Business Plan 2000-2001

Message from the Minister

I am pleased to present the Ministry's 2000-2001 business plan and report on our key achievements. The 2000 Ontario Budget was historic. The Ontario government announced back-to-back balanced budgets for the first time in more than half a century.

Due to higher than expected economic performance in 1999, we were able to make additional investments including $1 billion to accelerate hospital capital restructuring, $286 million in college and university expansion and renewal, and we are giving $1 billion back to taxpayers as a dividend. We accomplished all of this while balancing the budget a full year ahead of schedule. In fact, a $654 million surplus was recorded in 1999-00 which was applied directly to reduce the provincial debt.

To ensure that we do not continue the era of repeated annual deficits, we passed the Taxpayer Protection and Balanced Budget Act, 1999. Ontario's fiscal position is now on a more stable and secure track, one that will help us deliver our debt-reduction commitment of at least $5 billion during this mandate.

Cutting taxes continues to play a large part in fostering economic growth and job creation in the province. Last year alone, 198,000 new jobs were created. We have experienced the best two consecutive years of job creation in Ontario's history. An additional 67 tax cuts announced in the 2000 Budget brings the total to 166 tax cuts for Ontarians since we came to office in 1995. We have already reduced personal income tax rates for all Ontarians and we are on track to fully implement our promised 20 per cent personal income tax reduction ahead of schedule. The Province will also reduce the taxable amount of capital gains, corporate income tax and further reduce the small business tax, making it the lowest in Canada.

We are also building for Ontario's future with the SuperBuild initiative - a $20 billion program of strategic capital investments and public-private partnerships. To enhance the considerable core capital spending of the government, SuperBuild will invest $1 billion for the new SuperBuild Millennium Partnerships initiative, $300 million for the SuperBuild Sports, Culture and Tourism Partnerships initiative, $600 million for the Ontario Small Town and Rural Development initiative and $300 million for the Northern Ontario Heritage Fund over the next five years. Through SuperBuild we are also signalling that we are ready, willing and able to do our part to revitalize Toronto's waterfront and to make Toronto's 2008 Olympic bid a resounding success.

We will continue to pursue economic growth and job creation by cutting taxes, by spending taxpayers' money wisely on programs that are a priority for the people of Ontario.

The Honourable Ernie Eves, Q.C.
Minister of Finance

Ministry Vision

The vision of the Ministry of Finance is to maintain a strong and vibrant economy for the people of Ontario. Our vision is based on an Ontario that:

• leads Canada in jobs, income and investment;
• spends taxpayers' money with increasing economy, efficiency and effectiveness;
• spends taxpayers' money on programs that are a priority for the people of Ontario and has the financial capacity to sustain these programs; and
• invests in a better future for all Ontarians.

The mission of the ministry is to establish an environment that will sustain a dynamic, innovative and growing economy. This in turn will enable us to manage the fiscal, financial and related regulatory affairs of the Province of Ontario. The ministry will:

• support economic growth and job creation in the province;
• reduce taxes to create a competitive investment climate;
• ensure Ontario has a competitive and efficient tax system;
• ensure accountability to taxpayers for the prudent use of their funds and continually strive to treat all taxpayers fairly;
• ensure prudent management of the province's debt and financing program;
• reduce provincial net debt;
• promote the effective and efficient delivery of government services;
• invest, through SuperBuild, in strategic capital infrastructure; and
• maintain a sound and dynamic regulatory environment for financial services.

Core Businesses

To achieve its vision, the ministry will focus its efforts on six core businesses:

• Tax Policy, Budget and Revenue Operations
  
  
• Economic, Fiscal and Financial Policy
  
  
• Strategic Infrastructure Investments and Partnerships
  
  
• Financial Services Industry Regulation
  
  
• Government Financing and Debt Management
  
  
• Internal Business Support

Tax Policy, Budget and Revenue Operations

• Office of Budget and Taxation
• Tax Revenue Division

Core activities include:

• providing tax policy advice to ensure that the tax system is equitable, efficient and competitive with other jurisdictions, while generating sufficient revenue to meet the government's fiscal targets and continue to support priority programs.
  
  
• developing and coordinating the Ontario Budget, providing input into other major economic/fiscal government documents and designing legislation that efficiently and effectively implements tax policy.
  
  
• administering many of Ontario's tax statutes. Maintaining the integrity of the province's self-assessment system through taxpayer information services and an independent objections review, while discouraging non-compliance through audits, investigations and collection procedures.

Economic, Fiscal and Financial Policy

• Office of Economic Policy
• Fiscal and Financial Policy Division
• Ontario Electricity Restructuring Secretariat
• Provincial-Local Finance Secretariat
• Integrated Financial Information System (IFIS)

Core activities include:

• providing analytical support and policy advice on a wide range of economic, fiscal and financial issues that affect economic growth and job creation including revenue, economic, labour market, sectoral, regional and demographic trends as well as economic and revenue projections.
  
  
• supporting the development of the government's overall fiscal framework including operating and capital expenditure management and non-tax revenue strategy, and ensuring the effective financial management of public dollars.
  
  
• restructuring Ontario's electricity industry, which is moving to an open market in the year 2000. This involves the restructuring of an industry with over $10 billion in annual sales and the management of past debt and liabilities.
  
  
• providing advice on policies, legislation and operational initiatives that support the property tax system and the Province's fiscal and financial relationship with municipalities.

Strategic Infrastructure Investments and Partnerships

• Ontario SuperBuild Corporation

Core activities include:

• providing leadership and central coordination through the Ontario SuperBuild Corporation for policy development, planning and Cabinet approvals relating to the Province's capital envelope.
  
  
• a focus on developing innovative, leading-edge public-private partnerships to modernize and expand Ontario's strategic infrastructure.
  
  
• establishing three new SuperBuild partnership initiatives focused on strategic infrastructure partnerships, infrastructure critical to the future growth of rural areas - small towns and small cities, and recreational, cultural and tourist attractions throughout the province.

Provincial support for the Toronto Waterfront Revitalization Plan and 2008 Olympic Games bid could also be accommodated in the new SuperBuild Millennium Partnerships initiative. The Olympic & Waterfront Development Agency, which reports through the Ontario SuperBuild Corporation, would manage Provincial involvement.

Financial Services Industry Regulation

• Ontario Securities Commission (OSC)
• Financial Services Commission of Ontario (FSCO)
• Motor Vehicle Accident Claims Fund

Core activities include:

• implementing a policy framework that promotes fairness, efficiency and competition in financial services. Regulatory services support important public priorities by means of industry standards and consumer protection in the financial services sector. This contributes to investor and consumer confidence in the soundness of the financial services industry.

Government Financing and Debt Management

• Ontario Financing Authority (OFA)

Core activities include:

• arranging and coordinating all aspects of financing for the Province of Ontario and its crown corporations and agencies including borrowing, debt management, investment, cash and banking activities as well as investor and credit rating relations.

Internal Business Support

• Corporate Services Division

Core activities include:

• providing planning, advisory, controllership, audit, information technology and administrative support to the ministry to ensure the direction and management of operating programs is consistent with Ontario Government policy and legislation.

Annual Report on Key Achievements for 1999 - 2000

The ministry recorded a number of significant achievements during 1999-2000 based on the implementation of sound fiscal, economic, taxation and financial strategies. These include:

• balancing the budget a full year ahead of schedule, while reducing the burden of taxation has further strengthened business and consumer confidence;
  
  
• producing a budget surplus of $654 million;
  
  
• 30 tax cuts in the 1999 Budget including a further personal income tax cut, extension of the land transfer tax refund and a capital tax exemption for small business;
  
  
• passing the Taxpayer Protection and Balanced Budget Acts. The former ensures that future tax increases must be approved in a province-wide referendum and the latter ensures consecutive balanced budgets;
  
  
• fostering a healthy business climate and contributing to robust growth of the Ontario economy;
  
  
• supporting the creation of 198,000 new jobs in 1999, the best two consecutive years of job creation in Ontario's history;
  
  
• creating real economic growth of 5.7 per cent in 1999, faster than growth in the rest of Canada, the United States or any of the other G-7 industrialized nations;
  
  
• facilitating export expansion by 10.7%;
  
  
• establishing the SuperBuild Corporation to develop and implement a multi-year capital plan that meets the strategic infrastructure needs in Ontario;
  
  
• exceeding economic forecast projections for revenues, debt management and economic growth;
  
  
• providing relevant and timely information to the taxpayers of Ontario through Public Accounts and quarterly financial and fiscal updates;
  
  
• creating a Quality Service Office to ensure client satisfaction; and
  
  
• transforming financial policies, processes, systems, skills and organization through the Integrated Financial Information System (IFIS) Project to provide the financial information required to support a changing Ontario Public Service.

The ministry has implemented a number of measures designed to improve customer service and reduce red tape for Ontario businesses. These include:

• reducing the corporate tax return for small business corporations from 16 to four pages;
  
  
• eliminating employer health tax instalment payments for employers with an annual total Ontario remuneration of $600,000 or less;
  
  
• developing small business pointer tax guides to provide "plain language" information on retail sales tax; and
  
  
• amending seven acts administered by the Financial Services Commission to improve the business climate for insurance, cooperative corporations, credit unions, caisses populaires and mortgage brokers.

Key Commitments and Strategies for 2000 - 2001

The Ministry of Finance will continue to focus its attention on two key strategies: improving the way it does its core businesses, and exploring options for alternative delivery of existing programs and services.

Key commitments and strategies that will sustain a strong and vibrant economy include:

• developing and implementing Ontario Budget 2000 measures designed to achieve the government's policy priorities, including a total of 67 new tax cuts;
  
  
• the Ontario SuperBuild Corporation that strengthens the capacity of the government and broader public sector in the areas of capital investment, partnership development and asset management;
  
  
• working with the federal government, City of Toronto and private sector partners to support the Toronto Waterfront Revitalization Plan and 2008 Olympic Games bid;
  
  
• investing, together with the private-sector, a combined $1.8 billion for postsecondary education;
  
  
• implementing a reinvestment strategy that will provide $1 billion to hospital capital and $500 million to the Ontario Innovation Trust;
  
  
• returning $1 billion of the taxpayers' money back to them;
  
  
• designing and implementing a five-year capital strategy that will provide $1 billion for the Millennium Partnerships, $300 million for Sports, Culture and Tourism Partnerships, $400 million for the Ontario Small Town And Rural Development initiative (OSTAR), $50 million for Living Legacy and $300 million for the Northern Ontario Heritage Fund;
  
  
• a $1 billion record commitment to Ontario's highway system in 2000-01;
  
  
• merging the Financial Services Commission and the Ontario Securities Commission (OSC) to create a single organization of insurance, pension and securities regulators that will advance harmonization and co-ordination of financial services regulation;
  
  
• supporting the Ministry of Energy, Science and Technology in developing, coordinating and implementing all financial aspects of the restructuring of the Ontario electricity industry;
  
  
• developing a Declaration of Taxpayer Rights, in consultation with a number of different stakeholder groups, which demonstrates Ontario's commitment to administering tax laws with fairness, courtesy and common sense;
  
  
• working with Canada Customs and Revenue Agency to establish a "Made-for- Ontario" personal income tax system to preserve the gains enjoyed by Ontario's taxpayers and protect the fairness, integrity and stability of the tax system;
  
  
• developing a new federal/provincial relationship on the Tax Collection Agreement ;
  
  
• supporting a major review of Ontario's personal, corporate and property tax systems by the Business Tax Review Panel;
  
  
• implementing a cost recovery mechanism for the deposit institutions sector of the Financial Services Commission of Ontario;
  
  
• designing and prototyping a single, integrated financial information system (IFIS) for the OPS; and
  
  
• encouraging the federal government to restore Canada Health and Social Transfer (CHST) payments, cut taxes, reduce employment insurance premiums and provide tax policy autonomy.

Key Performance Measures

Tax Policy, Budget and Revenue Operations
Goals/Outcomes	Measures	Targets/Standards	2000-2001 Commitments
An efficient tax revenue system with reduced public administration and taxpayer compliance costs	Cost of collecting $100 of tax revenue	Legislative appropriation vs. budget revenue	$0.57
	Return on cost of tax administration	Enforcement revenue vs. legislative appropriation	$6.00 in enforcement revenue for each $1 spent

Economic, Fiscal and Financial Policy
Goals/Outcomes	Measures	Targets/Standards	2000-2001 Commitments
Positive climate for investment that stimulates economic growth	Prudent economic forecasts	Forecasts that are more cautious than those of major private sector forecasters	Forecasts that are more cautious than those of major private sector forecasters
Producing an orderly, prudent and sustainable fiscal plan	Balanced budget targets which reflect expenditure projections and revenue forecasts	Meet or exceed balanced budget targets which reflect accurate expenditure projections, conservative revenue forecasts and sound fiscal management	Meet or exceed balanced budget target
The provision of relevant and timely information to the public	Timing of the issuance of Public Accounts, Ontario Finances and other fiscal updates, reflecting all known and material changes	Moving towards having Public Accounts ready for public release 90-120 days after year-end	1999-2000 1: 130 days 2000-2001 1: 120 days
		Ontario Finances ready for public release 30- 45 days after the end of the quarter	Ontario Finances ready for public release 30-45 days after the end of the quarter
	The Provincial Auditor's opinion	An unqualified opinion 2	An unqualified opinion 2

Note 1: Refers to Public Accounts pertaining to these fiscal years but released in the subsequent fiscal year.
Note 2: An unqualified opinion means that the Auditor has no specific observations or findings to report on the Accounts.

Strategic Infrastructure Investments and Partnerships
Goals/Outcomes	Measures	Targets/Standards	2000-2001 Commitments
Using provincial capital investment to lever partnership contributions for strategic public infrastructure	Quality of the government's overall capital investments Quality of partnership proposals and degree of partnership participation	Implementation of an effective provincial capital plan More efficient delivery of public infrastructure and reduced risk and financial exposure for taxpayers	Implementation of the 2000 Ontario Budget initiatives New, innovative infrastructure partnerships across the province as a result of the new 2000 Ontario Budget initiatives

Financial Services Industry Regulation
Goals/Outcomes	Measures	Targets/Standards	2000-2001 Commitments
Climate for a strong and competitive financial services sector in Ontario	Only safe and sound financial institutions are permitted to operate in Ontario	100%	100%
Commitments that are made to plan members by Administrators of employer-sponsored pension plans are met	All beneficiaries of pension plans receive the benefits to which they are entitled	100%	100%
Public confidence in, and access to, a fair, effective, efficient and responsive private insurance system in Ontario	Only solvent, licensed insurance companies operate in Ontario	100%	100%

Government Financing and Debt Management
Goals/Outcomes	Measures	Targets/Standards	2000-2001 Commitments
Efficient and prudent management of the province's financial assets and liabilities	Timing of borrowing 1	Costs below domestic market average interest rates to evaluate timing of debt issues	Cost below the benchmark
	Debt Management 2	Positive contribution from debt management activities	Cost savings realized
	Operation within approved exposure limits for Public Debt Interest, interest rates and foreign exchange 3	Below approved exposure limits	Below approved exposure limits

Note 1: For timing, the actual cost of borrowing is compared to the average domestic interest rate, showing how successful the timing of issues was compared with what the cost would have been if debt had been issued evenly throughout the year.
Note 2: The debt management measure takes into account cost savings arising from overall management of the debt portfolio by comparing debt service cost versus a market neutral strategy.
Note 3: Exposure limits are: unhedged foreign exchange exposure to 5 per cent or less of Funded Debt and Trust Liabilities; debt subject to interest rate resetting (net of liquid reserves) to 25% or less of Funded Debt and Trust Liabilities; and the increase in public debt interest from all debt and risk management exposures is limited to 3 per cent or less of annual budgeted public debt interest.

1999 - 2000 Ministry Spending by Core Business - Interim Actuals ¹

Ministry of Finance Operating Capital $739 million $12 million 3,600 staff

Office of Privatization Operating $12 million 30 staff

Tax Policy, Budget and Revenue Operationse Operating $446 million 2,200 staff		Economic, Fiscal and Financial Policy Operating $110 million4 240 staff
Office of Budget and Taxation Tax Revenue Division		Office of Economic Policy Fiscal and Financial Policy Division Financial Services Policy and IFIS Project Community Reinvestment Strategy

Financial Services Industry Regulation Operating Capital $73 million $6 million 350 staff2		Government Financing and Debt Management Operating Capital $23 million3 $6 million 290 staff
Financial Services Commission of Ontario

Internal Business Support Operating $75 million 490 staff

Note 1: Expenditure data are PSAB based; staff numbers are shown as full-time equivalents.
Note 2: Does not include the staff of the Ontario Securities Commission as they are not members of the Ontario Public Service.
Note 3: Includes only the operating costs of the Ontario Financing Authority and does not include Public Debt Interest.
Note 4: Excludes the Community Reinvestment Fund.

2000 - 2001 Ministry Approved Allocations by Core Business - Plan¹

Ministry of Finance Operating Capital $787 million $203 million 3,925 staff

Tax Policy, Budget and Revenue Operations Operating $478 million 2,555 staff		Economic, Fiscal and Financial Policy Operating $121 million4 225 staff
Office of Budget and Taxation Tax Revenue Division		Office of Economic Policy Fiscal and Financial Policy Division Ontario Electricity Restructuring Secretariat Integrated Financial Information System Provincial-Local Finance Secretariat

Financial Services Industry Regulation Operating Capital $86 million $3 million 355 staff2		Government Financing and Debt Management Operating $24 million3 290 staff
Financial Services Commission of Ontario

Internal Business Support Operating $56 million 475 staff		Strategic Infrastructure Investments and Partnerships Operating Capital $22 million5 $200 million6 25 staff7
		Ontario SuperBuild Corporation

Note 1: Expenditure data are PSAB based; staff numbers are shown as equivalents.
Note 2: Does not include the staff of the Ontario Securities Commission as they are not members of the Ontario Public Service.
Note 3: Includes only the operating costs of the Ontario Financing Authority and does not include Public Debt Interest.
Note 4: Excludes the Community Reinvestment Fund.
Note 5: Operating funding for the Ontario SuperBuild Corporation
Note 6: Announced in the 2000 Ontario Budget, the Millennium Partnership Fund has been established to invest in public-private partnerships for strategic infrastructure: environmental projects, and projects for the economic development of urban centres across Ontario. This fund will be administered by the Ontario SuperBuild Corporation.
Note 7: Staffing of the Ontario SuperBuild Corporation.

Who to Call

Questions or comments about the ministry's business plan are welcomed.
Visit our web site at www.gov.on.ca/hmpage.html or call: