: Ontario Finance Minister Dwight Duncan, Remarks to the Canadian Club
Friday, March 05, 2010

Minister Duncan addresses the Canadian Club

Read transcript

Thank you and good afternoon.

Today, I’m going to talk about the economic outlook and the McGuinty government’s plan to open Ontario to new growth and new opportunities.

I’ll talk about some of the challenges we face and the government’s plan to increase jobs and growth both in the near-and long-term.

Economic Outlook

We’ve seen a deep, significant recession that was felt in every corner of the globe. The speed and breadth of the slowdown took the world by surprise. 

The United States lost 8 million jobs during this recession – 6.1 per cent of American jobs wiped out.

For every new job in the U.S., there are six people actively looking for work.

Ontario lost close to 250,000 jobs.

The Ontario government saw corporate tax revenue drop by 50 per cent in a single year.

Today, the good news is: some early signs of the recovery have arrived.

All major economic indicators in Ontario have improved since the lows posted during the recession.

Ontario real GDP has increased for two consecutive quarters, rising 0.5 percent in the third quarter of 2009 and indications point to stronger growth in the fourth quarter of 2009.

Since June of 2009, employment has increased by 85,000 net new jobs.

Retail trade has recovered very well – almost 85 per cent of the decline has returned. 

Much of the weakness resulted, of course, from auto sales, which came down 32.9 per cent from
January 2008 to December 2008.

For Ontario as a whole, housing re-sales have bounced back.  Since last January, sales have increased 62 per cent and Ontario MLS prices rose 19.5 per cent.

By no means though, are we out of the woods.

As Mark Carney recently pointed out, the thaw is coming, but there’s a catch.

The Ontario economy and the Canadian economy are entering crucial periods of adjustment.

And let’s not forget that far too many of our fellow citizens are out of work. We have an economic and moral imperative to get more people back to work.

It is what we do now that will help shape how fast we get out of this and how ready we are for the increasing pressures in the global economy.

One of our first challenges is that the pace of recovery is uneven.

Overall, we’re doing better than some of our neighbouring American states.

We’ve seen, however, that there is a disparity in the recovery across Ontario.  The bidding wars are back for many houses in Toronto.  Those same houses in Windsor and other cities have to wait for buyers. 

Though employment is up in some sectors, we haven’t gotten back to pre-recession highs.

In some sectors, job numbers have not moved back up at all.
Until we return to pre-recession employment levels, we have more to do.

Employment statistics don’t mean much when a member of your family has lost a job. 

That’s why we created a stimulus program to create jobs.

Like other leading governments, we had to mitigate the impact of the recession by taking action on jobs.

We invested, and invested significantly in infrastructure programs right across the province.

We invested in the auto sector to keep people working.

We made a conscious decision to follow the IMF’s advice and invest two to three per cent of GDP in stimulus. We did it to protect and create jobs.

The $32.5 billion investment in infrastructure is creating over 300,000 jobs -- not to mention providing the province with improved, roads, bridges and public transit.

In spite of what has happened in the auto sector, Ontario continues to build more cars than any other state or province in North America.

Our support for the auto sector, including our assistance to General Motors and Chrysler, has helped preserve thousands of jobs in an industry that employs some 400,000 people.

At the same time, we protected the valuable public services that keep Ontario thriving: education and health care.

We also accelerated the Ontario Child Benefit plan by two years to help families in need better weather the slowdown.

We invested in helping people get back to work in new and emerging industries.

Our groundbreaking Second Career program is supporting over 26,000 Ontarians who are going back to school and training for a new career.

The McGuinty plan is working. But there’s more to be done.

Fiscal Challenges

During the recession we needed to position Ontario for new jobs – and we continue to do that, but now we have the additional pressure of needing to position Ontario for long-term sustained growth.

Mr. Flaherty laid out his plan yesterday. It was a “stay-the-course” budget.

The federal government is wrestling with the same challenges that governments all over the world are facing.

We were pleased to see that the Canada Health and Social Transfers have been extended for another year, though at the same time, we’re concerned about the expiration of skills training dollars and child care funding.

In Ontario, we have a balanced and responsible plan to manage our finances prudently.

We know that if we want to maintain strong public services and attract investment, and we do, Ontario needs to be on a solid financial footing. 

Let’s remember where we were a few short years ago: 

Ontario inherited a deficit from the previous Conservative government.

We eliminated that deficit and recorded balanced budgets for three consecutive years.

Then the great recession came. 

And, like other places in Canada and around the world, Ontario has incurred a deficit in order to create jobs and protect public services.

Allowing deficits to continue without a plan to eliminate them is untenable. 

To start with, we’re facing a demographic ticking time bomb.

We Baby Boomers started as Mouseketeers and we became flower children and hippies.

Then we became YUPPIES and as of this year, we’re about to become senior citizens.

This will have a significant impact on health care costs and retirement income plans.

A significant risk for Ontario and other governments is the possibility, some would argue probability, of rising interest rates.

Interest rates are at a historic low and government borrowing is at a historic high.

For every one per cent increase in our forecasted interest rate, Ontario would pay an additional $520 million in interest costs.

Every dollar that goes to interest costs is a dollar that cannot go to health care or education.

That’s why in my upcoming budget, we will lay out a plan to return the budget to balance.  

We will not put economic growth at risk by cutting too much, too soon threatening job creation and growth.

Nor will we proceed with spending as if there is no deficit.

We will continue to make responsible choices – and at times, difficult choices.

We will do so in a fair and balanced way. 

The Plan: Open Ontario

Roger Martin points out that since 1990, we have fallen behind our peer states in GDP per capita.

The consequences for not realizing our full prosperity are real.

So now, we must focus on building a new foundation for economic growth in Ontario.

Our job is to help create an environment for economic competitiveness – an environment for Ontario to reach its true potential.

That’s why on Monday, our Speech from the Throne will focus on growing our economy.

Growing stronger requires that Ontario be open to change, open to new opportunities.

We see the need for Ontario to be more open.

More open to global trade,
more open to investment,
more open to new ideas,
and more open to people.

Open Ontario is a five-year plan to build a new foundation for economic growth and jobs.

We’ve already laid out some important aspects of this plan with two important initiatives:  tax modernization and green energy.

Our Tax Plan for Jobs and Growth has been getting strong support from Ontario businesses who tell us it will help them invest and create jobs.

Small business in particular, will find administration easier under a single, straightforward sales tax.

A recent KPMG report shows that our tax plan will significantly improve Ontario’s competitiveness.

Personal income taxes were reduced on January 1 of this year.

And on July 1, we’re reducing corporate income taxes and moving ahead with the HST, all of which will help create jobs here in Ontario.

Jack Mintz notes that our tax measures will have a dramatic impact: by significantly lowering the tax burden on new business investment and increasing capital investment by $47 billion.

The research suggests that by 2020 we will see an increase of household income of up to 8.8 percent. 

Most importantly, Mintz estimates that our tax plan will lead the creation of nearly 600,000 net new jobs within 10 years.

That’s good news for all Ontario communities and all Ontario families.

Green energy is going to be a significant source of employment in the very near future. Our program will create 50,000 new Ontario jobs over three years.

Al Gore has called it “the single best green energy program on the North American continent.”

Samsung’s partnership with Ontario to produce clean energy from the wind and the sun is just the beginning.

In the Speech from the Throne next week the government will be outlining more elements of the Open Ontario plan.

In the meantime, let me share some of the thinking with you.

Since we took office, we’ve placed an extraordinary emphasis on education.

We launched full-day learning for four- and five-year olds which will help our youngest children be ready for school.

We lowered classroom sizes and invested in schools.

Our Reaching Higher program delivered the most significant investment in postsecondary education in 40 years.

The evidence is clear: a well-educated workforce is Ontario’s competitive advantage, Ontario’s key to prosperity and Ontario’s key to more jobs. 

One of the areas where Ontario is starting to do very well is in the clean water industry.  Slowly, this sector has become one of significant global demand.

The Conference Board of Canada estimates that the global market for water technology is over $400 billion – with annual growth of up to 15 per cent. 

The other factor that has been decidedly in our favour is the strength of our financial services sector. 

Our financial services sector weathered the global economic storm and we became known for having the world’s most reliable financial institutions.

In Ontario, this sector accounts for significant employment and wealth creation.

This sector still has untapped potential to be more innovative and to create more jobs. 

Northern Ontario has much more to offer the world.

Ontario’s first diamond mine opened in 2008.

Now, people are talking about the Ring of Fire – an extraordinary find around Hudson’s Bay.

It may contain the largest chromite deposit in the world.

Chromite is the metal that gives stainless steel its shine. Forbes magazine called it the Accidental Gold Rush.

Chromite and diamonds are both a significant boon to our mining industry and to the nearby communities – and we need to help them create more jobs in the region.

Before I conclude, I want to talk about one last thing:

As many of you have heard, we are doing a thoughtful review of government business assets to determine if we can do more to turn them into generators of jobs and growth.

The upcoming Throne Speech and Budget will not announce the sale of any asset we currently own.

We will continue to examine whether our government businesses could be unleashed to provide new jobs and economic opportunity for Ontario families. 

There are new models for maximizing assets that protect and preserve the public interest.

It is possible to significantly increase revenue and maintain regulatory control.

The question we’re grappling with is: are our assets being maximized to the advantage of all Ontarians?

As we review and research our options, we’ve established a number of principles:

Government regulation and protection of the services provided to Ontarians are critical.

Any changes to the structure of our assets must create jobs and growth. 

The bottom line is simple: our objective is the long-term interest of all Ontarians.

On Monday, you’ll be hearing more about our Open Ontario Plan through our Speech from the Throne.

In the coming weeks, we’ll breathe life into that plan – and lay out a plan to eliminate our deficit – through the budget.

We all have tough work to do and a duty to dedicate ourselves. 

I consider it my primary task to help position Ontario for jobs and prosperity while managing our finances prudently.

Ontario has the raw material to build on its strength as a global innovator and a competitive force in the global marketplace.

We’ve been a leader among provinces:
we’ve been a leader among our competitor states;  now, in this new environment, we need to be a global leader.

Ontario’s doors need to be open:
open to trade,
open to students,
open to global opportunity.

In so many ways Ontario is a global leader in mining,
in financial services,
in education,
in health care,
but we can do better still.

We have what it takes to be the best.
Our Open Ontario plan will help us get there.
We can do it, together.

Thank you.

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