This discussion paper is intended to serve as a basis for conversations with a broad range of Ontarians who are interested in the province’s economic future. As a starting point, we would propose five objectives that a federal policy agenda should support:

• increased labour force participation;
• increased productivity;
• improved economic opportunity for all and reduced poverty;
• increased exports; and
• an improved federal fiscal framework that supports Ontario.

This discussion paper focuses on seven issues that require attention from the federal government if we are to see measureable progress in achieving the five goals we have identified:

• Infrastructure
• Workforce development
• Immigration
• Trade and investment
• Innovation
• Federal transfers
• Targeted strategies for sectors and regions

In all these areas, cross-cutting themes emerge, such as greater Aboriginal participation in the labour market and economic opportunity for young people.
Please read this short paper and provide your advice on the issues it raises. Based on the advice we receive and additional research we are conducting, our intention is to release A Federal Economic Agenda for Ontario in the spring of 2015 to help shape the policy debate in advance of the federal election.

Why does Ontario need a Federal Economic Agenda?
Ontario has historically been a desirable place to live, work and prosper. Our competitive business environment, safe communities, stable government, diverse population, access to natural resources, and high quality education and social programs have attracted people and investment from around the world throughout our history. A prosperous Ontario has historically been the foundation of a strong Canadian economy.

Despite all of these assets, Ontario is facing a clutch moment. The economy is growing at a slower pace than it once did, and is expected to continue to do so well into the future.1 Lagging innovation and productivity, weak job growth (particularly for youth and immigrants), an ageing population and large public debt loads are amongst the many challenging issues facing governments and policy-makers.

A clear understanding of these challenges, along with realistic policy options to respond, is necessary. In October 2015 voters from across the country will cast their ballots in the federal election. There is currently no federal agenda uniquely designed to respond to the forces, challenges and opportunities facing Ontario or a strategy designed to strengthen the Ontario and, by extension, the Canadian economy.

While the provincial and local governments, the private and not-for-profit sectors, labour and others all have a significant role to play in addressing the challenges outlined in this discussion paper, our project is focused on the federal role. Some issues cannot be left to any actor than the federal government. For example, the structure of fiscal federalism continues to shift resources away from rather than towards Ontario at a time when Ontario’s fiscal capacity and GDP are below the national average. The fact that the suite of federal fiscal transfers leaves Ontario worse off rather than better off is something that the federal government alone can change.

Drivers of change and impacts on Ontario’s economy
The last decade has seen enormous change in the structure of the global, Canadian and Ontario economies. It is likely that the next decade will continue to demonstrate structural and disruptive change. Globalized trade and increased competition, the rise of the Canadian dollar, the financial crisis and subsequent recession, the rise of emerging markets and a new middle class, and the sustained commodity boom have each, in their own way, been experienced by Ontario.

The consequences of these larger global forces are well-known to Ontarians:

• growing income inequality, wage stagnation, and an increase in precarious employment, which now accounts for almost a quarter of all employment in Ontario;2
• low productivity growth, with both Ontario and Canada experiencing over the past 30 years a sustained plateau in productivity growth compared to our peers;3
• high levels of public debt; and
• the striking decline of the manufacturing sector, which has shrunk by 30% and 300,000 jobs over the past decade.

While governments cannot control the forces that are shaping economies globally, they can react to them. They should use the wide variety of policy tools at their disposal to anticipate and respond to these disruptive forces to support communities in their efforts to emerge stronger from this period of transition.

The forces have been experienced differently in different parts of the province, with mid-sized communities with a heavy reliance on manufacturing being particularly hard-hit. But no part of the province has been immune to the forces or the problems that have been caused. In many parts of the province there is widespread anxiety about the future. Nearly 60% of Ontarians expect that the next generation will be worse off 25 years from now than people today.4 Despite this loss of confidence, there are also enormous opportunities that can be seized during this period of global and national economic re-structuring. An engaged federal government is necessary for communities across the province to build the foundation for the next era of Ontario’s prosperity.

Opportunities for Future Prosperity
Ontario has many strengths, and with the right efforts by governments and other actors, is well-positioned for future prosperity. A diverse, well-educated population; a competitive tax environment; vibrant safe cities; a dynamic global city-region; a healthy ecosystem with access to water, natural resources and arable land; and a diversified economy with globally competitive firms and clusters will continue to support economic growth, job creation and attract foreign direct investment. This discussion paper is intended to support a conversation that will lead to a credible actionable federal agenda to support the next wave of Ontario prosperity.

The federal government controls many of the levers required to unleash Ontario’s full economic potential. This paper suggests some of the possible ways those levers could be deployed. Upon completion of this project, our hope is that all Ontarians will have an evidence-based resource to use to raise important issues with federal political parties during the next federal election. Our goal is that all federal parties clearly articulate how they will work with the Ontario government, stakeholders and specific communities and sectors to ensure that Ontario has a strong economic future in the coming decade.