This afternoon, the Government of Ontario released its 2016 Ontario Economic Outlook and Fiscal Review, which provides an update on the government’s finances and progress on key commitments since the release of the 2016 Budget. As of October, the province’s unemployment rate was 6.4 percent, lower than the rate of 7.4 percent in the rest of Canada. Ontario’s real GDP advanced by 0.8 percent and 0.2 percent in the first and second quarters of this year, respectively.
The government remains committed to eliminating its budget deficit in 2017-18. It continues to project a deficit of $4.3 billion in 2016-17, and expects to maintain a balanced budget in 2018-19. Ontario’s net debt is expected to be $317.9 billion, with net debt-to-GDP rising to 40.3 percent in 2016-17, an increase from 40 percent in 2015-16. The province is projected to pay $11.4 billion in Interest on its debt, or 8.3 percent of total expenses.
The government also made announcements related to its business growth initiative, health care, and home ownership. You can find more details below.
Updates to Ontario’s Business Growth Initiative
Today’s announcements provided updates to the province’s Business Growth Initiative, proposed in the 2016 Budget. The government will invest $32.4 million over four years in the “Scale-Up Voucher Program” to help high-impact companies overcome barriers to their next stage of growth. Vouchers can be used to fund activities such as developing and recruiting specialized talent, accessing new markets and protecting intellectual property.
The government also announced the “Small Business Innovation Challenge” pilot program, in which participating SMEs will be provided with development opportunities to demonstrate innovative technology solutions based to government-identified problems. The government is investing $28.8 million over five years to support the pilot program.
OCC Position: The OCC supports efforts to help our most promising firms scale up. As outlined in our report Breaking Barriers, businesses in the province face a number of barriers that prevent them from growing. Business and government must continue to work together to help our companies grow into large, global leaders.
New Investments in Health Care
The government is investing an additional $140 million across all hospitals in the Province to support better care for patients and reduce wait times. This investments means that all of Ontario’s public hospitals will have received at least a two per cent increase to their base funding in 2016–17.
OCC Position: We support the government’s efforts to improve access to quality care for Ontarians. Through a series of reports released as part of our Health Transformation Initiative, we identified opportunities to improve patient outcomes while increasing value and innovation. In Prescription for Partnership, we analyze the concept of commissioning, an evidence-based approach to service design, procurement and delivery that priorities outcomes over inputs. Our findings suggest that by taking a collaborative approach to problem solving, we can generate greater value for dollars spent, improve quality of service, and encourage investment in local R&D.
Enhanced Affordability for First-Time Home Buyers
Effective January 1st, first-time home buyers in the province of Ontario will no longer pay the land transfer tax on the first $386,000 of their first home purchase and will receive a land transfer tax rebate of $4,000. The government will fund the break through increasing the land transfer rates on houses valued above $2 million dollars.
The government will also freeze the property tax rate on apartment buildings, while a review is conducted on its impact on rental market affordability.
OCC Position: The chamber supports the government’s expansion of the land transfer tax program as a means to enable first time home buyers access into the housing market. The ability to own and purchase a home plays an invaluable role in maintaining a strong economy for Ontario.