Ontario Provincial Election 2018: Impacts on Business and Funding

ByJeff Reading Time: 4 minutes
Ontario Provincial Election 2018 Impacts on Ontario Government Funding for Business

On June 7, Ontario voters ushered in a new Conservative majority government to be led by Doug Ford. The incoming Premier won 40% of the popular vote and 76 seats overall, signaling a big change in provincial government. Having already appointed a Chief of Staff and assembled a transition team, it’s expected Ford’s cabinet will be selected and sworn-in by the end of June.

Much of Ford’s success can be attributed to his economy-based platform that’s underscored by reducing the cost to work and live in Ontario. This includes measures such as ending the carbon emissions Cap and Trade program, reducing energy costs, lowering the corporate taxation rate, and relaxing business regulations.

However, platform positions such as eliminating funding programs can weaken the growth rate of strategic, forward-thinking businesses who often use grants and loans.

The Ontario PC Party’s platform makes direct mention of the Jobs and Prosperity Fund (JPF), vowing to cancel the program and other grants that it deems corrupt. This excludes regional economic development funds, such as those tailored to expand businesses operating in northern Ontario.

Ontario Provincial Election 2018: Impacts on Business Competitiveness

The Progressive Conservative Party’s pro-business platform was a deciding factor in winning a majority government. There are many issues where the newly-elected government will either reverse or restructure programs brought in while the Liberals held power for the last 15 years. Some of these include:

Cap and Trade

Doug Ford has vowed to cancel the Cap and Trade program that requires large industrial businesses including manufacturers to pay for emissions generated over the year. This will directly lower the cost of doing business for these companies, who presumably can re-invest those funds back into their business and adopt more clean technologies to improve efficiency.

Energy Costs

Businesses will gain two ways of saving on energy costs under the new Conservative government. For one, Premier-Designate Doug Ford has vowed to reduce the cost of hydro rates through measures such as firing the CEO of Hydro One, retiring the Green Energy Act, and reducing hidden costs in hydro bills. Secondly, gas and diesel costs could be cut by up to 10 cents per litre, which is beneficial for companies and their employees alike.

Taxes

There are three expected beneficiaries of lower tax rates. These include:

  • Corporations: Business taxes and the Manufacturing and Processing Rate will be reduced from 11.5% to 10.5%.
  • Small Businesses: The Small Business Tax Rate will be reduced by 8.7%.
  • Minimum Earners: Those earning minimum wage will receive a tax credit to offset taxes owed, effectively eliminating provincial income taxes for those workers. This could potentially replace increases to the minimum wage imposed by the Liberals and help companies who were negatively impacted by minimum wage hikes.

Reducing Regulations

The incoming Conservative Party has vowed to reduce red tape in government, but has not yet announced any concrete plans for how they plan to do so. Expect a task force to be set up within the first year of this government’s mandate that looks into improving the ease of doing business in Ontario.

Access to Apprenticeships

Likewise, Ontario’s PCs have committed to improving access to apprenticeships, however, it’s presently unclear how they might improve financial support or enact other administrative changes to make the system more effective.

Provincial Election 2018’s Impacts on Ontario Government Funding Programs

Ontario government funding programs were somewhat vilified during the provincial election. Doug Ford repeatedly called out the Liberal government for its creation and administration of the Jobs and Prosperity Fund (JPF). While this program is likely to be dissolved, it’s still unclear what approach the new government may take to business incentives such as government grants and loans.

Jobs and Prosperity Fund (JPF)

The Jobs and Prosperity Fund is an Ontario business funding program that supports large private-sector businesses investing in Ontario-based operations. Launched in 2013, the fund has supported over 35 projects with approximately $830 million worth of grants and repayable contributions. As result, more than $10.9 billion worth of investment has been brought into Ontario, a ratio of $9 in corporate investment per $1 of government support.

Some of the program’s success stories include:

The program was subject to some scrutiny during the election, as transparency into the process by which companies are selected for funding was called into question. Until a full audit has been done of the previous government, and the contributions it awarded, it is unlikely that similar government incentives will be announced.

Regional Development Funds

Under less stringent review are regional development funds such as the Southwestern Ontario Development Fund (SWODF), Eastern Ontario Development Fund (EODF), and Rural Economic Development (RED) program. These types of region-based programs are viewed by the incoming government as necessary to support local business issues and ensure that investment continues flowing to activities that influence economic prosperity.

Stay Informed About Ontario Government Funding Updates

Ontario’s new provincial government will undoubtedly move to strengthen the business environment and make companies more competitive. There are many ways to achieve this, and Ontario businesses will now wait patiently to see what changes happen, and when.

For updates on business incentives, including Ontario government grants and loans, please subscribe to Mentor Works’ weekly Government Funding Snapshot™ newsletter.

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Posted: June 18, 2018 by Jeff Shepherd. Updated: June 18, 2018 by Jeff Shepherd.

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