THE CANADIAN PRESS/Chris Young
THE CANADIAN PRESS/Chris Young
Last week the Ontario government released its 2023 Fall Economic Statement (FES) titled Building a Strong Ontario Together, and one major highlight stuck out like a sore thumb—the introduction of a provincial infrastructure bank.
Ontario Infrastructure Bank
Premier Ford is proposing an initial investment of $3 billion towards standing up the Ontario Infrastructure Bank. This provincial agency will aim to allow public-sector pension plans and other trusted institutional investors to participate in large-scale infrastructure projects across the province. The immediate focus of the Ontario Infrastructure Bank will be long-term care homes, affordable housing and infrastructure in the municipal, community, energy, and transportation sectors.
As is custom for the FES, the Ford government also reiterated its previously announced commitments, including a staggering $185 billion over ten years towards infrastructure development which will see $20.7 billion spent during 2023-2024. This upcoming capital spend will go towards building critical infrastructure such as highways, hospitals, schools, and transit.
Other key highlights
- The Building Faster Fund to help municipalities hit their housing supply targets through $400 million for municipalities that meet their targets by 2031.
- The Streamline Development Approval Fund to increase efficiency in approving housing developments.
- Ontario Made Manufacturing Investment Tax Credit to help lower Ontario’s manufacturers’ costs through an estimated $780 million in income tax support over three years.
- $200 million spread over three years in a fresh Housing-Enabling Water Systems Fund.
- $12 million per year towards a tax credit support program for the mining industry to strengthen critical mineral exploration.
- Removal of the eight per cent provincial portion of HST on qualifying purpose-built homes and an increase to the Non-resident Speculation Tax to deter foreign speculation on Ontario homes.
- Six-month extension of the reduced Gasoline Tax by 5.7 cents per litre and Fuel Tax by 5.3 cents.
Infrastructure was again a major focus in the 2023 FES as it has been in the last few budget cycles from the Ford Government. The establishment of the Ontario Infrastructure Bank in parallel with the billions already committed towards building highways, hospitals, schools, and more.
Housing was unsurprisingly another key feature with a focus on affordability and supply. With growing concerns province-wide about tackling this issue, the government has made significant investments in developing a plan to ensure municipalities are on track to meet their housing targets while introducing several new red-tape reduction and tax-related measures.
Transit was priority highlighted throughout the FES, with seven GO transit extensions, expansions or station creations on the way, and four subway extensions or additions currently in the works. With many transit expansions on the way, the province is also in the process of eliminating most double fares when transferring to other forms of public transit to help cut costs to Ontarians.
The budget also heavily discussed the province’s current economic and geopolitical uncertainties, and the impact of high interest rate increases. Finance Minister Peter Bethlenfalvy reported that Ontario is expecting lower than predicted revenues this year and is projecting deficits of $5.6 billion in 2023-24. The spring budget projected a $1.3 billion deficit and then balancing in 2024-25. Given the expected deficit has since quadrupled, the province is projected to balance a year later than originally expected, in 2025-26.
The road ahead for Ontario
According to the budget, Ontario has faced stronger spending pressures against an unfavourable backdrop of a slowing global economy and high-interest rates. Ontario has a long way to go to reach fiscal balance considering the budget deficits projected over the next few years.
Job creation could see an upward trend by the end of 2023 but a downward trend shortly thereafter in 2024 is likely to follow to account for stagnant growth.
The provincial government also set a target for 1.5 million new homes to be built by 2031, requiring roughly 150,000 housing starts per year. However, projections show that they will be hitting under 100,000 starts per year until 2026.
It is likely that there will be high external pressure on the government to ramp up housing development starts and support municipalities in meeting their individual targets through more government initiatives.
Does your organization have a role to play in assisting the Ontario government with advancing its priorities? Contact NATIONAL’s Public Affairs team to learn more about the 2023 FES.