Chapter I, Section B: Making Ontario Open for Business

Introduction

Ontario’s economy underperformed compared to its provincial peers in 12 of the past 14 years under the previous government. Business investment has been weak, slowing Ontario’s economic growth. Unnecessary red tape and regulatory burdens have stifled business growth, and made it more difficult for many people in Ontario, especially youth, to find meaningful jobs. The cost of doing business has become prohibitive, as key inputs like electricity have seen significant price increases. Many sectors that have traditionally contributed to Ontario’s prosperity, such as manufacturing, have suffered, hurting the regions and communities where these industries are located. At the same time, rising global competition has challenged the province’s position in international markets. Taken together, this business environment has driven jobs and investment out of the province. See Chapter II: Economic Outlook for more details on Ontario’s economic challenges.

Ontario’s economy is at a crossroads. The province’s historical position as the economic engine of Canada has been eroding over the last 15 years. Without a change in direction, this erosion will worsen.

Ontario’s Government for the People is committed to, once again, make Ontario a premier destination for job creation, investment, entrepreneurship and growth. The government recognizes that it is the private sector that creates the prosperity from which all the people of Ontario benefit. What government can do is create the right environment to make Ontario open for business, helping to grow the economy, and create and protect jobs across the province. Because when businesses succeed, workers succeed, families succeed and communities succeed.

Photo of workers with text: Protecting Ontario jobs

As outlined in this chapter, Ontario’s Government for the People has already taken a number of steps to create a business-friendly environment. Actions taken to cancel the cap-and-trade carbon tax, reduce Workplace Safety and Insurance Board (WSIB) premiums, and keep the minimum wage at $14 per hour will provide Ontario’s businesses with $3.6 billion in direct savings in 2019. As well, Ontario is urging the federal government to take action to accelerate the income tax deduction for the cost of depreciable assets in order to further reduce business costs and increase competitiveness.

The government will take further action to ensure future growth and prosperity for all of the people of Ontario. The Province will:

  • Improve economic competitiveness through its Open for Business Action Plan and its proposed repeal of Fair Workplaces, Better Jobs Act, 2017 (Bill 148) provisions, helping to significantly reduce the regulatory burden on businesses;
  • Reduce the cost of doing business by ending expensive green energy contracts and undertaking a review of electricity prices for industry;
  • Take steps to encourage more economic growth with such initiatives as the forestry strategy and Ring of Fire, benefiting Northern Ontario and other regions;
  • Vigourously defend and advance the province’s economic interests at home and abroad to maintain the competitiveness of Ontario’s vital industries; and
  • Make changes to improve the skilled trades and apprenticeship system, such as winding down the Ontario College of Trades, which will remove a layer of bureaucracy.

Through these actions, the province will again become an attractive destination for the private sector to start and grow a business, helping to keep and create good jobs right here in Ontario.

Cancelling the Cap-and-Trade Carbon Tax

As part of the plan to reduce costs and regulations for Ontario businesses, the Province cancelled the cap-and-trade carbon tax. This will bring about savings through lower energy bills and fuel costs relating to gasoline, diesel and natural gas. The direct savings to Ontario private-sector businesses are estimated to be $880 million dollars in 2019. The elimination of the cap-and-trade carbon tax also removes cost burdens and unnecessary regulations for Ontario’s businesses, allowing them to grow, create jobs and compete around the world.

Open for Business

Chart 1.3: Returning Money to Hardworking Business Owners
Accessible description of Chart 1.3

Creating and Protecting Jobs

Open for Business Action Plan

Cutting Red Tape

Reducing red tape will help boost productivity, competitiveness and investment. The government promised to cut red tape to make it cheaper, faster and easier to do business in Ontario. Currently, Ontario has approximately 331 statutes and over 380,000 regulatory requirements, many of which affect businesses. For example, requirements for businesses to provide their name and location a few times when completing a single permit or licence application form can create unnecessary burden and reduce productivity, leaving owners less time to manage their businesses.

Photo of a stack of papers with text: Cutting red tape

To grow good jobs and investment in the province, the government is developing its Open for Business Action Plan that will lower costs, reduce the regulatory burden and make businesses more competitive. The Action Plan is setting a target of reducing regulatory red tape by 25 per cent by 2022, supported by an ongoing review of the Province’s laws and regulations. It will also promote best practices on requirements for businesses, assisting them on a case-by-case basis. As part of the first phase, the government will introduce one high-impact burden reduction bill each fall and spring throughout its mandate.

Making Ontario Open for Business

The government is moving to ease the burden on businesses by introducing the Making Ontario Open for Business Act, 2018 (Bill 47). If passed, this legislation would remove the onerous provisions of Bill 148 and repeal the scheduled increase in the minimum wage to $15 per hour.

In raising the minimum wage from $11.60 to $14, the previous government introduced an unexpected change to a key input cost which was difficult for businesses to absorb. It had a negative impact on business, consumers and some workers, particularly young workers seeking the career-starting jobs that may pay minimum wage. Over the first 10 months of 2018, there were 31,000 fewer part-time positions in Ontario. Positions in sales and service occupations have decreased by 17,200 year over year. Holding the minimum wage to $14 per hour will encourage job creation and protect existing jobs and incomes. It will lower employer costs by an estimated $1.4 billion in 2019, while preserving the recent minimum wage increase for workers. If passed, Bill 47 will restore minimum wage increases based on inflation beginning in October 2020. Ontario’s workers and businesses deserve a minimum wage based on sound economics, not politics.

Following consultations and review by the Minister of Labour, the government is proposing amendments to other provisions of Bill 148, including:

  • Removing requirements for four days’ notice for scheduling changes and on-call pay;
  • Providing workers with three sick days, two bereavement days and three family responsibility days; 
  • Repealing provisions for equal pay for equal work on the basis of employment status, e.g., part-time and full-time workers, temporary and permanent workers; and
  • Changing the Labour Relations Act, 1995 to repeal card-based certification in specific sectors, revoking access to employee lists based on a 20 per cent threshold and bringing back the six-month limit on reinstatement following strikes.

A report commissioned by the Ontario Chamber of Commerce3 estimated that the reforms in Bill 148 added a $23 billion challenge for businesses over two years. The proposed changes to Bill 148 will lower costs and administrative burden for employers, protect jobs and help ensure Ontario is open for business.

The government will also introduce regulations exempting Crown employees from hours of work rules to better manage delivery, cost and compliance issues for critical public services.

Key provisions that deliver real benefits for Ontario workers, such as domestic and sexual violence leave and a minimum three weeks of vacation after five years of service, are being retained.

In addition, the government is proposing to delay the implementation date for the Pay Transparency Act, 2018 to allow for consultation. Complying with the Act’s current reporting requirements would have significantly increased costs for businesses and affected some sectors more than others.

Trade

United States-Mexico-Canada Agreement on Trade

Ontario exports billions of dollars worth of goods to the United States every year, with one in five Ontario jobs relying directly or indirectly on these exports. Ontario is the top export destination for 19 U.S. states, and the second largest for nine others. It is critical for both Ontario and its trading partners south of the border that the new United States-Mexico-Canada Agreement (USMCA) helps build upon that success.

During the negotiations, the Ontario government made it clear that any deal must keep the province’s industries and economic interests top of mind. On September 30, 2018, Canada, the United States and Mexico announced the completion of negotiations of the USMCA.

While the government is optimistic that the USMCA will create continued opportunities, it remains concerned about the impact on the province’s agriculture sector, specifically from Canada’s concession on Class 7 milk; increased access to Ontario’s supply-managed markets, particularly dairy; and, export limits. Addressing these concessions is a federal responsibility, and Ontario has called on the federal government to compensate the supply-managed sector and support the families and livelihoods that are now at risk, along with any other negative impacts to the province from the new agreement.

The Ontario government also remains concerned about the remaining steel and aluminum tariffs. The government, under Premier Ford’s leadership, is speaking directly with lawmakers of the United States and industry representatives on both sides of the border to try to get the tariffs lifted.

Ontario welcomes the opportunity for business to expand trade through agreements like the USMCA and the recent Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, the government will vigourously defend and advance Ontario’s economic interests at home and abroad to maintain the competitiveness of Ontario’s vital industries, such as the province’s automotive, steel, aluminum and supply-managed agri-food sectors. In October 2018, the government appointed Ian Todd to be Ontario’s Trade Representative in Washington, D.C. to promote Ontario’s interests in the United States, including cross-border trade and investment issues.

The Importance of Interprovincial Trade to Ontario

Interprovincial trade plays a central role in supporting jobs and growth across Ontario, providing additional opportunities for companies throughout the province in a highly competitive and often uncertain global economy. In 2017, Ontario’s services exports to other provinces and territories amounted to $104 billion — almost double Ontario’s services exports to other countries. Given Ontario’s strength in key sectors, there is potential for increased trade with other provinces and territories. According to BMO Capital Markets,4 the net positive impact to Ontario’s GDP from free interprovincial trade would build to a range of between $15 billion to $20 billion over 10 years. Building a strong internal trade market allows Ontario companies to capitalize on opportunities at home, and shows the rest of Canada that Ontario is open for business.

Ontario is already a leader, but can and will do more — both in working directly with other provinces and territories, and by implementing the Canadian Free Trade Agreement. In the areas of trucking regulation and interprovincial business registration, provinces have already reduced costs and cut the regulatory burden to promote trade across our borders. Going forward, provinces will make further progress to harmonize or reconcile regulations. Ontario will be a leader in cutting red tape and removing interprovincial barriers to trade. Working with provincial and territorial partners, the Province will enhance the economic competitiveness and opportunities for growth for Ontario businesses.

Promoting Growth within the Forestry Sector

Ontario’s forest industry is an important driver of the province’s economy, generating more than $15 billion in revenues and directly employing more than 46,000 workers. Forestry provides a significant number of jobs across Northern Ontario.

This fall, the government will hold consultations to help the Province develop a strategy for encouraging economic growth within the forestry sector and promoting the sector as open for business. A Provincial strategy will help unleash the potential of Ontario’s forest industry, creating the conditions for the industry to innovate, attract investment and create jobs and prosperity for the North and for all communities that depend on this sector.

Creating a Pro-Business Environment

The private sector is the key source of prosperity in the provincial economy. The Province is committed to creating an economic climate that makes it more attractive to start and grow a business and encourage investment, allowing more Ontario workers to find a good job. To achieve this goal, the government needs the right mix of programs and policies that support the efforts and activities of business. It means creating a framework that will make Ontario truly open for business.

An important step in developing a pro-business environment is to better understand what employers require to compete and grow, and then align the government’s programs to complement the needs of the private sector. For this reason, the government will undertake a review of all business support programs to determine their effectiveness, value for money and sustainability. The review will help to ensure that the Province’s business support programs are not outdated, but instead, are making Ontario a place where the private sector can thrive.

Ontario Place Governance

Ontario Place has the potential to become a spectacular world-class, year-round destination that would attract local, provincial and international visitors. Unfortunately, for far too long, Ontario Place has been mismanaged, and its potential has not been realized. Ontario Place lost $4.2 million in 2017 and is forecasting a loss in 2018. The government will introduce legislation that, if passed, would streamline accountability and governance for the redevelopment of a bold new Ontario Place.

Ontario’s Support for the Film and Television Industry

The film and television industry is making significant and growing contributions to Ontario’s economy and quality of life.

Supported by Ontario film and television tax credits, the industry employs world-class creative talent and highly skilled technical production workers. It also supports a large number of indirect and spinoff jobs across the province. With almost $3 billion in Ontario production spending in 2016–17, the industry supported over 50,000 jobs in the province.5

With a vibrant film and television industry, the province’s creators and producers can share Ontario’s unique stories and perspectives with domestic and international audiences, enriching the cultural landscape and enhancing Ontario’s profile.

The government is committed to providing stability and support for this key industry, while reviewing all business support programs. Ontario’s existing tax credits help ensure the industry continues to contribute to the Ontario economy.

Business Tax Competitiveness

Photo of workers with text: Open for business

Creating an open for business environment in Ontario requires a competitive business tax system.

Recent U.S. tax reform cut the U.S. federal corporate income tax (CIT) rate and implemented other measures, such as immediate expensing for a wide range of depreciable assets, which together dramatically improve the country’s tax competitiveness and encourage greater business investment in the United States. A recent report from PwC Canada for the Business Council of Canada finds that 635,000 jobs are at risk in Canada if the competitive challenges stemming from the U.S. tax reform are not addressed.

The U.S. federal CIT rate dropped from 35 per cent to 21 per cent in 2018, resulting in an average combined U.S. federal–state CIT rate of about 26 per cent. This compares to a combined federal–Ontario general CIT rate of 26.5 per cent (25 per cent for manufacturing and processing income).

Chart 1.4: Combined Corporate Income Tax Rates — Ontario vs. Great Lake States
Accessible description of Chart 1.4

A more comprehensive measure of tax competitiveness is the marginal effective tax rate (METR) on new business investment. The METR takes into account federal and provincial/state corporate income taxes, capital taxes and sales taxes.

In 2017, prior to U.S. tax reform, the METR in Ontario was substantially lower than the average U.S. METR of 34.6 per cent. Following U.S. tax reform, the METRs in Ontario and the United States are almost equal, eliminating Ontario’s tax advantage and weakening Ontario’s attractiveness as a location for business investment.

Chart 1.5: Marginal Effective Tax Rates (METRs) — Ontario and United States
Accessible description of Chart 1.5

Restoring Ontario’s Business Tax Competitiveness

Accelerated Depreciation

A key commitment of the government is to create and protect good jobs in Ontario. The government intends to create conditions that make it more attractive to start and grow a business and to invest in Ontario.

To help maintain Ontario’s tax competitiveness for business investment, Ontario’s Minister of Finance and Minister of Economic Development, Job Creation and Trade wrote to the federal government, strongly encouraging initiatives such as the immediate expensing of depreciable assets similar to the United States.

If the federal government introduces a measure that accelerates the expensing of new depreciable assets, Ontario will parallel this measure. This would support jobs and growth opportunities in Ontario, and strengthen Ontario’s competitiveness in the global economy.

Ontario is Standing Up for Small Businesses

The Province supports small businesses by providing the Ontario small business deduction (SBD), which reduces the Ontario general Corporate Income Tax (CIT) rate from 11.5 per cent to 3.5 per cent. The federal government introduced a measure which phases out access to the federal small business CIT rate based on the amount of passive investment income earned by a corporation.

In the 2018 Budget, the previous administration proposed to parallel the federal measure for the purposes of the Ontario SBD. The Budget proposal would have reduced or eliminated the benefit of the lower small business CIT rate for some of Ontario’s small businesses. The Budget estimated that this measure would have increased taxes on Ontario small businesses by about $160 million annually by 2020–21.

The government is committed to helping small businesses and cutting taxes. Ontario is proposing to not parallel this federal measure and will not proceed with the 2018 Budget proposal.

Employer Health Tax Relief

Ontario employers will also benefit from an increase in the amount of their Ontario payroll that is exempt from the Employer Health Tax (EHT). For eligible private-sector employers, the first $450,000 of payroll is already exempt from EHT. Based on indexation, this amount is scheduled to increase to $490,000 in 2019, providing about $40 million in additional tax relief.

See the Annex: Details of Tax Measures for more information on these measures.

Energy

Further Reducing Electricity Rates by 12 Per Cent

The cost of electricity in Ontario has become a burden for families, farms and small businesses and a disincentive for business investment. As announced in the 2018 Speech from the Throne, the government will take action to further lower electricity bills in Ontario. One of the government’s first actions was to cancel 758 energy contracts, which will contribute towards the government’s plan to cut electricity bills by 12 per cent.

Ending Green Energy Contracts

Ontario families and businesses have been forced to pay inflated hydro prices as the result of unnecessary, expensive and subsidized energy initiatives.

Ontario ratepayers will benefit from $790 million in savings thanks to the government’s decision to cancel 758 renewable energy contracts. Cancellation of these unnecessary and wasteful contracts is part of the plan to cut electricity rates by 12 per cent for families, farms and small businesses.

All of the projects that were cancelled have not yet reached advanced development milestones under the terms of their contracts. The government intends to introduce a proposed legislative amendment to protect electricity consumers from any costs incurred from the cancellations to maximize benefits for ratepayers.

Thunder Bay Generating Station

There is currently a surplus of power in Ontario. The Thunder Bay Generating Station was used for electricity generation an average of only 2.5 days each year. Ontario Power Generation Inc. (OPG) and the Independent Electricity System Operator (IESO) announced in July that it is in the best interests of electricity customers to shut down the Thunder Bay Generating Station due to high capital repair and operational costs, and lack of demand. This will save Ontario electricity customers $40 million and save $5 million in costs to OPG. No OPG employees will lose their jobs from the closing of the Thunder Bay Generating Station. OPG is in discussions with employee unions on redeployment opportunities for affected staff and work reassignments.

Ontario Energy Board

The Ontario Energy Board (OEB) is Ontario’s independent regulator of the electricity and natural gas sectors. The OEB Modernization Review Panel has been exploring how the mandate, role and structure of the OEB can respond to a rapidly changing energy sector by modernizing the Board’s governance to deliver accountability and predictability.

The OEB has also conducted a review of its customer service rules for electricity distributors, rate-regulated natural gas distributors and unit sub-meter providers. It is proposing a suite of changes to strengthen the customer service rules that protect electricity and natural gas consumers throughout the province.

Review Industrial Electricity Prices

The government understands the challenges to Ontario industry caused by the high cost of electricity. This is why the government, as part of its open for business policy, is launching a public review of current electricity pricing for industrial users. It will also review written submissions to assess what makes sense and what does not, to better align with the needs of industrial consumers.

Supporting Consolidation of the Electricity Distribution Sector

Ontario is committed to encouraging consolidation and efficiencies in the electricity distribution sector. The goal is to reduce costs and improve services for customers through innovation and efficiency gains. The government recognizes that private-sector investment, expertise and innovation can play an important role in achieving these goals.

To encourage and allow for more time to achieve consolidations, the government is extending two time-limited transfer tax incentives and an exemption for capital gains under the deemed disposition rules, which are scheduled to expire on December 31, 2018, until December 31, 2022. See the Annex: Details of Tax Measures for more information. Ontario will consider additional ways to promote efficiency and modernization of the electricity distribution sector in consultation with consumers and other stakeholders. 

Supporting Pipeline Construction

The federal carbon tax will affect Ontario’s — indeed, all of Canada’s — ability to compete globally. As Ontario takes steps to attract and retain good jobs, the Province will also seek to support economic development in other provinces that could be hindered by the federal carbon tax.

The government will not stand in the way of a project that would transport oil from Western Canada to Ontario or Canada’s East Coast. To that end, Ontario will seek to increase energy market access through any necessary changes to the Canadian Free Trade Agreement negotiated by the previous government. Pipelines create good jobs, both in Ontario and across the country. In every way possible, Ontario will support its partners looking to expand oil distribution, and at the same time, protect their competitiveness from the federal carbon tax.

Natural Gas

There is significant demand for natural gas, particularly among families and businesses in rural and Northern Ontario. Natural gas is the most common heating source in Ontario and is more affordable than other sources, such as electricity, oil or propane. The government is committed to meeting this demand and is taking action to expand access to natural gas across Ontario.

Photo of farm with text: Expanding access to natural gas for rural Ontario

On September 18, 2018, the government introduced the Access to Natural Gas Act, 2018 which if passed, would enable private-sector participation in the expansion of natural gas and encourage more private gas distributors to partner with communities to develop projects that expand access to affordable and efficient natural gas. Under the proposed program, communities would continue to partner with gas distributors to bring forward natural gas expansion applications to the Ontario Energy Board. The government will work with the Ontario Energy Board to develop regulations to enable the program.

The new proposed program would help provide decades of benefits to communities across Ontario by providing natural gas connections for over 70 communities and connecting approximately 33,000 households. Switching to natural gas will also make life easier and more affordable by saving the average residential customer between $800 and $2,500 a year. Expanding natural gas would make Ontario communities more attractive for job creation and new business growth, and send a clear message that Ontario is open for business.

Previously, natural gas expansion was managed by a taxpayer-funded program. Savings from this program will be reinvested to expand broadband and cellular projects. Attracting private capital to facilitate development of new natural gas networks demonstrates the government’s commitment to expand natural gas across Ontario, while ensuring that taxpayers do not bear the cost for this expansion.

Broadband Expansion

In a quickly evolving world, broadband and cellular connectivity are critical to job creation, economic growth and the delivery of public services such as education and health care.

Most residents in Ontario have access to the internet, but the speed, quality and cost varies significantly across the province. There are also coverage gaps in rural and Northern communities, as well as in some urban areas. Investing in broadband infrastructure to expand access to reliable, fast and affordable broadband internet connectivity will allow communities and businesses to fully participate and compete in the digital economy. It will also support increased access to digital technology and a digital first approach to providing government services (e.g., access to data and online services).

This government is committed to ensuring that communities across Ontario have access to critical broadband and cellular connectivity. To support this commitment, and help promote job creation and economic competitiveness, the Province will release a broadband and cellular strategy in early 2019, outlining an action plan to expand broadband, digital services and cellular access in unserved and underserved areas.

Minister’s Agriculture Task Force

The agri-food sector is critical to Ontario’s continued growth and prosperity. In 2017, it contributed $39.5 billion to Ontario’s economy and employed over 170,000 people. The contribution of agriculture and agri-food should be recognized in the province with meaningful consultation on issues that impact this sector. That is why, as part of the government’s efforts to reduce regulatory burden and create growth, the Ministry of Agriculture, Food and Rural Affairs is planning to launch a formal agricultural advisory group that will hear from leaders across the agriculture and agri-food sector and provide the government with an important perspective on key policies from the experts themselves.

The group will meet regularly to discuss issues that impact the industry, such as trade, and provide input on crucial future decisions, such as changes to the Ontario Food Terminal network.

Industry input will ensure policies and programs foster economic growth and do not impose additional regulatory burden or costs on farmers or agri-food businesses.

Labour Market Improvements for Business

Skills and Training — Dissolution of the Ontario College of Trades

Ontario’s skilled trades offer careers leading to secure jobs and a good quality of life, and are also vital to the health and growth of the economy. Apprenticeship opportunities help businesses harness new talent, while equipping workers with the practical skills and qualifications that the economy needs now and in the future.

The government’s priorities to improve Ontario’s skilled trades and apprenticeship system include:

Photo of workers with text: Reducing the burden for business & boosting the economy
  • Reducing the regulatory burdens placed on businesses, apprentices and journeypersons;
  • Closing the skills gap by establishing programs that encourage the people of Ontario to enter the skilled trades, get re-trained and become aware of the benefits of good paying jobs in the trades; and
  • Reviewing Ontario’s apprenticeship system and enacting reforms to increase access to apprenticeship opportunities.

To achieve these goals, the government is proposing a phased approach to the dissolution of the Ontario College of Trades (OCOT) and creating a more modern, outcomes-focused system.

The proposed Making Ontario Open for Business Act, 2018 includes:

  • Setting journeyperson-to-apprentice ratios at 1:1 for all 33 trades that are subject to ratios;
  • Implementing a moratorium on trade classifications and reclassifications;
  • Providing the Minister of Training, Colleges and Universities with the authority to take charge and control of the College’s Board of Governors, and to appoint an administrator to act on his/her behalf if required; and
  • Winding down OCOT by repealing the Ontario Colleges of Trades and Apprenticeships Act, 2009 on a date to be proclaimed.

These amendments represent the first phase to support employers in getting more individuals into apprenticeships. They will also support apprentices in completing their programs of study and becoming eligible for good-paying jobs in the skilled trades.

Ontario’s Support for Businesses that Train Apprentices

The government plans to review the supports available to apprentices and to the businesses that employ and train those apprentices. The plan is to ensure that the right supports are available to maintain a strong and highly skilled workforce in Ontario.

Workplace Safety and Insurance Board Review

This fall, the Workplace Safety and Insurance Board (WSIB) announced that the average WSIB premium rate will decline from $2.35 to $1.65 on every $100 of insurable payroll, effective January 1, 2019.

Photo of construction worker with text: Safer workplaces growing businesses

The reduction represents a 29.8 per cent cut to the WSIB’s average premium rate and comes after eliminating a long-standing liability. The reduction will support Ontario being open for business by delivering cost savings to employers estimated at $1.45 billion in 2019. Combined with a new WSIB premium rate framework in 2020, this will help safeguard Ontario’s workplace health and safety system, ensuring it remains accountable, sustainable and able to meet its obligations.

The government is launching a review of the workers compensation system to ensure it remains sustainable in the future. The review will assess whether risks are being appropriately considered while providing rate predictability for employers. It will also consider, as part of the review of Provincial agencies, whether the WSIB is operating efficiently and effectively, and whether the governance framework can fulfill its mandate.

Creating Efficiencies in the Pension Sector

Supporting Mergers and Conversions

As the population ages and more people retire, it is more important than ever to look at making pensions more efficient. Broader public-sector employers have been working towards the conversion of their single-employer pension plans to jointly sponsored pension plans (JSPPs). There are several mergers into JSPPs currently under way to reduce costs and improve efficiencies, including a number in the hospital, municipal and university sectors. Several universities are working to merge their individual plans into a single JSPP which will be available to the university sector.

The government is committed to improving the pension system for the university sector. A new JSPP is a means of obtaining efficiencies of scale, improved investment opportunities and savings in plan administration. The new JSPP would allow universities to focus on their core mandate of providing high-quality education for students, rather than diverting resources to managing their single-employer pension plans.

Based on the shared risk structure between plan members and employers, it is expected that this newly established plan would be treated similarly to other broader public-sector, solvency‐exempt JSPPs following a successful conversion and a request from the newly established university plan.

Enabling Electronic Designation of Beneficiaries

Currently, beneficiary designations in pension plans are primarily done through paper-based processes. The government is proposing amendments to the Pension Benefits Act that if passed, would allow administrators of pension plans to permit electronic beneficiary designations, making it easier for plan members, while reducing red tape for pension plans throughout Ontario.

Building More Efficient Regulators

Attracting Further Investment to Ontario

The government is committed to making Ontario the most attractive place in North America in which to invest, grow businesses and create jobs for the people.

Critical to accomplishing this goal, is creating a globally competitive, efficient and strong capital markets regulatory system that attracts investments from around the world, streamlines capital-raising for businesses, and protects investors from financial system risk and misconduct.

Currently, Canada is the only G20 country without a national regulator. Instead, the country’s capital markets are regulated by a patchwork of 13 different securities regulators with different laws and regulations in each of the provinces and territories. This does not contribute to the goal of making the regulatory system more efficient and more competitive relative to other countries.

Canadian businesses — including those in Ontario — seeking to raise money to expand and create jobs, as well as global investors seeking to invest in those businesses, must spend significant resources to understand and comply with a needlessly complex regulatory system. It also means Canada does not have the ability to effectively monitor and respond to systemic risk on a national basis, and provide investors timely and uniform protections across jurisdictions.

Ontario’s Minister of Finance is playing a leadership role in the implementation of the Cooperative Capital Markets Regulatory System (CCMR). This would help Ontario’s businesses raise capital more efficiently and better protect investors. Minister Fedeli serves as Co-Chair of the Council of Ministers of the CCMR, an initiative of the governments of Ontario, British Columbia, New Brunswick, Saskatchewan, Prince Edward Island, Yukon and Canada to implement a streamlined capital markets regulatory system.

Ontario will respect the decision of the Supreme Court of Canada in pursuing streamlined capital markets regulation.

Enhancing Confidence and Competitiveness in Capital Markets

In recent years, enforcement action was taken against several international banks for manipulating the London Interbank Offered Rate (LIBOR), a widely used benchmark for short-term interest rates referenced in securities, financial instruments and loans valued at hundreds of trillions of dollars. The banks falsely inflated or deflated rates to benefit their own trading positions or improve the perception of their creditworthiness. The banks were fined billions of dollars, and some employees were sentenced to jail terms. This situation precipitated several reports and consultations on financial benchmarks and their regulation, and various jurisdictions have started to enact new laws to regulate benchmarks.

The Ontario government is committed to enhancing competitiveness and confidence in its capital markets. That is why the government is proposing to amend Ontario capital markets legislation to regulate critical financial benchmarks in Canada. The Canadian Dollar Offered Rate (CDOR) and the Canadian Overnight Repo Rate Average (CORRA), the two most widely used Canadian benchmarks, are referenced in tens of thousands of financial contracts worth trillions of dollars in notional value, involving parties such as governments, pension funds, banks, asset managers and businesses within Ontario, Canada and around the world. CDOR is also used in many commercial loan agreements in Canada. Ensuring that these benchmarks are subject to internationally recognized rules will provide more confidence for investors and businesses as they engage in the province’s capital markets, and help Ontario and Canada compete in the global economy.

Financial Services Regulatory Authority of Ontario

The new Financial Services Regulatory Authority of Ontario (FSRA) will deter fraud, foster competition and innovation, and streamline regulatory processes for consumers and stakeholders, investors and plan beneficiaries in Ontario. The government is working with FSRA on a plan to make it fully operational, with a focus on reducing red tape and finding more efficient and effective ways to deliver regulatory services.

To support the FSRA in its launch as a strong and efficient regulator, the government is introducing legislative amendments that would, if passed, provide for the amalgamation of the Deposit Insurance Corporation of Ontario, including the Deposit Insurance Reserve Fund, with FSRA. The amalgamation of these entities would simplify the regulatory landscape by establishing one regulator for non-securities-related financial services in Ontario, while maintaining the sector specific expertise to regulate effectively.

FSRA should be focused on its mandate to regulate auto insurance, financial services and pensions in Ontario. To ensure this happens, the government is introducing legislative amendments that would, if passed, allow it to transfer administrative responsibility for the Motor Vehicle Accident Claims Fund, a non-regulatory function performed by the current regulator, to the Ministry of Government and Consumer Services (MGCS). This move would allow FSRA to focus its resources on the regulated sectors, while leveraging existing expertise and resources within MGCS.

Supporting the North

Northern Ontario’s economy is supported by its vast natural resources that fuel mining and forestry activities, in addition to other industries such as steel manufacturing, transportation, tourism, and traditional hunting, fishing and trapping. The communities and resources in the North have great potential for additional economic growth and development. The Province is committed to supporting economic development and job creation in the North by cutting through delays and investing in infrastructure.

Ring of Fire

The Ring of Fire is a large, geologically rich potential mining development area in Ontario’s Far North. Located about 535 kilometres northeast of Thunder Bay, it holds significant deposits of minerals, including chromite, nickel, copper, vanadium, platinum group metals and gold, among others. Given the volume of the deposits, it is estimated that the Ring of Fire could support mining operations for more than a century. Recent estimates suggest that the value of the mineral resources in the area could be more than $60 billion,6 due in large part to known chromite and nickel deposits. The Ring of Fire represents a significant opportunity to open up the resources of Northern Ontario and create jobs in the region.

The government is committed to addressing the delays blocking the development of the Ring of Fire by working with willing partners to ensure sustainable development in the North.

Review of the Far North Act, 2010

The previous government enacted the Far North Act, 2010 to develop land use plans in the Far North. Since enactment, little progress has been made to promote collaboration with First Nation communities, which has hindered investment opportunities in Northern Ontario, and limited the possibilities for jobs and economic growth among First Nations. The Act also complicated economic development possibilities and opportunities, resulting in additional planning processes for some 225,000 square kilometres of land, or about 25 per cent of Ontario’s total land mass and 28 per cent of the province’s North.

The government’s goal is to encourage economic growth, diversification, job creation and self-reliance in communities in Northern Ontario. To ensure a collaborative approach to development, the Province will undertake a review of the Far North Act, 2010 to ensure land use planning aligns with local, First Nations’ and Provincial priorities.

Resource Revenue Sharing

The government will continue to explore ways to encourage development of natural resources across the North, by helping Northern towns and Indigenous communities share in the benefits of resource development from mining, forestry and aggregates.

Mining Working Group

The government will establish a special mining working group that will focus on opening Ontario for business by speeding up regulatory approvals and attracting major new investments.

Algoma

Photo of steel worker with text: Committed to protecting Ontario's workers

Algoma Steel is the mainstay of Sault Ste. Marie’s economy. Algoma is the second largest private-sector employer in Northern Ontario, supporting approximately 7,400 direct and indirect jobs. The government is putting workers, pensioners and families first by supporting the restructuring of Algoma’s business, allowing it to continue for future generations. The successful restructuring will protect thousands of jobs and the environment, and secure a long-term commitment to fund Algoma’s pension plans, benefiting approximately 2,100 current and 6,300 former or retired employees’ pensions.

Emergency Forest Firefighting

When natural disasters occur, the government of Ontario stands shoulder-to-shoulder with those that are affected. Annually, the government provides base funding of approximately $70 million to deliver front-line operations for forest fires. On August 8, 2018, the government committed an additional $100 million to fight forest fires across the province, addressing escalated fire activity in parts of Central and Northern Ontario.

Ontario will continue to dedicate as many resources as necessary to fight forest fires across the province, and help ensure the safety and protection of communities and private property.

Northern Transportation Improvements

A number of expansion projects along Highway 11/17 are planned or underway. Increasing the capacity along various stretches of the highway from two lanes to four lanes will help improve the safety and reliability of the Trans-Canada Highway system. As well, the government will continue to review other initiatives to meet Northerners’ transportation needs, including passenger rail and bus services. This work is an important part of the government’s plan to promote economic development and keep people moving in Northern Ontario.

Chart Descriptions

Chart 1.3: Returning Money to Hardworking Business Owners

Illustrative Savings for a Small Restaurant

The government is delivering immediate savings to small businesses across Ontario through lowering taxes, stabilizing hydro bills and cutting job-killing red tape.

To illustrate the impact, imagine a small restaurant owner, Raj, who employs seven staff, including four students making minimum wage. With the rapid minimum wage hike from $11.60 to $14 on January 1, 2018, Raj’s payroll costs dramatically increased, and he was forced to cut staff hours to make ends meet. Added to that, the cap-and-trade carbon tax introduced hidden costs to his business that made everything from buying his restaurant supplies to his food delivery costs more expensive.

The government’s reduction of WSIB premiums and cancellation of the cap-and-trade carbon tax immediately saves Raj’s business $800 a year. On top of that, the government’s commitment to pause further minimum wage hikes until 2020 will save Raj’s restaurant an additional $5,800 annually. The combined savings amount to a total of $6,600 in 2019, money that can be reinvested back into the restaurant’s staff and supplies to help Raj’s business grow.

This chart illustrates the combined impact from reducing WSIB premiums, cancelling the cap-and-trade carbon tax, and keeping the minimum wage at $14 an hour on a small restaurant with similar characteristics.

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Chart 1.4: Combined Corporate Income Tax Rates — Ontario vs. Great Lake States

This bar chart shows that in 2017, prior to U.S. tax reform, Ontario’s combined federal–provincial general corporate income tax rate of 26.5 per cent was lower than the combined federal–state corporate income tax rates of Pennsylvania at 41.5 per cent, Minnesota at 41.4 per cent, Illinois at 41.2 per cent, Wisconsin at 40.1 per cent, New York at 39.2 per cent, Michigan at 38.9 per cent, Indiana at 38.9 per cent, and Ohio at 35 per cent. Following U.S. tax reform in 2018, Ontario’s combined rate is below the combined rates of Pennsylvania at 28.9 per cent, Minnesota at 28.7 per cent, Illinois at 28.5 per cent, and Wisconsin at 27.2 per cent, and above the combined rates of New York at 26.1 per cent, Michigan at 25.7 per cent, Indiana at 25.5 per cent, and Ohio at 21 per cent. Ohio imposes a commercial activity tax (based on gross receipts) rather than a corporate income tax.

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Chart 1.5: Marginal Effective Tax Rates (METRs) — Ontario and United States

The marginal effective tax rate (METR) is a comprehensive measure of the tax burden on new business investment. It takes into account federal and provincial/state corporate income taxes, capital taxes and sales taxes, and excludes the resource and financial sectors and tax provisions related to research and development. This bar chart shows that in 2017, prior to U.S. tax reform, Ontario’s METR of 19 per cent was substantially lower than the average U.S. METR of 34.6 per cent. Following U.S. tax reform in 2018, the average U.S. METR dropped to 18.9 per cent. METR estimates are provided by Philip Bazel, Jack Mintz and Austin Thompson of The School of Public Policy, University of Calgary.

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Footnotes

Updated: November 15, 2018
Published: November 15, 2018