Last Thursday’s quarterly fiscal update from the Ontario Ministry of Finance confirmed that the province will receive an extra $1.9 billion in federal cash transfers this year.
The money, a one-time injection for health care and COVID-19 vaccination costs, did not exist when the Ontario budget was tabled in March, as the federal budget came after. Combined with close to $1 billion in higher revenues from an expanding economy, Ontario expects to bring in an extra $2.9 billion this year above its budget estimates.
So how will the province make use of this found money? Short answer: mostly, it’ll do nothing.
Of the $2.9 billion, about $700 million will go to pay for various tax breaks and other aid to business. The lion’s share, though—$2.2 billion—will be set aside as a “Time-Limited COVID-19 Fund.” The finance minister said he is ready to spend that money if needed but that he currently has no plans to spend it.
This approach merits a rethink.
When the pandemic began, Queen’s Park vowed to do “whatever it takes” to protect the health and jobs of Ontarians. Before long, though, it became clear that Queen’s Park was frequently spending less than needed and later than needed in key areas. Long-term care wasn’t getting funding to boost staffing. Most of the money to help schools grapple with the virus was coming from either the federal government or the school boards themselves. Financial help for the economy mostly came from Ottawa until 10 months into the pandemic, when the province set up the Ontario Small Business Support Grant. And so on.
The finance minister said he is ready to spend that money if needed but that he currently has no plans to spend it.
Seventeen months into the pandemic, the list of urgent issues Ontario is facing—COVID-related and not—is very, very long. For example, we could rescind Bill 124, the legislation that guarantees that wages for our (mostly female) frontline public sector heroes don’t keep up with inflation. We could be fixing our schools, installing air conditioning in all residents’ rooms in long-term care facilities, or repairing municipal infrastructure, all while providing jobs to some of our 40,000 unemployed construction workers. We could boost income supports for Ontarians going hungry on social assistance. We could do something meaningful about housing, post-secondary education and the climate crisis.
Things are bad enough right now. We can’t sit idly by and wait for them to get worse.
It’s not as if the government is failing to meet its own fiscal targets. Quite the contrary: in the first year of the pandemic, the province had spent $10.3 billion less than planned, according to the Financial Accountability Office (FAO). The 2020-21 budget deficit, pegged at $38.5 billion by the government, will actually come in at $29.3 billion, the FAO estimates. For 2021-22, the provincial deficit is already shrinking faster than predicted.
As I’ve written elsewhere, the current government is not one to raise revenues to boost spending on public services. That being said, a $2.9 billion windfall is an opportunity to tackle some of our most pressing challenges.
It’s an opportunity we can’t afford to throw away.