Canadian Manufacturing

Jobs, infrastructure get the most attention in Ontario budget

Ontario's net debt will hit $308 billion in 2016-17 with interest payments totaling $11.8 billion. Oh, and toll lanes are coming to the QEW this spring



TORONTO—Ontario’s finance Minister Charles Souza has unveiled the province’s budget for 2016, and the document is long on promises for a better future.

It markets the provincial Liberal’s track record in terms of economic growth over the last two years of Premier Kathleen Wynne’s mandate, claiming that economic growth in Ontario is outpacing national growth (a feat made easier with the current resource and commodity woes), and forecasts this performance to continue for the next two years.

It also says Ontario has created more than 600,000 jobs since the recession in 2009 (Wynne was elected in 2013) and is projected to create more than 300,000 additional jobs by the end of 2019, bringing total job creation to more than 900,000 net new jobs over that 10-year period. It seemed Sousa took a page from the Stephen Harper play book by celebrating programs and investments from previous years.

But the elephant in the room for Souza et al is not jobs numbers—its the public debt. And Ontario is in the dubious position as being the most indebted non-nation government in the world.

Indeed, Ontario’s net debt will hit $308 billion in 2016-17 with interest payments totaling $11.8 billion. That figure will increase to $13.1 billion by 2018.

According to the totally unofficial (but quite interesting) provincial debt clock, each resident of Ontario owes about $21, 600.

This year’s budget has forecast a provincial deficit of $5.7 billion, which is down from the last estimate of $7.5 billion. The deficit for the 2017 budget is projected to come in at $4.6 billion. The Liberals have vowed to eliminate the deficit by 2018. Hopefully that is when we can start paying down the principle.

The Liberals don’t seem especially worried about it though, including few direct measures in this year’s financial plan that deal with what the opposition are calliing a functional deficit. Sousa’s plan is to limit average program spending growth to less than two per cent, and to ensure businesses pay the proper amount of tax. The budget claims that last year Ontario gained $330 million through such tax initiatives, which means they only have $5.37 billion left.

But enough of the gloom—budget day is a happy day for the Ontario government! Here’s a look at some of the ways the provincial government proposes to spend some of the money its borrowing:

  • The government is eliminating the debt retirement charge for non-residential uses as of April 1, 2018. Large industrial companies using 3,000 megawatt-hours per month could save $21,000 monthly, while a small business using 20,000 kilowatt-hours per month could save $140 monthly.
  • $137 billion over the next 10 years for public infrastructure such as roads, bridges, public transit, hospitals and schools. Planned investments will purportedly support an average of about 110,000 jobs each year.
  • The Province is also developing programs to help utilities to extend access to natural gas supplies. Ontario will introduce a loan program to support access to natural gas in 2016.
  • The Industrial Accelerator Program (IAP) has been extended to 2020. It provides financial incentives for process improvements and equipment retrofits to reduce electricity consumption and help eligible companies become more competitive.

The budget referenced the massive Ring of Fire resource development project, but the only figures mentioned have already been announced: that the Ontario government has committed up to $1 billion for transportation infrastructure development in the region.

  • $13.5 billion to implement GO Regional Express Rail (RER), which will quadruple the number of weekly trips within the GTHA to nearly 6,000.
  • Toll lanes are coming—a 16.5-kilometre pilot project is the first step in Ontario’s plan to implement high-occupancy toll lanes. The pilot will begin on a section of the Queen Elizabeth Way between Trafalgar Road in Oakville, Ont. and Guelph Line in Burlington, Ont. in summer 2016.
  • Widening Highway 400 from eight to 10 lanes, adding a new high-occupancy vehicle (HOV) lane in each direction between Major Mackenzie Drive and King Road. This project is scheduled for completion in 2018–19.

The budget said the 10-year, $2.7 billion Jobs and Prosperity Fund is helping create and retain more than 16,000 jobs and attracting more than $1 billion in investments. Fund commitments include:

  • More than $50 million to help Guelph car components maker Linamar create more than 1,200 jobs and retain more than 6,800 jobs.
  • More than $19 million to support up to 50 young life sciences companies involved with JLABS @ Toronto, a collaboration of Johnson & Johnson, University of Toronto and MaRS Discovery District.
  • More than $22 million to leverage a total investment of almost $55 million by Ontario Centres of Excellence and IBM Canada to support up to 500 startups and other early-stage companies.
  • $5 million to leverage a total investment of $40 million by P&H Milling Group in a new Hamilton flour mill and storage equipment, creating 16 jobs while retaining 200 jobs.

The Business Growth Initiative will commit $400 million over the next five years to modernize business regulations, lower business costs and make more Ontario firms into global industry leaders. Commitments include:

  • $50 million at the Perimeter Institute, providing funding through 2020–21; to foster the next generation of information technology advancements in areas such as quantum computing.
  • Helping traditional manufacturers transform into more innovative, dynamic and productive companies through a five-year, $35 million investment in the Advanced Manufacturing Consortium, including three Ontario universities: McMaster, Waterloo and Western.
  • Establishing a three-year, $20 million fund that connects colleges and private-sector employers on applied innovation projects that result in breakthrough products and services for sale at home and abroad.
  • Launching the Red Tape Challenge, an online consultation tool designed to identify and eliminate duplication, lessen compliance burdens, shorten response times and make it easier for businesses to interact with the government.

The Province will create a Strategic Investments Office to serve as a “one-window point of entry” to provide improved investment attraction services for major investment projects, licensing and permit coordination, facilitation of workforce training and site-selection supports. The Province will also launch an online portal to help firms easily find and navigate the programs and initiatives it provides across government.

The Province also announced an intention to support the financial services sector by “advancing a modern and flexible approach to regulation,” and promoting Toronto as a global financial hub. No details were included.

Income from the cap-and-trade plan is expected to hit $1.9 billion in 2017, up from last year’s projection of $1.3 billion

University and college tuition will be free for students from families with incomes of $50,000 or less, and more than half of students from families with incomes up to $83,000 will receive non-repayable grants that exceed the average tuition.

There will be a $3 increase in the price of a carton of 200 cigarettes, effective at 12:01 a.m. Friday, and the tobacco tax will keep rising at the rate of inflation each year over the next five years.

The minimum price for a bottle of wine rises to $7.95, and there will be a series of increases in the LCBO’s mark-up on wine, starting with a two percentage point hike in June followed by another two percentage points in 2017 and 2018, with a one-point hike in 2019

There will also be annual increases of about 10 cents in the tax on wine sold in private retail outlets, increasing from 16.1 cents to 20.1 cents over four years.

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