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Economy Province of Ontario RBC- $181,965 Billion at March 31, 2014 August 28, 2013 July 17, 2014 © Robert G Parker & UWCISA V-3 S-1 Economy Annual Inflation Rate – Major Canadian Cities The Annual Rate of Inflation Has Been Less that 2% for Most of the Last Decade July 17, 2014 © Robert G Parker & UWCISA V-3 S-2 Economy July 17, 2014 © Robert G Parker & UWCISA V-3 S-3 Economy July 17, 2014 © Robert G Parker & UWCISA V-3 S-4 Economy Richest 20% (highest taxable income) paid 75% of the Personal Income Taxes Richest 1% accounted for 11% of total personal income and paid 20% of the Personal Income Taxes July 17, 2014 © Robert G Parker & UWCISA V-3 S-5 Economy July 17, 2014 © Robert G Parker & UWCISA V-3 S-6 Economy The population does not appear to understand the consequences of out of control and ever expanding government spending “A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy." 43.8% We need to educate people about taxation Starting at an early age Alexander Tyler 1887 July 17, 2014 © Robert G Parker & UWCISA V-3 S-7 Economy Impact on Business and Society Canada and the Provinces will have to increase business and personal tax rates to fund an ever increasing debt Canada will become a more expensive country in which to operate a business Canadian made products will become uncompetitive in the global marketplace Worsening relative economy Risks and Impacts Increased unemployment Difficulty in attracting capital investment Loss of Canadian entrepreneurs and expertise to other countries Inability of private sector to compete with public sector for employees July 17, 2014 © Robert G Parker & UWCISA V-3 S-8 Pensions With overly generous defined benefits plans governments and the private sector are faced with restructuring their pension plans. July 17, 2014 © Robert G Parker & UWCISA V-3 S-9 Pensions Some Private Sector Organizations also have Defined Benefit Pension Plans July 17, 2014 © Robert G Parker & UWCISA V-3 S - 10 Pensions Ontario’s municipal pension plans - OMERS is currently at $7.3-billion deficit. Ontario’s Workplace Safety and Insurance has an unfunded liability of $12.3-billion. The Ontario Teachers’ Pension Plan had an unfunded liability of $17.2 -billion as of Jan. 1, 2011, totalling $36.8 billion. Source: Globe & Mail and Financial Post 2012 Source: Canadian Federation of Independent Business. 2008 Public Accounts do not include Hospital, Municipal, Regional or Other MUSH sector Pensions July 17, 2014 © Robert G Parker & UWCISA V-3 S - 11 Pensions Impact on Business and Society Canada and the Provinces are engaged in pension plans that are massively underfunded and ultimately unsustainable Funding expensive public sector pension plans when many Canadians do not have a plan will generate increased public backlash With a significant portion of Canadian society relying on “government” as their employer, scaling back the pensions of this group will have significant economic impact Risks and Impacts Less disposable income as employee pension contributions are increased Less future disposable income as pension obligations are scaled back Demand for additional assistance from those without adequate pension plans The Canadian “worker pyramid” model may become unsustainable Increased focus on automation and robotics as businesses encounter significantly increased payroll taxes July 17, 2014 © Robert G Parker & UWCISA V-3 S - 12