Introduction

Purpose of the Long-Term Report on the Economy

Ontario's Long-Term Report on the Economy presents an assessment of the province's future economic and fiscal environment, based on past trends and current projections. This longer term perspective provides important context for planning towards the opportunities and challenges the province is likely to face in the coming decades.

The Ontario government's commitment to deliver a long-term assessment is one component of its approach to fiscal sustainability, transparency and accountability. The legislative requirements regarding this report are included in the Fiscal Sustainability, Transparency and Accountability Act, 2019 (FSTAA):

Long-range assessment of economic and fiscal environment
s 12(1) Within two years after the most recent general election, as defined in section 1 of the Election Act, the Minister shall release a long-range assessment of Ontario's economic and fiscal environment.

Contents of assessment
s 12(2) The long-range assessment must include the following information:
1. A description of anticipated changes in the economy and in population demographics during the following 20 years.
2. A description of the potential impact of these changes on the public sector and on Ontario's fiscal policy during that period.
3. An analysis of key issues of fiscal policy that, in the Minister's opinion, are likely to affect the long-term sustainability of the economy and of the public sector.

In addition to describing the anticipated changes in demographics (see Chapter 1: Demographic Trends and Projections) and the economy (see Chapter 2: Economic Trends and Projections), this report discusses the factors that are likely to impact the provincial economy and finances over time (see Chapter 3: Implications of Demographic and Economic Trends for the Public Sector and Fiscal Policy). It is not possible to predict all the potential changes and developments that could occur over this period. At the same time, it is important to understand and better plan for the things that are reasonably certain, such as the growth and aging of the population, while also assessing the potential alternative scenarios and risks that could place the province on a different path.

Uncertainty Stemming from the COVID‑19 Pandemic

The outbreak and rapid global spread of COVID‑19 in 2020 has unexpectedly shocked the global economy, disrupted financial markets and caused economic and social hardships for many people in Ontario. Although Ontario has and will continue to feel the impacts, the full extent remains unknown.

In response to COVID‑19, coordinated actions by governments and central banks around the globe are supporting people, families, businesses and the economy. The impact and spread of the pandemic are being closely monitored. The Province continues to work in cooperation with the Government of Canada and its other partners to coordinate its response to the outbreak, as well as the restart and the recovery of the economy.

Ontario's Response to COVID‑19

On March 25, 2020, the Minister of Finance released Ontario's Action Plan: Responding to COVID‑19 (Action Plan), which included $17 billion in new measures to increase resources for the health care system, support people and jobs, and improve cash flows for people and businesses. Key initiatives in the government's plan include:

  • A COVID‑19 health sector response contingency fund of $1 billion for any emerging needs to support the Province's timely response to the outbreak;
  • $935 million for the hospital sector to address capacity issues and provide additional acute care and critical care beds, as well as more assessment centres;
  • One-time payments of $200 per child up to 12 years of age, and $250 for those with special needs, to help offset extra costs associated with the closure of schools and daycares;
  • Supporting more affordable electricity bills by temporarily setting time-of-use electricity prices at the lowest rate; and
  • Making $10 billion available to improve cash flowsfor people and businesses through tax and other deferrals.

In addition to the measures noted in the Action Plan, the government has taken further steps to provide immediate support to respond to the COVID‑19 outbreak and ensure people, businesses and the economy are well-positioned for a strong recovery. This includes:

  • Measures to help contain the spread of COVID‑19 by closing non-essential workplaces;
  • Providing temporary pandemic pay of $4 per hour worked on top of regular wages, as well as monthly payments of $250, for eligible frontline workers fighting COVID‑19;
  • Launching a new $50 million Ontario Together Fund to help businesses provide innovative solutions or retool their operations in order to manufacture essential medical supplies and equipment including gowns, coveralls, masks, face shields, testing equipment and ventilators; 
  • Partnering with the federal government to provide urgent relief to small businesses and their landlords through the new Canada Emergency Commercial Rent Assistance Program;
  • Providing additional relief to Ontario's most vulnerable citizens, including working with the Ontario Community Support Association to launch a new Ontario Community Support Program to expand existing Meals on Wheels services; and
  • Supporting the agri-food sector including new funding to connect workers with in-demand jobs to keep supply chains strong and store shelves stocked.

Looking Ahead Post COVID‑19

The actions being taken to support people and jobs through the COVID‑19 pandemic are currently the central focus of governments in Canada and globally. History shows that periods of slowing economic activity are followed by a period of relatively strong growth. Future growth will be supported by Ontario's strong economic fundamentals, including diversification among many robust sectors, a highly skilled workforce, and a motivated population. This foundation has been enhanced by the steps the government has taken to reduce business costs, invest in infrastructure, reduce unnecessary regulatory burden and further enhance labour force skills.

While the potential implications for long-term economic and financial trends arising from COVID‑19 will be discussed, this report will focus on the key factors affecting the provincial economy after the recovery from COVID‑19 is complete. The long-term economic implications of COVID‑19 are highly uncertain, and as such, this report focuses on key trends observed over the past 50 years that are expected to continue in the future, such as the slowing growth and increasing aging of the population.