Source: https://www.fin.gov.on.ca/en/budget/ontariobudgets/2015/ch1d.html
Timestamp: 2018-02-20 21:50:12
Document Index: 585908490

Matched Legal Cases: ['art 1', 'art 1', 'art 1', 'art 1', 'art 1', 'art 1']

Chapter I, Section D | 2015 Ontario Budget
Section D: Creating an Innovative and Dynamic Business Environment
To create rewarding, high-paying jobs, Ontario’s businesses must succeed and grow. Success and growth in today’s rapidly changing global economy require innovative responses to constantly evolving competitive challenges. That is why creating an innovative and competitive business climate is the third pillar of the government’s four-part economic plan, outlined in the 2014 Budget.
The government has improved Ontario’s competitiveness through various initiatives:
Corporate tax reductions and sales tax reform have substantially enhanced Ontario’s attractiveness as a location for business investment. The Province has also cut business regulations by 17 per cent. As a result, the cost of doing business in Ontario is competitive within Canada and around the world.
Ontario’s Jobs and Prosperity Fund (JPF) is partnering with businesses to attract new investments to the province that will enhance innovation, increase productivity and grow Ontario’s exports.
By supporting its key sectors, Ontario is experiencing promising growth in new, high-value sectors of the economy, including advanced manufacturing, biotechnology and life sciences, and information and communications technologies (ICT).
The Going Global Trade Strategy is helping firms export. In 2012, over 18,000 Ontario firms exported, an increase of more than 600 firms since the global recession.
By making strategic investments that improve access to capital, the government has helped Ontario exceed most G7 countries in venture capital investment intensity.
The evidence shows that Ontario’s plan is having the right impact. Since the recessionary low in June 2009, over 500,000 net new jobs have been created, primarily in the private sector. Not only has Ontario recovered all the jobs lost since the 2008 recession, but the majority of new jobs are full time and in industries paying above-average wages. High-quality jobs provide opportunities for personal development while helping to create financial stability for families.
Notwithstanding Ontario’s successes, more must be done to ensure Ontario’s continued prosperity. Accordingly, the Province is taking steps in this Budget to address the following challenges:
Intense international competition, including from emerging economies;
Not enough small firms scaling up into medium and large firms; and
Inadequate productivity growth and underinvestment in innovation.
The government continues to build on its economic plan by addressing these challenges through:
Supporting a competitive tax environment;
Making strategic investments;
Strengthening international and interprovincial trade;
Growing businesses in the north.
In particular, the government will:
Enhance the Jobs and Prosperity Fund (JPF) by a total of $200 million to attract more business investments that will spur innovation and create jobs. The government will also extend eligibility to the forestry sector;
Participate in the creation of a new innovation initiative with an experienced group of senior business leaders who will bring their capital, knowledge and networks to the mission of bringing Ontario startups to scale; and
Provide ongoing electricity pricing support for qualifying large northern industrial facilities, which sustains jobs and global competitiveness, beyond March 2016.
Supporting a Competitive Tax Environment
Business investment is necessary to support long-term economic growth and job creation. In today’s global economy, where jurisdictions must compete for business investment, a competitive tax system is critical. Through recent tax reforms, Ontario has significantly improved its tax competitiveness.
TABLE 1.3 Measures the Government Has Taken to Maintain a Competitive Business Tax System
The Harmonized Sales Tax (HST) will remove $4.7 billion a year in embedded sales taxes paid by businesses when fully implemented.
The government has cut Corporate Income Tax (CIT) rates for businesses, providing $2.3 billion of tax relief per year:
The general CIT rate was reduced in stages from 14 per cent in 2009 to 11.5 per cent in 2011.
The CIT rate for manufacturers and processors (M&P) was reduced from 12 per cent in 2009 to 10 per cent in 2010.
The CIT rate for small businesses was reduced from 5.5 per cent in 2009 to 4.5 per cent in 2010.
Capital Tax Elimination
The government eliminated Capital Tax, which corporations paid whether or not they had a profit. This measure provides $2.1 billion of tax relief per year.
Business Education Tax Reductions
The government implemented significant cuts to high Business Education Tax rates, resulting in ongoing savings of over $200 million per year for Ontario businesses.
Supporting Manufacturing and Processing Investment
Paralleling the 2013 federal extension of the accelerated depreciation
rate for manufacturing and processing machinery and equipment to
December 31, 2015, provides a benefit of $265 million over three years.
Administrative Savings for Business
Ontario’s general Corporate Income Tax (CIT) rate was reduced in stages from 14 per cent in 2009 to the current 11.5 per cent, resulting in a combined federal–Ontario general CIT rate of 26.5 per cent. Ontario’s combined rate is lower than the combined federal–state CIT rate in any of the U.S. states and lower than the average CIT rate of G7 and G20 member countries.
For an accessible description of Chart 1.13, click here.
The CIT rate reductions, Sales Tax reform and Capital Tax elimination have together cut Ontario’s marginal effective tax rate (METR) on new business investment by half since 2009. As a result, Ontario’s METR is lower than the average METR among Organisation for Economic Co-operation and Development (OECD) countries and is well below the average METR in the United States.
For an accessible description of Chart 1.14, click here.
Since 2007, both Ontario and the federal government have provided an accelerated deduction for investments in manufacturing and processing machinery and equipment. This deduction helps businesses rebuild capacity and remain competitive in the global economy. Ontario has encouraged the federal government to continue this support for manufacturers and processors, which is set to expire on December 31, 2015, and commits to paralleling the federal government in this regard.
Productivity growth is an important driver of an economy’s prosperity and is strongly linked to competitiveness. Growth in the productivity of an economy can be affected by a variety of investments, including in machinery and equipment and research and development (R&D). Innovation — the ability to turn ideas into useful new products and services and new ways of doing things — is also a vital driver of competitiveness and prosperity.
The government is supporting the private sector to become more competitive and make productivity-enhancing and innovation-focused investments through:
A new 10-year Jobs and Prosperity Fund;
Access to capital for entrepreneurs;
Fostering an innovation ecosystem;
Helping more Ontario startups scale up;
Supporting excellence in technology and business management;
Supporting health innovation; and
Supporting the sharing economy.
In January 2015, the government launched a 10-year, $2.5 billion Jobs and Prosperity Fund to partner with businesses. The Fund is anchored in enhancing productivity growth, innovation and exports of Ontario companies. These three principles are also part of the government’s new Strategic Investment Framework, which is used to evaluate potential projects. When determining Provincial support for a potential project, the Strategic Investment Framework also takes into consideration:
Incremental investments are business activities that occur only because of government support and exclude activities that would have occurred regardless.
Leveraging incremental investments;
Alignment with Ontario’s key growth sectors; and
The requirement that projects provide a positive rate of return and net economic benefit to Ontario’s economy.
The Fund has three distinct streams to help support businesses across the economy:
The New Economy Stream — Increasing firms’ capacity for innovation; encouraging productivity-enhancing investments in ICT and advanced manufacturing equipment; and helping businesses expand their reach in the global marketplace.
The Strategic Partnerships Stream — Bringing together business, research institutions and entrepreneurs to create and adopt new technologies and improve their competitiveness.
The Food and Beverage Growth Fund — Improving the productivity and competitiveness of food, beverage and bioproduct manufacturers.
Under the Jobs and Prosperity Fund, Ontario will also extend funding eligibility to the province’s forestry sector to help it increase production capacity and expand into new markets while ensuring this resource is managed sustainably. This will also help modernize the forestry sector and facilitate the production of higher value-added products by supporting the adoption of new technologies.
Project commitments will help create and retain jobs. For example, the investment in Linamar will create 1,200 jobs and retain more than 6,800 jobs over 10 years. To enable the Province to partner with more businesses, the Fund will be enhanced by a total of $200 million beginning in 2015–16, increasing the Fund to $2.7 billion over 10 years.
TABLE 1.4 Recent Strategic Partnership Investments
Linamar (2015) An investment of over $500 million over 10 years through support from the Jobs and Prosperity Fund. The project will result in investments in productivity-enhancing equipment, increased research and development (R&D) activity, and increased exports, with the Province projected to recoup its investment in six years.
Honda Canada (2014) An investment of $857.4 million in Ontario’s auto sector, including R&D, training, supplier tooling and installation of new technologies at the company’s three Ontario facilities.
OpenText (2014) An investment of up to $2 billion to expand the company’s operations across Ontario, including new jobs in R&D. OpenText is Canada’s largest software company, specializing in enterprise information management software.
Cisco (2013) An investment of up to $4 billion that will establish Ontario as one of the company’s R&D hubs. This project will support the development of technology used in mobile computing and video technology.
Regional and community development funds support businesses and communities across Ontario, helping to create jobs, boost productivity and form a solid foundation for regional economic growth. The government continues to directly support regions around the province by making more than $150 million available annually through its funds.
Eastern Ontario Development Fund;
Southwestern Ontario Development Fund;
Northern Ontario Heritage Fund Corporation;
Rural Economic Development program; and
Aboriginal Economic Development Fund.
TABLE 1.5 Recent Examples of Supporting Economic Development in Ontario’s Communities
Nemak of Canada Corp.
Located in Windsor, Nemak supplies high-tech aluminum casting components for the automotive industry. The company received a $1.5 million grant from the Southwestern Ontario Development Fund for a facility expansion, creating 80 new jobs and leveraging $14.6 million in private investment.
Silicorp Developments Inc.
Received a $535,000 grant from the Northern Ontario Heritage Fund Corporation to establish a silica crushing and processing plant in North Bay, leveraging $1.4 million in private investment and creating 16 new jobs.
Receiving $457,348 over three years from the Aboriginal Economic Development Fund to implement its regional business organization project, allowing both parties to be effective partners in resource development and other emerging sectors. The project is expected to create or sustain up to 375 jobs and provide skills training for up to 185 Aboriginal people.
Access to capital plays a critical role in accelerating the growth of innovative startups and entrepreneurial firms into medium and large companies. That is why the government has made strategic investments that improve access to capital. In January 2014, Ontario launched the Northleaf Venture Catalyst Fund in partnership with the federal government and private-sector partners. To date, the Fund has made nine investments in companies and other venture capital funds.
The Fund’s investment activities contributed to a strong year for venture capital investment activity in Ontario. According to the Canadian Venture Capital and Private Equity Association, more than $930 million was invested in Ontario-based companies in 2014. Ontario’s venture capital activity has improved since 2009, and the province outpaces most other G7 countries in venture capital investment as a proportion of GDP.
For an accessible description of Chart 1.15, click here.
Social enterprises are organizations that use business strategies to maximize their social or environmental goals.
Partnerships with the private sector are also helping improve access to capital for social enterprises. Social enterprises often face unique financing challenges as they pursue their vision. In December 2014, the MaRS Centre announced a partnership with Virgin Unite, the non-profit arm of the Virgin Group. The MaRS Centre for Impact Investing will manage a new $1 million fund on behalf of Virgin and the Mindset Social Innovation Foundation to support early-stage social enterprises, with a goal of raising up to $5 million from additional investors.
In February 2015, the government announced support for 11 social finance organizations through the Social Enterprise Demonstration Fund. With the Province’s $4 million contribution, these organizations will provide loans or grants to accelerate the growth of early-stage social enterprises. Ontario’s funding is expected to leverage more than $6 million from other sources, including the private sector.
Foreign direct investment (FDI) can play a key role in improving productivity and competitiveness. The Ontario government has played an important role in attracting FDI by contributing to a positive business investment climate and leveraging major capital spending projects by leading global companies. Ontario remains the leading destination in North America for FDI.
fDi Intelligence, a major source of research and analysis on FDI trends globally, published in its report on global FDI trends in 2013 that Ontario is the number one destination in North America for global FDI, based on capital spending projects.
Ontario ranked second in North America in the software and information technology sector, third in autos and fourth in financial services. The province continues to punch above its weight in FDI in these major sectors, while ranking only fifth in North America in overall economic size.
Ontario’s innovation ecosystem, which includes the Ontario Network of Entrepreneurs (ONE), is among the most robust in the world. Over the last decade, a culture of entrepreneurship has blossomed in Ontario. Thousands of new companies are starting. Those companies are attracting customers and risk capital, both domestically and internationally, fuelling their growth and creating jobs.
The Ontario Network of Entrepreneurs (ONE) is a comprehensive suite of programs, services and resources to assist businesses at every stage of their development — from local businesses to globally focused, technology-based firms. ONE provides advice and mentorship, skills and knowledge development opportunities, as well as access to local networks of academics and investors, and access to seed capital. ONE consists of:
Regional Innovation Centres (RICs) — Operating across the province, Ontario’s 17 RICs are a province-wide innovation network that supports technology-based entrepreneurs. The RICs work together with the Ontario Centres of Excellence and MaRS Discovery District.
Small Business Enterprise Centres — With 57 locations across Ontario, Small Business Enterprise Centres are a partnership between the Province and local municipalities focusing on “main street” businesses. Working with a local Small Business Enterprise Centre helped the Krista Norris Collection, an Ottawa-based fashion accessory company, double the number of retailers carrying its products throughout Ontario and the United States.
Business Advisory Services — The Province helps existing and aspiring entrepreneurs grow their businesses at home and abroad through 12 Business Advisory Services offices across Ontario.
The government will engage international experts to evaluate the effectiveness ‎of the ONE to maintain its global leadership position. The review aims to ensure that Ontario continues to be one of the top jurisdictions globally for companies to start and grow. It is vital that an innovation network adapt to new approaches and opportunities, with a focus on growing the next generation of leading innovation-driven businesses.
Building on its successes, Ontario has an opportunity to compete with Silicon Valley and establish itself as a globally recognized hotbed of innovation.
Helping More Ontario Startups Scale Up
Alongside venture capital and other risk capital, mentorship helps to support the growth and expansion of innovative startups and entrepreneurial firms. For this reason, the Province will participate in the creation of a new innovation initiative that will convene an experienced group of civic-minded senior business leaders to bring together their capital, knowledge and networks to scale up Ontario startups.
Communitech’s Corporate Innovation Lab
Recognizing the need to boost productivity by adopting new technologies and business models, large companies such as the TD Bank Group and Canadian Tire have partnered with the Communitech Hub in Kitchener. This relationship is helping some of Canada’s companies become more competitive, while at the same time accelerating the growth of innovative startups through new sales and partnerships — a true win–win. Ontario proudly supports the startup ecosystem through the Ontario Network of Entrepreneurs.
Supporting Excellence in Technology and Business Management
The Institute for Competitiveness and Prosperity had previously identified a gap in Ontario’s technology management expertise. To address this gap and support the high-tech industry, funding will be provided for a new school within Wilfrid Laurier University.
The Lazaridis Institute for the Management of Technology Enterprises will teach students the specific management skills required by the technology sector. It will focus on teaching these skills through customized curricula, research activities, seminars and conferences. The Province will contribute $1.5 million annually to the Institute over the next 10 years to leverage an investment of $20 million from the private sector.
In addition, the Province is investing $10 million over two years to expand Brock University’s Goodman School of Business through renovation and additions. It will also leverage an investment from the private sector. This expansion will provide more students with innovative learning options and greater flexibility to gain the skills and knowledge required for success after they graduate.
Supporting Health Innovation
To support the growth and competitiveness of Ontario’s health technology sector, the Ontario Health Innovation Council (OHIC) was established in November 2013. In December 2014, the Council issued a final report and provided recommendations to the government, including options to reduce barriers to innovation and to better support the use of health care technologies in Ontario.
The Province will adopt all of the Council’s recommendations including the appointment of a Chief Health Innovation Strategist and six innovation brokers to connect health technology entrepreneurs with the people and resources needed to advance their innovations. The government will also establish the $20 million Health Technology Innovation Evaluation Fund to support pre-market evaluations and early adoption of home-grown innovative health technologies. In addition, the government will continue working on shifting to strategic, value-based procurement and creating incentives for innovation.
Helping Innovators Bring New Technologies to the Health System
In line with the work of the Ontario Health Innovation Council, the government already supports the development, procurement and adoption of new health innovations through three initiatives:
MaRS EXCITE — MaRS EXCITE (Excellence in Clinical Innovation Technology Evaluation) helps innovators accelerate the development, regulatory approval and adoption of their health technologies through a single, harmonized, pre-market, evidence-based process. MaRS EXCITE will receive $2.3 million in funding over the next four years.
AdvancingHealth Program — The AdvancingHealth Program, delivered by the Ontario Centres of Excellence, connects health care organizations, innovators and academic institutions to better align health needs with innovative technologies and services developed in Ontario.
Improving Procurement of Health Innovation — With government support, the Healthcare Supply Chain Network encourages a shift to value-based procurement activities and a competitive process that is more open to health innovations.
Government support for health innovation is already making a difference:
Provincial funding to Xagenic has supported the development of a revolutionary molecular diagnostic system.
With government support, Interface Biologics develops biomedical polymer technologies that enhance the safety and effectiveness of implantable medical devices.
Ontario is a global leader in various fields of health research including neuroscience, oncology and regenerative medicine. The Province continues to support groundbreaking medical research in those areas and more, which helps improve health care outcomes for Ontarians, while supporting the commercialization of innovations developed in Ontario:
The Province will commit $23.5 million over five years to help establish the Aging and Brain Health Innovation (ABHI) Centre at Baycrest Health Sciences, a world leader in the study of cognitive neuroscience. The ABHI Centre will support the development of new technologies, products and resources to enable people to age in the setting of their choice by maintaining their cognitive, emotional and physical well-being and independence as long as possible.
The Province is investing $25 million over five years to support the recently established Ontario Institute for Regenerative Medicine (OIRM). The Institute offers a strategic opportunity to accelerate the translation of discoveries into new treatments and therapies for a wide variety of diseases and conditions, including cancer, diabetes, blindness, and heart and lung diseases.
In February 2015, the government announced a $6.4 million investment over four years in the Health Services Research Program of the Ontario Institute for Cancer Research (OICR). The funding will support new research on increasing screening rates for colon cancer, decreasing toxicity for patients undergoing chemotherapy, and improving pain management for cancer patients. The OICR is at the leading edge of cancer research and has received commitments of more than $750 million in Provincial funding since 2006.
The Alzheimer Society of Canada estimates that the economic burden of dementia in Canada will increase to $24 billion by 2018. To improve the diagnosis and treatment of conditions such as autism, depression, Alzheimer’s disease and Parkinson’s disease, the Province will continue to support the work of the Ontario Brain Institute (OBI).
Ontario is providing $2 million to support the Brain Imaging Centre at The Royal’s Institute of Mental Health Research in Ottawa. The funding will be used to acquire a unique PET–MRI brain-imaging system that will advance the understanding of a variety of mental health disorders. It will also enable mentoring and training to build Ontario’s and Canada’s next generation of researchers and clinicians.
The right regulatory and tax environment can help innovation thrive. As part of the growing shift to the sharing economy, new technologies are disrupting existing business models. These software-driven applications often involve thousands of individual operators. As these business models are quickly emerging, the labour landscape is changing. Moreover, aspects of the regulatory and taxation environment may need to adapt to new and previously unconsidered business models.
To help vibrant, emerging sectors thrive, the government commits to working with firms and industries to help them comply with existing obligations and to consulting on an ongoing basis to ensure those obligations reflect a changing economy.
Strengthening International and Interprovincial Trade
Ontario’s economic growth and continued prosperity depend on increasing its exports within Canada, within North America and around the world.
Global opportunities to grow and diversify Ontario’s exports have never been better. Ontario’s principal export market, the United States, is rebounding as a global leader, at a time when lower oil prices and a more competitive Canadian dollar are helping lift the province’s exports. Fast-growing markets within emerging economies remain a significant growth opportunity for Ontario businesses.
In the fall of 2013, the Province introduced its Going Global Trade Strategy, to capitalize on global export trends and help Ontario firms compete and become more productive. The fast-changing global trading environment holds tremendous opportunities and some market challenges for firms. Ontario’s trade strategy is helping new and existing exporters learn about foreign opportunities and successfully respond to market changes.
Since 2000, Ontario exports have more than tripled to Asia and doubled to Latin America, as firms have been slowly diversifying towards these fast-growing markets. As these regions’ large middle classes grow and demand higher-quality products and services, Ontario exporters must be ready and able to meet the challenge.
Key elements of the Going Global Trade Strategy include:
Helping firms start exporting and existing exporters build capabilities;
Diversifying exports into global markets, building on U.S. export success;
Promoting Ontario’s high-quality and competitive industry strengths;
Collaborating with the federal government and industry associations, including many business groups representing Ontario’s immigrant communities. Together with foreign partners, Ontario is helping to provide customized advisory services, foreign facility access and innovation partnerships to help businesses access global markets; and
Working with the federal government to negotiate important new trade agreements. These include the Canada–European Union Comprehensive Economic and Trade Agreement (CETA), Canada–South Korea Free Trade Agreement, and potential future pacts with India, Japan and the 12-nation Trans-Pacific Partnership.
Small and medium-sized enterprises (SMEs) account for over 90 per cent of all exporters in Ontario and have led the growth in exporting to foreign markets, focusing on niches such as quality food products and specialized machinery. Small and medium-sized enterprises need to build on their strengths in the U.S. marketplace, take advantage of supply-chain linkages, boost their exports overseas and scale up into larger companies. Almost half of all SMEs in the Ontario manufacturing sector export products, but mainly only to the United States.
The Province’s trade strategy continues to build on its recent success in helping Ontario exporters. Over 18,000 firms exported in 2012, according to Export Development Canada. This is an increase of more than 600 net new exporters since the global recession.
Customer demand for Ontario’s high-value-added goods and services is growing around the world. Emerging markets such as China and India are expected to continue expanding at a rapid pace. For example, China’s share of the global economy is expected to almost double to 27 per cent by 2035. Regions such as the United States and Europe will continue to generate solid demand for Ontario’s resources, high-technology exports, and professional and technical services.
Initiatives under the Going Global Trade Strategy will help Ontario exporters continue to grow in number, capability and success:
China remains an important market with which Ontario continues to build stronger ties. During the Premier’s 2014 international trade mission to China, Ontario secured 11 investment projects valued at $966 million. These projects will create about 1,800 jobs in communities across the province, from Ottawa to Niagara Falls to Stouffville. In addition, the government will conduct a trade mission to China in April 2015 to increase opportunities for Ontario’s agriculture and agri-food sector.
More than 2,400 Ontario exporters have received help to become export-ready and expand globally, supporting $750 million in new business opportunities (from 2013 to late 2014).
Ontario has undertaken a growing number of trade missions to help develop business interests, including 97 trade missions to the Americas, Europe, the Middle East and Asia Pacific. Almost 1,000 Ontario companies have participated.
International Marketing Centres have helped more than 830 Ontario companies looking to access new export markets. Centres are located in New York, San Francisco, Mexico City, São Paulo, London, Paris, Munich, Beijing, Shanghai, Tokyo and New Delhi (with a satellite office in Mumbai).
In early February, Minister of Finance Charles Sousa travelled to Chicago, Illinois, where he met with both direct and fixed-income investors to promote greater cooperation, partnership and investment between the State of Illinois and Ontario.
The government continues to undertake new initiatives, such as finding new markets; expanding opportunities for firms to connect with foreign buyers; expanding the reach of Ontario’s exports, particularly to fast-growing emerging nations; and promoting Ontario-made, innovative goods and services.
Growing Opportunities Interprovincially
Interprovincial trade plays an essential role in the economy, supporting thousands of jobs across the province. In 2014, Ontario’s interprovincial exports of goods and services were valued at $134 billion. Quebec remains Ontario’s largest provincial export market, accounting for more than one-third of total interprovincial exports, followed by Alberta and British Columbia.
Barriers to interprovincial trade can add unnecessary obstacles to doing business across Canada and hinder economic potential. Canada’s Premiers recognize this economic reality and are working together to strengthen and modernize the internal trade framework. Ontario is co-leading this renewal with Manitoba, Saskatchewan and Nova Scotia to secure an ambitious and balanced updated internal trade agreement that levels the playing field for trade within Canada.
Ontario–Quebec Partnerships
At a joint meeting of ministers held in Toronto in November 2014, the Premiers of Ontario and Quebec committed to reinvigorating the Ontario–Quebec Trade and Cooperation Agreement (OQTCA). The objectives include increasing regional trade and investment, enhancing the region as a centre of productivity and innovation, and promoting it as an export hub within Canada. The two provinces agreed to work together to:
Align OQTCA government procurement commitments with those of the CETA, to ensure that Ontario and Quebec suppliers are treated no less favourably than European Union suppliers in each other’s markets;
Enhance the OQTCA regulatory cooperation chapter to share information on proposed regulations and regulatory best practices, with a view to having a tangible impact on business; and
Explore opportunities to conduct joint trade missions for industries of mutual interest, or to countries or regions of mutual interest, with a view to leveraging existing resources and international linkages.
Ontario and Quebec also signed agreements to work together to keep electricity affordable and reliable, tackle climate change, build modern infrastructure and support La Francophonie. The next joint meeting will take place in Quebec City later this year.
See Chapter III: National Leadership — Strong Ontario, Strong Canada for more details about Ontario’s intergovernmental relations.
Ontario is creating an environment where businesses can flourish through targeted legislation, smart regulations, and the effective delivery of publicly provided goods and services.
Helping Businesses Manage Electricity Costs
The government is committed to reducing electricity cost pressures on small businesses and industrial consumers while promoting the conservation of energy and electricity. Through Ontario’s five‐point small business energy savings plan, small businesses will have the tools they need to conserve energy, manage costs and save money.
In the 2014 Budget, Ontario announced an expanded Industrial Electricity Incentive (IEI) to further capitalize on the province’s strong supply of electricity by incenting industrial expansion through rate mitigation — supporting a dynamic and innovative business climate in which companies can thrive, grow and create jobs.
As part of this enhancement, eligibility for the IEI was expanded to encourage participation from more diverse economic sectors throughout the province.
Under the IEI Stream 3 intake, eligible companies in electricity-intensive sectors qualify for reductions related to the cost of their incremental power consumption, and will allow for better use of Ontario’s current surplus energy capacity to drive local economic growth and support domestic job creation. Under Stream 3, 22 companies have received offers for 24 different projects.
Ontario remains committed to ensuring competitive industrial electricity rates to support large industrials while also promoting the demand management of electricity.
In the 2014 Budget, Ontario committed to expanding the Industrial Conservation Initiative (ICI) to provide a stronger incentive for more large and medium-sized electricity consumers to shift their electricity consumption away from peak periods, thereby improving reliability and lowering total system costs. To date, the ICI program has helped more than 200 of Ontario’s largest energy consumers save an average of 10 to 20 per cent on their electricity bills. These benefits help support large industrials and associated employment, and are central to Ontario’s economic plan to support an innovative and dynamic business climate.
The ICI is being expanded by lowering the threshold for qualifying industrial sectors from five megawatts (MW) to three. New eligible participants that opt in will begin receiving billing under the ICI starting July 1, 2015. Lowering this threshold will make more companies eligible for this rate mitigation program. This helps a wider array of businesses across the province save on the cost of electricity, especially medium-sized companies in the manufacturing, mining, quarrying, oil/gas extraction, refrigerated warehousing, greenhouse and data processing sectors.
An effective and streamlined regulatory environment is key to business efficiency and economic growth. The government continually reviews regulations to ensure they are appropriate and do not impose unnecessary burdens.
The Better Business Climate Act, 2014, was enacted in December 2014. It will reduce unnecessary regulatory burdens and practices that cost businesses time and money. The Province’s target is to reduce compliance costs by $100 million by the end of 2017.
Under the Act, the Province is required to report every June on the progress of burden reduction activities undertaken by ministries. This builds on the government’s earlier initiatives that have resulted in eliminating 80,000 regulatory requirements, a 17 per cent reduction, since 2008.
The government will undertake a comprehensive review of the Province’s corporate and commercial statutes to ensure Ontario has modern laws that facilitate an efficient market and prosperous business climate. Ontario has over a million active business corporations, with over 60,000 new corporations being created every year. While targeted legislation has been passed to modernize and respond to particular business needs, a comprehensive review of corporate and commercial statutes has not been undertaken in the past 10 years. This review strengthens Ontario’s competitive advantage in a global economy and supports a dynamic business climate.
Through this review, the government will explore innovative business structures to solidify Ontario’s position as a jurisdiction of choice for new business, including for social entrepreneurs who are driving innovation and competing to attract investment globally. As an early priority, the government will take steps to enable the proclamation of the Ontario Not-for-Profit Corporations Act, 2010.
Amending the Personal Property Security Act
The government will introduce an amendment to the Personal Property Security Act to remove the current five-year limit on the registration period with respect to collateral that is or includes consumer goods. If enacted, this would remove an unnecessary burden on Ontario businesses that must file one or more renewal registrations where the financing or lease transaction relating to consumer goods is longer than five years.
Managing Forfeited Corporate Property
The government intends to move forward with the introduction of proposed new legislation to support the efficient and effective management of forfeited corporate property. The Province comes into ownership of forfeited corporate property when a property-holding corporation ceases to exist because it has been dissolved, either of its own accord or by government action. Any property the corporation owns at the time it is dissolved forfeits to the government.
The new framework would help put properties back into productive use faster, save Ontarians money and strengthen corporate responsibility to benefit businesses and communities across Ontario.
Reviewing Labour Laws to Enhance Security and Competitiveness
Like most developed economies, Ontario has experienced significant changes in the workplace over the past several decades. These changes have included jobs shifting towards the services sector and an increase in non-standard employment. Dramatic technological change has become common in the workplace, affecting many routine-based jobs. As well, Ontario’s workforce itself has become more diverse.
In this environment, it is important to ensure that labour and employment laws are responsive — supporting the competitiveness of business while providing security for workers. That is why the government has initiated a review of Ontario’s labour and employment laws, including the Labour Relations Act, 1995, and Employment Standards Act, 2000. The Changing Workplace Review is being conducted by two Special Advisors who will lead public consultations, balance different perspectives about employment and labour law reform, and report back to the Minister of Labour. This will be the first step in identifying potential labour and employment law reforms that would help strengthen Ontario as a place to work and invest.
Ensuring Workplace Stability During Transition
The government remains committed to ensuring good relationships between unions and employers, and ensuring disputes between unions are handled as fairly as possible and with minimal interruption to workers, employers and the public. To that end, Ontario will propose to amend the Public Sector Labour Relations Transition Act, 1997, to reduce unnecessary strife by ensuring that when changes are made to the structure of public workplaces, workers undergo the disruption and expense of a vote only when there is a reasonable prospect of success. The Province will introduce a minimum threshold necessary to trigger a vote under the Act.
Ontario’s financial services sector remains the Province’s second-largest sector after manufacturing, based on output. In 2014, the sector created jobs almost twice as fast as the overall Ontario economy.
The government will continue to strengthen the financial services sector, protect investors and consumers, and bolster the stability and efficiency of financial markets. In particular, the government plans to:
Actively work with other jurisdictions to establish a Cooperative Capital Markets Regulatory System (CCMR) in Canada.
Review the regulation of financial advisers and planners.
Move forward with enhancing access to capital for businesses of all sizes and stages of development.
Carefully consider the recommendations of the five-year review of the Credit Unions and Caisses Populaires Act, 1994, when it is completed in the fall of 2015.
Conduct mandate reviews of the Financial Services Commission of Ontario, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario, and consider legislative changes to the governing acts.
Implement key recommendations from the five-year review of the Mortgage Brokerages, Lenders and Administrators Act, 2006, by strengthening fraud prevention measures in regulations and prohibiting advance fees for arranging mortgages of less than $400,000 — an increase from the current threshold of $300,000.
Changes to give the Ontario Securities Commission (OSC) broader tools to ensure an accurate, reliable and transparent proxy voting infrastructure; and
Establishing a Cooperative Capital Markets Regulatory System
Ontario is taking a leadership role, working with other provinicial and territorial jurisdictions to achieve the milestones set out in the Memorandum of Agreement (MOA) Regarding the Cooperative Capital Markets Regulatory System (CCMR) that was released in September 2014. The MOA is the fundamental document that formalized the terms and conditions of the CCMR.
The CCMR, once implemented, would enhance Canada’s stature and competitiveness in global capital markets, which would in turn promote economic activity in all provinces and territories. The CCMR would also foster more effective regulation and enforcement through a strong and more competitive regulatory structure that would help grow business investment.
The participating jurisdictions are reviewing the comments received relating to the consultation drafts of the capital markets legislation and federal complementary legislation that were released in September 2014. It is expected that further CCMR-related developments will be announced and that initial regulations will be published for comment in the coming months.
Reviewing the Regulation of Financial Planning
The government is moving forward with its review of a potential regulatory gap in the general oversight of financial advisory and planning services. More tailored regulation of these increasingly vital services would foster the growth of the profession by promoting appropriate educational requirements and qualifications, and help consumers make informed choices and investments.
As announced in the 2014 Ontario Economic Outlook and Fiscal Review, the Province has appointed an expert committee to thoroughly consider more tailored regulation of financial advisers, including financial planners. The committee will be mandated to provide key recommendations and submit its final report to the government for review by early 2016.
The government, together with the OSC, continues to foster a regulatory environment that accommodates newer ways for businesses to raise capital, while maintaining appropriate investor protection. The Minister of Finance recently approved several new prospectus exemptions proposed by the OSC that are designed to facilitate capital formation and job creation. The OSC is also expected to bring forward this year other proposed prospectus exemptions to facilitate capital raising, including a crowdfunding proposal.
Reviewing Ontario’s Legislative Framework for Credit Unions and Caisses Populaires
Following the launch of the five-year review of the Credit Unions and Caisses Populaires Act, 1994, in the fall of 2014, a number of steps have been taken to solicit public input. These will contribute to a comprehensive analysis of ways to improve the legislative and regulatory framework. Regional consultations were held in eight communities across the province, with over 220 participants from the sector and the public. As well, the public was invited to provide written comments on a consultation paper released in November 2014.
Laura Albanese, Member of Provincial Parliament and Parliamentary Assistant to the Minister of Finance, led the consultations and continues to lead the review. She is expected to submit a final report in the fall.
Reviewing the Mandates of Key Financial Services Regulators
The government has appointed an expert panel to lead the mandate reviews of the Financial Services Commission of Ontario, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario. The panel consists of:
George Cooke — former president and chief executive officer of The Dominion of Canada General Insurance Company, and current chair of the board of directors of OMERS Administration Corporation;
James Daw — former Toronto Star personal finance columnist who has written extensively about all facets of Ontario’s financial system; and
Larry Ritchie — Osler, Hoskin & Harcourt LLP partner and former vice-chair of the OSC.
Work is currently underway and the panel will be conducting consultations this spring. The reviews will continue the government’s efforts to modernize financial services by ensuring that regulatory activities are carried out in the most appropriate and efficient manner, reflecting the complexity of this important sector. The reviews also benefit the financial services sector by ensuring that the mandates of each agency remain flexible in a changing environment.
The mandate reviews also provide an opportunity to improve public administration by bolstering the Province’s commitment to enhancing oversight and risk management in the agencies sector.
The expert panel will deliver its recommendations to the government by early next winter.
Investments in Tourism and Culture
In 2015, the province is celebrating the 400th anniversary of the Francophone presence in Ontario. The government has committed $5.9 million to support a wide range of initiatives that will help mark the anniversary of Samuel de Champlain’s passage through the province and highlight the important role of Franco-Ontarians in the province’s history and development. These include local and regional events that celebrate Franco-Ontarian culture, refurbishing a park in the Town of Penetanguishene, and commemorative plaques marking de Champlain’s journey. Community organizations, municipalities and others are also planning a variety of activities, including festivals, concerts and museum collections that will attract tourists, contribute to the economy, and leave a notable legacy. Celebrations will take place in communities throughout the summer and fall of 2015, including at the 2015 Pan/Parapan American Games in Toronto.
On July 1, 2017, Canada will celebrate the 150th anniversary of Confederation. This milestone provides an opportunity for celebration, commemoration, and looking forward to Canada’s collective future. The government will engage Ontarians to share ideas for commemoration and will work collaboratively to make Canada’s 150th birthday an occasion for pride and celebration across the province.
The 2015 Pan/Parapan American Games will be the largest multi-sport event ever held in Canada. This summer, Toronto will be the proud host city of the Pan Am Games from July 10 to 26 and the Parapan Am Games from August 7 to 15. Toronto, partner municipalities and First Nation communities in the Greater Golden Horseshoe region will welcome more than 10,000 athletes, coaches and delegates from the Caribbean and Central, South and North America. Athletes will compete in 51 sports at more than 40 venues, spread across several municipalities.
The Games will showcase Toronto and Ontario to an international audience, attracting tourists, jobs and new business investments. The Games are expected to generate more than 26,000 new jobs, boost GDP by $3.7 billion and attract over 250,000 tourists. Beyond 2015, the Games will provide housing, transportation, sport, educational, accessibility and recreational legacies for decades to come.
The City of Windsor will host the 13th Fédération Internationale de Natation (FINA) World Swimming Championships (short-course) from December 7 to 11, 2016. The Province will support the event with an investment of $2.5 million over the next two years. The short-course international swimming event is expected to draw approximately 2,500 visitors, including more than 700 athletes from around the world, and will showcase the region’s vitality, diversity and hospitality. This will be the first time this event has been held in Canada, and the first time since 2004 that it has been held in North America.
Continuation of the Ontario Music Fund
Ontario has the largest music sector in Canada and one of the most diverse in the world. To support the development of strong, competitive and sustainable music companies, the Province established the Ontario Music Fund in 2013 as a three-year program. The Fund is aimed at strengthening Ontario’s music industry while advancing live music and creating opportunities for emerging artists. By supporting activities that contribute to a thriving music sector, the Fund helps position the province as a leading global destination to record and perform music. Support from the Fund’s first year has already helped to create or retain 2,000 jobs and produced $24 million in additional revenue for music-related businesses.
The Province will invest $6 million in 2015–16 and $10 million per year starting in 2016–17 in a renewed Interactive Digital Media (IDM) Fund to help support some co-production opportunities and activities that would not be eligible for the Ontario Interactive Digital Media Tax Credit (OIDMTC) after the proposed changes described in Chapter IV: A Fair and Sustainable Tax System. Through the redesign, Ontario will ensure that the Fund will continue to support early product development, intellectual property investment, and company incubation, while also broadening its scope to include co-productions and magazines. This investment is made possible by the savings from the proposed changes to the OIDMTC.
Established in 2005, the IDM Fund is a grant program that supports Ontario-based IDM companies by providing access to the final piece of funding required to move content projects into production. The IDM Fund has provided $19 million since 2005 to support 169 projects. This investment has resulted in more than $56 million in product revenues and supported more than 950 highly skilled jobs.
Enabling Long-Term Success for Ontario’s Horse Racing Industry
The horse racing industry is vital to rural communities across Ontario and is an important part of Ontario’s rich heritage. The industry supports rural jobs and economic development in the agricultural sector, particularly as they relate to the horse breeding sector.
Supporting the Agriculture and Agri-Food Sector
Ontario’s agri-food sector, including both agricultural production and food processing, supports over 780,000 jobs and $34 billion in economic activity.
The Province’s suite of business risk management programs helps farmers manage risks beyond their control, like fluctuating costs and market pricing. The government continues to support farmers through these programs and, through Agricorp, make changes to ensure it is meeting the needs of Ontario’s producers. Going forward, the Province will ensure that production insurance programs provide the funding and support that farmers need to mitigate risk.
The Premier’s Agri-Food Challenge
Ontario’s diverse and dynamic agri-food sector, which ranges from farming and food processing to wholesale and retail food services, continues to advance. In October 2013, the Premier challenged the sector to double its growth rate and create more than 120,000 jobs by 2020. The industry is responding and making progress on these goals. Between 2013 and 2014, the agri-food sector created over 17,000 net new jobs, with total employment rising to over 780,000, and exports from the sector increased by 5.5 per cent to almost $12.5 billion.
The environmental, social and economic challenges of climate change are a global issue. Similar to many other jurisdictions, Ontario has endured the effects of climate change, including recent extreme weather events such as ice storms, severe thunderstorms and flash flooding. These events have caused unprecedented damage to the places Ontarians live, work and play, costing governments, businesses and families hundreds of millions of dollars.
The government is committed to tackling climate change and recognizes the importance of acting now to ensure a prosperous economic future and a flourishing society. If local and broader action is not taken, the Province will see more frequent and severe weather events that will threaten its infrastructure and economy. A changing climate will also pose risks to biodiversity, agriculture, and the health and well-being of all Ontarians. Addressing these challenges will open up many new opportunities to grow the economy in a sustainable way.
As the world gains more momentum in addressing climate change, an enormous economic opportunity has emerged for low-carbon production and services. This is an opportunity that Ontario, with its many strengths, is well positioned to take advantage of to maintain its leading role.
Ontario has already demonstrated leadership in response to this challenge. In 2007, Ontario established concrete targets for reducing emissions by six per cent below 1990 levels by 2014, 15 per cent by 2020 and 80 per cent by 2050. The Province has taken a significant step by successfully ending coal-fired electricity generation. Eliminating emissions from coal-fired electricity generation played a large role in helping the government exceed its 2014 target, and is the single largest climate initiative in North America to date.
An End to Coal-Fired Electricity Generation in Ontario
In April 2014, as the Thunder Bay Generating Station — the province’s last coal-fired power plant — burned its last supply of coal, Ontario fulfilled its commitment to end coal-fired generation before its target of the end of 2014. Coal has been replaced by a mix of refurbished nuclear, natural gas, renewables and conservation. Eliminating coal-fired electricity generation represents a reduction of 30 megatonnes of greenhouse gas emissions annually. In 2014, about 90 per cent of the electricity generated in Ontario came from emission-free sources. The proposed Ending Coal for Cleaner Air Act, 2014, will protect the health, environmental and climate change benefits of ending coal use by ensuring that coal-fired electricity generation will never happen again.
Many of Ontario’s energy-intensive industries that produce raw materials, such as cement, are also leading the way in reducing the use of fossil fuels by switching to alternative low-carbon fuels. As well, Ontario businesses in the clean technology sector, including firms providing water and wastewater solutions, environmental engineering, recycling and composting, and power generation such as wind and solar, are all helping the province advance towards a low-carbon economy.
The government has been working for a number of years to create a culture of energy conservation and develop clean energy sources. Its aggressive conservation efforts, including improvements to building codes and time-of-use electricity rates, are helping families, schools, hospitals, businesses and other public institutions reduce their energy bills while contributing to a cleaner environment. Since 2003, the government has ensured that over one-third of its new electricity generation capacity, over 6,000 megawatts, is from wind, solar and other renewable energy sources.
In November 2014, Ontario and Quebec signed a Memorandum of Understanding (MOU) to collaborate on concerted climate change actions. The MOU recognizes the significant threat of climate change to the development and security of individuals, communities and states, and recognizes the need for jurisdictions to work together to fight climate change and its impacts. Subsequently, Ontario also issued a joint statement with California, Quebec and British Columbia, identifying climate change as a serious environmental and economic threat, and resolving to work together towards greenhouse gas reduction goals.
In February 2015, the government released a climate change discussion paper and held broad public consultations, asking all Ontarians to participate in the creation of the vision and guiding principles for Ontario’s transition towards a low-carbon economy. The discussion paper provides an overview of the opportunities and actions needed, including:
Short-term climate-critical actions: Taking action now in certain policy areas will help Ontario achieve its 2020 emissions target. This includes strengthening conservation, supporting technological innovation and implementing emissions-reduction measures. These actions will also lay the foundation for long-term change.
Long-term transformational actions: The economies of China, India, the United States and the European Union are all investing in a low-carbon future. To build on the leadership it has already demonstrated, Ontario needs to be part of this global transformation to build a strong low-carbon economy that is sustained by clean energy sources, robust infrastructure and well-built communities.
Building on this, Ontario intends to join Quebec and California in moving forward with a cap-and-trade system as its carbon pricing mechanism. Cap-and-trade is a way of incorporating a price on carbon into business and household decision-making. The government is able to set an overall emission limit (the cap) on those facilities included in the program, providing certainty for emission reduction, rewarding innovative companies and creating more opportunities for investment in Ontario. Under this system, businesses will have their own greenhouse gas quota and will then be able to sell (trade) their quota if they are under their emitting limit.
The government recognizes that Ontarians want a balanced approach — one that protects the environment and economy, now and in the future. It also recognizes that the fight against climate change requires a range of initiatives, which is why, in the fall, Ontario will release a comprehensive strategy to address climate change.
The Province will consult throughout the summer, listening to experts, industry and environmental groups, as it develops the design of a cap-and-trade program. A variety of options will be considered to determine what works best for Ontario’s unique circumstances and how Ontario could link the province with the cap-and-trade program already in place between Quebec and California. Part of this plan will be to ensure that the proceeds from a cap-and-trade program would be directed towards key priorities that will help lower greenhouse gas emissions and help businesses remain competitive, which could include:
Research and development of new and innovative green technology solutions; and
Increased energy efficiency in homes, buildings and automobiles.
The consultations will also inform the initiatives that make up the comprehensive climate change strategy.
Growing Businesses in the North
Northern Ontario is the largest region in Ontario, with vast, diverse landscapes and a wealth of natural resources. The government recognizes the unique economic climate of the north and continues to ensure the needs of northern Ontarians are met while helping contribute to the region’s long-term sustainability and prosperity. The Northern Ontario Heritage Fund Corporation (NOHFC), for example, helps northerners invest in innovative technologies, infrastructure and economic development capacity. The Province understands the economic importance of traditionally strong sectors such as mining and forestry. That is why Ontario continues to help these industries develop, innovate and create jobs in the 21st century.
The Ring of Fire, located 540 kilometres northeast of Thunder Bay, has chromite and nickel deposits estimated to be of $60 billion value. The 2014 Budget committed up to $1 billion towards strategic transportation infrastructure development in the Ring of Fire region. In the summer of 2014, the government established the Ring of Fire Infrastructure Development Corporation to create partnerships with industry and First Nation communities to facilitate investment decisions in strategic transportation.
See Chapter III: National Leadership — Strong Ontario, Strong Canada for more details about the Ring of Fire.
Ontario is a global mining hub and the largest mineral producer in Canada, with the value of mineral production reaching $11 billion in 2014. To further strengthen its position as a world leader in mining, the Province released a discussion paper on March 2, 2015, to renew its Mineral Development Strategy. The government is currently consulting with industry, Aboriginal communities and other interested parties for their input on addressing key challenges and opportunities. A renewed strategy is expected to be released later this year.
The government is moving forward with its commitment to the forest industry, and will be investing $60 million in the Forest Access Roads Program for 2015–16. This investment will create safer roads and allow industry greater access to forestry resources, which will in turn create jobs and economic growth.
Continued Electricity Support for Northern Industries
To ensure northern industries remain competitive, the government introduced the Northern Industrial Electricity Rate (NIER) Program in the 2010 Budget. It was a three-year, $150 million annual initiative that allowed qualifying large industrial facilities in northern Ontario to reduce their electricity prices by two cents per kilowatt hour, thereby sustaining jobs and maintaining global competitiveness. In December 2012, having created or sustained 16,000 jobs at 24 mining and forestry facilities through NIER, the government announced its extension, investing $120 million per year over three years to March 31, 2016.
Building on this success, the government is committing to ongoing support for northern industrial facilities beyond March 2016, with continued investment of up to $120 million annually. The government will undertake a review of the efficiency and effectiveness of the program and options for a sustainable approach. This will support and retain large electricity users, as well as promote competitiveness and jobs in northern Ontario for the benefit of all Ontarians.
Supporting Northern Municipalities through the Ontario Municipal Partnership Fund
The Province will enhance the Ontario Municipal Partnership Fund (OMPF) to further support northern municipalities with their unique challenges by increasing the Northern Communities grant component by $5 million in 2016. This will increase the amount of funding dedicated to the north through this component of the OMPF to $84 million, providing more funding for northern municipalities to invest in infrastructure and other key priorities for their communities. As a result, the OMPF will total $505 million in 2016.
Chart 1.13: Ontario’s Internationally Competitive CIT Rate
This bar chart shows that in 2015 Ontario’s combined federal–provincial general CIT rate of 26.5 per cent is lower than the average CIT rate of G20 and G7 member countries, 28.2 and 31.5 per cent, respectively, and well below the average federal–state CIT rate in the United States (39.0 per cent), Michigan (38.9 per cent) and New York (39.6 per cent).
Chart 1.14: Ontario’s Marginal Effective Tax Rate on New Business Investment Has Been Cut in Half
The marginal effective tax rate (METR) is a comprehensive measure of the tax burden on new business investment. It takes into account federal and provincial/state corporate income taxes, capital taxes and sales taxes. Ontario and federal tax changes have reduced Ontario’s METR from 33.2 per cent in 2009 to 16.6 per cent in 2014 and 16.3 per cent in 2015. By comparison, in 2014, the average METR for the United States was 34.7 per cent. It was 20.1 per cent for member countries of the OECD, excluding Canada.
Chart 1.15: Ontario Exceeds Most G7 Countries in Venture Capital Investment Intensity
According to data for 2009 and 2013, Ontario has outpaced most G7 countries in venture capital investment as a proportion of GDP. Within the G7, Ontario trails only the United States in venture capital investment intensity, and is tied with Canada. Ontario’s venture capital activity has improved since 2009.