The Top Line
Governments commonly use their final budget before an election to position themselves for re-election, and today’s Ontario budget was no exception. In fact, Ontario Budget 2022 will most definitely become the election platform for the Progressive Conservative Party.
Finance Minister Peter Bethlenfalvy tabled his second full budget since becoming Ontario’s Finance Minister in December 2020. The budget was immediately followed by the adjournment of the current session of the Legislature, effectively kicking off the 2022 provincial general election. This budget was introduced but will not be debated or passed in the legislature before the election.
Since the most recent Fall Economic Statement in 2021, the Ford government has focused on health care and the economic recovery as its major priorities. This budget continues that trend, building on the implementation of the provincial vaccine program allowing for specific economic enhancements while eliminating pandemic-specific hand-outs.
As expected, the budget contains no new taxes or spending cuts. Rather the emphasis is on services and projects designed to get Ontarians working again and re-establishing the economic engine of the country.
This budget was designed to capture the attention of Ontarians who need a reason to support the government. From new transit to highways, the budget spoke to a specific bracket of the province while ignoring potentially controversial sectors such as the ongoing climate change debate.
Economic Snapshot
The Ontario PC Government is very much aware that with record spending in the fight against COVID-19, their brand is reliant on being responsible fiscal stewards. The 2022 Budget outlines a plan to eliminate Ontario’s deficit two years earlier than projected last fall, returning the province to a surplus position by 2027–28. Net debt is set to rise to $395 billion this year, up from $324 billion five years ago.
The 2021–22 deficit is projected to be $13.5 billion — $19.6 billion lower than the outlook published in the 2021 Budget. The net debt-to-GDP ratio is projected to be 40.7% 2021–22, 8.1% lower than the 48.8% forecast presented in the 2021 Budget. Over the medium-term outlook, Ontario’s net debt-to-GDP is now forecast to be 41.4% in 2022–23 and 2023–24, and declining to 41.3% in 2024–25.
Ontario’s real gross domestic product (GDP) increased 4.3% in 2021, and employment rose by 344,800 net jobs in 2021 or 4.9% – the strongest annual pace of job growth on record. After declining by 355,300 in 2020, due to the impact of the COVID-19 pandemic, employment in Ontario rose by 344,800 in 2021.
Interest rate hikes cost the province $7 million in interest payments per basis point, per year, meaning a 0.50% hike costs the province $350 million in added interest costs. Under a faster than projected growth scenario, the province could be in a positive position by 2024-25 with a $2.4 billion surplus.
Budget Highlights
To clearly articulate their plan, the government broke down the budget into five distinct themes. Each theme was aimed at the government’s priorities as highlighted by earlier announcements and focused on their most urgent priorities for Ontarians. Given the timing of the release of the budget, on the eve of a provincial election, there were new projects and promises mentioned, clearly establishing government priorities with a re-elected Ford government.
The five themes in the budget are:
Rebuilding Ontario’s Economy: Following a 2-year economic focus dealing with the Covid-19 pandemic, the government is now turning its sights on continued economic recovery and growth. New programs and incentives have been announced and will be introduced if and when the budget passes. These include:
- Close to $1 billion committed for critical legacy infrastructure including expansion and access to the northern Ring of Fire and harvest Ontario’s critical mineral opportunities.
- Over $12 billion in new investment for new vehicle production mandates and battery manufacturing over the past 18 months.
- An estimated $8.9 billion in cost savings and support for Ontario employers, including small businesses.
- Working to bring jobs and provincial agencies to communities across Ontario to help spur economic growth. This includes a recent announcement of relocating WSIB headquarters to London.
- Investing nearly $107 million over 3 years to help Ontario compete in a global race to develop critical technologies and establishing Ontario as a hub for electric vehicles.
Working for Workers: The Government is introducing plans to get Ontario working and to create and support more and better jobs. These incentives include:
- A 50 cent increase in the minimum wage to $15.50 per hour starting October 1, 2022.
- $1 billion annually towards employment and training programs to help people retain and upgrade their skills.
- Additional $114.4 million over three years for the Skilled Trade Strategy.
- Adjustment to college programs with a new, three-year applied degree and four-year degree programs.
- Providing $268.5 million over three years in additional funding through Employment Ontario to strengthen the government’s skills training and employment programs, including pandemic recovery initiatives.
- Attracting new workers to Ontario with a plan that includes an additional $15.1 million over three years in the Ontario Immigrant Nominee Program (OINP), which nominates applicants for permanent residence who have the skills and experience that match Ontario’s labour market needs.
Building Highways and Key Infrastructure: The Government has announced aggressive plans to expand the transportation network to get Ontario moving and ease gridlock, especially in southern Ontario. Included in this plan is:
- $158.8 billion capital plan over 10 years, including $20 billion in 2022–23.
- $25.1 billion in capital over 10 years to support planning, building and improving highways, including Highway 413 and the Bradford Bypass.
- Expansion of Highway 7 and Highway 401 east of Oshawa to Brockville.
- $61.6 billion in capital over 10 years for public transit, including expanding GO rail services to London and Bowmanville.
Keeping Costs Down: The government is moving to increase housing supply, making it less expensive to drive or take transit, provide relief on child care and taxes:
- A long-term housing plan to address the housing crisis by speeding up approvals to get more shovels in the ground faster, prioritizing Ontario homebuyers over foreign speculators, cracking down on unethical developers, and committing to introduce a housing supply action plan every year for the next four years.
- Making it cheaper to drive by eliminating and refunding license plate renewal fees for passenger vehicles, light-duty trucks, motorcycles and mopeds, cutting the gas tax by 5.7 cents per litre for six months beginning July 1, 2022, and removing tolls on Highway 418 and 412.
- Providing an additional $300 in Personal Income Tax (PIT) relief, on average, to about 1.1 million taxpayers by enhancing the Low-income Individuals and Families Tax Credit.
- Lowering child care fees for parents and securing a fair deal with the federal government to achieve an average of $10-a-day child care by September 2025.
A Plan to Stay Open: Ontario has fared better than many jurisdictions during the COVID-19 pandemic with more than 32 million vaccine doses administered and more than 90% of people aged 12 and over fully vaccinated. The government sees this as the basis to staying open:
- Launching the new Learn and Stay Grant for up to 2,500 eligible postsecondary students who enroll in priority programs and stay to work in underserved communities in the region where they studied.
- $764 million investment over 2 years to provide Ontario’s nurses with a retention incentive of up to $5,000 per person.
- Investing $230 million in 2022–23 to enhance health care capacity.
- Investing $42.5 million over two years beginning in 2023–24 to support the expansion of 160 undergraduate and 295 post-graduate positions.
- New medical schools in Brampton and Scarborough.
- $77 million for the Ontario Together Fund to leverage almost $230 million in investments to support manufacturing of Ontario-made personal protective equipment (PPE).
- $15 million over three years in a new Life Sciences Innovation Program
- Building and improving hospitals by investing more than $40 billion over the next 10 years that will add 3,000 new beds.
- Making $1 billion investment over the next 3 years in home car, and
- Proposing a new, refundable Ontario Seniors Care at Home Tax Credit to help seniors aged 70 and older with eligible home care medical expenses.
Opposition Reaction
Reaction to Budget 2022 by the Opposition was typical and expected:
“There’s no plan to make life more affordable in this budget, and Ford is signaling that he plans to cut deeper, pushing health care and education past the breaking point.”
Andrea Horwath, Leader of the Official Opposition (NDP)
“The lack of ambition for Ontario is breathtaking from the Ford Conservatives. Not a single new idea to improve our schools, or provide better care for our seniors.”
Steve Del Duca, Leader of the Ontario Liberal Party
What’s Next?
Budget 2022 maintains the Government’s focus on the key government announcements made in recent weeks to kickstart the economy and include a variety of health care and long-term care initiatives. For the first time in 2 years, the Finance Minister’s focus is not only on the pandemic, but returns to the issues promoted by the governing party prior to March 2020.
Looking ahead, there is a plan for getting Ontario’s economy moving again while investing in key areas of the economy, including health care, transportation and infrastructure. The budget also addresses the growing concern for housing, expanded infrastructure and internet services especially in rural Ontario.
Budget 2022 will not be passed during this parliamentary session. With the general election set to officially begin on May 4th, the Ontario PC Government delayed the budget to focus the attention on their issues and use the budget as the defacto election platform.
Beginning immediately, there will be no parliamentary processes upcoming for stakeholders to engage on the budget. The apparatus of government will enter “caretaker mode” – where no major decisions will be made, however, senior bureaucrats will guide the day to day operation of the government until the return of the next government in late June 2022. With that, it is important to point out that despite the fact that MPP’s officially are deemed unelected at the call of the election, Ministers will hold their titles over the course of the election until the next Cabinet is sworn in. But don’t expect these ministers to be anywhere near Queen’s Park. All ministers and MPP’s will be in their ridings across the province campaigning.
With the election set for June 2nd, the next Government and cabinet will likely be sworn in by late June. A summer return of the Legislature will be at the call of the Premier as the new government will move to implement its agenda. It is likely that a re-elected Ford PC government will seek an immediate summer sitting to re-introduce and then pass their budget. This is not unprecedented. One month after their respective elections, Premier Ford in 2018 and Premier Wynne in 2014 reconvened parliament. Any other outcome to the election will offer a wide variety of options that will also offer widely different options for stakeholders. A minority government complicates the return of the House as it is unlikely that the Ontario NDP or Ontario Liberals will support the re-introduced budget. The minority government would need to amend their budget to seek the support of one other party. Both parties are on the record as saying they would not support a PC government – this will present a challenge for all three parties. An election upset by either the Ontario Liberals or the NDP would provide yet another set of options that would not include the current budget at all.
While Budget 2022 outlines the PC Party election platform, stakeholders should monitor the general election to see what issues become priorities and how each of the political parties react.
If pollsters are correct, and the voters accept Budget 2022 as the mandate going forward, stakeholders can expect an active summer on the Ontario legislative front. With a July return of the House, a new Throne Speech will be introduced followed by the budget debate. Assuming the passing of both, an adjournment will see a return to the legislative calendar returning the House on September 12, 2022. There are likely to be immediate opportunities to engage with incoming Members of Provincial Parliament, Ministers, political staff and departmental staff.
