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Sask. budget: Record $2.6B deficit projected, no balanced budget until 2026-27
The Saskatchewan government's 2021-22 budget forecasts a record deficit of $2.6 billion and projects that the province won't see a balanced budget until 2026-27. The budget forecasts $14.5 billion in revenues, up 6.1 per cent from 2020-21, and $17.1 billion in expenditures, up 6.3 per cent from 2020-21. The debt is forecasted to reach $27.8 billion by next March, an increase of $4.2 billion.
During the provincial election campaign last fall, the Saskatchewan Party made $849 million in spending promises, with an additional $7.5 billion planned for capital projects over the next two years. A host of platform promises and projects previously announced are included in the 2021-22 budget.
Small business tax rate reduction (previously announced)
The temporary small business tax rate reduction which was announced in Fall 2020 is aimed to help Saskatchewan small businesses. The rate was reduced from 2.0 per cent to zero effective October 1, 2020 and will provide $96 million in tax savings to Saskatchewan small businesses in 2021-22. The rate will increase to 1.0 per cent July 1, 2022 and return to 2.0 per cent on July 1, 2023 as Saskatchewan recovers from the pandemic.
Health
Health expenditures for 2021-22 are set at $6.54 billion. This is an increase of $359 million, or 5.8 per cent, from the previous year. The government said $90 million of the increase is directed toward COVID-19 response, including the mass vaccination rollout, personal protective equipment, lab capacity and physician costs. The Saskatchewan Health Authority's budget will increase by $221 million, or six per cent. The province also allocated $6 million for the hiring of 100 continuing care aides to help long-term care residents.
Education
The government will spend $3.75 billion on education, which includes pre-K to 12, post-secondary and career training. This portion of the budget has increased by $391 million, or 11.6 per cent. The province's 27 Pre-K to 12 school divisions will see $1.96 billion in funding for next year, an increase of $19.2 million. That increase includes a two per cent salary increase for teachers that was part of the recent collective agreement. Education spending includes money to create 176 new licensed home-based child-care spaces and 51 new licensed centre spaces.
Social Services
Social services spending is increasing by 4.5 per cent to $1.56 billion in 2021-22.
Pandemic spending
The province said it has committed to $1.5 billion in pandemic spending for 2021-22. This includes the $90-million health sector response, $20.7 million for Saskatchewan schools and $6.8 million for the Northern isolation program.
The government also lists several economic supports as "COVID-19 supports":
- $488 million in capital spending.
- $285 million for SGI rebate.
- $200 million to clean up inactive oil wells.
- $174 million SaskPower rebate.
- $66 million home renovation tax credit.
Opposition Reaction
The Opposition NDP said the budget does not address immediate needs in education, child care and long-term care. “There is no jobs plan in this budget,” said NDP finance critic Trent Wotherspoon. NDP Leader Ryan Meili said the government's financial plan includes "half measures" and does not do enough to support those affected by the pandemic.
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Ontario Premier “We’re going to have further restrictions”
On Tuesday, Ford announced Phase 2 of Ontario's vaccine rollout. He also teased an announcement coming on Wednesday for stricter public health measures, likely focused on high-transmission areas — though he didn't get into specifics, such as whether Ontarians can expect another stay-at-home order.
Ford said his government made a "massive move" last week to institute a four-week, provincewide shutdown, which doesn't include a stay-at-home order and allows non-essential stores to remain open with capacity limits. Ford said he hates to shut down businesses, "but we're going to have further restrictions moving forward, very, very quickly."
What the government refers to as a shutdown also doesn't include some items health experts have been calling for, for months such as a stay-at-home order and a provincial paid sick leave program for essential workers. Local medical officers in Toronto, Peel Region and Ottawa, as well as the Ontario Medical Association, are among those calling for a new stay-at-home order. Sources told Star columnist Bruce Arthur that the government rejected advice from its public health measures table for a stay-at-home order as well.
Chief Medical Officer of Health Dr. David Williams said he is getting recommendations from the public health measures table soon, which he will take to the health minister and discuss potential "further restrictions."
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Toronto mayor calls for paid sick days
Toronto Mayor John Tory is calling on the federal and provincial governments to work together to improve the paid sick day program to help workers stay home and isolate. "The time has certainly come now when we're in the third wave," he said on Monday. "When people have paid sick days, 94 per cent comply with public health guidance", he said. "When they don't, just over half do... It's not their fault."
Tory said people shouldn't be afraid to get tested, to get vaccinated, or to stay home when they're sick for fear of missing a paycheque.
The mayor's statement was echoed by de Villa, who said paid sick leave is an integral component of the pandemic response. "We need both the protection for workers for paid sick leave...and of course, we need vaccine," she said.
The Ontario government has said it will not duplicate the paid sick leave program run by the federal government.
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Ontario consults on extending WSIB coverage to all PSWs
The provincial government is asking the public whether Ontario residential care workers should have mandatory Workplace Safety and Insurance Board (WSIB) coverage. Currently, all public and private long-term care facilities cover their workers under WSIB — which provides financial support to workers hurt on the job — but retirement homes and group homes don't necessarily cover their employees.
An external review of the WSIB, released last November, recommended the government extend mandatory coverage to all developmental support workers and residential care employees.
"Workers can be doing the same work in a workplace that is subject to mandatory coverage and in another workplace that is not, sometimes on the same day," the proposal reads. Before the COVID-19 pandemic, many PSWs worked multiple part-time jobs at different homes to make ends meet.
"The report notes that this anomaly in WSIB coverage justifies immediate action to level the playing field for workers in these industries." The proposal notes that there is "heightened immediacy" to the recommendation given the pandemic.
Unions that represent residential care workers, like CUPE Ontario and SEIU Healthcare, said they're in favour of the proposal.
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Lockdowns didn’t stop national growth in January
According to the Conference Board of Canada “Amid stricter lockdowns in Ontario and Quebec, Canada’s real GDP managed to post growth of 0.7 per cent in January. With a preliminary estimate of 0.5 per cent growth for February, this suggests that first quarter growth will be stronger than expected in our most recent national forecast. Notable month-over-month gains were made in both the wholesale trade and resource extraction industries. Overall, the country’s economic recovery forged ahead, though output remained at 97.4 per cent of its pre-pandemic level.”
Read the full report here.
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StatsCan: Retail Services Price Index, fourth quarter 2020
The Retail Services Price Index (RSPI) rose 1.5% in the fourth quarter, following a 0.6% increase in the previous quarter. Margins were up in 6 of the 10 major retail subsectors surveyed.
Margins at health and personal care stores increased for the second consecutive quarter, up 4.5% in the fourth quarter because of higher retail prices.
Margins at general merchandise stores rose 4.8%, reversing the margin losses recorded in the previous quarter.
The margins of gasoline stations increased by 4.1%, as the decline in vendor prices outpaced that of retail prices.
The growth of the RSPI was largely moderated by lower margins at building material and garden equipment and supplies dealers (-3.0%).
Year-over-year highlights
The RSPI increased by 4.2% in the fourth quarter, compared with the same quarter in 2019. Of the 10 major retail subsectors surveyed, 8 were up and 2 were down.
Gasoline stations (+19.3%) contributed the most to the gain, recording the largest year-over-year increase since the introduction of the index. The margin rose as the decline in vendor prices outpaced that of retail prices. The tightening of public health restrictions in response to the resurgence of the COVID-19 pandemic continued to weigh on low global demand for gasoline.
Food and beverage stores (+3.1%) and health and personal care stores (+5.6%) also reported year-over-year margin gains.
Lower margins at building material and garden equipment and supplies dealers (-0.4%) moderated the year-over-year increase of the RSPI.
The Retail Services Price Index (RSPI) represents the change in the price of retail services. The price of retail service is defined as the margin price, which is the difference between the average purchase price and the average selling price of the retail product being priced. The RSPI is not a retail selling price index.
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US News: Biden Infrastructure Plan Contains Anti-Franchise PRO Act & Tax Increases for Small Businesses
Last week, President Biden unveiled a $2 trillion infrastructure plan, the American Jobs Plan (AJP), which includes tax increases for small businesses and corporations in an effort to fund the multitrillion-dollar plan.
While no details of the bill have been released, its public roll-out highlighted a number of items of direct interest to IFA members and the business community, including a harmful provision specific to franchising: the passage of the Protecting the Right to Organize or PRO Act, which would codify the expanded joint employer standard and California's damaging ABC test for worker classification, essentially undoing franchising as a viable business model. To learn more about the bill's harm to franchises, click here.
The following provisions are also included in the plan:
- Raising the corporate tax rate to 28% from 21%
- Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships
- Raising the income tax rate on individuals earning more than $400,000
- Expanding the estate tax’s reach
- Home care sector reform that includes collective bargaining policies.
The IFA will likely engage and relay their concerns with some of these provisions. While President Biden had already expressed support for the PRO Act, the inclusion of the PRO Act in the infrastructure plan is surprising, which comes on the heels of the enactment of last month’s $1.9 trillion COVID-recovery legislation, the American Rescue Plan.
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Business Recovery Summits On-Demand Videos Now Available for Purchase!
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Session recordings from the Business Recovery Summit Series are now available for purchase! Choose from the Franchisee Recovery Summit, Franchise Recruitment Summit, Operations & Franchisee Support Summit, and Franchise Marketing Summit! View On-Demand Library
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OUR WEBINARS ARE AVAILABLE ON-DEMAND
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COVID-19's impact on the world is creating waves across all sectors and industries.
Every member of the CFA community is dealing with an issue that is affecting the world, our industries, our communities, our businesses, and our people.
We would like to hear from you if you have any topics, issues or questions to navigate turbulent times in order to support you further:
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Subscribe to the COVID Update
If you would like to subscribe all your franchisees to receive our COVID Update, please contact Alex Mann at amann@cfa.ca.
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