Ontario unveils measures to boost stagnating economy
Canwest News Service
Published: Tuesday, March 25, 2008
TORONTO — Ontario will invest $1.5-billion in skills and job training, Minister of Finance Dwight Duncan said Tuesday as he unveiled the centerpiece of the Liberal government’s first budget since re-election in October.
The province said it would spend $355-million over three years for long-term retraining for 20,000 unemployed workers as well as $75-million to expand apprenticeship spaces — measures designed to help Ontario’s battered manufacturing sector.
The Skills to Jobs Action plan also includes money for post secondary student aid and programs that include a new textbook and technology grant of up to $150 for full-time college and university students this year.
Despite demands by Federal Finance Minister Jim Flaherty to lower Ontario business taxes or risk becoming a “have not” province, Duncan made no cuts to the corporate tax rate. Instead, the budget proposes $750-million in business tax relief over four years.
Flaherty has repeatedly warned high business taxes leave the province the â€˜last place” business want to invest. But Duncan said the government’s “prudent’ and â€˜balanced” approach will give the province the flexibility to weather any economic challenges.
“Competitiveness is defined by a broad range of factors including education, health care, and yes, taxes,” Duncan said. “This plan strikes the right balance.”
Duncan said the government would eliminate the Capital Tax retroactive to January 1, 2007 for businesses in the manufacturing sector. The move will provide businesses in the sector, which have hemorrhaged more than 200,000 jobs in the past four years, $190-million in rebates.
The province will also accelerate business education tax rate cuts for northern businesses resulting in savings of $70-million over three years, Duncan said.
A 10-year Ontario income tax holiday for new corporations that commercialize intellectual property developed by Canadian universities is also being proposed.
The weakened U.S. economy, high Canadian dollar and soaring energy prices forced the province to slash expectations for growth in 2008 to 1.1% — down from 1.8% in the Fall Economic Statement.
Duncan said the province is forecasting growth of 2.1% in 2009 and 2.7% growth in 2010.
Despite the slower growth in 2008, the province is on track to post a $600-million surplus this year with break even budgets predicted in the next three years.
The province has already pledged to introduce legislation to direct a portion of provincial surpluses over $800-million to municipal infrastructure projects after paying $600-million towards a $162-billion debt.
Duncan said though the surplus is only $600-million at the moment, there is a “good likelihood” there will be enough money to trigger the additional infrastructure funding for municipalities after public accounts are finalized later this summer.
In total, the government took in roughly $5-billion more than expected in 2007-08 and spent $4.8-billion more than expected.
Last week, the province announced $1-billion in infrastructure pending for municipalities and on Tuesday Duncan said Toronto’s share will be $393-million — $300-million for Metrolinx projects and $93-million for Toronto Transit Commission subway cars.
The province is giving seniors who makes less than $35,000 year property tax grants in 2009. Under the plan, the government said more than 550,000 seniors would be eligible for a grant of up to $250 next year and up to $500 in 2010.
Duncan said the province will spend $40-billion this year on health-care and will hire 2,000 more nurses for long-term care homes.
The government will also spend $107-million to hire 2,500 more personal support workers for nursing homes over the next three years — a fraction of what advocates were demanding.
The newly created ministry of Aboriginal Affairs will have a $55-million budget while the province said an additional $600-million is spent annually on training, social services, education and policing initiatives for First Nations.
Education spending will also increase to $18-billion this year, and will include $16-million to expand the Pathways to Education program to increase the number of at-risk you finishing high school.
Conservative Leader John Tory called the budget a “missed opportunity” and slammed the province for being “addicted to spending.”
“There is nothing in this budget that will get the economy going again and save jobs that are disappearing at an alarming rate,” Tory said. “When you spend like there is no tomorrow, whether you are a family or a business or a government of Ontario, there is always a day of reckoning and we are there.”
NDPLeader Howard Hampton said the “half-baked” budget failed to deliver on promises to improve care for seniors in long-term facilities, and “falls short” on providing support for the manufacturing sector.
“Training for 20,000 when over 200,000 have lost their job is pretty thin gruel,” Hampton said. “What happens to the other 180,000?”