Ontario’s 2014 Budget ~ Infrastructure spending overdue but pension plan will stifle small business growth

Forget for a moment that the Ontario Government’s deficit will balloon to $12.5 billion in 2014-15 compared to $11.3 billion last year. And forget, if that’s possible, that our overall debt will grow from $289 billion to $317 billion by the end of 2016-17 – what’s more unthinkable is that in spite of all that, the government plans to increase spending by $3 billion over last year’s numbers – say what?? Wasn’t there an Ontario government not too long ago who thought they could spend their way out of debt? I needn’t remind anyone how that experiment turned out for us.

And if you measure by the standard Debt-to-GDP (gross domestic product) comparatives, Ontario’s Debt-to-GDP will grow to a whopping 40.3 per cent. Compare that to BC at 17.6, Saskatchewan at 6.1, Manitoba at 29.8, and the Maritimes on average at 37.3. And, on the total opposite ends of the scale, Alberta at minus 1.2 per cent, while the worst is Quebec at 51 per cent according to the Royal Bank’s Economic Research of July 8th 2014. Comparing our numbers to Canada’s total Debt-to-GDP of 33 per cent, it becomes quite clear that Ontario is heading in entirely the wrong direction.

If we really want Ontario to guarantee its long-term prosperity, for my money I want to see a far more robust plan to reduce spending and tackle the debt.

We can also ensure Ontario’s economic recovery by focusing more clearly on the needs of small business. If this government truly believes in what it preaches, that small business will be the number one job creators in Ontario, then why the heck would they handcuff them with this proposed Ontario Retirement Pension Plan in 2017? Asking small businesses to buck up for the 1.9 percent of wages (on average $1,800 annually per employee) on top of contributions towards a perfectly good Canadian Pension Plan system is counterintuitive. It’s a bit like someone on a moving ship throwing a life preserver to a drowning man without a rope attached. He may float for a while longer – you just won’t see him again.

At the Chamber we have stressed all along that the best way to allow people who do not contribute to a pension plan is to introduce legislation on Pooled Registered Pension Plans (PRPPs) a new form of tax-assisted individual retirement savings plan for workers without employer-sponsored pension plans. In fact, Eighty six percent of Chamber members in Ontario support PRPPs as opposed to a stand-alone Ontario Pension Plan which will create administrative duplication with the CPP and will no doubt deter job creation.

Equally astonishing is that this budget made no real attempt to tackle the out of control increases in electricity costs. Ontario electricity prices are among the highest in North America, and as such are one of the biggest, if not the biggest, barrier to business expansion in the province. Worse still, they may also be one of the chief reasons why Ontario businesses would elect to look elsewhere to locate. Reducing electricity costs should have been a top priority for this budget. That effort is nowhere to be found.

On the infrastructure file, while I would have to say I am pleased with the $29 billion in dedicated funding over the next 10 years for transit and transportation infrastructure projects, I am not at all convinced that we should be funding it by increasing our aviation fuel taxes. Our airports have enough difficulty in getting Canadians to fly out of their local or regional airports as opposed to flying out of neighboring American cities, without adding, yet again, more cost to ticket prices for both domestic and international flights. As it is we lose nearly 5 million passengers to American airports each year. Surely, there is a more prudent, less damaging way to fund infrastructure.

Finally, the proposed $2.5 billion Jobs and Prosperity Fund aimed at attracting business investment in Ontario while very noble in intent, seems a bit ill conceived. I would argue that we could do much better with the $2.5 billion if we were to invest it in reducing electricity prices in the province, ditching the Ontario Pension Plan, and getting our provincial books balanced once and for all. But that’s just me.

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What are the Liberal Party’s plans for Ontario Business?

In conjunction with the Ontario Chamber of Commerce, Ms. Wynne’s party was recently asked to respond to our top five Business Priorities for the 2014 election. Here is what the Ontario Liberal Party says it will do to create a business climate that fosters investment and growth.

Business Priority 1: Tackle the Debt and Deficit

What specific steps will you take to eliminate the deficit and pay down the debt, while protecting core services that Ontarians value?

The Ontario Liberal Party is committed to balance the budget by 2017-18 in a fair and responsible way, and agrees with the OCC that across-the board cuts would hurt Ontarians and restrict our ability to balance the budget.

We have a strong record of fiscal management and achievement. We have maintained the lowest program spending per capita of any province. We have implemented around 80 percent of the Drummond recommendations, while rejecting those that would diminish public services. We’ve kept spending growth overall at around 2.2 percent over the last three years; less than the growth of the economy and inflation.

The Liberal Plan does not include increases in income taxes on low-to-middle income earners, and does not raise general corporate taxes. Instead, we will:

  • Bring in a modest increase on income taxes for those who can afford it – the highest earning 2 percent of the population
  • Continue to restrain costs through an expenditure review process that will find savings of $250 million for 2014-15 and $500 million for each of 2015-16 and 2016-17
  • Continue to manage compensation costs

Finally, we agree that the federal government must close the $11 billion gap between what Ontarians pay in federal taxes and what we receive from federal spending and transfers. If Ontario was treated fairly, our deficit would virtually be eliminated.

Business Priority 2: Create a Better Business Climate

What will you do to create a more favourable climate for businesses and investment in the province?

Our province is one of the most competitive jurisdictions in the world for new investment: in 2013 we led North America in attracting FDI. Corporate tax rates in Ontario are the fourth-lowest in Canada and almost 15 percentage points lower than any of our Great Lakes competitors. We will create a dynamic and innovative business climate by taking the following key actions:

Energy: Working with the OPA, an Ontario Liberal government would expand and renew the Industrial Electricity Incentive. We will also continue to help businesses save by conserving electricity through our Industrial Conservation Initiative. We’ll expand eligibility to more consumers (3MW and up). Our aim is to continue the 15 to 20 percent energy savings that businesses are currently achieving through this program.

Red tape: This March the Ontario Liberal government introduced The Better Business Climate Act which, if passed, would have helped to reduce unnecessary regulatory burdens. This new legislation and renewal of the associated “Open for Business” initiative will save business over $100 million and countless hours by 2016-17.

Taxes: The Ontario Liberal government has created a highly competitive tax system, especially for small business. We’ve reduced the general corporate income tax to 11.5 percent (down from 14 percent) and small business rate to 4.5 percent (down from 5 percent), with corporate income tax cuts delivering $2.3 billion of tax relief per year.

Further tax cuts before the budget is balanced, as proposed by the PCs, would recklessly endanger Ontario’s plans to balance the budget by 2017-18.

Business Priority 3: Invest in Critical Infrastructure

What specific steps will you take to address Ontario’s infrastructure deficit? How will you pay for them?

A re-elected Liberal government would commit up to $1 billion toward industrial infrastructure development in the Ring of Fire, with or without the federal government. Investing in this infrastructure is vital to the Ring of Fire development. Given the national significance of this project, the federal government should be supporting this, just like it does with nationally significant development projects in British Columbia, Newfoundland and Labrador.

A Kathleen Wynne Government will implement a 10-year infrastructure plan that invests more than $130 billion, including $29 billion for transit and transportation infrastructure projects across the province. We will create two dedicated funds for transit and transportation: one for the Greater Toronto and Hamilton Area, with up to $15 billion available for investment in transit; and one for the rest of the province with nearly $14 billion available for investment in roads, bridges, transit and other critical infrastructure. This investment will introduce train service every 15 minutes on all GO lines. It will mean less congestion on the roads.

The plan includes a balanced and responsible approach to paying for these investments. The funds will be from dedicated sources of revenue:

  • Dedicated gas tax, and HST on gas tax: $14.54 billion or 50.3 percent
  • New revenues: $1.49 billion or 5.2 percent
  • Asset optimization: $3.15 billion or 10.9 percent
  • Federal Building Canada Plan: $2.55 billion or 8.8 percent

The funds will be allocated to specific projects between the GTHA and the rest of Ontario fairly, based on population.

Business Priority 4: Build a 21st Century Workforce

What are your specific plans to address skills shortages in the province?

The Ontario Liberal Party recognizes that the apprenticeship system is a key part of building the well-educated and highly-skilled workforce the province needs to compete in the current and future economy, and has a strong record supporting the growth of that sector in the last 10 years.

Since 2003, the number of apprentices has doubled to over 120,000 in 2013. New apprenticeships have also nearly doubled in the same period. In 2013-2014 alone, we have invested over $165 million in Ontario’s apprenticeship system, including programs that support apprentices and employers, capital investments for upgrades in state-of-the-art equipment, and loans to apprentices to buy tools and equipment that they need to kick-start their careers. These investments will ensure Ontario has the skilled workers it needs to succeed in our economy. Moreover, our investment in better labour market information means that students and their educators will know what jobs to train for.

Ontario Liberals are the only ones with a plan to invest adequately in infrastructure: our $130 billion, ten year building plan will mean thousands of good paying jobs for Ontario’s skilled workers, who will be among the 110,000 Ontarians directly employed by this plan.

Business Priority 5: Address the Pension Problem

How will you ensure that Ontarians are equipped with the resources they need to support themselves during retirement, without placing too great a burden on Ontario businesses?

The Ontario Liberal Party is committed to a strong and secure retirement income system to help ensure that Ontarians are better able to enjoy their retirement years. There are economic ramifications for not acting to avert the retirement savings crisis. Retired people make up a large percentage of the economy. If their spending power goes down, the economy will suffer. And if people don’t have adequate pensions, social assistance costs will soar.

We have a strong retirement income system in Canada, starting with the Canada Pension Plan (CPP). However, the CPP is not enough – the basic structure of its benefits has not changed since 1966. The maximum benefit is only $12,500 per year, and the average benefit is just $6,800 per year. Privately available options do not work well enough to make up the difference; in 2012, there was approximately $280 billion of unused Registered Retirement Savings Plan (RRSP) room in Ontario. Workers and employers must work together to help fund better retirement savings options. However, the federal government has rejected a nation-wide consensus of Premiers, led by Kathleen Wynne in Ontario, and is refusing to enhance the CPP.

We choose to lead. In the absence of federal leadership, as part of our 10-year plan, a Kathleen Wynne government will create the Ontario Retirement Pension Plan (ORPP), the first of its kind in Canada. The ORPP will provide a predictable stream of income in retirement, funded by investment returns and premiums from employers and employees, and will operate at a low cost.

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Room taxes not the answer for what ails Canadian Tourism

It’s Déjà vu all over again as City Council considers the benefits of adding a Hotel Tax (okay call it a fee if you are on the pro side) as a way of adding more muscle to the destination marketing efforts of the local tourism industry.

But, the argument isn’t whether they (hotel taxes) are legal or fair, the argument should be – do they work? There have been numerous opinions as to the merits of such programs and an equal number that have opined the pitfalls. Sure, you can raise more funds (I like calling them taxes frankly) and sure you can likely pump out a lot more advertising and marketing schemes aimed at increasing tourism traffic to our area. But how does one address the well publicized inequities of such programs. What about the jurisdiction just across county lines that does not charge room taxes?  Level playing field? – not so much. Of greater concern is the American traveler who is in no way accustomed to the already high taxes and room rates of Canadian operators compared to that of the U.S. Will the addition of another 2%-3% negatively impact occupancy numbers? Especially now – probably.

And what about the associated players in this sector – the restaurants, entertainment and sports facilities, and beverage emporiums? Should they help to shoulder the added cost of a destination marketing fee? If you agree they should – exactly where does the line of beneficiaries stop anyway? Should we include food suppliers, beverage alcohol products, popcorn growers and oh yes, what about the trucking companies that deliver all that stuff.  Gets a bit ridiculous doesn’t it?!

Even if a room tax came to pass, who then would control the purse strings and allocate the money. Ah ha – but the City of course and ‘aye, there’s the rub’. Contributors to the fund would argue that they should have total control while you just know that the City would have something to say about that.

So why are we resorting to this type of tactic again?  It’s not because the industry isn’t worth it, indeed it is. And it’s not because we don’t have a very effective tourism marketing team already in place because we do. Sadly, it’s in reaction to our senior levels of government increasingly withdrawing from the race for precious tourist dollars.

According to the Discussion Paper, Restoring Canadian Tourism by the Canadian Chamber of Commerce, Canada had been one of the world’s premier tourism locations for six decades running. In fact, just a decade ago, Canada was in the top 10 destinations in international arrivals but has slipped and has now fallen out of the top 20. Canada’s decline is not because it or London has suddenly become less beautiful, engaging or safe. Rather, Canada has failed to respond to changing realities. It has failed to respect the growing choices travellers have, and it has failed to fight for tourism’s future.

 Today, the industry contributes $84.8 billion to the economy and drives private sector growth and jobs in all regions of the country.

Surprisingly, tourism’s contribution to the GDP every year is worth more than agriculture, fisheries and forestry combined. Tourism is also one of Canada’s leading job creators. The industry directly employs more than 600,000 people across the country, a larger employment impact than oil and gas

It is also a sector that could contribute even more to the Canadian economy, given the right policy environment. The global market for tourism is growing at an astonishing rate, but Canada’s share is shrinking.

It would be easy to blame Canada’s tourism challenges on factors that are beyond its control, like the rise of the Canadian dollar, the U.S. recession and post-9/11 policies.

However, the reality is Canada has failed to respond to these challenges by addressing factors that are within its control, such as its layers of regulations, fees and taxes – its very cumbersome visitor visa system and its lack of investment in its national marketing initiatives.

Considering tourism is the largest service export in the country and is worth $17.3 billion a year in export revenue, it’s shocking to me that it doesn’t benefit from the same tax and regulatory support as other export industries. And when you look at what tourism contributes in taxation revenues to governments ($21.4 billion in 2011, nearly $10 billion to the feds alone) it’s hard to fathom why it gets so little in return.

Alarmingly, Canada’s share of this export sector continues to erode, dropping from 20.1 million visitors in 2002 to 6.3 million in 2012.  As a result we now have a $17.8 billion travel deficit which has ballooned by 736% in a decade, making it the country’s second highest deficit after manufacturing.

With this in mind, when our competitors are increasing their investment in tourism marketing initiatives, the CTC’s (Canadian Tourism Commission) budget was counter-intuitively cut by 20% to $58.8 million this year.

So what are some of the causes of this decline? Here’s just a few. Non-airline costs on passenger tickets represent more than 65% of the total ticket cost in Canada. Quite bizarrely in the developed world, only Canada requires users to pay the entire cost of the aviation system, including security, airport infrastructure and air traffic control, on top of the actual charges the airlines levy.

Compare this aviation cost structure to the U.S., our closest competition where aviation is considered an economic spark plug and is supported as such, making it, on average, 30% cheaper to fly to the U.S. than Canada. Tellingly, we are ranked first for airport infrastructure but 124th (out of 140) for overall price competitiveness. So while we have excellent flight frequency, choice and availability, flying in Canada comes at an exorbitant rate.

Case in point, the Canadian Airports Council estimates that almost 5 million Canadians drive to U.S. airports per year and that this cross-border leakage represents a loss of approximately 9,000 well-paying jobs in Canada, employment income loss of $511 million and tax revenue loss of $190 million.

As well, tourism and travel is the only export sector not “zero-rated” for GST, an anomaly worth almost half a billion dollars a year to industry players. And Canada is the only G8 country without a value-added tax (VAT) rebate. Go figure!

Provincial and municipal marketing programs can and do play a key role in attracting visitors. And, while a number of Canadian destinations conduct their own destination marketing initiatives, it’s the national marketing campaigns that are so critical.

Research has consistently demonstrated that travellers chose “Canada” first and then subsequentlydecide on province, region or specific destination. A lack of investment in national-level marketing cannot bereplaced by local/provincial or private marketing initiatives.

Memo to all levels of government: Fix the national tourism marketing inequities, fix the visa processing for inbound visitors, put Canada’s airline industry on a level playing field with the U.S., and change the tourism tax structure to match those of our other export sectors.  Do these things and there will be so much new revenue, municipalities won’t have to think about yet another room tax scenario.

 

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Term Limits for Council? It’s Time to Talk!

Free Press Writer Patrick Maloney, in his article “Just how long is too long?” (LFP Monday, Jan. 6/2014) raises an interesting and thought provoking question.  Should there be term limits for those serving on municipal council? And, if one subscribes to the view that Council acts as the Board of Directors for the Corporation of the City of London, as they (Councillors) readily claim that they are, why then should a member of any board or council have a limitless term? Really good question.

As I started to poke around the issue, I first thought of scanning the very long and cumbersome Municipal Act (Municipal Act, 2001, S.O. 2001, CHAPTER 25) under which most aspects of local municipal authorities are governed. There, under PART II GENERAL MUNICIPAL POWERS – Scope of powers, two things jumped out at me that I thought were germane to the argument: one,

 

8.  (1)  The powers of a municipality under this or any other Act shall be interpreted broadly so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality’s ability to respond to municipal issues. 2006, c. 32, Sched. A, s. 8. – and two:

By-laws

(2)  A single-tier municipality may pass by-laws respecting the following matters:

1. Governance structure of the municipality and its local boards.

Clearly, I am no lawyer, and there are many who are far more capable of deciphering the Municipal Act than I, but at first blush, it would appear to me that London, or any municipality in Ontario, may have the right under the Act to set its own term limits for councillors.

So let’s assume for the moment that it is possible to establish a local by-law limiting these terms. What about best practices and best results? I know it’s not the same as City Council but, here at the Chamber we have a very specific set of term limits for directors (the Board) which allows for the proper mix of continuity, wisdom, sage advice, and importantly – new ideas, fresh thought, and energy. With a two-year term extended by mutual consent for one more two year term, you end up with the ideal mix for a board of this nature. Some can move up to the executive ranks which can extend their term another four years if they are selected as a candidate for President of the Board. In their view, this is quite enough time indeed in service to the business community. This type of format yields the greatest productivity within a defined time limit, maximizes the energies required to deliver peak performance within that time line, and critically – says to the rest of the business community that there is room for you and you are encouraged to put your hat in the ring. In a perfect world, and if all the conditions remain as planned you end up with a churn or attrition rate of about one-third, one-third, one-third.  In other words, a third of the directors are moving out of their terms while another third are just moving in. This provides for the greatest balance, again the best continuity, and it keeps administration on its toes. The Chamber is not the only one that operates with term limits.  The LEDC, the London International Airport Authority, the London. St. Thomas Real Estate Board, the London Home Builders Association, LHSC, and the list goes on and on. Why, because in one fashion or another, these organizations know that it works. It’s simply good governance.

Looking at other models, in New York City for instance, a two-term limit was imposed on City Council members and citywide elected officials after a 1993 referendum there.  And referendums to have it extended have twice failed. Similarly, U.S. President’s are limited to two terms.

And none of us needs to be reminded of the outrage over the recent Senate scandals in Canada with many organizations calling for complete reform of the upper chamber including defined term limits.

There are likely no perfect answers to the question and different arguments from both sides are worthy of more discussion. Will term limits result in “citizen legislators,” bringing more common sense and real-world experience to City Council? Probably not – as there is no evidence that term-limited councillors are any different in their political experience and ambition than those who are not term-limited. Will term limits make councils more diverse? Again, probably not as term-limited councillors are not noticeably different in occupational profile, average age, gender or race.

And then there is the question of will term limits increase competition and decrease campaign spending? I’m guessing that these won’t likely change with term limits, although their patterns might. A term-limited incumbent is rarely challenged for re-election. Instead, people interested in the job will wait for his/her final term.  A good thing? -  not so sure.

How about this one? Will term limits strip council of experience and policy knowledge?  It’s true that dealing with council matters can be complex and it’s also true that in most cases effectiveness will increase with experience to some degree.

All of these questions and more will require vigorous debate and full consideration here in London as well as municipalities right across the province. And with the greatest respect to those long-serving councillors who have worked hard and served their community well for all these years, the time for a fulsome, practical discussion on the benefits associated with defined term limits is now. London has a choice when it comes to this discussion.  We can lead, follow, or, ________(fill in the blanks).

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Give Me Land Lots of Land

It was the Sean Connery character, Jimmy Malone, in “The Untouchables” (1987) who made popular the expression…”Don’t bring a knife to a gun fight”. And that is exactly what London would be doing if doesn’t secure the necessary industrial lands to compete in the “fight” for industrial development and the attraction of foreign direct investment.

To be sure, every community from Windsor to Cornwall and from Ft. Frances to North Bay are all in the same fight – the quest for new development and with it, much needed new jobs. 

To its credit, the City’s Strategic Priorities and Policy Committee this week unanimously approved a plan that will add a minimum of 200 hectares of industrial land to our vastly depleted and “critically low” inventory and even though the cost to acquire the land will cost tens of millions of dollars, and probably more than a decade to achieve, it’s an investment we can ill afford to turn down.

John Fleming, managing director of planning, has said, “If we don’t take on this role, we believe we will miss opportunities.” He couldn’t be more right. Communities all along the 400 series of highways are moving very aggressively to assemble as much industrial land as they can and as fast as they can because they recognize how critically important it is in the “fight” to win new business.

London’s Economic Development Corporation (LEDC) has done a great job in bringing new industries here (Dr. Oetker, The Cakery, Hanwha etc.) but if they don’t have a place where new companies can land, all of their best efforts will go for not and other communities will win the battle for new investment and jobs.

The idea that the city would create an Industrial Land Development Team that would work closely with London Economic Development Corporation to identify and acquire the necessary land is a good one and frankly long overdue. It simple makes good sense to give the LEDC the added leverage it needs to close the deal when they have a client that is keen to make a move here.

Fleming has again quite rightly pointed out that apart from land acquisition, new industries also need to know that we have the right skilled labour force available to ensure future success. Personally, I am very confident that we do, and where we may find ourselves wanting in some sectors, we have Fanshawe College and others more than willing to customize training to be sure we can fill that labour demand.

For its part, the London Chamber of Commerce has been concerned for a number of years that the lack of available industrial lands could set us back economically and put us behind the competitive eight ball if not rectified.

The report that was presented to the Strategic Priorities and Policy Committee was an excellent start and whether the final report comes to Council this December or later in March 2014, the message is clear. We cannot afford to let any opportunities pass us by because we did not have the foresight to secure and prepare the necessary lands that we need to attract new industry and create the jobs that we need to regain our strong economic position that we enjoyed before the downturn of 2008.

The $120 million is a lot of money to be sure, but one can only imagine the hundreds of millions that we will give up if we don’t invest it.

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Chamber’s Positions on the Upcoming 2014 Federal Budget

The President of the Board of Directors, Dave Craven and CEO Gerry Macartney, had the opportunity to present the Chamber’s positions on the upcoming 2014 Federal Budget in a pre-budget consultation hosted by London North MP, Susan Truppe on November 13th at the London Convention Centre.

 During the consultation they had an opportunity to deliver the following points.

 With respect to Debt Management they emphasized the critical need to balance the federal books by 2015-2016 and ensure that the debt-to-GDP ratio falls below 30 per cent by 2016. “Your government, and in particular Finance Minister Flaherty deserve credit for establishing these goals and working to ensure that we meet them” said Dave Craven, President of the Chamber. “These are clearly in line with the goals of the London Chamber and that of our national Chamber in Ottawa”, he added.

On Program Spending they stressed that the government should limit growth in program spending to an average of 1.5 per cent per year through 2015-16 and continue to examine new ways to reduce costs, modernize how government works and ensure value for taxpayers’ money, including in the areas of service delivery, corporate asset management, travel and administrative systems.

On the matter of Tax Policy they emphasized the need for the government to ensure that Canada’s tax system is as neutral, simple, efficient and fair as possible. They also want government to avoid ad hoc changes to tax legislation, like the constant addition of special provisions and targeted tax benefits that some analysts say cost Canadian business about $2-3 billion annually.  They also wanted the government to appoint an advisory panel (similar to the Advisory Panel on Canada’s System of International Taxation) to identify ways to reduce the complexity of Canada’s tax system. This should include a comprehensive review of the hundreds of exemptions, deductions, rebates, deferrals or credits that are part of the federal tax system to determine which ones are inefficient and wasteful. The panel should be supported by a secretariat and rely on the Department of Finance, the Canada Revenue Agency and the Auditor General of Canada for information and data regarding the current system.

 Furthermore they want the government to reduce Canada’s heavy reliance on more damaging, high-cost sources of taxes, namely income and profit taxes, and rely more on consumption-based taxes, like the GST/HST.

 Once the books are balanced, the government should be in a position to reduce the 15 per cent rate that applies to the first $43,561 of taxable income (2012) to 14 per cent, and the 22 per cent rate that applies to taxable income between $43,561 and $87,123 to 21 per cent. They can also raise the threshold at which the top federal marginal personal income tax rate kicks in to $200,000 from $135,054. As a result, income in the $135,054 and $200,000 range would be taxed at a rate of 26 per cent, down from 29 per cent.

 During the exchange they also had an opportunity to share with the MP their frustration over the lack of High Speed Rail services in SW Ontario and the need for her government to demand that SW Ontario, particularly the Windsor/London to Toronto corridor, not be left out of the High Speed Rail Conversation.

 Dave Craven also insisted that the Government needs to accelerate its efforts in support of the Keystone Pipeline and the opportunities that exist to export Canadian energy specifically liquid natural cast in both BC and the Maritimes.

 CEO Macartney pointed out that with the advent of CETA (Canada Europe Trade Agreement) the government must do everything it can to eliminate the wasteful practice of interprovincial trade barriers that cost Canadian businesses in excess of $8 billion annually. Macartney credited Minister Flaherty for attempting to at least partially resolving one of those debilitating issues by trying to get a single securities regulator in place as opposed to the 13 we presently have in this country.

 The chamber will continue to monitor these and other issues and the response to its recommendations as more details of the 2014 Federal Budget become known to us.

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Rejecting 401/PenEquity is a vote against job creation in London!

To suggest support for the now deferred PenEquity offer to build a signature Gateway project along London’s Hwy. 401 corridor is a watershed moment for this city would be a colossal understatement.

Forget for a moment all the arguments being tossed out by various councillors and environmentalists. What’s really at stake here is the possibility, if rejected, that a third arrow would strike right at the heart of London’s reputation as a City that says it wants to grow, that says it wants to develop the 401 corridor, and a city that claims a desperate need to grow new jobs yet fails to deliver when an opportunity like this presents itself.

Fresh on the heels of losing out to Woodstock in the competition to land the much sought after, Texas-based food-distribution giant Sysco Canada (400,000 sq. ft. food distribution employing 250 to 350) as well as the rejection of Sun Life’s proposed Industrial Park in the same general area, London may well be poised to send yet another and perhaps fatal message to developers and global investors alike that we simply don’t want you here.

Are we actually going to tell the world that we will not accept developments along that corridor unless they don’t cost us any money, produce only 6 figure income jobs, and do not impact the environment in any way, shape, or form? That, as Tom Cruise would know, is mission impossible.

And while we continue to play this dangerous game of development roulette, our competitors are kicking our teeth in all along the busiest trade corridor on the planet, the 401/402 corridor (estimated at over $2 billion daily).

The arguments that are being put forward by some councillors against the PenEquity project are troubling to say the least in that they are short on facts and long on political rhetoric. For instance, the land in question does not have 10,000 trees of significant importance. Actually the number is only 1600 of which, most are Ash and Elm that are either infected or are prone to infection. Some argue that we need to protect the wetlands that are there. Fact is there are no wetlands as defined by the Ministry of Natural Resources. It’s only a small pond area that was created by natural run off after the 401 ramp area was built in the late 90s.

And PenEquity didn’t just show up this spring, the LEDC has been working with them on this project since 2010. As to their credentials, Pen is considered a first-class developer with huge projects right across Ontario including Dundas Square in downtown Toronto and the Kanata Centre in Ottawa.

The project itself would provide a signature Gateway at the centre point of the 401/402 that could provide London the visibility that we have long desired with a premier development. And, in case we forgot, it was London (City Councillors, the LEDC, the Chamber and others) who convinced both senior levels of government to invest $100 million in the 401/402 corridor with the promise of future wealth and job creation as our collective lever. Good luck convincing them (senior government) of the need for future projects if we can’t demonstrate that we are prepared to act on that promise.

The PenEquity people are working with a number of international and North American based signature clients that could create not only a strong presence for the city, but will also provide a regional attraction position. These would be new businesses not another set of outlets of stores that are already here. Furthermore it could position London to take advantage of new high-end, US based retailers wanting to come to this region like Saks for instance, which was recently bought by the Bay.

As a life-long supporter of the free market, the contention by those that have no experience in this area that this project will simply cannibalize existing business from other parts of London is, in my view, simply a lot of noise. Pen will, as any responsible developer does, thoroughly analyze market demand and determine what can work and what cant.

Imagine if we took the view that we will never build anything in London ever again because it would compete with those that are already here. You would never have had a Masonville, White Oaks, Home Depots, Lowes, or two Costcos. Hmmmm….seems they are doing quite well thank you very much.

Councilors who contend that the Pen Equity development will poach existing businesses off of Wellington Street or as far away as Masonville, fail to realize that retailers will go where the market dictates. Case in point, Canadian Tire & Winners at Masonville moved to the Hyde Park big box plaza few years ago. Toys R Us and others moved from Wellington to the Wonderland/Southdale region last year – Home Depot from Wharncliffe to Wonderland/Southdale and the list goes on and on.

And are those former locations empty now? Of course not! The market, as it always does, moves in to fill the demand and the new operators in those old locations are doing very well. Only the market can determine what works and what doesn’t.

Moreover, as a destination we attract customers from an area of over 650,000 people, not to mention the potential for attracting new 401 business from the 60,000+ domestic and U.S. vehicles passing each day.

According to the Altus Group (who participate in many London initiatives), they are able to confirm the following forecasts for the project;

• 681 person-years of employment in direct construction representing over 300 jobs during the development phase

• 150 employment jobs regarding materials and services during the construction of the development.

• 1,200 jobs in the completed development based on the average profile of the anticipated clients

• Approx. $9.4 million in development charge revenue for the City.

• Approx. $440,000 in building permit revenue for the City;

• And, an annual property tax revenue of approximately $2.8 million.

Some Councilors insist that there is no way of getting people to this proposed site as there is no public transit. Wrong again, there is existing service along Wellington and Wilton Grove areas directly across from the proposed site and if successful you can bet the LTC would ramp up service to meet demand.

One of the weakest arguments I have heard in opposition to this development is that we (London) don’t want retail jobs and yet these same naysayers are often the ones that demand more work for our youth in an effort to retain them in London.

Fact is, youth employment is the highest in the retail sector and if we hope to retain our youth in London we will need more, not less retail jobs. Besides, retail is an excellent learning ground for business and with a little effort and hard work, management jobs in retail can be quite lucrative, I know from experience. On the flip side of the coin, the City of Ottawa very progressively started a matching service for youth with available jobs in the …..wait for it – Retail sector!! Good on you Ottawa!

So as we watch the growing number of shoppers (including thousands of Londoners) heading off to the jammed Outlet Mall in Milton as well as the other retail giants that have and will continue pop up along the 401, some London councilors would convince you to wait instead for the construction of the next Mayo Clinic, or Microsoft for the so-called knowledge jobs they provide. Really!

My advice is to start asking these same councilors why no investors are interested in London at all….for anything, anytime. In fact you should start asking them right now. Watch for the electronic voting results on this issue in the days and weeks ahead, write them down and remember them when election time roles around next November.

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