Rapid Policy Update
2021 Fall Economic StatementNovember 4, 2021
On November 4, the Government of Ontario released its 2021 Fall Economic Statement entitled, Build Ontario, which provides an update on the government’s finances and announces commitments for the upcoming 2022 Budget.
WORKFORCE DEVELOPMENT, SKILLS, AND IMMIGRATION
The Government of Ontario announced plans to:
- Propose an extension to the temporary Ontario Jobs Training Tax Credit by one year, providing Ontarians with an additional $275 million of support for eligible training expenses.
- Invest an additional $90.3 million in its Skilled Trades Strategy over the three years to promote and streamline careers in the skilled trades.
- Invest $5 million in 2021-22 to expand the Second Career Program to aid newcomers, gig workers, and people with disabilities acquire the skills needed for in-demand jobs.
OCC analysis: The OCC welcomes the expansion and continued funding of all three initiatives, which together underscore the importance of demand-driven skills programs that help Ontarians train for employment. Reskilling for in-demand careers will be essential to addressing Ontario’s protracted labour shortage and skills mismatches. The Province has also recently announced it will ask the federal government to double the number of immigrants allowed under the Ontario Immigrant Nominee Program (from 9,000 to 18,000) and table legislation outlining foreign credential recognition for internationally trained immigrants, which will help further alleviate labour shortages if passed.
The government announced plans to:
- Increase the general minimum wage to $15 per hour and eliminate the special wage rate for liquor servers so that they would be entitled to the general minimum wage as of January 1, 2022. Annual increases based on the Ontario Consumer Price Index will continue to take place starting October 1, 2022.
OCC analysis: The OCC is in favour of fair compensation and wage increases that are planned and done in consultation with the business community so employers have time to prepare and implement the changes. We recognize workers have been impacted by the pandemic and higher cost of living, at the same time, many businesses are still grappling with the ongoing impacts of the pandemic, including cashflow constraints and the increased cost of doing business. The way the proposed changes are being implemented, leaving employers with less than two months to plan, will have considerable administrative and financial impact amidst a pandemic and after 20 months of duress and uncertainty.
TRANSPORTATION AND INFRASTRUCTURE
The government of Ontario announced plans to:
- Invest an additional $1.6 billion over the next six years to advance key highway expansion projects, including Highway 413 and the Bradford Bypass, and support large bridge rehabilitation projects, including:
- Reconstruction of Essa Road overpass bridge in Barrie
- Replacement of the “Midtown Bridges” in Ottawa
- Replacement of the Grand River Bridges in Cambridge
- Highbury Avenue interchange in London
- Support Ontario’s municipal public transit systems with an additional investment of $345 million in 2021-22 in response to year-over-year declines in Gas Tax revenue and lower ridership.
- Invest an additional $1 billion over the next five years through the Ontario Community Infrastructure Fund to help 424 small, rural, and Northern communities build and repair roads, bridges, water, wastewater, and stormwater infrastructure.
- Provide an additional $200 million to increase support for municipal infrastructure.
OCC analysis: The OCC has long supported strategic, growth-enabling infrastructure investments. Although Highway 413 could improve goods movement in Halton, Peel, and York regions, connect businesses, and alleviate congestion on Highway 401, the OCC encourages the province to adopt a balanced approach. More specifically, policymakers need to ensure highway investments are fiscally sound, with a clear return on investment and protect the environment for current and future generations.
The Ontario Community Infrastructure Fund is a valuable program to help municipalities address their growing infrastructure deficits. While we welcome the additional funding and urge the Province to incentivize greater municipal collaboration on infrastructure as recommended in Better Budgets: Bolstering the Fiscal Resilience of Ontario’s Municipalities, we strongly encourage the provincial government not to neglect existing infrastructure in the pursuit of new projects. Significantly more investments are needed to address the $52 billion municipal infrastructure backlog reported in 2020 by the Financial Accountability Office of Ontario (FAO).
Moreover, investments in both existing and new infrastructure and transportation construction should also prioritize climate resiliency and decarbonization goals through electrification and EV infrastructure. The Insurance Bureau of Canada (IBC) and Federation of Canadian Municipalities further highlight that $5.3 billion is required just to avoid worse impacts of climate change.
As per the recommendations in our Moving Forward: A Strategic Approach to Ontario’s Transportation Needs, additional investments are needed in rail infrastructure that enables better mobility between Northern and Southern Ontario. Enhanced mobility across the province will foster business competitiveness and access to talent, particularly in the age of remote work opportunities.
TOURISM AND HOSPITALITY
The government is proposing to:
- Provide $150 million worth of tax credits to reimburse Ontarians for up to 20 percent of eligible Ontario tourism expenses, encourage staycations, and support small businesses and local tourism operators.
OCC analysis: The OCC is pleased to see additional details for the Ontario Staycation Tax Credit for 2022, which was originally announced in Budget 2020. Through its partnership with the Tourism Industry Association of Ontario (TIAO), the OCC looks forward to consulting members in early 2022 and providing the Province with additional recommendations to support the sector’s economic recovery and future trajectory.
HEALTH AND SENIOR CARE
The government announced plans to:
- Invest an additional $548.5 million over three years to expand home and community care, allowing hospitalized patients to recover at home.
- Invest $233 million over three years to strengthen health human resources (HHR), specifically nursing and PSWs in the health and long-term care systems.
- Invest $342 million to add and upskill over 5,000 registered nurses and registered practical nurses, as well as 8,000 PSWs.
- Investing an additional $1.8 billion in 2021–22 to increase hospital beds and reduce surgical and diagnostic imaging backlogs.
OCC analysis: As outlined in a recent letter, the OCC is pleased to see the province intensify investments towards community care, thereby reducing the reliance on costly, institutional-based care settings and alleviating some of the pressure facing hospitals.
As outlined in another letter, the province’s investment in the medical laboratory sector will help address the anticipated influx of patients whose care has been delayed during COVID-19. While addressing nursing and PSW shortages is critical, a comprehensive HHR strategy is needed to ensure Ontario has an adequate supply of qualified health care professionals.
The government announced plans to:
- Propose to fund the above-market costs of near-term re-contracting or extensions of existing biomass electricity generators in Northern Ontario through the Renewable Cost Shift program.
- Expand the Aboriginal Loan Guarantee Program to a broader range of electricity infrastructure projects and increase the program envelope to $1 billion.
OCC analysis: As noted in our recent letter, biomass is a renewable source of energy that supports Ontario’s power grid during peak periods, as well as an important pillar of the forestry sector, mining industry, and regional economies in northern and eastern Ontario. We are pleased to see the Government of Ontario recognize its value and provide more predictability to businesses investing in affordable and sustainable biomass generation.
Further, expanding the Aboriginal Loan Guarantee Program is a positive step towards advancing more Indigenous-led clean energy projects that reduce emissions from diesel in Ontario’s North and provide tangible economic benefits to Indigenous communities.
The government announced plans to:
- Launch a new Small Business Digitization Action Plan, which includes:
- $40 million over the next two years to enhance the Digital Main Street Program; and
- $10 million over the next two years to create a Small Business Digitization Competence Centre that will provide SMEs with training for emerging equipment and processes and an understanding of the benefits of digital adoption.
OCC analysis: The OCC applauds the province’s desire to improve the Digital Main Street program to help more SMEs shift to e-commerce. Since the onset of the pandemic, this program has helped 20,000 businesses digitize their operations and sales channels. However, considering the debt and cost pressures that many small businesses are still facing, we urge the Province to introduce additional targeted supports in Budget 2022 (see below).
We support the government’s focus on investing in healthcare, infrastructure, and skills. However, ensuring a robust and inclusive economic recovery will not come immediately, particularly with no overarching strategy for business predictability and stability. Specifically, in Budget 2022, we urge the Province to consider:
- Measures to support businesses impacted by the unplanned raise to the minimum wage. For example, the government should consider wholesale pricing for alcohol to alleviate cost pressures on restaurants and bars impacted by a 20 percent minimum wage increase.
- Enhanced access to capital for small businesses through targeted supports such as energy efficiency retrofits or capital market reforms.
- Targets, timelines, and investments to mitigate Ontario’s greenhouse gas emissions and seize on the economic opportunities in the green economy, including through electrification of transportation systems, cleantech research, sustainable procurement, and net-zero building codes.
- Climate adaptation resources to help municipalities and Indigenous communities manage the growing impacts of severe weather events.
- A commitment to developing a long-term integrated energy plan focused on securing affordable, reliable, and sustainable supply to meet Ontario’s future energy needs and provide greater predictability to investors.
We also urge the government to develop a strategic plan to address Ontario’s ongoing labour shortage, which is complex and can be attributed to a myriad of factors (including the aging population, reduced immigration levels, burnout, and workers retraining into other sectors). The government should consider the following priorities for Budget 2022 to address this challenge:
- Extend regional immigration pilots to bring more economic immigrants to rural and remote communities.
- Provide new immigrants with more information upon arrival about employment opportunities in smaller communities, particularly where there are jobs relevant to their skills.
- Work with other provinces and territories to remove barriers to interprovincial labour mobility and trade.
- Reach an agreement with the federal government to implement the Canada-Wide Early Learning and Child Care System as a critical component of economic recovery and women’s participation in the labour force.
- Require app-based platforms to contribute to flexible benefit funds.
- Ensure the new service delivery model for skilled trades is streamlined, client-facing, and equitable, as outlined in the OCC’s submission to the Skilled Trades Panel Consultation.
- Re-establish a Universal Basic Income pilot to understand the viability and impact a program would have in Ontario, as outlined in Growing a More Resilient Food Supply Chain in Ontario.