It’s premature to view Ontario Premier Kathleen Wynne’s recent announcement that Ontario’s economy is doing better as evidence of the arrival of a new golden age for Ontario’s economy. Despite annualized real GDP growth of 3.3 per cent in the fourth quarter of 2015 and 3 per cent in the first quarter of 2016, the fact remains that business investment in Ontario remains at historic lows as a share of the province’s GDP.

A common investment spending measure is gross fixed capital formation, which measures the value of new additions to productive assets such as buildings, machinery and equipment. Such spending is important because it adds to the economy’s productive capacity and renews technology as new investment replaces old equipment. Yet, not only have recent years seen a decline in Ontario’s share of Canadian gross fixed capital formation but business investment has become even less of a driver of Ontario’s economy.

Business investment is the most volatile component of an economy given that it’s highly sensitive not only to costs but also to investor expectations regarding the future. Why might businesses be unsure about investing in Ontario? Two things come to mind: provincial government debt and the price of electricity.

From $13.8 billion in 1981, Ontario’s net provincial government debt grew to $38.4 billion in 1990, $132.5 billion in 2000 and then soared to $284.1 billion by 2014 and according to Ontario’s Financial Accountability Office is expected to reach $350 billion by 2020. This has been accompanied by a net debt to GDP ratio that has grown from 10.5 per cent in 1981 to approximately 40 per cent today. Rising provincial government debt carries with it the prospect of less-effective government spending given the need to service the provincial debt as well as the ever-present specter of higher future taxes.

As for electricity prices, these have also risen steadily. The Electric Power Selling Price Index (EPSPI) constructed by Statistics Canada to measure the price movements of sales of electricity illustrates just how much two broad industrial price categories have grown.

Between 1981 and 2015, the annual average index (with 2009=100) for 5,000 kilowatts or more in Ontario rose from 43.9 to 146.2—a price increase of 233 per cent. For users of less than 5,000 kilowatts, the index grew even more from 36.3 to 155.5—an increase of 328 per cent. For Canada as a whole, the respective increases were 213 and 237 per cent. Smaller industrial users in particular have been especially hard hit by electricity cost increases in Ontario.

Whereas Ontario once had some of the cheapest electricity in North America, today it is one of the higher cost-producers with costs no longer substantially lower than nearby U.S. states or the adjacent provinces of Quebec and Manitoba. This cost increase weakens the case for business investment in Ontario and has been yet another factor in the erosion of investment as a driver of Ontario’s economy.

Ontario may be having a good couple of quarters relative to the rest of Canada given the battering the resource sector has been taking. Enjoy it while it lasts. Given the long-term performance of business investment in the province, this economic uptick is probably not sustainable.