For an alternative view, read the response from former Liberal policy chief Karim Bardeesy.
As expected, the 2021 Ontario Budget attempts to straddle the line between pandemic management and pandemic recovery. Investments in contact tracing, vaccination rollouts and hospitals help ensure the health-care system can continue to handle the stresses of the COVID-19 pandemic yet to come. That health spending lays the groundwork for a concerted recovery effort in which the government has clearly chosen to put the province’s economic recovery ahead of a quick return to balanced budgets.
The recovery plan is two-fold. First, it must minimize the economic barriers created by COVID-19. For example, the pandemic underscored the importance of childcare to the economy and brought new attention to its rising costs; those costs are addressed through enhancing the CARE tax credit and direct financial transfers to parents.
Next, it must adapt to the realities of economic competition in a post-pandemic world. The new Ontario Jobs Training Tax Credit is exactly the type of policy that helps to embrace that change, helping those laid off or struggling to pursue more resilient careers with higher earnings potential. The largest ever provincial commitment to broadband expansion is another of these recovery-focused policies.
The “plan to have a plan” may be the correct approach as government, rightfully, has been completely preoccupied with the day-to-day impacts of the pandemic, but that still leaves many critical questions unanswered.
Tackling the immediate challenges posed in the economic recovery, as seen through measures like these, is where this budget is the strongest. However, it is on the long-term recovery front where the budget falters. In announcing its intent for a new growth plan that will lay out a five-year vision, the government is signalling its intention to think long-term, but not much more at this point. The “plan to have a plan” may be the correct approach as government, rightfully, has been completely preoccupied with the day-to-day impacts of the pandemic, but that still leaves many critical questions unanswered.
One notable question is what this five-year vision will mean for deficit reduction. It is hard to imagine that a government facing re-election only months after unveiling its vision will resist the temptation to announce large new spending initiatives as part of that vision. The vision for growth and the goal of deficit reduction — even if it is a on a nine-year timetable — will forever be at odds. To accommodate for this, expect the government to lay out longer-term spending stretched over a number of years, and to outline higher-level goals that are less tied to spending — such as becoming the province with the lowest regulatory burden or becoming the country’s leader in foreign direct investment.
These long-term goals and policy targets are the next logical step for the Ford government to tackle. The pandemic has upended plans to build transit, fix the administrative side of the health-care system and get energy costs under control. Meanwhile, it has added new urgency to developing policy challenges, like skyrocketing home prices, faster automation of jobs, and growth challenges that come with large-scale demographic changes within the province. Yesterday’s document does not reveal plans to solve these thornier and more complex problems, but it does allow the government to get to a place where it can consider those areas to be priorities again instead of solely focusing on lockdowns and vaccine shipments.
Overall, putting together a framework that lets Ontario think about something other than COVID-19 is an overwhelmingly a good thing.
Mitchell Davidson is the executive director of the StrategyCorp Institute of Public Policy and Economy and the former policy chief to Ontario Premier Doug Ford.
