Rapid Policy Update
Ontario Budget 2017April 27, 2017
Today the Government of Ontario tabled its 2017 Budget A Stronger, Healthier Ontario. What follows is a summary of key highlights from Ontario’s business perspective.
In Budget 2017, the Government indicates it will invest $13.5 billion through Moving Ontario Forward to enable faster and more frequent service on the GO network and Union-Pearson Express In addition, the Government announced that funding for the Connecting Links program will increase to $30 million per year by 2018-9.
- In our 2017 Pre-Budget Submission, we called for a one-time, $30-million enhancement of the Connecting Links fund as a transitional measure to assist affected communities in addressing the two-year gap in which the program was discontinued. We are pleased to see that investment will be made beginning 2018-9. However, the OCC expected to see more dedicated infrastructure investment announcements, particularly outside of transit and roads.
Business Growth Initiative
The Business Growth Initiative was announced in Budget 2016 as a plan to support Ontario’s transition to a new economy. Budget 2017 includes an expansion of the BGI by $650 million over five years.
- The OCC is encouraged by the Business Growth Initiative and welcomes further investment in the plan. The challenges faced by small businesses seeking to scale into medium- and large-sized firms is one we identified in Breaking Barriers: Ontario’s Scale-Up Challenge.
Cap and Trade
In Budget 2017, the Government indicates it is working on a separate system of Ontario-based voluntary carbon offsets to support the government’s carbon-neutral commitment. The proceeds of the carbon allowance auctions are expected to be $1.8 billion in 2017-8 and $1.4 billion in 2018-9. Projected spends of those proceeds include:
- $800 million towards helping homes and businesses adopt low-carbon technologies
- $55 million towards municipal partnerships to achieve emission reduction targets
- $420 million towards modernizing transit towards low-carbon goals (i.e. rail, cycling infrastructure)
- $410 million towards implementation of Green Investment Fund initiative.
- The OCC has become increasingly concerned that increased input costs imposed on the private sector mean that Ontario risks losing out on jobs and investment. However, we are encouraged that the government has developed a plan for the next two years of carbon allowance auction proceeds.
Financial Literacy and Skills for the Knowledge Economy
In Budget 2017, the Government reiterated its support for injecting financial literacy into the secondary school curriculum. In addition, the Government has committed to invest nearly $190 million over three years in the Career Kick-Start program which will create more opportunities for high school and post-secondary students, along with recent graduates, to develop job relevant skills.
- We support government’s efforts to modernize the secondary school curriculum and provide students with hands-on opportunities to develop the skills they need to compete and succeed in a technology-driven, knowledge-based and ever-changing economy. Hiring challenges were identified as a top priority by OCC members in the recent Business Confidence Survey.
Health Care Booster Shot
The government is providing for greater health care spending in the form of a $7 billion “booster shot” over the next three years. In budget 2017 the government also plans to spend an additional $11.5 billion over the next three years, including the cost of the new children and youth pharmacare program with annual growth in health care spending is projected to be 3.3. percent on average.
- While the OCC is pleased to see that healthcare is a priority for this government, we do not believe that spending more money is a sustainable solution.In recent advocacy efforts the OCC has encouraged government to shift towards a value based health care system and modernize procurement and supply chain processes.
OHIP+: Children and Youth Pharmacare
The Government plans to provide universal drug coverage to all children and youth aged 24 and under, regardless of family income. Beginning in 2018, OHIP+: Children and Youth Pharmacare will cover the costs of medicines funded through the existing Ontario Drug Benefit Program. The preliminary estimate of the cost of OHIP+ is $465 million per year.
- While the goal of providing drug coverage to all Ontario children and youth is a laudable one, we are concerned that the costs of the pharmacare plan will further contribute to the unsustainable health care spend Furthermore, we are concerned that OHIP+ may disrupt current workplace drug benefit plans, many of which already fill needed prescriptions for young Ontarians.We encourage the government to work with insurance firms and employers to determine the best way to ensure Ontario children and youth have access to the medicines they need, without duplicating or disrupting current coverage. We hope to work with government to design a plan that works in tandem with private drug benefit programs.
Interprofessional Primary Care Teams
The Government is investing a further $15 million to create new, or expand existing, interprofessional care teams.
- In Transformation Through Value And Innovation: Revitalizing Health Care in Ontario, the OCC called for greater use of interprofessional care teams to better co-ordinate holistic care and to ensure patient needs are consistently and effectively addressed.
In Budget 2017, the Government projects that business investment will outstrip real GDP growth and household spending, rising by an average 3.1 percent between 2017 and 2020. Government attributes this growth to a competitive Canadian dollar, strong U.S. demand, and improving domestic opportunities.
- In the Ontario Economic Report, we found that business investment is slowing due to a high perception of risk in the Ontario economy. Given the uncertainties surrounding existing free trade agreements with the U.S., as well as an on-going lack of business confidence in the province’s economic outlook, it is unclear how business investment could be prompted to reach such levels of growth.
Previously, the Ontario government released a set of 16 comprehensive measures aimed at helping Ontarians find affordable homes and bring stability to the real estate market. In Budget 2017, they detailed their plans to address the complex network of factors influencing the Ontario real estate market.
- The OCC appreciates that the Province is “collecting more precise data on the real estate market”. It is concerning that the Government’s own projections show projected housing starts in 2017 through 2020 to be lower than those in 2016. This indicates that their 16-point housing affordability plan may have negative unintended consequences. Given the importance of increasing supply to improving affordability, these projections do not bode well for the success of the Government’s plans.
Read the OCC’s media release.