Vulnerabilities in Ontario’s economy post challenges to our prosperity. Government must prioritize growing the economy, creating jobs and driving a competitive advantage.
Today, the Oakville Chamber of Commerce in partnership with the Ontario Chamber of Commerce, released the inaugural Ontario Economic Report (OER), a landmark agenda aimed at shaping and informing future public policy. The OER includes entirely new economic analyses that demonstrate the difficult economic environment faced by Ontario businesses and consumers in 2017. The report also contains exclusive economic information pertaining to the Greater Toronto Area.
The report includes the results of the Ontario Chamber of Commerce’s new Business Confidence Survey conducted in partnership with Fresh Intelligence, a Business Prosperity Index developed by the Canadian Centre for Economic Analysis (CANCEA), and an Economic Outlook for 2017 prepared by Central 1 Credit Union. These datasets, viewed together, reveal broad challenges to Ontario’s economic health.
“Our research shows that Ontario’s economic climate is posing challenges to the businesses we represent and Ontarians more broadly,” said Allan O’Dette, President and CEO of the Ontario Chamber of Commerce. “Investment is being held back because of a high perception of risk. We need immediate action in order for our province to continue to grow and prosper.”
Economic outlook data reveals that the Toronto region will see a slight drop in the unemployment rate to 6.8 percent in 2017. The median residential housing price will rise 7.4 percent to $580,000, which is a considerable slowdown when compared to the jump of 15.9 percent between 2015 and 2016. Not surprisingly, this will continue to be the region of the province with the highest median housing price and the largest jump in prices year-over-year.
“The OER reinforces many of our policy priorities that arose from our 2016 Advocacy Survey” stated John Sawyer, President, Oakville Chamber of Commerce. “Our members stated that rising costs were the most significant factor impacting business and industry; focusing on the rising cost of electricity and the need for investment in infrastructure. With these highlighted as priorities for the Ontario Chamber of Commerce and Ontario Chamber Network, we can assure our members that government will hear our strong and unified voice.”
Additional key findings in the OER are from the Business Prosperity Index. This index shows that, despite total business prosperity increasing since 2000, prosperity is increasingly generated from asset and liability management rather than the production of goods or services. This means that Ontario businesses are less likely to earn income from actual business activity today than they have in the past.
While Ontario enjoyed an average 2.6 percent real GDP growth rate between 2000 and 2006, the source of wealth generated from the production of goods and services actually declined by 12 percent during that same period. Since the recovery from the “great recession”, production activities fell a further 12 percent over that period. Broadly, this means Ontario’s business prosperity is increasingly dependent upon non-production, financial activities.
This challenge is a result of the current economic environment, in which increased costs associated with production, regulation and housing have resulted in weak market and labour force activity. Businesses in Ontario are operating in a risk-averse environment in which they are disinclined to grow production by investing or hiring.
“For many years, the voice of Ontario business has cautioned that regulatory burdens, high input costs, and government policies not attuned to innovation have hampered economic growth,” added O’Dette. “The findings in the OER reinforce this, and indicate that there are also structural issues impeding our province’s potential.”
The results of the OER highlight the key policy issues that the Ontario Chamber of Commerce and Ontario Chamber Network intends to prioritize in 2017, including workforce development, infrastructure, energy, and health care. Central to the organization’s work is the notion that industry and government tackle these issues together, in order to grow economic prosperity and drive positive change for all Ontarians.