Ontario Budget – Impact on Agricultural Equipment Manufacturers

Dear AMC Members,

In the last of AMC’s budget summary series this year, it is refreshing to write a summary about a balanced budget. While the economies of Alberta, Saskatchewan and Manitoba are or have been struggling, Ontario in contrast is seeing its economy expand faster than scheduled. As discussed last week at AMC’s first ever expo in Guelph, agricultural equipment manufacturing in Ontario has increased in the last five years with exports rising 33% from $532 million in 2012 to $710 million in 2016.

The budget can be accessed here:

http://www.fin.gov.on.ca/en/budget/ontariobudgets/2017/index.html

Our initial analysis of the Ontario budget and its impact on our industry is as follows:

• No new taxes announced.
• HYDRO RATES: Confirmation that the 25% hydro rate cut promised earlier this spring will come into effect in June of this year. The government will further expand the Industrial Conservation Initiative (ICI) program by reducing the eligibility threshold from one megawatt (MW) to 500 kilowatts (kW) for targeting manufacturing and industrial sectors, including greenhouses. The various changes, according to the government, are expected to benefit ~500,000 small businesses and farms. If this positively impacts your business, or if the hydro rate makes your operations in Ontario uncompetitive, please let me know.
• SKILLED LABOUR: Investing $15 million over three years for over 3,000 new internships and fellowships through the Mitacs Accelerate program, which leverages federal dollars. Some agricultural equipment manufacturers have used the Mitacs program and representatives from Mitacs are generally quite knowledgeable about how and where to access public funds. If you are doing a R&D program that requires some engineering support, this is likely a good program for you. Please contact me and I’ll be happy to connect you with a Mitacs representative in your region.
• AGRICULTURE: Farmers and the agri-food sector are recognized as a cornerstone of the economy. To further support agriculture, the government will review its property tax treatment of small scale agricultural processing and commercial activities on farms. Specifically, the government is “…introducing a legislative framework that would provide municipalities with flexibility to reduce property tax rates for eligible small‐scale value‐added and commercial activities on farms. Currently, these operations are taxed at industrial or commercial rates. Under the proposed changes, a portion of the assessment attributable to the value‐added processing or commercial activity would be eligible to be taxed by the municipality at a reduced rate. This measure is intended to provide sustainable property tax treatment to farmers who diversify their operations by engaging in small‐scale processing or retail activities as a direct extension of their farming business” (p. 288).
• INNOVATION and R&D: The government recommitted to the Business Growth Initiative, announced in Budget 2016 but further enhanced it to be more than $650 million over 5 years. This program includes dollars for the automotive sector to pursue autonomous vehicles however, the writing seems to also suggest it can be used in the agriculture industry too, specifically referencing: “Tomorrow’s farmers will use AI [artificial intelligence] and 5G technologies to monitor their crops in minute detail, using sensors to spot early signs of disease and to deliver precision herbicides. They will be able to use sophisticated datasets to make better judgments about weather, planting schedules and patterns, and crop yields” (p.76). I will follow up with OMAFRA and other departments to better understand how and when these dollars will be available to agriculture equipment manufacturers.
• SKILLS DEVELOPMENT: The government wants to modernize its key employment and training programs in the upcoming year. It will consult with employers, education and training institutions, workers and job seekers. With a growing economy, having skills and a labour force that meet employers’ needs is vital to fulfilling the growth opportunities.

Overall it is encouraging to see Ontario’s economic growth outpace that of other provinces. Ontario has been an economic leader in the last two years and is forecasted to be one of the fastest growing provinces over the next two. Since 2015, AMC has been engaging more with the Ontario government to raise the profile of agricultural equipment manufacturing in the province (and nation-wide) and we appreciate your comments on key business concerns and opportunities you foresee in the province.

With all the key provincial budgets now delivered, we are turning our attention to what our industry needs to grow faster and more than it would otherwise. In the coming weeks and months, I will be working with members to develop a list of what our industry seeks from governments to secure our growth opportunities faster than we would otherwise. All governments are committed to innovation, reducing red tape and growing the economy. They have differing views on how to achieve such outcomes, however these three issues will be a key part of our budget submissions and deliberations so stay tuned.

Agricultural Manufacturers of Canada