2016 Ontario Economic Outlook and Fiscal Review
Chapter I: Creating Jobs and Building Prosperity for Everyone

Section A: Fostering a More Innovative and Dynamic Business Environment

To grow Ontario’s economy and create jobs, the government is focused on fostering a dynamic, competitive business environment in which innovation thrives. Ontario’s continued economic growth has occurred in the face of intensified international competition and uncertainty around global growth forecasts. From reducing regulatory burdens to lowering electricity cost pressures to helping businesses keep pace with technological change and expand their operations, the Province is improving the conditions for economic growth, now and in the future. Looking ahead to new opportunities resulting from the transition to a low-carbon economy, the government is implementing its plan to combat climate change and support individuals and businesses. Attracting and supporting investment in financial services and technology sectors and the sharing economy will provide significant new economic opportunities.

2016 Budget: Jobs for Today and Tomorrow

The 2016 Budget announced a number of strategic initiatives for the Province to further improve its performance and better position itself in the global economy. These include:

  • Bolstering Ontario’s economic competitiveness through the Business Growth Initiative;
  • Maintaining a competitive tax environment;
  • Reducing electricity cost pressures for businesses;
  • Expanding international and internal trade;
  • Supporting the sharing economy;
  • Promoting stable financial markets; and
  • Positioning Ontario to be a leader in the global transition towards a low-carbon economy.

Making Progress

Implementing the Business Growth Initiative

As announced in the 2016 Budget, the Business Growth Initiative is the government’s five-year, $400 million plan to bolster Ontario’s economic competitiveness. The strategy has three components:

  • Creating an innovation-driven economy;
  • Scaling up Ontario firms into global leaders and exporters; and
  • Modernizing regulatory systems to lower business costs.

By implementing this plan, the government will help increase Ontario’s economic growth, create more high-paying jobs and enhance prosperity for Ontarians.

Creating an Innovation-Driven Economy

Ontario’s economy has a strong capacity for innovation. The province is home to world-class research institutions, has been a pioneer in many technological fields, and offers an attractive environment for research and development (R&D) and entrepreneurial activity. More than 560,000 Ontarians were employed in science and engineering occupations in 2015 — an increase of almost 95 per cent since 1990. Investing in people’s talents and skills is an important aspect of supporting the transition to an innovation economy. (See Section C: Investing in People’s Talents and Skills in this chapter for details on the Province’s Highly Skilled Workforce Strategy.)

In the 2016 Budget, the government committed to increasing the connectivity of Ontario’s Innovation SuperCorridor, which runs from London and Waterloo in the west through Toronto to Ottawa in the east. To support economic activity in this region, the Province is undertaking a number of initiatives to seamlessly connect these communities and businesses in the SuperCorridor. (See Section B: Building Tomorrow’s Infrastructure Now in this chapter for details.)

Ontario’s Innovation Economy Attracts New Investment from Thomson Reuters

In October 2016, Thomson Reuters announced an expansion of its operations in Ontario. The company’s new Toronto Technology Centre will focus on the company’s advanced computing initiatives and enhance the services it offers to professional markets around the world. The project will create 400 high-quality technology jobs in the next two years and approximately 1,500 jobs overall in the future.

In 2017, the president and chief executive officer of Thomson Reuters, as well as the chief financial officer, will relocate to Toronto from Connecticut.

“Canada is not only our home, it is home to an emerging ecosystem of world-class technology talent. Our new Technology Centre furthers our commitment to growing Canada’s preeminent hub of innovation, and to building the customer-centric platforms and solutions of the future.”

Jim Smith, president and CEO, Thomson Reuters.

Ontario must continue to build on its progress in transitioning to an innovation-led economy by making investments that will drive productivity, job creation and long-term economic growth. This includes support for world-class academic research at leading institutions across the province through the Ontario Research Fund and support for entrepreneurs through the Ontario Network of Entrepreneurs.

  • In August 2016, the Ontario Research Fund — Research Infrastructure program announced almost $35 million in support for 161 state-of-the-art and industry-relevant infrastructure projects at 25 institutions.
  • The Province also continues to encourage entrepreneurship across Ontario through the Ontario Network of Entrepreneurs to expand capacity and support more startups and high-growth companies. This includes $1.2 million in new funding to Waterloo Region–based Communitech, announced in July 2016. This funding will provide mentorship, training and connections to more than 500 startups per year. Companies supported by this program include Babylon VR, which uses virtual reality to visualize renovation projects, and Eyeread, a digital reading coach for children.

Ontario, together with the federal government, is also supporting enhanced and modernized facilities at colleges and universities across the province through the Post-Secondary Institutions Strategic Investment Fund. (See Section B: Building Tomorrow’s Infrastructure Now in this chapter for details.)

The Province continues to explore partnerships with the private sector and others in the development and commercialization of made-in-Ontario transformative technologies.

Ontario Investment Office

Changing the way the government provides investment services to businesses will allow Ontario to better compete for private-sector investments. The Ontario Investment Office, launching this fall, will be a one-window “concierge service” for businesses looking to invest in the province. It will provide a seamless range of services, such as helping to select suitable sites, facilitating the training of workers and fast-tracking provincial and municipal permits and licences.

This one-window approach to investment attraction is already paying off — recently drawing an advanced manufacturing investment from GE Canada in Welland, creating 220 jobs and securing an overall investment of almost $240 million.

Automotive Sector

As announced in the 2016 Budget, the government is investing $15 million over four years to support R&D and commercialization of new technologies through the Canadian Urban Transit Research and Innovation Consortium and to establish the Automotive Supplier Competitiveness Improvement Program to help small and medium-sized automotive suppliers adopt advanced technologies and improve competitiveness.

In June, General Motors of Canada announced a major expansion of its engineering and software development work in Ontario, including the hiring of more than 700 new, highly skilled workers and the creation of a new software development centre in Markham.

Ontario is continuing to work with industry partners to help secure new investments to maintain and build a competitive and productive auto assembly and parts sector. The recent successful conclusion of labour negotiations at the Ontario operations of Fiat Chrysler Automobiles, Ford and General Motors demonstrates that Ontario remains a competitive location for auto investment. These agreements will help secure approximately 17,500 jobs in communities across the province, including Windsor, Oakville, Oshawa, St. Catharines, Woodstock, Etobicoke and Brampton, and significant new investments.

Scaling Up Ontario Firms into Global Leadership

The Province is building on its Budget commitments and taking actions to support programs that would provide access to the capital, resources and expertise that small and medium-sized enterprises (SMEs) need to grow into larger, export-oriented global firms.

Scale-Up Voucher Program

As part of the 2016 Ontario Economic Outlook and Fiscal Review, the government is announcing $32.4 million over four years for the new Scale-Up Voucher Program to provide a fast and flexible one-stop shop for high-impact companies seeking to remove barriers to their next stage of growth. These vouchers will be used by companies to fund activities such as specialized talent development and recruitment, accessing new markets and intellectual property protection services.

The program will be designed to also provide support through matching grants and wrap-around services such as executive-in-residence and executive peer-to-peer networks.

Small Business Innovation Challenge Pilot Program

The government is also announcing the launch of the Small Business Innovation Challenge pilot program. Supported by an investment of $28.8 million over five years, participating SMEs will be provided with development opportunities to demonstrate innovative technology solutions, positioning these firms for commercial success. The government will first identify a specific problem or issue for which an innovative or technological solution is needed. Ontario-based SMEs will then be invited, through an open call for proposals, to submit an innovative solution to the Small Business Innovation Challenge pilot program.

The pilot program will provide Ontario SMEs with an opportunity to propel their innovations from the idea stage into globally competitive products and services. Having a real world–tested product will better position SMEs to market their new ideas and products to the world, and help to foster long-term economic growth for Ontario.

Access to Capital

Both SMEs and entrepreneurial firms rely on access to capital to scale up and create well-paying jobs for Ontarians. That is why the government has worked with its partners to increase the supply of capital for dynamic SMEs and entrepreneurs.

These efforts are paying off — more than $1.1 billion in venture capital investments were made in Ontario-based companies in the first nine months of 2016, placing Ontario sixth among all North American states and provinces in venture capital investment activity, up from 14th in 2009.

To meet the additional capital needs of businesses, the government committed $25 million in April 2015 to the ScaleUP Ventures Fund, a new venture capital fund that will also provide mentorship to a new generation of Ontario-based startups and entrepreneurs. The fund completed its first close as of the end of August 2016 and, with private-sector contributions, is targeting a final fund size of $75 million. To date, the fund has already made four investments, including to:

  • Fusebill, an Ottawa-based company that develops software to manage billings; and
  • FundThrough, a Toronto-based small business lender.

The Province is also exploring the creation of new venture capital funds to build on Ontario’s expertise in areas such as quantum technologies, regenerative medicine and artificial intelligence.

The Province continues to work on the development of venture capital funds in the areas of clean tech and life sciences. As committed in the 2016 Budget, a new $55 million Clean Tech Venture Capital Fund will be established to support Ontario companies. In early 2017, the Province will begin to find partners to participate in the fund.

Modernizing Regulations

Ontario is committed to building a more effective and efficient regulatory environment by reducing unnecessary requirements, eliminating duplication and improving government services designed to help businesses.

In March 2014, the government set a goal of achieving $100 million in savings for businesses by the end of 2017. To date, the Province’s burden reduction initiatives have saved businesses over $122 million and more than five million hours since 2011.

Ministry of Economic Development and Growth, 2016 Burden Reduction Report.

Red Tape Challenge and Burden Reduction

Since the 2016 Budget, Ontario has launched the Red Tape Challenge online consultation tool as part of the government’s Business Growth Initiative. This challenge is designed to engage businesses, stakeholders and the broader public in identifying regulatory improvements and lessening compliance burdens, while protecting environmental and health standards and enhancing worker safety. The improvements would also shorten response times and make it easier for businesses to operate in Ontario. In June, consultations were completed with the auto-parts manufacturing sector, and 80 opportunities for burden reduction were identified. A report outlining the government’s response to these opportunities will be released later this fall. Similar consultations with the food processing industry recently concluded. Over the next two years, consultations will focus on financial services, mining, chemical manufacturing and forestry.

The government is committed to delivering an annual report on its burden reduction accomplishments.

Reducing Electricity Costs for Business

Ontario is taking action to reduce electricity costs for small businesses, farms and large electricity consumers, helping them remain competitive.

Supporting Small Business

The government will provide a rebate on electricity costs equal to the provincial portion of the Harmonized Sales Tax (HST) to eligible small businesses, farms and residential consumers beginning January 1, 2017. Small businesses and farms that claim input tax credits will receive an incremental benefit from this rebate.

See Section E: Towards a Fair Society in this chapter for more information.

A small business using 20,000 kilowatt-hours (kWh) per month could save an estimated $270 per month, or about $3,200 a year.

Ending the Debt Retirement Charge

The government is ending the debt retirement charge (DRC) as of April 1, 2018, for industrials, businesses and other electricity users such as institutions and not-for-profits — nine months earlier than previously estimated — providing certainty through a fixed end date and helping businesses plan their investment decisions more effectively.

Expanding the Industrial Conservation Initiative

Through the Industrial Conservation Initiative (ICI), large electricity consumers can lower their bills by up to one-third by reducing their electricity consumption during peak hours. By reducing the province’s peak electricity demand, the ICI improves system reliability, helps reduce greenhouse gas (GHG) emissions, and lowers electricity system costs for the benefit of all consumers by deferring the need to build new electricity generation capacity.

Currently, electricity consumers with monthly peak demand exceeding three megawatts (MW) are eligible to participate. Ontario is expanding the ICI to include customers with monthly peak demand greater than one MW and is also removing sector-specific restrictions, enabling all eligible commercial, institutional and industrial consumers to participate. Together, these changes would allow more than 1,000 additional businesses to reduce their bills by up to 34 per cent.

Helping Ontario Businesses Thrive

A plastics manufacturer with an average peak demand of two megawatts that participates in the Industrial Conservation Initiative could see its electricity costs reduced from $154 per megawatt-hour (MWh) to as low as $102 per MWh. This could result in energy cost savings of up to $42,000 per month.

Supporting Large Industrials in the North

As announced in the 2015 Budget, the government remains committed to ongoing support for northern industrial facilities, with continued investment of up to $120 million annually. The Northern Industrial Electricity Rate (NIER) Program helps northern Ontario’s largest industrial electricity users reduce energy costs, sustain jobs and remain globally competitive. The government is undertaking a comprehensive review to ensure that the program will continue to meet the needs of eligible large industrials in northern Ontario.

Fighting Climate Change and Ensuring Ontario Remains Competitive

As outlined in the 2016 Budget and the Climate Change Action Plan (CCAP), the government intends to use cap-and-trade auction proceeds to invest in initiatives that reduce GHGs and ensure that the net impact of cap and trade would not result in an overall increase in electricity costs for commercial and industrial consumers. In addition, both small businesses and large companies will have access to programs that will help lower both GHG emissions and energy costs through the CCAP.

Expanding International and Internal Trade

Ontario is an attractive international location in which to invest, produce and export, contributing to its global competitiveness and growth. According to fDi Intelligence, in the past three years, Ontario has twice been named the top destination in North America for foreign direct investment, indicating that it is a highly desirable place to invest.

While the United States remains a primary trading partner, over the past 10 years, Ontario has been diversifying its exports to markets abroad. Ontario’s share of exports to the European Union has continued to expand, while doubling to the fast-growing Chinese market.

Since the 2016 Budget, the Premier and Ministers have made further international business missions resulting in a number of agreements, partnerships and memoranda of understanding (MOU):

  • The mission to Mexico generated an MOU between Ontario and the State of Jalisco to support collaboration among business leaders, scientists and innovators towards developing new low-carbon technologies;
  • The mission to Israel and the West Bank generated 44 agreements valued at over $180 million, which are expected to create more than 200 jobs in Ontario in the life sciences, technology and innovation sectors; and
  • In April 2016, Minister of Finance Charles Sousa travelled to the United Kingdom and France to meet with leaders in the financial services and banking sectors to promote Ontario as an attractive investment location.

Encouraging international businesses to invest in Ontario remains a priority of the government, as well as diversifying and expanding the Province’s international bond investor base.

The Premier and Ministers will continue leading international business missions to priority markets around the world. Premier Kathleen Wynne will lead her first business mission to Japan and South Korea this fall to strengthen economic ties, create new partnerships and encourage investment in Ontario. She will be the first Ontario Premier to visit South Korea in 30 years and Japan in a decade.

Removing Barriers to Interprovincial Trade

Ontario businesses should have the same access to markets across Canada that their international trade partners enjoy. A recent Canadian Senate committee report1 has suggested that internal trade barriers reduce Canada’s gross domestic product (GDP) by $50 billion to $130 billion. Ontario has been the leader behind a multilateral national effort to renew Canada’s economic union for the 21st century by removing longstanding barriers to interprovincial trade and investment.

At this summer’s meeting of Canada’s Premiers in Whitehorse, an agreement-in-principle was reached on a new Canadian Free Trade Agreement. This comprehensive new trade and economic growth agreement will promote business growth and create jobs by removing trade barriers, improving the flow of workers, goods and services across provincial and territorial borders and reducing red tape. It will also help attract new job-creating investments to Ontario and to other provinces and territories across Canada.

Strategic Partnerships

Jobs and Prosperity Fund

The Jobs and Prosperity Fund (JPF) is a 10-year, $2.7 billion fund created to support a dynamic and innovative business climate and improve productivity and market access for Ontario companies and sectors. The fund is supporting key elements of the Business Growth Initiative by investing in R&D and innovative production.

The government has provided over $810 million in funding through the JPF since January 2013, leveraging private-sector investments of more than $7.4 billion, and creating or retaining over 37,500 jobs.

TABLE 1.1
Recent Strategic Investments through the Jobs and Prosperity Fund since the 2016 Budget
Company Description
Fiat Chrysler Automobiles Canada (June 2016) An investment of almost $86 million to support the Windsor operations of Fiat Chrysler Automobiles Canada. The project will enhance research at the company’s Automotive Research and Development Centre and support the world-class workforce at the Windsor assembly plant through advanced training and plant upgrades for the production of the Chrysler Pacifica, creating 1,200 new jobs and retaining 4,000 existing jobs.
GE Canada (August 2016) An investment of more than $26 million to leverage an overall investment of almost $240 million by GE Canada to build its new “Brilliant Factory” in Welland. The new facility will produce energy-efficient engines and other components, and will be one of the most advanced in GE’s global operations, creating 220 jobs.
Baylis Medical Company (March 2016) An investment of up to $4.2 million to leverage an investment of $32.5 million by Baylis Medical Company. The R&D expansion project at the company's Mississauga manufacturing plant will increase exports, creating 84 new jobs and retaining 194 positions.

Regional and Community Partnerships

Local businesses play a key role in sustaining regions and communities by creating employment opportunities for Ontarians across the province. Through its regional development funds, the government continues to support businesses and communities across the province.

Regional and community development funds include the:

  • Southwestern Ontario Development Fund (SWODF);
  • Eastern Ontario Development Fund (EODF);
  • Northern Ontario Heritage Fund Corporation (NOHFC); and
  • Aboriginal Economic Development Fund (AEDF).
TABLE 1.2
Recent Regional Development Investments
Company Amount Outcome Project Description
Stubbe’s Precast Commercial Inc. $1.5 million 274 jobs created and retained Ontario supported an investment in Harley in a new 200,000-square-foot, highly automated plant through SWODF. The plant manufactures structural and architectural precast concrete.
Qlik $1.5 million 106 jobs created and retained Ontario supported the establishment of an R&D lab
in Ottawa focused on software development for cloud computing, analytics and business intelligence. Support from the EODF leveraged a total investment of over $22 million.
The City of Timmins $2.5 million New industrial park Ontario supported the development of a new industrial park through the NOHFC to attract more businesses to Timmins. The project includes water, road and hydro upgrades, as well as the construction of rail spurs to accommodate a new anchor tenant to the industrial park.
Kagita Mikam Aboriginal Employment and Training Inc. $202,000 67 Indigenous persons trained; 18 jobs created and retained The government supported Indigenous apprenticeship employment and training by investing in the partnership between Indigenous employment agreement holders, industry and trade unions within the Greater Toronto Area. Support from the AEDF leveraged $300,000 in private investment.

Supporting the Sharing Economy

The sharing economy has significant potential to create jobs and drive economic growth, productivity and innovation. The benefits of the sharing economy also include cost savings and greater choice for consumers, flexible employment opportunities and increased access to capital for small startups.2

Since the 2016 Budget, the government’s Sharing Economy Advisory Committee has met with municipal partners and industry stakeholders, and engaged the public through polling and focus-group sessions. Several municipalities are already making considerable progress in developing their own localized responses to new sharing economy business models.

The advisory committee will continue to maintain an open dialogue as it works to develop recommendations for an‎ Ontario approach that supports the sharing economy while promoting a level playing field, ensuring tax fairness and protecting workers and consumers.

Insurance for Ride-Sharing

The government has modernized Ontario’s auto insurance system and enabled better protection for both drivers and consumers by approving a regulatory change under the Insurance Act to allow commercial fleet insurance to be offered for vehicles that can be hired through an online application.

The Financial Services Commission of Ontario (FSCO) has approved an interim fleet insurance policy that will help close the gap in auto insurance coverage for private vehicles for hire. More changes will be necessary and the government remains committed to working with FSCO and insurance stakeholders to develop a long-term solution that will fully integrate sharing economy business models into Ontario’s auto insurance system.

Home-Sharing

Home-sharing has the potential to boost tourism, benefit local economies and allow hosts to earn supplemental income.

In February, the Province and Airbnb successfully launched a pilot project with the Canada Revenue Agency. Tax information was sent to 14,000 hosts, making Ontario the first province in Canada to partner with Airbnb to ensure consumers and hosts know their legal rights and responsibilities.

Moving forward, the government will continue to consult with municipalities, industry stakeholders and the public on a potential framework for home-sharing in Ontario. Such a framework would take into account existing municipal tools to achieve a balance between municipal and provincial responsibilities and objectives.

Financial Technology

Ontario Is an Attractive Location for Financial Technology Startups

The government recognizes the growing role that financial technology (fintech) plays in contributing to the province’s position as a global leader in financial services. Ontario provides an attractive business, regulatory and tax climate for fintech startups. The province already has existing strengths in information and communications technology (ICT) and financial services, with the potential for greater dynamic interaction between these two significant clusters. Ontario leads the nation with an estimated 150 fintech firms, and strong concentrations in Toronto, Waterloo and Ottawa Regions.

Strong Base for Innovative Startups

  • OMERS Ventures, a venture capital fund, is tracking 89 startup fintech companies in Canada that have attracted more than $1 billion in capital since 2010.
  • The SmartStart Seed Fund, funded by the Federal Economic Development Agency (FedDev) and the Ontario government, is designed to support entrepreneurs transitioning their startups from product development to market entry.
  • The Ontario Centres of Excellence (OCE) and Toronto Financial Services Alliance are partnering to connect firms, startups and financial institutions with Ontario's innovation ecosystem, including its academic community and technology companies, to address challenges and develop partnerships to spur business growth and help build the talent base.

Ontario recognizes that fintech is evolving in a globally competitive environment. In striving to stay at the forefront of what some commentators have called the “fintech revolution,” the world’s leading jurisdictions for finance have sought to make effective use of the policy levers available to them. They have explored an array of policy options relating to the suitability of their regulatory environment, as well as general tax incentives and financial and educational supports. In the coming year, Ontario will examine these policy options with the objective of developing a strategy to support and strengthen Ontario’s position as a leader in fintech.

Modern and Flexible Financial Regulatory Climate

In October 2016, the Ontario Securities Commission (OSC) announced an innovative pilot project called the OSC LaunchPad. This pilot project is intended to help fintech firms navigate the current securities regulatory environment and more quickly launch their new businesses. The OSC LaunchPad will also provide the OSC with the opportunity to see the sector’s latest developments up close, allowing it to incorporate key lessons as it modernizes regulations.

Strengthening Consumer and Investor Protection

An environment in which Ontarians can confidently and efficiently manage their money offers a host of benefits. Those benefits include greater financial security for individuals, as well as a strong financial services sector and the jobs that such a sector provides. Effective consumer protection is essential to maintaining Ontario’s position as a leader in these matters.

Establishing a New Financial Services and Pensions Regulator

The financial services sector is a significant part of the economy and touches the everyday lives of Ontarians. Ontarians rely on agencies such as FSCO, Financial Services Tribunal (FST) and Deposit Insurance Corporation of Ontario (DICO) to ensure they are adequately protected.

The government recognizes the important regulatory role these agencies serve. The appointment of an expert advisory panel in 2015 to review their mandates was a significant step towards delivering on the Province’s commitment to modernize and strengthen the regulation of financial services and pensions, and improve consumer, investor and pension-plan beneficiary protection.

In June, the government released the expert advisory panel’s final report. The panel recommended significant reforms to the regulatory landscape, including the establishment of a new, independent and flexible regulator with a modernized governance and accountability framework and a mechanism to ensure individuals’ perspectives are considered, for example, through the establishment of an Office of the Consumer.

The government is introducing legislation that, if passed, would establish the initial parameters of the new Financial Services Regulatory Authority (FSRA). The establishment of FSRA would represent an important first step towards the panel’s vision for modernizing and strengthening the regulation for financial services and pensions in Ontario.

In the coming months, the government intends to take other important steps in support of this multi-phased transition process, such as the appointment of FSRA’s initial board of directors, if enabling legislation is passed, and the development of a detailed implementation plan.

Regulation of Financial Planning and Financial Advisory Services

Currently in Ontario, no general framework exists to regulate the activities of individuals who offer financial planning and financial advisory services. This potential regulatory gap leaves consumers vulnerable when seeking assistance to meet their financial goals.

Last year, the Ontario government took an important step in appointing an independent expert committee to review the regulatory framework relating to financial planning and financial advisory services. The final report is expected to be released in early 2017.

Syndicated Mortgages

The Financial Services Commission of Ontario, which regulates mortgage brokers involved in Ontario’s syndicated mortgage market, reports that syndicated mortgage lending in Ontario almost doubled from $3 billion annually to close to $6 billion annually between 2012 and 2015. As the size of the market has increased, the types of investors participating have changed, with syndicated mortgage investments increasingly marketed to smaller-scale retail investors.

In this evolving context, the expert advisory panel that reviewed FSCO’s mandate suggested changes to the way that syndicated mortgages are regulated. In particular, the panel recommended that syndicated mortgage–offering documents should be subject to the same level of regulation that the securities regulator applies to other offering documents used to raise capital in Ontario.

Similarly, the material published in August 2015 by participating jurisdictions in the Cooperative Capital Markets Regulatory System (CCMR) proposed that the Capital Markets Regulatory Authority should be responsible for the regulation of those offering syndicated mortgage investments.

The government is taking steps to ensure that strong investor protection is provided under the regulatory framework for such products. As an initial step, the Ministry of Finance recently established a working group, composed of representatives from the ministry and experts from the OSC and FSCO. It is expected that, over the coming months, the working group will develop recommendations for the government’s consideration. The government will announce further actions by spring 2017.

Modern and Flexible Approach to Financial Services Regulation

Establishing the Cooperative Capital Markets Regulatory System

The government continues to play a leadership role towards the establishment of the CCMR. The CCMR, once implemented, would enhance Canada’s stature and competitiveness in global capital markets, which would in turn promote economic activity in all provinces and territories. The CCMR would also lead to more effective regulation and enforcement through a stronger and more competitive regulatory structure that would help grow business investment.

In summer 2016, the government, together with its partners, announced the Capital Markets Regulatory Authority’s initial board of directors and set new timelines for implementing the authority. Going forward, the government plans to introduce the Capital Markets Act and related CCMR legislation, following work with other participating jurisdictions. The authority is expected to be operational in 2018.

Modernizing the Credit Unions and Caisses Populaires Act, 1994

In the 2016 Budget, the government announced its intention to implement the recommendations contained in the November 2015 report on the review of the Credit Unions and Caisses Populaires Act, 1994.

As a first step, the government is proposing amendments to the Act that would:

  • Provide authority to set different deposit insurance limits for different insurable deposits, therefore enabling regulations to be proposed to set the deposit insurance coverage limit for non-registered deposits at $250,000;
  • Remove differentiated rules for small credit unions; and
  • Permit credit unions to enter into loan syndication agreements with credit unions in other provinces.

The government will also propose amendments to regulations under the Act and other relevant statutes that would further implement the above measures and would:

  • Permit credit unions to establish or acquire a corporation that is an insurance agent or a registered insurance broker; and
  • Address provisions in regulations under various statutes to include credit unions as permissible financial institutions.

Implementing these changes would help improve the legislative framework for credit unions so they can meet the evolving needs of their members, contribute to the Ontario economy and ensure that deposits continue to be well protected.

Low-Carbon Economy

Ontario has established itself as a leader in reducing GHGs and is positioning itself to seize the opportunities of a low-carbon economy.

In May, the passage of landmark legislation, the Climate Change Mitigation and Low-carbon Economy Act, 2016, laid the foundation for Ontario’s cap-and-trade program, a cornerstone in the Province’s fight against climate change. A new cap-and-trade regulation that took effect on July 1, 2016, includes detailed requirements for businesses participating in the cap-and-trade program, which is set to begin its first compliance period on January 1, 2017, with the first permit auction expected to take place in March 2017.

In June 2016, the government released its Climate Change Action Plan. The action plan outlines key actions the government will take to combat climate change and create jobs, while enabling people and businesses to shift to a low-carbon economy. It will also guide the investment of cap-and-trade proceeds. By law, proceeds from the Province’s cap-and-trade program must be invested in a transparent and accountable way into initiatives that reduce GHG emissions.

The areas of action in the plan cross a wide spectrum and include the following specific goals:

  • Establishing a climate change agency that would help homeowners and businesses access grants and finance energy-efficient technologies to reduce GHG emissions;
  • Reducing emissions related to electricity usage while keeping electricity rates affordable for institutional, commercial and industrial consumers that are not eligible for the proposed Ontario Rebate for Electricity Consumers; and
  • Building almost 500 electric vehicle charging stations at more than 250 convenient locations across Ontario, with plans to build more.

Ontario’s $325 million Green Investment Fund, for initiatives that support the Province’s climate change strategy, will strengthen the economy, create jobs and drive innovation.

Ontario also recognizes the importance of adapting to climate change. In 2017, the government will release an updated climate change adaptation plan. A central aspect of the plan will be dedicated to helping private- and public-sector decision-makers understand potential climate impacts so that they can make effective, climate-resilient decisions.

Collaborative Partnerships on Climate Change

Recognizing the global scope of climate change, Ontario has taken a leadership role in engaging other jurisdictions and seeking their collaboration. For example, Ontario recently signed a joint declaration with Quebec and Mexico at the Climate Summit of the Americas in August 2016 in Mexico. This declaration establishes the foundation for sharing information and expertise on carbon markets and opportunities to reduce GHG emissions, while driving innovation
and supporting strong economic growth.

Ontario’s Clean Tech Sector

Ontario has the highest concentration of environmental and clean tech companies in Canada. Clean technology companies develop innovative technologies that reduce GHG emissions and generate other environmental benefits in sectors such as power generation, transportation, energy efficiency, recycling, and water and wastewater solutions. These companies are highly varied, from renewable energy to water technologies, and are spread out geographically and in all stages of business growth.

The clean tech sector plays a critical role in Ontario’s economy by developing technologies that improve the environmental performance of businesses and increase productivity by improving the efficiency of resource extraction and processing in industries such as forestry, agro-biomass, food waste, oil and gas.

Some Examples of Clean Tech Companies in Ontario

  • Trojan Technologies — A global leader in ultraviolet purification of water, providing customers with eco-efficient solutions for water quality that reduce and recover costs, energy, resources and space (London).
  • Electrovaya — A global leader in developing advanced lithium-ion battery solutions for customers involved in clean transportation, smart grid and renewable energies (Mississauga).

Ontario is working to develop a clean tech sector strategy that will help position the sector as a global leader and support the goals of the Business Growth Initiative.

[1] Standing Senate Committee on Banking, Trade and Commerce, “Tear Down These Walls — Dismantling Canada’s Internal Trade Barriers,” (2016).

[2] Bryant Cannon and Hanna Chung, “A Framework for Designing Co-Regulation Models Well-Adapted to Technology-Facilitated Sharing Economies,” Santa Clara Computer and High Technology Law Journal 31, no. 1 (2015): 22–96.

Chart Descriptions:

Chart 1.1: Ontario Exports Expanding to New Markets

The bar chart shows Ontario’s merchandise exports to international destinations as a share of total merchandise exports in 2005 and 2015. The share of exports destined for the United States has declined (from 88.8 per cent in 2005 to 80.5 per cent in 2015), while the share of exports has increased to other destinations such as China (from 0.6 per cent in 2005 to 1.2 per cent in 2015), Hong Kong (from 0.3 per cent in 2005 to 1.3 per cent in 2015), Mexico (from 0.9 per cent in 2005 to 1.4 per cent in 2015), the European Union (from 2.4 per cent in 2005 to 3.1 per cent in 2015) and the United Kingdom (from 2.4 per cent in 2005 to 6.4 per cent in 2015).

Return to Chart 1.1

Chart 1.2: Ontario and Canada Greenhouse Gas Emissions and Targets

This chart shows, for both Canada and Ontario, greenhouse gas emissions from 1990 to 2014. It also shows Ontario’s emission reduction targets for 2014, 2020 and 2030 and Canada’s emission reduction targets for 2020 and 2030.

Ontario has set emission reduction targets of 15 per cent below the 1990 level by 2020 and 37 per cent below the 1990 level by 2030. Ontario has achieved its 2014 emission reduction target of 6 per cent below the 1990 level.

Canada has set emission reduction targets of 17 per cent below the 2005 level by 2020 and 30 per cent below the 2005 level by 2030.

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