s

2016 Ontario Government Fall Economic Statement

Published on
November 14, 2016

This afternoon Ontario Finance Minister Charles Sousa delivered the Wynne government’s Fall Economic Statement (FES).  Its formal name is “Building Ontario Up for Everyone: the 2016 Ontario Economic Outlook and Fiscal Review”. With the Liberals trailing badly in public opinion polling, and with two by-elections looming in just three days, the content and delivery of this year’s Statement was expected to take on additional strategic importance.

Fall economic statements are not necessarily bound by the same number of strict rules that accompany federal and provincial annual budgets.   However, they have become a milestone on the parliamentary calendar that governments, opposition parties, and stakeholders look to for how the government of the day is implementing its existing agenda, and for new items added to that agenda.  Over the years, FES’s have served as everything from mini budgets to midyear report cards on that year’s budget, to pre-election communications tools.

 

Highlights

As first signalled by Minister Sousa in a recent speech, Ontario is helping first time homebuyers by doubling the maximum Land Transfer Tax refund for eligible first-time homebuyers to $4,000.  The land transfer tax system is a bracketed one, with prescribed rates and price levels.  Land transfer taxes on single family homes above $2 million will actually increase, as rates have been “modernized”.

You may recall that shortly after the recent by-election in Scarborough, which the Liberals lost, the government announced the creation of 100,000 new licensed child care spaces.  Today Minister Sousa announced $65.5 million this school year to support the creation of approximately 3,400 new licensed spaces for infants, toddlers and preschoolers as a next step in creating those 100,000 additional child care spaces by 2022.

Hospitals will receive a further $140 million investment over and above the $345 million announced in the 2016 Budget for their operating budgets to maintain and expand patient access to services to meet the needs of their local communities. With this new investment, all of Ontario’s public hospitals will have received at least a two per cent increase to their base funding in 2016–17. The new funding will help many hospitals sustain and improve access to key services such as elective surgeries and diagnostic imaging, and will help reduce wait times. 

Of interest, $32.4 million will be made available over four years to help more small and medium-sized enterprises grow into larger, export-oriented firms under Ontario’s scale-up voucher program that tailors support for high-impact companies.

The government also announced the launch of the Small Business Innovation Challenge pilot program. Supported by an investment of $28.8 million over five years, participating SMEs will be provided with development opportunities to demonstrate innovative technology solutions, positioning these firms for

commercial success. The government will first identify a specific problem or issue for which an innovative or technological solution is needed. Ontario‐based SMEs will then be invited, through an open call for proposals, to submit an innovative solution to the Small Business Innovation Challenge pilot program.

Ontario will make an investment of up to $180 million in new university-led postsecondary sites in Brampton and Milton, focused on science, technology, engineering, arts and mathematics.

Other consumer (voter) friendly announcements included:

  • Introducing legislation to establish the initial parameters for the Financial Services Regulatory Authority, a new independent and flexible regulator of financial services and pensions that would be more consumer-focused and improve protections for consumers, investors and pension plan beneficiaries.
  • Banning door-to-door marketing of certain household appliances, including water heaters, furnaces, air conditioners and water filters to protect consumers who feel pressured to sign contracts at the door.
  • Regulating the home inspection industry through mandatory licensing and qualifications for home inspectors as well as minimum standards for contracts, home inspection reports, disclosures and the performance of home inspections.

A number of previous commitments were reiterated, such as the plan to reduce hydro rates by an amount equal to the provincial portion of the HST (8%) beginning in January 2017.

The provincial deficit for 2016/17 is confirmed at $4.3 billion; the government reiterated its commitment to a balanced budget in 2017/18, as well as 2018/19.  Sousa announced that Ontario’s GDP growth is expected to average 2.2% over the next three years.  Employment in the province remains strong.

Not surprisingly, the Progressive Conservative reaction focused in on the size of the Ontario cumulative debt.  Even with historically low interest rates, servicing the debt now costs taxpayers $1 billion per month.  As well, The PCs reminded us all that Ontario is now the largest sub national debtor in the world (over $300 billion), that taxes are too high, and that the Liberals are using asset sales to show a balanced budget.  For their part, the NDP emphasized hydro costs for consumers, and the lack of meaningful progress on poverty. 

Of course, budgets are all about targets and forecasts.  To the government’s disadvantage, it is difficult to know the impact on the provincial economy after next January, when Donald Trump is sworn in as the next American President.  Renewed infrastructure spending south of the border should help Ontario; US protectionism and a changed/scrapped NAFTA probably will not.  It remains to be seen.

So what does this all mean?

It is unlikely that the today’s FES will impact the outcome of the two by-elections taking place on Thursday.  Frankly, there wasn’t enough here to sway votes toward or away from the Liberals.  While few expect that the Niagara area riding held by former PC Leader Tim Hudak will turn Liberal red, the Ottawa area riding where voters will vote this week is, like Scarborough Rouge River, one that has been held by the Liberals for as long as anyone can remember.  A loss there will only bring intensified pressure on Premier Wynne and her government; there are not that many opportunities remaining between now and the June 2018 general election for the Liberals to change the political dynamic that exists today, and does not bode well for them.

While the Land Transfer Tax and daycare space initiatives are consistent with the government’s theme articulated since the Scarborough by-election of helping Ontarians with their everyday lives, and will help some, the compelling question is, are these enough? Even when coupled with post secondary tuition relief for low income students, hydro rate relief, and other targeted initiatives, will they satisfy the public that their provincial government is in fact looking out for them?

The commitment to balancing the budget next year and the one after will help to reaffirm the Wynne government’s managerial competence.   However, based on the acrimony that exists between the government and the provincial Auditor General, we expect that the next AG’s report, which will be tabled any day now, will not do the government any favours.  Against the backdrop of the recent charges laid under the Elections Act against senior Liberal operatives in connection with the Sudbury by-election, one is left to wonder if today’s FES was in fact a missed opportunity for the Liberal government to be more bold, and more ambitious given all of these negative circumstances.

As always, feel free to contact your Sussex consultant for additional information.  To learn more about Sussex, please visit www.sussex-strategy.com .

Stay informed

Enter your email below to receive content just like this in your inbox.
Sussex Adrenaline is supporting Prostate Cancer Canada's "Plaid for Dad" campaign. Join us, and thousands of Canadians, and wear Plaid for Dad on June 17th in support of Prostate Cancer Canada.
Learn more
Sussex is proud to be both agency of record and a sponsor for World Refugee Day 2016. Find out how you can help us save lives together on June 20th.
Learn more