"What is going to be the engine of economic activity in Ontario over the next six months to a year?" Block asked.

"What we really are going to need is public-sector job creation and public-sector leadership to get us through this phase of the economic crisis that we're in."

Phillips has said the budget will lay out three scenarios for how the economy could play out over the next three years.

The government's most recent financial report — published in August — projects the deficit for the 2020-21 fiscal year at $38.5 billion. That is based on a forecast that the economy would contract by 6.7 per cent this year, with government tax revenues taking a hit of some $10.8 billion.