Wednesday
Aug262015

Provincial business priorities and the federal election

Copyright Library of ParliamentThe 2015 federal election is now into its fourth week with seven left before the polls open on October 19th.  Already we’ve seen the leaders and the parties tackle many of the issues we would expect to see at a federal level, from the economy to taxes and tax cuts to the environment to child care.  But within those issues that have nationwide impact are the issues that affect each of the provinces.  The relationship Ontario has with the federal government is different from the needs of the western and eastern provinces.  

“The federal election comes at a critical time for Ontario businesses,” said Allan O’Dette, President & CEO of the Ontario Chamber of Commerce (OCC). “It is essential that all parties commit to policies that will improve the business climate and spur economic growth in Ontario. By publicly evaluating the commitment of each federal party to this end, we are putting pressure on our federal politicians to demonstrate leadership and help our business community succeed.”

The OCC, Ontario’s most prominent and diverse business network, is calling on all federal political parties to make bold commitments that will improve Ontario’s business climate and drive economic growth. To that end, the OCC has released an Ontario business agenda for the federal election.  

“The central guiding principle of the report is that all intergovernmental relations, cooperation and policy harmonization should be paramount,” says O’Dette.

The report, “In Focus: Federal Priorities for the Ontario Economy”,  makes nine recommendations under four other principles:

Guiding principle: Federal policy should aim to fix the fiscal framework to enable greater reinvestment of the wealth generated in Ontario into its workforce and productivity capacity  

Ontario businesses and residents are poorly served by the federal government’s unprincipled allocation formulae in areas of major federal spending.  As a result of systemic inequities, Ontarians contribute between $9.1 and $12.5 billion more into the federation than what we get back in terms of services (Granofsky and Zon, 2014). 

Fiscal federalism has failed to keep pace with the 21st century macroeconomic realities of the country (Ibid). The federal spend to promote economic growth and development across the country should be allocated on a principled basis (OCC, 2015). 

  • Reform Canada’s broken EI system
  • Distribute economic development funds on a principled basis

Guiding principle: In all intergovernmental relations, cooperation and policy harmonization should be paramount

As Canadian provinces increasingly step into areas of traditional federal responsibility (retirement savings and environmental regulation, for example), the country’s regulatory landscape becomes more fragmented. Intergovernmental squabbling has at times exacerbated this fragmentation, to the detriment of Canada’s investment climate.  

The federal government – through its actions and its approach to intergovernmental relations – should promote policy harmonization across the country (OCC, 2015). 

  • Avoid further regulatory fragmentation by demonstrating leadership on key regulatory files
  • Provide businesses with accurate labour market data

Guiding principle: Federal policy should seek to make Canada and Ontario a global destination of choice for foreign investment

Ontario suffers from a $60 billion infrastructure gap, its share of economic immigrants to Canada has declined steeply over the past decade, and its productivity gap vis-à-vis the United States is widening (Association of Municipalities of Ontario, 2012; Ministry of Finance, 2014).  All these factors combine to weaken the business climate.  

Given the contribution Ontario’s economy makes to the broader Canadian economy, the federal government has a vested interest in the province’s economic fortunes and should act correspondingly (OCC, 2015)

  • Allocate infrastructure funds on a per capita basis
  • Ensure that the immigration system does not unduly limit employers’ access to the international talent they need

Guiding principle: Federal policy should champion Ontario’s competitive advantages

Ontario maintains a competitive advantage over our international competitors in several key sectors.  The province is rich in natural resources, our financial services sector is among the largest in North America, and our agri-food sector is primed for explosive growth as global food demand is set to double over the next 30 years. Meanwhile, the manufacturing industry has the potential to rebound – provided that Ontario can remain competitive globally.

The federal government should align resources behind -and build on- Ontario’s competitive advantages (OCC, 2015).

  • Improve the manufacturing sector’s connections to Canada and the world
  • Show a commitment to Ontario’s north

Guiding principle: The government should act in a fiscally responsible manner

While Ontarians are acutely aware of the fiscal challenges facing their provincial government, fewer understand the deteriorating fiscal capacity of the Canadian government.  The federal government spends nearly $30 billion a year on debt servicing costs. Meanwhile, the federal debt-to-GDP ratio has risen by 4 percentage points since 2007, and now stands at 33.1 percent.  While Canada is still in a relatively strong fiscal position, any deterioration in the federal government’s finances could drag on investor confidence.  

The federal government should – at a minimum – maintain Canada’s fiscal position (OCC, 2015).

  • Begin to pay down the federal debt

In the end all this to say that Ontario needs its federal government to be involved and committed to seeing the province prosper.  “A healthy Ontario economy is good for Canada,” said O’Dette. “All parties must be prepared to take the bold actions necessary to solidify a bright future for Ontario and further the economic success of our great country.”

The Peterborough Chamber of Commerce has sent questions on business-related issues to the candidates. The responses will be posted to the Chamber website.  The Chamber is also holding an all candidates debate on business issues Tuesday, October 6 from 4-6pm. 

Comment through the "Peterborough Chamber" group of LinkedIn. 

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