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Connie Evans, president of the Ontario Homes for Special Needs Association (OHSNA), is photographed at the Queensville Residential Home on Jan. 17, 2018.

Fred Lum/The Globe and Mail

The recent spike in Ontario's minimum wage is creating financial hardship for cash-strapped private care homes for people with special needs, some of which face closing without immediate government assistance.

"This has been devastating to our industry," Connie Evans, president of the Ontario Homes for Special Needs Association (OHSNA) says of the impact of the 21-per-cent increase in the minimum wage, to $14 from $11.60, which took effect on Jan. 1. Ontario is set to increase the minimum wage another 7 per cent to $15 in 2019.

"We are already operating close to the bottom line … and that was before this increase in minimum wage," says Ms. Evans, who also owns the Queenview Residential Home for Special Care in Queensville, Ont., about 60 kilometres north of Toronto. "I don't know how they expect us to do it … How can we provide the same care to our clients when our expenses will be more than 30 per cent higher?"

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Ms. Evans says care homes, which house people with physical and mental-health problems, have a unique business model with fees and staffing levels fixed and mandated by government. These for-profit companies receive a government per diem, but Ms. Evans says those rates have for years lagged behind the increase in service costs, even before the recent hike in minimum wage. She says a handful of homes across the province have closed in recent years as a result.

The industry is calling on the government to at least increase the per diem it pays operators to reflect the increased cost of the minimum wage.

"If the government does not increase our per diem, I have no doubt we will see more home closures and vulnerable people will lose their housing," Ms. Evans says. "We depend on this government to recognize that, when they bring in changes like this, they have to follow up and give us enough to cover these increased costs, which to date they have not."

For precedence, she points to the Ontario government's decision to give licensed child-care centres $12.7-million to help cover the higher labour costs. The government has earmarked an extra $24.3 million for Indigenous and community agencies, as well as for individuals and their families to fund services for adults with developmental disabilities. The Canadian Press reported on Wednesday that Premier Kathleen Wynne is looking across government at other sectors that receive public funding to see if more needs to be done.

Ms. Evans says she has been reaching out to officials in the Ministry of Health and Long-Term Care, asking for some financial relief in light of the minimum-wage increase. On Wednesday, she received an e-mail back from the department with no response to the request. Instead, the department pointed to a 6-per-cent increase in the per diem provided for the 2017-18 fiscal year and the recent reduction in the small-business corporate income tax rate from 4.5 per cent to 3.5 per cent, effective Jan. 1. A ministry spokesperson also told The Globe it "will continue to review funding levels for the 2018-19 funding year."

Ms. Evans says the 6-per-cent increase was announced before the minimum-wage hike and comes after years of no increase. "And the tax savings does not help if you have very little profit," Ms. Evans says.

It's not just the sudden wage increase that is hurting the private home-care industry either, says Ms. Evans, but also the rising price of food and other products and services from suppliers also affected by the wage increase.

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"Everyone is raising their prices to cover the higher labour costs," says Ms. Evans. "In our industry, we don't have that luxury like other small businesses. We can't just raise our prices to cover this cost. We can't lay off staff because they look after vulnerable people and we have a set ratio of staff we have to have … and set hours … We are very dictated."

Rose Hrncie, owner and operator of Victoria Manor in Hamilton, says a higher per diem is needed but is also seeking more immediate funding "like the daycares got" to cover the higher payroll costs that began on Jan. 1.

Ms. Hrncie has written a letter to the City of Hamilton and the provincial government seeking "immediate emergency assistance," and warned that without a cash injection "800 residents will be immediately affected, exacerbating the homelessness problem and affecting 500-600 employees."

"The province must accept responsibility for this initiative and the resulting damage," she wrote, calling on Premier Kathleen Wynne to "please prevent this crisis before it happens."

A City of Hamilton spokesperson says it has "a long history" of working with residential-care facilities (RCF) in the municipality. "We will continue to work with them to help find operational efficiencies to ensure that residents are housed and receiving appropriate levels of care," the spokesperson said in an e-mail. "This is a downloaded issue, and we are encouraging our RCF partners to continue to advocate to the province on behalf of all RCFs in Hamilton."

"We are in a unique situation. We can't go to the residents and say, 'We are going to pass this cost off to you,' like other businesses can," Ms. Hrncie says. She warns more homes could close, which would be "catastrophic" to both her city and the province.

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