Ontario’s Economy: Two Minutes from Now
BY ANGUS GILLESPIE
The economy of Ontario is the largest in Canada; rich and diversified, with a gross domestic product nearly twice that of neighbouring Quebec – Canada’s second largest economy.
Manufacturing still plays a critical role in employment, creating thousands of good-paying jobs throughout the province, which now has 14 million residents. However, the need to develop more in the way of advanced manufacturing techniques is clearly what will distinguish the international players who survive and those who perish. Motor vehicles and auto parts still accounts for more than 30% of all Canadian exports. Agriculture, energy and mining also remain crucially important. These are just a few examples of areas where innovation is necessary to remain competitive on a global scale. In fact, the success of one sector most often directly impacts on the others. As example, exorbitant hydro rates continue to be one of the primary concerns that face manufacturing.
With the year 2016 upon us, Ontario Minister of Economic Development and Infrastructure Brad Duguid recently addressed the Economic Club of Canada where he talked about what he calls the tale of two economies as the world continues to develop with daily advancements at what seems like the speed of light.
“We live in the best of times and we live in the most challenging of times,” Duguid says. “It’s the most intimidating of times and the most exciting of times.
“Our generation of leadership is being challenged like none before us. We are the first generation to live in two economies at the very same time.”
What was once known as the next generation economy, or the economy of tomorrow is now here. It’s the economy of today and it is the current generation of the workforce that must deal with it.
“We still live and compete in the economy of today but we must live, lead and compete in what I refer to as ‘the economy two minutes from now’,” Duguid says. “I’m pleased to confirm that in the economy of today Ontario is competing and doing well overall.”
Exceptional talent, tax rates and infrastructure investment among other things have helped Ontario lead the country in growth. It’s all made the province No.1 in North America for attracting foreign direct investment for the past two years in a row.
Ontario Finance Minister Charles Sousa recently released the fall economic statement. It included a new business growth initiative representing the first steps to a refresh for our economic development strategy. Ontario is among the leaders in growth in Canada and North America but it is evident the province must step up its game in order to stay perched in such as prime position to lead both domestically and globally.
“One concern that I hear from businesses time and time again is that we’re still in their faces far too often. Regulatory burden is still a challenge in this fast-paced global economy. We’re slowing businesses down when we need to be helping them speed up,” Duguid emphatically states.
About 80,000 regulatory burdens have been reduced in the last six years, which is a great start and increased roundtable efforts with business sectors have been very successful. Since 2014, the Reducing Regulatory Burdens Program achieved $50 million in cost savings for Ontario businesses and just as importantly 2.4 million hours saved for businesses in Ontario.
“When we look back at the HST and corporate tax reforms, as tough as they were politically for us to bring in, they are now saving businesses in compliance costs; $635 million every year,” Duguid emphasizes. “But in today’s fiercely competitive global economy we need to do more.”
Additionally, Duguid says his government is taking the Open for Business program to the next level.
“Over my 21 years in elected office one thing that I’ve experienced is that government structures are simply too slow to react, to respond and to drive regulatory reform at a globally competitive pace,” Duguid candidly states.
Duguid says the Province is restructuring the way it makes decisions regarding the regulatory burden within government. It’s a promise to set up powerful new structures with authority and a mandate to drive change throughout the entire organization. It’s not the type of work that makes headlines but will help drive a culture shift through the provincial government resulting in quicker response times for business concerns.
Another new initiative is called the Red Tape Challenge, an online crowd-sourcing platform to reach out to all businesses large and small, to tackle red tape and eliminate it. Quite simply, the government needs to find ways to ensure public and private sector work together to make the entire process easier to do business. Duguid says the approach reaches out beyond the usual stakeholders and has worked well in other jurisdictions, including the United Kingdom.
In the fall economic statement, the Ontario government announced it would be reducing the time it takes to review air, noise and environmental approvals. Streamlining road permits to speed up the movement and fast-tracking mining procedures with online registration and electronic processes.
“We’re also responding to requests from industry for certainty with regard to provisions around the scope of work for engineers and industrial settings,” Duguid says.
Another common annoyance for enterprise is the incessant amount of duplication. It costs Ontario businesses millions of dollars and it’s creating a place of un-competitiveness for them. This topic was the catalyst for a meeting between Duguid and Toronto Mayor John Tory.
“In Canada we have three levels of government and that means three levels of regulations, inspections and regulatory burden. It can be uncoordinated and ripe with duplication,” Duguid begins. “Mayor Tory and I launched an initiative called the Toronto-Ontario Burden Reduction Project. We’re determined to bring our governments together with our business leaders to find a way to better coordinate and reduce duplication in our interactions with business. I’m confident it will contribute significantly to our goal of making Ontario the easiest place in the world to invest.”
The ‘economy of two minutes from now’ includes disruptive technologies, which are changing the way we do business. The way we consume products in the very way we live. Duguid says his government has had an eye on this for more than a decade now and have doubled investment funding in research. A disruptive innovation creates new markets and value networks, thus disrupts existing market methodologies, but it’s all become necessary because the change in inevitable. It’s a hard pill for traditionalists to swallow, but the fact of the matter is we must move with the times or be left behind. Ontario has the expertise, funding and overall capabilities to lead, and failing to do so would be a major opportunity wasted.
MaRS, one of the largest bioscience and science innovation centres anywhere in the world was an important part of that innovation effort. Now, the MaRS west tower, which has just been constructed, is now 84% leased and will likely be fully leased very soon and is already one of the largest innovation hubs anywhere in the world. It’s attracted a mix of institutional and private sector tenants, including disruptive bio and tech innovation leaders.
Universities and colleges are seizing the opportunity by developing world class centres of innovation. The Toronto-Waterloo super-tech corridor is truly coming of age and is becoming known as Ontario’s single greatest competitive advantage in ‘the economy of two minutes from now’.
Toronto now ranks second only to Silicon Valley when it comes to information communication technology. We now have 19,000 ICT companies driving disruption throughout our economy, but just as importantly, throughout the world.
C100 is a group of ex-patriate Canadians who run a non-profit, member driven organization in Silicon Valley, where Duguid recently visited and brokered an interesting deal. A partnership was launched with the Toronto International Film Festival called Venture North. Capital leaders from Silicon Valley were invited to Toronto to experience the incredible growth happening in Ontario’s start-up community.
“Our expectation was that we’d see half a dozen – at most – entrepreneurs and venture capitalists take us up on this. Our result was close to 30. It was a huge success,” Duguid exclaims.
In the past few years there have been incredible advances in areas like 3D printing, supercomputing, artificial intelligence, sensors and bioscience. Ontario’s ecosystem is absolutely blessed with so much talent in all those areas. Technology will continue to disrupt our lives – in a positive manner, if we take full advantage of what is at our disposal.
A special advisor to the automotive sector for the provincial and federal governments is Ray Tanguay, retired Chairman of Toyota of Canada and the highest ranking official outside of Japan. He took on the role as of June, 2015 and was instrumental in introducing Duguid to more than 25 new business prospects in Japan relating to the aerospace and automotive industry. Duguid was recently on the campus of the University of Waterloo where engineering students have built a driverless golf cart, capable of driving and parking by itself.
“The announcement we made that day was to open up roads to autonomous vehicle testing. A few weeks later when Ray Tanguay and I were in Japan they knew we had been doing that. That’s the type of proactive initiative we must take in this province if we are to stay ahead of the innovation curve,” Duguid remarks.
Ontario continues to be the No.1 producer of automobiles in North America but it is constantly changing. The choice is to either lead the way with disruptive technologies or be left behind.
“We’re fortunate to have the innovation capacity to lead with ICT and research and development for the connected car, driverless technology, fuel cell technology, cleantech and even sound system technology. We need to be leaders – not followers.
“One of my top priorities as your minister of economic development is to work with GM to get a feature mandate for their Oshawa assembly plant. Tens of thousands of jobs depend on it. But at the same time we must get the supply jobs in tech, because those are part of ‘the economy of two minutes from now’.
Auto, aerospace and health are prime examples of sectors directly affected by disruptive technology. It’s being developed exponentially fast. Most of it is not being led by governments but consumers. The pace of technological change outpaces the speed at which governments react, rendering the regulatory systems of yesterday horribly outdated and inapplicable.
Uber is a prime example of disruptive technology in the transportation services industry, leaving taxi cab companies – and government bodies – in a quandary over how to deal with it. Disruptive innovation covers virtually every sector of enterprise as we head through the 21st century, whether it’s education, communication, computer hardware, data storage, manufacturing, healthcare, publishing or transportation. Where it will all lead, nobody knows for sure. But one thing that is certain is that regions must continue innovating, or risk being left behind. Those two minutes will go by rapidly.