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McGuinty-commissioned report urges support for Ontario businesses, dismisses tax credit

Kevin Lynch

Peter Power/Peter Power/The Globe and Mail

Ontario needs to streamline assistance to businesses, improve access to venture capital and offer manufacturing tax breaks, recommends a blue-ribbon panel that also warned that a proposed tax credit for job creation "may not" be a wise idea.

The panel – chaired by Royal Bank President and CEO Gord Nixon – warned that "the status quo is not an option" as it released its report Wednesday.

"We are confident that our recommendations will help equip Ontario to compete in the long term," Mr. Nixon wrote in an introductory letter to Ontarians, co-signed by vice-chair Kevin Lynch, vice-chair of BMO Financial Group. "This is not a partisan report: it raises issues that all Ontarians need to address."

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Their report covers a wide range of suggestions but lands at an uncertain time in Ontario politics. Although the group would like to reconvene in 12 months to review progress, the province will get a new premier and possibly a new government within that time, making it less likely anything will happen in the short term.

Officially dubbed the Jobs and Prosperity Council, the 14-member group includes some of the biggest names in Canadian business. Among them are Hudson's Bay Company President Bonnie Brooks, Bell Canada President and CEO George Cope, Research in Motion founder and former CEO Mike Lazaridis and Maple Leaf Foods President and CEO Michael McCain.

They list recommendations in five categories: going global, driving productivity growth, unleashing innovation and entrepreneurship, capitalizing on strength in talent and delivering smart, efficient government.

"Leadership cannot come from government alone," Mr. Nixon said in a release accompanying the report. "Ensuring Ontario's competitiveness and prosperity will require strong action from all sectors. Business will have a strong role to play."

The plums for business include the recommendation that the federal government be urged temporarily to increase the accelerated capital cost allowance to 100 per cent and, eventually, consider making the current 50-per-cent rate permanent. The report also calls for the provincial government to work with Ottawa and the private sector to improve access to venture capital and for "reverse trade missions" focused on key emerging markets.

The report notes that the group was asked to provide advice on the merits and feasibility of a proposed tax credit that would assist businesses that hire new employees. They warn that the cost might be more than expected – because all new jobs would qualify, not just net new jobs – and that some businesses would have created these jobs anyway. As well, it would be hard to target the measure to specific sectors and the compliance and reporting costs "would be material."

"Taken together, these considerations suggest that the proposed tax credit entails significant fiscal risks and may not achieve the desired objective most effectively."

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About the Author

Oliver Moore joined the Globe and Mail's web newsroom in 2000 as an editor and then moved into reporting. A native Torontonian, he served four years as Atlantic Bureau Chief and has worked also in Afghanistan, Grenada, France, Spain and the United States. More

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