2024 Provincial Budget

On March 26, 2024, the Government of Ontario released its 2024 Budget: Building a Better Ontario. The following is a summary of highlights from the perspective of Ontario’s business community.

Housing

Budget 2024 invests $1.6 billion in new funding to address Ontario’s housing crisis. This includes $1 billion in the Municipal Housing Infrastructure Program, dedicated to core infrastructure projects, and an additional $625 million for the Housing-Enabling Water Systems Fund. These funds are designed to provide the infrastructure necessary to help Ontario meet its target of building 1.5 million new homes by 2031.

The Budget also gives municipalities new tools to address the housing crisis. Specifically, it encourages municipalities to lower property taxes on purpose-built rental properties and to apply a higher on foreign-owned vacant homes used for speculation. These combined measures are meant to incentivize municipalities to step up their new housing starts.

OCC analysis: Ontario is currently in the midst of a housing crisis, impacting businesses’ ability to attract and retain talent. Addressing the scale of the crisis requires an all-hands-on-deck approach, outlined in the OCC’s policy brief, Home Stretched. Ontario is projected to build just 80,000 homes in 2024. This is down from 109,000 new homes last year and remains well short of the 175,000 homes per year needed to reach the government’s target of building 1.5 million homes by 2031. 

We welcome today’s investment of $1.6 billion in additional funding to support the roads, infrastructure and water systems required to build new housing developments. However, the government must continue to take further action, including dedicated funding streams, tax credits, leveraging surplus public lands, and ending exclusionary zoning policies. This will enable the rapid building of purpose-built rental housing, expanding opportunities to densify housing and embracing missing-middle solutions such as fourplexes.

Workforce Development

Budget 2024 adds $100 million to the existing Skills Development Fund to help workers, job seekers, and apprentices move up in their careers. In addition, the budget is adding $16.5 million every year for the next three years into the Skilled Trades Strategy, which will support programs designed to get more young people interested in skilled trades and increase employer involvement in apprenticeships. Building off consultations with the sector in 2023, the Budget proposed draft regulations to implement the Target Benefit Framework to help protect the retirement security of workers in the skilled trades and other occupations while promoting job mobility, allowing employees to keep the same pension.

The Budget outlines a $425 million reduction in the base funding for Ontario colleges and universities in 2024-25 due to the lower college spending as a result of the federal government announcement to cap international student study permit applications for two years, beginning in 2024. 

OCC analysis: As emerging technologies continue to transform business operations, it is more important than ever to prioritize skills development, including robust reskilling and upskilling initiatives, to ensure Ontario’s workers remain agile in a rapidly evolving landscape. We welcome the government’s decision to boost funding for the Skills Development Fund and supplemental funding to attract more young people into the skills trades. 

With regard to Ontario’s post-secondary institutions, the Chamber has advocated for a revision of the federal student permit policy and will continue to call upon the government to implement recommendations from its Blue-Ribbon Panel report, which highlights the precarious financial state of post-secondary education in Ontario. While we welcomed the $1.2 billion funding announcement earlier this year as an important first step to stabilize the sector, sustained supports to address the funding shortfall are needed to pursue OCC’s challenge to become one the best-funded post-secondary education systems in Canada.

Health

Budget 2024 focuses on improving access to primary health care. This includes $546 million over three years with a goal of connecting an additional 600,000 people to primary health teams (composed of family doctors, nurses, physiotherapists, social workers, dieticians and health professionals). The government is investing an additional $45 million over three years to enhance the Northern Health Travel Grant program, enabling patients from Northern and Indigenous communities to travel, if required, to access medical services. 

To address challenges in Health Human Resources,  the Budget invests $743 million over three years to grow the future talent pipeline of doctors, nurses and healthcare workers. This includes a commitment to open a new York University School of Medicine, the first medical school in Canada specializing in training family doctors, as the province seeks to improve access to primary health care.

The Budget also invests an additional $965 million in hospitals to improve the delivery of care and cut wait times, and $155 million in new funds to fast-track the construction of long-term care facilities. The provincial government is also investing $12 million in a new Health Technology Accelerator Fund, to encourage the adoption of innovative health care technologies to improve patient care.

OCC analysis: Currently, 2.2 million Ontarians do not have access to a family doctor, and with an aging population, the scope of this problem is likely to get worse over time.  We welcome the Province’s continued investments to prioritize equitable and timely access to health care, as advocated in our budget submission. We also celebrate the government’s long-term commitments to the viability of the sector, including a new medical school at York University, which will help to ensure that every Ontarian has access to a family doctor,  primary health care teams, and emergency rooms.

To ensure the province’s health care system continues to thrive, we encourage the government to continue investing in Ontario’s broader health ecosystem, including revitalizing the province’s Life Sciences Strategy, preparing for the challenges of Alzheimer’s disease and dementia associated with an aging population, and implementing an integrated health data system. Building on the Ontario Innovation Pathway, Budget 2024 also establishes a new Health Technology Accelerator Fund.  This new funding is welcome, but as indicated in the Chamber’s Power of the Purchase Order report, in order to be effective – Ontario must learn from best practices globally to ensure implementation encourages a broad range of solutions

Mental Health & Addictions

Budget 2024 boosts mental health and addiction supports with an extra $396 million over the next three years to make services more stable, accessible, and broad. $124 million of this investment will be used to support the continuation of the Addictions Recovery Fund, as well as the Ontario Structured Psychotherapy Program. In addition, the Budget announced $60 million over three years to maintain mental health and addictions services, including clinical supports, community mental health and opioids programming for Indigenous and Northern Ontario communities.

Also included is a net new investment of $152 million over the next three years towards building out a supportive housing initiative for vulnerable people dealing with mental health and addictions.

OCC analysis: The “echo pandemic” of mental health and addictions, including an increasingly present opioid crisis, has never been more clear. The Chamber has been a strong advocate for scaling up evidence-based solutions (like the Ontario Structured Psychotherapy Program) and boosting funding for supportive housing and mental health and addictions services and programs. It is encouraging to see improved investments in mental health service delivery, especially for Indigenous and northern communities, at a time when demand for wrap-around care and  supports is increasing, and many Ontario municipalities are declaring a state of emergency from substance overdose. We encourage the government to continue to prioritize mental health and addictions through a whole-of-government approach to mitigate the outsized impacts faced by Ontario businesses and communities.

Transit & Infrastructure

The budget introduces a $200 million Community Sports and Recreation Infrastructure Fund aimed at strengthening communities by investing in new and enhancing existing sport, recreation, and community facilities. Additionally, it announced the rebranding of the Ontario Infrastructure Bank as the Building Ontario Fund, with an update on its activities, which include the development of a detailed process for selecting projects and partners in key areas such as long-term care homes, energy, municipal and community infrastructure, and transportation.

The Budget also includes the Ontario Transit Investment Fund, which has an annual allocation of $5 million to support local and inter-community transportation projects in rural areas of Ontario that currently lack such services. This initiative replaces the Community Transportation Grant Program, which ended in 2023 and broadens eligibility to include municipalities, Indigenous communities, and non-profit organizations.

OCC analysis: It is encouraging to see the government continue to prioritize infrastructure investments, including improving access to broadband, transit and road infrastructure. The rebranded ‘Building Ontario Fund’ has the potential to unlock private investments to fund critical infrastructure projects, including diversifying affordable housing options along the housing continuum, investing in energy generation, transmission, and distribution infrastructure, and the continued acceleration of broadband rollout across the province. We look forward to more details in the coming months as the government introduces legislation to support its mandate and investment goals as an independent agency.

Investment Attraction

Budget 2024 includes an additional $100 million to the Invest Ontario Fund to draw key investments into Ontario that generate high-quality jobs, foster innovation, and strengthen supply chains. This enhancement increases the size of the total fund to $600 million.

An additional $15 million is included in the Critical Minerals Innovation Fund to continue supporting Ontario’s mining industry with funds for research, processing, and commercializing new solutions in the rapidly growing sector. The Budget also invests $60 million over three years in the Forest Biomass Program to create more jobs in the forestry sector and spur economic development in wood harvesting regions.

OCC analysis: The 2024 Ontario Economic Report survey highlights that business confidence has reached a record low for the second consecutive year. In a time of heightened global competition to attract new investment, it has become increasingly important for Ontario to strengthen its business environment. We welcome today’s additional investments for Invest Ontario and strategic sectors such as critical minerals that will help boost Ontario’s value proposition as a desired investment jurisdiction, but further action is needed to catalyze investments in high-growth sectors that will form Ontario’s future economy. 

Small Business & Entrepreneurship

Budget 2024 announces a $6.8 million investment to support small businesses and entrepreneurs over the next two years to enhance the Starter Company Plus program. This builds upon previously announced measures such as the reduction of the small business corporate income tax rate. The enhancement will allow more eligible entrepreneurs to receive a Starter Company Plus Grant of $5,000 and will provide grants to an additional 500 entrepreneurs over two years. This new funding will also support the Summer Company program, delivered through Ontario’s Small Business Enterprise Centres, providing additional services for Ontario’s youth business entrepreneurs. 

OCC analysis: Entrepreneurship fosters innovation, competition, and economic growth, and the OCC commends the government for making investments in fostering a predictable, competitive business environment. In addition to continuing to incentivize investments for Ontario businesses and entrepreneurs, we encourage the government to explore tools outlined in the OCC report, Capital is Key. These include improving small business access to private capital and credit via tax policies, capital market reforms, and loan guarantees, expanding digitization funding and training programs, promoting co-operative conversion for succession planning through education and incentives, and collaborating with Ontario’s business community to reduce regulatory burdens.  

Cannabis

Budget 2024 invests $31 million in new funding over three years to support the Provincial Joint Forces Cannabis Enforcement Teams (PJFCET) to crack down on illegal cannabis operations. Since legalization in 2018, the illicit cannabis market has continued to make up a higher than desirable share of cannabis sales. These investments are designed to keep cannabis out of the hands of youth and ensure available products meet government safety standards.

OCC analysis: We welcome the government’s announcement, which the OCC’s Cannabis Policy Council has advocated for. The announcement aims to address Ontario’s sizable illicit market and minimize the sale of unsafe products that jeopardize the safety of Ontario’s youth. 

Fiscal Outlook

Budget 2024 reveals a record spending plan of $214.5 billion, with a focus on building infrastructure and healthy communities. In light of ongoing economic uncertainty due to high-interest rates and global instability, the budget includes investments to build Ontario’s economy without raising taxes.

The budget deficit for this fiscal year (2023-24) stands at $3 billion, an improvement from the projected $5.6 billion from Ontario’s 2023 Fall Economic Statement. The provincial government is now expecting to see a balanced budget in 2026-27, a year later than the projected 2025-26, as noted in Ontario’s 2023 Fall Economic Statement. The Budget projects the deficit to more than triple in 2024-25, to $9.8 billion. The deficit is expected to continue in 2025-26 ($4.6 billion) before turning a small surplus of $0.5 billion in 2026-27. The increase in the deficit is largely attributed to slowing economic growth projections leading to lower tax revenues.

This budget notes a worsening of the province’s debt burden, with Ontario’s expected net debt-to-GDP ratio in 2023-24 increasing slightly from 37.8 percent (as outlined in the 2023 Budget) to 38 percent. This measure indicates the government’s debt burden in relation to its capacity to repay the debt. The net debt-to-GDP ratio is forecasted to reach 39.2 percent in 2024-25 and remain elevated until 2026-27 (39.1 percent).

Much of this is due to a slower GDP growth projection between 2024 and 2026, with the most pronounced deterioration in 2024 and higher than previously projected deficits. Despite inflation cooling to 3.8 percent year-over-year in 2023, Ontario’s economic growth outlook shows signs of a slowdown, ongoing labour shortages in key sectors, echo impacts of high inflation over preceding years, and geopolitical instability.

As important as fiscal prudence and contingency planning are during times of economic uncertainty and higher interest rates, it is equally critical to ensure sustained support for Ontarians grappling with escalated living expenses and businesses confronting workforce shortages and rising operational costs. Prioritizing investments in supply-side policies that augment productivity, expand market capabilities, and deliver substantial social and economic advantages is essential for fostering a robust and resilient economy.

What’s Missing

Budget 2024 did not include new announcements around tourism, digital innovation, or specific measures to support Ontario’s creative industries sector.

This Budget was also light on measures for a climate adaptation and mitigation plan to support sustained funding and strategies that value nature and ecosystem services, building on the federal Task Force on Flood Insurance and Relocation.

The government has yet to develop and implement a portable benefits program for workers who fall outside of traditional employer-provided benefit programs. The OCC continues to encourage the Province to engage with industry stakeholders on program design and implementation, launch a pilot project to gather relevant data on the program’s efficacy and outcomes, and prioritize portability, proportionality, flexibility, and affordability in program design to better support small and medium-sized enterprises and low-income workers.

The Budget lacked specific new measures to help accelerate clean energy infrastructure projects. We encourage Ontario to take a more proactive approach to investing in transmission and distribution infrastructure, move to harmonize impact assessments for clean energy projects with the federal government and commit to introducing a long-term integrated energy plan.  

More work remains to be done to create robust supply chains and provide value-for-money procurement. Modernizing Ontario’s procurement strategy presents a key opportunity to transform health care and other public services, build more resiliency, and better support the reliable movement of goods. As detailed in the OCC’s brief Power of the Purchase Order, strategic choices made through Supply Ontario can support de-risking supply chains, incorporate sustainability, and meet Indigenous procurement targets while promoting innovation, attracting investment, and delivering long-term value for Ontarians.

For post-secondary institutions funding, while we welcomed the $1.2 billion funding announcement earlier this year as an important first step in stabilizing the sector, measures to address the funding shortfall for Ontario post-secondary institutions were notably absent. We call on the government to implement recommendations from its Blue-Ribbon Panel report to help make Ontario the best-funded post-secondary education system in Canada.

Budget 2024 did not take new steps to eliminate barriers to interprovincial trade, which continues to limit Ontario’s competitiveness and deter further investment. The OCC urges the government to take bold national leadership on interprovincial trade by signing mutual recognition agreements and/or unilaterally recognizing standards in other parts of the country, where appropriate, to promote trade and labour mobility of Ontario-made goods and services. 

For more details, refer to the Ontario Chamber of Commerce’s 2024 provincial budget submission.