Presented by Stuart Johnston, Vice President Policy & Government Relations

Good morning Mr Chair and Committee members:

 Thank you for this opportunity to express our members’ views on the 2010 provincial budget.

 Our organization represents some 60,000 businesses from all parts of the economy across Ontario, through our local network of 160 local chambers of commerce and boards of trade. We do not represent one particular business sector, but rather the collective and cumulative views of business in this province.

Our mission is to research and promote important policy issues that serve to bring economic renewal and business competitiveness back to this province. Our key priorities are policies that focus on a competitive tax and regulatory regime, a skilled workforce, modernizing energy & infrastructure and those that assist Ontario to transition to the new economy.

Difficult decisions lay ahead for the government as it prepares the next budget.

We have emerged from the worst economic downturn since the great depression.

Lower demand for Ontario goods has resulted in lower sales for Ontario companies – meaning smaller profits – fewer jobs – and ultimately lower government revenues.

On the flip side – higher unemployment and lower economic activity have compelled governments around the world – including here in Ontario – to stimulate the economy through increased government spending.  And we as a society had given our governments’ tacit approval to do such a thing.

Of course, this resulted in a large gap between government revenues and expenditures.

Leaving governments – like their private sector partners – with difficult decisions.

Like any home or business that must balance its books – the government must make prudent decisions about where dollars are spent – based on realistic projections of the money that can be expected to come in.

In preparation for our budget submission – we gathered input from across our membership through surveys and round table discussions in communities throughout Ontario.

In addition – our grassroots membership has input into the policies that govern our thinking each year.

This research has generated a lot of good news.

For one thing – Ontario business confidence for the next 12 months – has surged almost back to 2007 levels.

Fully 60 percent of our respondents expect better performance this year than last.

And what’s more – they intend to invest – in hiring new staff – expanding their businesses and increasing their capital investments.

This is great news for the economy.

There also seems to be a consensus among our members on the priorities they expect of their government as it embarks on the difficult decisions ahead. 

I’ve boiled this down today into a few key points.

Let’s start with the revenue side of the equation.

Our government must take measures to stimulate more economic activity.

Just last week in his State of the Union Address, to great applause from both sides of the Chamber – President Obama stated that the,

 “True engine of job creation … will always be America’s businesses. But government can create the conditions necessary for businesses to expand and hire more workers.”

It is no different here in this country.

The tax reforms announced in last spring’s budget will go a long way to creating an environment more conducive to job creation and business investment.

The harmonization of the retail sales tax with the federal GST – as well as the reductions in business and personal tax rates – are measures long called for by our members as part of a smarter taxation package.

These reforms go a long way to reduce the corporate tax burden – improving business competitiveness which will lead to greater investment, the creation of more jobs and higher government revenues.

It is vital that the government stay the course on these reforms – and where possible accelerate their implementation and further reduce the personal and business taxes as a way to stimulate the economy.

The higher government revenues that come from increased economic activity will be critical to a government facing a $24.7 billion deficit.

The second way to a more competitive business climate – and therefore more business investment – and stronger government revenues – comes in the form of smarter regulation and less red tape.

We cannot underscore this issue enough.

Businesses across Ontario continue to cite regulatory costs as their greatest impediment. And a dollar spent managing red tape is a dollar less for investment or hiring new people.

Promising announcements like the Open for Business Strategy and the Twice Annual Effective Dates policy in 2009 signalled to our members that improvement was on the way.

And yet – progress seems to have stalled.

Businesses in Ontario understand the need for regulations, but they expect smart regulations that are properly implemented.

Let me give you a real life example.

A small automotive repair shop business owner in Southern Ontario has been in business for nearly 40 years. 

He has employed and trained many mechanics over his career and paid millions in taxes.

Moreover, not once has he had a claim with the WSIB or violated safety regs. He has a clean record with the Ministry of Labour.

However, just days before the Christmas Holidays, a Ministry official asked him how many employees he has.

He replied 4 but that his spouse comes in once a month or so to do the books.

The official indicated that because he has more than 5 people working on the premises (when you include his wife), it vaults his business into a different category which requires adherence to more regulations.  An arbitrary number not based on the realities of this business.

He is now required to have employees elect a safety officer, whom he must train at his own expense, and maintain their certification.

The business owner is now subjected to much greater expenses, all because his wife comes in once a month to do the books. This was the regulatory straw that broke his back….and ultimately why he’s shutting his business.

Smart regulations would not pose this burden. 

Smart regulations would not impede business investment – and would stimulate economic activity and as a result, government revenues.

Now to the expense side of the equation.

Our members overwhelmingly agree that the government must reduce the size of government and its overall spending – and dramatically transform its fiscal planning to work towards planned – efficient spending.

In short, our members are concerned about the affordability of government – all levels of government.

In fact – stimulus spending and reduced tax revenues aside – Ontario has long been spending beyond its means.

Overall spending by the Ontario government has outpaced economic growth since 2001.

While it should be acknowledged that spending – excluding stimulus funds – began to decline last year – much more needs to be done.

And a commitment to keeping spending growth at or below the same rate as the economy will be a significant and welcome achievement.

Government expenditures cannot be addressed without looking at the elephant in the room – healthcare.

As you know, this is the single largest cost to government and growing at a significant pace.  It simply cannot be excluded with regards to spending restraints or cost efficiencies.

We recommend that the government first conduct an actuarial analysis of healthcare expenditures – similar to what is done in regards to the Canada Pension Plan, for example.

This would provide much needed predictability, transparency and accountability – and provide a window to long term planning.

The same philosophy should be applied to transportation and infrastructure planning, as well.

The Quebec-Ontario gateway is currently conducting a goods movement study.

Using the results of this study – a 30 year long-term transportation plan must be developed – that will include short – medium and long-term planning and investment objectives.

Modernizing our transportation and infrastructure is a priority of the OCC membership.

Therefore we are suggesting government plan for a generation – not just for five years.

And finally – smarter – more efficient spending must be applied to all programs – programs across the broader public sector.

We are suggesting a mandated competitive bidding process for government services across the broader public sector — which allows bids from both the public and private sectors – be implemented.

The OCC believes government should support competition in the marketplace for the delivery of publicly funded services – both provincial and municipal.

Taxpayers expect value for money. And a competitive bidding process will ensure services are being delivered in an efficient and cost effective way.

Opportunities for greater value for money exist in areas like health care – waste diversion and pick up – permit and license registrations and processing – support programs for businesses and individuals, and so much more.

And as I stated earlier, our members are concerned about the affordability of government.

Government is no different than any household or business here in Ontario. Our members expect a return to balanced books – and a stronger focus on long term debt reduction as well.

By stimulating economic activity through tax reform and less red tape –greater government revenues will be generated.

And by taking steps to curb spending growth, and better plan – for expenditures – made more efficient through greater transparency and competition – the government will better manage its expenses.

Thank you for your time this morning – I would be pleased to answer any of your questions.