A new economic vision is needed for Ontario, suggests TD Economics in a special report issued on Monday.

TD’s report says that it is worried about the economy’s long-term health: “Ontario’s past success has been due to a thriving industrial base, which in turn, was largely built on a foundation of a competitive and often undervalued Canadian dollar, relatively free access to the U.S. market and low-cost energy supplies. Yet, a thesis of this report is that a cyclical rebound in the U.S. economy won’t be enough to restore this foundation. Much of it appears gone forever.”

However, Ontario can prosper again, the report says. “But the province will need to set its sights on a different kind of prosperity and exploit different advantages. Above all, a different policy backdrop will be required,” it counsels; including: a top-quality labour force, effective integration of immigrants into the workforce, world-class infrastructure, a reliable electricity system, environmental leadership, a competitive tax system, enhanced trade, a shift to labour force participation from dependence (welfare) and supportive federal policy. Parts of the puzzle have already been put into place, it says, but there is much work to be done.

“We recommend that the Ontario government put out a broad discussion paper this fall on where it wants to take the economy over time. Such a report, which would replace the relatively sterile exercise of the mandated long-term economic and fiscal outlook, could form the basis of debate on the issue,” the TD report says. “It is vital that the discussion paper not just be about numbers and budget balances. It should address the fundamental issues that matter to Ontarians: jobs, income and making people’s lives better.”

The provincial government must also move swiftly to turn the vision into reality, TD says, adding that although overnight shift would be very expensive, the Ontario government is likely to find itself with shrinking fiscal wiggle room over the next few years if it does nothing.

“With much of Ontario’s economic success driven by advantages that no longer exist, a new direction is required,” the TD report concludes. “We look to the provincial government to take leadership on this front by developing a vision on where it plans to take the economy down the road. Some of the pieces have already been put in place. But as we discuss, other parts need to be added and all the pieces need to fit together.”