Highlights From the 2023 Ontario Budget

Highlights from the 2023 Ontario Budget that impact various sectors of the Canadian Lenders Association community including our mortgage, SMB and sustainable finance roundtables.


Toronto, ON — March 24, 2023 — The Canadian Lenders Association (CLA) is pleased to provide an overview of Ontario’s 2023 Budget, which includes significant measures aimed at fostering business growth and creating job opportunities. As an organization that represents Canada’s leading lenders and providers of credit, the CLA is committed to working harmoniously with the government to ensure that all Canadian consumers and small businesses have access to safe and open credit. With this goal in mind, the CLA welcomes the budget’s emphasis on tax relief for businesses and initiatives to support the growth of the housing market. In this article, we will delve into the key aspects of the budget and provide our perspective on how it will impact the Canadian lending landscape.

1. Housing and Job Creation

The Ontario government’s budget for fostering business and creating jobs includes plans to build 1.5 million more homes by 2031. However, projections for housing starts have fallen, and if continued, only slightly over half of the targeted homes will be completed. The government plans to increase housing starts through future policies and initiatives aimed at getting more young people into skilled trades. Additionally, the budget includes measures to support job creation across the province. The government has allocated significant funding towards training and skills development programs, particularly in the technology and healthcare sectors, in order to equip workers with the skills needed for the jobs of the future. The budget also includes tax incentives for small and medium-sized businesses, aimed at encouraging investment and growth. These measures are intended to stimulate economic growth and create new job opportunities for Ontarians, particularly those who have been hardest hit by the economic impacts of the COVID-19 pandemic.

Why this is relevant for Canadian lenders:

Initiatives focused on the housing and job market in Ontario will impact the overall economic stability and lending risks in the region. The Ontario government’s plans to build more homes and increase job opportunities can potentially drive economic growth and reduce unemployment rates. However, if the housing starts fall short of projections, it could lead to a housing shortage and potentially impact the property market, which may affect the ability of borrowers to repay their loans.  Lenders may need to monitor the housing and job market in Ontario and adjust their lending strategies accordingly to manage potential risks and seize new opportunities. The CLA’s Mortgage Roundtable consistently will pay close attention to these developments and provides a collaborative forum for industry leaders to advance innovative solutions.

2. Review of Ontario’s Tax System

As part of the Ontario government’s efforts to make the province an attractive place for businesses to invest and grow, it has also proposed a review of the current tax system. The aim of this review is to identify areas where the tax system can be improved to better support businesses and encourage investment. Additionally, the review will focus on modernizing administration tools by implementing improvements that simplify tax administration and create a more convenient and modern digital platform. The government plans to make continued investments in information technology infrastructure to provide clients with more digital options, which is expected to streamline tax-related processes and make them more accessible. Through these measures, the government hopes to create a more business-friendly environment that will support the growth of the Ontario economy.

The budget also includes significant tax breaks for businesses, including an income tax credit and an extension of the phase-out range for the small business corporate tax rate, delivering $8 billion in tax relief for businesses. This proposed measure would take effect for taxation years starting on or after April 7, 2022, consistent with the federal effective date.

Why this is relevant for Canadian lenders:

Ontario government’s efforts to create a business-friendly environment that supports growth and investment impacts our small business lenders. The proposed review of the tax system, along with the implementation of modern administrative tools and digital platforms, can potentially reduce the administrative burden and costs for small businesses. The tax breaks, income tax credits, and corporate tax rate phase-out extensions can also provide small businesses with financial relief, freeing up capital for investment and growth.

As a result, small business lenders in Ontario may need to adjust their lending strategies to take advantage of these new opportunities. They may need to consider offering more financing options to small businesses seeking to invest in growth and expansion. They may also need to evaluate the creditworthiness of their clients, taking into account the potential benefits of the proposed tax relief measures. Overall, the government’s efforts to create a more business-friendly environment can provide small business lenders with new opportunities to support the growth of Ontario’s economy. We look forward to discussing how small business lenders can capitalize on this new opportunity in the CLA’s SMB Roundtable.

3. Ontario’s Green Bond Program

Ontario’s borrowing program continues to prioritize Green Bonds as a key component, recognizing their importance in financing public transit initiatives, extreme weather-resistant infrastructure, energy efficiency, and conservation projects. With a total of $15.0 billion issued since 2014-15, Ontario remains the largest issuer of Canadian dollar Green Bonds, with $13.0 billion still outstanding. This highlights the government’s commitment to sustainable financing and its efforts to prioritize projects that align with its climate change goals. Ontario recently issued its thirteenth Green Bond, worth $1.5 billion, with the aim of funding five projects related to clean transportation and energy efficiency. The province plans to issue multiple Green Bonds each year, including in 2023-24, to finance public transit initiatives, extreme-weather resistant infrastructure, and energy efficiency and conservation projects. Ontario is currently the largest issuer of Canadian dollar Green Bonds and is updating its Green Bond Framework to allow for a greater breadth of potential bond offerings in the future.

Why this is relevant for Canadian lenders:

The Ontario government’s commitment to sustainable financing and its efforts to prioritize projects that align with its climate change goals can potentially drive demand for Green Bonds, leading to new investment opportunities for lenders. The CLA , through its Sustainable Finance Roundtable, is currently collaborating with private partners to ensure current frameworks are crafted and adhered to in a manner that facilitates the fulfillment of sustainability targets by all lenders.