This policy brief highlights what the 2023 budget means for Ontario’s digital economy. The province’s annual budget is published in the spring of each year and outlines the government’s main spending priorities.

Economic Update

Ontario’s 2023 capital plan, released last week, is Ontario’s largest capital plan in history, with $184.4 billion capital investments planned for the next ten years. The Province of Ontario is cautiously optimistic about its economic performance in the near and medium term. Ontario is projecting a small deficit in 2023, but budget surpluses in 2024 and 2025; the province expects to balance its budget ahead of initial forecasts. Despite its optimistic tone, the province has prepared contingency budgets for a case worse than expected economic outcomes. Ontario is predicting a small increase in output for 2023. It expects GDP to moderate over the next few years as it leaves the pandemic period, which saw larger than expected growth as industry recovered, behind. Ontario acknowledges that rising interest rates have the potential to slow household consumption and weaken housing resale markets. It is also planning around inflation remaining elevated and is concerned that elevated energy prices can continue to slow economic growth. Ontario expects these challenges to be balanced by strong performance in other areas such as exports and manufacturing. The budget allocates funding to advancing its critical mineral strategy, including dedicated expenditures to build capital infrastructure in the north. There will also be investments in manufacturing to advance the province’s local capacity, and investments in EV manufacturing will play a large role in building out this capacity. The newly announced Ontario Made tax credit, will provide $780 million over the next three years, and is designed to offset the cost of new capital investment to modernize and strengthen Ontario’s manufacturing sector.

Policy and Programs to Support Ontario’s Digital Economy

Building on the province’s recent Critical Minerals Strategy, critical minerals are a core focus of Ontario’s 2023 Budget. The government envisions Ontario as a reliable global supplier and processor of responsibly sourced critical minerals and to achieve this vision is proposing to invest an additional $6 million in the Ontario Junior Exploration Program for a total of $26 million over two years, and amend the Mining Act to make it easier for businesses to get new projects approved. Related to the province’s critical minerals industry is the development of Northern Ontario’s infrastructure. On this front, the budget commits nearly $1 billion to maintain and build critical infrastructure in Ontario’s North and Ring of Fire regions, including broadband infrastructure and restored passenger rail service to Northern Ontario.

In addition to becoming a key supplier of critical minerals, the government envisions Ontario as a choice destination for electric vehicles and other high-tech manufacturing. To this end, Budget 2023 proposes to establish a new Ontario Made Manufacturing Investment Tax Credit, which would provide a 10% refundable tax credit to Canadian-controlled private corporations on investments in manufacturing buildings, machinery, and equipment. It also reaffirms the government’s intention to establish an Advanced Manufacturing Strategy, which was originally announced in Budget 2022.

Ontario’s budget notes that “clean energy has become an economic imperative, as companies around the world want to invest in jurisdictions with affordable, reliable, and clean energy.” To promote clean energy and energy efficiency in the province, Budget 2023 proposes to launch a voluntary clean energy credit registry (which would enable businesses to show that their electricity is sourced from clean resources, such as hydroelectric, solar, wind, bioenergy and nuclear power) and expand the IESO’s energy efficiency programs by $342 million.

Budget 2023 makes several investments in Ontario’s innovation ecosystem. The budget proposes to provide an additional $3 million over three years to Invest Ottawa to help the organization become a Regional Innovation Centre hub for Eastern Ontario, and $4 million to the City of Brampton to help the City attract more businesses and investment to the Brampton Innovation District. Finally, approximately $2 million has been earmarked for the not-for-profit Futurpreneur Canada, which provides mentorship and loans to businesses led by people aged 18 to 39.

A number of initiatives in the Ontario 2023 Budget seek to create procurement opportunities for local technology businesses. To this end, the budget proposes to:

  • Modernize and centralize Ontario’s public procurement processes to reduce red tape and provide more transparency
  • Establish more public procurement opportunities for local entrepreneurs and businesses whereby the government buys made-in-Ontario products
  • Adopt digital technology solutions across government, including in areas like tax processing, the use of digital twins to guide infrastructure planning, data-driven decision making, digital payment methods for public transit, pilot programs for virtual government services, new IT infrastructure in post-secondary institutions, innovative solutions for healthcare system management, and health IT infrastructure
  • Explore a new Innovation Pathway, that in collaboration with Supply Ontario, would review promising new healthcare technologies and support their adoption by healthcare providers
  • Provide $107 million to help the private sector commercialize and adopt critical technologies, including 5G and next generation networks, artificial intelligence, quantum, robotics, blockchain, and cybersecurity

Finally, the government plans to invest $4 billion in broadband infrastructure develop and has promised to provide every Ontario community with high-speed internet access by 2025.

Supporting EDI and Workforce Development

Budget 2023 notes that Ontario is facing a historic labour shortage, particularly in healthcare and the skilled trades, and proposes to expand several workforce development and immigration-focused initiatives. Namely, Budget 2023 proposes to invest an additional:

  • $224 million to leverage private-sector expertise and expand training centres
  • $75 million over three years in the province’s Skills Development Fund to help individuals overcome barriers to employment
  • $32.4 million over three years to create an additional 6,500 high-quality research internships through Mitacs in the critical minerals, manufacturing, and health care sectors
  • $15 million over three years in the province’s Better Jobs Ontario program to help eligible applicants cover tuition, short-term training programs, and child care and transportation costs while in school
  • $15 million to launch a second round of the Ontario Micro-credentials Challenge Fund to support the creation of more micro-credential projects
  • $25 million over three years to attract more skilled workers through the Ontario Immigrant Nominee Program
  • $3 million to expand the Ontario Bridge Training Program, which helps international trained immigrants find employment in their fields and more quickly obtain the required licenses or certificates

In addition to new funding, the budget indicates the government’s intention to expand the range of degree options at Ontario’s public colleges, with a focus on in-demand sectors. For instance, the government is considering introducing new, three-year applied degree programs for computer science.

Protecting the Environment and Growing Ontario’s Green Economy

The government of Ontario supports a variety of efforts centered around protecting the environment and accelerating the green economy. In 2023, Ontario plans to invest an additional $14 million to expand the Greenlands Conversation partnership. This will allow conservation authorities to match investments with private sector capital, enabling the acquisition, management, and protection of new, privately owned natural areas, including grasslands, wetlands, and forested areas. Ontario also places high emphasis on protecting boreal caribou populations – a keystone species with cultural significance to Indigenous communities, and ecological significance to the broader boreal forest. Conservation efforts extend to the agri-food sector, with Ontario committing to the development and implementation of Ontario’s Agricultural Soil Strategy. This strategy includes $9.5 million over three years to set and meet soil conservation standards, including improving soil data monitoring and evaluation, and will help farmers innovate and use technology to improve long-term viability. Such investments will grow Ontario’s green economy, leading to new roles in conservation science, environmental management, and digital agriculture. Meanwhile, these investments are also likely to enhance biodiversity and increase carbon sequestration, ultimately assisting the province in cutting greenhouse gas emissions and improving environmental health.

This brief is part of ICTC’s policy updates series. ICTC provides timely updates on policy and political developments in Canada, including federal, provincial, and territorial elections campaigns, fall economic updates, annual budgets, and other major updates to policy and programs. Written by Allison Clark, Erik Henningsmoen, Mairead Matthews, Mansharn Toor, Justin Ratcliffe, and Todd Legere, with generous support from the ICTC Research and Policy Team.