Ontario tables new budget with large deficit spending and tax cuts

The Ontario government under Premier Doug Ford has unveiled a new budget which is projected to accumulate nearly $100 billion in debt over the next three years, CTV News reports.

According to Premier Ford, the deficit is necessary to tackle the fallout of the ongoing coronavirus pandemic. It does, however, put an end to the Ford government's promise to reduce the deficit inherited from his predecessor as the province's debt reaches record levels.

The plan includes high levels of spending in the healthcare sector including $570 million for hospitals and $12 million for wastewater coronavirus detection. The plan did not, however, impress Ontario Liberal Party Leader Stephen Del Duca, calling it "a betrayal of seniors who will die in nursing homes today."

Another element of the budget is widespread tax cuts and credits. Under the plan, seniors will receive a tax credit for renovating their homes, and businesses will receive a cut to the business education tax as well as greater tax credits for payroll tax payments. Hydro rates will also be cut for "major users."

The government received criticism for focusing tax cuts on businesses rather than individuals. According to the Ford government, however, tax cuts and credits for businesses are necessary to prevent them from leaving for the United States, where pandemic-related restrictions are generally less severe.

The tourism industry will also receive a boost from the budget, with the government setting aside $125 million in financial assistance to the struggling industry. The government also offered to subsidize 20% of the cost for Ontarians seeking to vacation within the province, although the budget did not specify which specific expenses would be subsidized.

The budget includes $2.8 billion in reserve spending for the remaining fiscal year, with Finance Minister Rod Phillips saying "we are still five months left in this year – it’s important we have those dollars available so that we can adjust – we’re in the middle of a second wave.”

NDP Opposition Leader Andrea Horwath criticized the budget as a "white flag" to the pandemic, citing the reserve spending included within. “I guess he thinks COVID-19 is over because this is a budget that sits on a lot of money,” Horwath said.

Horwath also criticized the lack of focus on education within the new budget, saying that Ford is “leaving 30 kids packed into classrooms."

While the government projects a GDP decline of 6.5% in 2020, the Ford government believes that the economy will come roaring back with a 4.9% increase in GDP in 2021 and a 3.5% increase in 2022. If the GDP recovered more quickly than projected, however, it is likely that the total debt accumulated would be smaller, possibly as low as $87.5 billion over three years.

If GDP growth is slower than expected, however, the government projects the new debt could be as much as $107.5 billion.

The Ontario budget was originally set to be revealed in March but was delayed due to the ongoing coronavirus pandemic.