On behalf of Canada’s business leaders, I want to offer congratulations to you and the Progressive Conservative Party of Ontario on your victory in last week’s provincial general election. After 15 years of Liberal governments, the people of Ontario voted decisively for change and now look to you and your team for fresh ideas and responsible, accountable leadership.
On election night, you said the results send a clear message that Ontario is open for business. As an association of business leaders from every major sector – fully half of whom represent Ontario-headquartered companies, employing more than a million Canadians – we share your belief that private initiative and investment, not increased public spending and deficits, are the source of long-term growth and prosperity.
As employers, community leaders and citizens, the members of the Business Council of Canada are convinced that Ontario’s best days lie ahead. But for the province to achieve its potential, governments must pay close attention to the significant challenges that now face the Ontario economy.
Like many other jurisdictions, Ontario is being transformed by structural forces such as globalization, technological change and an aging population. At the same time, escalating trade tensions and uncertainty over the future of NAFTA pose a threat to the province’s manufacturing base. Meanwhile, U.S. tax and regulatory reform are exacerbating longstanding competitiveness problems, reducing the province’s attractiveness as a destination for new business investment.
Ontario’s biggest immediate challenge, however, is the heavy burden of public debt, which has doubled in the past 10 years and now stands at $350 billion. This year alone, it will cost taxpayers $12.5 billion to service the debt – more than the province spends on all post-secondary education and training programs combined. Recently, both Moody’s Investor Service and DBRS issued warnings about the fragile state of the province’s creditworthiness. With interest rates set to rise and economic growth expected to moderate over the next few years, the fiscal picture could soon become unsustainable.
To overcome these challenges and deliver on your vision of a better Ontario, we recommend a two-pronged strategy. First, you and your officials must adopt a credible plan to clean up Ontario’s fiscal mess, constrain public spending and reduce the province’s debt-to-GDP ratio from 37 per cent today to below the pre-recession level of 27 per cent. Doing so would greatly reduce the risk that Ontario will be forced to slash spending on vital programs or raise tax rates to keep pace with rising interest rates. It would also help to ensure that Ontario is prepared to weather the next economic downtown.
Second, Ontario needs a strategy for growth. The province must not only be open for business – it must do everything in its power to attract new investment and ensure that existing Ontario-based companies stay and grow in the province rather than moving to jurisdictions where the cost of doing business is lower. Employers need relief from Ontario’s high regulatory burden, as well as assurances that the province is committed to shaping a more competitive tax environment as fiscal circumstances permit. Your commitment to these principles would bolster business confidence, foster job creation and ensure a higher standard of living for all Ontarians.
In closing, I can assure you that the province’s business leaders stand ready to work with Ontario’s new Progressive Conservative government to deliver on your vision of growth, prosperity and a brighter future for our children. My colleagues and I would welcome an opportunity to discuss these ideas with you at your earliest opportunity.