This presentation gives you a quick look at the economy for Ontario

1. Ontario Economy –
June 2017
By: PaulYoung, CPA, CGA
Date: June 25, 2017

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. OntarioGDP
Source – Stats Canada
Ontario's GDP rose 2.6% in 2016, following the same gain in 2015. Service-producing
industries (+3.0%) contributed more to the growth than goods-producing industries
(+1.3%). A robust housing market led to a 7.5% increase in residential
construction and influenced gains in banking services, lessors of real estate, real
estate agents and brokers, and insurance carriers. Total construction activity
(+1.6%) was tempered by declines in engineering construction and, to a lesser
extent, non-residential construction.
Wholesale trade grew 3.9% and retail trade advanced 3.5%, with growth reported in all
but one trade industry. Professional, scientific and technical services were up 3.7%,
largely on increased activity in computer systems design and related services. Financial
investment services, air and truck transportation, as well as, federal government public
administration contributed to the growth.
Manufacturing increased 1.8%, following a 1.1% gain in 2015. Increases in output were
reported by motor vehicle parts, food products, plastic products, primary metal
products, and pharmaceuticals and medicines manufacturing. Fabricated metal
products, petroleum and coal products as well as printing and related products
declined.
Electric power generation, transmission and distribution increased 3.0%. Low
metal ore prices contributed to a significant decline in support activities for
mining, with activity in this industry down 85% from its peak in 2012.

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

7. Ontario
Manufacturing
Source – Stats Canada

8. 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.

9. 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.

10. 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.”

11. Ontario
competitiveness
– RedTape
Source - =CFIB

12. Ontario
Competitivene
ss

13. 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

14. HousingStarts
Source: www.rbc.com

15. RetailSales
Source – Stats Canada
Retail sales were up in seven provinces in April. Higher sales in Ontario and
Quebec accounted for the majority of the increase. Ontario (+1.1%) reported
the largest growth in dollar terms, as gains were observed in 9 of 11 subsectors.
Following two months of declines, Quebec recorded a 1.6% increase on the
strength of gains across most store types.

16. 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

17. Employment
Employment:
• Employment declined by 17,000 in finance, insurance, real estate, rental and leasing, the
first notable decrease since November 2015. Ontario accounted for all of the decline in
May. Despite fewer workers in May, employment in the industry was up 38,000 (+3.4%)
compared with May 2016.
• Employment in health care and social assistance increased for the second consecutive
month, up 15,000 in May.The lion's share of the increase was in Ontario.The added
employment in May boosted total gains at the national level for the industry
to 63,000 (+2.7%) from May 2016.
• In wholesale and retail trade, employment increased for the third time in four months,
up 15,000 in May, powered by gains in Ontario. On a year-over-year basis, there
were 74,000 (+2.7%) more people employed in the industry.Wholesale and retail trade
continued to be the largest industry group by employment, accounting for an
estimated 2.8 million people or 15.3% of all workers.
Source: Stats Canada

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

19. Government
Deficit
Source – Government of Ontario

20. Government
Deficit
Source – Government of Ontario

21. Government
Debt
Source – Government of Ontario

22. 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

23. 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?