Ontario’s 2008–2009 Budget

March 26, 2008



Ontario’s 2008–2009 Budget



THE HONOURABLE DWIGHT DUNCAN

Ontario Minister of Finance



A joint meeting of The Empire Club of Canada and The Canadian Club of Toronto

Chairman: Allan O’Dette

President, The Canadian Club of Canada

Head Table Guests:



Greg Wong: CFO, Gulf and Pacific Equities Group, and Director, The Canadian Club of Toronto

Linda Franklin: President and CEO, Colleges, Ontario

Len Crispino: President and CEO, Ontario Chamber of Commerce

Janet Ecker: President, Toronto Financial Services Alliance

Elyse Allan: President and CEO, GE Canada

Ilse Treurnicht: CEO, MaRS Discovery District

The Hon. David Peterson: Former Premier of Ontario, and Chair, Cassels Brock & Blackwell LLP

Lisa Baiton: Vice-President, Government Relations, Environics Communications, and Director, The Empire Club of Canada

Warren Jestin: Senior Vice-President and Chief Economist, Scotiabank

Catherine S. Swift: President and CEO, Canadian Federation of Independent Business, and President, The Empire Club of Canada.



Introduction by Allan O’Dette:



The Honourable Dwight Duncan delivered the Ontario provincial budget about 18 hours ago—the McGuinty government’s fifth, and his second as finance minister.



I think we would all understand if he seems a little tired.



After all, there is a pretty good case to be made that the biggest day of the year for a provincial or federal government in a non-election year, of course, is budget day. That is the day that governments tell their taxpayers what they plan to do with the tax dollars they receive.



And budget day is the day that governments let their citizens in on their overall plan. Budget day is a pretty big day.



For the finance minister whose job it is to oversee the writing of the budget, and deliver it in speech form to the legislature, it’s a day requiring literally months of preparation.



Writing a budget means trying to please everyone in your own government, from the premier on down to every other cabinet minister, who all have a clear idea of what they want you to do. That’s not easy.



The Honourable Dwight Duncan has been through all this before, as finance minister, as a cabinet minister vying for the attention of the finance minister, and as a member of the opposition criticizing the finance minister.



He knows that at the end of the day, what is said before and after the delivery of the budget is much, much less important than what is in the budget itself.



Yesterday he brought in a document that walks the line between all the competing interests and disparate points of view in Ontario.



And we are so very grateful that he is here with us this morning, not that many hours after delivering his government’s biggest speech of the year, to tell us about it.



Ladies and gentlemen, please welcome to our podium today Ontario’s Finance Minister, the Honourable Dwight Duncan.



DWIGHT DUNCAN:



Good morning.



Yesterday I presented the 2008–09 Ontario budget to the legislature. I delivered some frank news about the state of our economy. We saw stronger-than-expected growth in 2007 of 2.1 per cent despite a more challenging external environment.



However, as you well know, private-sector forecasters expect modest growth in 2008. This is expected to strengthen to 2.8 per cent by 2010.



Certainly some sectors of our economy are quite healthy and will weather this slower growth period. However, other sectors and some communities and families are facing serious difficulties.



A slowing U.S. economy, high oil prices and a stronger-than-anticipated Canadian dollar are reducing growth forecasts and creating uncertainty. Our export-based manufacturing industries and the forest sector have reduced output and cut jobs.



We will maintain our approach of prudent fiscal planning and careful management. And we plan to invest in our economic foundations by implementing our five-point economic plan that will steer Ontario through these challenging times.



The plan makes investments in the skills and education of Ontarians, accelerates our investments in infrastructure, supports innovation, lowers business costs and strengthens key partnerships to maximize our future potential.



Yesterday, I outlined the steps we are taking to move that plan forward.



On the skills front, we are making new investments of some $1.5 billion in our Skills to Jobs Action Plan. It will train unemployed workers for new careers, expand apprenticeships, build more spaces in colleges and universities and help students with education costs. A highly skilled work force is a key economic advantage—and at the moment, it’s critical.



We also moved forward on an additional $1 billion in municipal infrastructure including funding for roads, bridges, public transit and social housing. We have a long history of investing in Ontario innovators.



As you may know, I didn’t wear new shoes to deliver the budget yesterday. Instead, I bought a new Blackberry, to symbolize my commitment to groundbreaking Ontario innovators.



I am particularly excited about our new 10-year corporate income tax exemption for burgeoning companies that would help commercialize research from Canadian universities or colleges. It’s the first exemption of its kind in Canada. Qualifying companies would be ones that are established after March 24, 2008 and before March 25, 2012 and will be exempt from Ontario Corporate Income Tax and Corporate Minimum Tax for its first decade in business.



We’re hoping to encourage the growth of new companies in bio-economy, clean technology, advanced health technology, telecommunications, computer and digital technologies. But we are open to all kinds of innovation, the development of prototypes and bringing new products to market.



This proposal, together with our new Venture Capital Fund, will help launch the next wave of innovative firms in Ontario.



These incentives would also help bring new ideas to market and turn concepts into products and profits.



Our innovation investments help a whole range of groundbreaking companies. Atreo Medical in Hamilton, for example, which is run by a few graduate students at McMaster, has invented a CPR glove. Because CPR is very difficult to do, even by professionals, the glove was designed to help people perform it properly. It won Time Magazine’s award as one of the best innovations of 2007.



That’s the kind of innovation we need in Ontario. So to help ensure that innovation happens more often, we are also supporting skills and lowering business costs. Exactly what we should be doing to help Ontario grow.



Yesterday, I also announced that we are continuing with our government’s plan to help lower the cost of doing business in this province.



In the 2007 budget, Ontario announced that it would accelerate the elimination of the Capital Tax to July 1, 2010 and reduce high Business Education Tax rates by $540 million when fully phased in.



Back in the fall, I proposed a package of business tax relief of $1.1 billion over three years—primarily benefiting manufacturers and resource companies.



In this budget I outlined a proposal to provide a further retroactive Capital Tax cut for manufacturers and resource firms. This would entitle them to $190 million in rebates to help them invest and grow.



We also plan to enhance capital cost allowances, providing firms with $433 million over three years to invest in new machinery and equipment.



Our total package of measures in this budget alone will provide $750 million in tax relief to Ontario businesses.



And we initiated our plan to modernize business and financial regulations—to help reduce red tape for hardworking business people.



In the meantime, our government continues to make unprecedented investments in infrastructure, in health care and in education.



All of this helps to make Ontario a great place to live and invest.



Today, I’d like to talk to you about one of the great success stories of the Ontario economy. Financial services and professional business services are major drivers of Ontario’s knowledge economy.



The strength of financial services has been one of the reasons that Ontario’s economy has been resilient in spite of external challenges like high oil prices and the exchange rate.



Our financial-services sector alone employs 350,000 people. That’s an increase of 12 per cent since 2003. Toronto has the third-largest concentration of financial-service employment in North America—behind New York and Chicago.



Toronto ranks 15th internationally as a global financial hub, according to international surveys. It is the nation’s business, financial and cultural capital. The Toronto region is home to just under 1,000 business head offices—almost twice as many as Montreal and three times as many as Calgary.



Ontario has almost 1,500 head offices, accounting for 39 per cent of the Canadian total. That is a similar proportion to Ontario’s share of Canada’s GDP. Financial services underline the point that this province is a great place to invest in. In fact, two of the largest investment banks in the world—Merrill Lynch and UBS—have made major investments in Toronto in order to provide services for their global operations. They made these investments because of the skilled financial work force present in Toronto and because Ontario is a competitive place to do business.



We should be very proud—I am very proud—of the success of Ontario’s financial sector. So today I would like to announce the establishment of a Centre of Excellence for Education in Financial Services to promote the advancement of financial services in Ontario.



The idea is to create a virtual, region-wide network of educators, researchers, financial-service professionals, government partners and experts in innovation and technology. They will work collaboratively to ensure that the sector attracts and develops the best and brightest talent to financial services in Ontario. It would support postsecondary research in financial services by helping to fund research chairs. Seven Toronto-area universities and colleges are working with us to make the centre a reality.



The skills and talents of Ontario people are our most important economic strength. The Centre of Excellence will help secure our talent advantage—and provide a substantial resource for the sector.



We know it will further strengthen Toronto’s global hub for financial-services education and training. We plan to invest $4 million over three years in the Centre of Excellence. Support for this initiative will be provided by the Ministry of Training, Colleges and Universities and in partnership with the Toronto Financial Services Alliance.



I would like to particularly thank my former colleague in the legislature and former finance minister, Janet Ecker. As many of you know, Janet Ecker is the president of the Toronto Financial Services Alliance. Janet has driven this project from the outset. Her enthusiasm has been quite contagious. Her tireless efforts to highlight the importance of this sector should be credited to her ongoing commitment to the betterment of Ontario. Thank you, Janet.



The Centre of Excellence is a great example of how partners—across the divide of public/private and across the divide of politics—can work together to get great things accomplished. Partnerships are never easy. They involve hard work and compromise, but deliver real rewards.



Ontarians expect the federal government to be a full partner in responding to today’s challenges and building tomorrow’s prosperity. We have a plan to meet and overcome the challenges currently facing Ontario. But we would get better results faster in partnership with the federal government. We need a federal partner to come to the table for our manufacturing sector the same way it does for other sectors in other parts of the country.



Ontarians are proud Canadians. We’re not looking for a special deal; we’re looking for the same deal. I think it’s time to step away from the partisan rhetoric, to step away from the cameras and sit down and actually work out what ideas would work best for all Ontarians. Mr. Flaherty, let us move past our differences and talk directly about what matters: the Ontario economy and how to best support it.



Partnerships aren’t easy. Working together isn’t always easy. But it is what people expect of us. And it is what we have a duty to deliver.



And so, ladies and gentlemen, I’d like to conclude by saying that we are open to partnerships. It’s how we like to do business.



The McGuinty government has made great progress. We’ve built a strong foundation for this province. We have a pragmatic and balanced approach to the province’s finances. By investing in health care and education, we ensure that the most important government services are strong. Our skills and postsecondary investments will ensure we have the work force to succeed. Our investment in infrastructure will help keep Ontario business moving. Our innovation initiatives ensure that Ontario will be at the cutting edge of new technology. Our investments in reducing the cost of doing business will help make it easier to grow and innovate in this province. And finally, our investment in the Centre of Excellence for Education in Financial Services will underline our advantage as a financial hub. The resilience of Ontario’s economy will continue into the future because of the ingenuity, perseverance and compassion of people like you.

Thank you.



The appreciation of the meeting was expressed by Catherine S. Swift, President and CEO, Canadian Federation of Independent Business and President, The Empire Club of Canada.