Ontario unveils $17-billion coronavirus plan, foresees zero economic growth in 2020
|National Post 25 Mar 2020 at 16:57|
Ontario Premier Doug Ford’s government unveiled a $17-billion plan Wednesday to protect businesses, households and public services from the financial fallout of the novel coronavirus, which the province predicts will bring economic growth to a screeching halt this year.
The Ontario government’s updated economic forecast, which it said is subject to a “greater-than-usual” level of uncertainty, assumes zero growth in the province in 2020 and two per cent growth in 2021.
Ontario’s deficit for 2020-2021 is now also projected to be $20.5 billion, up from an estimated $9.2 billion a year prior. The widening shortfall comes as the province aims to spend $7 billion in direct funds for healthcare and payments to families, and to defer $10 billion in tax and other payments in response to the crisis.
“There are moments that define a generation,” Ontario Finance Minister Rod Phillips said Wednesday in the provincial legislature, which was emptier than usual because of the need for social distancing during the coronavirus outbreak. “COVID-19 is our moment.”
The latest projections out of Ontario were part of a mini-budget of sorts, as Phillips and Ontario’s Progressive Conservative government were forced to delay tabling a full budget until November amid all the economic uncertainty caused by the coronavirus.
The outlook provided was much gloomier than the one presented in the province’s fall update last year, which forecast a deficit of $6.7 billion in 2020–21, and economic growth of 1.5 per cent.
Those and other previous projections have quickly grown stale because of the recent crisis, which is prompting all levels of government in Canada and around the world to take action to ensure their citizens and economies are not overwhelmed by the virus.
There are moments that define a generation. COVID-19 is our moment
Ontario Finance Minister Rod Phillips
Ontario’s $17-billion action plan is just supposed to be a “first step,” but it will be in addition to the $82-billion aid package the federal government has already outlined, and on top of the closing of non-essential businesses and other restrictions that have been announced.
While the full extent of the damage from the coronavirus remains to be seen, the province’s mini-budget contains a number of added measures to try to ease the pain.
To meet the challenge, Ontario is proposing to make $6 billion in liquidity available to businesses by giving firms a five-month holiday from penalties and interest for missed provincial tax filings and payments. The move matches a similar one made by the federal government.
The Ford government says there will also be $1.9 billion freed up for companies by allowing them to defer payment of Workplace Safety and Insurance Board premiums for up to six months.
Meanwhile, private-sector firms with annual remuneration of less than $5 million will see an exemption to an employer health tax double this year to $1 million of payroll, cutting approximately $355 million in tax. The government has proposed a 10-per-cent refundable corporate income tax credit, too, for certain capital investments in non-Toronto-area regions of the province
Another measure announced Wednesday were one-time payments to parents of $200 per child up to 12 years of age, and $250 for children with special needs. Ontario is also pumping $3.3 billion extra over last year’s budget into its health-care sector, and setting aside a $1-billion COVID-19 emergency fund.
Approximately $5.6 billion has been earmarked to offset electricity costs, which comes as the province is also tweaking time-of-use power costs for consumers, allowing them to be charged at the lowest level. Students are to receive six months of provincial loan and interest accrual relief as well.
Ontario’s fiscal and economic update on Wednesday acknowledged the province is likely to take a significant economic hit from the coronavirus, although the full extent remains to be seen. The latest outlook now anticipates the provincial unemployment rate rising to 6.6 per cent this year, up from 5.6 per cent in 2019 and an earlier projection of 5.5 per cent for this year.
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