Measuring business confidence in Ontario
The 2020 Ontario Economic Report (OER) was released recently. The report provides three areas of measurement: business confidence, the small business friendliness index (SBFI), and economic outlook for the various regions.
“The OER is a useful tool to inform government on where to reduce barriers and increase investment to support business competitiveness across the province,” says Stuart Harrison, President & CEO, Peterborough Chamber of Commerce. “We’ve found that the confidence survey helps government understand its impact on business and we are looking forward to seeing how the measurables under the SBFI will help improve offerings for start-ups and growing businesses.”
Business confidence is measured by the confidence gap. The gap is the difference between business’ confidence in themselves and in Ontario’s economic outlook. In 2020, the gap widened to 37 points which is up from 31 points in 2018 and 2019. The Ontario Chamber of Commerce (OCC) says the main areas of broad concern around confidence include the cost of doing business, the high cost of living and the province’s debt. The survey from which the confidence conclusions are drawn also identified that those with low confidence were also concerned with the national and/or global economic outlook.
When asked how the government could strengthen the province’s competitiveness responding
businesses identified the top four areas:
While the group at the Eastern Ontario Regional Network (EORN) is moving forward with their cell gap analysis and federal and provincial money for system upgrades has been made available, ensuring connectivity for residents and businesses at commonly accepted upload and download rates will continue to be a challenge.
Meanwhile, on built infrastructure the city is facing a deficit of $1.194 billion and the county around $135 million over ten years.
When businesses were asked about the factors critical to their own competitiveness, a business’ ability to recruit talent, navigate regulation and red tape and their ability to innovate were the top three.
The OCC says the confidence survey also reveals a shifting attitude toward technology as a driver of confidence.
The Small Business Friendliness Indicator (SBFI)
In the OER, the SBFI measures Ontario’s competitiveness from the perspective of small business.
For 2020, the SBFI score is -9, (on a scale of 100 to -100). This indicates that the business
environment poses some challenges for firms with fewer than 99 employees. Seven different metrics are used to determine the SBFI score including:
The scores for three metrics were positive: the helpfulness of the province in starting a business, the ease of licensing, and the delivery of useful training and networking programs from a variety of sources. The SBFI also revealed an eagerness on the part of small business to embrace more online services from government, especially with respect to regulatory compliance.
Interestingly enough, navigating regulation was identified as the top barrier to starting a business in Ontario.
The OCC says the data supports a long-time advocacy goal of the Chamber network: that small businesses will benefit from a modernized, client-centric relationship with government, rather than complicated new initiatives, grants, or subsidies that tend to have low uptake and awareness.
Overall, the economy in Ontario is expected to slow with real GDP growth of 1.9% in 2020. The OER suggests that household spending will remain tepid as household debt will restrain expenditures. Commercial capital investments fell in 2019 and the authors of the OER suggest this is the result of concern for the future. On the labour market side, in 2019, job growth reached the highest it has been in 20 years and the unemployment rate approached a near 30 year low. That said, the economic outlook section also notes regional disparity and the majority of growth contained to the Greater Golden Horseshoe and Ottawa.
In the Muskoka-Kawartha Census Metropolitan Area (CMA) projections for 2020 are as
follows: the jobless rate will be 6.2%, up from 6.0% in 2019; employment will move from the negative to 0.6% and the population of the CMA will grow at a slightly slower rate of 1.2%, down from 1.3% in 2019.
Challenges related to accessing financial capital, attracting and retaining talent and burdensome regulations continue to compromise the ability of many of Ontario’s communities to compete effectively with other jurisdictions.
We hear these challenges from our members in the Peterborough business community along with the need for continued infrastructure investment that helps increase the economic capacity of communities such as built infrastructure and broadband.
The work of the Chamber will be to help inform the provincial policy landscape and encourage decision-making that makes our economy stronger for all.
“By the year 2020, the GPA will be sought out by many, and admired worldwide, as a uniquely healthy, diverse, enriched community which balances and promotes vibrant economic and employment opportunities while honouring the natural environment and valuing its cultural heritage. “
– That is the vision statement from GPA 2020 – A Vision for our Future. For those of you who are not familiar with it, it was a community engagement exercise like no other. Leading up to the final report in 1997, the steering committee led five action teams, each with co-chairs. Each action team was assigned 3 or 4 community sectors, each sector with 3 community at large volunteers. These volunteers spread out across the city and county and spoke with more than 2,000 residents and businesses.
It was an impressive effort, and it presented 26 recommendations in 12 areas designed to inform all levels of government – federal, provincial, City and County. The 12 areas included:
2020 is here. How does the reality stack up against the vision?
A 360 degree look at Canada
Stuart Harrison and I had the opportunity to get a 360 degree look at Canada’s economy recently. The 360 Summit was hosted by our national counterpart the Canadian Chamber of Commerce and featured an all-star line-up of speakers in touch with the heartbeat of the economy.
The day started off with five CEOs sitting on the stage talking about competitiveness and regulation, which was enlightening.
“Declining economic competitiveness in Canada should create the same gasp and concern just as if Canada went to an international hockey tournament and didn’t win a medal,” Mark Little, CEO Suncor. It wasn’t a jab at one of Canada’s national sports, but a way to create a connection to the economy for all Canadians. It matters that the country is competitive in business and the economy, not 14th place.
“Canada is fairly well positioned, but we continue to need skilled people to drive competitiveness,” Jad Shimaly of Ernst & Young. “How do we feed that funnel? We need to continue to foster innovation and generate Canadian owned intellectual property.”
Michael Doughty, CEO, Manulife. “We’re not an insurance company competing against other
insurance companies, we are competing against the companies who have a better, more effective, seamless experience for customers. We can’t fall behind in the digital transformation and skilled workforce and we need infrastructure that is world class in the physical and digital”
“There has to be a willingness of government to work with us. That’s what’s made the difference,” Heather Chalmers, President & CEO, GE. “Business must also be thoughtful in their approach of government.”
When it comes to regulatory environment, over the last 10-15 years Canada has dropped from 4th to 22nd on the list of developed countries and ease of doing business. “Canada needs a comprehensive review of the tax system. The last time one was completed none of the current federal party leaders
had been born.” Jad Shimaly, Ernst & Young
“Energy projects take about 10 years to get shovels in the ground. However, the pace of technology means the project submitted originally is modified and the process slows even further,” Mark Little, Suncor. “We’re not looking for cash; we’re looking for a yes.”
“Regulation existed before the internet and yet there has not been much change to allow for the environment the internet created.” Phillip Jette, Cogeco. “We have done more investment in the US because of the regulatory burden in Canada.”
“We are not risk averse; we are looking for regulation that supports our growth,” Jette, Cogeco.
The session wrapped up with agreement on the main challenges nationally:
The group then heard from VP and Deputy Chief Economist at RBC Dawn Desjardins who left us with a few key points.
The morning wrapped up with a discussion about Canada in the global economy. The panel encouraged Canadian businesses to export their services and knowledge as much as products and that businesses need access to markets and help with the cost of risk which is where Export Development Canada can help.
The panel also noted the following:
Learn more about the Canada 360 event at chamber.ca
This set of numbers will probably raise a few eyebrows here in Peterborough, but that’s good because it’s a pretty good news story for our community.
Statistics Canada (Stats Can) has just released population estimates of the census metropolitan areas (CMAs) and in the age category of residents aged 20 to 24
Peterborough ranks number 1 with 8.04% of our population in that age group.
That’s right, 1st - up from 9th place in 2008. And this statistic does not include students!
So, who are those in the 20-24- year-old category? These are young people at the start of their careers, who are more educated than ever and more tech savvy than any other generation.
A Stats Can report called “A Portrait of Youth” released in February of 2018 identifies the education level of this group.
The report concludes the following about youth: “They are more diverse, educated, and
connected and socially engaged than past youth, and in many ways are well positioned to succeed in today's complex global society. But not all young people are sharing these benefits. Some youth are unemployed or are in temporary jobs. Some are
struggling with mental health challenges, addictions, and homelessness. And not everyone feels included.”
Peterborough Chamber of Commerce President & CEO Stuart Harrison recently did an interview with Jordan Mercier on Extra 90.5FM asking the question: “What is drawing people in this cohort to Peterborough and what is keeping them here?”
We’ll take a crack at answering those questions. Perhaps they are returning home or perhaps they attended Trent University or Fleming College or a private institution or the trades school and have chosen to stay in the community.
Comparatively Peterborough is relatively affordable, there is a vibrant arts scene and a multitude of ways to experience the community indoors and out. And it’s also an attractive place to raise a family.
Knowing we have this cohort in our midst, the question then becomes how do we keep them? What are the tools? One of Peterborough’s strengths is our entrepreneurial culture. Over the past decade a concerted effort by the private and public sector and not-for profit business organizations has turned Peterborough into an incubator for business in all areas of our diverse economy.
Employment is another tool. The Peterborough Chamber of Commerce believes there is many an opportunity to increase the job prospects here. In the Portrait of Youth report, only 5% of 21 year olds enrol in apprenticeship programs. This is an opportunity. Peterborough and other rural communities need our skilled tradespeople to build the
infrastructure that will help us grow. The Chamber is asking the provincial government to have a flexible ratio for apprenticeships in rural and small urban communities. The intended outcome of this request is so that more young people will have the opportunity to build their lives in the community of their choice and not have to move away.
Another way we are trying to open the door for youth is by encouraging more technology development and innovation by asking the federal government to create a nationwide “my first patent program”.
The Chamber is also excited about the beneficial impact of the VIA Rail High Frequency Rail project which is on track for continued development. This direct access to the world from Peterborough plays well with the characteristics of a diverse, connected and socially engaged youth.
And when we talk about the socially engaged and opportunities for employment and action, the Peterborough Chamber recently put forward a national policy resolution asking the federal government to consider forward thinking structures to achieve social financing for community projects, as well as a stream of funding through the Community Futures network to help support early stage social enterprises.
Being at the top of the list for most 20-24 year olds in terms of a percentage of population gives Peterborough the advantage in the war for talent. But that means we still have to fight to make sure the environment is in place so this talent can find gainful employment and a supportive community that wants to see them succeed.