Mini-budget 2020: $17B COVID-19 relief package sinks deficit to $20.5B

By Sabrina Nanji and and Allison Smith March 25, 2020

The Ford government is putting up a $17-billion COVID-19 relief package that adds $11.3 billion to the annual deficit — more than tripling next year’s projection and complicating the plan to balance the books by 2023. 

Calling it a “first step,” Finance Minister Rod Phillips tabled the one-year fiscal outlook Wednesday in lieu of a budget, which is now expected this fall, by November 15. 

“COVID-19 is an extraordinary threat to the health and economy of Ontario — the greatest we’ve faced in my lifetime. And it demands an extraordinary response from all levels of government and civil society because we’re all in this together,” Phillips said in prepared remarks to the socially distant legislature. 

Billed as Ontario’s Action Plan: Responding to COVID-19, the 62-page mini-budget forecasts a $20.5-billion deficit for fiscal 2020-21 — more than three times the $6.7 billion that was predicted in the 2019 Fall Economic Statement. (The current fiscal year’s deficit is estimated at $9.2 billion.) 

The pandemic is expected to punch a $5.8-billion hole in provincial revenue projections. 

Overall, the province will spend a record $174.3 billion on programs and rake in $156.3 billion in revenue in the coming year — $400 million less than the previous year. (In a normal period of economic growth, government revenues increase.) 

A $2.5-billion reserve fund — the biggest in provincial history — is counted toward the bottom line. 

Here’s how the $17-billion moneypot breaks down. 

$3.3-billion booster shot for health care 
The PCs are injecting an additional $3.3 billion into the health-care system, including a $1-billion contingency fund dedicated to pandemic defences. 

A big chunk of health-care cash, $935 million, will flow to hospitals, in order to address capacity issues and boost the number of ICU beds and COVID-19 assessment centres.  

Other measures include $243 million to provide emergency capacity for the long-term care sector to help contain potential virus outbreaks. 

The province will also spend $75 million to procure more personal protective equipment for frontline health-care workers. Liberal Leader Steven Del Duca said that should be doubled. The Registered Nurses’ Association of Ontario has been ringing the alarm bells about possible shortages, but Ford announced Wednesday that Ontario ordered five-million N95 masks that are now on the way. 

An extra $62 million will be spent to hire more doctors, nurses and personal support workers. 

Another $160 million will go toward public health and $80 million to paramedic and ambulance services. 

No new direct payouts for laid-off workers, but boosts for social services, seniors and parents
While NDP Leader Andrea Horwath has called on the province to provide $2,000 emergency cheques to Ontarians who have lost income because of the COVID-19 crisis, the PCs are thus far avoiding that approach. 

British Columbia has announced direct $1,000 payments to workers that have been laid off, sick or in quarantine, as well as $500 monthly rental supplements. Quebec and Alberta are giving $1,146 to anyone forced to self-isolate for 14 days. 

Instead of following suit, Ontario will direct $100 million to Employment Ontario, which has recently taken up a pilot program involving for-profit firms, for skills retraining programs for workers who have lost their jobs. 

“This will not help anyone sleep better tonight,” Horwath said in the house. 

The province is also spending $75 million for low-income seniors, doubling the current monthly funding for guaranteed income support recipients for six months. 

The only direct payouts will go to families dealing with public and private school and daycare closures. They will receive one-time payments of $200 per child under 12-years-old, and $250 per child with special needs. The move will cost provincial coffers almost $340 million, according to officials at the tech briefing. 

Municipalities empowered to delay property taxes 
The PCs are deferring municipalities’ next education property tax remittance by 90 days. 

Rather than make payments to school boards on the June 30 deadline, municipalities will be able to provide up to $1.8 billion in property tax deferrals to local businesses and residents. 

The province says it will “adjust payouts to school boards to offset the deferral.” 

$7.9 billion in tax deferrals for businesses
The vast majority of the Tories’ aid package is directed at businesses so they can improve their cash flows and stay afloat during the coronavirus crisis. 

The government is giving businesses a six-month interest-free grace period for paying off the majority of their provincial taxes. According to the mini-budget, that will provide businesses with $6 billion in liquidity so they don’t have to take out loans. 

WSIB payments can also be delayed for six months, which will provide another $1.9 billion in financial relief. 

The province is also temporarily increasing the employer health tax exemption so 30,000 more small and medium-sized businesses qualify for a reduced rate. That’s expected to save employers with payrolls between $490,000 and $1 million around $9,945 this year at a cost of $355 million to the provincial purse. 

Horwath said these measures “will not stop businesses on the edge from falling off the cliff.” 

Bits & bobs

  • OLG revenue is expected to drop majorly, from $2.3 billion last year to $809 million this year, mainly due to the fact that casinos have been shuttered amid COVID-19 and weaker-than-expected economic conditions.

  • Ontario’s GDP growth for 2020 is now pegged at 0.0 per cent this year. (It had been projected to grow by 1.3 per cent.) 

    • Phillips said it’s a built-in cushion for fast-moving times.

    • The debt-to-GDP ratio will hit 41.7 per cent. Net debt is projected to grow to $379 billion.

  • The provincial unemployment rate is projected to grow to 6.6 per cent this year, from 5.6 per cent last year, and hold at that level in 2021-22.