Investing for Prosperity
In Investing for prosperity, the Task Force shows that Ontario’s prosperity ranked 13th place among a peer group of 16 North American jurisdictions consisting of the 14 most populous US states and Ontario and Quebec. Latest results from 2001 show that per capita economic output in Ontario trails the peer group median by $4,118 or 10 percent.
Productivity continues to be the source of the prosperity gap. The Task Force’s research shows that Ontarians are not creating as much value as we can from the province’s endowment of human, physical, and natural resources. The Task Force finds that Ontario is underinvesting:
- Ontario businesses invest about 10 percent less in machinery, equipment, and software, which are critical drivers of productivity and innovation
- Spending on education in Ontarians is much lower than in peer group states, especially in higher education; and young people’s aspirations to achieve university degrees are also lower
- Federal, provincial, and municipal governments in Ontario have shifted their spending more towards areas that consume current prosperity, such as health care and social services, and away from investment in education and infrastructure
- We underinvest in processes to integrate immigrants into our economy even though their qualifications and skills give us an advantage over our peer group
- Through governance and fiscal structures, we are under-investing in our cities where the prosperity gap with the peer group is highest
To close the gap Ontario needs to reverse the widening pattern of under-investment that limits our potential for productivity gains.
The Task Force recommends:
- Ontario and Canada explore opportunities for tax reform to address the high tax burden
- Ontarians raise their educational aspirations, especially since each level of education a student achieves translates into higher income and prosperity
- Strengthening processes for integrating immigrants into our economy
- Finding ways to overcome market and governance structures that are impediments to rising prosperity