Commission on the Reform of Ontario's Public Services

Chapter 11: Business Support
Appendix: <strong>Commission</strong> Recommendations
Recommendation 11-1: Government needs to publish an “economic vision” for Ontario.
Recommendation 11-2: Expand government reviews of direct business support programs
and tax expenditures to include supports such as business services, procurement, and publicly
funded research and development.
Recommendation 11-3: Refocus the mandate of business support programs from job
creation to productivity growth in the private sector.
Recommendation 11-4: Starting in 2012–13, make ministries responsible and accountable
for tax expenditures that align with their respective program areas. Ministries should initially
be provided with the means to fund the tax expenditures (i.e., a net zero impact for the
ministries), but after that they will have to manage the pooled envelope of tax expenditures
and direct business support programs to meet budgetary targets.
Recommendation 11-5: Introduce a new funding model that encourages efficiency and
harmonizes efforts across ministries. We propose that money for both direct and indirect
business support programs, including refundable tax credits, should be pooled into a single
funding envelope.
Recommendation 11-6: Sunset all current direct business support programs in 2012–13.
After accounting for legal commitments and legacy projects, as well as the 2017–18 deficit
reduction target, pool the remaining funds and tax expenditures into a single envelope used
to fund business support programs submitted by ministries. These programs must align with
the productivity focus of the government economic development policy and meet rigorous
design criteria.
Recommendation 11-7: Follow the Public Sector Accounting Board (PSAB) recommendation
to report transfers through the tax system as expenses, and adopt the PSAB standard for tax
revenue beginning with the 2012 Ontario Budget. In 2011, Ontario provided refundable
business tax credits (tax credits that are “refunded” or paid out, even if no tax is payable)
totalling $723 million to three main areas: media industries, research and development, and
apprenticeship and co-op student training. Many of these tax credits overlap with the
objectives of direct business support programs, and all should be subjected to the same
degree of scrutiny as program spending. Further gains could be achieved by making the tax
system more neutral, removing special preferences that favour some business activities over
others, and better aligning refundable corporate income tax credits with direct business
support programs.
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