Ont. GDP to average 2.1 per cent 2014 to 2035
TORONTO - A shrinking work force combined with an aging population will pose challenges for Ontario's economy, which is expected to grow at a slower rate than the national or U.S. average in the next two decades, according to a report released Wednesday.
The report, released by Finance Minister Charles Sousa, predicts Ontario's real Gross Domestic Product will average 2.1 per cent growth between 2014 and 2035, compared with 2.2 per cent nationally, 2.4 per cent in the U.S. and 3.1 per cent globally.
The number of seniors in Ontario is expected to nearly double to 4.1 million by 2035, which the report warns will increase the demand on public services, especially health care, social services and infrastructure.
"The report has highlighted some challenges, some of the things that we must address," said Sousa.
"The budget that's going to be coming out in the coming weeks will be the basis by which we start to address that. We need to start thinking beyond election cycles."
The Progressive Conservatives said the report is being used by the Liberals to justify their plans to spend billions of dollars more in the upcoming budget and to introduce payroll deductions to support a provincial pension plan.
"This is absolutely, 100 per cent a political document, which I had hoped it wouldn't have been," said PC finance critic Vic Fedeli. "They talk about PC policies in here. They talk about Liberal policies in here."
Sousa took shots at both opposition parties as he released the long term economic outlook.
"This is not a time for reckless cuts that Tim Hudak’s PCs have been advocating for, nor is it a time for the inexperience of the NDP," he said.
The report concludes that improving retirement income will be crucial to the economy, supporting the Liberal's plan to introduce an Ontario Pension Plan if Ottawa keeps refusing to enhance the Canada Pension Plan, the province's preferred option. Better pension incomes will help improve the economy, said Sousa.
"It enables investments by pension administrators to reinvest in our economy," he said. "It improves and enhances disposable income for retirees, and allows them to live in greater dignity and respect instead of having to rely on social programs."
It's not just people close to retirement age who should worry about pension incomes, added Sousa.
"The ability for us to support retirement security for our young people today is in question," he said.
The New Democrats said the report showing weak growth for the next two decades is proof the Liberals' economic policies are not working, and accused the government of using it to support its own spending plans.
"It does look partisan to us, and yes, it does look like it's being written to support a number of initiatives that the premier has been talking about," said NDP critic Peter Tabuns.
The report says that while the workforce shrinks, immigration will become the main source of growth for new labour in Ontario, supporting the Liberal's request for Ottawa to give the province the same powers to pick immigrants as Quebec.
"It will be crucial to smoothly integrate newcomers into the workforce," says the report. "The federal government will need to provide greater support to enable Ontario to achieve this goal."
The report predicts inflation will fall from the three per cent range to an average of two per cent in Ontario and about 2.2 per cent in the rest of Canada over the next two decades. It also forecasts Ontario's unemployment rate will fall from 7.7 to 5.6 per cent over the next 20 years, but won't slip under the six per cent mark before 2018.
The report says Ontario is "well positioned" to take advantage of the rising global share of market economies by developing countries like China by increasing exports from sectors such as agri-food, infrastructure, life sciences, communications technology, education, advanced manufacturing and financial services.
"We have to tap into the emerging markets," said Sousa.
The finance minister would not comment on the reliability of 20-year economic projections, but said he would use the report to help determine the best path forward.
"I want to make certain that those numbers change as we go forward, that's the whole point of the report," said Sousa.
The report also gives the first indication of what the Liberal government considers to be middle-income, a question on everyone's mind since Premier Kathleen Wynne vowed not to raise taxes on the middle class in the budget to fund public transit.
Under the heading "Middle Income Earners," the economic outlook lists Ontario workers with incomes between $25,000 and $75,000 a year, which could mean anyone earning more than that could face a tax hike in the budget.