Ontario Finance Minister Rod Phillips presented his Economic and Fiscal Update at Queen’s Park today, tabling the Ford government’s battle plan to combat the health and economic crises brought on by the accelerating spread of the COVID-19 virus around the world.
Phillips’ intervention is a big one. Today’s update includes new spending and (mostly) temporary tax reductions for business that, combined, top $17 billion. The 2020-21 budget deficit is estimated at more than $20 billion and could rise further.
The overall plan focuses on two main areas: keeping businesses afloat and shoring up public services, particularly health care and social services.
Maintaining cash flow for business
For business, Phillips has presented his own version of what the other Canadian provinces have done to date. Today’s update delays collection of most provincial business taxes for five months, defers education property tax payments for three, and defers Workplace Safety and Insurance Board payments for up to six. This leaves $9.7 billion in cash in the hands of businesses to help navigate the weeks and months ahead where many will see a major loss of income as sales fall off or stop completely. As British Columbia did on Monday, the government has also reduced, temporarily, the employer health tax for some businesses. Combined with similar moves at the federal level, Phillips’ changes provide businesses with ready cash and considerable flexibility to weather the COVID-19 storm.
Public services get a boost
Today’s statement boosts overall program spending for 2020-21 by 5.4% from 2019-20, including a 5.2% increase in health spending and a 6.9% hike in community and social services spending. These are real increases, and will help fight COVID-19, but they are hardly dramatic ones. Given population growth, inflation, and an aging population, health care spending in Ontario needed to grow by 4.6% just to maintain services at existing levels; spending 5.2% in the midst of a global pandemic hardly suggests excessively bold action (although it is better than the 2% number in Phillips’ November 2019 update). As the Financial Accountability Office noted a year ago, Ontario has the lowest spending on programs of any province in Canada, and the lowest spending on health care of any province as well. Nothing in today’s statement is likely to change the rankings by either measure.
The fact is, every dollar spent on health care is going into a system that is already exceptionally strained and severely lacking in the surge capacity needed to handle major shocks. When the COVID-19 battle is over, Ontario needs a plan to truly bring health and social services up to safe levels.
Federal income supports change math at Queen’s Park
While virtually all provinces have put forward some version of short-term income supports for those facing layoff or reduced hours because of COVID-19, Ontario declined to do so today. The reason is simple: a new federal program announced today, the Canada Emergency Response Benefit (CERB), changed the budget calculations at Queen’s Park.
The CERB is an ambitious program that will pay $2,000 per month to qualifying workers—and that is a large group. For those who would not qualify for EI under existing rules, and have lost work to COVID-19, the CERB offers relief at a very stressful time.
The Doug Ford government could say the same. With the federal government doing the heavy lifting on income supports, Minister Phillips was able to focus Ontario’s resources elsewhere.
For the CCPA’s ongoing COVID-19 coverage, visit www.policyalternatives.ca/covid19. For more coverage of Queen’s Park and Ontario policy issues, follow the CCPA-Ontario office on Twitter, @CCPA_Ont.