That Detroit Windsor corridor is very important to both countries and you can bet that Windsor will benefit from the influx of both government and private funds to economically infuse the area after the recent automotive manufacturing shut downs.
"Windsor is the southernmost city in Canada and lies at the western end of the heavily populated Quebec City-Windsor Corridor. Windsor is located directly south of Detroit and is separated from that city by the Detroit River. The city has views of the Detroit skyline. The Windsor-Detroit border crossing is the busiest commercial border crossing in North America. The region marks the only border crossing where entering the mainland United States from Canada involves travelling north."
From the Windsor chamber of Commerce 1/22/07:
To the Members of the Standing Committee on Finance and Economic Affairs:
As the “Voice of Business,” the Windsor & District Chamber of Commerce represents over 1,400 business members in Windsor and Essex County who collectively employ more than 80,000 people. Our membership profile truly represents a cross-section of the business interests in our community.
Summary of Recommendations
The Windsor & District Chamber of Commerce recommends that the 2007 Ontario Budget address the following immediate priorities:
1. Commit core infrastructure funding for a new Windsor-Detroit border crossing.
2. Enhance the tool kit for local Economic Development that allows communities to level the playing field with competing jurisdictions and the global marketplace.
3. Provide a fair and competitive tax regime for a balanced budget to ensure Ontario’s economic prosperity.
4. Develop a detailed energy plan on future supply sources and conservation of electrical power.
Our recommendations target those budgetary expenditures that have the greatest impact on economic prosperity: eliminate obstacles for the free flow of people and goods across the border, reduce taxation and red tape, provide investment incentives in human and physical capital and controls over increasing costs such as energy.
Introduction
In light of the current economic outlook for our region, the Chamber believes that the Government must deliver a balanced and “business-friendly” budget, focused on economic development. This Chamber recognizes that our region of Windsor and Essex County faces the hardest challenges and disproportionately higher economic risks relative to other cities and Ontario as a whole.
Our regional economy is heavily dependent on three primary sectors: manufacturing, tourism and hospitality, and agri business. To illustrate the magnitude of these difficulties for our region and to appreciate the Chamber’s recommendations, consider, as an example, the significance of the manufacturing sector for our local economy. Statistically,
1. The manufacturing sector represents the largest sector in our national economy or 17% of Canada’s GDP. In our area it accounts for 37% of the local GDP.
2. As a percentage of Canadian employment, manufacturing represents 15% of total employment. In our area alone, manufacturing accounts for 35% of the local employment.
3. Essex County’s manufacturing shipments amounted to 23 million units in 2003 and our auto-related shipments totaled 16 million. By comparison, only the GTA and Peel Region, with a much greater population base experienced more manufacturing activity. No other jurisdiction in the Province of Ontario reached nearly the output numbers of our region in auto-related manufacturing activity.
As a consequence, obstacles in border infrastructure, high commodity and energy prices, diminishing effects of the strong Canadian Dollar and potent global competition have had a disproportionately negative effect on the region’s employment and business success. As a result, the unemployment rate in Windsor and Essex County continues to soar above the national and provincial average. The latest Statistics Canada Labour Force report indicates that the unemployment rate for our area has reached 8.9 % in December 2006, raising recession concerns. The unemployment rate was 6.1% for the Province of Ontario and 6.1% for all of Canada. Recently, the region has lost thousands of manufacturing jobs as the manufacturers are restructuring their businesses in response to the challenges they face in competing jurisdictions and global marketplace.
The conclusion of our regional assessment is, in short, that our once prosperous sectors of automotive manufacturing, tourism and agri-business have been and will continue to be significantly impacted by the fiscal environment and regions are helpless to effect change.
Our 2007 pre-budget submission will address the drivers of economic development, which require the Government’s immediate attention.
Investment in Infrastructure: Windsor-Detroit Border
Commit core government infrastructure funding for a new Windsor-Detroit border crossing.
To capture the immensity of this issue, consider that an estimated US $1.2 billion in trade crosses the U.S.-Canada border daily, with over 40% of it (or $480 million) at the five international, land-border crossings in the Windsor-Detroit Region. Of this daily trade, as much as $US 234 million or 1/5 of total trade is automotive related.
Trade between Canada and US has climbed at nearly double-digit rates each year since the implementation of NAFTA in 1994. Economic development means more cross-border transactions, employment, tourism and recreation. It is estimated that by 2020 the number of daily crossings could exceed 90,000 from 58,000 in 2006.
While Ontario has become increasingly focused on exports, the border infrastructure has not kept pace. Given the importance of the region to the Ontario economy, the age, capacity, and vulnerability of existing infrastructures, the Chamber recognizes the immediate need for an additional border crossing and as a key economic asset to the Province, it must be given the highest priority.
The Chamber has long advocated for the timely completion of a process that provides for the most informed “best practice” recognizing national and regional needs. All levels of government must work together toward a resolution satisfactory to the affected communities on both sides of the Border.
The Province is a leading partner in the Bi-National study group that is currently at the environmental assessment phase to find a long-term border solution (DRIC study process). Our Chamber has been supportive of the actions of the Province within this partnership and has expressed firm support for the DRIC process.
However, time is of the essence. The Chamber urges the DRIC to avoid undo delays and expedite the process where possible, while still meeting necessary regulatory requirements of all levels of government on both sides of the border. The study must be defined as a plan for action and proceed within defined timelines, accountable to its citizens.
The underinvestment in the infrastructure is eroding our competitive advantage and is a barrier to growth in Ontario and Windsor and Essex County. Such delays have lead to economic distress due to the uncertainty in the minds of investors and the re-direction of investment and expansion dollars to competing jurisdictions and countries.
In finding a solution to ensure a well operating, highly livable and appropriately financed Windsor and Essex County region, the Chamber developed a number of guiding principles:
• Construct a freeway connecting 401 to I75
• Immediately improve current roadways to soften impacts, where applicable
• Compress work plans where appropriate in development of a new freeway and crossing
• Separate international traffic and local traffic
• Expand the use of current and developing technologies for screening commercial and passenger traffic with separated lanes for known users
• Improved efforts to accelerate and expand use of pre-clearance programs, including programs like FAST and NEXUS. Such efforts should include greater incentives for participation, ease of enrollment and greater access to these lanes upon approach.
• Ensure no redundancy of structures
• Provide appropriate public oversight of crossing
• Re-establish the confidence of the global community in a functioning Windsor-Detroit corridor. The Government must move forward with action gauged at dispelling any doubt that we are serious about solving the border problems we have.
Expeditiously solving the Border issues will send a strong signal to the business community that the Border is no longer a barrier to trade and commerce. Investment decisions made today are based on current conditions and current problems and the perception of delay negatively affect future investment. Ontario must continue to provide its leadership and the core funding to make this happen.
Regional Economic Development
Enhance the tool kit for local Economic Development that allows communities to level the playing field with competing jurisdictions and the global marketplace.
Many communities and businesses in Ontario do not have the necessary economic development tools to compete in a global marketplace. The fiscal stimulus is derived by not only on a better taxation regime but also by offering a variety of incentives to businesses to encourage capital investment and job creation.
The Chamber believes that to mitigate regional economic decline, the Government must distinguish economic indicators for communities that negatively deviate from the Provincial “norm” and create incentives for investment job retention and expansion and trade in the sectors and/or communities. It should consider targeted funding through the provision of low interest loans or grants and/or the creation of Diversification Funds (for cluster development) to communities that exhibit distress from these established economic indicators.
Providing real incentives directly to municipalities, businesses and/or centres of innovation will support the efforts to organize economic development initiatives and increase their competitiveness in the global marketplace. The Province has the benefit of observing best practices from other North American jurisdictions, which provide tax and other business incentives to drive economic prosperity.
Our competitiveness depends not only on spending on our education system or research and development but also from our ability to provide superb capital resources for Ontario businesses. Providing funding or incentives for investment in human and physical capital resources will serve as a significant competitive advantage for all businesses in Ontario, and in particular the Windsor and Essex County region.
Fair and Competitive Taxation
Provide a fair and competitive tax regime for a balanced budget to ensure Ontario’s economic prosperity.
As in the past, the Chamber is urging the Government of Ontario to be prudent in its fiscal policy, delivering a balanced budget for 2007. Fiscal prudence will enable the Government to orient its future budgets toward elimination of its debt and reducing the personal and corporate taxes, thereby improving business tax competitiveness. In balancing its budget, Ontario must aim to cut inefficient spending, identify other revenue sources, sell inefficient public corporations and challenge the Federal Government to reduce Ontario’s net outflow to other provinces in order to deliver fiscal measures to stimulate Ontario’s well being and prosperity.
Ontario’s current tax regime is uncompetitive related to US jurisdictions and other Canadian provinces, with whom it competes for jobs and capital. On its own, a competitive and fair Ontario tax system will have most impact on the province’s level of productivity and investment in physical, human and capital resources. The private sector must lead the way in providing jobs in Ontario and thus, uncompetitive corporate taxation and red tape discourages investment and should be avoided in an economy that is facing structural changes and numerous external challenges.
Reforming Ontario’s tax system involves the early elimination of the capital tax by 2008, harmonization of the sales tax with GST, reduction of the administration and compliance costs, and overhaul of the Property Tax and Property Assessment system in the Province.
Our municipal property taxes have become a significant burden to businesses and individual property owners. Yet, the system remains flawed and unfair given disparity in tax rates and assessment values for comparable properties in 280 regions within the province, businesses pay a higher rate than residential properties, and industrial properties’ tax rates are higher than commercial tax rates.
In addition, unfair increases in assessment are encouraging municipal decision makers to engage in creative budget process management. Municipalities have relied on the extra revenue to fund increasingly robust operating and capital budgets caused in part, by the fiscal imbalance that exists in relation to the provincially and municipally administered programs and enduring infrastructure deficits. Municipalities have not been able to cope with their budgetary pressures and even less with the need to provide a better business climate for its business taxpayers.
The Chamber, therefore, is urging the Government of Ontario to reform and improve the overall taxation system, including the Property Tax and Property Assessment system, which regularly reduce profits from the private sector. Such efforts will reduce the burden on the business community and increase investment in capital and human resources.
Energy Price and Supply
Develop a detailed energy plan on future supply sources and conservation of electrical power.
The supply mix needed for a robust Ontario economy has to take into account the price of base load energy. The business community is making investment decisions based on the “costs of doing business” that includes the cost of utilities.
While the Government of Ontario made a commitment to assure the future supply of energy fueling our economy, the Chamber is concerned about the pricing and future supply of electrical energy if the generation and distribution system in Ontario are not improved.
Nuclear energy has been the stable source of low cost electricity for Ontario for over 30 years. Latest-technology nuclear electricity is cost-competitive with coal and can be produced for total costs of 5-6 cents a kilowatt-hour or lower.
The Chamber urges the Government of Ontario to immediately pursue the expansion of nuclear generation in Ontario, as part of a balanced supply strategy, in order to provide an affordable source of base load electrical power to support economic prosperity.
Conclusion
The Windsor & District Chamber of Commerce has worked hard on addressing key issues that will lead to economic development and growth for our region and the Province. In the 2007 Budget, the Chamber expects the Province to prioritize and implement action steps in the following areas:
• Transportation infrastructure funding – Windsor-Detroit Border Crossing
• Regional economic development and growth strategies
• Fair and competitive taxation reform, focused on a 2007 balanced budget
• Elimination of red tape
• Energy price and supply
• Fiscal prudence
We expect that our government will work equally hard on addressing these priority areas in the 2007 Budget.
Thank you for the opportunity to present our views.
AI
