QP Briefing. FES 2019: A sector-by-sector look at the impact of the Fall Economic Statement

By David Hains and Sneh Duggal

The Fall Economic Statement contains bits and pieces of information that can affect diverse Ontario stakeholders in myriad ways.

Our team of reporters went through the 200-page document to summarize how the document affectionately known as the FES will have an impact on different sectors and stakeholders, including energy, autism, cannabis, beer and wine and more.

Energy

The Fall Economic Statement was light on new information when it came to Ontario’s power file.

The document continued to point the finger at the previous Liberal government for energy issues, highlighting that hydro rates increased due to their policies. To that end, the government changed up the look of hydro bills as of Nov. 1 in order to emphasize energy costs and subsidies.

“It … shows the people of Ontario just how much taxpayers continue to pay for the electricity decisions of the past government,” the document stated.

The government explained three ways it’s working to alleviate hydro rates, but none of them are new: terminating over 750 renewable energy contracts, sending ownership of conservation programs to the Independent Electricity System Operator and changing the executive compensation framework at Hydro One.

The lack of new information comes as the Ontario Energy Board just announced a 1.8 percent rate increase, while the government has struggled to provide specific details on how it will reduce hydro rates by 12 percent, a signature promise in the 2018 election campaign.

But the government did provide more substance when it came to industrial energy in Ontario’s north. On the subject, it promised to “[streamline] industrial electricity pricing,” based on consultations with stakeholders, who cited problems with the “regulatory process” as well as “cost transparency and certainty, and rate stability.”

The document added, “The government is proposing to take near-term action to reduce the red tape burden in the electricity system by working with the IESO to simplify and streamline industrial electricity billing and the Global Adjustment settlement process. The government is also introducing advisory services to assist businesses in navigating regulatory approvals and connection issues.” There will also be an independent third-party review “of existing generation contracts for opportunities to reduce electricity system costs,” with the review’s findings scheduled to come back in the first part of 2020.

Ring of Fire

Despite recent Globe and Mail stories throwing cold water on the business case for the Ring of Fire chromite deposit north of Thunder Bay, the government indicated it will proceed as planned.

Calling it “a transformative project” that will bring “nationally significant jobs and economic benefits,” the government said “it will focus on working directly with willing First Nations partners to develop all-season roads.”

The Ontario government also called on the federal government to fund a sizable portion of the road infrastructure, with the Globe recently reporting that the ministry recently sent a letter to Ottawa requesting almost $800 million.

Co-ops and credit unions

The government promised to pay some more attention to bank alternatives in the form of co-ops and credit unions. “Outdated and burdensome legislation creates barriers for co-ops, costing them time and money which prevents them from growing,” noted the FES.

“The government is introducing changes that would modernize the legislation. As part of this the government is leveling the playing field for some co-ops by removing the current ’50 percent rule,’ which restricts co-ops from doing more than 50 percent of their business with non-members,” the document added.

As for credit unions, the government promised “to develop new principles-based legislation to replace the outdated Credit Unions and Causes Popular Act,” which was passed in 1994. “The new legislation will aim to reduce regulatory burden for Ontario’s credit unions, enabling them to be more agile and competitive,” the document added. The FES also stated that the government was committed to “reducing burden” when it came to the mortgage broker sector.

Capital Markets Review

The government promised an overview of the Securities Act, which promises to be an initiative that will garner immense interest from Bay Street and any number of large companies that do business in Ontario.

The government noted that the Act has not been reviewed “in over 15 years,” calling it “outdated” and adding that it “should support modern capital markets.” The backgrounder on the subject added that the government “is working to modernize the securities regulatory framework to make it responsive to innovation and changes in a rapidly evolving marketplace.”

Cannabis

If the government has its way with new legislation then the local weed farm could provide a craft brewer experience. The FES states that the government will propose “to amend legislation to facilitate the establishment of retail stores by licensed producers related to their production sites.”

The government will allow retail stores to diversify their wares. “The government is also proposing to amend legislation to allow authorized retail stores to sell cannabis products online or over the phone for pick-up by the consumer in-store, which is known as click-and-collect.” The government also proposes to decrease audit requirements for co-ops on the grounds that it will lower compliance costs. The government also plans to shift responsibility for overview of the Co-operative Corporations Act from the minister of finance to the minister of government and consumer services, as of early 2020.

Beer and wine

House Leader Paul Calandra has said that alcohol legislation is on the back burner in this sitting, but the FES indicated that it could be around the corner in 2020.

“The government is also introducing legislation which, if passed, would modernize the legal framework for the sale, service, and delivery of beverage alcohol,” the document stated. The FES also promised to “clearly separate the operational function of the LCBO and the regularity function of the Alcohol and Gaming Commission of Ontario.”

There will be enabling legislation as part of the FES bill that will help lay the groundwork for big-box expansion for Ontario’s alcohol market, according to a senior civil servant who spoke on background. However, a negotiation with the Beer Store would still be necessary, so this wouldn’t be the long-awaited legislation that beer fans have been waiting for.

The government will also review the tax regime for alcohol, “and would permit the government to pause upcoming beer tax increases as the beverage alcohol review continues.”

Ontario Autism Program

The FES included a reference to an increased budget for the Ontario Autism Program (OAP) for 2019-20. The document noted an extra $279 million for the program in 2019-20, topping up the already allocated $321 million for a total of $600 million.

The government is in the process of revamping the OAP and has said it plans to implement the new program by April 2020. While the government had initially allocated $321 million for the program, Lisa MacLeod, the former children, community and social services minister, said in March that the government would boost the budget to $600 million for this year.

Some, including Bruce McIntosh, the former president of the Ontario Autism Coalition, previously noted that the $600-million figure had not been allocated anywhere up until now such as in the budget, economic statements or the Ministry of Finance website and questioned whether the government was actually committed to using a larger budget for the program this year.

French-language university

The Progressive Conservative government has reversed course on several decisions it made during its first year in office. Reference to its intention to help launch a new French-language university — Université de l’Ontario français — in this year’s FES marked one of the many policy reversals made this year.

In Fall 2018, the government stated in its FES that “Upon further review of the province’s fiscal situation, the government will also be canceling plans to proceed with a new French‐language university.” The move angered many and sparked protests all over the province.

However, the province indicated this summer that it was willing to help fund the start of such an institution, with the FES solidifying this commitment.

“The government recognizes the contribution of the Francophone community to the province’s social, cultural and economic development and wants to ensure that French-speaking students have access to post-secondary education that is aligned with labour market needs,” the government stated in the FES.

The government noted it was working with its federal counterpart to establish the Université de l’Ontario français and that the two parties had signed a memorandum of understanding to share start-up costs.

“A joint working group has been established to work out funding details, timelines, and activities for the Université de l’Ontario français.”

Education

As part of an overall spending increase of $1.3 billion in health, education, social services and child care mentioned in the FES, the government touted an additional $186 million in education spending for the 2019-20 year.

This includes $122 million for municipalities to provide child care programs, marking another previously announced reversal from the government. The PC government had announced cuts to municipalities, including to public health, child care and ambulance services that would have started this year. After much backlash from municipalities, the province agreed to cancel the retroactive cuts, but said some of them would go ahead in 2020.

Also in the FES was an additional $64 million “to support elementary and secondary education programs.” The government confirmed that this additional funding is due to its updated enrolment forecast updates.

Assorted

Should it be called the Metro Grocery Store Toronto Convention Centre? The government is exploring selling naming rights for the downtown Toronto real estate site that draws hundreds of thousands of visitors a year. It’s in keeping with their idea to sell naming rights for Metrolinx sites as well.

The government reiterated its commitment to enact “Ontario’s first-ever climate change impact assessment,” which it first put forward in the 2019 budget document. It “will seek the best science and information to better understand where the province is vulnerable and which regions and economic sectors are most likely to be impacted.”

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