Doug Ford's government is delivering a new budget, and the pandemic will dominate its math

Sectors of the Ontario economy most battered by the COVID-19 pandemic are hoping Premier Doug Ford's government will offer significant help when it tables the 2021-22 budget on Wednesday afternoon.  

Finance Minister Peter Bethlenfalvy is scheduled to deliver the budget at 4 p.m.

Ontario's extra pandemic-related spending plus the battering of provincial revenues as the economy shrank have combined to saddle the province with a record deficit, projected at $38.5 billion for 2020-21.

The signs from Queen's Park suggest while Wednesday's budget will likely forecast a lower deficit for the coming fiscal year, the government will remain deeply in the red.  

Ford said Tuesday that the budget will have two aspects — "protecting lives and protecting livelihoods" — and predicted that Ontario will lead North America in job creation once the economy opens up post-pandemic. 

"It's a recovery budget looking where we're going to be down the road," Ford told a news conference. "We will turn this economy on, the likes of which this province has never seen before." 

But after Ford spoke, government officials downplayed his description, suggesting that the budget will put far more emphasis on coping with the pandemic than on spurring economic recovery. 

The budget will show the price tag for Ontario's vaccination campaign against COVID-19, something that was not costed in the budget tabled in November.

This week, the government announced $1.2 billion to help hospitals erase deficits triggered by the pandemic and announced a $3.7 million fund to cover the cost of transport to vaccination appointments for seniors and people with disabilities 

Bethlenfalvy has also signalled that economic growth would be a theme of the budget. 

"Our recovery will be built on a strong foundation for growth, not painful tax hikes or cuts," Bethlenfalvy said two weeks ago when announcing the budget date. 

"You're going to hear the premier, my cabinet colleagues and I talk about growth an awful lot in the coming months, because economic growth is the way Ontario will recover stronger from COVID-19."

Small and medium-sized businesses affected by pandemic restrictions and lockdowns are in critical need of more financial support from the government, said Rocco Rossi, president and CEO of the Ontario Chamber of Commerce. 

"Restarting an economy is a lot like restarting a fire, it's a lot easier if there are embers," said Rossi in an interview Tuesday.

"If you have massive scarring caused by significant levels of bankruptcy, it's just that much harder to to rebuild." 

Rossi said financial support needs to come in the form of grants rather than loans, because businesses too deeply saddled with debt will be unable to get back on their feet. 

"Surely, society needs to share in shouldering that burden," said Rossi.

"You don't want to have a bunch of boarded up or 'For Lease' or 'For Sale' buildings up and down all of our Main Streets across Ontario." 

The provincial government's chief form of direct support for small- and medium-sized businesses has been a $1.5-billion fund allowing grants of up to $20,000 each for companies whose revenues were affected by COVID-19 restrictions.  

Bethlenfalvy hinted Tuesday that further help could be on the way.   

"Many small businesses have been hurt significantly. They're the engine of the Ontario economy," said Bethlenfalvy on Tuesday. "So we want to support businesses, we want to support jobs as we get to a position where we can, as the premier said, reopen the economy even greater than ever before." 

Bethlenfalvy will be the third finance minister to deliver a budget for the Ford government in less than three years.

Vic Fedeli delivered the first in the spring of 2019, then was demoted from the job that summer. Rod Phillips tabled the 2020 budget last fall, and then resigned from cabinet little more than a month later due to controversy over taking a Caribbean vacation while Ontario was deep in the second wave of the pandemic. 

Peter Graefe, a political science professor at McMaster University, said he expects Wednesday's budget will focus on pumping billions into pandemic-related services while refraining from introducing any bold new programing.

"There's a recognition that governments keeping the taps on is one reason why, even with a couple of closures in the economy in the past year ... we've managed to avoid a huge economic meltdown," he said.

Graefe said he expects the province's path to balance will be part of the document as a way for the Progressive Conservative government to signal it has an eye on long-term debt management.

But given the size of the deficit, and other elements that are difficult to predict, like interest rates and economic growth, the projection may not mean much, he added.

"One way that deficit politics is important for them is not really around the economics of it, but giving the illusion of control," Graefe said.

"I think it will be useful for them, electorally, even if it's really a pretty fictional pathway."