Pandemic to lead to largest ever Ontario deficit
The COVID-19 pandemic has led to a record amount of red ink at Queen’s Park.
Ontario Finance Minister Rod Phillips appeared before reporters on Wednesday morning to announce that the province is now projecting a deficit of $38.5 billion in the 2020-2021 fiscal year. That would be a record high deficit for Ontario. According to the government, private-sector forecasts suggest the Ontario economy will shrink by 6.6 per cent this year, leading to a considerable reduction in government revenue.
The economic update is the first to examine the impact on Ontario’s finances from the COVID-19 pandemic.
“Dealing with COVID-19 wasn’t a choice for any of us, but how we responded was,” Phillips said in a statement released Wednesday. “From the very beginning, we chose to do whatever was necessary to protect the people of Ontario from this pandemic and support them as they deal with the unprecedented impact on their lives.”
The Ford government’s projections estimate a $30 billion price tag for its COVID-19 response plan. In March, that estimate was $17 billion. A statement from the province said the cost went up because of increased investments in the health care system, as well as funding for pandemic pay for front line workers, targeted funding for municipalities and their transit systems, as well as financial relief for businesses, farms, and hydro consumers.
“From the outset, our government determined that putting public health first not only would save lives, but was the smartest economic policy,” Phillips said. “The faster and steadier the progress to contain the outbreak, the sooner restrictions can be lifted so customers can return to businesses and employees can get back to work. While we still have a long road to recovery, defeating the virus is essential to getting our economy growing again and to ensure the long-term sustainability of the public’s finances.”
The government said its next fiscal update will come no later than November 15, 2020. It said that update will be in the form of a multi-year provincial budget.