OSPE Engineers Dissect Ontario Budget 2020

On November 5, Ontario’s Minister of Finance Rod Phillips released Ontario’s Action Plan: Protect, Support, Recover. The Ontario Society of Professional Engineers was invited as a key stakeholder to be part of the consultation process undertaken by the government prior to the release of the budget.

Ontario Budget 2020 builds on the foundation of three pillars:

The Government of Ontario is projecting a deficit of $38.5 billion for 2020-21. Over the medium term, the government is forecasting deficits of $33.1 billion in 2021–22 and $28.2 billion in 2022–23.

While Ontario’s current levels of spending are critical to get through the pandemic, the government recognizes that this is unsustainable over the long term, thus the focus on building a foundation for recovery fuelled by economic growth. Acknowledging the continued uncertainty of the global pandemic, the government plans to table a path to balance in the 2021 Budget. Ontario’s 2020–21 net debt-to-GDP ratio is now forecast to be 47.0 per cent.

The government plans to update its debt burden reduction strategy in the 2021 Budget. Acknowledging the continued uncertainty of the global pandemic, the government plans to set a long-term target for the net debt-to-GDP ratio along with a path to balance in the 2021 Budget.

OSPE has identified the following areas of the Budget that are of most interest to our membership:

  • Increasing average daily direct care from a nurse or personal support worker (PSW) per long-term care resident to four hours a day over a four-year period,
  • Investing $2.8 billion in a Fall Preparedness Plan to support response efforts to the second wave of COVID 19. Key investments include over $1.4 billion to continue to ramp up COVID 19 testing, case and contact management, $351 million to support 2,250 hospital beds, $284 million to address the surgical backlog and $70 million to purchase influenza vaccines;
  • Investing $1.75 billion to increase long-term care capacity and access for residents by building 30,000 long-term care beds. The government is also introducing a new and innovative Accelerated Build Pilot Program that will enable the faster construction of four new long-term care homes and add up to 1,280 beds to the sector, with a targeted completion of early 2022;
  • Investing an additional $572 million in hospitals for costs incurred during the pandemic;
  • Providing $270 million for public health, home and community care supports and virtual care and Telehealth initiatives;
  • Providing over $1.5 billion for pandemic pay — a temporary pay increase of $4 per hour for more than 375,000 frontline workers for work performed from April 24 to August 13, 2020 — in partnership with the federal government;
  • Purchasing nearly $1.1 billion in personal protective equipment (PPE) and other critical supplies to protect our health care workers, patients and people across the province;
  • Providing $461 million in temporary wage increases, effective October 1, 2020, for over 147,000 personal support workers (PSWs) and direct support workers who deliver publicly funded personal support services, helping the province attract and retain the workforce needed to care for patients, clients and residents in response to the COVID 19 pandemic;
  • The Province is hiring 98 new occupational health and safety inspectors to help ensure workplaces across Ontario are doing their part to prevent the spread of COVID 19.
  • To help employers develop safeguards that protect workers from COVID 19, the Ministry of Labour, Training and Skills Development (MLTSD) has published COVID 19 guidance resources for the workplace.

    IMPACT: As the COVID-19 pandemic affects all Ontarians, including engineers, OSPE is glad to see that this budget seeks to address some major concerns that our members are facing daily. OSPE is glad that the province is hiring more Occupational Health and Safety Inspectors, as well as providing COVID 19 sector-specific Workplace Safety Guidelines. This will ensure that the vital work performed by engineers continues to be done in a safe manner.
Accelerating the Delivery of the New Subway Transit Plan
  • The Building Transit Faster Act, 2020 aims to expedite the planning and construction process by relocating utilities more efficiently while treating businesses fairly, ensuring the assembly of land required to construct stations, ensuring timely access to municipal services and rights-of-way, allowing the Province to inspect and remove physical barriers with appropriate notification to property owners, and ensuring nearby developments or construction projects are coordinated to avoid delays.
  • The Transit-Oriented Communities Act, 2020 seeks to help the Province work with municipal and regional partners to build more housing, including affordable housing, around transit stations and hubs, create jobs, offset the cost of station construction that would save taxpayers money, build complete communities, increase transit ridership, reduce traffic congestion and stimulate the economy for years after COVID‑19.
Building Highways, Roads and Bridges
  • The government has allocated $2.6 billion in 2020–21 for the rehabilitation and expansion of Ontario’s highways and bridges across the province.
IMPACT:  OSPE commends the government’s continued approach to invest in infrastructure, which includes public transit and infrastructure that supports trade and transportation. OSPE agrees that funding infrastructure projects is a beneficial, long-term investment. However, given that funding is finite, OSPE believes money must be spent wisely and hard decisions need to be made in terms of which infrastructure projects get approved. OSPE stresses to all levels of government that key decisions on infrastructure should be evidence-based and made in consultation with infrastructure experts, including engineers.

OSPE believes that Ontario should develop a transparent framework that informs how infrastructure projects will be prioritized, sequenced, and funded, including the mechanisms and models for funding. Ideally, this framework would be jointly developed by all levels of government, industry participants, community organizations, and other interested parties.

Engineers believe that the COVID-19 pandemic provides an opportunity to invest in infrastructure as a key method that will drive economic growth in Ontario. However, mistakes of the past should not be repeated. Infrastructure projects should:
  1. Not only be “shovel ready” but also “shovel worthy”: to ensure preparedness for future events and build an economy that is strong and benefits all people, it is imperative that new funding allocations provide a sustainable benefit for diverse, future generations by ensuring a targeted focus on building sustainability. OSPE believes that proper, smart, and prioritized investment in sustainable infrastructure will help alleviate the economic burden the province is facing, while decreasing unemployment rates in several critical sectors of the economy.
  2. Make use of a Qualifications Based Selection (QBS) framework: given Ontario’s current economic and fiscal situation, it is essential that all public infrastructure investments be transparent and return the greatest possible value for money. By adopting Qualifications-Based Selection (QBS) as its best practice for the selection of consultants, the government can realize the greatest possible value for investment in its infrastructure projects.
  3. Effectively report life-cycle costing: it is essential that all infrastructure projects conducted by the province properly report and consider life-cycle costing. To gain the maximum value for money, all costs incurred over the whole life span of infrastructure projects must be estimated. This will ensure that taxpayer’s money is used for infrastructure projects that are able to produce multigenerational benefits for most Ontarians at a proper cost.
  4. Consider diversity and inclusion: the provincial government should implement supply chain diversity policies. This will enable the province to use procurement to advance equity, diversity, and inclusion.
Supporting a Greener Economy
  • The government has successfully developed a made-in-Ontario alternative to the federal Output-Based Pricing System (OBPS) for emission reductions. In September 2020, the federal government accepted Ontario’s Emissions Performance Standards (EPS) program as an alternative to the OBPS. Ontario’s EPS will help the province achieve its share of Canada’s 2030 emission reduction targets while supporting economic growth.
  • In August 2020, the government launched Ontario’s first-ever multi-sector climate change impact assessment, anticipated to be released in 2022. This study will include a comprehensive assessment of climate change impacts on Ontario’s communities, economies, and the natural environment, and will provide information to help to strengthen the province’s resilience to the impacts of climate change.
IMPACT: OSPE is glad that Ontario was able to develop an output-based pricing system for emission reductions. Engineers believe that this is a key step forward towards the development of a comprehensive climate change strategy that will truly reduce emissions.

Improving Management of Wastewater and Stormwater Discharges To further protect the health of communities and ensure that water resources are safeguarded for future generations, the government is investing in several new and innovative wastewater and stormwater programs, which include:
  • $15 million over two years in one-time funding to support municipalities to improve the management of Lake Ontario wastewater and stormwater discharges, to reduce combined sewer overflows and bypasses, lower phosphorus discharges, and ensure the growing population along Lake Ontario can continue to benefit from cool, clean water;
  • $10 million to provide support for wastewater monitoring and public reporting, to improve transparency around monitoring and public reporting of sewage overflows and bypasses from municipal systems in the Great Lakes; and
  • $12 million over two years in one-time funding to establish a pilot for detecting COVID‑19 in raw wastewater, which could provide an early warning of COVID‑19 outbreaks. This could help the health care sector take early action to safeguard communities. The pilots would inform where to implement more focussed monitoring and the development and application of better decision tools for public health policy.
IMPACT: Since 2017, engineers have called on the government to increase investment in green infrastructure, where adequate, and municipal stormwater infrastructure, to help protect communities across Ontario. OSPE’s Weathering the Storms: Municipalities Plead for Stormwater Infrastructure Funding report found that most municipalities do not have adequate stormwater infrastructure asset management plans, funding resources to meet the changing demands and regulatory requirements for these assets, and/or the human resources to appropriately track and monitor assets and their metrics.

Participating in the National Disaster Mitigation Program
  • In response to calls from the provincial government, the federal government announced in July 2020, a two-year renewal of the National Disaster Mitigation Program (NDMP). Ontario will continue its participation in the NDMP in 2020–21 and 2021–22 to make federal funding available to municipalities, conservation authorities and other eligible organizations for flood mapping and flood mitigation projects. This will help reduce the risk of flooding to homes and businesses across the province, contribute to flood preparedness and reduce the economic impacts of flooding over the long term.
IMPACT: OSPE is glad that Ontario has committed to continue its participation in the NDMP. However, the Ontario Government must do more to fight flooding in the province. OSPE has been calling on the government to update the province’s flood mapping program and ensure it recognizes new technology and approaches for flood hazards. This should be updated and reviewed frequently. Such mapping should inform the creation of “municipal/communal flooding briefs” that identify and analyze the following flood risk factors.
Providing Electricity Cost Relief to Ontario Families
  • The government is focused on trying to provide greater customer choice for families, small businesses and farms who pay time-of-use (TOU) electricity rates. As of November 1, 2020, these consumers can choose a rate plan that best suits their household and lifestyle, with the option of either TOU or tiered pricing. Tiered pricing provides a set rate for electricity up to a certain level of consumption regardless of the time of day it is consumed. 
  • Starting on January 1, 2021, a portion estimated at approximately 85 per cent wind, solar and bioenergy contracts, entered under the previous government, will be funded by the Province, not ratepayers. The government claims that removing these costs from electricity bills will result in medium size and larger industrial and commercial employers saving about 14 and 16 per cent respectively, on average.
IMPACT: Giving consumers the choice to switch to tiered rates may have three negative impacts.  If consumers who switch to the Tiered Price Plan begin to use more of their electricity during peak hours, the power system will need more peaking capacity. That peaking capacity is likely to be fueled in part by natural gas which emits carbon dioxide. We could also have more surplus clean electricity at night that may be discarded. Those impacts will cause the price of electricity and emissions to rise.

OSPE recommended to the Ontario government in April 2019 that a better option is to have people volunteer for an optional price plan that allows them to get surplus clean electricity that is available between midnight and 6 am at very low prices. That electricity is sold to New York, Michigan and Quebec at prices under 1 cent/kWh. OSPE believes it would be better if we had a voluntary special TOU price plan that provided a 4th price period at the very low export rate from midnight to 6 am. Ontario consumers could then use that cheap and clean electricity to charge their electric vehicles and displace some of their fossil fuels used for hot water and space heating by purchasing a duel electric-fossil fuel furnace with a smart controller to use clean electricity for heating when available. In addition, industry could use that clean surplus electricity at those low prices to make low cost clean hydrogen for industrial use or to power the new fuel cell vehicles that will be introduced in Ontario in the near future. Ontario consumers would then benefit from lower fossil fuel bills and lower emissions.

Réjeanne Aimey, P.Eng., President and Chair of OSPE reiterated that “Re-allocating surplus electricity by way of price reform is the next step in Ontario’s advancement, and engineers are equipped with the innovation and scientific skills to accomplish this.”

Therefore, OSPE would like to caution the public to make sure they do not ask to switch to the Tiered Price Plan before they have checked to make sure their bill will not rise after the switch.For more information read our detailed analysis of this policy decision HERE.  OSPE will also continue to monitor this file and keep advocating for lower electricity prices for all Ontarians, not only businesses.

Supporting Small Modular Reactors in Ontario
  • The Province is supporting small modular reactor (SMR) development in Ontario, stimulating the creation of new jobs, and supporting the province’s economic recovery. In December 2019, Ontario signed a Memorandum of Understanding (MOU) with Saskatchewan and New Brunswick, committing to collaborate on the development and deployment of SMRs. In August 2020, Alberta also announced its intention to enter the MOU. 
IMPACT: OSPE commends the government’s steps towards the development of SMRs in Ontario. However, there are still some challenges to address with SMRs. The World Nuclear Association has identified licensing costs and waste management concerns as issues to overcome for favourable economics of this technology. The Canadian Nuclear Safety Commission has also noted that more research is required before licensing this technology as reliable and safe.

OSPE believes that the Government of Ontario should continue to include the development of SMRs as part of a long-term comprehensive energy strategy in partnership with other provinces and the federal government. This strategy should address:
  1. The limited supply of economically recoverable Uranium 235 needed to power SMRs.
  2. Security and safety concerns.
  3. Concerns regarding the disposal of long-lived used fuel and other nuclear waste.
  4. Lack of public knowledge regarding SMRs.
  5. The need for Indigenous engagement in advance of specific project proposals.
  6. The unique challenges faced by northern communities due to access and remoteness.
Supporting Research and Development

As part of the response to COVID‑19, Ontario is proposing to extend reporting deadlines for the Ontario Research and Development Tax Credit (ORDTC) to give corporations more time to file a claim. See Annex: Details of Tax Measures and Other Legislative Initiatives for further information.

The government is investing in a series of research initiatives to help stimulate the economy and support COVID‑19 recovery efforts, including:
  • An additional $2 million for the Ontario Health Data Platform, which will explore opportunities to integrate datasets and support research projects related to the COVID‑19 response;
  • An investment of $3.5 million, co-funded with the Canada Foundation for Innovation, to support the operations and maintenance related to Advanced Research Computing in Ontario; and
  • Up to $2 million in funding to enhance collaboration across the research sector.
IMPACT: OSPE is pleased to see the Ontario Government’s commitment to fuel research and innovation activities in the province. The extension of the reporting period to claim an ORDTC will help corporations, particularly small to medium enterprises, to potentially reduce their corporate income tax payable based on eligible scientific research and experimental development expenditures. As outlined in our pre-budget submission, SMEs have had to shift their operations, processes, products, and services because of COVID-19. This has come at a significant cost for many organizations and the need to invest in research and development has become crucial to their ability to remain competitive. Tax credits such as the ORDTC are one way that the government can reduce this burden on corporations.

Further, the investments highlighted above, demonstrate that the government is emphasizing digital transformation and advancements in technological uptake. Supporting collaboration across the research sector will also bridge current gaps in Ontario’s complex innovation ecosystem.
  • To help people retrain and upgrade their skills, the government is investing an additional $180.5 million over three years in micro-credentials, employment services and training programs, including apprenticeships. The Province is taking comprehensive action to help get people back to work and contribute to Ontario’s economic recovery, including a focus on the groups and sectors most impacted by the pandemic.
IMPACT: OSPE is glad that the government understands the need to invest in apprenticeships. We commend the focus on an integrated, multi-phased approach that equips more people with the skills needed to get quality jobs through apprenticeships. However, OSPE believes that more should be done to ensure that engineers, and not only tradespeople have access to these opportunities. As engineers lead the design aspects of many projects across these sectors, without supporting engineers in upskilling and keeping up with evolving trends, it will be very difficult to innovate in the province. This inability to innovate within these sectors will mean a loss of opportunities for new job creation for both professionals and tradespeople.
Generating, Protecting and Commercializing Intellectual Property

In May 2019, the government created the Expert Panel on Intellectual Property to identify the key challenges impeding the success of Ontario’s innovation ecosystem. Following the recommendations made by the Expert Panel, the government introduced the province’s first Intellectual Property Action Plan in July 2020.

The government is investing $1.5 million towards the Special Implementation Team on Intellectual Property that has been established to support the government’s plan, which includes four components:
  • Working with postsecondary institutions and research institutes to strengthen mandates related to commercialization entities within their organizations;
  • Strengthening Ontario's IP literacy by developing standardized, web-based basic and advanced IP education curriculums;
  • Creating a centralized provincial resource entity that will increase access to sophisticated IP expertise and help companies develop IP strategies; and
  • Developing a governance framework for organizations supporting entrepreneurial and innovation activities, which incorporates IP considerations.
IMPACT: We commend the government’s recent announcement to develop a Made-in-Ontario Intellectual Property Action Plan, to ensure that the social and economic benefits of research and innovation are incentivized and retained within the province. Many engineers and engineering school graduates are either entrepreneurs involved in launching SMEs or otherwise associated with SMEs.

As such we believe that the government must still address three key barriers currently preventing all types of SMEs from pursuing the generation, protection, and commercialization of IP:
  • Limited access to IP professionals with practical expertise (patent agents or patent lawyers)
  • Lack of transparency and uniformity in the process to engage research institutions in IP development and commercialization
  • Cumbersome administrative requirements that impact the access for funding
  • The Government is investing an additional $60 million over three years starting in 2020–21 in the Black Youth Action Plan, doubling its base funding to extend the current program and create a new economic empowerment stream that will support Black youth in achieving social and economic success. Consultations will inform these new enhanced BYAP investments, which will support pathways for lifelong social and economic success including:
    • Refining focus to better support Black communities to thrive and achieve economic success;
    • Expanding government partnerships, particularly with businesses and high-growth sectors, to increase economic inclusion and address systemic barriers; and
    • Enhancing educational outcomes for Black children and youth and increasing labour market participation through entrepreneurship and trades.
IMPACT: OSPE applauds the government for making an investment to support Black youth in achieving social and economic success. As a profession that is seeking to break down barriers and attract diverse peoples to engineering, this is a great start to breaking down socio-economic and racial barriers. However, we encourage the government to enhance education outcomes for Black children and youth and encourage their participation not only to trades and entrepreneurship, but also to professional careers such as engineering.  

A more diverse and inclusive engineering profession will lead to a more prosperous Ontario. We also encourage the government to consider other policies that advance the economic position of women, Black, Indigenous, and other people of colour, as well as members of other equity seeking groups such as those with disabilities, members of LGBTQ2+, etc.  

The government cannot afford to make decisions that exclude communities and individuals across the province. Failing to guarantee the equitable distribution of economic and social gains is both unethical and economically damaging. It is critical to get ahead of the curve and integrate inclusion from the onset rather than filling the gaps retroactively. To ensure that this does not occur, the Ontario Government can use the federal government’s Gender Based Analysis Plus (GBA+) tool as a model. The Government of Canada has been committed to using a GBA+ approach in the development of policies, programs, and legislation since 1995. Using a tool like GBA+ will ensure that, moving forward, decisions account for diverse needs and avoid a disproportionality of benefits. Communities across the province experience this today with issues such as limited broadband connectivity in rural locations or unsafe drinking water. GBA+ can be used in all sectors and domains of government such as:
  • To review large procurement projects to ensure products and equipment meet diverse needs.
  • To improve labour policies and contribute to more diverse and inclusive workplaces both within and outside of the public sector.
  • To address labour and talent shortages in sectors such as manufacturing and mining by considering barriers to entry for some segments of the population.
We also urge the government to consider policies that close the wage gap, reduce the burden of unpaid care, and encourage diverse and inclusive workplace practices.

 

For more on OSPE’s views on the Province’s spending, Read our 2020 Pre-Budget Submission

 

 What did you think of Ontario Budget 2020? How will it impact you as an engineer and Ontarian?

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