The State of Ontario's Economy
The Honourable Dwight Duncan
Minister of Finance
Date: March 3, 2008
Location: Toronto Board of Trade
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Good afternoon and thank you.
I'd like to thank our hosts today…..
The state of the Ontario economy is a concern for all of us.
We need to talk openly about what is going on and what we are facing.
I'd like to share with you what the McGuinty government has been doing to address immediate concerns and talk about our plan for managing the challenges ahead.
First of all, let me address what we are looking at as I prepare to deliver our budget later this month.
Ontario is being buffeted by a number of challenges which are conspiring to create a level of uncertainty that we have not seen in a very long time.
The state of the U.S. economy, the value of our dollar and the world price of oil are being felt throughout the province: from the mill in Thunder Bay, to the rich farmlands of south western Ontario; from the shop floors in Windsor to the high tech labs of Ottawa; from our great centres of tourism, to the boardrooms of Bay Street.
No reputable economist or business leader forecast our dollar at or above par just over a year ago.
Not a single government or industry leader saw oil topping out at $100 a barrel (U.S.) last March.
Yet, here we are.
Every economist and business leader I have spoken to has been impressed by the resilience of our economy in the face of these external challenges.
In 2007, we saw over 100,000 net new jobs created in Ontario.
Innovative Ontario businesses have developed overseas trading relationships that have lessened our dependence on the United States.
For 2007, real growth in the Ontario economy has exceeded private sector forecasts and Ontario is on track for a surplus.
Private sector economists continue to predict real economic growth in both 2008 and 2009.
This year, the GDP growth will average 1.2 percent in 2008 increasing to 2.3 percent in 2009.
Still, several sectors and communities have been particularly hard hit in the current climate.
Most importantly, many families have suffered the devastation of job loss.
Yet, in spite of the challenges, still other communities are experiencing critical skills shortages.
I have been told, the “innovation triangle” – the region around Kitchener-Waterloo – is in need of 1,800 computer scientists.
Make no mistake; our economy continues to grow albeit at a slower pace.
While the challenges I referenced a moment ago are beyond the control of any single government, we can and we must work on those things we can control.
The McGuinty government has always maintained a prudent and balanced approach to Ontario's finances.
We have made strategic investments in infrastructure, education and health care while, at the same time, eliminating a structural deficit, paying down debt and ensuring that our tax regime is competitive.
Going forward, we will be cautious in our growth and revenue forecasts recognizing that both Ottawa and B.C. are predicting real declines in revenues for the coming year.
The strength of our economy is its people and its businesses.
Government has an important role to play in maintaining a climate that maximizes jobs.
Our task in the upcoming budget is clear: to build a stronger Ontario for the next generation of economic growth.
This budget will build on our Fall Economic Statement, where we began to chart the course through turbulent economic circumstances.
In the Fall Statement, we undertook more than $3 billion in new investments, including more than $1.1 billion in proposed corporate tax cuts.
This brings our total corporate tax cuts over the next three years to more than $3 billion.
Let me remind you that the combined corporate income tax rate in Ontario is lower than the combined corporate income tax rates in every one of the 50 states in the U.S.
When the federal government finishes implementing its corporate tax cuts in 2012, their 15 per cent rate will still be above Ontario's current rates.
In challenging times, we must invest more in the human and physical capital that will create jobs in the short term and enhance productivity in the long run.
Investments in all forms of infrastructure will enable us to achieve these short and long term objectives.
Most importantly, the skill sets of our people must be matched to the new economy. Our greatest competitive advantage is what lies between our ears.
Preparing workers for our new economy will be a central theme in our budget.
The investments we make in this budget will be complimented by regulatory reform – for business and spending efficiency goals – for government.
We will build on our past successes by investing in our future potential.
We help out Ontario's most vulnerable to ensure that they too can participate fully in our economy.
Ontarians see the challenges ahead – and we will help them meet those challenges.
However, Ontarians expect the federal government to be a full partner in helping build our economic future.
We are proud of our province and, most of all, we are proud Canadians.
Ontarians are quite prepared to do their part to grow the entire Canadian economy, but they expect fairness in Employment Insurance, help for manufacturers, and continued investments in our infrastructure.
Ontarians want their governments to work together to achieve these ends – both here, and throughout the country.
Our Premier is fond of saying that we live in the greatest province in the greatest country in the world.
We will turn our current challenges into opportunity for the future.
Ladies and gentlemen, I've spoken today about what we see coming – a challenging year for the economy. I've also talked about what the McGuinty government has done to help Ontario weather the current and future storms.
Economic challenges are inevitable, but what is important is how to meet them, and overcome them.
We have what it takes to turn the challenges we're being served into opportunity for the future.
We have the brains, the strength and the diversity to weather economic storms.
As an Ontarian, I remain a proud optimist. As Churchill points out, “There's not much point in being anything else.”