Four things you need to know about Ontario’s new budget

ANALYSIS: A whopping $33.1 billion deficit is planned for this year — and we’re looking at deficits until 2029 as the province recovers from COVID-19
By John Michael McGrath - Published on Mar 24, 2021
The government is pledging to spend $1.8 billion on hospital services this year. (Frank Gunn/CP)

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The one-sentence summary of Premier Doug Ford’s career in provincial politics to date is pretty simple: he was elected on a promise to balance the provincial budget after years of Liberal spending, and then COVID-19 happened. Reasonable people can disagree on the state of Ontario’s finances, but the results of the pandemic have been stark in terms of economic losses — and, of course, of human ones: thousands of Ontarians have died, and hundreds of thousands have fallen ill.

On Wednesday at Queen’s Park, Finance Minister Peter Bethlenfalvy presented a budget plan that projects budget deficits for the foreseeable future. A whopping $33.1 billion deficit is planned for this year — only $5 billion less than last year. COVID-19 response spending is shrinking only slightly from last year: the government expects to spend $173 billion in the coming year; that will include $6.7 billion in more COVID-19 responses and $166.3 billion in overall (“normal”) program spending.

Under the plan, Ontario won’t return to a budget surplus until the 2029-30 fiscal year — two elections from now. That could come faster or sooner depending on the vagaries of economic growth over the next decade, but Ontario politics are at least as unpredictable: it could be a government of a different party that eventually balances the books.

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The deficits are not solely the result of revenue shortfalls. While Ontario raised $156 billion in tax revenues in 2019 before the pandemic, it is expecting to raise $160 billion next year and $187.3 billion in 2026-27, when the province will still be running an $11.2 billion deficit.

Bethlenfalvy’s budget plan includes substantial new spending not just on temporary COVID-19 response measures, but also in the form of expanded permanent spending: next year, the Tories will put $30 billion more toward program spending (that is, not debt service) than the Liberals did in 2017-2018, their last full year in power.

Here are four things Ontarians will be getting for that money.


Health care

COVID-19 has been a health-care crisis, so it’s not surprising that the sectors seeing the biggest expansion of spending are health care and long-term care. The government is pledging to spend $1.8 billion on hospital services this year; that will include $760 million for hospital beds and $300 million to clear the backlog of procedures that has built up during pandemic-related shutdowns. The government also plans to spend $1 billion through its vaccine-rollout plan and $2.3 billion for expanded COVID-19 testing; $933 million will go to expanding LTC spaces. All told, the government plans to spend $16.3 billion on health- and long-term-care COVID-19 responses.


TVO Explainer: What is an Ontario budget?


Tax credits for jobs

The government is introducing new tax credits and expanding existing ones to try to spur Ontario’s economic recovery as the pandemic recedes. The Tories are temporarily doubling the Regional Opportunities Investment Tax Credit, which is intended to encourage business investments outside the GTA and Ottawa regions.

The budget plan also includes a new Ontario Jobs Training Tax Credit, which would provide up to $2,000 per recipient to cover half of eligible expenses, which include college and technical qualifications or training programs (the credit is effectively being harmonized with a similar federal measure). The government is also proposing to send out a new round of grants to small businesses through the Ontario Small Business Support Grant, which paid out grants earlier in the pandemic. Small tourism-related businesses will be eligible for a new grant of as much as $20,000 through a new program to support businesses that have been among the hardest-hit in the pandemic.


Child care

The pandemic has made it abundantly clear that child care is an economic issue as well as a family one, and the government plans to temporarily top up the Childcare Access and Relief from Expense (CARE) tax credit to increase the amount of financial assistance available to families with large child-care expenses. The budget also includes another round of cheques for families with children in schools — $400 per child and $500 for people under 21 with a learning disability.


Broadband and other infrastructure

The government is doubling down on its pre-existing commitments to expand reliable broadband internet access across the province — a stubborn problem for Ontario’s rural and remote communities. The government is adding $2.8 billion in new spending to its plan and hopes to add more than 500,000 new high-speed-internet users by 2024. The budget also reiterates already announced infrastructure priorities, such as subways in the GTA and $1 billion in transit spending in Hamilton. It includes one item that will excite some northerners: $5 million to study a return of rail service from Toronto to Cochrane, a rail line the previous Liberal government cancelled in 2012.

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