CME Report – Ontario Budget Must Rev The Engine

ianhowcroftEditorial submitted by Ian Howcroft, Vice President (Ontario division) of Canadian Manufacturers & Exporters
January 26, 2015 – Ontario’s best chance of reviving the economy and meeting fiscal targets is to rev up the manufacturing sector. The low dollar and strengthening US employment picture creates the right conditions for growth in Ontario’s most important sector. But there are also some dark clouds on the horizon that could threaten to crimp this outlook. For example, the speed of the dollars descent could create uncertainty in the key markets which is not good for investment overall. Furthermore the importance of Alberta’s Oilsands to the overall economic wellbeing of the country raises some additional questions about what the future may hold for manufacturing. The Ontario government can be a great help under these circumstances but it all starts with the principle of: first do no harm. Raising taxes, for example, would be a huge mistake and could disrupt the fragile opportunity to re-invigorate the sector and economy. Though well intentioned, the Ontario Retirement Pension Plan is just one example of new mandatory cost to employers that makes Ontario less competitive in the near term (set to come into force in 2017).

The recently announced $2.5 billion jobs and prosperity fund has some great potential and we’ll be looking for more details about how this fund will be used to spur growth and stimulate innovation & productivity. CME will be calling specifically for some of these funds to be used to re-capitalize the CME SMART Program with a particular emphasis on small grants for innovation and productivity.
The biggest downside to the dollar is that it makes the purchase of machinery and equipment more expensive since these are typically priced in US dollars. Therefore it will be critical for government to help free up capital for companies to make the necessary investments to remain productive and competitive in this low dollar environment. There are a number of ways the government can help in this regard. First and foremost, we need to maintain a low tax environment for M&P investment that starts with the extension of the accelerated write-off for manufacturing and processing equipment. Government can also help by reducing or eliminating red-tape that acts as a significant drag on investment. Other measures should include reducing electricity rates for manufacturers and continuing to invest in employer sponsored training via the Canada Ontario Jobs Grant initiative.
Ontario has a great opportunity here and we’re calling on government to seize the day with a re-doubled focus on manufacturing, skills training and innovation.

For more information on CME, contact or visit