2021 Ontario Budget

Ontario Finance Minister Peter Bethlenfalvy tabled his first budget today, entitled “Ontario’s Action Plan: Protecting People’s Health and Our Economy”. Today’s budget was an important step for the government in demonstrating that it is laser focused on two priorities: protecting people’s health and protecting the economy. The fiscal plan was positioned as the blueprint for “finishing the job started one year ago”, in a way that ensures no one is left behind, noting that “you can't have a healthy economy without healthy people.”

This reflects the government’s belief that an economic recovery will only happen when every Ontarian is safe from the pandemic, which is centred on dispensing vaccines as soon as they are received. The Minister emphasized that the fiscal plan does not rely on tax hikes or cuts to government services, making it clear that economic growth will be the key to ensuring the sustainability of the province’s finances.  He further noted that while government will create the conditions, it will be the people and the employers of the province that will create the growth. 

The budget includes unprecedented spending on health care, including $1 billion towards implementing a province-wide vaccination plan. There is $5.1 billion in hospital funding ($1.8 billion this year alone) along with $2 billion in long-term care spending aimed at ensuring what happened in these facilities never happens again.

The budget also provides significant support to families, workers and employers. The COVID-19 child benefit is being doubled from $200 to $400 per child, and the CARE tax credit for childcare expenses is being enhanced by 20 per cent. For workers and employers, there is a second round of Ontario Small Business Support Grant payments, and more support for the tourism, hospitality and culture industries through an additional investment of $400 million over the next three years to support workers and employers in these sectors. The budget also includes a $2.8 billion investment in connecting homes and businesses to better and stronger broadband, a need brought into stark relief with the pandemic.

Against the backdrop of investments of $51 billion over four years in fighting the pandemic, the Minister said that although the deficit levels reflected in the budget are neither sustainable nor desirable forever, he also holds the unequivocable belief that they are necessary to get through the pandemic and onto recovery.

The Minister summarized the budget by expressing optimism about the road ahead: “I am putting the world on notice: don’t bet against us. Don’t bet against the people of Ontario. We will succeed.”

Spending Overview

Total projected revenue:  $154 billion

Total expenditures:  $173 billion

Deficit:  $33.1 billion

Fiscal Plan

The 2021 budget includes initiatives that bring total investments to $51 billion over four years in response to the global pandemic. The fiscal plan does not rely on tax hikes or spending cuts, but rather on sustained economic growth to drive the province’s recovery.

• The budget presents the government’s three-year fiscal plan, to 2023/2024.
   
• The government is projecting a deficit of $33.1 billion for 2021/2022, and forecasting deficits of $27.7 billion in 2022/2023 and $20.2 billion in 2023/2024.
   
• The budget presents two alternate scenarios for growth: slower and faster. Under the faster growth scenario, the government could eliminate the deficit by 2027/2028; under the slower growth scenario, the deficit would not be eliminated until 2031/2032.
   
• For planning purposes, real GDP is projected to rise 4.0 per cent in 2021, 4.3 per cent in 2022, 2.5 per cent in 2023 and 2.0 per cent in 2024.
   
• Ontario’s 2021/2022 net debt-to-GDP ratio is now forecast to be 48.8 per cent, and the province will pay $13.1 billion in interest costs this fiscal year.

Protecting People’s Health: $16.3 Billion

The first pillar in the 2021 budget is focused on protecting people’s health through investments of $16.3 billion. This spending provides support for a province-wide vaccination plan and more money for testing, contact tracing and PPE. It also provides funding to help fix the significant challenges in the long-term care sector and supports to people facing mental health issues and domestic violence.

Highlights of this spending include:

• $1 billion to support the administration, distribution and rollout of a province-wide vaccination plan; this includes $3.7 million to provide transportation for persons with disabilities and older adults to get them to their vaccination appointments and $50 million to support vaccine rollout in First Nations and urban Indigenous communities.
   
• $2.3 billion for testing and contact tracing and $1.4 billion for personal protective equipment.
   
• An additional $5.1 billion for hospitals to create 3,100 additional hospital beds and $933 million over four years to support building 30,000 new long‐term care beds.
   
• $246 million to improve living conditions in existing long-term care homes.
   
• $4.9 billion to increase the average direct daily care to four hours a day in long‐term care and a plan to hire more than 27,000 new positions, including personal support workers and nurses.
   
• Additional funding of $175 million to help people struggling with mental health and addictions issues and an additional $2.1 million to support victims of crime.
   
• Investments of $1.6 million to support the Anti‐Racism and Anti‐Hate Grant program to support initiatives focusing on anti-Black racism, anti-Indigenous racism, anti-Semitism and Islamaphobia.
   
• $8.4 million over three years to embed mental health workers in Ontario Provincial Police communications centres to provide support to individuals facing a mental health crisis — including helping them find and access existing services.
   
• Ensuring that postsecondary students have the supports they need during COVID-19 with an additional $7 million invested in 2020-2021 to increase access to on-campus and virtual mental health and addiction services.

Protecting Our Economy: $23.3 billion

The second pillar in the 2021 budget is focused on protecting the economy through investments of $23.3 billion. This spending helps to provide support for workers and families; protect jobs and Ontario’s small businesses; build a solid foundation for economic growth for job creation and long-term prosperity; and modernize government to make it work better for people and businesses.

Highlights of this spending include:

• Support for workers through a new Ontario Jobs Training Tax Credit that will provide up to $2,000 per recipient, and the investment of $614.3 million for employment and training supports. This includes $117.3 million to assist groups facing the highest rates of unemployment (women, racialized individuals, Indigenous peoples, youth and people with disabilities).
   
• Support for parents through a third round of Ontario’s COVID-19 Child Benefit payments, which have been doubled to $400 per child and $500 for each child with special needs, the creation of 30,000 new childcare spaces, and finally, a 20 per cent enhancement to the Childcare Access and Relief from Expenses (CARE) tax credit for 2021, increasing support from $1,250 to $1,500.
   
• Support for seniors through the Seniors’ Home Safety Tax Credit, providing an estimated $30 million for seniors and their families.
   
• Protection of jobs within 120,000 small businesses through a second round of Ontario Small Business Support Grant payments of $10,000 to $20,000, and within the tourism section by investing an additional $400 million over the next three years to support the sector.
   
• Creation of jobs and economic growth through business investment in certain regions with a temporary $61 million enhancement of the Regional Opportunities Investment Tax Credit.
   
• Support for communities, including: providing Ontario’s municipalities with $1 billion in additional financial relief in 2021 to preserve public services and support economic recovery; $50 million in grants for faith-based and cultural organizations facing increased costs through COVID-19; and a doubling investments in the Indigenous Community Capital Grants Program to address long-term infrastructure needs and fast-track shovel-ready projects on- and off-reserves.
   
• Transportation improvements by investing $21 billion over the next 10 years to expand and repair highways and bridges, and $61.6 billion over the next 10 years in public transit.
   
• Connectivity improvement with the investment of $2.8 billion to connect homes, businesses, and communities to broadband.
   
• The budget also reiterates the government’s focus on modernizing government and enabling a modern digital economy, reinforcing the intent to introduce a new form of secure, electronic government-issued ID to allow access to government services while protecting data privacy.