Earlier this afternoon, Ontario’s Minister of Finance, Vic Fedeli, rose in the Legislature to present the province’s 2018 Fall Economic Statement and Fiscal Review.
The fall economic statement is traditionally delivered at roughly the halfway point in the province’s fiscal year. At a minimum, fall economic statements update the budget forecast of major revenues and expenses for the year and provide an update on key economic variables. These updates kick off the pre-budget season, providing industry and stakeholder groups with a comprehensive foundation for providing input to the forthcoming budget process, which will begin this winter.
By undertaking some measures now, the government effectively clears the decks to allow the 2019 budget to be a document that focuses on the Ford government’s plan for the next three years.
Fiscal Situation:
- Ontario has a $14.5 billion deficit and continues to have the highest subnational debt of any jurisdiction in the world, with a net debt of $347 billion.
- The government is forecasting $12.5 billion in interest payments to service that debt in 2018-2019.
- The government is committed to returning the province to balanced budgets on “a modest, reasonable and pragmatic timetable,” but does not provide that timeline.
- Economic growth, including GDP and employment, is projected to slow.
Citing a “new direction,” the Ontario government will pursue a fiscal blueprint that “puts the taxpayer at the centre of government decision-making.” They highlight three important objectives: restore fiscal balance, reduce the debt burden, and strengthen accountability and transparency. To that end, the Ontario government commits not to raise taxes, but to pursue efficiencies and prioritize funding for front-line services. It also commits to “reinvent the way government operates and delivers services” and to review and cancel any initiatives promised by the previous government that are found to deliver “no value for money.”
Tax Changes
- Low-income and minimum wage earners (those earning less than $38,500 adjusted individual net income) will be exempt from provincial income tax by way of a credit effective January 1, 2019.
- Reverses the previous government’s proposal to parallel Federal tax measures on small businesses.
Reviews, Task Forces and Plans being launched:
- An agricultural task force to discuss issues affecting the industry, and provide input on crucial future decisions such as changes to the Ontario Food Terminal network.
- A review of the workers compensation system to ensure it remains sustainable in the future, which will consider the role of WSIB and whether it is operating efficiently and effectively.
- A review of the Far North Act, 2010 and will establish a special mining working group.
- A Housing Supply Action Plan in spring 2019 aimed at increasing housing supply and eliminating barriers that inhibit the development of ownership and rental housing.
- 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.
- Electricity pricing review for industrial users.
- Ontario will also be reviewing provincial agencies to find efficiencies.
Legislative and regulatory changes to be introduced:
- Reducing the allowances to registered political parties and constituency associations in 2021 and eliminate allowances in 2022, including per vote subsidies. This legislation will more closely align Ontario with federal rules on contribution limits and fundraising events. This would increase donation limits to $1600 by 2020 and allow MPPs, ministers, candidates and staff to once again attend fundraiser events.
- Exempting Crown employees from hours of work rules to better manage delivery, cost and compliance issues for critical public services.
- Streamlining accountability and governance for the redevelopment of “a bold new Ontario Place.”
- Amalgamating the Deposit Insurance Corporation of Ontario, including the Deposit Insurance Reserve Fund, with the Financial Services Regulatory Authority (FSRA).
- Transferring administrative responsibility for the Motor Vehicle Accident Claims Fund to the Ministry of Government and Consumer Services.
- Modernizing the Metrolinx Act, 2006, to enhance the agency’s focus on regional transit delivery and service excellence.
- Amending Ontario capital markets legislation to regulate critical financial benchmarks in Canada, including the Canadian Dollar Offered Rate (CDOR) and the Canadian Overnight Repo Rate Average (CORRA).
- Facilitating the implementation of variable benefit accounts, allowing retired members of defined contribution plans to receive income directly from their plans.
- Reducing the number of Legislative officers from nine to six no later than May 1, 2019, which will: eliminate the Offices of the Environmental Commissioner, the Child Welfare Commissioner, and the French Language Commissioner.
- The environmental oversight responsibility will now fall to the Auditor General, and child welfare and French language issues will be covered by the Ombudsman.
Other commitments:
- Expanding natural gas connectivity.
- Cancels the Development Charges Rebate Program and effective today, reintroduces the rent control exemption for new rental units.
- Commits to begin drafting a Ministry of Education Parents’ Bill of Rights.
- Commits to reforming social assistance.
- Requires that by January 1, 2019, colleges and universities develop, implement and comply with a free speech policy that will be monitored by the Higher Education Quality Council of Ontario starting in September 2019.
What’s next? Look for the Federal government’s Fall Economic Statement next week on November 21st. McMillan Vantage will have an analysis for you then as well.
