Economy

Canada's Ontario plots long-term path to balanced budget as economy rebounds – Reuters

Published

4 years ago

March 24, 2021

TORONTO (Reuters) – Ontario, Canada’s most populous province, outlined on Wednesday a long-term plan to balance its budget as the economy recovers from the coronavirus crisis, forecasting a narrower deficit in 2021-22 and further gradual declines in subsequent years.

The budget deficit remains historically wide, with additional pandemic-related spending announced, but a path back to balance could be welcomed by bond investors and credit rating agencies. The province is one of the world’s largest sub-sovereign borrowers.

The longer-term outlook gave investors a sense of how Ontario intends to tackle their high deficits, said Robert Hogue, a senior economist at Royal Bank of Canada.

“I think that will be viewed positively,” Hogue added.

The deficit is seen narrowing to C$33.1 billion ($26.4 billion) in 2021-22, matching a November projection, but lower than the record C$38.5 billion deficit forecast for 2020-21, a budget document showed. The fiscal year begins on April 1.

The deficit is then seen shrinking further in future years before swinging to a modest surplus in 2029-30.

The deficit is “neither sustainable nor desirable forever” but is necessary to get through the pandemic and to recover stronger, said Ontario Finance Minister Peter Bethlenfalvy, in prepared remarks.

The economy is expected to grow by 4% in 2021 and 4.3% in 2022, with the pace then moderating in subsequent years. It contracted by an estimated 5.7% in 2020.

The 2021 growth forecast for the province, which is home to manufacturers and Canada’s major financial center, was less than the 4.9% pace seen in November and slightly below the average of private-sector forecasts.

With economic activity recovering, revenue is forecast to rise 1.4% to C$154 billion in the upcoming fiscal year, while expenses are seen falling to C$173 billion, a drop of 2.7%, as funding of COVID-19 programs dials back.

Still, the province announced new support measures for health and the economy. It includes C$2.3 billion more for COVID-19 testing and contact tracing in 2021-22, as well as additional money for parents and small businesses.

Pandemic-related spending was projected at C$51 billion over a four-year period, up from C$45 billion in November.

The province forecast net-debt-to-GDP rising to 48.8% in 2021-22 from 47.1% in 2020-21. It is seen peaking at 50.5% in 2024-25 before gradually declining to 46.4% in 2029-30.

The yield on Ontario’s 10-year bond was at 2.05% on Wednesday, down 2.1 basis points, in line with moves on other provincial bonds.

($1 = 1.2553 Canadian dollars)

Reporting by Fergal Smith; Editing by Chizu Nomiyama, Sonya Hepinstall, and Aurora Ellis

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

2 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

6 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

7 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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