Speech: Address to the St. Catharines-Thorold Chamber of Commerce in St. Catharines, Ontario

OPENING

Thank you very much Mario (Marrone) for that kind introduction. 

Joining us here today is local regional councillor, Bruce Timms and Transportation Minister and local MPP for St. Catharines, Jim Bradley. Jim, thank you for inviting me to this great event and all the work he has accomplished for the people in St. Catharines.

It is delightful for me to be here in St. Catharines today.

Today, I want to talk to you for a few moments about our government’s recent Budget, and help you make sense of what it includes, why we chose certain initiatives, and why I am confident it  provides the roadmap to a more prosperous Ontario.

We all know that Ontario is feeling the effects of the global economic recession.  The impact on economic growth, jobs and investments is directly affecting this province’s individuals, families, communities and businesses.

In the past few weeks, we’ve seen Chrysler declare bankruptcy in the U.S., and we might see General Motors do the same in the near future.

I was reminded again about the vastness of the automotive sector when I saw the numbers that show GM is the second biggest major private sector employer in the Niagara region.

In the last five years, our government has made investments in public healthcare, improving our education system, and by investing in infrastructure.

So, in order to continue to offer Ontarians the kinds of public services they expect and have come to rely on, we had to look at things very differently.  

We had to say to ourselves, how are we going to get through this and when we do get through this, what’s the economic landscape going to look like?

How are we going to keep up with the rate of growth in healthcare expenditures?

How are we going to be able to make post-secondary education more accessible to all Ontarians?

How are we going to make our economy greener?

How do we deal with rising unemployment?

How do we deal with the consequences of a slowing economy?

These are difficult challenges, but they are challenges that we have to meet.

Well, I can tell you that now is not the time for timidity, nor is it the time to sit back and let the status quo carry on. 

Today’s challenges call for very dramatic change both in the short- and long-term.

INFRASTRUCTURE INVESTMENTS

Building a powerful Ontario economy is the McGuinty government’s top priority.  That’s why we’ve taken a two-stage approach.
In the short term, our Budget announced a $34 billion stimulus package over the next two years, representing 2.9 per cent of GDP.

This includes a $32.5 billion investment in new infrastructure across the province.

We estimate that this massive infrastructure investment will create and sustain 300,000 quality jobs across the province, as we build new roads, schools and hospitals.

This region would benefit directly, with further funding provided on top of the nearly $41 million the Region of Niagara received last fall to support municipal infrastructure initiatives from the Investing in Ontario Act announced in our 2008 Budget.

INVESTING IN THE NIAGARA REGION

We are widening Highway 406 from two to four lanes as I announced in the 2009 Budget.

The six kilometres of extra lanes will create about 1000 jobs and improve safety, reduce congestion and promote development here in Niagara Region.
The environmental assessment and planning study is expected to be done by June 2009 and construction could start as early as summer 2011.

Since 2003, the McGuinty government has committed $12 billion in highways, roads and bridges, and invested $7.4 billion in public transit.

This past October, the landmark Provincial-Municipal Fiscal and Service Delivery Review issued its report, which calls for the provincial upload of Ontario Drug
Benefits, Ontario Disability Support Program, Ontario Works benefits, and up to $125 million annually in Court Security costs.

The Niagara region will benefit directly from these uploads.  In fact, all taxpayers within the region will benefit from the removal of these costs from the property tax base.

By 2018, the Region of Niagara’s net annual benefit is estimated to exceed its March 2007 OMPF allocation by $64.4 million. 

We are also reducing high business education taxes by $540 million across the province.

Business in the Niagara Region will benefit from a BET cut of $6 million, or an average cut of 38.1 per cent, based on current estimates.

COMPREHENSIVE TAX REFORM

But it’s not just about what we do in the short-term.
We must build a stronger economy moving forward.
This has underpinned the portion of our Budget, which I think most people have been talking about, and that is our proposed comprehensive tax reform package. 

Starting July 1, 2010, Ontario would move away from the outdated, cumbersome Retail Sales Tax and towards a modern and efficient single, value-added tax.

The current retail sales tax applies to many purchases made by businesses in the course of providing goods and services for sale.  This hidden tax is ultimately added to the tab the consumer pays at the cash register.

Under a single sales tax, most businesses would be reimbursed for the sales tax they pay on their business costs.  Studies show these savings are passed on to consumers through lower prices.

In fact, the creation of a single sales tax would make our businesses more competitive, our exports less expensive, and would increase investment and productivity.  This would help position our economy for the next stage of growth.

We recognize that there are a number of goods and services that would be subject to a single sales tax, which are currently exempt from the provincial sales tax.

That’s why the McGuinty government is providing permanent and transitional relief for individuals and businesses to assist with the move to a single sales tax.

Under the single sales tax, books, children’s clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products would be exempt from the provincial portion of the tax.

We have proposed a package of tax relief for people that includes permanent personal income tax cuts and direct payments to Ontarians.  In fact, 93 per cent of Ontario taxpayers would pay less income tax than they do today.

Eligible Ontario families earning less than $160,000 annually would receive three payments from the province over the first year of the single sales tax totalling $1,000, while eligible single people with an income of up to $80,000 would receive three payments totalling $300.

At the same time, our government is proposing $4.5 billion in business tax relief over three years, which includes reducing the corporate income tax rate to 10 per cent.

The comprehensive tax reform package proposed, once fully implemented, would cut Ontario’s marginal effective tax rate on new business investment in half – making Ontario one of the most competitive jurisdictions in the industrialized world in terms of the taxation of new capital investment by corporations.

To put this in perspective, Ontario’s marginal effective tax rate on new business investment would be half the rate in the United States.  Also – at 18.6 per cent in 2010 – it would be lower than the OECD average of 21.8 per cent.  By 2018, Ontario’s rate would fall even further to 16.2 per cent.

CONCLUSION

I’ve recently come back from a very productive international trip where I met with a number of investors in Dubai, Abu Dhabi, Saudi Arabia and London.

What was made clear to me was that increasingly, investors from around the world are looking to Ontario as a place to invest, and with good reason.

With our recently announced Budget initiatives, I believe now more than ever that our province represents a prime investment opportunity.
 
Now is the right time to signal to the international investment community that Ontario is a great place to do business.

Less than two months ago, we launched the first step toward a single sales tax and today I’m calling on you to help make it work.

As local business leaders, you need to take the savings and pass them on to consumers.

As a government, we set the stage for growth; and then it is up to people like you to actually make it happen.

Each generation of Ontarians has risen to the challenge of its day. 

I am confident that together we will rise to this challenge too.

We will take up that challenge confidently, and with determination, just as those who came before us did.

Make no mistake, we will come out of this recession bigger, better and stronger – and ready for the next generation of growth.

Thank you.