Special Report

Five takeaways from the 2020 Ontario budget for the province’s innovation economy

Ontario Finance Minister Rod Phillips in Toronto in November 2020. The Canadian Press/Frank Gunn
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Ontario Finance Minister Rod Phillips tabled the province’s $187-billion budget Thursday afternoon, outlining the next phase of the government’s COVID-19 response, including $15 billion in new relief funding on top of the $30 billion it had previously budgeted. 

Many of the commitments in the 239-page document had been revealed incrementally over the seven months since the government initially postponed the budget due to the pandemic.

Talking Point

The Ontario government’s $187-billion budget tabled Thursday includes new commitments for retraining workers for the post-pandemic recovery, funding for an IP strategy and plans to digitize government services. Leaders in Ontario’s innovation sector said they were cautiously optimistic about the budget, but are looking for more details on procurement support for made-in-Ontario technologies that could help the province and companies through the pandemic.

Still, Premier Doug Ford’s Progressive Conservative government unveiled new details for initiatives including digitizing government services, training workers for the post-pandemic recovery and funding an IP strategy. 

Phillips pegged the deficit for 2020–21 at $38.5 billion, which the province projected in August. The deficit is a record high for the province and nearly double what it predicted at the start of the pandemic. The government anticipated the shortfall will decline to $28.2 billion in 2022–23.  

Here are some key initiatives laid out in the budget that will affect companies, entrepreneurs and workers in Ontario’s innovation economy.

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1. What: Tax breaks for small businesses

The details: Employers with annual payrolls below $1 million will be exempt from paying the employer health tax (EHT). Under the new rule, about 90 per cent of businesses in the province won’t have to pay it. The government also lowered a property tax called the business education tax, for some 200,000, or 94 per cent, of businesses in Ontario. And it’s proposed giving municipalities the option to lower property taxes for small businesses, which the province will consider matching. 

The numbers: The province projected cuts to the EHT could save businesses $360 million in the 2021–22 fiscal year, while potential property-tax cuts could lead to another $385 million in savings by 2022–23, based on its assumptions of municipal uptake. 

What’s happened already: The Ontario government temporarily raised the exemption from $490,000 earlier in the pandemic; the change is now permanent. 

Who benefits: Small businesses that qualify for the exemptions. 

2. What: Training workers for the post-pandemic recovery

What it means: The government is launching the Skilled Trades Strategy to help people retrain and upgrade their skills for available jobs and apprenticeships, including through grants to employers. 

The numbers: $180.5 million over three years, including $100 million for Employment Ontario to be spent in 2020–21 and $59.5 million over three years to acquire “in-demand skills.” 

The context: While employment rates have steadily improved since June, there were still 720,000 fewer Canadians in the workforce in September compared to before the pandemic. 

What’s happened so far: In September, Ford announced $37 million to retrain more than 15,000 people for roles in technology, advanced manufacturing, truck driving, construction and horticulture. The training is meant to specifically support 86 projects across the province. It follows an annual $250 tax credit announced in the 2019 federal budget for courses at universities, colleges and skills-training institutes. In October, the Ontario government earmarked $75 million to help cover living expenses for apprentices over the next two years, and appointed a five-person panel “to provide advice and recommendations to the Minister of Labour, Training and Skills Development on developing a new approach to training and certification.” 

Who benefits: Employers who don’t have to shoulder the cost of training alone, and some of the 757,400 people who were unemployed in the province as of September. 

3. What: “Making Ontario the leading digital jurisdiction in the world.” 

What it means: The government is launching a program called Ontario Onwards which, over the next two years, promises to offer digitally at least 70 per cent of the provincial services “people of Ontario use most,” like some health-care services and business-permit approvals. It also aims to digitize half of “the most common ways the people of Ontario interact with government.” The plan includes developing a “digital identity” that would allow residents to renew and register for business licences, for example, or allow patients to share health information with a care provider. 

The numbers: $500 million over four years

Between the lines: Leaders in Ontario’s business sectors have been calling for the government to use its purchasing power to help support local companies through the pandemic. Last year, the Ford government announced general plans to centralize procurement across departments in a bid to save about $1 billion of the $29 billion it spends on procurement annually. There was no indication that the plan would favour provincially made products. But leaders in Ontario’s tech sector say the new sweeping plans to digitize government services could create opportunities for local tech companies. “I see potential procurement for technology of all sizes—we’ve got Big Tech in here and a lot of opportunities for small- and medium-sized enterprises to provide some of that digital acceleration to the government,” said Angela Mondou, CEO of tech industry association Technation. “What we’d like to see for this big strategic plan from an execution perspective is a digital road map over the next 12 or 24 months and how [companies] can collaborate with government on that.”

Who benefits: Residents and business owners who will be able to access more government services remotely. The initiative could also benefit local tech companies, should the government prioritize their products and services in its digital transformation. 

4. What: Generating and commercializing intellectual property

What it means: The government is for the first time committing funding to a recently established Intellectual Property Action Plan. The team behind the initiative is tasked with working with post-secondary and research institutions to create commercialization mandates and improve overall IP literacy in the province through an IP curriculum. 

The numbers: $1.5 million 

What’s happened so far: The province announced in July that it had appointed a panel led by former BlackBerry executive Jim Balsillie to find ways to increase the commercialization of publicly funded research. “We were pleased to see that, even given the focus that has been COVID-19, we do still see the government understanding the importance of IP protection and commercialization and that it will lead to prosperity,” said Benjamin Bergen, executive director of the Council of Canadian Innovators, told The Logic

Who benefits: Ontario innovators and companies that may find new revenue streams in licensing their inventions, as well as post-secondary institutions that fund research that becomes licensed.

5. What: Establishing a market for internet gambling in Ontario

The context: The province plans to introduce legislation that would give the Alcohol and Gaming Commission of Ontario authority to manage and regulate online gaming.

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What’s happened so far: The proposed legislation builds on plans introduced in last year’s budget to establish an online market for internet gaming. It comes as the federal government weighs whether to lift a prohibition on single-event sports betting, allowing provinces to set their own rules in the space. 

The numbers: Unspecified 

Who benefits: The provincial government, which should see an increase in gambling revenue through the online platforms.