Why the next Ontario budget must redistribute wealth

March 1, 2021

These days it’s a trite observation to say that COVID-19 has shone a spotlight on just how unequal life in Ontario is.

Some people have lost their jobs to the pandemic; others have kept working. Some have to go in to work and risk exposure to the virus; others work safely from home. Some deliver groceries to doorsteps; others order groceries online.

For many people, the pandemic has hit personal finances hard, and the people hit hardest have been more likely to be lower-income, racialized, and female. That’s what inequality looks like in Ontario.

But the pandemic hasn’t just revealed inequality: it has made it worse.

Since last March, the federal government has stepped up to keep food on the table and stave off eviction for millions of out-of-work Canadians. Still, the $500-a-week Canada Emergency Response Benefit (CERB) was less than half the wage of an average worker. Many CERB recipients had no savings to speak of and took on more debt despite the federal help.

It’s a different story for higher-income Ontarians. After the initial shock of the first lockdown, incomes of the top quarter of wage earners bounced back quickly. By last summer, they were working more hours, on average, than before the pandemic. Employment-wise, for them, the pandemic was over.

Their incomes didn’t change much, but their spending habits did. Suddenly, high earners working from home were spending less on gasoline and transit fares; less on movies, concerts and restaurant meals; and less on travel. With little to buy, their savings piled up, and they paid down their debts.

So now we have, broadly, two groups of Ontarians — the haves and the have-nots — with vastly different experiences of COVID-19. The pandemic didn’t take money directly from low-income earners and give it to high-income ones, but it might as well have: the effect is the same.

Meanwhile, in the VIP lounge, the country’s ultra-rich have been having their own party. In the first six months of the pandemic, Canada’s top 44 billionaires saw their wealth surge by $53 billion — roughly equivalent to $1,400 for every Canadian. And as thousands of small businesses fight to survive, big corporations are still paying dividends.

Make no mistake: there is a lot of money in this country, much of it in Ontario. Unfortunately, COVID-19 has redistributed it upwards.

We need to redistribute it back. To do so, we need a strong policy response from government, and not just at the federal level. We need a higher minimum wage. Paid sick days for all. Equal-pay-for-equal-work legislation.

All of these changes fall under provincial jurisdiction.

With the next Ontario budget just around the corner, now is also the time to fund better income supports, stronger public services, and a jobs strategy underpinned by public investment. Before the pandemic, Ontario spent $2,000 less per person per year on public programs than the average of the other provinces. In 2020, we spent less per capita to fight COVID-19 than any province outside the Atlantic bubble.

Ontario can do better.

To pay for new spending — and address inequality directly — higher taxes on individuals and corporations who are better off as a result of the pandemic have a key role to play. While our premier may oppose tax hikes because “people are hurting,” this is a smokescreen. Not everyone is hurting. With so many Ontarians barely scraping by, those who are sitting pretty have an added responsibility to step up.

Anyone who has watched luxury cars drive past a homeless person knows Ontario was a highly unequal place long before COVID-19. A far-reaching plan to reduce inequality through actual concrete measures is long overdue.

To be clear, Premier Doug Ford has so far shown no interest in such an approach. From Day 1, his government has consistently underfunded public services while at the same time reducing the taxes that pay for them. Not counting COVID-19 spending, base funding for public services is set to fall short of the need until at least 2023, according to the Financial Accountability Office.

We need a better plan. A return to pre-pandemic “business as usual” can only lock in inequality at a new and more desperate level. It can only divide Ontarians even further into haves and have-nots.

Randy Robinson is Ontario Director of the Canadian Centre for Policy Alternatives. This piece was originally published in the Hamilton Spectator