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Ontario's economy on the rebound but pandemic scars remain, say AMO panellists

Ontario small retailers are taking a financial battering but panellists see opportunities in critical minerals, health-care sector
(Pexels/Anna Shvets photo)

The wounds from the pandemic on small retailers in Ontario continue to run deep.

Diane Brisebois, president of the Retail Council of Canada, estimates between 27 and 30 per cent of small businesses in Ontario likely won't survive to the end of 2021, many of which were locked down more than 200 days this year. 

Some customers will remain loyal to these stores, she said, but many will move to other shopping choices.

She took part in a virtual panel discussion discussing Ontario's path to economic recovery at the Association of Municipalities of Ontario's (AMO) annual conference held online, Aug. 18. Provincial Finance Minister Peter Bethlenfalvy also took part.

Brisebois was responding to a question by moderator and TVO host Steve Paikin on the criticism directed at Queen's Park on whether the provincially imposed lockdowns lasted too long and were too haphazard, despite many small retailers futilely spending millions to pandemic-proof their workplaces for employees and customers.

She said her group is on record with the provincial government in having many issues with the government's lockdown measures that created an "unlevel playing field," which allowed some retailers to remain open while others were forced to shutter.

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"We were told the decisions were science-based – we disagreed with that. We thought they were much more based on polling and sentiments than they were based on science."

The situation, Brisebois said, proved challenging for non-essential retailers to quickly ramp up their e-commerce capabilities while essential retailers quickly capitalized on market share because of the restrictions.

Though appreciative of the government support programs, many business owners already had "very little runway left," when it came to paying for inventory, property taxes and other fixed costs.

"You just need to drive through most of the communities, and with very few exceptions, and you see a lot of businesses boarded up. And so it will take a while to revive our Main Streets because it's been very challenging and a lot of our smaller retailers just were outta cash."

Minister Bethlenfalvy was asked by Paikin for some insight on the government's thinking on deciding to close down small retailers while big box retailers were allowed to receive surging crowds that, in some cases, turned into super-spreader events.

The minister elected to dodge the question, responding vaguely that in the early days of the outbreak it was about allowing people access to essential goods, and that it was a difficult decision to make that was ultimately done to protect the health of Ontarians.

"I think that while the medicine was tough, we have taken the pressure off our health-care system."

He pointed to government supports to prop up the economy with $3 billion provided in small business grants for 100,000 businesses, property tax and electricity rebates for locked-down businesses, and allowing for curbside pickup, but cautioned that Ontario is "not out of the woods yet" on tackling COVID, and people need to be vaccinated to reopen safely.

Paikin referenced a BMO report from earlier this month that placed Ontario's projected recovery behind that of Alberta, B.C. and Quebec, with a provincial growth rate lagging behind the 5.5 per cent national average, and a ballooning pandemic-induced debt that's north of $440 billion.

The parliamentary budget office expects Ontario be running annual deficits until 2095, a weighty anchor that would hinder the government's efforts to grow the economy.

In echoing Premier Doug Ford's familiar refrain, Bethlenfalvy said the province will "spare no expense" to protect the well-being of Ontarians. 

The minister said his most recent budget offers the path to balance the books through uncertain times with three scenarios of normal growth, low growth and faster growth environments in putting the conditions in place for the private sector to create good-paying jobs.

An optimistic Bethlenfalvy said he's "betting on the economy" of Ontario. The forecasts he's read show show robust economic and job growth for Ontario, alluding to 72,000 new jobs in Ontario last month during Stage 3 of opening. 

When asked what regional considerations the province has made to rebuild Ontario's economy, Bethlenfalvy pointed to investments made in broadband – critical for rural and remote business – and funds earmarked for workforce retraining and reskilling.

"One of the challenges in the North is that they're finding it very tough to find people; the jobs are there but finding people with the right skills, attracting and retaining workers is a critical area."

He added Northern Ontario's resource economy figures prominently in an emerging sector of future manufacturing and job growth. 

Bethlenfalvy said his government is investing in natural resources, "core to Ontario's economy," particularly as it pertains to the electric vehicle (EV) sector with substantial provincial investments in automakers, like Ford, to retain EV production capabilities here, and to build the critical minerals and the manufacturing supply chain that will feed battery manufacturing in the province.

"We have all of that in Ontario and the North is a big part of that."

Armine Yalnizyan, an economic policy advisor and an Atkinson Foundation Fellow on the Future of Workers, said an often overlooked part of the economy that needs more attention and government investment is the care economy.

Building the next generation of middle-class wage earners, she said, can come from occupations ranging from early childhood educators to personal care workers, much-needed but not always preferred occupations that pay little, but offer few rewards and benefits.

But the health care, education and social assistance sectors make up a combined 12 per cent of Ontario GDP and comprises 21 per cent of jobs.

Regions are competing for these workers, she said, and that's something an active government needs to address rather than allow the market to sort it out.

"If you want to build the next middle class in every region of the province you would make sure every job is a good job," Yalnizyan said. "We're not treating that sector as anything but a derivative."

Yalnizyan said the government could be doing more in committing itself to establishing a "Grade A care economy" in all regions of Ontario to lay the foundation of the "middle class of the future" and unlock more spending power to support small business.

"All of these things are economic drivers and they become anchor institutions," especially when it comes to caring for Ontarians, as we enter a period of our population aging over the next 25 to 30 years where more people will be exiting the labour force than entering it.

Brisebois encouraged the government to consider adopting vaccine passports as proof to admit people to attend large gatherings, such as theatres and indoor dining, where people stay for an extended period.

For Ontario to return as Canada's economic powerhouse, Brisebois said it must have well-paid workers and an economic environment that will attract foreign investment. Other regions of Canada are aggressively attracting foreign investment, which helps pay for our social safety. 

She praised the government in its pre-pandemic work in eliminating excessive red tape for small and medium-sized businesses, but offered that the province should never lose sight of the massive debt, which makes the cost of doing business in Ontario higher.