Deficit balloons as Ford government unveils record pandemic budget

The Ford government is projecting a $38.5 billion deficit after unveiling its largest spending budget in the province’s history.

The government will be spending a record $187 billion on programs as it grapples with the economic ripples of the COVID-19 pandemic.

The deficit is projected to hit $38.5 billion this year, $18 billion higher than what was projected in March.

Finance Minister Rod Phillips says a path to balance will be presented in the 2021 budget, when the projected deficit is pegged at $33.1 billion.

The Progressive Conservative government says it is spending $2.5 billion more on hospitals this fiscal year, including $572 million announced today aimed specifically at offsetting COVID-19 expenses.

The budget also includes a tax credit aimed at helping seniors stay at home longer, which will reimburse them for 25 per cent on eligible renovations of up to $10,000, regardless of their income and whether they owe taxes for 2021.

The document does not, however, provide costing for the new standard for long-term care announced earlier this week, which would see nursing home residents receive an average of four hours of direct care every day.

There is more money for parents as the province is extending a program that provides $200 per child and $250 per child with special needs for those who need assistance in remote learning.

The government is promising significant electricity bill relief for businesses, calling Ontario’s rates “job-killing” and proposing new rebates. Starting Jan.1, 2021, the change will see industrial businesses save 14 per cent and commercial businesses save 16 per cent on their average bill. The province estimates the program will cost $1.3 billion next year with costs gradually declining until 2040.

In tabling the spending plan in the legislature, Finance Minister Rod Phillips said the budget aims to “provide as much certainty as possible in an uncertain time.”

“There is still great uncertainty in the global economy, and this means the same thing for the Ontario budget as it does for the family and business budgets,” Phillips said.

“This means there is a greater degree of risk underlying our projections than normal.”

Some other points in the budget, it will allow restaurants to permanently sell alcohol with takeout while freezing tax increases on beer and wine until 2022. The government had previously frozen the scheduled tax increase for the current fiscal year. The move will cost the province $4 million in 2020-2021, and $40 million over the next two fiscal years.

It’s also predicting revenue from cannabis sales in stores will more than double next year to $170 million and is giving a 20 percent credit to encourage people to spend money in Ontario.

The government is also spending $12 million to test sewage for COVID-19 and overall it will spend $45 billion in the next three years on pandemic spending.

Phillips acknowledged in the legislature that some may question the government’s pandemic response.

“We respect those who, from outside of the government, in good faith, call for different decisions and different approaches,” he said.

“But please understand the difference. When critics get it wrong, the consequences are minor. When the government gets it wrong, people’s lives are at stake. And every decision we make is made with the heavy knowledge that lives are on the line.”

The government put off delivering a full fiscal plan earlier this year, citing the economic uncertainty caused by the global health crisis.

The fiscal update it gave in March instead initially included $17 billion in COVID-19 relief, though that projection was updated to $30 billion by the end of 2020-21.

The province also originally predicted a deficit of $20.5 billion, which was later raised because of the added spending.

Watch: Cynthia Mulligan goes one-on-one with finance minister as Ontario’s deficit balloons