Ontario Budget 2006: Paper B: Building Ontario's Economic Advantage

PAPER B
Building Ontario's Economic Advantage

Table of Contents

Introduction

Section I: Building Ontario's Economic Infrastructure Advantage

Section II: Building Research, Commercialization and Innovation

Section III: Building Ontario's Education and Skills Advantage

Section IV: Building Ontario's Health Care Advantage

Section V: Building Job Creation and Ontario's Sector Advantages

Section VI: Building Communities and Key Economic Sectors

Section VII: Building the Investment Climate

Conclusion

Introduction

A strong economy is the foundation of Ontarians' quality of life. Well-paid jobs are key to families' well-being and the prosperity and health of our communities. The goal of the province's economic policy is to strengthen the foundation for prosperity and increase the capacity of Ontario's people and businesses to compete in the global economy by creating new opportunity.

Ontario stands out from many other parts of the world because of the quality of its business environment and the diversity of its economy. This is due to the integrity and efficiency of its legal and regulatory system, excellent communications and physical infrastructure, publicly funded health care, competitive tax system, and highly skilled and diverse workforce.

Over the past year, Ontario's economy maintained moderate growth in the face of serious challenges — notably high world oil prices and the continued appreciation of the Canadian dollar. In 2005, both economic growth and job creation surpassed the average private-sector forecasts prevailing in the last Budget.

Government policy has a vital role to play in maintaining and enhancing Ontario's competitive advantages and in helping to ensure that the economy can weather the challenges it may face.

The key elements of the government's strategy for strengthening the Ontario economy include:

• introducing Move Ontario — the government's major new investment of $1.2 billion in public transit, roads and bridges, which are critical to ensuring future business investment and job creation in Ontario. Move Ontario builds on the government's five-year, more than $30 billion ReNew Ontario infrastructure investment plan;
• encouraging innovation through the new Ministry of Research and Innovation and investments in leading-edge public and not-for-profit research facilities;
• maintaining a competitive tax and business environment, including a proposed five per cent capital tax rate cut starting in 2007 to encourage investment growth;
• investing in people through early learning, elementary and secondary education, and Reaching Higher: The McGuinty Government Plan for Postsecondary Education;
• expanding Ontario's employment and training system through a Jobs and Skills Renewal Strategy with some new resources from three landmark Canada–Ontario agreements on labour-market services and immigration;
• helping new Canadians, including internationally trained professionals and tradespersons, integrate more rapidly into Ontario's workforce;
• enhancing Ontario's health care advantage;
• embarking on one of the most ambitious building programs in North America for new electricity generation, taking steps to develop new sources of clean, renewable power and introducing initiatives to encourage conservation;
• targeting investments in key sectors, including manufacturing, the entertainment and creative cluster, forest products, mining and agriculture;
• modernizing the regulatory environment to help businesses innovate, while promoting the confidence of consumers and investors; and
• building strong communities through new, more effective partnerships with municipalities.

Details of the government's economic strategy are presented in the following sections.

Section I focuses on the government's Move Ontario investments in public transit, roads, bridges, highways and other infrastructure investments.

Section II reviews the government's programs that, in partnership with the postsecondary and private sectors, foster a climate of innovation in the Ontario economy.

Section III reviews the government's initiatives in the areas of education and training, which will strengthen Ontario's education and skills advantage.

Section IV outlines the Province's investments in health care and their key role in supporting economic growth.

Section V examines Ontario's job creation.

Section VI describes the Province's commitment to building strong communities and examines key economic sectors.

Section VII summarizes measures to encourage investment.

Section I: Building Ontario's Economic Infrastructure Advantage

A modern, vital and renewed economic infrastructure supports the movement of goods and people, ensures reliable power supplies, strengthens Ontario's economic advantage, and creates opportunity for Ontario businesses and people.

Past neglect has generated an infrastructure deficit. Demographic factors will also put pressure on Ontario's infrastructure. Ontario's population is expected to grow from 12.5 million people in 2005 to a projected 16.4 million by 2031. The government needs to invest strategically in the infrastructure that supports future economic growth.

Through the ReNew Ontario infrastructure plan, the government and its partners are investing more than $30 billion over five years in strategic projects that reflect the priorities of Ontarians: health care, education and economic prosperity. These infrastructure investments will improve and expand schools, hospitals and the judicial system; create new affordable housing; upgrade and expand highways and transit systems; provide support for key infrastructure in northern Ontario; and improve municipal water systems, bridges and roads across the province. It is estimated that, over the next five years, the plan will support a total of about 360,000 jobs in Ontario.

This Budget builds on ReNew Ontario with Move Ontario, an additional $1.2 billion one-time investment in public transit, municipal roads and bridge infrastructure projects. The government's public transit investments through Move Ontario could lead to projects totalling nearly $2.5 billion in value, that, together with $400 million in provincial funding for road and bridge projects, have the potential to generate employment across Ontario of up to 27,000 jobs.

The government is undertaking these infrastructure investments because they are vitally important to the economic well-being of the province. In addition to the long-term productivity benefits of improved infrastructure, these projects will have a substantial and positive impact on the provincial economy and employment while they are under construction.

Expanding and Modernizing Public Transit

A comprehensive, efficient and safe public transit system enhances the mobility of Ontario residents and supports the growth and development of Ontario's cities and municipalities.

Delays caused by gridlock and congestion in the Greater Toronto Area (GTA) cost the economy about $2 billion per year in lost time and lost productivity. By reducing congestion on Ontario's roads and highways, a renewed Ontario transit system will also deliver real benefits to the environment, people's health, road safety and the efficient movement of people and goods.

All these benefits add up to improvements in the day-to-day quality of life in Ontario communities and help to promote investment growth and job creation across the province.

Investing in public transit benefits the economy in a number of important ways. Public transit makes cities more attractive to businesses when deciding where to locate. Public transportation in large cities is a more fuel-efficient mode of transportation than automobiles, and a wider public transit system provides local businesses with access to a larger pool of workers and potential customers.

Greater Toronto Transportation Authority

Over the last five years, the population of the GTA and Hamilton has increased by an average of roughly 125,000 people per year. This area is currently served by 10 different transit systems with insufficient coordination.

The government will introduce legislation in 2006 to establish the Greater Toronto Transportation Authority (GTTA) to lead the delivery of an integrated and more convenient transportation network to meet the growing needs of people in the GTA and Hamilton.

The GTTA would support the success of the Growth Plan for the Greater Golden Horseshoe and the Greenbelt Plan, which together create the planning framework on which to build the future growth of the GTA and surrounding regions. The GTTA would also reduce gridlock by attracting more riders to area transit systems and by removing cars from area roads and highways. It would plan, coordinate and set priorities for public transit and major regional roads.

The GTTA would be able to manage the GTA Fare Card System, an integrated ticket system to allow people to move easily across the region with a single card. The implementation of the GTA Fare Card System would enhance service levels for Ontario's most densely populated and fastest-growing urban area and would make travelling on 10 different transit systems as easy as the swipe of a card.

Expanding Subway and Public Transit Systems

The government's Move Ontario transit funding is the largest provincial investment in municipal transit infrastructure improvements in the GTA since the mid-1970s.

The Province is providing $838 million through Move Ontario for priority projects in the GTA.

Move Ontario funding means, for the first time in the province's history, Ontario can have new subway construction that crosses a regional boundary.

The City of Toronto and York Region will be able to use $670 million in new funding through the Move Ontario Trust to help extend the subway into York Region, ending at the Vaughan Corporate Centre. The Region of York has had a population increase of over 50 per cent over the last 10 years. The subway would include a station at York University, currently the second-largest generator of single-person auto use in the GTA, next to Pearson International Airport. Once up and running, the subway extension will result in 36 million transit rides per year, removing up to 30 million car trips from the road. The extension will also reduce congestion on the Yonge line and make more effective use of the Spadina line by diverting approximately 10 per cent of passengers off the Yonge line.

The Province will explore financial tools to assist the City of Toronto and York Region with their share of the cost of this expansion. This will include a role for the private sector and the use of innovative financing strategies to help fund the project from projected growth in property taxes. For example, the Province intends to introduce legislation to enable tax-increment financing for this initiative. This new municipal fiscal tool would be introduced on a pilot basis, allowing for a prudent review of its use in an Ontario context.

The government is providing Brampton with $95 million through Move Ontario to improve local transit. Brampton will be able to use the funding to build its AcceleRide Project, providing express bus service on major streets in the City of Brampton.

The government is providing Mississauga with $65 million through Move Ontario for improvements to local transit. Mississauga will be able to use the funding to develop its Transitway, a dedicated bus right-of-way line along Highway 403 and Eglinton Avenue. The Transitway will extend from Highways 403/407 in the west to Renforth Drive/Highway 427 in the east, with 14 stations planned. The government will also support the Transitway through an additional $25 million in GO Transit investments. This initiative will help remove over five million car trips from the road annually, once fully implemented.

The Province is providing York Region with $7 million through Move Ontario for new transit planning. This new funding will be used for the environmental assessment and detailed planning required for Phase II of the VIVA Transit express bus service. The service connects communities in York Region with each other and with the City of Toronto.

The Province will also provide $1 million in funding through Move Ontario towards an environmental assessment relating to the future of the Scarborough subway.

Promoting investment growth and job creation in Ontario through Move Ontario also contributes to Canada's economic growth, underlining the critical need for a federal partnership in public transit investment in the province. Federal funding support is necessary in order to ensure public transit expansion in the GTA is fully achieved.

Move Ontario represents a substantial new investment that, together with contributions from federal and municipal partners, will be a real start on improving the movement of people and goods, promoting the integration of transit services, easing congestion, and helping to develop a shared investment plan for transportation.

Ontario's Roads, Bridges and Highways

Ontario's 16,500-kilometre provincial highway network carries $1.2 trillion worth of goods to national and international markets annually. Investment in the construction and maintenance of highways, roads and bridges increases mobility and reduces transportation costs for businesses and families, thereby boosting productivity and sustaining economic growth. Effective highway design, construction and maintenance also contribute to Ontario retaining its high ranking among North American jurisdictions in terms of road safety.

As announced under the five-year ReNew Ontario infrastructure plan, the Province is providing a total of $3.4 billion to improve the provincial highway network in southern Ontario. The Northern Ontario Highway Strategy, announced in August 2005, includes investments of approximately $1.8 billion to renew and expand northern highways.

Strategic investments under Renew Ontario will focus on the key economic corridors in the province, especially the 400 series of highways and the Queen Elizabeth Way (QEW). The government will also focus on international trade routes and gateways such as the London-to-Windsor corridor to the Windsor–Detroit gateway; the Highway 403 corridor; the QEW to the Niagara–Fort Erie gateway; and Highway 402 to Sarnia.

Ontario's network of municipal roads and bridges also plays an important role in moving people and goods across the province. Local residents, businesses, tourists, school buses, mail trucks, agricultural vehicles, garbage trucks and emergency vehicles all use Ontario's municipal roads and bridges. The rehabilitation of municipal roads and bridges will not only support most economic sectors, such as agriculture, tourism and trade, but will also promote safety in Ontario's communities.

As well, municipal roads and bridges are key parts of Ontario's transportation system by providing the necessary connections among smaller communities, and access between these communities and the provincial highway network.

Under Move Ontario, the government is making an immediate, one-time new investment of $400 million to help municipalities primarily outside the GTA — with special emphasis on rural and northern communities — invest in municipal roads and bridges. This funding would allow resurfacing of 3,000 kilometres of municipal roads or the repair of up to 800 bridges.

Borders

Over 70 per cent of the value of Canada's international trade, travelling by road, flows into the United States across Ontario borders. In 2004, roughly 45 million vehicles, including nine million trucks, used Ontario's 14 border crossings with the United States. Between 1994 and 2004, the value of trade by truck between the United States and Ontario increased by over 52 per cent. Because the Ontario and Canadian economies depend so greatly on these critical border crossings, it is a priority for both the provincial and national governments to ensure that they accommodate growing trade with the United States.

The McGuinty government recognizes the significance of trade and tourism to both the Canadian and U.S. economies. The safe and efficient movement of goods and people is vital to the economies of both countries.

Each year, through the Windsor–Detroit corridor alone, more than 20 million cars, trucks and buses and $140 billion worth of goods flow between Canada and the United States, making this location the most economically significant border crossing in North America.

To increase capacity at Ontario's borders, the government is focusing on the Windsor border as a first priority, developing short-, medium- and long-term solutions in concert with our municipal, federal and U.S. partners.

As a result of successful federal, provincial and municipal partnerships, the Province is implementing the Let's Get Windsor–Essex Moving Strategy. The Windsor Border Initiatives Implementation Group (BIIG) has been established, with staff located in Windsor, London and Toronto, to take responsibility for the implementation of Phases I and II of the strategy. Some projects have been completed while others are underway. In addition to initiatives related to the Windsor border, projects are underway in Niagara, Sarnia and Sault Ste. Marie.

Electricity

The government has initiated one of the most ambitious building programs in North America for new electricity generation. It is based on a comprehensive energy plan focused on long-term stability, reliability and sustainability. Investments in a secure and reliable electricity supply and efficient delivery system are required to provide greater price stability and maintain and expand the infrastructure that supports Ontario's modern economy and quality of life.

By 2020, Ontario will need to refurbish, rebuild, replace or conserve approximately 25,000 megawatts (MW) of generation, representing approximately 80 per cent of Ontario's current capacity, to meet the province's demand. The government has moved aggressively to address the critical need for new supply, boost conservation and improve price stability for consumers across Ontario.

Securing Ontario's Electricity Supply

The government has advanced 33 projects and 10 additional initiatives through its comprehensive energy plan to provide the province with over 11,000 MW of supply and conservation and demand management (CDM) over the next five years. This includes the addition of more generation capacity than in any other province or state in North America and, once in service, will provide enough power for about five million homes. The projects and additional initiatives are listed in the next table.

In addition to these 33 projects and 10 initiatives, about 2,250 MW of capacity have come online since October 2003, including Bruce A Units 3 and 4, Brighton Beach, and Imperial Oil.

The 33 projects represent 7,700 MW of new and refurbished capacity and investments totalling about $11 billion. These projects will have a significant effect on the provincial economy. At the peak of construction activity, over 5,000 workers will be directly employed at these projects, plus many thousands more working in factories supplying equipment and materials to them. The 10 additional initiatives, representing 3,500 MW of new capacity and CDM, are expected to have a further positive impact on the economy.

To provide reliable delivery of electricity, Hydro One, the owner of most of Ontario's transmission grid, is also investing to sustain, expand and reinforce its transmission and distribution systems, including a planned $755 million in 2006, plus a minimum of about $600 million per year in subsequent years just to sustain its system.

The government is also pursuing new clean supply initiatives, including a second phase of a Clean Energy Transfer Initiative (CETI) with Manitoba. This would see hydroelectric sites being developed early in the next decade in northern Manitoba, including the 1,250-MW Conawapa hydro development and a major transmission line to bring power to Ontario. In conjunction with Hydro Quebec, Ontario has also made a proposal to Newfoundland and Labrador to develop major hydroelectric generation facilities on the Lower Churchill River. About 945 MW would be dedicated to Ontario.

To encourage smaller-scale, distributed generation in Ontario, the government has passed a regulation on net metering to enable homeowners, farms and businesses generating renewable electricity to receive credit for the excess electricity they produce. In addition, the Ontario Power Authority (OPA) is moving forward with a standard offer program aimed at small-scale generation that will be connected to the lower-voltage distribution system, increasing the availability of renewable power and promoting economic development within communities.

New Electricity Supply Projects

Project	Type	Capacity (MW)	Approximate Number of Homes Powered2
Projects Online1
Eastview Landfill Gas	Renewable	3	657
Glen Miller Hydro	Renewable	8	2,102
Melancthon I Wind	Renewable	68	17,739
GTAA Cogen	Gas	90	35,478
Pickering A Unit 1 Return to Service	Nuclear	515	360,912
Projects in Progress
Loblaws DSM	CDM3	10	2,628
York Region Demand Response	CDM	20	5,256
Blue Highlands Wind	Renewable	50	13,009
Erie Shores Wind	Renewable	99	26,017
Hamilton Cogeneration Project	Renewable	2	420
Island Falls Hydro	Renewable	20	5,256
Kingsbridge I Wind	Renewable	40	10,407
Kingsbridge II Wind	Renewable	159	41,706
KEPA Wind Farm	Renewable	101	26,595
Leader Wind A	Renewable	101	26,451
Leader Wind B	Renewable	99	26,017
Manitoba Phase I Power Purchase Agreement (PPA)	Renewable	150	93,294
Manitoba Phase I (PPA Incremental w/ Upgrade)	Renewable	250	155,490
Melancthon II Wind	Renewable	132	34,690
Niagara Tunnel4	Renewable	200	160,000
Prince I Wind	Renewable	99	26,017
Prince II Wind	Renewable	90	23,652
Ripley Wind	Renewable	76	19,973
Trail Road Landfill Gas	Renewable	5	1,314
Umbata Falls	Renewable	23	6,044
Wolfe Island Wind	Renewable	198	51,982
Greenfield Energy Centre	Gas	1,005	396,171
Greenfield South	Gas	280	110,376
Portlands	Gas	550	216,810
Sithe Goreway	Gas	860	339,012
St. Clair Power	Gas	570	224,694
Thunder Bay Gas Replacement	Gas	310	27,156
Bruce A1 & 2 (Bruce Power Refurbishment Implementation Agreement)5	Nuclear	1,500	1,051,200
Total		7,680	3,538,526
Procurements Underway and Planned
CDM - seven initiatives by the Ontario Power Authority	CDM	1,300	341,640
Renewables III RFP	Renewable	200	52,560
West GTA	Gas	1,000	394,200
Cogeneration	Gas	1,000	700,800
Procurements Underway and Planned Subtotal		3,500	1,489,200
Total Including Procurements Underway and Planned		11,180	5,027,726
1 In addition to the 33 projects and 10 initiatives advanced by the government, five projects with about 2,250 MW of capacity came online after October 2003, including Brighton Beach and Bruce Units 3 and 4. 2 Annual household consumption assumed at 10,000 kWh/year. Estimated number of homes based on capacity factors assumed: nuclear at 80 per cent, gas at 45 per cent, renewables at 30 per cent, CDM at 30 per cent,  cogeneration at 80 per cent, Manitoba – Phase 1 at 71 per cent. 3 Conservation and Demand Management /Response. 4 The Niagara Tunnel project allows more energy to be produced from existing capacity – 200 MW illustrates estimated average annual additional generation of 1.6 TWh. 5 In addition to Bruce A Units 1 and 2, the refurbishment agreement includes investments by Bruce Power on Units 3 and 4 to extend the operating lives of these units. Note: Numbers may not add due to rounding.

 

Building a Conservation Culture

The government's comprehensive energy plan includes much-needed new supply and a range of conservation and energy-efficiency measures. Conservation, demand response and demand management are integral to a cleaner and more sustainable energy future. The government has set two immediate and measurable conservation targets: a five per cent reduction in projected peak electricity demand in Ontario by 2007, and a 10 per cent reduction in the government's own electricity use by 2007.

Peak electricity demand occurs at the time of day when electricity consumption is highest, leading to pressures on electricity generation capacity and upward pressure on prices. Peak demand can be reduced either by reducing overall electricity consumption or by providing consumers with tools and incentives to change the time of day when they use electricity. To help with this reduction, the government has enacted the Energy Conservation Responsibility Act, 2006, which will enable it to meet its commit ment on the installation of 800,000 smart meters in Ontario homes and businesses by 2007, and all homes and businesses by 2010. These meters will give electricity consumers the ability to reduce and shift their electricity demand in response to electricity prices, and will help meet the government's conservation target to reduce projected peak demand in Ontario.

The newly created Conservation Bureau of the Ontario Power Authority (OPA) has been directed to support the Province's conservation objectives by undertaking a number of specific initiatives and investments. This includes  seven major initiatives to reduce electricity use by 1,300 MW across Ontario:

• a 300 MW conservation and demand management (CDM) target in the Toronto area;
• a 250 MW CDM program across Ontario initiated in June 2005;
• a 250 MW CDM program across Ontario initiated in January 2006;
• a 100 MW low-income and social housing program;
• a 100 MW appliance upgrade and efficient lighting initiative;
• a 150 MW CDM program for commercial buildings and the municipal, university, schools and hospital sectors; and
• a 150 MW CDM program for the residential sector to improve, for example, the energy efficiency of home heating, existing air conditioning and appliances in homes.

The government has also asked the OPA to procure up to 1,000 MW of high-efficiency combined heat and power projects across Ontario including industrial co-generation projects and district energy projects.

Building a conservation culture in Ontario is not something that can happen overnight. It will take time, education, partnerships and leadership. All Ontarians can do their part by making small but meaningful changes in their homes, businesses, local governments and institutions that, taken together, will amount to large changes and large savings. The government has worked with electricity local distribution companies (LDCs) to create a website, www.powerwise.ca, to help Ontarians find ways to reduce their electricity demand.

The Independent Electricity System Operator's (IESO) load-reduction program, to be in place before this summer, will create incentives for Ontario electricity users to help meet the reliability needs of the province. This voluntary program will reward participants who commit to reducing electricity consumption by at least one megawatt when the power system is being strained. The IESO anticipates enrolling as much as 500 MW in the program, enough to power over 400,000 homes, or a city larger than Brampton.

The government is more than halfway to meeting its target of reducing its own consumption of electricity by 10 per cent by 2007 by undertaking energy-efficient retrofits and upgrades to government buildings, and by committing to innovative energy solutions such as working with Enwave Energy Corporation on the deep water cooling of the government buildings at Queen's Park.

The OPA will develop an Integrated Power System Plan, in accordance with directions provided by the government. A key element of the plan will be the approach to conservation required to meet the Province's goals.

Price Stability for Ontario Consumers and Businesses

The government recognizes that predictable and stable pricing will benefit all consumers, and therefore plays an important role in a comprehensive energy plan.

Effective April 1, 2005, the government set an average price of 4.5 cents per kilowatt hour (¢/kWh) on the output of Ontario Power Generation's (OPG) regulated assets, which is reflected in the electricity bills for consumers each month. OPG's regulated assets include its nuclear and large hydroelectric plants, representing approximately 40 per cent of all power generation in Ontario. These regulated price levels are fixed until March 31, 2008, when the Ontario Energy Board takes over setting regulated prices for OPG.

Residential, small business and other eligible consumers also received the Ontario Price Credit this year, a rebate totalling over $500 million from the government's Interim Pricing Plan during the period from April 1, 2004, to March 31, 2005.

Moving forward, the government has also extended and adjusted the transitional revenue limit on most of the output from the rest of OPG's assets, which are not price regulated and otherwise receive the market price of electricity:

• 4.6¢/kWh from May 1, 2006 to April 30, 2007;
• 4.7¢/kWh from May 1, 2007 to April 30, 2008; and
• 4.8¢/kWh from May 1, 2008 to April 30, 2009.

OPG revenues from these non-price-regulated assets that are above these limits will result in a rebate issued quarterly, which ensures that the rebate benefits businesses and households as quickly as possible.

Together, the regulation of OPG's nuclear and large hydroelectric assets and the extension of the transitional revenue limit are an important part of improving electricity price stability for all Ontario's consumers, thereby enhancing the competitiveness of Ontario's economy and promoting a more prosperous Ontario.

Innovative Infrastructure Project Financing

The government is making greater use of innovative financing to move forward with needed infrastructure projects in a fiscally responsible way. For example, the Ontario Strategic Infrastructure Financing Authority (OSIFA) provides Ontario's municipalities and other public-sector partners with innovative low-cost loans to finance priority public infrastructure projects.

In November 2005, Ontario established Infrastructure Ontario as a new Crown agency responsible for managing Ontario's major infrastructure projects, using alternative financing and procurement methods. It is responsible for ensuring that public infrastructure projects are delivered on time and on budget using private-sector expertise in financing and project management. The government plans to introduce legislative changes, that, if passed, would amalgamate OSIFA with Infrastructure Ontario, allowing for better coordination of the government's infrastructure financing activities.

Section II: Building Research, Commercialization and Innovation

Research, commercialization and innovation create the opportunity for advancement. In a competitive global environment, Ontario's future prosperity will increasingly depend on the economy's ability to innovate. More specifically, it will depend on how well Ontario's industries are able to compete by producing new, higher-value products and services.

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. This total includes the following new initiatives announced in this Budget:

• $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 for the establishment of 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.

This investment is guided by a vision of an Ontario with a flourishing culture of innovation, where creativity is sustained, engrained and cultivated in every sector, and in every activity. The goal is to create an environment in which innovation is inevitable.

To implement this vision, the government is investing in the next generation of research talent, and supporting commercialization and the growth of entrepreneurial and investment talent. These are the people with the skills and drive to make world-first discoveries and the people who understand the commercial value of a new discovery and how to bring it to market.

Ontario offers many competitive advantages for innovative enterprises, including talented scientists and engineers; a highly skilled and diverse workforce; competitive taxes and research and development (R&D) tax incentives; and excellent infrastructure. While industry must play a leading role in innovation, the provincial government has an important role in helping to create a supportive environment for new ideas to emerge and grow into profitable ventures.

The creation of a new Ministry of Research and Innovation, led by Premier McGuinty, demonstrates that innovation is a top economic priority for the Government of Ontario. The government will also benefit from the advice and expertise of the new Ontario Research and Innovation Council, headed by Adam Chowaniec, a leading business innovator and founder of Ottawa-based Tundra Semiconductor.

Growing the Next Generation of Research and Innovation Talent

Research is a fundamental source of new ideas — the raw material of innovation. Ontario's researchers produce some of the best science in the world. To compete with researchers in other parts of the world, they need sustained public support. The Ontario Government is providing $100 million to two top research facilities to help produce the ideas and the people that will help place Ontario at the forefront of the next technology revolution:

• $50 million for the Perimeter Institute for Theoretical Physics in Waterloo. The institute was launched in October 2000 with a mandate to pursue research in foundational theoretical physics. Research in Motion President and co-CEO Mike Lazaridis and his wife Ophelia helped start the institute with a $100 million donation, to which they recently committed an additional $50 million; and
• $50 million for the University of Waterloo's Institute for Quantum Computing. The institute was established in 2002 to focus groundbreaking research into tackling large computations and complex mathematical problems at the atomic level. It has also benefited from a $50 million donation by Mr. and Mrs. Lazaridis.

The government and the new Ontario Research and Innovation Council will continue to look at ways of strengthening Ontario's research capacity, including the potential for establishing more federal research facilities in the Greater Toronto Area — the only metropolitan area in Canada without a National Research Council laboratory.

The increased funding that the government is providing to postsecondary education strengthens the quality of education provided and the quantity and quality of research talent that enters the workforce. Ontario's secondary-school students are among the world's highest achievers in science and mathematics. Science and engineering constitute a significantly higher share of degrees awarded by Ontario universities than is the case in the United States.

To enhance these advantages into the future, the Ministry of Research and Innovation is providing $17 million for three new awards programs aimed at recognizing and rewarding Ontario's next generation of research and innovation talent:

• five annual "Innovators Awards" of $200,000 to researchers who have demonstrated excellence in innovation and entrepreneurship;
• four annual "Senior Researcher Awards" totalling $1.5 million to recognize achievement in life sciences and medicine, natural sciences and engineering, social sciences, and innovation leadership; and
• 40 annual $50,000, two-year fellowships matched by institutions awarded to post-doctoral students, who play an important role in academic research teams as contributing scientists and as mentors to graduate students.

As well, to recognize and support excellence in medical research in Ontario, the government proposes to establish the $25 million Premier Summit Awards program.

Accelerating Commercialization and the Growth of Risk Capital Investment

Innovation happens when researchers with good ideas work with entrepreneurs and businesses that turn these ideas into new products and services for the marketplace. Fostering a culture of innovation takes more than just research talent — it also takes investment talent. Innovative firms need capital from investors who are prepared to take on higher risks in pursuit of higher returns.

It is when an innovative firm is in its startup stage that it most needs capital to survive and grow. Average survival rates for startups are quite low, often because they lack the business skills to attract and partner with investors.

Compared to the United States, however, returns on venture capital investment in Canada have been low. This has inhibited the growth of larger pools of capital that would meet the needs of fast-growing companies. As well, Ontario lags the United States when it comes to encouraging angel investors — individuals with personal capital to invest, who also provide hands-on business advice and help prepare young companies for follow-on investment by venture capital funds.

To accelerate commercialization and growth of innovative startups, the Ontario Government is investing new funding totalling $160 million over the next four years, including:

• $46 million to help startups become more investor-ready by acquiring business management and entrepreneurial skills and to help them move a product or service idea further along the commercialization process, from the technical feasibility stage into the market feasibility stage;
• $90 million to invest in early-stage Ontario-based innovative firms in partnership with venture capital funds, pension funds and the federal government; and
• $24 million to encourage the development and commercialization of new bio-based, environmental and alternative energy technologies.

Details of these initiatives will be announced later in 2006 by the Ministry of Research and Innovation. The government will also introduce legislation to transfer full responsibility for the Ontario Commercialization Investment Funds program to the Ministry of Research and Innovation.

Section III: Building Ontario's Education and Skills Advantage

In today's knowledge-based economy, education and skills are the prerequisites for growth and prosperity in the 21st century. Seventy per cent of all new jobs in the future will require some form of postsecondary education. Ontario will only be at its best when every Ontarian has the opportunity to achieve his or her potential.

The Government of Ontario views investments in people and a skilled workforce as a cornerstone of its economic strategy. That is why the government has moved swiftly to make comprehensive investments in education, with a plan at each critical stage. In the past two years, the government has announced billions of dollars in new investment to prepare young people for the jobs of tomorrow.

Ontario's investments address the education and training needs of all learners. They start in the early years and proceed through elementary and high school to studies at the postsecondary level and skills training in the workplace, supporting new approaches and achieving tangible results. Highlights include:

• smaller class sizes, better math and literacy scores, and fewer students dropping out of high school;
• investing $6.2 billion in Ontario's colleges, universities and training systems by 2009–10 to improve access, quality and accountability as announced in the Reaching Higher plan;
• encouraging workplace training through the Apprenticeship Training Tax Credit, and providing greater opportunity for immigrants through the Bridge Training and International Medical Graduate programs;
• developing a new Jobs and Skills Renewal Strategy with support from the signing of three landmark Canada–Ontario agreements that significantly expand resources for immigration services and skills training for Ontarians; and
• creating a new Youth Challenge Fund to support community-led programs that give at-risk youth opportunities for greater success.

The government's plan for all stages of education will strengthen Ontario's knowledge and skills advantage and improve its competitive position.

Success for Students

Strong public education is the foundation for a strong economy and a cohesive society.

Children need the best start in life to achieve their full potential. To support its Best Start vision, Ontario signed the Early Learning and Child Care (ELCC) agreement with the federal government in 2005, an agreement that was to provide Ontario with $1.9 billion over five years. Regrettably, the new federal government has given notice to terminate this agreement.

Given the elimination of federal ELCC funding after 2006-07, the Province will use the final federal payment to support the child care system. The government is allocating $63.5 million per year over the remaining life of the original agreement, from 2006–07 to 2009–10. The Province will also work with municipalities to continue to urge the federal government to reconsider and honour the ELCC agreement.

Investments at the elementary and secondary level are resulting in greater success for students. To help achieve its key results, the government has already funded an additional 4,300 elementary and secondary school teachers. The government's elementary school priorities are to reduce class sizes and reach high levels of achievement in literacy and math for every student before age 12. Students and schools are getting new resources, including 600 specialist teachers in 2005–06 to help struggling students and to teach physical education, music and the arts, and turnaround teams of experts in literacy and math.

At the secondary level, the government's priority is to increase the high school graduation rate to 85 per cent by 2010 through its Learning to 18 strategy. The government has already provided new resources to hire 1,300 additional teachers. Ontario's high school graduation rate, while increasing, is still unacceptably low at about 72 per cent.

The Learning to 18 initiative is essential to the government's commitment to opportunity. New efforts to increase the high school graduation rate will generate long-term benefits, including better employment opportunities, enhanced earning capacity, improved cognitive and literacy skills, and broader social networks.

Providing Opportunity for At-Risk Youth

Strong and safe communities support a cohesive society, strengthen economic growth, and improve opportunities for the most vulnerable youth, especially those at risk of engaging in violent behaviour.

The Government of Ontario is committed to making the province's communities safer and to creating opportunity for at-risk youth. Fighting gun violence requires being tough on crime and strong on enforcement. In January 2006, the government announced a $51 million investment, including new funding to give police and Crown prosecutors additional resources to investigate and prosecute gun crimes.

Making communities safer and reducing gun violence also means tackling the root causes of crime through preventive strategies that directly help youth in their neighbourhoods. Young people at risk of joining gangs and engaging in criminal activity must be offered positive alternatives that strengthen their connection to the community and invest in their future.

The Learning to 18 strategy is a key part of the government's plan to help at-risk youth. Ontario has taken other action in its schools, including a three-year, $23 million Bullying Prevention Strategy and $20 million annually for the Community Use of Schools program to help school boards open up gymnasiums and other facilities to non-profit groups after school hours.

In February 2006, the government enhanced its preventive strategy by announcing a Youth Challenge Fund for at-risk youth. Chaired by Toronto Argonauts head coach Mike "Pinball" Clemons, the fund will initially provide $15 million in new resources to local communities in Toronto. The government has committed an additional $15 million over three years to match contributions by the private sector, for a potential total investment in at-risk youth of $45 million. Community organizations will be able to apply to the fund to cover the costs of programs that engage youth in activities that enhance their opportunity to succeed at school and participate in postsecondary education, training and employment.

In addition, the Province has recently announced more than $28 million in the first three years of a new Youth Opportunities Strategy. The investment will support the hiring of youth outreach workers and other employment and training opportunities in at-risk communities, starting in Toronto and expanding across the province in 2007–08, including Windsor, Ottawa, London, Hamilton and Thunder Bay.

Ontario supports many other preventive and remedial programs critical to youth success. Examples include the $111 million annual youth employment and training program called Job Connect and a $15 million Academic Upgrading investment by 2007–08 that assists those who leave school early to improve their skills and labour-market readiness, largely through colleges. The Province also spends $22 million annually to provide community alternatives to custody programs for youth in conflict with the law. The ACTIVE2010 strategy invests $12 million in promoting sport and physical activity, and $5 million in the Communities In Action Fund. Part of this strategy is to remove barriers to sports and recreation for low-income youth and children. A $2 million program supports healthy development of urban Aboriginal children.

Reaching Higher: A Historic Investment in Postsecondary Education

The government's postsecondary plan is strengthening Ontario by strengthening its most important competitive advantage — its people.

As announced in the 2005 Budget, Reaching Higher is a new cumulative investment in postsecondary education of $6.2 billion. This includes a 35 per cent increase in operating funding by 2009–10 compared to the 2004–05 funding base and doubling of funding available for student aid.

Reaching Higher is a historic multi-year investment — the largest in 40 years — one that will translate into a competitive advantage, economic growth and a higher standard of living for Ontarians.

The government's Reaching Higher investments are tied to performance and results. The Reaching Higher plan:

• ensures access for every qualified Ontario student, resulting in a higher postsecondary participation rate;
• improves access to and success in postsecondary education for traditionally underrepresented groups;
  assures quality teaching and an improved student learning experience, including better interaction between faculty and students;
• enhances the learning infrastructure such as libraries and laboratories;
• enrols 14,000 more graduate students by 2009-10, creating knowledge and ideas for economic growth and maintaining Ontario as a North American leader in research and innovation;
• will graduate more doctors through a 23 per cent expansion of first-year medical education spaces, including a new Northern Ontario School of Medicine;
• enables thousands more new Canadians to contribute their skills to Ontario's economy;
• strengthens the public reporting of system-wide outcomes; and
• results in a high-quality postsecondary education system able to compete with the best in the world.

In 2006–07, the government is continuing to implement the Reaching Higher plan. The next phase of the plan introduces further enhancements to student assistance and a new regulated tuition framework that balances access and quality.

The government will:

• implement additional enhancements to student financial assistance for 2006–07 and beyond by increasing loans and grants for low- and middle-income students and ensuring debt levels are manageable and predictable, benefiting 145,000 students. These enhancements will:
  • make tuition Access Grants available to students from middle-income families, by more than doubling the income threshold for a family with two children from about $35,000 to $75,000, benefiting 27,000 more students, bringing the total number of beneficiaries to nearly 60,000 in September 2006;
  • raise book and supply allowances for the first time since the mid-1980s so that 75 per cent of student aid recipients will have their actual book costs covered, compared to 13 per cent previously, benefiting 138,000 students;
  • continue to ensure that student debt is limited to $7,000 per completed year through the Ontario Student Opportunity Grant;
  • implement a new "Access Window" website in 2007–08 to allow students to identify costs and all sources of financial aid in the institution and program of their choice;
• introduce a regulated tuition framework starting in 2006 under which each institution will be held to an average five per cent overall increase in tuition per year and will be required to demonstrate improvements in quality and access;
• under the plan, average tuition increases for the coming year will be limited to about $100 for almost 90 per cent of college students and about $200 for almost 70 per cent of university students.

Reaching Higher is committing $55 million by 2009–10 to improve access to postsecondary opportunities for those traditionally underrepresented. Committees have been put in place to advise on how best to achieve this goal for Aboriginal Peoples, persons with disabilities and those who would be the first in their families to attend college or university. Similar efforts will help the francophone population gain better access to postsecondary education.

Jobs and Skills Renewal Strategy

The Ontario Government is committed to ensuring that the province has the highly skilled workforce needed to attract jobs and investment and maintain a skills advantage. The government has a comprehensive framework, the Jobs and Skills Renewal Strategy, that provides skills training and other labour-market services so that people can find work and contribute to strong economic growth. The strategy builds on Ontario's One-Stop Training and Employment System, and brings new tools and new resources to address worker and employer labour-market and training needs. It ensures that workers have up-to-date skills to secure good jobs and that the unemployed, the underemployed, new Canadians, the working poor and social assistance recipients have greater opportunity to reach their potential.

Total funding under this strategy to help Ontarians do better in the labour market will be $2.1 billion annually by 2008–09, including $1.6 billion in programs provided by Ontario and $0.5 billion in programs provided to Ontarians by the federal government.

The development of the comprehensive Jobs and Skills Renewal Strategy and increased funding for training and employment programs are the direct result of three landmark agreements covering immigration and labour-market services signed with the federal government in November 2005. Some of the funding from the agreements will be transferred directly to Ontario and some will be delivered to Ontarians by the federal government.

The new and transferred resources under the agreements will accelerate the expansion and improvement of Ontario's programs, and, along with enhanced federal services negotiated by Ontario, will mean more and better service for Ontarians. Ontarians will benefit from integration of services and from reduced duplication and streamlined program delivery through a one-stop approach, making it easier for them to find the programs they need. The goal is to provide smooth and straightforward access to services for a diverse range of clients.

A workforce that has good literacy and numeracy skills and keeps all skills up-to-date through lifelong learning is essential in a modern economy. The government funds classes for Ontarians with poor literacy in community settings, in college classrooms and in workplaces. The Canada–Ontario agreements on immigration and labour-market services give high priority to new approaches to literacy training and higher-level language training to enable new Canadians to participate fully in their trade or profession.

With the Jobs and Skills Renewal Strategy, Ontario now has in place comprehensive plans to create learning opportunities for all people at all stages of their lives. Together with Success for Students and Reaching Higher, this strategy will ensure that all Ontarians can reach their potential and will keep Ontario competitive with the best in the world.

Selected Training Initiatives and Results

Commitments:	Results to Date:
Over $100 million annually to support apprenticeship as well as an Apprenticeship Training Tax Credit to encourage employers to hire more apprentices. The credit provides up to $15,000 over the first three years of an eligible apprenticeship.	On target to achieve 21,000 new registrations in 2005–06 and to increase new entries to 26,000 per year by 2007–08.
$15 million annually by 2007–08 for new academic upgrading and training options for those who leave high school early.	Nearly 1,700 at-risk youth and adults are participating at colleges. Will serve 6,000 by 2007–08.
$21 million in 2005–06 to expand Bridge Training and other employment services for new Canadians to enter the workforce.	More than 6,000 people have participated in over 56 Bridge Training projects in professions such as nursing and pharmacy. Enhanced language training provided for 3,000 people. Information and referral provided for 5,000 clients and more intensive employment services provided for 650 clients through Job Connect.
$20 million by 2007–08 for other new services for new Canadians and prospective apprentices.	Pilots to help immigrants in colleges and to encourage employers to better recognize the skills of new Canadians are underway. 21 organizations are receiving funding to expand bridging programs.
$27 million in 2005–06 for the International Medical Graduate (IMG) program.	Up to 200 opportunities per year, up from 90 in 2003, for internationally trained physicians to be assessed and trained in family medicine and needed specialty areas.
$4.5 million in 2005–06 for scholarships/employer bonuses for those leaving high school early and entering apprenticeship.	425 individuals are on track to receive scholarships after completing upgrading or registering as an apprentice; an additional 125 individuals have already completed.
$63 million for the Literacy and Basic Skills program.	46,000 participants in 2005–06.
$51 million for the ESL/FSL program.	About 20,000 enrolled in 2005–06.
$111 million for the Job Connect program for labour-market training and support services.	129,000 people, largely youth, were served in 2005–06. 78 per cent find a job or go on to further education and training.
$52 million for the Ontario Summer Jobs program.	61,000 young people found summer jobs or started their own businesses in 2005.
$219 million in 2005–06 for employment assistance programs for social assistance recipients.	There are about 200,000 participants in employment assistance activities annually.
JobsNow pilot project in six communities to help social assistance recipients.	There have been over 2,000 job placements since the pilot began.

Section IV: Building Ontario's Health Care Advantage

Medicare is an important part of Ontario's economic advantage because it lowers costs to business and supports the productivity of Ontario's workforce.

Rising health care costs are a source of concern for business and governments across North America. Ontario's publicly funded health care system provides a solid base of services that eases the pressure on firms to purchase these critical benefits for their employees. This provides a valuable advantage for Ontario in competing for jobs against U.S. jurisdictions, especially in manufacturing sectors such as automotive, where the cost of health benefits is cited as harming U.S. competitiveness.

A strong, sustainable health care system also contributes to Ontario's economy because a healthy labour force loses less time to illness and injury and is more productive on the job. To sustain and enhance this advantage, it is critical to treat illness and injury as effectively as possible, and to work with Ontarians so that they have the information and tools they need to engage actively in maintaining their good health. The government's commitment to promoting healthy and active living is demonstrated by the historic creation in June 2005 of a new Ministry of Health Promotion and by initiatives such as ACTIVE2010 and the Communities In Action Fund (CIAF), which support physical activity and participation in sports.

To sharpen the province's competitive edge, the Government of Ontario continues to invest in improvements to both the quality and availability of health care such as:

• longer funded hours of operation for medical diagnostic equipment, including magnetic resonance imaging (MRI) machines;
• more cancer and cataract surgeries, cardiac procedures, and hip and joint replacements;
• increasing the number of Family Health Teams (FHTs) to 150 to provide access to primary health care services for approximately 2.5 million Ontarians. So far, the government has created 100 FHTs across Ontario and will announce the remaining 50 in 2006–07; and
• investments in hospitals and Community Health Centres.

A full description of the government's strategy for improving Ontario's health care system is presented in Paper A, Building Opportunity, Building a Stronger Ontario.

Section V: Building Job Creation and
Ontario's Sector Advantages

The Province's economic strategy is built on the fact that a highly skilled, well-educated workforce and a diverse economy, coupled with modern economic infrastructure, are essential to economic growth today and in the future. A $1.2 billion investment in public transit, roads and bridges on top of the five-year, more than $30 billion ReNew Ontario infrastructure investment plan; one of the most ambitious building programs in North America for new electricity generation; education investments from junior kindergarten to the end of high school; the $6.2 billion Reaching Higher plan for postsecondary education; a comprehensive Jobs and Skills Renewal Strategy; health investments that are producing results; a new Ministry of Research and Innovation making substantial investments in research and commercialization — all are providing Ontario's economy with what is needed in order for it to grow and create jobs.

The strategy is paying off — more jobs are being created and for the most part these are good, full-time and higher-paying jobs. Every job that is created represents an opportunity for an Ontarian and for an Ontario business.

Ontario Employment Continues to Grow

In 2005 — a year that saw the Canadian dollar and oil prices continue to rise — 81,200 net new jobs were created in Ontario, bringing the total number of net new jobs created since October 2003 to almost 200,000.

Ontario's unemployment rate fell to 6.6 per cent, the lowest annual rate since 2001.

Strong Job Growth in Higher-Paying Occupations

The nature of Ontario's job creation over the last year has also been very positive. Almost 90 per cent of the 81,200 net new jobs created last year were full-time positions. As well, total wages and salaries earned by Ontario workers grew 5.0 per cent in 2005 — the best annual increase in five years.

In 2005, a significant majority of net new jobs were in higher-paying, knowledge-intensive occupations that are so important to future economic growth in the province.

In 2005, occupations with above-average weekly wages had strong job growth. These included jobs in management, sciences, education, government, transportation and health.

Ontario's Service Economy

Service sector industries in Ontario are growing fast and account for an increasing share of provincial employment and output. In 2004, service sectors contributed about $302 billion to Ontario's economy (roughly 70 per cent of GDP). In 2005, employment in Ontario's services industries in the private sector totalled approximately 3.4 million workers, roughly 53 per cent of total employment in the province.

Ontario is home to a number of highly successful, higher value-added services sectors, such as the finance, insurance and business services sectors and the information and communication technology (ICT) sector, which includes industries such as software development and telecommunication services.

Higher value-added services — so important to higher employment and incomes in developed economies — are characterized by high levels of specialized knowledge and skills. Investments in education, training and postsecondary education provide the foundation for generating the needed skills in an economy. Investments in research and innovation fuel the technological and creative breakthroughs that create the new products and services that achieve market success. Investments in economic infrastructure, including public transit investments, help build communities with the high quality of life that attracts investment and bring together the creative and knowledge workers critical for high value-added industries.

Ontario's job performance will also benefit from the government's support of key economic sectors, both those with rapid growth potential and those adjusting to global economic pressures.

Section VI: Building Communities and Key Economic Sectors

The province's diverse communities and key economic sectors have an important role in building a culture of innovation, producing a positive business environment, enhancing quality of life and creating opportunity.

Strong Communities

Ontario's communities will be well positioned to seize opportunities and overcome challenges if all levels of government — federal, provincial and local — work together to achieve the shared goal of long-term economic prosperity.

The Province's commitment to building strong communities through new, more effective partnerships with municipalities is demonstrated through the following initiatives:

• establishing Move Ontario, the McGuinty government's major new $1.2 billion investment to expand and modernize Ontario's public transit systems, roads and bridges;
• providing long-term, sustainable funding for transit that municipalities can count on. The government is delivering on its commitment to make two cents of the existing provincial gas tax available for Ontario's public transit systems. Over five years, the total gas tax allocation across the province could be more than $1.4 billion. Municipalities will now be able to use funding for both transit capital projects and transit system operations;
• enhancing the 2006 Ontario Municipal Partnership Fund (OMPF), to provide an additional $56 million targeted to those municipalities with high municipal social program costs relative to their residents' household incomes;
• increasing the Provincial share of funding for public health to 65 per cent in 2006 and to 75 per cent by 2007;
• investing an estimated additional $300 million, over the next three years, to move towards a 50–50 sharing of the cost of municipal land ambulance services by 2008;
• introducing new legislation that, if passed, will make the Ontario Municipal Board (OMB) more efficient and accessible — giving municipalities a stronger voice in the process that shapes their communities;
• developing a more efficient and effective brownfield redevelopment program. A new one-window web portal is now available with easy-to-understand information on government initiatives that support brownfield remediation;
• introducing legislation enabling tax increment financing (TIF) to assist with brownfield redevelopment and public infrastructure development. This new municipal fiscal tool would be introduced on a pilot basis, allowing for its prudent review in an Ontario context. If the legislation passes, the two pilots would be the subway expansion involving York Region and the City of Toronto, and the West Don Lands, a brownfield redevelopment initiative that is part of the revitalization of Toronto's waterfront;
• supporting the infrastructure renewal loan program of the Ontario Strategic Infrastructure Financing Authority (OSIFA), which is making a real difference in communities across Ontario. Collectively, municipalities are saving millions of dollars in interest charges and transaction fees over the life of their infrastructure financing loans;
• investing in the Canada–Ontario Municipal Rural Infrastructure Fund (COMRIF), a partnership with the federal government that is helping Ontario municipalities improve water and sewage treatment and waste management facilities, fix roads and repair bridges; and
• proposing legislation that would provide a process to review the governance model of the Ontario Municipal Employees Retirement System (OMERS), extend the municipal election cycle from three to four years, and allow the St. Clair Parks Commission to wind up by transferring parkland and recreational property to local municipalities.

There is also growing recognition that in order to fully address the financial challenges faced by many Ontario municipalities, the federal government needs to step up and contribute in a significant way.

A Solid Foundation for Long-Term Growth
in the Greater Golden Horseshoe

The economy of the Greater Golden Horseshoe (GGH)¹ is a key driver of the province's prosperity, accounting for 70 per cent of Ontario's GDP. This area is a vibrant economic region where urban and rural communities contribute to a high quality of life and long-term economic growth.

The GGH is a hub of innovation and growth, where a diverse range of individuals, companies and institutions combine to bring new ideas to the world market. The challenge is to sustain and enhance this region's economic performance while maintaining a high quality of life that can attract the best and brightest from around the globe.

In order to improve coordination in support of sustainable economic growth and address key challenges such as congestion and urban sprawl, the government is moving forward with Places to Grow, the growth plan for the GGH. Building on other key government initiatives (e.g., the Greenbelt Plan, Planning Act reform and the Provincial Policy Statement, 2005) and working within the planning process, this plan will provide a framework for decisions on a wide range of issues, such as land use planning, transportation and infrastructure. It will also create a better environment for investment decisions. The Ministry of Public Infrastructure Renewal expects to finalize the growth plan for the GGH in the first half of 2006.

An effective and efficient transportation system within the GGH will be a key element of a successful economy and a healthy environment. Strategic investments in GGH infrastructure are described in Section 1, including substantial contributions to transit funding within the GTA and the creation of the GTTA. Move Ontario, together with contributions from our federal and municipal partners, will be a major improvement to the movement of people and goods throughout the region.

At the heart of the GGH, the City of Toronto plays a vital role in both Ontario's and Canada's economies. It is a centre of commerce and innovation and the third-largest financial centre in North America.

The McGuinty government is the first to propose legislation that recognizes the City of Toronto as a responsible, accountable government. If passed, the Stronger City of Toronto for a Stronger Ontario Act would give Toronto the broad permissive powers needed to become more fiscally sustainable and autonomous. This act would provide the City with potential new sources of revenue and greater control over the services, programs and public assets it manages.

In addition to these proposed new revenue sources, Toronto will benefit from new transit funding, the ability to use the gas tax transfer for transit operating purposes, the recent enhancement to the land ambulance program and new funding under the Ontario Municipal Partnership Fund. Taken together, these measures provide Toronto with multi-year funding to significantly address its budget pressures until a long-term solution to the fiscal imbalance with the federal government is reached.

Strong Rural Communities

Ontario's diverse rural communities make valuable contributions to Ontario's quality of life and are an important part of the economy. By forging strong relationships with rural communities, the provincial government can ensure that rural areas continue to contribute to and share in Ontario's prosperity.

On February 20, 2006, the government released a progress report on Ontario's Rural Plan. First published in 2004, "Strong Rural Communities: Working Together for Success" outlines a framework under which the Province and rural municipalities can work together in support of strong, sustainable rural economies. Investments in rural communities include the following:

• under Move Ontario, an immediate investment of $400 million in municipal roads and bridges for communities primarily outside the GTA — with special emphasis on rural and northern communities;
• in 2006, rural communities across the province will receive $464 million in Ontario Municipal Partnership Fund and transitional support — more than half of the total funding provincewide. This funding will help rural communities address their local challenges and respond to policing and social program costs;
• $298 million to renew municipal infrastructure through the Canada–Ontario Municipal Rural Infrastructure Fund (COMRIF), expected to stimulate a total investment of $900 million over five years;

• as of February 14, 2006, OSIFA has committed to provide more than $1.24 billion in financing to more than 150 rural communities for upgrading local infrastructure projects;
• investments to improve health care in rural Ontario:
  • between 2005 and 2008, the government is investing in 17 new Community Health Centres (CHC) and seven new satellite CHCs serving rural communities, providing access to primary health care and community health programs;
  • $9.5 million for telemedicine to bring health care to rural and northern residents who cannot get to a clinic or hospital;
• improvements to education in rural Ontario, such as:
  • recognizing the unique needs of rural schools through more than $200 million in additional supports since 2002–03, including new funds for school repairs, energy efficiency, library books and additional teachers;
• over $20 million has been funded through the Rural Economic Development Program in 2005–06. These investments support sustainable rural economies and community partnerships. The priorities of the Rural Economic Development Program are improved access to health care services, community revitalization, and skills enhancement;
• investments in rural industries include:
  • $520 million in the Ontario Ethanol Growth Fund to support expansion of ethanol production in Ontario; and
  • initiatives that encourage a strong, sustainable farm sector and programs that support and stabilize farm incomes.

Agriculture

Ontario has the largest agriculture sector in Canada, employing about 90,000 people in 2005. Like many sectors, farming is adapting to competitive challenges in a rapidly changing international marketplace.

Ontario's farm sector is highly diversified and benefits from proximity to markets, a favourable climate and good soils. Agriculture Canada forecasts that sales by Ontario farms will total more than $8 billion in 2005 — five per cent higher than the average of the previous five years.

The high Canadian dollar, increasing international competition, subsidies in other jurisdictions, trade disruptions and bad weather have challenged certain segments of the sector.

The government recognizes these challenges and is working to maintain a strong, sustainable farm sector. The government's recent announcement of $125 million includes new funding to help grain and oilseed farmers and horticulture farmers dealing with low returns and will bring total Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) expenditures for farm income stabilization and support programs to more than $800 million over the 2003–04 to 2005–06 fiscal years. Ontario farmers also receive favourable treatment under a number of taxes, such as the property tax, RST and fuel tax (see table below).

Farmers play an important role in Ontario's rural economy and many government programs work to the benefit of the broader rural community. Ontario's efforts to encourage ethanol production is one example. Another is the government's commitment to the development of renewable sources of electricity generation. Net metering will allow electricity from water, wind, solar power and farm biomass to be sent to the grid, giving farmers who generate their own power an opportunity to earn credits towards their energy costs. The Ontario Power Authority (OPA) is moving forward with a standard offer program aimed at small-scale, clean or renewable generation, increasing economic opportunities for small businesses, including farms.

Selected Examples of Ontario Support for Farmers
($ Millions)

OMAFRA Expenditures for Farm Income Stabilization and Support (200304 to 2005-06)1	834
Value of Farm Property Class Tax Rate Reduction2 (2005)	300
Value of Retail Sales Tax Exemption for Agricultural Goods (2005)	265
Value of Fuel Tax Exemption for Coloured Fuel Used in Farm Equipment (2004)	43
Value of $500,000 Lifetime Capital Gains Exemption (2005)3	41
Value to Farm Corporations of Small Business Corporate Income Tax Rate (2005)	20
Expected OMAFRA Expenditures for Nutrient Management Assistance (2005-06)	12
Expected OMAFRA Expenditures for Agricultural Drainage Infrastructure Management (2005-06)	7
Expected OMAFRA Expenditures for Meat Plant Assistance Program (2005-06)	7
OMAFRA Expenditures for Ontario Cull Animal Strategy — abattoir expansion (2004-05)	7
Land Transfer Tax Exemption for Transfers of Farm Land between Family Members (2005)	5
1 Three-year total for the 2003–04 to 2005–06 fiscal years using expected expenditures for 2005-06. 2 Includes both municipal and education portions. 3 Estimates of Ontario's share of federal tax expenditures based on Ontario's 27 per cent share of national farm capital value. Sources:Public Accounts of Ontario 2003–04 and 2004–05; 2005 Ontario Economic Outlook and Fiscal Review, Background Papers; Tax Expenditures and Evaluations 2005, Department of Finance Canada; Statistics Canada data and Ontario Ministry of Finance estimates.

 

Ontario and the federal government both have roles to play in helping to stabilize farm income and position agriculture for long-term success. In addition to meeting its commitment to fund business risk management and other programs under the federal–provincial Agricultural Policy Framework, in 2005–06, Ontario is providing:

• $80 million for grain and oilseed farmers to offset their losses on the 2005 crop;
• $35 million for producers of all edible horticulture crops to offset their past losses;
• $25 million to allow the University of Guelph to invest in its animal health laboratory;
• $10 million for an Ontario livestock and poultry traceability system;
• $3 million to small and medium-sized producers of Vintners Quality Alliance wine; and
• an additional $1 million to further support Ontario wine marketing efforts.

The government remains committed to a multi-year strategy that will stabilize and strengthen the province's agriculture industry for the future but requires the federal government's participation as a full partner to support the agriculture industry in the way it needs and deserves.

Continued success for Ontario farms requires new approaches by both farmers and governments. In its pre-Budget submission, the Ontario Federation of Agriculture noted, "Agriculture research is the most cost-effective support for agriculture." Research is the raw material of innovation, and the government provides significant support for agricultural research. In addition to existing efforts, the government is providing $1 million in 2005–06 to the Grape Growers of Ontario for advanced research into hardier varietals.

The government is also investing in farm-level innovation, which is important in a number of ways, including increasing the productivity of agriculture, meeting changing consumer demands and managing the effects of farming on the environment. To help foster farm-level innovation, the government proposes to establish a new award for agri-food innovation excellence. Over the next five years, $2.5 million is to be awarded to outstanding farmer-innovators. The government will work with industry and academia to identify award criteria, with the intention that the first awards will be presented at the next Premier's Agri-Food Summit.

Northern Ontario

Northern Ontario's unique circumstances require focused and coordinated programs and initiatives to promote economic growth and job creation. The Province continues to work with communities and key industries in northern Ontario to support long-term prosperity within an increasingly competitive global economy. For example, as the Premier recently announced, the government is substantially increasing its commitment to help the forestry industry invest in and foster a new generation of forest-sector jobs.

Other Provincial investments that support prosperity for northern Ontario include the following initiatives:

• developing strategic economic infrastructure projects, such as:
  • an investment of more than $1.8 billion over five years announced on August 30, 2005 to upgrade and expand northern highways under the Northern Ontario Highway Strategy; and
  • the introduction of Move Ontario, an immediate one-time new investment of $400 million to help municipalities primarily outside the GTA — with special emphasis in rural and northern communities — invest in municipal roads and bridges.
• offering low-cost loans through OSIFA to northern municipalities to upgrade local infrastructure, providing $259 million to 47 northern communities as of February 14, 2006;
• investing in ongoing improvements to health care in northern Ontario, including:
  • a total investment of almost $25 million in 2004–05 and 2005–06 for surgeries, exams and equipment to northern communities under the Wait Time Strategy;
  • a commitment of $6.6 million annually for telemedicine services;
  • funding for Aboriginal health programs as part of the annual $44 million provincial Aboriginal Healing and Wellness Strategy;
  • substantial investments in northern Ontario hospitals over the next five years, such as expansion and service quality projects in North Bay, Sault Ste. Marie, Sioux Lookout, Thunder Bay and Sudbury;
  • the establishment of a new medical school to help alleviate the doctor shortage. The official opening of the Northern Ontario School of Medicine was celebrated in September 2005;
• investing in improvements to education in northern Ontario, such as $16 million to Northern school boards through the Good Schools Open Program and $6.6 million through Good Places to Learn;
• providing municipalities in the north with $278 million in OMPF funding and transitional assistance in 2006;
• reviewing the Provincial Land Tax (PLT) system and consulting broadly with northern communities and stakeholders. In 2006, the government will continue its review of the feedback from these consultations;
• providing $4 million to establish a Bio-Energy Research Centre in Atikokan to accelerate work now underway on the future use of the Atikokan Generating Station. This centre will carry out research of practical relevance to the future of the community and the province, and allow the station to continue to be a source of employment for the community;
• supporting jobs and investment created by the mining sector in northern communities;
• contributing $60 million annually to the Northern Ontario Heritage Fund Corporation (NOHFC). Under its new mandate, NOHFC will provide support for private-sector job creation, youth and emerging technologies, while continuing to invest in public infrastructure projects that support economic development;
• embarking on a new approach to Aboriginal Peoples, many of whom live in northern Ontario. The government is responding to the socioeconomic gap that exists between Aboriginal Peoples and other Ontarians by working on a number of initiatives, including actively engaging Aboriginal Peoples in creating a new, effective partnership in support of economic development. This includes developing proposals to enable Aboriginal Peoples to share fairly in the benefits of natural resource development. The government is also supporting literacy by providing:
  • $6 million to First Nations libraries to help strengthen literacy and promote lifelong learning for people of all ages;
  • more than $800,000 for the Lieutenant Governor's summer camp initiative that encourages literacy among aboriginal youth in northern Ontario. This initiative builds on the success of the Lieutenant Governor's Book Program, which provided over 850,000 books to First Nations and Native Friendship centres across Ontario;
• committing to initiatives under the Northern Prosperity Plan, such as:
  • the Northern Ontario Grow Bonds pilot program, which is providing financing for new and expanding firms;
  • a $15 million investment over three years, which began in 2005, to support geological mapping, which will help open the mining potential of the Far North;
  • the Go North Investor Program, which is putting northern Ontario on the radar for international investors and attracting new, innovative anchor investments to northern communities, such as
    • an investment in SIAG Great Lakes LP, a joint venture of more than $35 million between Algoma Steel Inc. and German-based SIAG. This state-of-the-art facility will use innovative technology to manufacture steel wind towers, bringing approximately 140 high-value jobs to Sault Ste. Marie;
    • the Northern Communities Investment Readiness initiative, which is helping northern communities identify and market their strengths to the world; and
    • Ontario's North, a new video that is part of a Go North marketing package that will be taken to international markets to showcase the north's business advantages, sector strengths and quality of life.

Forest Products

Ontario's forest-products industry plays a vital role in the Province's economy, particularly in northern Ontario, where it provides employment for some 30,000 people and is the mainstay of many communities.

Although global demand for wood and paper products continues to grow at a healthy rate and Ontario has many strengths in terms of experienced workers, proximity to key markets and a large resource base, the industry is facing a challenging period. The difficulties facing the industry include a strong Canadian dollar; U.S. softwood lumber duties; increasing supplies of low-cost plantation-grown fibre abroad; and weakening North American demand for newsprint and office papers.

Fundamental changes are needed to address these challenges.

Following up on the report of the Minister of Natural Resources' Advisory Council on Forest Sector Competitiveness in 2005, the government announced $680 million in assistance for the industry to help lever investments to improve its competitiveness. The Ministry of Natural Resources is moving to implement this assistance, including the $150 million Forest Prosperity Fund, cost-sharing for forest access roads, enhanced forest inventories and streamlined forestry approval processes. In addition, on February 22, 2006, the Premier announced a further $220 million over three years to help strengthen the industry.

The forest industry's continuing strength requires a sustained effort and the cooperation of companies, workers, communities and senior levels of government. This includes ensuring that the federal government follows through on the November 2005 commitment of a $1.5 billion, five-year national program to help forest companies, workers and communities.

Mining

Mining has played a long and distinguished role in Ontario. Some of the world's outstanding deposits of nickel, gold and copper have been discovered here. Today, Ontario's first diamond mine is under development.

Currently, Ontario produces some $7 billion per year of metals, non-metallic minerals and aggregates. The industry directly employs 50,000 people across Ontario. In addition, Toronto has emerged as one of the world's premier centres of mining finance. Over 1,100 mining and exploration companies are listed on the Toronto Stock Exchange.

The mining industry is currently enjoying an exceptional boom in global demand, prices and profitability, and has a bright future, owing in large part to the robust demand expected from rapidly growing economies such as China and India.

Sustained strong investment in mineral exploration is also essential to the industry's continued well-being. Exploration expenditures in Ontario have nearly tripled since 2001 to an estimated $321 million in 2005, and are vital to the ongoing need to identify new ore reserves to sustain long-term mining activities.

New mining developments currently underway in Ontario include DeBeers' diamond mine near Attawapiskat; Falconbridge's new Nickel Rim mine in the Sudbury area; the expansion of Falconbridge's copper-zinc mine in Timmins; and the expansion of Goldcorp's gold mine in Red Lake.

Ontario has an opportunity to play a larger role in mining-related technology and innovation, and in the creation of an expanding range of value-adding goods and services. The recent launch of the new Centre for Excellence in Mining Innovation in Sudbury represents a new milestone in this direction. The Ontario Government is providing $10 million to Laurentian University to help launch the new Centre.

Manufacturing

The McGuinty government recognizes that a vibrant manufacturing sector is essential to Ontario's prosperity. Manufacturing accounts for about 17 per cent of Ontario's employment, 21 per cent of the province's GDP and 88 per cent of its international merchandise exports. Ontario's highly skilled workforce and labour cost advantages, including public health care, contribute to the competitiveness of the sector.

From 1994 to 2004, Ontario led North America in manufacturing job growth with a gain of 259,000 net new manufacturing jobs — more than any other Canadian province or U.S. state. Today, Ontario has the second-highest number of manufacturing employees of any province or state in North America. However, in 2005, Ontario's manufacturing sector came under increased competitive pressures due to a higher Canadian dollar and higher energy costs. As a result, manufacturing employment in 2005 declined 3.3 per cent.

Despite these pressures, the sector is proving resilient. Ontario manufacturing productivity increased 4.3 per cent in 2005. The higher dollar made it less expensive for companies to make capital investments to improve productivity by lowering the price of imported machinery and equipment. In 2005, expenditures in new machinery and equipment by Ontario's manufacturing sector increased by 7.4 per cent. This was the highest increase since 1998.

That being said, the government appreciates how difficult it has been for employees facing job loss or uncertainty in the manufacturing sector. The government provides a number of services for affected workers. These include:

• a $2.1 billion Jobs and Skills Renewal Strategy, including a One-Stop Training and Employment System that provides programs for the quick retraining and rapid re-employment of workers affected by layoffs and plant closures;
• adjustment committees, which provide a range of services for affected workers including job search assistance, vocational and business counselling, and training information; and
• ongoing support and strategies to encourage the auto industry to make new investments in Ontario.

The Ontario Government has been investing in the competitiveness of the manufacturing sector by putting in place policies that foster a positive investment climate in the province, including the enhancement of Ontario's economic infrastructure.

• In the past two years, Ontario surpassed Michigan as the leading auto-producing jurisdiction in North America. Ward's, the leading source of automotive market analysis and data, forecasts that Ontario will continue to lead North America over the near future.
• The Ontario Automotive Investment Strategy (OAIS) ensures that Ontario enhances its competitive advantage in this key export industry. So far, the government's auto strategy has leveraged over $5.7 billion in new investment in this sector.
  • Four of the world's leading auto producers — General Motors, Toyota, Ford and DaimlerChrysler — have committed to making new investments in Ontario in cutting-edge auto manufacturing technology, confirming that Ontario continues to be one of the best places in the world to manufacture automobiles.
  • Last year's announcement of a new Toyota auto plant in Woodstock – the first greenfield assembly plant in the province in nearly 20 years – was quickly followed in March of this year by announcements to establish a Hino Motors Ltd. truck assembly facility in Woodstock, and a Toyotetsu auto-parts plant in Simcoe. These announcements are further proof that the government's auto strategy is working, and confirm Ontario's economic advantages in attracting investment – great location, a skilled workforce, and excellent health care and education systems.
• Hybrid electric vehicles promise to be an emerging growth area for the future of the automobile sector, helping to reduce greenhouse gases. To promote the use of hybrid electric vehicles in Ontario, and signal the importance for Ontario of maintaining leadership in North American auto production, the Ontario Government proposes to double 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.
• Ontario's $500 million Advanced Manufacturing Investment Strategy (AMIS) will help Ontario's industrial community make investments in leading technologies and innovations in order to keep them globally competitive.
• The Ontario Government's Reaching Higher plan for postsecondary education will make $6.2 billion in new cumulative investments by 2009–10 in universities and colleges, apprenticeships and skills programs to help address skills shortages in manufacturing as well as provide training for workers in transition.
• The government's ReNew Ontario plan is expanding and improving provincial highways and relieving congestion at border crossings. The government is also investing an additional $1.2 billion in transit, roads and bridges under the Move Ontario plan announced in this Budget.
• The three years of stable pricing on electricity provided by OPG for all electricity consumers will help the province's manufacturers to better manage electricity costs.

Despite the challenges faced by Ontario's manufacturing sector, the government is confident that manufacturing will continue to be a successful and productive participant in Ontario's diverse economy.

The Entertainment and Creative Cluster

In 2004, the entertainment and creative cluster contributed nearly $9.9 billion to Ontario's economy (2.3 per cent of GDP). Ontario is North America's third-largest employer in the entertainment and creative industries, after California and New York. In 2005, Ontario employment in the cluster totalled approximately 185,000 people, accounting for 42 per cent of Canada's total workforce in this cluster. In addition to this direct economic contribution, the presence of the cluster enhances quality of life, creativity and innovation, which further boosts economic growth by attracting tourists, businesses, skilled workers, and highly mobile professionals and investors.

The entertainment and creative cluster includes a broad range of creative content industries, including film and television production, sound recording, and book and magazine publishing. The cluster also includes fast-growing new media industries (e.g., digital special effects and interactive products like video and computer games) and independent artists, authors, musicians and filmmakers.

The development of this cluster is characterized by the enhancement of economic linkages and synergies among these various creative industries, as well as linkages with other related industries, including fashion, architecture, graphic and industrial design, computing (hardware and software) and telecommunications.

In order to reinforce and further support the entertainment and creative cluster, the government is committing to a number of initiatives including:

• a proposed extension of the enhanced 18 per cent rate for the Ontario Production Services Tax Credit until March 31, 2007;
• a proposed enhancement of the Ontario Interactive Digital Media Tax Credit to provide more support for smaller companies and to facilitate access to this tax credit for large companies and more industries, such as Ontario-based interactive video-game developers;
• providing $49 million to support Ontario's major cultural agencies and attractions. The Royal Ontario Museum, Art Gallery of Ontario, Canadian Opera Company, National Ballet School, Royal Conservatory of Music and Gardiner Museum of Ceramic Art will all receive funding to help them realize their full economic potential as premier tourist attractions;
• allocating $10 million to the Ontario Heritage Trust in support of its mandate to identify, preserve and protect Ontario's heritage, as well as to increase public awareness of the importance of heritage conservation;
• establishing the Entertainment and Creative Cluster Partnerships Fund. This new fund will provide $7.5 million over the next three years to promote cooperation between firms among the different sectors in the cluster. Project areas will include entrepreneurship and skills development, domestic and international marketing, new product prototype funding and development of cluster performance measures; and
• providing $1 million in support for development and production plans for the 2007 Toronto International Arts Festival. This is in addition to $1 million in support provided to Festival organizers in 2005. From a base in Toronto, the Festival will highlight and make use of artistic and cultural venues and resources from other parts of Ontario including Niagara, Stratford and Muskoka.

Section VII: Building the Investment Climate

Continued growth in Ontario's economy depends on the vitality of the investment climate and the health of its diverse economic sectors. Creating opportunity for investment is important to the health of the economy. There are a number of ways that the government can support a strong investment climate, including many of the measures related to infrastructure, education, training and innovation discussed in the previous sections.

Competitive Taxes: Accelerating Ontario Capital Tax Rate Cut

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

Although corporate income tax rates in Ontario remain competitive with surrounding jurisdictions, Ontario's capital tax — which taxes business investment rather than profits — is widely recognized as a barrier to attracting investment and fostering new economic growth. One of the key areas where the Ontario economy has underperformed the United States is investment as a share of GDP. This has stood in the way of high-productivity job creation, which is needed to fully utilize our skilled workforce.

The government enacted legislation in 2004 to enhance Ontario's investment climate by gradually phasing out the province's capital tax at a pace that enabled the funding of key government priorities such as education, health and infrastructure. This capital tax elimination plan included increases to the deduction, followed by reductions to the capital tax rates until the tax is eliminated in 2012. The deduction is being increased from $5 million in 2004 to $15 million in 2008, which will have the effect, by 2008, of exempting more than 14,000 additional corporations from the capital tax. Starting on January 1, 2009, the capital tax rates are being reduced every year so that by January 1, 2012, the tax is completely eliminated.

However, recognizing the increased importance of attracting new investment to the province, the government is proposing, in this Budget, to accelerate the capital tax rate cut. Effective January 1, 2007, the current rate would be cut by five per cent — a full two years earlier than currently scheduled. Further, the government intends to eliminate the tax in 2010 should the fiscal position of the Province allow.

Increased capital investment creates widespread benefits to people throughout the Ontario economy. It provides incentives to invest in new technology that raises productivity, allowing companies to pay higher wages and create more and better jobs. The capital tax rate cut proposed in this Budget will further enhance Ontario's already competitive business environment in a fiscally responsible way.

Combined corporate income tax rates in Ontario compare favourably with most competing jurisdictions. Ontario's combined statutory corporate income tax rates are below the average for the United States, particularly for manufacturing, and are below the combined rates in each of the Great Lakes states against which Ontario competes most directly.³

With Ontario's highly educated workforce, competitive tax environment, health care cost advantage, and supportive business environment, Ontario remains a leader in attracting new business and fostering a new generation of economic growth. The McGuinty government is committed to policies that will help Ontario improve this economic advantage.

Modernizing Business and Financial Services Regulation

Along with competitive taxation, a competitive regulatory framework also supports a positive investment climate and a growing economy. Ontario is continuing to modernize its business and financial regulation in order to maintain a high-quality business environment, stay ahead of fast-changing global markets and build on Ontario's economic advantage.

Modern regulation supports both dynamic markets that unlock economic growth potential and consumer choice, and provides protection for consumers and investors. This includes making sure regulation is up-to-date and internationally competitive, so that businesses can adapt to changing markets and to new ways of serving customers. High-quality business and financial regulation, which supports market confidence and efficiency, can be a key competitive advantage that helps attract investment.

• Modern and competitive regulation is pivotal to the growth of two key sectors of the economy: business services and financial services. They represent Ontario's top two traded industry clusters, according to the Institute for Competitiveness and Prosperity.
• A high-quality regulatory environment is among the many advantages that Canadian financial institutions recognize as helping to anchor their location in Toronto. Toronto's pool of skilled professionals is another such advantage — Toronto is home to the second-largest number of financial analysts in the world, after New York. More businesses locate their head office in Toronto than in any other city in Canada.
• Canada, however, is the only major nation without a national securities regulator, and this may contribute to Canada falling short of achieving its full economic potential. Ontario will continue to promote the creation of a common securities regulator in Canada.

Modern regulation and commercial laws that protect the public interest on a cost-effective basis help companies start up and grow. As a result, governments are taking a closer look at their business regulations to reduce barriers to growth for small and medium-sized businesses, a key engine of growth.

• The Small Business Agency of Ontario has been set up to:
  • promote regulatory best practices, including facilitating compliance while protecting health and safety;
  • streamline paperwork; and
  • ensure that small business interests are part of government decision-making. Last fall, through the agency, the government launched a new online Regulatory Registry to facilitate the exchange of information between government regulators and businesses regarding the impact of regulatory proposals on small business.

Regulatory reforms undertaken by the Ministry of Labour to help advance safe, fair and harmonious workplace practices are having a positive impact on Ontario's economic climate. More effective, targeted inspection and enforcement have helped to create safer workplaces.

Conclusion

The Ontario economy has faced substantial challenges from high oil prices and a record-high increase in the Canadian dollar over the past two years. Despite these obstacles, Ontario's economic growth over this period has exceeded the expectations of most forecasters.

The ability of the economy to withstand these external risks is an indication of strong fundamentals and the hard work and ingenuity of Ontario's people and businesses. Ontario has a vibrant and highly diversified economy that is well positioned to compete in the world economy.

These challenges from the global economy will be a fact of life for the foreseeable future. This makes it even more important for all levels of government to work together to ensure that the environment for doing business in Ontario is as strong as possible, to maximize our competitive advantages and encourage investment that creates growth in productivity and rising standards of living for Ontario families.

The Ontario Government has the responsibility for providing some of the key economic resources and services that will contribute to strengthening Ontario's economic advantage.

The government's plan includes key elements that will:

• bring Ontario's economic infrastructure up to 21^st-century standards;
• create a comprehensive, efficient and safe provincial transit system;
• ensure a reliable and environmentally sustainable supply of electricity;
• invest in education and health care;
• foster a culture of innovation;
• work with key sectors such as forestry to adjust to changing conditions; and
• ensure competitive tax rates, including a proposed five per cent capital tax rate cut.

The government's strategy is about maximizing the potential of Ontarians. Ontario's economy has some of the strongest fundamentals in the world. Ontario is already a great place to live and do business, but it has the potential to be even greater. The right government policies, carried out in a fiscally responsible manner, will help Ontario achieve its potential.

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Budget de l'Ontario 2006 - Documents budgétaires