Earlier, Ontario Finance Minister Charles Sousa presented the Ontario government’s 2017 Ontario Economic Outlook, also known as the Fall Economic Statement (FES). With the June 7, 2018 election looming, the FES, known to many as a ‘mini budget’ for its combination of broader, more visionary strokes coupled with a handful of detailed policy announcements, serves as a key opportunity for the Ontario Liberals to try to build momentum with voters on major focus areas, while trying to mitigate potential headaches with certain vocal stakeholders.
A government’s core message can often be found in the title it chooses for the Fall Economic Statement and the budget, and this one was no different. “A Strong and Fair Ontario” is a line Ontarians should get used to: they’re going to be hearing it often from any government official in a public setting between now and June. While various polls show a continued lead for Patrick Brown’s Progressive Conservatives, the Ontario Liberals tend to build momentum in the months and weeks leading up to campaigns, and the government’s shift back towards a more activist, progressive agenda (rent control, minimum wage, pharmacare for everyone under 25, etc.) have generally been well received by the electorate.
So, what did the Ontario Liberals see as areas most in need of a pre-election shot-in-the-arm?
Relief for small businesses
The (not unexpected) announcement receiving the most headlines initially is a textbook example of a government trying to mitigate the headaches (both political and economic) resulting from one policy by making a corresponding investment. Ontario will cut its corporate tax rate on the first $500,000 of profits to 3.5 per cent effective Jan. 1, down from the current level of 4.5 per cent – Jan. 1 being the date when, in no way coincidentally, the minimum wage will rise to $14 an hour from $11.60 (before again increasing to $15/hour in 2019). It also includes a broader package of $500 million in new incentives over the next three years for companies with fewer than 100 employees, including $124 million to hire and retain workers between the ages of 15 and 29.
Maintaining a Balanced Fiscal Outlook
Importantly, (particularly in an election year), Ontario is continuing to project a balanced budget in 2017–18 and ongoing balance in 2018–19 and 2019–20, unchanged from the 2017 Budget forecast. Government revenues are anticipated to be $150.1 billion this fiscal year, slightly more than its expenses of $149.6 billion. Ontario is expecting a surplus of $500 million for the year that ends March 30.
Recognizing Indigenous Institutes
The government announced it plans to introduce legislation to recognize a new pathway for Indigenous students to earn a diploma, certificate or degree. The proposed legislation recognizes that Indigenous Institutes play a unique role in Ontario’s postsecondary education system by providing accessible education and training to Indigenous students in culturally responsive learning environments. This commitment is in addition to the province’s $56 million investment in Indigenous learners, announced in the 2017 Budget.
Updated Apprenticeship Training Tax Credit
The government is proposing to transform the existing Apprenticeship Training Tax Credit (ATTC) into a new Graduated Apprenticeship Grant for Employers (GAGE). The GAGE is designed to encourage employers to ensure apprentices complete their training programs by providing providing the following employer grants:
- $2,500 upon the apprentice’s completion of level one and again at level two;
- $3,500 upon the apprentice’s completion of level three and again at level four; and
- $4,700 upon the apprentice’s attainment of certification (either through a certificate of apprenticeship or certificate of qualification if applicable).
The GAGE would be available to all 125 trades that are currently eligible for the existing ATTC, plus an additional five Red Seal service sector trades.
Despite the rosy projections overall, there was still some sober text. The FES noted that “high levels of household debt have left Ontario households more sensitive to rising interest rates,” and that, “there is a risk that faster-than-expected interest rate increases may lead to a more significant slowing in consumer spending and housing activity.” The FES also noted that although global equity prices remain near record highs, geopolitical risks “raise the likelihood of a significant market correction should risks materialize, which would dampen growth and confidence globally.”
Next up: 2018 Budget Consultations
To prepare the 2018 Ontario Budget, the Minister of Finance and the Parliamentary Assistant to the Minister of Finance will again meet — both in person and virtually — with communities across the province, beginning in December 2017.
For the 2018 Budget Talks process that invites the public to offer ideas for the budget, the total funding has been increased to up to $5 million. This year’s program will also feature live events where people throughout the province can discuss the ideas and help determine the shortlist for public voting.