The Ontario 2017-2018 budget highlights economic challenges including a declining automotive sector, rising housing costs, and a burdened healthcare system due to increasing hydro rates. Competitiveness has worsened since 2003, with businesses considering relocation due to high hydro rates and carbon taxes, while essential services like hospitals face funding freezes amid soaring electricity costs. Additionally, the budget saw cuts to northern development and forestry budgets, raising concerns about economic prospects and resource management in the region.

1. ONTARIO 2017-2018
BUDGET – SMOKE AND
MIRROR GAME
BY: PAUL YOUNG CPA, CGA
APRIL 28, 2017

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. SUMMARY
• Source – BMO Economics

4. RISKS / GDP
• Automotive Production is forecasted to fall in 2017 and into 2018. Automotive appears to have hit its
peak cycle in 2016
• Housing Market is over heated including price. Wages and Inflation are not keeping pace with the
cost of accommodation
• Labor market in Ontario is creating jobs, but many jobs are part-time and/or job churning
• Small to medium size manufacturing are looking at expanding to other jurisdiction due to high hydro
cost
• Commodity prices continue to struggle (mining sector)
• Softwood lumber duties will impact the forestry sector
• FDI is driven by clean technology. Clean Technology companies are struggling to make a profit
• The budget axed $70M from Northern Development budget
GDP will be challenge to achieve 2% growth.
Economic Fundamentals

5. ONTARIO COMPETITIVENESS
• Source – Stats Canada

6. HYDRO RATES
http://www.torontosun.com/2017/03/21/liberal-plan-to-cut-hydro-rates-leaves-hospitals-hung-out-to-dry-ndp or
The Liberal government’s plan to slash hydro rates will offer no relief for Ontario hospitals, some of
which have seen their bills go up by as much as 105%, says the NDP.
Andrea Horwath says documents released to the New Democrats through a Freedom of Information
request show that many hospitals in the province have seen double-digit electricity cost increases over
the last six years. That’s valuable money being pulled from patient care and a new government plan to
slash rates by 25% offers no reduction for hospitals, she said
Toronto Sun – March 21, 2017 – Healthcare Sector
Financial Post – March 16, 2017 – Industrial Sector

7. CAP AND TRADE
• http://www.torontosun.com/2017/04/11/wynnes-cap-and-trade-lacks-transparency
First, cap and trade doesn’t just impact the cost of home heating fuel and gasoline, but almost all
consumer products. Food, for example, is grown and transported to market using fossil fuel energy, so
when the price of gas goes up due to cap and trade, so does the price of food. So does the price of
fertilizer.
The second problem is that Wynne’s government was 34% low in predicting monthly natural gas bills for
average homeowners would rise by $5.
The average price increase since Jan. 1 has been $6.70 per month, according to natural gas suppliers,
while many homeowners report their bills are rising faster than that, as the actual increase depends on
the amount of natural gas a household consumes.
Meanwhile, the Wynne government refuses to break out the new cost of cap and trade on home heating
bills, although it tells hydro ratepayers in every bill, down to the penny, how much its 8% rebate on the
provincial portion of the HST is saving them.
Toronto Sun – Lorrie Goldstein – April 11, 2017

8. SUMMARY
• Ontario is less competitive in 2017 than it was when Liberals took power in 2003
• Ontario has some highest hydro rates in North America
• Carbon taxation does not reduce emissions, but does increase overall costs to consumers
• Ontario continues to drag its feet when it comes to developing natural resources, like Chromite or
Lithium or other areas
• Ontario productivity has worsen due to fact many companies are starting to make investment in other
jurisdiction
• Ontario debt is highest of any sovereign place in the world
• Systemic issues with real estate have not been addressed all parties in Ontario

9. TAXATION / ONTARIO

10. TAXATION RISK
• Carbon Tax will not bring in the windfall
• Ontario equalization payment will be gone ($1.4B). Ontario has higher GDP
growth than other provinces
• Business investment will go elsewhere due to carbon tax and hydro policies
• New protectionism from Trump could impact GDP
• Revenue numbers include one-time sales like OPG sell off

11. ONTARIO / SPENDING
• Harris spent close to 40% on healthcare as compare to
McGuinty and Wynne that spent approximately 38% on
healthcare
• LHINs and CCAC were created but have done little in terms
of improving wait times and/or controlling of costs
• Education received more money, but we have more grads
having hard time finding jobs. Meanwhile. Ontario has
significant skills gas that could influence FDI
• Wynne pledge to bring the debt down to 26% of GDP. If
Wynne were to bring the debt down then should need to
reduced the debt by $10B per year.
• Drummond report was virtually ignored and it was succinct
in terms of Ontario has spending problem. Ontario is
spending from 18.5 to 17.5% of GDP of government and
only taking in 16.8% in revenue. More taxation is not the
answer

12. HOSPITAL / HYDRO RATES
• An increase of more than $800,000 in Sault Area Hospital’s electricity bill at
the same time the province has frozen hospital funding is putting patient care
in jeopardy, says NDP leader Andrea Horwath.
• Documents obtained by the NDP through the Freedom of Information Act
show SAH’s electricity consumption has remained the same between 2011
and 2015, while the cost of that electricity has gone up 45 per cent — from
$1.8 million annually to almost $2.7 million.
• Horwath is in the Sault today to address SAH cuts as part of a campaign stop
with Joe Krmpotich, NDP candidate in the yet-to-be-called by-election for the
Sault Ste. Marie riding.
Soo Today – March 13, 2017

13. NATURAL RESOURCES / RING OF FIRE
• https://www.tbnewswatch.com/local-news/budget-missing-ring-of-fire-cash-says-conservative-critic-
600167
The Conservative’s finance critic has slammed the Ontario budget, saying it
proves the governing Liberals have given up on Northern Ontario.
Vic Fedeli said the budget, released on Thursday, includes a $70-million cut to
Northern Development and Mines and the $1 billion promised for Ring of Fire
infrastructure has mysteriously disappeared.
“The Ministry helps to establish mining operations all over Northern Ontario,
creating good well-paying jobs that help to grow our Northern economy —
obviously not a concern of this government,” Fedeli said.
“It came as a serious shock to see that this year’s budget removed all mention of
the Ring of Fire. After three years of promises the Wynne government has
completely abandoned this critical mining project,” Fedeli said.

14. FORESTRY MANAGEMENT
• Ontario slashed the forest fire budget to $69M for 2017-2018
• Risk of forest fires maybe higher this summer due to dry
conditions

15. SPENDING ISSUES
• Unions will be looking for wage increases
• Ontario government has frozen spending which then forces cuts
• Ontario has spending problem and not revenue problem