On April 11th, the Government of Ontario released its 2019 Budget, “Protecting What Matters Most.” Below is an analysis of key highlights from the perspective of Ontario’s business community.
- Ontario’s Debt as of now is $343 billion and the interest on the debt is $13.3 billion.
- The Government is projecting a deficit of $11.7 billion in 2018-2019 with a plan to return to a balanced budget by 2023-24.
- In running its forecasted course to a balanced budget, the Province projects economic growth to average 3 percent, in contrast to an average 1 percent forecast increase in program spending.
The Budget also introduces the Fiscal Sustainability, Transparency and Accountability Act, 2019. This legislation applies the principles of sustainability, transparency, responsibility, flexibility, and equity to government administration. It legislates that government be required to provide:
- The fiscal year in which it projects it will achieve a balanced budget;
- Major revenue and expense estimates for the period of the recovery plan, including underlying forecasts and assumptions;
- Details of a reserve to protect against unexpected negative changes in revenue and expenses; and
- The projected net debt‐to‐GDP ratio for the period of the plan.
Chamber Analysis: The government has taken the advice we gave in our 2019 Pre-Budget Submission and in our recent report, Accounting for Ontario’s Debt. We are pleased to see a robust plan for returning the Province to balanced budgets, including meaningful action to improve government’s fiscal responsibility via a ‘spend smarter’ approach rather than an austerity approach.
Budget 2019 details the government’s Open for Business, Open for Jobs Strategy, which links existing “open for business” policies with regulatory reform, modernization of business supports, workforce development, and incentives for new investment.
As part of its efforts to reduce the regulatory burden on business, the government intends to:
- Review payroll legislation with a view to reducing paperwork and red tape.
- Introduces a plan to modernize business support programs to focus on talent, research and commercialization, entrepreneurship and growth, and investment attraction including a review of the Ontario Innovation Tax Credit and other R&D tax incentives
- Create an Expert Panel to create a provincial intellectual property framework so Ontario can maximize commercialization opportunities in the post-secondary sector.
With a focus on supporting Ontario’s manufacturing sector, the Government has introduced the Ontario Job Creation Investment Incentive which will allow for:
- Manufacturing and processing machinery and equipment and specified clean energy equipment to be immediately written off; and
- Capital investments will be eligible for an Accelerated Investment Incentive that provides a depreciation rate of up to three times the normal rate in the first year the asset is put into use.
Chamber Analysis: Budget 2019 takes a holistic view of economic development. Refocusing business supports on key outcomes—as recommended in our Pre-Budget Submission—will make them more effective and sustainable. Strengthening commercialization through an intellectual property framework and tax incentives will help address Ontario’s scale-up challenge and drive economic growth.
The incentives announced will mirror those announced in the Federal Government’s Fall Economic Statement of 2018. The quick write off for manufacturing will stimulate investment in Ontario.
Skills and Workforce Development
The Budget includes a number of measures to address skills and workforce development in Ontario. These include:
- Establishing a new governance framework through proposed new legislation to replace the Ontario College of Trades and Apprenticeship Act, 2009;
- A new financial incentive program to support employers to come together and train apprentices;
- Promoting apprenticeship and the skilled trades as a pathway choice for all students from kindergarten to Grade 12; and,
- Enhancing and streamlining labour market information for job seekers to help identify opportunities for relevant education, training and reskilling, and career opportunities.
The Budget also introduces changes to Ontario’s Immigration Nominee Program to better reflect changing labour market needs across the province. Specifically, the government will:
- Amend the program by creating a technology-focused stream to attract skilled employees
- Expand the occupations eligible for the Employment Job Offer to reflect in-demand skills, and
- Expand the Entrepreneur Stream.
Chamber Analysis: We applaud the government’s new financial incentive program to support employers to come together and train employers. The Ontario Chamber Network has long called on government to enhance support for apprenticeship consortiums to help address capacity issues in the skilled trades.
We are also pleased to see the government take action to leverage the skills and global connections of international talent in Ontario, which is critical to ensuring the province’s global competitiveness and future prosperity. We also look forward to the government’s role out of a pilot program to help bring highly-skilled immigrants to smaller communities, an initiative the Ontario Chamber Network has long called for.
Infrastructure and Transportation
Budget 2019 reveals that planned investments for 2019–20 total $14.7 billion and announces an infrastructure investment of approximately $144 billion over the next decade.
Critical investments include:
- An additional $250 million over the next five years, on top of a previously committed $65 million investment into broadband and cellular infrastructure across Ontario.
- Developing a Transit Oriented Development Strategy.
- Leveraging third‐party investment for transit expansion (e.g. allowing developers to build above transit stations in exchange for building new infrastructure).
Chamber Analysis: We are pleased to see a commitment to investing in broadband and cellular infrastructure, essential to the competitiveness of businesses across the province, and look forward to seeing more details in the Broadband and Cellular Strategy that will be released later this year.
We are also pleased to see the Ontario Government taking a regional focus in its transportation plan, with projects earmarked for both rural and urban parts of the Province including the the Yonge-North Subway extension. Additional focus on a market-driven transit-oriented development strategy in partnership with the private sector has the potential to increase housing supply and community development.
We encourage the Province to prioritize investments that present the greatest potential return on investment, including High-Frequency Rail.
We will continue to advocate for increased infrastructure investment across the province and press the government to meet its spending commitment of $144 billion over 10 years.