Ontario Budget 2006: Backgrounder: Economy

2006 ONTARIO BUDGET - Building Opportunity: Backgrounder

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March 23, 2006

STRENGTHENING ONTARIO'S ECONOMIC ADVANTAGE
Building Opportunity Through Key Investments

Ontario's economic strength is due, in large part, to the diversity of its economy and of its people. Almost 200,000 net new jobs have been created since October 2003. The McGuinty government is continuing to strengthen Ontario's economic advantage and build opportunity through investments in infrastructure, research and innovation, postsecondary education and key economic sectors, while maintaining a competitive tax and business environment.

Infrastructure

Investments in infrastructure will create a competitive advantage, economic growth and a higher standard of living for Ontarians. The government's key infrastructure initiatives include:

  • Move Ontario, a one-time, $1.2 billion investment in public transit, municipal roads and bridge infrastructure projects, including $838 million in new funding for public transit in the Greater Toronto Area and $400 million for roads and bridges in municipalities primarily outside the GTA, with special emphasis on rural and northern communities. These investments are in addition to the McGuinty government's five-year, over $30 billion ReNew Ontario infrastructure plan.
  • with the federal government and other partners, an investment of $623 million to enhance border crossings in Windsor, Niagara and Sarnia;
  • one of the most ambitious building programs in North America for electricity generation to provide about 11,000 megawatts of supply and conservation over the next five years; and
  • creation of approximately 480,000 jobs through Move Ontario, ReNew Ontario and electricity projects between 2006 and 2012.

Research and Innovation

To strengthen and promote Ontario as an innovative economy, the Ministry of Research and Innovation is investing nearly $1.7 billion over five years to 2009-10 through research, commercialization and outreach programs.

Initiatives announced in this Budget include:

  • $100 million for the Perimeter Institute for Theoretical Physics and the Institute for Quantum Computing in Waterloo;
  • $17 million for three new awards to recognize new research and innovation talent;
  • $25 million to establish the Premier Summit Awards program to support excellence in medical research;
  • $16.2 million to support the development of Phase II of the MaRS Discovery District; and
  • $160 million to accelerate commercialization and the growth of innovative startups.

A Competitive Tax System

A competitive tax system is essential to attract business investment and foster economic growth in a highly competitive global economy. The 2006 Budget:

  • includes no new taxes or tax increases; and
  • proposes to accelerate the capital tax rate cut to promote new investment, economic growth and job creation. Effective January 1, 2007, the current rate would be cut by five per cent — a full two years earlier than currently scheduled. The government intends to eliminate the tax sooner — in 2010 — should the Province's fiscal position allow.

Support for Key Sectors

The 2006 Budget makes investments in key sectors, including:

Municipalities

  • $2.4 billion in low-cost, long-term loans through the Ontario Strategic Infrastructure Financing Authority;
  • an additional $300 million over three years to support land ambulance services;
  • more than $1.4 billion in gas tax revenues over five years;
  • increasing the share of Provincial public health funding to 65 per cent in 2006 and to 75 per cent by 2007; and
  • increasing the Ontario Municipal Partnership Fund to $763 million in 2006.

Entertainment and Creative Cluster

  • a proposed extension of the enhanced 18 per cent rate for the Ontario Production Services Tax Credit until March 31, 2007;
  • proposed enhancements to the Ontario Interactive Digital Media Tax Credit;
  • $7.5 million over the next three years to establish the Entertainment and Creative Cluster Partnerships Fund; and
  • $49 million to support capital projects at Ontario's major cultural agencies and attractions.

Manufacturing

  • a proposed doubling of the maximum retail sales tax rebate for qualifying hybrid electric vehicles from $1,000 to $2,000 for vehicles delivered to purchasers after March 23, 2006;
  • $5.7 billion in new investment to date, leveraged through the government's automotive strategy and $500 million through the Advanced Manufacturing Investment Strategy;
  • stable electricity prices; and
  • investments in postsecondary education, training and infrastructure.

Agriculture, Forestry and Mining

  • more than $800 million over the last three years for farm income stabilization and support programs, including the recent $125 million announcement to help grain, oilseed and horticulture farmers and the livestock industry;
  • $25 million to allow the University of Guelph to invest in its animal health laboratory;
  • $2.5 million over five years for a new award for agri-food innovation excellence;
  • $220 million to help the forestry industry lever investments to improve its competitiveness, building on the $680 million in support announced in 2005; and
  • $10 million to help launch the new Centre of Excellence for Mining Innovation in Sudbury.
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Contact:
Scott Blodgett
Ministry of Finance
416-325-0324

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You can access the 2006 Budget and all related documents at www.ontariobudget.ca, or by calling 1-800-337-7222.

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