Ontario's 2021 Budget: A focus on overcoming the COVID-19 pandemic and economic recovery

The Ontario government released its 2021 Budget titled “Ontario’s Action Plan: Protecting People’s Health and Our Economy” this afternoon, the first under Finance Minister Peter Bethlenfalvy and third since Premier Ford and his Progressive Conservatives took office in 2018. Minister Bethlenfalvy, who also doubles as Treasury Board President, has pledged to protect people’s health while supporting those who are continuing to struggle during the pandemic, a theme that’s constant throughout the budget.

Dubbed as the “pandemic budget,” COVID-19 has remained front and centre for the Ford government for a second consecutive budget, in the run up to what experts believe is the beginning of a third wave. There is some light at the end of the tunnel though with an invigorated focus on a province-wide vaccination rollout that the Premier hopes will bring back some semblance of “normal” life this year.

“That job is our number one job in this province—to make sure everyone that wants a vaccine gets one,” said Minister Bethlenfalvy this week. “The best stimulus for reopening the economy is a vaccination and keeping people safe. That job is not done yet.”

All in all, the Ontario government has dedicated $173 billion in total within the 2021 Budget, which is slightly down from last year’s record-breaking $177.8 billion allotment. Ontario’s net debt to GDP ratio has increased to 43.1 per cent in 2021 and is projected to rise to 43.8 per cent by 2022. The provincial government has stated its commitment to slow the rate of increase and will not allow that ratio to exceed 50.5 per cent over the medium term until 2023-2024.

NATIONAL’s first take

Our immediate analysis is as follows:

• Ontario’s fight against COVID-19 is far from over but its primary focus has largely shifted from outright containment to bolstering its vaccine rollout, and the latter is seen as the eventual path toward reopening our economy for good. The Premier and Minister Bethlenfalvy have doubled down on their commitment to “quite literally” drive Ontarians to go and get their vaccines, with a new investment of $3.7 million to transport seniors and people with disabilities to and from vaccine sites.
• To no surprise, the Progressive Conservatives have again put forward a budget that does not carve out a path to balance, and while there is no doubt that the Premier is steadfast in his commitment to defeat COVID-19, he will have to address the deficit sooner than later. His election promise to “solve Ontario’s deficit problem”—which is projected to be $32.1 billion, down from the $38.5 billion deficit in 2020 next year—has become largely unsustainable, signalling the need for a significant change in policy priorities heading into the 2022 provincial election. Of course, nobody predicted we would be in the second year of a global pandemic when Doug Ford made the election promise in 2018. Still committed to eventually balancing the budget, the province is projecting a relatively rapid economic recovery and hopes to eliminate the deficit as early as 2027-2028 or as late as 2031-2032.
• As Ontario’s third Progressive Conservative Finance Minister since 2018, today’s announcement is a momentous one for Finance Minister Bethlenfalvy, particularly as his next challenge will be delivering the programs launched in the Budget as Ontario’s Treasury Board President. Considered by insiders to be the most important figure in Premier Ford’s cabinet, Minister Bethlenfalvy has his work cut out for him.
• For the last year, we have seen Prime Minister Justin Trudeau and the 13 provincial and territorial Premiers working together to combat COVID-19. Today’s Ontario Budget followed by Quebec’s Budget on March 25 and Saskatchewan’s Budget on April 6 will culminate with the federal government’s long-anticipated Budget on April 19. This will be an opportunity for the Prime Minister to outline how his government will either continue to work together with the provinces and continue the fight against COVID-19 or pave a path back towards the politicization of federal-provincial relations. Should the latter happen, this could be a signal that an election is forthcoming.
• There was no mention of funding for Highway 413, suggesting that the Ford government is steering clear of controversy after receiving significant pushback from municipalities and all opposition parties, including Ontario Liberal leader Steven Del Duca stating that he’d “kill it once and for all” if elected. Could this be one of the first signs that the Premier is thinking ahead to the 905 belt of seats for the 2022 provincial election?

Core themes

This year’s budget is split between the two core themes of Protecting Ontario’s Health and Protecting Ontario’s Economy:

Protecting Ontario’s Health

The Ontario government has allocated an additional $16.3 billion to protecting Ontarians’ health in 2021. Key highlights include:

• $6.1 billion in additional COVID-19 funding, including $1 billion to support vaccine distribution, $3.7 billion toward testing and $1.4 billion for the procurement PPE
• $30.2 billion over ten years for hospital infrastructure and expansion projects
• $1.8 billion in funding for hospitals to continue providing care for COVID-19 patients, address the surgical backlogs and keep pace with patient needs
• An additional $933 million over four years to increase long-term care capacity and access
• $246 million over the next four years to improve living conditions in existing long‑term care homes
• $4.6 billion over four years to increase average daily direct care per long-term care beds resident to four hours per day
• A provincial staffing strategy to improve working conditions for staff in long-term care homes including more than $121 million to accelerate the training of nearly 9,000 personal support workers (PSWs)
• $1.6 million over two years to support the Anti-Racism and Anti-Hate Grant program, which will support community-based anti-racism initiatives focusing on anti-Black racism, anti-Indigenous racism, anti-Semitism, and Islamophobia

Protecting Ontario’s Economy

The Ontario government has committed an additional $23.3 billion to protect Ontario’s economy. Key highlights include:

• A new Ontario Jobs Training Tax Credit, which would provide up to $2,000 per recipient toward 50 per cent of eligible expenses, for a total of an estimated $260 million in support
• An additional $614.3 million over two years for employment and training supports
• A 20 per cent enhancement of the Childcare Access and Relief from Expenses (CARE) tax credit
• $1.6 billion in direct support through a second round of the Ontario Small Business Support Grant program, which will be issued automatically to previous grant recipients
• $400 million over the next three years in new initiatives to support Ontario’s tourism, hospitality, and culture sectors
• $2.8 billion to connect homes, businesses, and communities to broadband
• $1 billion in COVID-19 relief payments to municipal governments to help preserve vital public services and support economic recovery
• A new form of secure, electronic government-issued ID that could be used to access government services, from children's immunization records to sharing health information with caregivers and health providers, while protecting personal information

Like the 2020 Budget, which we saw just four months ago, the Ford government has allocated a significant amount of spending to maintain and improve Ontario’s healthcare system to withstand the impacts of COVID-19, but there is one overarching objective rampant throughout, to do whatever it can to reinvigorate Ontario’s economy and truly recover from the pandemic.

Next steps

Opposition parties have been unanimous in their support for increased healthcare spending but still feel as though it’s too little too late and are weary of the province-wide vaccination strategy that is lagging in comparison to our neighbours south of the border.

As expected, the Ontario NDP feels as though the province isn’t doing enough for long-term care, hospitals and schools, and NDP Leader Andrea Horwath has reiterated the need for a paid sick-leave program and measures to ensure Ontarians are paid even while they head to their vaccination appointments.

The Ontario Liberal Party pushed back against the budget’s provisions, arguing that it did not go far enough to provide immediate support to families across the province. Leader Steven Del Duca accused the government of “abandoning every Ontario family still in crisis” and promised to focus more on families, including investing $8 billion in the province’s schools.

Green Party of Ontario Leader Mike Schreiner accused the Ontario government of failing to address the multiple crises facing the province, specifically highlighting a lack of mandated sick days or paid time off for vulnerable workers, inadequate mental health funding, and failing to invest in affordable housing or a green building program.

NATIONAL will continue to monitor reaction and provide further updates on the 2021 Budget, especially as the province fast-tracks its vaccination rollout and prepares to reopen the economy for what many are hoping will be the final time. As always, our team of public affairs experts are available to provide further insights and analysis on today’s announcement and how it impacts your organization.