Ontario Election – Ford Wins Majority – Impact on Government Incentives
If you have not yet heard, the Progressive Conservatives won a majority government in the Ontario election. Party leader Doug Ford will be the next Premier of Ontario. Kathleen Wynne won her seat, but resigned as Liberal leader, as the Liberal Party lost official party status for the first time in its 161-year history. The NDP won official opposition party status, as people voted for change.
Regional Economic Development Programs: EODF/SWODF/NOHFC
Within Ford’s platform, he promised to keep the regional economic development programs such as EODF/SWODF as well as Northern Ontario programs. These programs are legislated in, making it harder for them to be removed. We expect the existing $40 Million per year for EODF & SWODF to continue at that level.
Jobs & Prosperity Fund
Ford has communicated that he would eliminate the Jobs and Prosperity Fund (JPF). With existing agreements already in place/signed off, funding that has already been allocated will not be impacted by the program’s closure. There may be a wind down period of existing applications already in queue as funds have already been allocated to the JPF program within previous budgets. Within the Conservative platform, a ‘value for money’ audit across all government programs has been proposed. We expect this will happen, but it will take time to complete the comprehensive review process.
The existing $250M allocated annually to JPF will likely take a different form, either as an investment tax credit or a different funding program. There may be some fairly significant revisions made to new program framework. A majority government will allow the Conservatives to expedite the decision- making process to get things done quickly.
Ford has vowed to cut what he deems “corporate welfare”; however, at the end of the day, Ford/Conservatives are pro business, and want to attract and support business investment in Ontario. Almost every US state and Canadian province has a business attraction/investment incentive package. In order to remain competitive and be “open for business”, Ontario will need to issue an investment incentive either in the form of a tax credit or a grant. We suspect Ford will want to control which companies get funded, making a grant far more likely than a blanketed tax credit. Through the value for money review, we think it will be determined that grants achieve better outcomes than tax credits because they have the ability to be more targeted to specific sectors of the economy.
Green ON Programs – Cap and Trade
Ford has promised to dismantle the Cap and Trade program and the entire suite of Green ON funding programs. The funds that have been collected from businesses already will still need to be redistributed according to the legislation, so a wind down period will be required. We suspect he will work to make sweeping changes or completely dismantle Cap and Trade, but the process will take time.
Canadian Agricultural Partnership (CAP)
The 5-year federal-provincial bilateral agreement that was signed in April is not easily modified and we do not expect any changes to this program. We also expect the August 28th intake, as previously announced, will remain the same for agri-food processors.
Within the next week, the Cabinet will likely be decided. The following two key Ministries that have a significant impact on incentives are:
- Minister of Agriculture and Small Business (Currently Jeff Leal)
- Minister of Economic Development and Growth (Currently Steven Del Duca)
- Ministry of Economic Development signs off on JPF approvals
Neither of the aforementioned sitting members in these roles had been elected to their seats.
G7 Summit – World Trade
Over the past weekend, we also had the G7 Summit where trade and tariffs was a hot topic that could/will have a significant impact on the world and Canadian economies. Ford announced he would ‘stand shoulder to shoulder’ with Trudeau to protect Ontario and Canadian jobs in response to Trump’s strong position on NAFTA negotiations and the introduction of steel and aluminum tariffs. Any tariff changes will cause some businesses to win and some to lose. Incentives will play a key role in guiding/pushing the economy to shift to adjust to a new tariff reality.
Summary – A Changing Political and Economic Landscape
With the changing political and economic landscape, government incentives can be difficult to track and interpret, and then subsequently to align with your business investments. Contact us today to discuss how our digital software platform and national team of funding specialist can develop an incentive strategy that will maximize your businesses funding opportunities.