Budget 2020: Ontario's Action Plan

Today, the Ontario government released the 2020 budget, Ontario’s Action Plan: Protect, Support, Recover, which builds on Premier Ford’s promise to do “whatever it takes” to get Ontario through COVID-19. Originally planned for the end of March but scuttled due to the pandemic, this is the second budget for this government. Over the past eight months, governments around the globe have been grappling with how best to respond and recover from the pandemic. Ontario has now plotted their course with three pillars:

• Protect, ensuring that the province continues to be equipped to deal with COVID-19.
• Support, investments in families and businesses that help them weather the current uncertainty.  
• Recover, funding for infrastructure projects and other initiatives aimed to spur economic activity.
  

Previously laser-focused on balancing the budget by 2023-24, the toll of COVID-19 is clear: the deficit stands at $38.5 billion. Given the circumstances facing the province, the government has hit the pause button on the legislative requirement to include a path to a balanced budget in their fiscal plans. 

Ontario’s Action Plan: Protect, Support, Recover provides $15 billion in new supports, building on the $30 billion in total supports to date from the first phases of Ontario’s response to COVID-19, for a total of $45 billion in supports over a three-year period. 

Protect: Investments in Healthcare

Ontario's COVID-19 health response now totals a projected $15.2 billion. The government is making available $4 billion in 2021-22 and a further $2 billion in 2022-23 so the province has the necessary resources to continue to fight COVID-19. 

Earlier this week, the government announced a new standard that would see nursing home residents receive four hours of direct care every day by 2024-25. Although announced, there is no budget allocated to this promise because of the complexity of recruitment and training of staff and other complications. Coupled with $1.75 billion to increase capacity in long-term care facilities, support for the long-term care sector is a clear highlight of this budget. 

For seniors who are still living at home, the government is proposing a new tax credit: The Senior’s Home Safety Tax Credit for the 2021 tax year. This will give 25% back for renovations (for instance, wheelchair ramps) of up to $10,000. There are also two investments totalling $270 million allocated for homecare, community care, telehealth, and virtual healthcare. The government is also investing $3.1 million in seniors active living centres for 2021-22. 

Support

Totalling $13.5 billion, this section focused on ensuring direct support is available to families, workers, and children.

Parents will be getting another round of cheques in the mail to support their children during COVID-19. Back in March, parents received $200 for each child under 12-years old and $250 for each child or young person with special needs up to 21 years old through the Support for Learners initiative.

In a timely move, the government is doubling funding for the Black Youth Action Plan. These investments will continue current programs and create a new economic empowerment stream that will support Black youth in achieving social and economic success.

The tourism sector has been one of the hardest hit by COVID-19. The Ontario government has put on their masterful branding hat (just ignore those license plates!) and dubbed 2021 “the year of the Staycation.” To encourage Ontarians to explore the province, they will be eligible to claim 20% of eligible tourism expenses. How this will work hasn’t been fleshed out yet.

In addition, through the Ontario Trillium Foundation, $100 million will be available over two years to support community tourism, cultural and sport organizations.

Recover

With an eye to a post-COVID world, a total of $4.8 billion was invested to lay the foundation for economic recovery. 

Last budget, the big spending on infrastructure was for transit. The banner project was the Ontario Line in Toronto that will add 15.5 kilometres to the subway system in the next decade. In this budget, the province invested heavily in broadband. 

Nearly $1 billion dollars was announced earlier this week, ahead of budget, for projects to connect people in southwestern, northern, and eastern Ontario to high-speed internet. As the prevalence of telecommunicating, learning from home, and connecting with friends online increases because of the pandemic, so too does the need for reliable internet connectivity in rural Ontario. 

The crusade against high hydro prices continues for the government. According to numbers in the budget, Ontario electricity prices are some of highest in North America — 17% higher than the American average for commercial employers.

Under the last government, contracts were signed for wind, solar and bioenergy power. Starting on January 1, 2021, a portion of these contracts will be funded by the province, not ratepayers. Removing these costs from electricity bills will result in medium size and larger industrial and commercial employers saving around 15% on their electricity bills. The last bit of big news out of this section is a reduction in property taxes for businesses. Business Education Tax (BET) rates for over 200,000 employers (94% of all business properties in Ontario) fall to a rate of 0.88%. In addition, the province is empowering municipalities to cut property taxes for small businesses — and are committing to match these reductions. 

Analysis

Budget 2020 is very much a document of its time. A plan to make important investments that are more critical because of the ongoing pandemic, recognizing the concerns of Ontarians to ensure a robust healthcare system, and supporting employers. This budget is clearly a bridge to March, when a more typical budget will hopefully be tabled by Minister of Finance Rod Phillips. This government has chosen to pivot to protect essential services, help support economic drivers, and prepare for a post COVID new normal that gets our economy back on track with a path to recovery.