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 swathe 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.
Ontario Premier Doug Ford and Finance Minister Rod Phillips delivered the province’s 2020 fiscal update at Queen’s Park on March 25. The government postponed tabling its full budget until November because of the COVID-19 pandemic. (Frank Gunn/The Canadian Press)
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.”
There are those who question whether the government has truly thrown every necessary resource at the pandemic, whether in supports to the private sector or the 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).
Julie Kwiecinski is director of provincial affairs in Ontario for the Canadian Federation of Independent Business. (Julie Kwiecinski)
“Just letting businesses open is not going far enough,” said Kwiecinski in an interview with CBC News.
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.
A new poll shows plenty of support in Ontario for pandemic spending, and limited concern about red ink.
The provincial government’s most recent forecast for the Ontario economy is a 6.7 per cent drop in GDP in 2020-21. (David Donnelly/CBC)
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 Abacus Data survey was conducted through an online panel of 1,000 Ontario residents from Oct. 28 to 30. The margin of error for a comparable random sample of the same size is +/- 3.1 per cent, 19 times out of 20. The results were weighted according to census data to ensure that the sample matched the age, gender, educational attainment, and regional breakdown of Ontario’s population.
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 in an interview with CBC News.
“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.”
Sheila Block is senior economist with the Canadian Centre for Policy Alternatives. (Lauren Pelley/CBC News)
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.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
