Ontario Fall Economic Statement 2021
By Temple Scott Associates
Today, Ontario Finance Minister Peter Bethlenfalvy tabled the Government’s annual Fall Economic Statement (FES).
Measures like the minimum wage increase, a commitment to building new highways north of Toronto, and that no new taxes are being introduced, can be seen as popular with important segments of the Conservative voter pool – especially within the vote-rich 905 region – and the June 2022 election draws closer.
The plan lays out how the Government will build the foundation for Ontario’s recovery and prosperity by getting shovels in the ground on critical infrastructure, including road openings for the Ring of Fire, attracting increased investments, and restoring leadership in auto manufacturing and other industries. The plan also protects Ontario’s progress against the COVID‑19 pandemic while significantly reducing the annual projected deficits.
This theme will dominate messaging and can be expected to also be present in the Spring 2022 Ontario Budget which will serve as the Ford Government’s de facto campaign platform. As the June 2 election nears, the Opposition Parties will be looking for holes in the Conservatives’ chosen direction and will continue to contrast the Conservative approach with their own – especially in relation to pandemic management and the Government’s approach to the environment and climate change.
The 2021 FES is based on three themes:
- Protecting progress.
- Building Ontario.
- Working for workers.
This is the Government’s seventh update since the beginning of the pandemic. In March 2020, $17 billion was made available in the Government’s Action Plan; today’s economic statement brings that figure to $51 billion.
Fiscal and Economic Overview
Real GDP is projected to rise 4.3% in 2021, 4.5% in 2022, 2.6% in 2023 and 2.0% in 2024. The Minister stressed that these are conservative estimates and slightly below private sector forecasts.
Meanwhile, the Government boasts that employment recovery has exceeded that of Canada as a whole and the US. The Ontario economy has seen an increase in net jobs of 1.1 million since 2020 or a 0.1% increase above the pre-pandemic level of February 2020. Job growth is projected at over 300,000 net new jobs in 2021 and more than 500,000 by 2024.
The Government is predicting a deficit of $21.5 billion in 2021-22, which is $11.6 billion below the projected deficit in the March 2021 budget. Subsequent years will also see lower than projected deficits of $19.6 billion in 2022-23 and $12.9 billion in 2023-24.
Economic Statement Highlights
Priority 1: Protecting Progress
As the pandemic appears to be coming under control, largely through vaccinations, the Government will continue to support the vaccine rollout with a total commitment of $1 billion. As of October 18, 83% of Ontarians are fully vaccinated.
The FES notes 40% of the budget will be spent on healthcare and that Ontario strongly supports the provincial ask of the Federal Government to increase health transfers, warning that the healthcare system in Ontario and across the country will be severely impacted. Ontario has joined all provinces in a call on the Trudeau Government to increase health transfers to cover 35% of costs, with annual escalator of at least 5%.
Otherwise, the Ford Government is pledging $550 million for home and community care for surgical patients and patients with complex needs. This means that the total to date invested in pandemic health care since March 2020 is $5.1 billion. Also, in 2021-22 the Government is adding $1.8 billion to cover the cost of 3100 additional hospital beds.
Finally, the Government has added over 13,000 new and upscaled health sector workers.
The Government is investing in long-term care (LTC) by doubling the number of LTC inspectors. Also, they will be spending $3.7 billion beginning in 2024-25 to create an additional 10,000 new beds, and upgrading 12,000 existing beds. There is also $35 million for a seniors’ home safety tax credit ($1,100 average and maximum of $2,500 to 32,000 seniors). Finally, the FES pledges $17 million for dental services for eligible seniors.
The Government will spend $12.4 million over two years to ensure health workers have continued access to existing and expanded mental health supports. There is also $27.9 million to increase mental health support for universities and colleges and $8.1 million to address child and youth eating disorder services.
The Government is pledging $1.6 billion in resources for the school year, including proper pandemic protection and equipment.
The Government will double its investment in identification, investigation, protection and commemoration of Residential School burial sites in Ontario, with $10 million in additional funding.
Priority 2 – Building Ontario
The Ford Government will continue to make significant investments in transit and transportation systems, including:
- Construction of Highway 413 and the Bradford bypass.
- $474 million over five years for large bridge rehabilitation.
- $345 million this year to support municipal public transit systems.
- $28.5 billion for Toronto Transit subway expansion, including the Ontario line, Scarborough subway, Eglinton cross-town and Yonge Street North subway expansion.
Also, the Government is proposing amendments to the Ontario Far North Act with a $1 billion pledge to support planning and a road network in the Ring of Fire and is calling on the Federal Government to match the contribution.
Meanwhile, the government is investing $30.2 billion over ten years to increase capacity in hospitals.
The Government will also double infrastructure investment directed towards small rural and northern communities, establish a taskforce on further actions to make housing more affordable, and expand and grow high speed internet to increase accessibility to all regions of Ontario by the end of 2025.
Priority 3 – Working for Workers
The FES says the Government will support workers by:
- Increasing the minimum wage to $15/hour, including for liquor servers, effective January 2022. Subsequently, the wage will be adjusted annually for inflation beginning in October 2022.
- Extend the Ontario Jobs Training tax credit to 2022.
- Provide $90.3 million for skilled trades.
- Invest $5 million to expand the second career program.
- Spend $5 million over two years for targeted supports to racialized and Indigenous entrepreneurs.
In addition, the Government will continue to move forward with a new small business digitization action plan, including digital sales and promoting business through online platforms.
The Government will also spend $40 million for a new advanced manufacturing and innovation competitive stream under the Regional Competitive Fund.
Finally, the Government will support the Aboriginal Loan Guarantee Program with a total investment of $1 billion to support indigenous investments.
What This Means to You
This Fall Economic Statement is focused on expanded investments to healthcare and infrastructure. It is a clear signal of the Government’s commitment to economic growth with a focus on Conservative priorities.
As the June 2022 general election nears, expect to see more boutique-styled announcements that are designed to capture the attention of specific voter blocks. There will be a flurry of activity as stakeholders and interest groups attempt to influence policy platforms.
Interestingly, the Government as it stands now has taken a turn from its original focus upon taking office in 2018 of restoring Ontario finances. It is now much more focused on workers and rebuilding Ontario’s battered economy through strategic investments.
The Finance Minister committed to the next full budget being delivered before March 31, 2022.
Click here to read the Ontario Chamber of Commerce Analysis