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.
Finance Minister Peter Bethlenfalvy said adding mountains of additional debt did not phase him.
“I would do it all over again for protecting the health and wellbeing of the people of Ontario. We have a war against an invisible enemy – this is what governments do.”
“We’re incurring debt not just to increase the deficit but to support health-care and increase jobs,” he said.
Health-care remains the central focus for spending, with $2.1 billion more for hospitals, to address the backlog of surgeries and to assist groups disproportionately impacted by COVID-19.
A further $2.3 billion is set aside for contact tracing and PCR testing for COVID-19, which now costs taxpayers $46 per test.
“I would hope putting a dollar figure toward some of these commitments will help get them off the ground,” NDP leader Andrea Horwath said.
But she said the money allocated to hospital funding falls short.
“This budget provides less than half of what hospitals need – leaving people literally in pain, waiting for when they are going to get their surgery.”
“I think the government missed the memo that the pandemic is still happening,” Horwath said.
Another $1 billion has been set aside to help public health units administer COVID-19 vaccines, with officials unsure of how much of that fund has already been spent.
Businesses to get cash grants
Apart from health-care, the central focus of the budget appears to be new rounds of direct cash grants for businesses impacted by COVID-19 measures and parents dealing with a school year peppered with closures.
Businesses who can prove revenue was impacted by lockdowns can apply for a second round of cash grants ranging from $10,000 to $20,000, with the new round costing taxpayers $1.7 billion.
And parents with children are getting $400 per school-age child, and $500 per child with special needs. The exact date the payments will be made is not yet known and anyone who registered for the second round of payments last year will automatically be entered for the third.
The payments for parents will cost taxpayers $980 million. The province is also increasing the childcare tax credit, meaning the average tax filer who is a parent will receive $1,500 next year instead of $1,200.
The long-term care sector is getting another $650 million this year to maintain and expand staffing levels.
Over the next four years, fulfilling the commitment to give every long-term care resident at least four hours of care will require another $4.9 billion.
The Ford government is also earmarking $400 million for the tourism sector over the next four years, along with a program they announced last year that would cover 20 per cent of the cost of Ontarians’ in-province vacations, when it is deemed safe to travel.
There will also be $50 million made available to “faith based and cultural organizations” that have been impacted by the pandemic, likely places of worship and cultural groups with physical halls where people have not been allowed to gather as normal.
There are no new tax cuts for businesses this year, as opposed to last year when a raft of them were approved, and new details are emerging about several major capital projects demanded or opposed by municipal leaders in the GTA.
Liberal Leader Steven Del Duca called the 2021 budget mediocre, even in normal times.
“While in the best of times – this budget would have been considered mediocre, this was not a budget for the single biggest economic crisis in a generation.”
Hospital and transit projects
Brampton’s mayor and council have long asked for a new hospital in their city, as their existing facilities run over 100 per cent capacity even outside of the pandemic.
The province said in its 2021 budget that Peel Memorial Hospital will receive an unspecified addition allowing it to provide inpatient care.
But officials speaking on background could provide no cost, timeline or description of the project’s scope.
Also, the budget includes funds for an environmental assessment of the proposed Highway 413 that would cut through Halton Hills, and Brampton, linking Highway 400 with highways 407 and 401.
But no capital funding for construction of the highway is included, and the project is now opposed by several of the cities it would serve including Mississauga and Vaughan.
Bethlenfalvy said he will wait for the results of the environmental assessment before allocating any money to the project.
“I have not set any money aside for any highway -- I want to hear from the environmental assessment and from as many people as possible about how they feel about it.”
The Ministry of Finance said its contingency funds for dealing with the pandemic are now “fully allocated” for 2020 and 2021, but there will still be approximately $2.8 billion available for COVID-19 related issues in 2022.
It is not clear what this money will be spent on, as Bethlenfalvy said in his opening remarks Wednesday that normal is “months, not years away.”
But even with the new cash handouts and hospital spending, there are still areas being cut.
Baseline funding in the education sector is increasing by more than $700 million, but the end of more than $1.5 billion time-limited funding for COVID-19 measures in the education sector means overall spending in education will fall by $789 million.
Education spending will then increase below the expected rate of inflation for the next three years.
The Ministry of Labour is losing $70 million in funding.
The province’s forest fire fighting program will be cut by $20 million, from $120 million to $100 million.
The Ministry of Government and Consumer Services is expected to lose $400 million.
Part of the squeeze is due to rising borrowing costs.
The province expects the average interest rate it pays on debt to double between now and 2023 to 3.2 per cent.
By 2023, annual borrowing costs will be equal to almost as much as the entire colleges and university sector and justice sector combined, at $14.6 billion per year.
Bethlenfalvy insisted the province’s finances could weather the storm.
“With lower interest rates right now it’s very manageable.”
Lobby groups including the Ontario Chamber of Commerce and the Canadian Federation of Independent Business welcomed the budget, commending the Ford government for extending support to businesses impacted by lockdowns and support for the tourism industry.
Meanwhile, the Ontario Long-Term Care Association (OLTCA) said the new funding commitments in the 2021 budget represented generational change.
“The Ontario Government’s Budget 2021 contains the most significant investments in decades in Ontario’s long-term care sector and they will make a meaningful difference in the lives of Ontario’s seniors now and in the future,” OLTCA CEO Donna Duncan said.
Meanwhile, Sharleen Stewart of SEIU Healthcare said the end of temporary pandemic pay for personal support workers in settings including long-term care has left her members worse off.
“Sixty-seven per cent of our union members report a decline in their take home pay, yet Premier Ford's budget fails to provide low-wage workers, like personal support workers, a living wage of at least $25 per hour.”