This presentation will discuss Ontario's economy including areas like FDI, Hydro Rates, Capital Investment, Taxation and Carbon Taxation. The presentation will look at economic data related to housing starts, retail sales, exports and manufacturing. The presentation will also highlight government policies in areas like hydro rates, innovation, carbon taxation and debt/deficit.

1. Ontario Economy –
October 2016
By: PaulYoung, CPA, CGA
Date: October 29, 2016

2. PaulYoung,
CPA,CGA
 Bio
 26+ years of business experience
 8+ years in academia
 20+ years as CPA/CGA
 11+ years in analyzing government policies
 11+ years working on financial solutions
 15+ years in corporate reporting and analysis, taxation, business
process change, risk management, budgeting and costing
 Contact: Paul_Young_CGA@Hotmail.com

3. Agenda
 OntarioGDP
 GDP Growth numbers
 Ontario Manufacturing
 Competitiveness
 Housing Starts
 Retail Sales / August 2016
 Household Spending / 2014
 Employment
 Ontario Deficit
 Statement of Financial Position

4. OntarioGDP
Facts – Ontario
• Largest GDP in Canada or about 36.6% of total GDP in Canada
• Key Sectors
• Automotive
• Steel Production
• Metal Fabrication
• Food Processing
• Forestry
• Mining
• Pharmaceutical
Source – Stats Canada

5. GDPGrowth
Projections
Source: http://www.rbc.com/economics/economic-reports/pdf/provincial-
forecasts/ont.pdf

6. Ontario
Manufacturing • In Ontario, total manufacturing sales rose 1.8% to $289.7 billion in 2015—the
highest level since 2006.Transportation equipment contributed to the higher
sales in the province, despite retooling at motor vehicle assembly plants early in
the year that reduced sales and production at some plants. However, this
retooling work allowed some assembly plants to produce higher-end and/or
redesigned models later in the year, leading to higher sales toward the end
of 2015. Petroleum and coal product sales were down 28.3% on lower prices, and
primary metal sales dropped 10.5%, partially offsetting the overall provincial
growth
Source – Stats Canada

7. Ontario FDI
Source: http://forms.fdiintelligence.com/report2016/files/The_fDi_Report_2016.pdf
Facts:
• Texas has low tax and no state
income tax
(http://www.bankrate.com/fin
ance/taxes/state-with-no-
income-tax-better-or-worse-
1.aspx)
• NewYork has made changes
to corporate tax. NewYork has
received power from Ontario
(http://www.torontosun.com/
2015/08/12/ontario-taxpayers-
spend-200-million-on-
exported-electricity-in-june
• California investment is
related to clean energy
project.

8. Key comments
Ontario
Economy
 Ring of fire - http://www.cbc.ca/news/canada/thunder-
bay/thunder-bay-ring-of-fire-1.3806947 (issues with
transportation)
 Automotive / Chrysler - http://www.theglobeandmail.com/report-
on-business/ontario-policies-could-put-auto-making-at-risk-fiat-
chrysler-ceo-warns/article25418311/ (hydro rates)
 Forestry Sector - http://www.cbc.ca/news/canada/thunder-
bay/hornepayne-lumber-mill-shutdown-1.3357255 (Heading into
the holiday season, nearly half of the workforce in Hornepayne,
Ont., is without a job because of layoffs at the mill, which were
announced two weeks ago and could become permanent.The co-
generation plant at the Olav HaavaldsrudTimber Company needs
to sell more power to the provincial grid, in order to turn a profit.
But so far, the Ontario government is saying no.And that means
no work, and no jobs.

9. Ontario
competitivene
ss – Hydro
Rates
 Hydro Rates -
http://www.forbes.com/sites/judeclemente/2016/03/30/ontarios-
high-electricity-prices-crush-business/#3fae312f2fa8 key Quotes
“High cost electricity is “unavoidably harmful” because electricity
is indispensable: “electricity cannot not be used.”Today,
Ontario has had “the highest industrial rates in North
America,” far higher than neighbors using low cost natural gas.
With prices increased again in November, ratepayers are “angry,
confused.” “How Ontario lost 300,000 manufacturing jobs (and
why most aren’t coming back).” “Ontario drives manufacturers
away with overpriced electricity.” These industry losses
are particularly harmful: manufacturing supports high-paying jobs
and has extensive “multiplier effects,” that ripple benefits across
the entire economy. Devastating the auto sector in
particular, “the main reason for soaring costs — and
plummeting employment — is the high cost of electricity as a
result of the Green Energy Act.”

10. Ontario
competitiveness
– RedTape
Source - =CFIB

11. Ontario
Competitivene
ss

12. Ontario
Competitivene
ss -
Recommendat
ions
 Source - https://www.utoronto.ca/news/ontario%E2%80%99s-
thriving-%E2%80%9Ccluster%E2%80%9D-regions-can-grow-our-
economy-institute-competitiveness-and

13. HousingStarts
Source: http://www.rbc.com/economics/economic-reports/pdf/provincial-
forecasts/ont.pdf

14. RetailSales
Source – Stats Canada
Sales at motor vehicle and parts dealers were down 0.5% in August, in
large part because of weaker sales at new car dealers (-1.1%) and, to a
much lesser extent, used car dealers (-0.6%). Following declines in
July, sales rose at other motor vehicle dealers (+5.4%) and automotive
parts, accessories and tire stores (+1.1%).The gains at automotive
parts, accessories and tire stores were concentrated in Ontario and
Quebec.

15. Household
Spending Facts:
• Food costs are the lowest in Ontario
• Carbon taxation/Price of Carbon will increase food costs by 6-8% -
http://www.slideshare.net/paulyoungcga/carbon-tax-or-carbon-pricing-
impact-on-consumer-good-prices-for-canada
• Households in Ontario spend on average 31.5% on shelter.
• Ontario has some highest hydro rates in Ontario. It is not on unheard to
have $400-500 monthly bills - http://www.torontosun.com/2016/10/28/5-
ontario-hydro-bills-compared-rural-bills-in-the-hundreds-while-toronto-
brothers-pay-100 or
http://www.owensoundsuntimes.com/2016/10/24/even-greenest-of-
grocers-burned-by-hydro-costs

16. Employment
Employment in Ontario was little changed in September, and the
unemployment rate was 6.6%. However, on a year-over-year basis,
employment in the province increased by 82,000 (+1.2%) and the
unemployment rate declined 0.3 percentage points.
Source: Stats Canada

17. Where are the
jobs
Source: http://careers.workopolis.com/advice/canadas-hiring-
outlook-for-2016-where-the-jobs-will-and-wont-be-created/

18. Government
Deficit
Source – Government of Ontario

19. Statement of
Finance
Position
Source – Government of Ontario

20. Ontario Debt
Comments  Ontario debt - http://www.ofina.on.ca/borrowing_debt/debt.htm
 In a 600-page report released in late 2014, provincial auditor general Bonnie Lysyk
was already warning about the growing debt, pointing out that the government
was, at that point, spending more on debt interest payments than on post-
secondary education. A large debt-load can have several negative effects, Lysyk
noted, not the least of which is that the government needs to divert money away
from other programs in order to cover the interest payments and pay down what it
owes. Source - http://globalnews.ca/news/2845864/reality-check-is-ontarios-debt-
really-that-bad/
 Today’s debt is tomorrow’s spending cuts and/or taxation increases -
https://www.youtube.com/watch?v=PAGqKhSw5Lg (MargaretThatcher on government
spending)

21. What’s next
 Ontario – area of focus
 Low dollar has insulated Ontario from global pressures
 High hydro rates are impacting business investment -
http://www.occ.ca/portfolio/empowering-ontario/
 RedTape is delay projects (http://business.financialpost.com/news/mining/what-
ontario-needs-to-unlock-ring-of-fires-mineral-wealth-is-a-marshall-plan
 Broken arbitration system (http://www.cfib-fcei.ca/english/article/6069-government-
wages.html
 Carbon taxation (https://www.thestar.com/business/2016/10/04/how-trudeaus-
carbon-price-plan-will-affect-five-canadian-industries.html or
 Innovation spending (http://www.theglobeandmail.com/report-on-
business/economy/canada-falling-behind-in-research-and-
development/article21605656/)
 Slow global economy
(http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf
 Ontario business investment - http://www.statcan.gc.ca/daily-
quotidien/160510/dq160510a-eng.pdf
 Ontario heads to another election in 2018
 Issues at hand
 Hydro Rates
 Economy
 Delivery of program spending
 Government debt
 Taxation/carbon tax

22. Ontario Debt /
Deficit
 Ontario’s budget watchdog says that the province’s deficit will be
$2.6 billion in 2017-18, despite a Liberal government pledge to
balance the books by then.The FinancialAccountabilityOffice
released its economic and fiscal outlook today, saying that beyond
that fiscal year the deficit will deteriorate further to $3.7 billion in
2020-21.
 Ontario’s Liberal government is dipping into its reserve fund to
help balance the budget for the next two years, ahead of the next
provincial election.
 An accounting dispute with the auditor general over how pension
assets should appear on the books is adding $2.2 billion to the
deficit this fiscal year, but the government insists it will reach
balance by its self-imposed deadline of 2017-18.
 Ontario universities face several financial pressures, among them
pension solvency deficits, according to a new commentary by debt
rating service DBRS Ltd. (who is on the hook for the pension
shortfall?