HomeMy WebLinkAboutOS 04-12
Cit, 00 Report to
Council
PI rKERING Report Number: OS 04-12
Date: February 21, 2012 i
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From: Tom Melymuk
Director, Office of Sustainability
Subject: Proposed Southwestern Ontario Development Fund
- Ministry of Economic Development and Innovation
File: A-1440-001-12
Recommendation:
1. That Report OS 04-12 regarding the proposed Southwestern Ontario Development
Fund - Ministry of Economic Development and Innovation, be received.
2. That Pickering Council request the Minister of Economic Development and
Innovation to ensure that all municipalities in the Province have equal access to
development funding opportunities.
3. That the City Clerk forward a copy of this report to the Premier of Ontario, the
Minister of Economic Development and Innovation; the Minister of Finance, the
MPPs for Pickering- Scarborough East, Ajax-Pickering, and all other members of
Provincial Parliament in Durham Region, Regional Council and all municipal
councils in Durham, and the Ajax-Pickering Board of Trade.
Executive Summary: The Province recently introduced legislation proposing the
permanent establishment of the Eastern Ontario Development Fund (EODF), and the
proposed creation of a new and permanent Southwestern Ontario Development Fund
(SWODF) to help a number of communities in Ontario create jobs and attract new
investment.
Municipalities proposed to be covered by this legislation include Kitchener-Waterloo,
Barrie, Windsor-Sarnia, Stratford-Bruce Peninsula, London, Hamilton-Niagara and
Burlington.
Durham Region has similar unemployment levels and economic conditions as many of
the communities included in the Southwestern Ontario Development Fund
announcement. The exclusion of Durham Region from this or any other similar funding
opportunities places municipalities from the Region at a significant disadvantage in
attracting new investment and jobs. It is therefore recommended that the Minister of
Economic Development and Innovation ensure that all municipalities in the Province
have equal access to development funding opportunities.
Report OS 04-12 February 21, 2012
Subject: Southwestern Ontario Development Fund Page 2
Financial Implications: Pickering's local economy could see a loss of jobs and
investment if not included in the proposed Southwestern Ontario Development Fund or
a similar fund, as well as business closings and a loss of municipal revenue through
reduced property taxes.
Discussion: On November 29, 2011, to help address certain challenges in
the provincial economy, the Province of Ontario introduced the Attracting Investment
and Creating Jobs Act, 2011. The legislation proposes to make an existing Eastern
Ontario Development Fund permanent, and create a new and permanent Southwestern
Ontario Development Fund. The enabling legislation has had first and second reading
and is now in a consultation phase (see Attachment 1).
The Southwestern Ontario Development Fund (SWODF) is proposed to be modeled
after the Eastern Ontario Development Fund (EODF), which has helped attract and
create over 11,700 jobs and leveraged over $485 million in investment across eastern
Ontario. The proposed SWODF would provide $80 million over 4 years through two
funding streams:
• A Business Stream - available to businesses looking to improve their
competitive position and pursue growth through the development new products
and services.
• A Regional Sector Development Stream -available to economic development
offices, business associations or NGO's for projects that will secure investment,
enhance investment attraction and lead to job creation over the next five years.
The Province has indicated the need to improve the Southwest Region's unemployment
rate as a key reason for proposing the SWODF. However, according to a consultation
paper provided by the Province, southwestern Ontario has an average unemployment
rate of 7.5% which is similar to the average unemployment rate in Durham Region.
If the Ontario Government proceeds with the SWODF as announced, then Pickering
and the other municipalities in Durham Region will be at a significant disadvantage in
attracting investment and creating jobs compared to other municipalities in the Province.
Economic activity could actually be lost from the Region should the EODF be made
permanent and a new and permanent SWODF fund be established.
To maintain a level playing field, Durham Region should be included in the boundaries
of the proposed Southwestern Ontario Development Fund or some other similar fund.
It is therefore recommended that Pickering Council request the Minister of Economic
Development and Innovation to ensure that all municipalities in the Province have equal
access to development funding opportunities. A similar position has recently been
taken by the Region (see attachment # 2), and other Durham municipalities.
CORP0227-07/01 revised
Report OS 04-12 February 21, 2012
Subject: Southwestern Ontario Development Fund Page 3
112
Attachments:
1. Southwestern Ontario Development Fund Consultation Paper
2. Region of Durham - Planning and Economic Development Committee (Report -
2012- EDT-6 - Southwestern Ontario Development fund)
Prepared By: Approved/Endorsed By:
qo a o on, B C m. (Hons), MPM Lynn Winterstein
nomic D opment Officer Manager, Marketing & Business
Development
Approved/Endorsed By:
Th mas M lym , MCIP, MES
Director, Office of Sustainability
FJ:fj
Recommended for the consideration
of 'Pickering City ouncil
t~ t5, 20l2~
Tony Prevedel, P.Eng.
Chief Administrative Officer
CORP0227-07/01 revised
ATTACHMENT # TO REPORT
.Southwestern Ontario Development Fund
Consultation Paper
Introduction
On November 29, 2011, the McGuinty government introduced the Attracting Investment and Creating
Jobs Act, 2011. This Act proposes to make the Eastern Ontario Development Fund permanent as well as
to establish and make permanent a new Southwestern Ontario Development Fund. These regional
economic development funds, combined with other initiatives taken by the government, respond to the
challenges facing local communities across Ontario. The two funds are focused on creating jobs and
attracting new investment across multiple sectors.
The government intends to continue the Eastern Ontario Development Fund and will meet with
stakeholders in the coming months to discuss enhancements to the fund's effectiveness.
The Southwestern Ontario Development Fund will build on the strengths of the region. To this end, the
government is embarking on a consultation process aimed at developing a fund that addresses the
economic development challenges faced by Southwestern Ontario. This Consultation Paper is intended
to guide the discussions in the coming months on the parameters of the fund.
Context
The global economy is facing uncertain times. Ontario has made tremendous progress over the last
eight years, but the province is not sheltered from the global economic downturn. As a response to this
challenge, the Government of Ontario has taken a number of measures to improve the economy, create
jobs, protect and continue to invest in education, while maintaining its commitment to eliminate the
deficit. The government's priorities include:
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1. Attracting investment and creating jabs
• Since the low point of the recession in May 2009, employment in Ontario has increased by
almost 261,000 net new jobs, equal to nearly half of all the new jobs created in Canada.
2. Protecting education
• About 200,000 more students are currently enrolled in postsecondary education or learning
a trade than in 2002-03.
3. Protecting Health Care
• Since 2003, about 1.3 million more Ontarians have access to a family doctor, with nearly
2,900 more doctors practising in the province.
4. Eliminating the deficit
• The 2011-12 deficit is currently projected to be $16.0 billion an improvement of $0.3 billion
compared with the 2011 Budget.
Economic Profile of Southwestern Ontario
"The fragile global economy has created uncertain times for families in Southwestern Ontario. We're
committed to working together with businesses and communities to bring new opportunities and new .
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jobs across the region, and the Southwestern Ontario Development Fund would help us to achieve that
goal."
- Dalton McGuinty, November'28, 2011
Southwestern Ontario is home to some of the most innovative and globally competitive companies. Like
many parts of Ontario, this region has been significantly impacted over the past decade by challenges
such as the high Canadian dollar and increased global competition. In manufacturing, there have been
plant closures, including those in the automotive and chemical sectors, which in turn have impacted the
related industrial value chains. At the same time, the region has seen areas of growth and investment,
such as in the Information and Communication Technology sector in Kitchener-Waterloo and the
Interactive Digital Media sector in London. Similarly, the sectors gaining the most jobs over the last ten
years in the region were in health care, construction and education. This highlights the process of
industrial transition in the region and provides a compelling rationale for the government to ensure
continued economic development for this regional economy.
Figure 1: Southwestern Ontario Employment Profile
(Note: The boundaries for the Southwestern Ontario Development Fund have not yet been determined).
Southwestern Ontario
Population: 3,514,700, (32.1 % of Ontario)
Unemployment Rate: 7.6%
Stratford-Bruce Peninsula
~C
Population: 245,700
Unemployment Rate: 4.7%°
Kitchener-Waterloo-Barrie
11 Population: 1,038,800
Windsor-Sarnia - Unemployment Rate: 7.1%
Population: 519,300
Unemployment Rate: 8.9% i
Hamilton-Niagara Peninsula
London (includes Burlington)
Population: 540,900 Population: 1,170,000 °
Unemployment Rate: 9.1% Unemployment Rate: 7,4%
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Source: Statistics Canada, Labour Force Survey (Cat. no. 71-001-X). Data is for September 2011. Data Is 3-month moving average, not adjusted for
seasonality.
Consultation Process
The Government of Ontario is initiating an open, inclusive and broad consultation process to incorporate
the views and opinions of all regional stakeholders. The consultation process will incorporate advice and
feedback from key regional stakeholders on the scope and purpose of the fund. The consultations are
necessary to gain an understanding of the key challenges and opportunities in the region. This
information will be central to the fund design, administration, eligibility and application process.
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How to Get Involved
Consultations will take place from December 2011 to February 2012. The government plans to hold four
consultation sessions in Windsor/Sarnia, Kitchener-Waterloo, London/St.Thomas and Owen Sound.
Each consultation will include regional stakeholders and members of the general public, including, but
not limited to:
• Regional economic development associations and local chambers of commerce
• Municipal and community representatives
• Non-profit organizations
• Individual business leaders, industry and trade associations.
Written submissions
For those unable to attend a consultation meeting, the Ministry of Economic Development and
Innovation will accept written submissions by all interested parties at: swodf@ontario.ca
Consultation Questions
Fund Objectives
The overarching objectives of the fund are to create jobs and attract investment. Direct support to
business can be used to target specific investment and job creation activities at the firm-level, but in
certain cases community organizations may lead projects that serve a broader interest.
Should the fund focus exclusively on providing direct support to businesses?
Should some funding be provided to community organizations?
Type of Assistance
Grants and repayable loans
Prior economic development funds have employed both grants and repayable loans to leverage
economic growth in regions. While grants provide the most direct form of stimulus to accelerate
economic growth, the current fiscal climate and limited spending power of the government would
favour repayable loans.
Grants may be necessary to encourage cluster effects in new, high-growth industries, and establish
supply-chain networks. Recent evidence has indicated that only direct funding - mainly through grants -
is capable of driving innovation to allow small and medium enterprises to grow into larger, competitive
firms (Innovation Canada: A Call to Action - Expert Panel Report, 2011). However, the fiscal capacity of
the government to dispense large amounts of grant funding is limited. Repayable loans would ensure
that public funds were secured against assets, impose fiscal responsibility on recipients, and deliver
value-for-money for Ontario taxpayers.
Should the Fund provide only grants, or should there be a mix of grants and loans?
Should two funding streams be available? That is, one for community, regional economic
development and industry associations, and the other for businesses.
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Coordination of Funds
Implementing a cap on the level of support that can be offered to one recipient is a way to ensure that
there can be many beneficiaries of the fund. This encourages diversity and balance in the type of project
supported by the fund (e.g., projects by sector, business size, and market maturity). It can also ensure
the funding of innovative and emergent business models. At the same time, it can prevent the funding
of larger-scale, multi-stakeholder projects to achieve multiple goals through one overarching initiative.
The Government of Ontario has a number of economic development programs and funding mechanisms
from multiple ministries and provincial agencies for which a single project may be eligible. Project
proponents are not discouraged from applying to multiple funding sources. However the government
intends to ensure that projects receiving support from other programs - such as the Feed-in-Tariff
program and energy generation.projects - are excluded from consideration.
What is an appropriate amount of project funding support by the province?
Should funding from other sources be allowed?
Should there be funding caps?
Eligibility Thresholds
Geographical area
The boundaries for the Southwestern Ontario Development Fund are not yet determined. (Note:
Projects in the Greater Toronto Area will not be eligible.)
Minimum number of employees
Mandating the fund to target some of its investments towards firms of a specific size might prevent
competition between different-sized organizations. In addition, proposals from different sized firms may
need to be evaluated differently due to their unique characteristics.
Minimum investment value
Attracting business investment to the province and leveraging business investment to create jobs,
improve productivity and increase innovation is a priority for the government. A minimum threshold for
investment might help ensure that the fund attracts firms and organizations with a certain level of
stability, but smaller projects from emerging firms may also hold great potential.
Job creation
Job creation remains a priority for the government, and a key indicator of economic well-being. The
region's unemployment statistics point to a need for improvement in this area. Setting a threshold for
minimum number of jobs that each investment must create can anchor growth in the region.
Alternatively, high-value, high-growth industries, which are characterized by efficiency and productivity,
may also be worth supporting.
What should be the geographical limits for the fund?
How many employees should a company have in order to be eligible for funding?
What is the minimum project investment value to be eligible for funding?
How many jobs must be created (direct or indirect) by the project to be eligible for funding?
In addition to job and investment targets, what other metrics should be considered when
evaluating proposals?
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Applicants & Review
The government is open to applications from all qualifying entities to the Southwestern Ontario
Development Fund. The government also intends to use direct marketing and lead generation activities
to consider additional opportunities. All applicants will be entitled to a formal response from the
Government of Ontario -confirming receipt and further accepting or denying the application - as in
accordance with the Government of Ontario's service guarantee.
All applications and leads will be reviewed and evaluated by the Ministry of Economic Development and
Innovation to ensure the completion of due diligence prior to the evaluation of funding
recommendations by a committee of senior Ministry executives.
Priority sector focus
The eligibility of applicants should be aligned with federal and provincial priority sectors to ensure that
the region benefits from other initiatives in progress to help develop a 21st century economy. These
sectors (e.g. advanced manufacturing, life sciences, etc.) typically represent high-value, high-growth
areas where broader public sector players can provide support (e.g., educational and research
institutions, infrastructure development, technology investment).
Net benefit
In order to ensure that the project is of net benefit to Ontario and to Canada, the fund mandate could
be designed to disqualify relocation projects from elsewhere in the province and country. The fund is
intended to be incremental in nature and not for ongoing business.
Costs
The eligibility of project costs can include, but are not limited to, activities such as:
• Co-investing with business (capital investments, infrastructure, technology acquisition)
• Not-for-profit organizations (training, marketing, incubation, cluster support)
• Community initiatives (labour market survey, strategy development, regional collaboration)
What priority sectors should the fund concentrate on for the region?
Are there specific expenses that should be considered to be included in the fund?
What specific expenses should be disallowed in the fund?
Contact Information
For further information please contact:
Bonnie O'Neill
Manager - REGIONAL ECONOMIC DEVELOPMENT PROGRAMS
Phone: 1-866-909-9951
Email: svvodf@ontario.ca
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ATTACHMENT TO REPORT z
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The Regional Municipality of Durham
To: The Planning & Economic Development Committee
From: Commissioner of Planning and Economic Development
Report No: 2012-EDT-6
Date: January 31, 2012
SUBJECT:
Southwestern Ontario Development Fund
RECOMMENDATIONS:
a) THAT the Minister of Economic Development and Innovation be requested to
ensure that all municipalities in the Province have equal access to development
funding opportunities; and
b) THAT Durham's area municipalities be advised of Council's request.
REPORT:
1. PURPOSE
1.1 On November 29, 2011, the Province introduced the Attracting Investment and
Creating Jobs Act, 2011. This Act proposes to make the Eastern Ontario
Development (EOD) Fund permanent, and, as well, proposes to establish and
make permanent a new Southwestern Ontario Development (SWOD) Fund.
These regional economic development funds are focused on creating jobs and
attracting new investment across multiple sectors. When combined with other
initiatives, the funds respond to economic development challenges facing local
communities and regions across Ontario.
1.2 The SWOD is modeled after the Eastern Ontario Development (EOD) Fund
(which includes the Township of Brock and areas east of Durham Region) will
invest $80 million over 4 years, with two funding streams:
• The Business Stream - available to help businesses improve their
competitive position and pursue growth through the development of new
products or new markets.
Report No.: 2012-EDT-6 Page No.: 2
• The Regional Sector Development Stream - available to economic
development offices, business associations or NGOs for projects that will
secure investment, enhance investment attraction and lead to job creation
over the next five years.
The enabling legislation was debated at a Second Reading on December 6,
2011.
1.3 The Minister of Economic Development and Innovation (Brad Duguid) and local
MPP's met with local business leaders and partners in London, Kitchener and
Guelph to seek input on the proposed fund.
1.4 In January and early February, the Province will meet with local business
leaders in Hamilton, St. Catharines/Niagara, Chatham/Kent and Windsor'to
help shape the program and ensure that the proposed new fund addresses the
unique regional challenges facing the businesses and communities of
Southwestern Ontario.
.1.5 For those unable to attend a consultation meeting, the Ministry of Economic
Development and Innovation will accept written submissions by all interested
parties at: swodf@ontario.ca.
2. COMMENTS
2.1 On December 16, 2011, Economic Development staff participated in an
economic development focus group with the Ministry of Economic
Development and Innovation, where the Southwestern Ontario Development
Fund was presented.
2.2 While the Province's Consultation Paper notes that the area where the fund will
apply has not yet been determined, the Director, Regional Economic
Development Branch, advised that the urban areas of the GTA and Ottawa will
not be included.
Report No.: 2012-EDT-6 Page No.: 3 120
2.3 When questioning their approach, the Province indicated a need to improve the
Southwest Region's unemployment rate. As well, Durham Region was advised
it could access the Community In Transition Fund and the Strategic Jobs
Investment Fund, currently being offered through the Province.
2.4 According to the Consultation Paper's economic profile, Southwestern Ontario
has an average unemployment rate of 7.5%. Durham Region's unemployment
rate is similar, clearly indicating that Durham has a similar need.
2.5 Exclusion from economic development funds is of significant concern to
Durham Region as:
• Existing businesses will be encouraged to expand outside of Durham due to
funding available elsewhere;
• Existing businesses may be forced to close due to funding provided
to competitors outside of the Region; and
• New investment may be lost to other regions where incentive funding is
available.
2.6 To assist Durham in growing its share of the expanding GTA's economy, the
Region should be included within the boundaries of either the SWOD Fund or
the EOD Fund. As previously noted, Brock Township is included within the
boundary of the EOD Fund.
3. CONCLUSION
3.1 It is evident that Durham Region will be impacted when competing for
investment, with other communities that have access to job creation and
business growth funding, through the EOD and SWOD Funds.
3.2 The Province should create a level playing field and ensure that all
communities and their businesses have equal access to funding opportunities.
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Report No.: 2012-EDT-6 Page No.: 4
3.3 Economic Development staff have notified economic development
stakeholders in Durham Region of this new funding program, and the impacts
associated if Durham Region is not included. Accordingly, it is imperative that
the Minister of Economic Development and Innovation be requested to ensure
that all municipalities in the Province have equal access to development
funding opportunities.
A.L. Georgieff, MCIP, RPP
Commissioner of Planning and Economic Development
RECOMMENDED FOR PRESENTATION TO COMMITTEE
Garry H. Cubitt, M.S.W.
Chief Administrative Officer