2013 Ontario Economic Outlook and Fiscal Review

Chapter III: Fiscal Outlook

Section B: 2013–14 Fiscal Performance

The deficit for 2013–14 is currently projected to be $11.7 billion, on track with the 2013 Budget forecast and more than $1.0 billion ahead of the deficit projection for 2013–14 outlined in the 2012 Budget. Despite slower economic growth in 2013 and 2014, revenues are on track with the 2013 Budget projection.

Similarly, expense is on track with the 2013 Budget projection, reflecting the government’s commitment to manage spending. The 2013–14 program expense outlook is essentially unchanged from the 2013 Budget projection and is also consistent with the 2012 Budget projection, which forecasted program expense of $117.0 billion in 2013–14.

With the economy in a period of sustained moderate growth, the government remains on track to balance the budget by 2017–18 in a fair and responsible way. The 2013–14 outlook maintains a $1.0 billion reserve to protect the fiscal plan against any adverse changes in the Province’s revenue and expense. If the reserve is not needed by year-end, it will be applied to reduce the deficit.

TABLE 3.1 2013–14 In-Year Fiscal Performance
($ Millions)
  Budget
Plan
Current
Outlook
In-Year
Change
Revenue 116,845 116,834 (11)
Expense      
Programs 116,983 116,970 (13)
Interest on Debt 10,605 10,605
Total Expense 127,588 127,575 (13)
Reserve 1,000 1,000
Surplus/(Deficit) (11,743) (11,741) 2
Note: Numbers may not add due to rounding.

2013–14 Revenue Changes since the 2013 Budget

The 2013–14 revenue outlook, at $116,834 million, is $11 million below the projection in the 2013 Budget.

TABLE 3.2 Summary of Revenue Changes since the 2013 Budget
($ Millions)
    2013–14
Taxation    
Corporations Tax 750  
Personal Income Tax (700)  
Ontario Health Premium (70)  
Sales Tax (250)  
Land Transfer Tax 80  
All Other Taxes (70)  
Total Taxation   (260)
Other Non-Tax Revenue    
Gain on Sale of GM Shares 249  
Total Other Non-Tax Revenue   249
Total Revenue Changes since the 2013 Budget   (11)
Note: Numbers may not add due to rounding.
Details of 2013–14 In-Year Revenue Changes

Key changes to revenue projections since the 2013 Budget include:

  • Corporations Tax revenue is $750 million, or 6.7 per cent, higher due to stronger-than-expected 2012 and prior-year assessments based on tax returns processed since the 2013 Budget.
  • Personal Income Tax revenue is $700 million, or 2.5 per cent, lower due to weaker-than-projected 2012 and prior-year assessments based on tax returns processed since the 2013 Budget.
  • Ontario Health Premium revenue is $70 million, or 2.2 per cent, lower due to weaker-than-projected 2012 and prior-year assessments based on tax returns processed since the 2013 Budget.
  • Sales Tax revenue is $250 million, or 1.3 per cent, lower mostly due to a downward revision to Ontario’s estimated 2013 Harmonized Sales Tax entitlement by the federal government.
  • Land Transfer Tax is $80 million, or 5.8 per cent, higher, reflecting stronger receipts to date as the Ontario housing market has outperformed expectations.
  • Other Taxes are $70 million lower, mainly due to lower-than-expected Mining Tax revenue mostly because of large prior-year refunds and lower instalment payments.
  • The $249 million increase in Other Non-Tax revenue reflects the gain on the sale, announced on September 10, 2013, of the Province’s interest in 10 million shares of General Motors Company. The government is committed to using the proceeds from this sale in the future to strategically invest in Ontario’s infrastructure. The government proposes to establish the Trillium Trust to ensure the proceeds are invested strategically and at the appropriate time.

2013–14 Expense Changes since the 2013 Budget

The 2013–14 total expense outlook, at $127,575 million, is $13 million lower than the projection in the 2013 Budget.

TABLE 3.3 Summary of Expense Changes since the 2013 Budget
($ Millions)
  2013–14
Program Expense Changes  
Ontario Northland Transportation Commission 75.0
Emergency forest firefighting 32.0
Ontario Disaster Relief Assistance Program 18.0
2015 Pan/Parapan American Games: promotion and legacy strategy 8.5
Ministry of Natural Resources transformation plan (13.0)
Contingency Funds (58.5)
Transition Fund (75.0)
Total Program Expense Changes (13.0)
Interest on Debt
Total Expense Changes since the 2013 Budget (13.0)
Note: Numbers may not add due to rounding.
Details of 2013–14 In-Year Expense Changes

Key changes to expense projections since the 2013 Budget with offsets from the Contingency Funds include:

  • An increase of $32.0 million to cover emergency forest firefighting expenses until the end of the 2013 fire season.
  • An increase of $18.0 million to provide financial assistance to a number of municipalities and victims affected by spring flooding in Central, Eastern and Northern Ontario through the Ministry of Municipal Affairs and Housing’s Ontario Disaster Relief Assistance Program.
  • An increase of $8.5 million to help showcase Ontario and create a lasting legacy for people across the province surrounding the 2015 Pan/Parapan American Games.

Key changes to expense projections since the 2013 Budget with offsets from the Transition Fund include:

  • An increase of $75.0 million to the Ontario Northland Transportation Commission to support ongoing operations in 2013–14 and to ensure safety while stakeholder consultations and transformation activities continue.

Other key changes to expense projections since the 2013 Budget include:

  • A decrease of $13.0 million resulting from an internal realignment of funds from operating expense to capital asset, which is amortized over the life of the asset. This investment is part of the Ministry of Natural Resources’ transformation plan and is primarily for improving capital infrastructure in Ontario parks.
  • Interest on debt expense is unchanged from the forecast in the 2013 Budget.