But Expresses Concern Over Growing Provincial Debt
A News Release from the Greater Niagara Chamber of Commerce (GNCC)
Posted March 25th, 2021 on Niagara At Large
Niagara, Ontario – This March 24th, Minister (Peter) Bethlenfalvy delivered the Government of Ontario’s 2021 Budget. As widely expected, it contained significant investment in healthcare and funded the fight against the pandemic through testing and vaccination.
The budget also saw significant investment in the future of Ontario’s businesses. Those businesses have struggled under the pandemic and its fallout for over a year, with almost half indicating they cannot take on any additional debts, and a similar proportion reporting uncertainty as to whether they will even still be in business by the fall.
A second round of funding for the Ontario Small Business Grant will be welcomed by Ontario’s small enterprises.
The program, which offered a non-repayable grant of $10,000 to $20,000 for affected small businesses, was a welcome boost as reserves and loans ran dry. An additional grant will help nurse many hard-hit firms through the months to come before widespread vaccination allows the country to turn the corner.
“The small business grant made a big difference to businesses, and the 120,000 recipients really needed it. We were especially pleased to see it being made available to startups as well, which, along with seasonal businesses, had often fallen through the cracks of the federal programs,” said GNCC CEO Mishka Balsom.
Before the pandemic, over 12-and-a-half million visitors to the region injected almost $2 billion into our economy, supporting over 36,000 jobs. The pandemic brought tourism almost to a halt. Traffic from international destinations was down almost 90%.
Additional direct funding programs to help affected tourism and hospitality businesses will be very helpful to the Niagara firms who were dependent on that traffic, as will tax credits to encourage tourism in Ontario once it becomes safe.
“We had over 2,500 tourism businesses in Niagara before the pandemic,” said Balsom. “We know better times are coming – vaccination is happening, and there is pent-up demand for travel and entertainment. We welcome these efforts to bring our tourism industry over the finish line of this crisis.”
The pandemic also shone a spotlight on the uneven distribution of broadband access in Canada. As everyone moved online, regions without broadband, including many communities in Niagara, were at a distinct disadvantage. The investment into broadband development, and the goal to deliver broadband to every region in the province by mid-decade, will help those communities remain economically competitive.
However, this spending – delivered without significant tax increases or program cuts – obviously comes at a cost. That cost is continued deficits, which will be run until 2029-30. Net debt will reach $440 billion this year and will be fully 50% of provincial GDP by 2023-24.
If growth is slower than projected, paying down the debt may not begin for a full ten years.
Provincial debt began to accrue in significant amounts during the 1990s and is now fully a generation old. The current debt may not be paid off for another generation or more, meaning this is a problem we are effectively leaving to our children.
The choice between program cuts and tax increases is never an easy one, and neither represents a good outcome. Nevertheless, prolonging that choice only exacerbates the problem.
A new recession precipitated by a public debt crisis in ten years will not serve the interests of Ontario’s businesses or its people. A plan to tackle the mounting debt sooner would go some way to restoring the confidence in Ontario’s economy shaken by the pandemic.
The Greater Niagara Chamber of Commerce is the largest business organization in Niagara and the second-largest Chamber of Commerce in Ontario, with 1,500 members representing 50,000 employees. More information on the GNCC is available at gncc.ca<https://gncc.ca/>.
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