In response to Budget 2017, the Ontario Chamber of Commerce (OCC) and the Sault Ste. Marie Chamber of Commerce (SSMCOC) today expressed concern that there is no clear path for long-term fiscal prudence, while commending the government for Ontario’s first balanced budget since the global recession. While there is no deficit over the planning period, there is also no plan for surplus. Given that, downward payment on the debt will be pushed beyond the medium-term. This will place tremendous fiscal burden on future generations and considerable pressure on future economic planning.
“Budget 2017 demonstrates that much of Ontario’s fiscal outlook will depend on the prosperity of our private sector,” says Richard Koroscil, Interim President & CEO, Ontario Chamber of Commerce. “The government acknowledged that business investment spending slowed in 2016, though expects firms to increase investment by 3.1 percent, annually, to 2020 – an amount that would outpace growth in real GDP growth and household spending. These assumptions depend upon business confidence – which has fallen precipitously in recent years according to the Ontario Economic Report – and U.S. demand, which is subject to considerable risk given recent comments by American President Donald Trump.”
Rory Ring, Executive Director for the Sault Ste. Marie Chamber of Commerce commends the government for bringing in a balanced budget but expresses concerns on the path taken to get to this point and what that holds for the future. Ring says, “We remain deeply concerned about the state of the province’s finances and its debt, which are a drag on business confidence and jeopardize the sustainability our public services. A balanced budget should be the first step toward beginning to pay down debt, instead what we saw yesterday was the balance used as a springboard to launch new spending.”
Ontario’s revenues rely on the level and pace of economic activity of the province, but Budget 2017 offers limited vision for how to ensure that private-sector economic growth will continue to rise. Promised Corporate Income Tax rate relief, which the government paused following the economic downturn, were not reinstated. In the 2009 budget, the province pledged to reduce the Corporate Income Tax (CIT) rate to 10 percent by 2013. Within ten years it was estimated that the value of this CIT reduction would see Ontario benefit by increased capital investment of $47 billion, increased annual incomes of $29.4 billion and an estimated 591,000 net new jobs. However, the CIT reduction promise was halted in 2012 in light of the province’s deteriorating fiscal situation, and so the CIT rate remained at 11.5 percent.
Ring notes that after close to two years of significant lobbying by the Ontario Chamber network on the government’s Cap and Trade program, the government is still providing little detail on how they intend to re-invest the revenues. “The program is in place, businesses and consumers are paying more into the provincial coffers as a result,” says Ring. “We expected more detail on Cap and Trade re-investment in this budget.”
“The provincial government has insisted that it will invest Cap and Trade proceeds to help business and industry remain competitive and that it will do so in a ‘transparent and accountable way’” explains Ring. “Yet, government has provided little detail on how these proceeds will be spent or what programs they will fund. This is a cause for concern and uncertainty to both businesses and communities that find themselves particularly exposed to the effects of carbon pricing, like Sault Ste. Marie.” Ring adds that the Sault Ste. Marie Chamber will partner with the Sudbury Chamber of Commerce to bring forward a resolution to the Ontario Chamber of Commerce next week to lobby the government to outline a plan to re-invest Cap and Trade dollars back into communities that are home to businesses hit hardest by Cap and Trade costs.
The Sault Ste. Marie Chamber of Commerce is concerned about the budget’s cut of $70 million dollars to the Ministry of Northern Development and Mines. MNDM oversees the Northern Ontario Heritage Fund Corporation (NOHFC), a crown corporation and development agency that invests in northern businesses and municipalities through conditional contributions, forgivable performance loans, incentive term loans and loan guarantees. The Chamber notes that both MNDM and NOHFC are integral to the economic development and well-being of Northern Ontario.
The local Chamber also expresses concerns over the 2% cap placed on increases to rental rates and the impact that this will have on rental property owners. The cap will make it increasingly difficult for property owners to stay ahead of, and recoup, rising expenses such as energy and heating which have outpaced rental increase rates in recent years.
One bright spot in Budget 2017 were details provided around the clear commitment by Ontario’s private sector to providing job growth for the province. The budget suggests that 98 percent of all new jobs since the recession in Ontario have been full time, and 78 percent in above-average wage industries. This positive economic activity by Ontario’s private sector demonstrates a clear commitment to good, quality jobs throughout our province.
The Sault Chamber is also pleased to learn that funding to the Connecting Links program will increase to $30 million per year by 2018-9, but cautions that even with the increase, the program is still not funded to the level that it should be. Connecting Links provides critical funding needed to maintain infrastructure that supports the provincial transportation system.
“Government must listen to its own budget document on the consistent creation of high-quality jobs when they consider the final report of the Changing Workplaces Review, expected in the coming weeks,” says Koroscil. “While Premier Wynne and others have recently spoken about the rise of part-time work and concern over precarious work more generally, Budget 2017 states that the majority of the jobs created since the recession were in industries that pay above-average wages, in the private sector and in full-time positions.”
KEY POINTS FOR ONTARIO’S BUSINESS COMMUNITY:
– Ontario will not return to planned Corporate Income Tax cuts, jeopardizing tens of billions of dollars in potential capital investment and hundreds of thousands of news jobs.
– While there is no deficit over the planning period, there is also no plan for surplus. Ontario’s debt will rise by 21 per cent in the next three years as a result of interest charges, with no plans to begin debt repayment.
– 98% of all new jobs since the recession in Ontario have been full time, and 78% in above-average wage industries. This positive economic activity by Ontario’s private sector demonstrates a clear commitment to good jobs throughout our province and challenges many recent comments about precarious work and the need for the Changing Workplaces Review.
– Private sector investment is predicted to grow by 3.1 per cent, annually, to 2020, an amount that would outpace growth in real GDP growth and household spending.
The Sault Ste. Marie Chamber of Commerce has been the voice of the Sault’s Business Community since 1889. Visit ssmcoc.com
The Ontario Chamber of Commerce is Ontario’s Business Advocate, for more information go to occ.ca.