Ontario budget expected to post record deficit as province fights COVID-19

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Ontario Premier Doug Ford is expected to unveil a budget on Thursday with a record multibillion-dollar deficit as he tries to counter charges he has skimped on spending in the COVID-19 pandemic.

The budget will lay out a multiyear financial plan, the first from a large Canadian province during the pandemic, in a move aimed at reassuring Ontario’s lenders. It will detail a record deficit last estimated in August at a whopping $38.5-billion, as the province spends billions fighting the virus.

With Ontario now posting more than 900 new infections a day but set to loosen restrictions on businesses in virus hotspots, the budget is expected to present a number of economic scenarios to project the pandemic’s potential impact on Ontario and the government’s books.

The budget comes as Mr. Ford has faced months of criticism that he has not spent enough to deal with the virus, despite his repeated pledges to spend “whatever it takes.” Finance Minister Rod Phillips said Wednesday the budget won’t include any new taxes.

Opposition leaders say the Premier has scrimped on funding for hospitals and schools, failed to inject the necessary resources into struggling testing and contact-tracing systems, and did not do enough to help businesses blindsided by the pandemic or forced to close.

Ryan Mallough, director of provincial affairs for Ontario at the Canadian Federation of Independent Business, said the province’s promised $300-million in financial supports for restaurants, gyms and other businesses forced to close won’t help similar establishments outside the virus hotspots of Toronto, Ottawa, Peel and York Regions. He also said businesses in those hotspots wouldn’t continue receiving help once restrictions are loosened over the next two weeks, based on the government’s new guidelines.

While many businesses in regions outside those zones were not forced to close, he said they are still suffering staggering losses.

“Even with the lifted restrictions, the public sentiment around going out and the nervousness and the lack of consumer confidence, is still going to be a major hit on their revenues,” he said, calling for Mr. Ford to top up the federal government’s commercial rent relief program and fulfill his election campaign promise to cut hydro bills.

Official Opposition NDP Leader Andrea Horwath has accused Mr. Ford for weeks of “penny pinching." She noted that the independent Financial Accountability Office said last month Ontario had $9-billion in unspent COVID-19 funds, much of it from the federal government. The province says it is spending that money, although it is still expected to include a multibillion-dollar reserve fund in its budget Thursday.

Ms. Horwath said Wednesday that Mr. Ford needs to spend more on testing, contact tracing and hospitals, fund a class-size cap of 15 students in schools, hire thousands of personal support workers for long-term care and boost their pay, boost supports for businesses and laid-off workers and provide for paid sick days.

Critics point to numbers that show Ontario boosted health care spending more slowly than other provinces in the first wave of the pandemic in the spring. According to the Canadian Centre for Policy Alternatives (CCPA), a left-leaning think tank, Ontario only increased health care spending in its first quarter (April-June) by 10.6 per cent – less than half the increases in B.C. (26.9 per cent) and Quebec (21.4 per cent).

“There have been a lot more announcements and reannouncements, without the actual money flowing‚” said Sheila Block, a senior economist with the CCPA’s Ontario office.

Last week, Anthony Dale, head of the Ontario Hospital Association, told The Canadian Press that the province has yet to cover extra pandemic costs incurred since April, forcing some hospitals to rely on reserves or lines of credit while facing the possibility of being unable to meet payroll.

The province said in August that it was adding $7.7-billion in new health care spending for COVID-19, pledging to spend $67-billion on the health system in total. Its 2019 spending plan for this year called for $61.7-billion for health care, long before COVID-19 hit. It said last week it would spend $115.5-million on new hospital beds.

While calls for spending to stop COVID-19 are near unanimous, and borrowing costs are at record lows, some say the government needs to also provide an indication of how it will put the province back on a fiscally sustainable path.

Rocco Rossi, president and CEO of the Ontario Chamber of Commerce, says fighting the virus is no time for austerity. But he said the province must show that spending meant to boost the economy will help produce long-term growth. He cited plans to spend $680-million to improve access to broadband internet, revealed in advance on Wednesday, as an example of spending that produces growth.

“Ultimately, the [monetary] printing presses will stop, or blow up, and we’re going to need the economy to be generating revenues in order to pay for all of this,” Mr. Rossi said.

On Monday, Mr. Ford said the budget includes a plan to fund four hours of guaranteed care a day for residents in nursing homes, where 1,900 people have died from COVID-19. Unions and health care advocates have long demanded such a move, estimated to cost $1.6-billion a year. But the government says it will take until 2025 to roll out.

The Progressive Conservative government scrapped what would have been its second budget in March as the pandemic first hit the province. Its 2019 budget included faulty new provincial licence plates and cuts to public health, both of which were scrapped.