Chamber questions where business growth will come from
Yesterday, the Ontario Government presented the first balanced budget since the 2008 recession. The Sarnia Lambton Chamber commends the Province for this achievement, but is concerned that new funding will place a tremendous fiscal burden on future generations and considerable pressure on future economic planning. Budget 2017 projects no deficits over the next three years, nor does it project any surpluses, or commit to paying down the $302 billion that Ontario owes in public debt.
The budget expects business investment to grow by 3.1% annually to 2020, and yet business investment has slowed and business confidence has fallen, as the Ontario Chamber of Commerce reported in its Ontario Economic Report. This is due to increasing input costs like electricity and Cap and Trade, as well as economic uncertainty around US trade policies.
Another concern is that a balanced budget was possible because of short terms gains – like selling Hydro One – and projected earnings from Cap and Trade. Assets can only be sold once, so this revenue isn’t sustainable, and Ontarians must wait and see how future rounds of carbon auctions pan out.
“The Chamber is pleased to see an additional $30 million per year for the Connecting Links fund, as this will help generate economic activity and help our local communities repair roads and bridges,” says Shirley de Silva, President & CEO. “The Business Growth Initiative will be expanded by $650 million over five years to help small businesses scale into medium- and large-sized businesses. The government provided some clarity on how it plans to spend Cap and Trade revenues and reiterated its support for injecting financial literacy into the secondary school curriculum.
KEY POINTS FOR ONTARIO’S BUSINESS COMMUNITY:
- Ontario will not return to planned Corporate Income Tax cuts, jeopardizing tens of billions of dollars in potential capital investment and hundreds of thousands of news jobs.
- There is no deficit over the planning period nor any plan for surplus. Ontario’s debt will rise by 21% in the next three years as a result of interest charges, with no plans to begin debt repayment.
- 98% of all new jobs since the recession in Ontario have been full time, and 78% of those were in above-average wage industries. This positive economic activity by Ontario’s private sector demonstrates a clear commitment to good jobs.
- Private sector investment is predicted to grow by 3.1% annually, to 2020, an amount that would outpace growth in real GDP and household spending.