Ontario’s Fall Economic Statement sets the stage for the spring election
Ontario’s Fall Economic Statement, released late last week, was clearly drafted with the province’s upcoming spring election in mind. With a focus on infrastructure and economic development, the statement is aimed at positioning the Progressive Conservatives as the party focused on economic growth, which is their traditional political wheelhouse. But it was also a decidedly labour-friendly document, likely to help the Tories pre-empt inevitable election accusations from the political left; namely, that Doug Ford’s party is pro-business and anti-worker.
The highlight for the labour sector was the government’s proposal to increase the provincial minimum wage to $15 per hour on January 1st, 2022. The minimum wage for liquor servers would also jump to the new general minimum in the New Year. While no doubt employee-friendly, the decision has left many business owners scratching their heads.
Those that own and operate businesses that rely on minimum-wage workers—such as in the hospitality, manufacturing and service sectors—are only now beginning to recover form the worst of the coronavirus pandemic. Many are still teetering on the brink of financial collapse. The added bottom-line burden that comes with a minimum wage increase—not to mention the trickle-up effect that higher minimums create by pushing up compensation for managers and longer-tenured employees—has been criticized as ill-timed. Delaying such a measure, at least until later in 2022 or even 2023, would have been the preferred option for many business leaders.
But the minimum wage boost was only one of many proposed measures that would impact businesses across the province. Other significant highlights include:
- An extension of the Ontario Jobs Training Tax Credit to 2022, covering 50 per cent of eligible expenses to a maximum credit of $2,000
- An additional $5 million for the Second Career program to help retrain workers
- A new temporary Ontario Staycation Tax Credit for 2022, intended to encourage inter-province tourism. The 20 per cent credit would allow holiday-makers to claim up $1,000 for an individual or a $2,000 for a family (to respective maximums of $200 and $400 in credits) on eligible accommodation expenses in 2022
- A new requirement, effective January 1st, 2023, for privately-held business corporations to collect information on beneficial owners and individuals with control over the business. The information would need to be available to tax authorities, law enforcement and regulatory authorities upon request. Public corporations would be exempt from the new requirement
- Plans to develop a Critical Minerals Strategy to encourage the responsible sourcing of critical minerals (in particular those used in electric vehicles) across the province
- Securing $5.6 billion in new auto sector investments to boost electric vehicle supply chain capacity
- Creating a new $40 million Advanced Manufacturing and Innovation Competitiveness stream to promote competitiveness and address supply chain challenges
- Investing an additional $90.3 million over three years in the Skilled Trades Strategy, starting in 2021-22
- $2.6 billion in funding to expand Ontario’s highways, including construction of the proposed Bradford Bypass linking highways 400 and 404
- $4 billion over six years to bring high-speed internet to all regions of Ontario by the end of 2025
- Doubling the annual investment in the Ontario Community Infrastructure Fund with an additional $1 billion in funding over several years
- Nearly $1 billion to build all-season roads to access remote First Nations in the province’s far north
The Statement also made new funding commitments on the health care front as the province continues to grapple with the impact of COVID-19 across the system. The major investments included a proposed $3.7 billion in increased funding for new and upgraded beds for long-term care facilities, along with $30.2 billion over 10 years for the construction and upgrade of hospitals across the province.
The government also proposed $342 million in funding to hire 5,000 nurses and 8,000 personal support workers beginning in 2021-22. The province would inject $548.5 million in new funding over three years to expand home and community care, along with $12.4 million over two years to boost mental health supports for health and long-term care workers. The government intends to spend $72.3 million over three years to double the number of long-term care facility inspectors in an effort to enhance standards enforcement and improve quality of life at care facilities.
Lastly, the Statement offered some good news about the provincial deficit, which is predicted to come in at $21.5 billion for 2021-22, or $11.6 billion less than original estimates in the 2021 budget. Little was said about eliminating that deficit or reducing the province’s debt load, but right now Queen’s Park is focused on spending and preparing for the election ahead. The going logic, it seems, is that the tab can be picked up later.
Armando Iannuzzi, Co-Managing Partner
For more information on the Fall Economic Statement 2021, contact a member of our team.