This chapter outlines Ontario's fiscal outlook for 2010–11 and the medium-term forecast for 2011–12 and 2012–13. In addition, it reviews federal support for the delivery of services important to Ontarians.
While the economy is gradually recovering, Ontario's families and businesses are still feeling the effects of the global financial and economic crisis. Key economic indicators have improved from lows posted during the recession, but most remain below pre-recession levels. Risks to the outlook include uncertainty regarding the U.S. economic recovery and the ongoing challenges in the global economy, such as sovereign debt concerns and trade imbalances (for further details, see Chapter 2: Ontario's Economic Outlook).
The government has already announced that it has exceeded its fiscal target for 2009–10, recording a deficit of $19.3 billion, down from the $24.7 billion deficit projected in the Fall 2009 Ontario Economic Outlook and Fiscal Review.
The Province is now projecting an $18.7 billion deficit in 2010–11 — a $1.0 billion improvement from the 2010 Budget and an almost 25 per cent improvement from the $24.7 billion deficit forecast a year ago for 2009–10.
The government is on track to meet the medium-term fiscal targets outlined in the 2010 Budget. These include steadily declining deficits of $17.3 billion in 2011–12 and $15.9 billion in 2012–13, and incorporate the initiatives announced as part of this document, including the proposed Ontario Clean Energy Benefit. The government has laid out a realistic, responsible plan to cut the deficit in half within five years of its highest point and to eliminate it in eight years.
The 2010 Budget and the First Quarter Ontario Finances projected a deficit of $19.7 billion for 2010–11. The government is now projecting a deficit of $18.7 billion for 2010–11 — a $1.0 billion improvement.
The improvement to the fiscal forecast for 2010–11 is mainly due to an increase in revenue resulting from stronger economic growth and the government's prudent fiscal management. Total program expense is unchanged from the 2010 Budget plan.
Total revenue has increased by 0.7 per cent while total expense has decreased by 0.2 per cent. Total expense is lower due to the fact that the Province's interest on debt expense projection is $0.2 billion below the 2010 Budget forecast.
The fiscal plan continues to maintain a $0.7 billion reserve in recognition of the global economic uncertainty that remains.
|Budget Plan||Current Outlook||In-Year Change|
|Interest on Debt||9,961||9,715||(246)|
The 2010–11 revenue outlook, at $107.7 billion, is $0.8 billion above the 2010 Budget forecast, largely reflecting stronger economic growth in 2010.
|Personal Income Tax||(1,130)|
|Education Property Tax||382|
|Ontario Health Premium||151|
|Land Transfer Tax||126|
|Government of Canada||76|
|Other Non-Tax Revenue||(169)|
|Total Revenue Changes since Budget||789|
Key revenue changes since the 2010 Budget forecast include:
Consistent with the government's approach to controlling the rate of growth in spending while protecting core public services, total program expense is unchanged from the 2010 Budget plan. Total expense in 2010–11 is currently projected to be $125,611 million — 0.2 per cent lower than the 2010 Budget forecast, due to a lower interest on debt expense projection than forecast in the 2010 Budget, reflecting lower interest rates than those projected in the Budget.
|Key Program Expense Changes|
|Ontario Clean Energy Benefit||300|
|Home Energy Savings Program||85.1|
|Extra Forest Firefighting||57.1|
|Other Program Expenses||8.3|
|Total Program Expense Changes||–|
|Interest on Debt Expense Forecast Change||(246.2)|
|Total Expense Changes since the Budget||(246.2)|
Key 2010–11 expense changes from the 2010 Budget forecast include:
Interest on Debt expense, at $9,715 million, is $246.2 million lower than forecast in the 2010 Budget. This reduction primarily reflects lower interest rates than those projected at the time of the Budget.
The medium-term revenue forecast reflects the Ministry of Finance's economic outlook and the estimated impact of government policy measures.
|Government of Canada||18.6||23.8||21.1||21.1|
|Income from Government Business Enterprises||4.2||4.2||4.4||4.6|
|Other Non-Tax Revenue||8.0||7.2||6.9||6.9|
The medium-term Taxation Revenue outlook reflects current revenue information and projections for the Ontario economy.
The outlook for Government of Canada transfers reflects current federal-provincial funding arrangements.
The outlook for Income from Government Business Enterprises is unchanged from the 2010 Budget.
The forecast for Other Non-Tax Revenue is based on information provided by government ministries and provincial agencies.
|Source of Change||2010–11||2011–12||2012–13|
|Economic Growth Outlook||1.5||1||0.6|
|Lower 2009–10 Tax Base||(0.7)||(0.7)||(0.7)|
|Government of Canada||0.1||(0.4)||–|
|Other Non-Tax Revenue||(0.2)||(0.1)||(0.1)|
|Total Revenue Changes||0.8||(0.2)||(0.1)|
The revenue outlook is up in 2010–11 due to stronger economic growth in 2010. The outlook for 2011–12 and 2012–13 remains close to the 2010 Budget outlook.
A stronger 2010 economic growth outlook increases taxation revenues in 2010–11. This increase diminishes over the 2011–12 and 2012–13 period due to weaker economic growth projected for those years.
A lower 2009–10 tax base is largely due to weaker Personal Income Tax revenues reported in the 2009–10 Public Accounts. This lowers the revenue base upon which projected growth is applied, resulting in lower revenues over the forecast period.
Changes to Government of Canada transfers in 2011–12 reflect updated estimates based on current agreements and funding arrangements with the federal government.
Other Non-Tax Revenue changes largely reflect updated information based on the current forecast.
A key element of the 2010 Budget plan to eliminate the deficit was a commitment to manage down expense while following through on policies that support jobs and growth to ensure future opportunity and prosperity. The government is committed to maintaining a prudent and responsible approach to managing growth in expense, while preserving public services.
The medium-term expense outlook is consistent with the 2010 Budget plan, and reflects the impact of the following adjustments:
The government remains committed to ongoing expenditure management and has a long track record of effectively realizing savings and efficiencies (for further details, see Chapter 1, Section B: Managing Responsibly). As outlined in the 2010 Budget, the government has continued its comprehensive review of all government programs and services. To date, this review has identified over $260 million in potential savings through both programming and administrative expenditure reductions. The government will continue to identify program efficiencies to ensure the rate of expense growth remains well below the rate of growth in revenue over the medium term.
The Province is on track to meet the fiscal targets established in the 2010 Budget. Ontario's fiscal outlook includes steadily declining deficits of $18.7 billion in 2010–11, $17.3 billion in 2011–12 and $15.9 billion in 2012–13.
In recognition of the ongoing challenges in the global economy, such as sovereign debt concerns and trade imbalances, as well as the uncertain outlook for the U.S. economic recovery, the medium-term fiscal outlook continues to include a reserve of $1.0 billion in each of 2011–12 and 2012–13.
|Interest on Debt||8.7||9.7||10.8||12.2|
Although economic recovery is underway in Ontario, significant risks remain that could cause variances to both the Province's revenue and expense outlooks.
Detailed information on revenue and expense risks and sensitivities can be found in Chapter II of the 2010 Budget.
Through the recent global recession, Ontario and the federal government worked closely together to support the economy. Both levels of government coordinated investment in infrastructure, provided financial support to the auto industry and worked together on sales tax harmonization. The federal government also provided additional support for skills training.
The Province's Open Ontario plan will help Ontarians increase productivity and promote economic growth. The plan includes new investments in education and continuing investments in labour-market training and health care. During a time of continued economic uncertainty, the Province seeks the federal government's ongoing support in strengthening Ontario and Canada.
Ontario has been asking for fairness in all transfers and this should include programs and supports in the areas of immigration and labour-market training.
The Province looks to the federal government to provide adequate settlement and training support for new Canadians in Ontario. To date, the federal government has underspent its commitments through the Canada-Ontario Immigration Agreement by more than $200 million. The federal government must fulfill this commitment and flow this money to immigrant service agencies immediately. This is particularly important considering immigrants will account for a significant and rising share of labour-force growth in the coming years. Ontario is committed to supporting the success of its immigrants. To improve outcomes for immigrants who choose Ontario as their home, the federal government must immediately begin negotiations on a new agreement with Ontario — one that would give the Province greater policy control and full funding support for immigrant settlement and training.
In its 2009 budget, the federal government increased funding for labour-market programs through time-limited enhancements that provided much-needed assistance to workers affected by the recession. These enhancements, which will expire on March 31, 2011, provided additional support of approximately $314 million per year in 2009–10 and 2010–11. Ending this funding means that tens of thousands of Ontarians will lose the opportunity to develop labour-market skills that are crucial in the current economic climate. Ontario is asking the federal government to extend the labour-market training enhancements to provide Ontarians with greater opportunities to transition their skills to the new economy.
The federal government has used time-limited funding to support the delivery of provincial services. When federal support for provincial programs such as health care declines over time or ends, it leaves Ontario with significant financial pressures to continue delivering these much-needed services. Time-limited federal funding reflects a lack of commitment to the needs of Ontario families. This approach hurts the province's prospects for a stronger Ontario and a stronger Canada.
Provincial governments are working together to manage the cost of health care services, including work on the pan-Canadian procurement of drugs and medical equipment, and sharing of clinical best practices. To continue to deliver the quality services on which Ontarians rely, Ontario needs the federal government to renew its commitment to fund the reduction of health care wait times.
Provinces need a strong and sustained federal commitment beyond 2013–14 to help them plan to meet future demand for health care, postsecondary education and social services. The growth of major federal transfers in support of health, postsecondary education and social programs is currently set in federal legislation until the end of 2013–14. Ontario is encouraged that the federal fiscal plan provides for growth in major federal transfers at current legislated rates for an additional two years to 2015–16. The future of universal health care depends on the federal government providing adequate financial support to provinces and territories.
The federal government and interested provinces and territories are working together to establish a Canadian Securities Regulator. In order to meet the needs of Canadian capital markets, the national regulator should be centred in Toronto, Canada's financial capital.
Ontario wants a federal partner that supports the initiatives the Province is implementing in response to new and emerging economic, demographic and social realities that will help with its long-term economic transformation. Ontario looks to the federal government for continued support to be a true partner in the areas of health care and postsecondary education, and to work with Ontario to support its immigrants as well as its economic plan going forward.
This section provides information on the Province's current fiscal outlook, historical financial performance and key fiscal indicators.
|Interest on Debt 1||8.7||9.7||10.8||12.2|
|Net Debt 2||193.6||219.5||244.5||267.4|
|Accumulated Deficit 2||131.0||149.6||166.9||182.8|
|Personal Income Tax||25,472||25,738||23,393||24,812|
|Sales Tax 1||16,745||17,021||17,059||19,463|
|Education Property Tax||5,754||5,696||5,626||5,698|
|Employer Health Tax||4,605||4,617||4,545||4,747|
|Ontario Health Premium||2,713||2,776||2,763||3,022|
|Land Transfer Tax||1,363||1,013||1,015||1,149|
|Beer and Wine Tax (replacing Fees)2||–||–||–||414|
|Electricity Payments-In-Lieu of Taxes||546||830||516||481|
|Government of Canada|
|Canada Health Transfer||8,487||8,942||9,791||10,217|
|Canada Social Transfer||3,778||4,079||4,204||4,327|
|Labour Market Programs||664||797||1,253||1,207|
|Wait Times Reduction Fund||468||235||97||97|
|Other Federal Payments||2,468||1,867||1,440||4,306|
|Government Business Enterprises|
|Ontario Lottery and Gaming Corporation||1,857||1,921||1,924||1,859|
|Liquor Control Board of Ontario||1,374||1,410||1,440||1,465|
|Ontario Power Generation Inc./Hydro One Inc.||1,214||713||854||844|
|Other Government Enterprises||(8)||(2)||(23)||(4)|
|Other Non-Tax Revenue|
|Vehicle and Driver Registration Fees||1,051||1,034||1,057||1,059|
|Electricity Debt Retirement Charge||982||970||907||916|
|Power Supply Contract Recoveries||929||953||1,409||1,385|
|Sales and Rentals||553||733||647||673|
|Other Fees and Licences||677||683||717||736|
|Beer and Wine Fees (replaced by Tax)2||466||459||451||115|
|Net Reduction of Power Purchase Contract Liability||398||373||348||339|
|Miscellaneous Other Non-Tax Revenue||943||655||854||737|
|Aboriginal Affairs 1||33||55||67||71.0|
|Agriculture, Food and Rural Affairs 1||731||877||1,265||1,288.1|
|Board of Internal Economy||257||188||187||195.0|
|Children and Youth Services||3,733||4,069||4,430||4,666.5|
|Citizenship and Immigration||90||89||101||112.4|
|Community and Social Services||7,549||8,001||8,629||9,263.2|
|Community Safety and Correctional Services||1,982||2,121||2,201||2,690.6|
|Economic Development and Trade 1||328||245||223||349.8|
|Energy and Infrastructure 1, 2||389||251||292||723.6|
|Francophone Affairs, Office of||5||5||5||5.1|
|Government Services 1||916||939||1,106||1,102.4|
|Health and Long-Term Care||37,744||40,352||42,730||45,352.4|
|Health Promotion and Sport 1||364||382||381||408.7|
|Municipal Affairs and Housing 1||744||756||694||686.4|
|Northern Development, Mines and Forestry||506||645||653||857.3|
|Research and Innovation 1||301||295||333||411.5|
|Tourism and Culture 1||584||566||668||720.0|
|Training, Colleges and Universities 1||5,787||6,081||6,479||7,154.9|
|Interest on Debt 3||8,914||8,566||8,719||9,715.0|
|Other Expense 1||7,490||3,035||8,985||12,646.5|
|Year-End Savings 4||–||–||–||(1,174.5)|
|One-Time Expense for the First Nations
|Agriculture, Food and Rural Affairs|
|One-Time Extraordinary Assistance||274||–||–||–|
|Time-Limited Investments in Infrastructure||–||–||618||1,898.00|
|Economic Development and Trade|
|Teachers' Pension Plan 1||342||50||255||525.0|
|Energy and Infrastructure|
|Capital Contingency Fund||–||–||–||200.0|
|One-Time Investments in Municipal Infrastructure||450||–||–||–|
|Ontario Clean Energy Benefit||–||–||–||300.0|
|One-Time Automotive Sector Support 2||–||75||3,022||–|
|Investing in Ontario Act Investments||1,149||–||–||–|
|Ontario Municipal Partnership Fund||907||905||781||645.5|
|Operating Contingency Fund||–||–||–||1,389.9|
|Pension Benefit Guarantee Fund||–||–||500||–|
|Power Supply Contract Costs||929||953||1,409||1,385.0|
|Pension and Other Employee Future Benefits||531||971||949||1,102.0|
|Health Promotion and Sport|
|Time-Limited Investments in Infrastructure||–||–||48||345.1|
|Municipal Affairs and Housing|
|Time-Limited Investments in Municipal Social and Affordable Housing Stock||100||–||585||659.3|
|Research and Innovation|
|Harmonized Sales Tax Transitional Support||–||–||–||3,200.0|
|Tourism and Culture|
|Training, Colleges and Universities|
|One-Time Transit and Infrastructure Investments||1,536||–||190||–|
|Total Other Expense||7,490||3,035||8,985||12,646.50|
Expenditures 2009–10 Actual
|2010–11 Current Outlook|
|Investment in Capital Assets||Transfers and Other
Infrastructure Expenditures 1
|Total Infrastructure Expenditures|
|Highway Expansion/High-Occupancy Vehicle Lanes||1,020||1,018||–||1,018|
|Highway and Bridge Rehabilitation||771||1,017||–||1,017|
|Other Transportation 2||720||1,022||117||1,139|
|Municipal and Local Infrastructure||448||34||493||527|
|Short-Term Stimulus Investments||1,616||697||3,679||4,376|
|Less: Other Partner Funding 3||620||464||–||464|
|Total Excluding Partner Funding||11,961||10,264||5,614||15,878|
|Less: Flow-Throughs 4||1,133||487||2,179||2,666|
|Total Provincial Expenditure 5||10,829||9,776||3,435||13,212|
|Interest on Debt 4||10,337||9,694||9,604||9,368||9,019||8,831||8,914||8,566||8,719||9,715|
|Net Debt 5 6||132,121||132,647||138,816||140,921||152,702||153,742||156,616||169,585||193,589||219,462|
|Accumulated Deficit 7||132,121||118,705||124,188||125,743||109,155||106,776||105,617||113,238||130,957||149,613|
|Gross Domestic Product (GDP) at Market Prices||453,701||477,763||493,081||516,106||537,383||560,576||583,946||584,460||578,183||610,561|
|Population — July (000s)||11,897||12,091||12,242||12,391||12,528||12,665||12,793||12,932||13,065||13,211|
|Net Debt per Capita (dollars)||11,106||10,971||11,339||11,373||12,188||12,139||12,242||13,113||14,817||16,612|
|Personal Income per Capita (dollars)||30,360||30,553||31,132||32,363||33,480||34,956||36,430||37,016||36,559||37,385|
|Interest on Debt as a per cent of Revenue||14.3||13.0||12.9||11.2||10.0||9.1||8.6||8.8||9.1||9.0|
|Net Debt as a per cent of GDP||29.1||27.8||28.2||27.3||28.4||27.4||26.8||29.0||33.5||35.9|
|Accumulated Deficit as a per cent of GDP||29.1||24.8||25.2||24.4||20.3||19.0||18.1||19.4||22.6||24.5|