Preparing Ontario's People, Businesses and Infrastructure for the Future
The Long-Term Report on the Economy provides a detailed summary and analysis of Ontario's challenges and opportunities over the next 20 years.
Looking beyond Ontario's current economic and fiscal environment helps the government make long-term decisions. It is important to assess the broad trends stemming from today's policy decisions and demographic indicators that will shape Ontario's social, economic and infrastructure policies in the years to come.
Given the federal government's reluctance on a Canada Pension Plan expansion, Ontario is leading the way to develop a made-in-Ontario pension solution, which will help people retire with better security.
The report's long-term demographic and economic projections shed light on a number of important policy areas:
- By helping to foster business innovation and research capacity as well as valuable partnerships with other jurisdictions, the province is supporting high value-added, made-in-Ontario products and services
- The number of Ontario seniors is projected to nearly double to 4.1 million by 2035, increasing the demand on public services, particularly health care, infrastructure and social services
- Improving retirement income security for Ontario workers is crucial to the future of the province. Adequate personal savings, efficient investments and better access to pension plans would enable workers to better prepare for their retirement years. More savings now would also lead to higher investment and stronger economic growth over the long term
- As immigration becomes the main source of labour force growth, it will be crucial to smoothly integrate newcomers into the workforce. The federal government will need to provide greater support to enable Ontario to achieve this goal.
The overarching demographic and economic trends are:
- An aging and moderately growing population
- Increasing global competition, especially from emerging economies
- Rapid technological change, with profound but uncertain impacts
- Expansion of global trade, bringing a broader array of more affordable goods and services to consumers
- Trade expanding more rapidly with fast-growing emerging markets, although the U.S. remains the top destination for Ontario exports.
Other factors influencing Ontario's economy include:
- Resource prices are likely to rise as the demand from global economic growth outstrips the discovery of new supplies
- In the global competition for talent, Ontario's welcoming, secure communities and attractive quality of life will continue to draw many international immigrants
- Interest rates will rise from historic lows as economic growth improves
- Pressure on the physical environment will persist and remain a concern and a focus of public policy.
Long-Term Economic Projections
Ontario's average annual real GDP growth is projected to be 2.1 per cent between 2014 and 2035.
The rest of Canada's real GDP growth is projected to average 2.2 per cent annually during the 2014-35 period.
U.S. real GDP growth is projected to average 2.4 per cent annually during the 2014-35 period.
Global real GDP growth is projected to average 3.1 per cent annually over the 2014-35 period. Growth in China is expected to slow from about 10 per cent a year historically to 6.5 per cent annually over the 2014-35 period.
Trade Expansion
The province is committed to expanding and diversifying its trade base through trade missions to fast-growing emerging economies. These benefit consumers and provide incentives for Ontario firms to innovate and compete aggressively. To help these businesses, government has put in place a competitive tax system, streamlined regulations, and enhanced the safety and efficiency of capital markets.
The government is supporting trade missions to key markets worldwide to promote the Ontario economy as an internationally competitive source of products and innovative solutions, a strategic location for investment, and a leading partner for collaborative research and innovation in priority sectors. Markets include Asia, the European Union, Russia, the Middle East, Latin America and the United States. Recently, Ontario led trade missions to Paris, Stuttgart, Tokyo, San Francisco and Israel.
Strengthening Innovation and Labour Markets
The Ontario government has introduced a broad range of policies and programs to improve the climate for business innovation in the province's economy. It is also modernizing and integrating employment and training programs to better serve businesses and vulnerable populations, including social assistance recipients, persons with disabilities, Aboriginal people and at-risk youth.
The government has also raised the minimum wage to $11 per hour and proposed legislation to index it to inflation to ensure fairness and predictability for both workers and employers.
Immigration
Achieving the full benefits of immigrants' participation in the labour market requires the provincial and federal governments to work together to enhance the economic integration of newcomers. Providing the necessary training and supports will help immigrants prepare to enter the labour market and contribute to Ontario's future prosperity sooner.