There is no downplaying the huge challenges facing Ontario’s economy caused by the COVID-19 pandemic, Ontario Finance Minister Rod Phillips said during a recent online panel discussion held as part of the Association of Municipalities of Ontario (AMO) conference.
Phillips joined Retail Council of Canada CEO Diane Brisebois and Ontario Chamber of Commerce CEO Rocco Rossi on a panel assigned to discuss The Path to Economic Recovery in Ontario. TVO’s Steve Paikin hosted the session on Aug. 19.
Phillips said dealing with the ravages of COVID-19 represented “the challenge of our generation.”
“We are meeting that challenge but frankly we don’t know if we are in the first period or the third period when it comes to the virus itself and its economic impacts,” he commented, arguing the key to recovery was restoring consumer confidence, and the way to restore confidence is to assure consumers and businesses that Ontario is a safe and healthy place to do business.
“Being realistic and honest about the challenge is important,” said Phillips. “That is certainly why we keep doing our updates every quarter, in terms of where are financially and economically.”
Ontario has got where it is now by being open to course corrections, said the minister.
“We have to keep that up, and keep the optimistic frame that Canadians are famous for, but also a realistic frame that this is a one-in-100 years health crisis. We are going to have to find our way through this together, and there are going to be sacrifices along the way,” Phillips remarked.
Paikin cited statistics from a recent Canadian Federation Of Independent Business survey indicating that 82 per cent of Canadians are worried that their favourite local businesses will close; 69 per cent said they are concerned the economy is not recovering fast enough; and 76 per cent said Canada needs to start focusing on economic recovery.
Brisebois told the AMO audience main-street retailers have suffered a double whammy, with deep losses suffered during the first months of the shutdown compounded by an abrupt transition to online purchasing. She noted the Post Office reported that deliveries of goods bought online made every week seem like the Christmas rush.
“Within three months, we had digital growth that we had projected for over two years,” she said, citing a growth in online sales from eight per cent to 15 per cent.
Rossi said everyone in the business sector is reporting consumers are very slow to return. Cash shortages are a huge threat.
“The vast majority of small- and medium-sized businesses in this province and this country entered the pandemic with 20 to 30 days of cash on hand,” he stated. “We are in month five. That 20 to 30 days is long gone.”
Rossi said even with governments deferring property taxes, HST, workers compensation and other payables to help businesses with cash flow problems, when the bills come due, one of three things is going to occur.
“One, we are going to kick the can further down to the road, to October at least, in the hopes that we will have more economic activity and cash flow will come and people can pay it back,” he enumerated.
“Two, there is going to have to be a significant amount of forgiveness, which is going to eat into those contingency funds which the minister has wisely set aside; or three, there is going to be a massive wave of bankruptcies the likes of which we have not seen.”
Paikin asked Phillips if the provincial government would consider cancelling taxes and other fees owing instead of merely deferring them. Phillips declined to commit to that step.
“We have other areas of our business community, although they may have had a short shutdown, or in some cases no shutdown, and quite frankly we have had some businesses that are doing very well, the discussion of digital was a relevant one,” the minister said.
“We are going to keep our eye on what is necessary…We are trying to work together as best we can with our federal and municipal partners to make sure all of the supports are delivered as effectively and simply as possible.”
Asked how he felt about the current size of the deficit, estimated at $38.5 billion, given that the Doug Ford government came to power promising to take strong action to reduce the deficit, Phillips noted he has been asked that several times recently.
“I just say two words: ‘global pandemic,’ ” he said.
“The size of the deficit reflects the significance of the problem.”
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