: Ontario's Long-Term Report on the Economy
Chapter 6: Towards a Prosperous and Sustainable Future

Introduction

Ontario’s economy faces some demographic challenges in the long term: its population is aging while the pace of growth of the core working-age population is slowing. Globalization of the world economy also means that Ontario will continue to face growing competitive pressures. In addition, environmental issues such as climate change will influence the future economic prosperity of the province.

Preparing for the challenges ahead

This chapter describes how the Province is preparing Ontario for the challenges of the coming decades. The government’s comprehensive set of policies focuses on encouraging business investment and reducing regulatory barriers; on investing in infrastructure and in knowledge and skills; and on ensuring that Ontario’s economy has the flexibility to innovate and to seize opportunities emerging from technological progress and the development of new markets. These policies will help to improve productivity growth, which can counter slower labour-force growth.

Ontario is also playing a central role in addressing the challenge of climate change. The government’s policies to green the economy and promote the transition to a low-carbon future will help Ontario meet its climate change objectives and move towards a prosperous, sustainable future.

Tax Plan for Jobs and Growth

Tax measures for a stronger economy

The 2009 Budget presented a comprehensive package of measures that modernizes Ontario’s tax system. Together, these tax measures strengthen the long-term competitiveness of Ontario’s economy, leading to more jobs and higher incomes.

The current Retail Sales Tax (RST) will be replaced with a value-added tax that is combined with the federal Goods and Services Tax (GST) to create a Harmonized Sales Tax (HST). The HST will take effect July 1, 2010 and have a combined rate of 13 per cent, with the provincial portion at eight per cent (the same as the general RST rate) and the federal portion at five per cent.

Temporary and permanent tax relief for people and businesses is also provided, totalling $15 billion over three years.

  • For people, the tax relief includes a permanent income tax cut for 93 per cent of income tax payers starting January 2010 and enhanced property tax and sales tax credits for low- to middle-income individuals and families.
  • For businesses, corporate income tax rates will be cut starting July 1, 2010.
  • People and businesses will also receive temporary support to help them adjust to the HST.

Studies predict significant benefits from comprehensive tax package

A recent study1 concludes that the tax measures in the 2009 Budget will generate significant benefits for Ontarians. The study predicts that, within 10 years, these tax measures, together with other recent tax changes, will increase business investment by $47 billion, create 591,000 net new jobs and raise annual incomes by up to 8.8 per cent.

The tax measures are discussed more fully in Chapter 4: Modernizing Ontario’s Tax System for Jobs and Growth.

Reducing Regulatory Barriers to Innovation and Economic Growth

To enhance productivity and economic growth over the long term, the Ontario government continues to simplify and modernize its relationship with business.

Government to become faster, smarter, more streamlined

In March 2009, the Ontario government announced the “Open for Business” strategy, an ongoing plan to make government faster, smarter and more streamlined for families and businesses while continuing to protect the public interest. To achieve this goal, the government will take action to:

  • Modernize Services: The Province aims to redesign the structures, processes and capacities required for modern service delivery, with the following key initiatives:
    • improve business access to services through one-window, one-number, one-stop access;
    • implement a single business identifier to simplify access for business, reduce duplication and enable information sharing;
    • establish high-quality, consistent and predictable services through service standards and guarantees; and
    • provide facilitator services to support business.
  • Modernize Government: The Province is also aiming to modernize the way it operates. It will work collaboratively with business in developing regulations, change its approach to compliance and help businesses to comply.

Addressing the Infrastructure Gap

Investing now for infrastructure needs of the future

Reliable, well-maintained, modern infrastructure is important to retaining Ontario’s competitive location advantage, enhancing productivity and enabling growth. Ontario’s growing and aging population will put additional pressure on the significant infrastructure deficit that has built up over the past few decades.

In the 2009 Budget, the government allocated $32.5 billion for infrastructure investments over two years in all key sectors — including health, education, culture, tourism, sports and recreation, social and affordable housing, and water and environmental projects. These investments build on the $30 billion ReNew Ontario infrastructure investment plan, which was completed in 2008–09 — a full year ahead of schedule.

Further details on infrastructure investments are provided in Chapter 5: Addressing Ontario’s Infrastructure Gap.

Investing in Knowledge and Skills

Ontarians have higher rate of postsecondary education

A highly skilled and educated workforce is a key building block for a prosperous and sustainable future. Businesses in Ontario already benefit from a talent-rich workforce. About 62 per cent of Ontarians aged 25 to 64 have completed a postsecondary certificate, diploma, degree or other training program — a higher rate of postsecondary education than in any Organisation for Economic Co-operation and Development (OECD) country. To stay competitive in the future, it will be increasingly important to build on this advantage and continuously improve the education and skills training systems in Ontario.

Over the past six years, the government has put in place programs and policies to meet longer-term skills challenges. Key initiatives include:

  • implementing the $6.2 billion Reaching Higher plan for postsecondary education that is significantly improving participation in and access to higher education;
  • launching Employment Ontario, the network of employment and training services in communities across the province;
  • providing additional supports for workers affected by the global economic recession, including the Second Career program that helps laid-off workers get the training they need to succeed in new jobs;
  • helping internationally trained immigrants gain faster and better access to Ontario’s labour market through bridge training services, mentorship opportunities and other measures to break down barriers to credential recognition; and
  • providing tax incentives to employers to encourage workplace training, notably apprenticeships.

Incentives encourage workplace training

In addition, Ontario will phase in a full-day early learning program as part of a comprehensive plan to increase student achievement and build a stronger workforce. The goal for full implementation is 2015–16.

The program was developed to support the Province’s long-term vision of how to improve education for children up to age 12. It builds on recommendations of the Report to the Premier by the Special Advisor on Early Learning, Dr. Charles E. Pascal.2

Ontario has already achieved significant improvements in the performance of elementary and secondary school students. Key milestones include:

  • 90 per cent of primary classes with 20 or fewer students and 100 per cent of classes containing 23 or fewer students;
  • 67 per cent of Ontario Grade 3 and 6 students meeting or exceeding provincial reading, writing and math standards — a 13 percentage point increase over 2002–03; and
  • raising the high school graduation rate from 68 per cent in 2003–04 to 77 per cent in 2007–08, resulting in 36,000 more students having graduated than would have had the rate remained at the 2003–04 level.

Measures to prepare young Ontarians for careers of the future

These and other measures, combined with the introduction of a full-day early learning program, should help to improve student achievement and ensure that young Ontarians are better prepared for careers of the future in a new knowledge-based economy.

Fostering Innovation

Innovation and technological change are key drivers of Ontario’s prosperous and sustainable future. Technological change has far-reaching impacts on society, including on the health and well-being of people, the environment, and how products are designed, manufactured and distributed. Fostering innovation will continue to be a key government priority.

Over the next 20 years, some of the following technological trends may reshape Ontario’s economy:

  • information technologies that enhance computational capabilities (such as cloud computing and quantum computing);
  • new sources of renewable power and energy storage as well as sustainable production techniques;
  • biomedical technologies that build upon advances in genomics and stem cell research; and
  • smart technologies that integrate sensors, computers and communication technologies (such as smart electricity grids).

Important to support business investment in innovation

As the pace of technological change continues to accelerate over the coming decades, it will be important for Ontario to maintain a supportive environment for business investment in innovation.

Industrial research and development (R&D) is especially critical because it is linked to other business investments in innovation such as new equipment and machinery, training, recruitment of highly skilled talent, and creation of higher-value jobs, products and services.

Almost half of all industrial R&D performed in Canada in 2007 was in Ontario

In 2007, Ontario accounted for about $7.6 billion or 48 per cent of all industrial R&D performed in Canada.3 About 60 per cent of industrial R&D in Ontario is performed in the manufacturing sector, including communications equipment manufacturing, semiconductors and electronics, automotive, pharmaceuticals and machinery.4

Around the world, less R&D is being done in traditional corporate labs and more is being outsourced to other companies and universities at home and abroad. For Ontario, the “internationalization” of R&D is an opportunity to attract more multinational R&D investment and talent by collaborating with the province’s strong university R&D sector.

Ontario is implementing policies and programs to attract investment and expertise in new technologies and to keep the economy at the forefront of technological change. For example, businesses in Ontario continue to benefit from one of the most attractive tax environments for industrial R&D in the world. In addition, from 2003–04 to 2007–08, the government spent about $2.6 billion on R&D — 81 per cent of which was spent on R&D performed in Ontario universities and hospitals.5

Transforming research into new products and services

Ontario’s Innovation Agenda aims to transform new knowledge from strategic sectors into the businesses and jobs of the future.6 Ontario government programs provide entrepreneurs and emerging companies with the support they need to turn research and ideas into new products and services for the global marketplace. These programs include:

The Innovation Demonstration Fund, which helps companies commercialize new clean technologies. The fund was enhanced in the 2009 Budget with an additional $50 million over four years.

  • The $205 million Ontario Venture Capital Fund, which helps to strengthen the ability of the province’s venture capital sector to support innovative, high-growth companies in Ontario. The fund is a partnership between the Ontario government and leading institutional investors.
  • The Ontario Emerging Technologies Fund, which is a $250 million direct investment fund, where the Province will co-invest, alongside qualified investors, in innovative, high-growth, private Ontario companies.
  • In addition, through the Ontario Network of Excellence (ONE), the government is supporting an innovation system that is responsive to the needs of Ontario’s world-leading researchers, entrepreneurs and innovation-based companies. By leveraging the capabilities of key partner organizations, including the Ontario Centres of Excellence and the MaRS Discovery District, ONE is providing a comprehensive suite of programs and services to innovators, from idea to market.

Seizing Opportunities in the Green Economy

Greening the economy and promoting the transition to a low-carbon future are central to Ontario’s long-term economic prosperity and sustainability. The government has set targets for reductions of greenhouse gas (GHG) emissions and is pursuing measures to help ensure these targets are met.

Ontario plans to become a leading green economy

The Green Energy and Green Economy Act, 2009 is helping to build Ontario’s green economy infrastructure by attracting new investment in renewable energy projects and promoting conservation. The Act is part of Ontario’s plan to become a leading green economy in North America. It will boost investment in renewable energy projects, increase conservation, create green jobs and foster economic growth. Specifically, the Act is expected to:

  • spark growth in clean and renewable sources of energy such as wind, solar, hydro, biomass and biogas in Ontario;
  • create the potential for savings and better-managed household energy expenditures through a series of conservation measures; and
  • create 50,000 jobs for Ontarians in its first three years.

Over $5.2 billion invested in renewable energy projects since 2003

Ontario has brought more than 1,300 megawatts of new renewable energy online since October 2003. New renewable energy projects already in place or under construction in Ontario since 2003 represent a total investment of more than $5.2 billion. In 2009, wind generation was up more than 60 per cent, compared to 2008.

The Green Energy and Green Economy Act builds on the government’s earlier initiatives, including plans to eliminate coal from the power supply. Coal-fired generation is the single largest source of air pollution in Ontario and eliminating it from the supply mix will be the largest climate change initiative in Canada. In 2009, coal-fired generation was down about 70 per cent compared to 2003.

As well, on December 3, 2009, legislation was passed that will allow for the design and implementation of a cap-and-trade system in Ontario that can link to emerging North American and international systems. Cap-and-trade is a flexible, market-based mechanism that facilitates the reduction of GHG emissions and promotes the transition to a green economy by encouraging technological innovation.

“The economic crisis is no excuse to delay action on climate change. On the contrary, it is a great opportunity to ‘reset’ our economies on the base of a new ‘green growth’. Ambitious policies to move toward a low-carbon economy should be an essential element in the strategy to recover from the crisis.”

Angel Gurría, OECD Secretary-General (remarks delivered at the National Forum on Energy, Environment and Climate Change Policy in Mexico City, August 24, 2009).

Technological innovation to drive transition to a low-carbon future

The transition to a low-carbon future will drive reductions in GHG-related expenses through energy conservation and the adoption of new technology.

The Ontario Centre for Environmental Technology Advancement (OCETA) has identified more than 100 clean technology companies in Ontario that are engaged in designing, developing and manufacturing technologies that reduce environmental impacts.7 These companies cut across nine industrial sectors, with many in the areas of water and wastewater, energy infrastructure, and recycling and waste. The broader environmental technology and services sector in Ontario is already a $7 billion market, with more than 2,400 companies employing 62,500 professionals.8 There are further opportunities for long-term economic growth in sectors such as green transportation and energy efficiency.

Partnering with Industry to Encourage Jobs and Investment

Ontario’s economy, like other major industrialized economies, continues to shift from a goods-production focus to a service-sector orientation. Productivity improvements and economic growth in both sectors are increasingly driven by knowledge and creativity. The Ontario government’s policies foster the development of a knowledge-based economy, particularly in advanced manufacturing, information and communications technology, business and financial services, entertainment and creative industries, and life sciences.

Strengthening established industries for long-term prosperity

The Province is also focused on building a dynamic future for its established industries such as automotive, tourism, agri-food, forestry and forest products, and mining. These industries are important to maintaining economic diversity and sustaining long-term prosperity. To that end, the Ontario government has been partnering with established industries to reach new markets and develop higher value-added activities.

Growth of the Service Sector

In 2008, the service sector (private and public) employed 77 per cent of Ontario’s workforce, up from 69 per cent in 1988. Nearly three-quarters of Ontario’s real gross domestic product (GDP) was generated by the service sector in 2008 — up from its share of about two-thirds in 1988.

An increasingly service-oriented economy

Over the past two decades, the shift to a more service-oriented economy has been driven by increased consumer demand and changing preferences, as well as greater demand for service inputs from the goods-producing sector. Technological change has also transformed many services, such as financial services and health care, and has enabled the growth of new areas of economic activity.

While research and development (R&D) is often associated with advances in manufacturing, important growth areas such as biotechnology and software are driven by service-sector R&D performers. In 2006, about 57 per cent of software R&D and 69 per cent of biotechnology R&D was performed in Canada’s service sector.9

Chart 1, bar graph: Share of Employment by Industry, Ontario

The service sector’s share of employment is expected to continue to increase in the next 20 years. Competitive pressures can be expected to drive productivity growth in private-sector service industries as they continue to integrate into the global economy, with international service exports likely to increase. This will contribute to domestic value-added and economic growth.

Ontario manufacturers adapt to transition

The shift to a service economy has an impact on how Ontario manufacturers do business. They are adapting by building more specialized components and bundling services with finished products. The government is helping firms and employees in the manufacturing sector through this transition. Examples of key initiatives include:

  • the Second Career program and Employment Ontario that help workers get the training they need to succeed in new jobs;
  • the Advanced Manufacturing Investment Strategy that encourages manufacturing firms to undertake product and process innovation; and
  • the Next Generation of Jobs Fund that encourages investment in areas with significant growth potential, such as green auto research, parts production and assembly; environmental technologies; advanced health technologies; pharmaceutical and biotechnology research and manufacturing; and information and communications technology.

A New Knowledge-Based Economy

Knowledge-based activities likely to lead growth over long term

Ontario’s future economic success is increasingly dependent on knowledge, creativity and innovation. Knowledge-based activities in areas such as advanced manufacturing, information and communications technology, business and financial services, entertainment and creative services, and life sciences are likely to lead to job creation and output growth over the long term.

Advanced Manufacturing

Advanced manufacturers use technologically advanced methods of production to deliver high value-added products.10 The methods are found in all Ontario manufacturing industries, but especially in the production of computers, electronic and communications products, aerospace products and parts, motor vehicles and parts, industrial machinery, chemicals and pharmaceuticals.

Advanced manufacturing industries are innovative and research intensive, and require workers with advanced education and skills training. Growth in advanced manufacturing also drives exports to international markets and creates demand in domestic markets, including demand for higher-value services.

Over the next 20 years, higher value-added products and/or operations that can employ advanced manufacturing systems will continue to be important growth areas for Ontario. Within the automotive industry, for example, advanced propulsion systems, lightweight materials and electronic sensors will continue to be researched, designed and developed in Ontario. Carbon emission standards and pricing may create further opportunities for advanced manufacturing in Ontario. Indeed, clean technologies and green energy systems already have a growing presence in the province.

Strategic partnerships with advanced manufacturing industries

The Ontario government has set the stage for continued growth of the province’s advanced manufacturing industries through major investments in skills and education and infrastructure. It has also built strategic partnerships with key advanced manufacturing industries, while strengthening collaborative links between industry and the province’s world-class research institutes. In addition, the Province has taken steps to modernize government-business relations and to lower business costs, including reductions in business taxes.

Recent studies predict that the tax measures in the 2009 Budget will generate significant benefits for Ontario manufacturers, including advanced manufacturers.  One study estimates that the HST, combined with other tax cuts, will create 103,000 net new manufacturing jobs within 10 years.11 When fully implemented, the HST, Ontario corporate income tax cuts and elimination of the capital tax will together provide total savings of $1.2 billion a year for the manufacturing sector as a whole.

Information and Communications Technology

Leader in information and communications technology

Ontario is among North America’s largest employers in the information and communications technology (ICT) sector. The province has three main ICT centres — Toronto, Ottawa and Kitchener-Waterloo — each with its own areas of specialization. The sector, which is composed of services, such as computer software and telecommunications, and manufactured products, such as computers, is at the forefront of technological change and the shift to a knowledge-based economy.

Information and communications technologies are enabling or platform technologies, which underpin the competitiveness and efficient operation of all sectors of the economy. Increasing reliance on ICT technology in business, medicine, industry and leisure is likely to continue driving the growth of the sector over the coming decades.

Rapid change in IT likely to keep accelerating

Led by computer software, the ICT sector’s share of total employment in Ontario increased from 4.4 per cent in 1988 to 5.3 per cent in 2008. This reflects the rapid change and diffusion of information technology, which will likely continue to accelerate over the next two decades. The computer software industry accounts for more than 40 per cent of the sector’s employment and will continue to rise in importance. In 2008, ICT services accounted for 4.1 per cent of employment in Ontario, an increase from 2.5 per cent in 1988. This shift reflects the widespread adoption of ICT and computer software.

With its many competitive strengths, including a deep expert talent pool, Ontario has the capacity to attract and absorb new advances in ICT. This will enable the sector to continue increasing its share of employment over the coming decades.

Chart 2, bar graph: Information and Communications Technology Share of Employment, Ontario

The government supports the growth of Ontario’s ICT sector through investments in skills, education and modern infrastructure. The Province also provides R&D and investment support through grants, tax credits and other funding programs.

Business and Financial Services

Ontario is the business and financial services head-office capital of Canada. Based on total employment, business and financial services are the province’s largest internationally traded industries. The sector’s share of total employment increased from 11.5 per cent in 1988 to 15.1 per cent in 2008.

Chart 3, bar graph: Business and Financial Services Share of Employment, Ontario

Shift to knowledge-based services supports growth of business services

The business services component consists of professional services, such as legal, accounting and management consulting, and other services, such as call centres. Its share of total employment has grown from 6.6 per cent in 1988 to nearly 10 per cent in 2008. The growth of business services reflects the shift to knowledge-based services and increased outsourcing opportunities from domestic and foreign businesses due to specialization and efforts to achieve greater efficiency. The competitiveness of Ontario’s business services will be supported by the province’s highly educated workforce.

Financial services, such as banking, life and property insurance, and securities activities, account for more than five per cent of Ontario’s jobs. Output growth in the sector has been affected by changing technology and capital investment, including the growing use of the internet and ATMs. Over the next 20 years, demographic changes will create greater demand for financial services related to savings and retirement. The share of employment in financial services will rise as the sector moves from lending and borrowing to more advisory services.

Ontario expected to remain leader in business and financial services

Ontario is expected to remain a national leader in business and financial services over the long term. Major Ontario-based business and financial services firms will continue to expand and compete globally. As well, the sector is likely to become more integrated and specialized within the North American economy.

The government supports the growth of business and financial services in Ontario by investing in skills, education and modern infrastructure, and by establishing a competitive tax system and an efficient provincial regulatory climate. Building on this support, the Province is working with the recently formed Financial Services Leadership Council, which includes CEOs from Canada’s major financial services companies. The Council is developing a strategy to help make Ontario one of the top 10 financial centres in the world.12 The government is investing $1 million in the Council’s plans.

Entertainment and Creative Industries

Entertainment and creative industries include firms engaged in music production, book publishing, magazine publishing, film and television, interactive digital media and theatre. Between 1988 and 2008, employment in Ontario’s entertainment and creative industries grew by about 46 per cent, compared to growth of about 32 per cent for Ontario’s economy as a whole.13

Ontario’s entertainment and creative industries third largest in North America

Ontario’s entertainment and creative industries are strong global competitors. Collectively, they are the third largest in North America by employment, after California and New York. Within Canada, Ontario is a hub of activity in many areas, including digital media, music production and film production.

Digital Media

Ontario is a hotbed of digital media activity, drawing on three industries in which the province already excels — creative content, computing and telecommunications. There are approximately 1,000 interactive digital media companies in Ontario.14 These companies are well supplied with high-quality talent from digital media studies programs at Ontario postsecondary institutions.

The global digital-game and internet and mobile advertising industries are expected to continue to grow rapidly in coming years.15 Supported by Ontario government initiatives such as expansion of the Ontario Interactive Digital Media Tax Credit and streamlining of support for large specialized game developers, Ontario digital media companies are well positioned to seize global opportunities.

Music Production

Toronto a major hub of music production

Ontario is home to a large number of critically acclaimed artists, and has the largest sound recording and music publishing industry in Canada. In 2007, Ontario accounted for about 73 per cent of total operating revenues for record labels in Canada.16 Toronto, in particular, has developed a solid reputation in the global music industry, rivalling Nashville and Los Angeles — the two largest hubs of music production in North America.

The Ontario government is helping to build the capacity and competitiveness of the province’s music production industry through initiatives such as the Ontario Sound Recording Tax Credit.

Film Production

Ontario films continue to receive attention both in Canada and internationally for their excellence. The province’s film industry is well developed, reflecting its role as English-speaking Canada’s film production capital. The industry covers the entire range of services required to produce and distribute film products.

Supporting the continued growth of Ontario’s film industry

The Ontario government recently launched an Intellectual Property Development Fund to support the continued growth of Ontario’s film industry. The $10 million pilot program will help screen-based companies move ideas from the development stage into production and marketing. This will help increase the volume of films that are created and owned by Ontario-based companies, which, in turn, will help the industry grow over the long term. The Ontario Production Services Tax Credit and Ontario Film and Television Tax Credit are also helping the province’s film industry to grow and remain competitive.

Life Sciences

Ontario life scientists have made breakthrough discoveries such as insulin, stem cells, and identification of genes linked to cystic fibrosis, epilepsy, breast cancer and Alzheimer’s disease — discoveries that have helped save lives in Ontario and around the world.

Although life sciences industries cover a very wide range of areas, they are typically thought of as ones that support human health: medical devices, pharmaceuticals, and scientific and laboratory services.

Significant employment growth in life sciences

Employment growth in Ontario’s life sciences industries has increased significantly over the past 20 years. In the pharmaceutical sector, employment increased by 83 per cent from 1988 to 2008; by 30 per cent in medical devices and equipment; and by 93 per cent in scientific and laboratory services.

Assisted by strong government support, Ontario’s life sciences industries are globally competitive in a number of areas including medical and assistive devices, health services, bioinformatics, medical imaging, diagnostics and pharmaceuticals. In addition, companies in Ontario’s robust ICT sector are finding new business opportunities in life sciences due to the growing need to gather, store, compile, interpret and report on data, especially genomic data.

Chart 4, bar graph: Employment Growth in Ontario’s Life Sciences Industries

Innovative life sciences products and services

Over the next two decades, innovative new products and services will be key to the competitiveness and growth of Ontario’s life sciences industries. In the 2009 Budget, the government announced new funding that will benefit research and innovation in life sciences:

  • $250 million over five years for a new Ontario Emerging Technologies Fund that includes a focus on life sciences and advanced health technologies; and
  • $100 million over four years in operating funds for biomedical research, focusing on genomics and gene-related research.

Strength in Economic Diversity

The diversity of Ontario’s economy is a key strength and foundation for growth. The government is committed to partnering with established sectors, such as tourism, agri-food, forestry and forest products, and mining, to help them reach new markets and transition to high value-added activities. This will allow them to continue to be globally competitive and major contributors to the Ontario economy over the long term.

Tourism

Tourism sector has untapped potential

Ontario’s tourism sector is a key economic strength and is acknowledged to have unexploited potential. International tourism is expected to reach 1.6 billion people by 2020 — more than double the figure in 1997.17 The government is working with the sector to help it benefit from this growth.

Cultural tourism is an area where Ontario has significant potential. The government has made investments to cultivate and enhance the province’s cultural agencies and attractions, such as the Royal Ontario Museum, Art Gallery of Ontario and Royal Conservatory of Music. In addition, the government has made significant capital investments that will benefit Ontario’s tourism industry. For example, the 2009 Budget announced $41 million over the next three years to support revitalization projects associated with Huronia Historical Parks and St. Lawrence Parks Commission, as well as infrastructure improvements at Fort William Historical Park.

A 10-year plan to boost Ontario tourism

To further strengthen the province’s tourism sector, the government asked Member of Provincial Parliament Greg Sorbara to develop a strategy to maximize Ontario’s tourism advantage. The Ontario Tourism Competitiveness Study, in its final report to government released in February 2009, proposed a 10-year plan to boost tourism in the province. In response, the Ontario government is supporting the formation of 13 new tourism regions and Regional Tourism Organizations. This will help Ontario’s tourism sector better coordinate marketing and management, leading to more visitors and more tourism-related economic activity across the province.

“The economic contribution of [the tourism] sector, through tourism receipts of $22 billion annually, is significant. It ranks seventh among Ontario’s export industries. The contribution from a stronger, more dynamic sector could make tourism a fundamental building block of the next Ontario economy…. And most importantly, when we invest in and develop destinations and experiences that attract the interest of tourists, those same attractions and experiences enhance the quality of life for 13 million Ontarians.”

The Ontario Tourism Competitiveness Study, “Discovering Ontario: A Report on the Future of Tourism,” February 2009.

Agriculture and Food Processing

Strong base for agri-food expansion

Agriculture is important to the Ontario economy and forms the economic backbone of many rural communities. Ontario farms generate more revenue from sales of farm products than farms in any other province, including the highest cash receipts from the livestock and livestock products sector. In addition, Ontario’s food processing industry is the largest in Canada, leading the nation in areas as diverse as the processing of fruits and vegetables, dairy products and meat products. This strong base will help Ontario’s agri-food industries expand into new industrial markets such as bio-products and bio-energy. A continuing focus on productivity improvements and increasing international market access are key to the future success of Ontario’s agri-food industries.

Several Ontario government programs under the Growing Forward Agreement with the federal government are helping Ontario farmers incorporate best practices and aiding innovation and commercialization of new products. The Ontario government has also provided $25 million to support the Agricultural Research Institute of Ontario and Vineland Research and Innovation Centre. As well, processors of agricultural products benefit from government programs that encourage capital investment in new value-added activities, such as the Advanced Manufacturing Investment Strategy.

Forestry and Forest Products

The province’s forestry and forest products sector is undergoing a transition as demand for Ontario’s traditional, low value-added commodities (such as newsprint) slows. Increasing competition from low-cost producers in emerging markets has also had a significant impact on the sector.

Forestry sector moving to higher value-added product

The Ontario government has been helping the sector develop higher value-added products. Supported by the creation of the Centre for Research and Innovation in the Bio-Economy in Thunder Bay, research and development is already underway in Ontario to develop new and innovative uses for forest biomaterials. Bio-energy presents new opportunities for the forestry and forest products sector and also allows companies to use some of their residues as a power source, thereby reducing energy input costs. Increasing use of wood pellets for energy production will provide a strong base of domestic demand for the sector.

The government is also in the process of developing a regulatory environment that will help forest companies make the best use of Crown forest resources by improving the design of forest tenure and pricing.

Mining

Continuing demand expected for mining commodities

Ontario is the largest producer of metallic and non-metallic minerals in Canada, and a major global centre for mining finance. Continuing demand for commodities, especially in emerging markets, will help sustain Ontario’s mining sector over the long term. In addition, the sector is a source of expertise that can be exported to the rest of the world.

The government has provided $10 million to support a Centre for Excellence in Mining Innovation in Sudbury. More recently, the 2009 Budget announced support to help increase the export capacity of Ontario mining equipment and service companies. The government also announced an investment of $40 million over three years for initiatives to support Mining Act modernization for a vibrant and sustainable Ontario minerals industry.

CONCLUSION

This paper has outlined some of the key issues that the province will have to deal with in the coming years. Demographically, as described in Chapter 1, the province will see population aging and slower growth in the working age population. This may have an impact on economic performance and productivity growth. Economic growth, as outlined in Chapter 2, will be affected by demographics as well as ongoing shifts in world economic growth, U.S. economic growth, commodity prices and the value of the Canadian dollar. Globalization and the structural changes in the composition of the economy will also have an impact.

Chapter 3 reviewed the rising demands on public services — particularly health and education — that over time will have long-term influence on fiscal sustainability. Chapter 4 lays out the McGuinty government’s comprehensive tax package that was designed to encourage competitiveness and long-term growth. Chapter 5 discussed the importance of infrastructure investments to Ontario’s long-term economic well-being. Finally, Chapter 6 described a number of forward-looking programs and policies that the government has launched to prepare Ontario for the future.

The Ontario economy has had to face some significant changes over the past two decades — from the North American Free Trade Agreement to the global economic crisis of 2008–09. But Ontario’s economy remains resilient in spite of those challenges. New industries, such as digital media and life sciences, have emerged. More mature industries, including financial services, have continued to flourish.

In the next 20 years, Ontario will face some of the challenges outlined in this report as well as many unforeseen challenges that will inevitably alter the economy. The government’s task is to do what it can to ensure that Ontario remains a prosperous and good place to live and to do business.

Supporting higher education and training, health care, infrastructure, green energy and competitive taxation will all help to encourage Ontario’s productivity — a key driver of quality of life. The government’s current focus on education, innovation and tax modernization will capitalize on Ontario’s key strengths: a well-educated population and a diverse economy. The Ontario economy has great potential both today and in the coming years.

1   Jack M. Mintz, “Ontario’s Bold Move to Create Jobs and Growth,” School of Public Policy, University of Calgary, November 2009.

2   Dr. Charles E. Pascal, “With Our Best Future in Mind: Implementing Early Learning in Ontario,” June 2009.

3   Statistics Canada, “Gross Domestic Expenditures on Research and Development in Canada (GERD), and the Provinces,” Catalogue No. 88-221-X, Vol. 2, No.1, December 2009.

4   Statistics Canada, “Industrial Research and Development: Intentions, 2008,” Catalogue No. 88-202-X, March 2009.

5   Statistics Canada, “Scientific Activities of the Government of Ontario,” 2005–06 to 2007–08 Survey Results,” May 2008; and Statistics Canada, “Scientific Activities of the Government of Ontario: 2007–08 and 2008–09 Survey Results,” May 2009.

6   Ontario Ministry of Research and Innovation, “Seizing Global Opportunities: Ontario’s Innovation Agenda,” http://www.ontario.ca/innovation, April 2008.

7  OCETA, “The 2009 OCETA SDTC Cleantech Growth and Go-to-Market Report,” February 2009.

8 Ontario Environment Industry Association, http://www.oneia.ca/about.php#4.

9   Statistics Canada, “Industrial Research and Development: Intentions, 2008,” Catalogue No. 88-202-X, March 2009.

10   Thomas Hatzichronoglou, “Revision of the High-Technology Sector and Product Classification,” STI Working Paper 1997/2, OECD, 1997.

11  Jack M. Mintz, “Ontario’s Bold Move to Create Jobs and Growth,” School of Public Policy, University of Calgary, November 2009.

12 Based on recommendations of the November 2009 report, “Partnership and Action: Mobilizing Toronto’s Financial Centre for Global Advantage,” prepared by the Boston Consulting Group for the Toronto Financial Services Working Group.  

13   Statistics Canada (Labour Force Survey) and Ontario Ministry of Finance, 2009.

14  Nordicity, “2008 Canadian Interactive Industry Profile,” February 2009.

15  PricewaterhouseCoopers, “Global Entertainment and Media Outlook: 2008–2012,” June 2008.

16  Statistics Canada, “Service Bulletin: Sound Recording and Music Publishing, 2007,” Catalogue No. 87F0008X, June 2009.

17 World Tourism Organization, “Tourism Highlights 2009 Edition,” September 2009.

Table of Contents