Businesses need confidence to invest: chambers

Inspiring businesses to invest is among the challenges highlighted by the inaugural Ontario Economic Report (OER), an agenda aiming to shape future public policy released Tuesday by the Ontario and Peterborough chambers of commerce.

The report, which is based on 15 years of data, includes new analyses that demonstrate the difficult economic environment faced by businesses and consumers, prompting many businesses to hold back investment because of a high perception of risk.

What first struck him was how the report shows that businesses are being cautious, Greater Peterborough Chamber of Commerce president and CEO Stuart Harrison said. “I think there is a wait-and-see attitude out there rather than a spend attitude.”

That creates the perception that they are sitting on their wallets – but they need predictable economic indicators before they can commit to spending, he said.

What also stood out for Harrison, and connected with business confidence, is the difficulty of hiring the right people for the right job – the report showed 86 percent of companies have encountered challenges in that process.

The report includes the results of the Ontario chamber’s Business Confidence Survey done with Fresh Intelligence, a business prosperity index developed by the Canadian Centre for Economic Analysis and an Economic Outlook for 2017 prepared by Central 1 Credit Union.

It shows that the government must prioritize growing the economy, creating jobs and driving a competitive advantage, officials stated.

The report’s results were also reflected in what the local chamber heard through its Small Business Too Big To Ignore campaign, a series of workshops that identified challenges such as lack of confidence and lower revenue projections, Harrison said.

Key now will be working with government and the private sector to ensure businesses can be competitive, creative and confident in their future.

“The players are all in place. You have some really good people doing really good things,” he said, citing development at the city airport, the innovation cluster and the innovation and research park coming to Trent University as examples of their work.

“Everybody’ s talking to each other ... we’ re supporting all the organizations that are helping to drive the economy.” he said. “Peterborough is in a really good position to take advantage of a transition in the province of Ontario .”

Economic outlook data reveals that the unemployment rate in the Peterborough census metropolitan area (CMA) is expected to rise to 6 percent( up from 5.1 percent in 2016) and the median residential housing price will be $300,000, reflecting an increase over last year.

The report also found, from the business prosperity index, that despite total business prosperity increasing since 2000, prosperity is increasingly generated from asset and liability management rather than the production of goods or services.

This means that Ontario businesses are less likely to earn income from actual business activity today than they have in the past, officials stated.

“There is a real transition going on in the economy ,” Harrison said, calling the blue-to-white collar transition the most dramatic example.

While Ontario enjoyed an average 2.6 per cent real GDP growth rate between 2000 and 2006, the source of wealth generated from the production of goods and services actually declined by 12 per cent during that same period.

Since the recovery from the“great recession” of 2008 and 2009, production activities fell a further 12 per cent over that period, officials stated, adding that broadly, this means Ontario’ s business prosperity is increasingly dependent upon nonproduction, financial activities.

This challenge is a result of the current economic environment, in which increased costs associated with production, regulation and housing have resulted in weak market and labour force activity. Businesses in Ontario are operating in a risk-averse environment in which they are disinclined to grow production by investing or hiring.

“For many years, the voice of Ontario business has cautioned that regulatory burdens, high input costs, and government policies not attuned to innovation have hampered economic growth,” Ontario chamber president and CEO Allan O’Dette stated. “The findings in the OER reinforce this, and indicate that there are also structural issues impeding our province’ s potential.”

The results of the OER highlight the key policy issues that the Ontario chamber intends to prioritize in 2017, including workforce development, infrastructure, energy, and health care.

The business confidence survey and prosperity index have set a baseline for continual measurement that will now be reported on annually, Harrison said.

NOTE: To view the report, visit www.peterboroughchamber.ca/ uploads/4/2/5/0/42505955/final_ ontario_ economic_ report _2017_ with_logo.pdf.