Province of Ontario Presentation August 4, 2020 Ontario Financing Authority www.ofina.on.ca Ontario Financing Authority http://www.ofina.on.ca
March 2020 Economic and Fiscal Update • The COVID-19 pandemic is currently having an adverse impact on the global financial markets and economy, including the Province’s economy: • In response, the Provincial government implemented an action plan and revised forecasts. The Province released its March 2020 Economic and Fiscal Update on March 25, 2020, which due to the prevailing economic uncertainty presents a one-year outlook based on the best information available. The government will release a multi-year provincial Budget by November 15, 2020. • In addition to negatively impacting the near-term global and Ontario economic growth outlooks, the COVID-19 pandemic has made it difficult to quantify the uncertainties stemming from the pandemic. • This significant uncertainty makes forecasting more difficult and the economic planning assumptions underlying such forecasts may be quickly out of date due to rapidly changing circumstances. • The spread of COVID-19 and the measures taken to contain its spread may continue to have adverse impacts on the Province’s revenues and economy. • The March 2020 Economic and Fiscal Update includes Ontario’s Action Plan: Responding to COVID-19 that will increase resources for the health care system, support people and jobs, and improve cash flows for people and businesses. 1
Ontario’s Fiscal Plan • The Province is projecting a deficit of $9.2 billion in 2019 – 20 which represents an improvement of $1.1 billion relative to the 2019 Budget . • As a result of the response to the COVID-19 outbreak, the government is planning for a deficit of $20.5 billion in 2020 – 21. • The fiscal plan also includes higher than usual reserve and contingency funds as a measure of prudence to protect against additional unforeseen adverse changes to revenue and expense. Fiscal Summary Actual Interim 1 Plan 2018 – 19 2019 – 20 2020 – 21 ($ Billions) Revenue 153.7 156.7 156.3 Expense Programs 148.8 153.1 161.1 Interest on Debt 12.4 12.6 13.2 Total Expense 161.1 165.7 174.3 Surplus/(Deficit) Before Reserve (7.4) (9.0) (18.0) – Reserve 0.2 2.5 Surplus/(Deficit) (7.4) (9.2) (20.5) Net Debt as a Per Cent of GDP 39.5 39.9 41.7 Accumulated Deficit as a Per Cent of GDP 25.3 25.3 26.8 1 Interim represents the March 2020 Economic and Fiscal Update projection for the 2019 – 20 fiscal year. Note: Numbers may not add due to rounding. Source: Ontario Ministry of Finance and Treasury Board Secretariat. 2
Ontario’s Action Plan: Responding to COVID -19 $17 Billion in New Support in 2020 – 21 3
Support for Health Care • Ontario’s Action Plan includes $3.3 billion in additional resources for health care, including $2.1 billion in new outbreak response measures. Hospitals Long-Term Care • • $243 million to provide $935 million for the hospital sector, including: emergency capacity in the long-term care sector and virus – $594 million to accelerate progress containment measures on addressing capacity issues • Approx. $80 million to – $341 million to provide additional improve and maintain the acute care and critical care beds, quality of care in long-term and more assessment centres care homes • $124 million to support the delivery of • Approx. $23 million to more than 90 transitional care support the ongoing repair projects to free up hospital capacity and modernization of facilities 4
Support for Health Care • Ontario’s Action Plan includes $3.3 billion in additional resources for health care, including $2.1 billion in new outbreak response measures. Public Health Additional Investments • $160 million in increased • $1.0 billion for a dedicated COVID-19 response health sector contingency fund for funding for public health to support COVID-19 emerging needs monitoring, surveillance • $75 million to supply personal protective and laboratory and home equipment and supplies to front-line staff testing, including • $120 million to increase home and investments in virtual care community care capacity and Telehealth Ontario • $62 million to provide more physicians, • $61 million for publicly nurses, and personal support workers funded vaccines to support the province’s • A new website, Ontario Together , to help immunization program redirect resources towards the production of essential equipment, such as ventilators 5
Support for People and Jobs • The government is investing $3.7 billion in direct support for people and to protect jobs. Students Seniors • Suspending Ontario Student • Proposing to double the Assistant Program (OSAP) loan Guaranteed Annual Income repayments for six months System (GAINS) payment for low- income seniors for six months Workers • Coordinating subsidized deliveries • Providing job-protected leave to of meals, medicines and other employees in isolation, quarantine or essentials caring for children Parents • Committing $100 million for skills • Providing emergency child care training programs for workers options for front-line workers affected by COVID-19 • Providing one-time payments for • Working with the federal government to additional costs while schools are find ways to support apprentices closed 6
Support for People and Jobs • The government is investing $3.7 billion in direct support for people and to protect jobs. Indigenous Peoples and Communities Vulnerable People • Providing $26 million in additional • Investing $52 million to expand supports to Indigenous peoples and access to the emergency assistance communities , including for people facing economic hardship – Emergency assistance for urban • Providing $148 million to Indigenous people, and municipalities and district social service providers to support charitable and – Supporting costs of transporting not-for-profit service providers health care workers and supplies • Supplying personal protective equipment and supplies to first responders and front-line staff in the justice sector 7
Support for People and Jobs • The government is investing $3.7 billion in direct support for people and to protect jobs. Electricity Relief Employer Health Tax • Setting time-of-use prices • Proposing a temporary increase to the at the lowest rate for 45 Employer Health Tax (EHT) exemption days – Would cut taxes by $355 million for • Expanding eligibility for the approx. 57,000 employers in 2020 Low income Energy – About 30,000 more employers would not Assistance Program pay any EHT for 2020 (LEAP) , ensuring no disconnections for Regional Opportunities Investment Tax Credit nonpayment • Proposing a new Regional Opportunities • Providing $5.6 billion for Investment Tax Credit, a new 10 per cent electricity cost relief refundable Corporate Income Tax credit to programs in 2020 – 21, an support business investment in regions where increase of $1.5 billion employment growth has lagged 8
Support People and Businesses to Improve Cash Flows • Ontario is making $10 billion available through tax and other deferrals to improve cash flows for people and businesses over the coming months. • Deferring property tax payments • Providing interest and penalty municipalities make to school boards by relief of five months for 90 days. businesses to file and make payments for most provincially – This deferral will provide administered taxes municipalities with the flexibility to, in – This measure provides turn, provide over $1.8 billion in property tax deferrals to residents $6 billion in relief to and businesses. support the cash flow needs of Ontario • Allowing deferral of Workplace Safety businesses , and and Insurance Board (WSIB) premium complements federal payments for up to six months, providing Corporate Income Tax $1.9 billion in financial relief to measures employers 9
Ontario’s Economic Planning Projection • For planning purposes, in the March 2020 Economic and Fiscal Update , the Ministry of Finance assumed Ontario’s real GDP would be unchanged on an annual basis in 2020 and advance by 2.0 per cent in 2021. Summary of Ontario’s Economic Outlook 2018 2019 2020p 2021p (Per Cent) Real GDP Growth 2.2 1.6 0.0 2.0 Nominal GDP Growth 3.7 3.9 2.0 4.0 Employment Growth 1.6 2.9 0.5 1.0 Unemployment Rate 5.6 5.6 6.6 6.6 Sources: Statistics Canada and Ontario Ministry of Finance. p = Ontario Ministry of Finance planning projection. 10
Ontario’s Diverse Economy • Ontario has a diverse economy, with extensive financial and business services, manufacturing and a smaller primary sector compared to the rest of Canada Structure of the Ontario Economy, 2018 (Per Cent Share of Nominal GDP) Primary Utilities Other Services 2 2% Construction 2% 10% 7% Public Administration 7% Manufacturing 12% Health & Services (77% of GDP) Education Goods (23% of GDP) 13% Wholesale & Retail Trade 11% Professional & Scientific Transportation 7% & Warehousing 4% Real Estate & Information & Finance & Renting & Cultural Insurance Leasing 1 3% 9% 13% 1 Includes estimate of imputed rental income from owner occupied dwellings. 2 Other services include: management of companies and enterprises; administrative and support, waste management and remediation services; arts, entertainment and recreation; accommodation and food services; and other services. Source : Statistics Canada. Note: Numbers may not add due to rounding. 11
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