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What you need to know about the provincial budget

4/17/2019

 
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On Thursday, April 11, 2019 the provincial government released its first budget.
There are a number of areas of interest to the Peterborough business community:
  • Fiscal Position
  • Taxation
  • Electricity
  • Workforce Training
  • Housing Supply
  • Agriculture
  • Tourism
  • Provincial-Federal Relations

Below is a more in-depth look at these areas. Please take some time to read through the details.
​

Any feedback is appreciated and can be sent to:
Sandra Dueck, Policy Analyst sandra@peterboroughchamber.ca

The full budget document can be found here.

Fiscal Position
The provincial government has announced the following plans:

Budget 2019 outlines a fiscal recovery plan that “will prioritize investments that generate the greatest returns for the people of Ontario (…) Programs will be continually reviewed to ensure that they are efficient, effective and modern, relying on best practices from around the world.”
  • The government is projecting a deficit of $11.7 billion in 2018-19, but lays out a plan to return to a balanced budget by 2023-2024.
  • 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. This represents an approximately 11 percent divergence between the average annual economic growth rate and the program expense, by 2024.
  • The fiscal recovery plan includes a variety of spending cuts and tax decreases, in addition to limitations on future spending growth and organizational consolidations.
  • Through such measures, the government estimates that Ontario taxpayers will save approximately $26 billion between now and 2024.

With respect to debt repayment, the government is forecasting a net debt‐to‐GDP of 38.6 percent by the end of their recovery plan (vs. the forecast 40.8 percent for 2018-19). The Budget acknowledges that, “When debt is used to make long‐term investments, such as taking out a mortgage to purchase a home, it can have a beneficial long‐term impact.”

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.

The proposed bill also includes the “Premier and Minister’s Accountability Guarantee” which requires the Premier and the Minister of Finance to pay a penalty of 10 percent of their salaries for each missed public reporting deadline, along with an explanation and revised deadline.

Read more on Fiscal Position.

Comment:
These fiscal responsibility commitments encourage a spend smarter attitude rather than an austerity approach. This is inline with the recommendations made through the policy resolution process and reports from the Ontario Chamber of Commerce.

Taxation
The government has announced the following plans:

Ontario Job Creation Investment Incentive
  • A 100 percent write-off for manufacturing and processing machinery and for clean energy equipment, and an accelerated write-off for many other assets.
  • This is equivalent to $3.8 billion in tax relief over six years.

Accelerated Investment Incentive
  • A business can deduct an amount equal to three times the former first year depreciation rate in the first year that equipment is put into use (in subsequent years, the existing depreciation rate applies).

Combatting Tax Evasion
The government is also creating a special unit of tax experts to combat tax evasion and avoidance, in collaboration with federal officials.

Read more on Taxation.

Comment:
The Ontario Job Creation Investment Incentive mirrors the federal Accelerated Capital Cost Allowance program and will help with competitiveness. Increasing revenue without punishing law-abiding businesses and residents is key.

Electricity
The provincial government has announced the following plans:
  • Introduced Bill 87 Fixing the Hydro Mess which includes refinancing of the Global Adjustment
  • Consultations on industrial electricity pricing and programs with the following sectors:
  • automotive
  • forestry
  • mining
  • agriculture
  • steel
  • manufacturing
  • chemicals
  • Modernizing the Ontario Energy Board (OEB)

Plans also include:
  • Ending Green Energy contracts
  • Supporting the nuclear industry in Ontario
  • Promoting transparency and accountability at Hydro One

Read more on Electricity.

Comment:
Our Peterborough Chamber member businesses consistently report concern around the pricing of electricity and available programs.
​
Consultations are currently underway and the Peterborough Chamber of Commerce will be requesting feedback from members in the above industries to provide to the provincial government.

Contact Sandra Dueck, Policy Analyst if you would like to participate.
Email: sandra@peterboroughchamber.ca

Workforce Training
The provincial government has announced the following plans:
  • Proposing new legislation for a governance framework that would replace the Ontario College of Trades and Apprenticeship Act, 2009
  • Financial incentives to encourage employer participation in the apprenticeship system to support a consortium like model where employers come together and train apprentices
  • A new one-window application process for apprentices
  • Promoting apprenticeship and the skilled trades to students from K-12
  • A flexible framework to allow training and certification in a full trade or in a portable skill set
  • A micro-credentials pilot in an effort to develop the in-demand skills employers are seeking
  • Enhanced labour market information website featuring job profiles and a connection to the federal government job bank
  • 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
  • Expanding the occupations eligible for the Employment Job Offer to reflect in-demand skills
  • Expanding the Entrepreneur Stream
​
Read more on Workforce and Training.

Comment:
In the Peterborough Chamber's most recent membership survey, retaining and recruiting talent was identified as one of the most prevalent challenges. The Chamber is hopeful that these new programs, particularly those around apprenticeships, will help our member businesses.

The Peterborough Chamber has advocated for flexibility in the apprenticeship system for small urban and rural centres for the past three years.

Changes to the Ontario Nominee program have the potential to bring highly skilled immigrants to communities such as Peterborough.

Housing Supply
The provincial government has announced the following plans:
  • Development of a Housing Supply Action Plan with the following principles:
  • Develop the right mix of housing where it is needed
  • Lower the costs of development
  • Make it easier to develop rental housing
  • Address other concerns and opportunities to increase the housing supply
  • Allow municipalities flexibility while protecting the Greenbelt, agricultural lands, and cultural heritage areas

  • Introduce legislation in Spring 2019
​
Read more on Housing Supply.

Comment:
Through its membership, the Peterborough Chamber of Commerce has identified that housing is an area that has an impact on employment.

In the Chamber's Municipal Business Platform under Building Whole Communities, we call for increasing housing stock by supporting the construction of a variety of types.

Agriculture
The provincial government has announced the following plans:
  • Commitment to partnering with farmers and agricultural communities
  • Focus on reducing red tape and regulatory burden (some reductions were in Bill 66)
  • Support for the Canadian Agricultural Partnership which is a provincial-federal initiative ($3B available over 5 years Canada-wide). Farmers and other businesses can apply for support for projects that boost innovation, economic development, environmental stewardship, and food safety.

Read more on Agriculture.

Comment:
Agriculture is a key pillar of Peterborough's economy. It is positive to see several regulatory reductions pass in Bill 66. Learn more.

One area still to be addressed is workforce in agriculture. Members in this area say workforce development help is needed in all aspects of the industry.

Tourism
The provincial government has announced the following plans:
  • Commitment to Made-in-Ontario Tourism Strategy
  • Consultations are complete and strategy development is underway

Read more on Tourism.
​
Comment:
Tourism is an important pillar of Peterborough's economy. It is positive to see the recognition of the need to develop a tourism strategy that is reflective of the importance of the industry to Ontario's economy.

Provincial-Federal Relations
The provincial government has announced the following plans:

Advocate to the federal government for the following changes:
  • Ontario must be treated fairly and transfers should have clear goals
  • Transfers must meet the fiscal needs of the Province
  • Transfers must not apply more constraints or costs on Ontario

Read more on Provincial-Federal Relations.

Comment:
The Canadian Chamber of Commerce encourages continuous reduction in budget deficit and a detailed plan to get back to a balanced budget.

Resources
Ontario Chamber of Commerce Rapid Policy Update
2019 Provincial Budget

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