Quarterly Ontario Finances: Second Quarter 2000-2001

ONTARIO FINANCES

1999-00 PUBLIC ACCOUNTS

• The 1999-00 Public Accounts, released November 1, 2000, reported the 1999-00 audited actual surplus at $668 million, up $14 million from the $654 million interim estimate in the 2000 Ontario Budget.
  
  

2000-01 IN-YEAR PERFORMANCE

SURPLUS AT $1.4 BILLION

• The 2000-01 surplus is projected at $1,366 million, as compared to a balanced budget outlook in the 2000 Ontario Budget and First Quarter Ontario Finances.
  
  

REVENUE AT $64.1 BILLION

• The revenue outlook, at $64,053 million, is up $1,993 million from the Budget Plan, and up $1,990 million from the First Quarter Ontario Finances, mainly due to increased tax revenue as a result of the strength of the economy and the revenue impact of consolidating the Independent Electricity Market Operator as a government organization.
  
  

IN-YEAR EXPENDITURE UP $0.6 BILLION

• In-year decisions increased total expenditure $611 million from the 2000 Budget Plan and $608 million from the First Quarter Ontario Finances, mainly due to an additional $498 million for the Hospitals' Comprehensive Strategy and for emergency health services, and $138 million for Public Service Pension Plan expenditures.
  
  

ACCOUNTING CHANGES INCREASE TOTAL EXPENDITURE BY $0.7 BILLION

• Accounting changes introduced in the 1999-00 Public Accounts increased 2000-01 total expenditure by $746 million due to an increase in the Provision for the Electricity Sector and the expenditure impact of consolidating the Independent Electricity Market Operator and the Metro Toronto Convention Centre as government organizations. Revenue increased by $358 million in 2000-01 as a result of these accounting changes.
  
  

RESERVE APPLIED TO REDUCE NET PROVINCIAL DEBT

• Based on improvements in the economic and revenue outlook, the $1 billion reserve has been eliminated and applied to Net Provincial Debt reduction.

REVENUE

• Total revenue is projected to be $64,053 million, up $1,993 million from the 2000 Ontario Budget Plan, and $1,990 million above the First Quarter Ontario Finances outlook. Major changes this quarter are:
  
  
  • Personal Income Tax revenue is $1,200 million higher due to the vigorous pace of growth of employment and incomes in Ontario.
    
    
  • Retail Sales Tax is $200 million higher as a result of strong growth in consumer and business spending.
    
    
  • The Employer Health Tax outlook is increased by $60 million due to robust job creation.
    
    
  • Net income from the Ontario Lottery and Gaming Corporation is increased by $170 million due to the performance of slot machines at race tracks.
    
    
  • Other Income from Government Enterprises is increased by $5 million as a result of the change in status of the Metro Toronto Convention Centre from government enterprise to government organization. With this change in status, a $5 million net loss for the Metro Toronto Convention Centre, which was included in the 2000 Budget outlook, is now excluded from Income from Government Enterprises.
    
    
  • Sales and Rentals is increased by $45 million as a result of the change in status of the Metro Toronto Convention Centre from government enterprise to government organization.
    
    
  • Miscellaneous Other Revenue is $310 million higher due to $308 million for the consolidation of the Independent Electricity Market Operator as a government organization, and $2 million for policing services provided for the Town of Tillsonburg, the County of Brant and the Township of Red Rock.
    
    

OPERATING EXPENDITURE

• Net operating expenditure, at $60,208 million, is up $1,223 million from the Budget Plan and up $1,212 million from the First Quarter Ontario Finances. Major changes this quarter are as follows:
  
  
  • Ministry of the Attorney General: An increase of $1 million to implement legislation relating to domestic violence intervention orders (restraining orders) and to fund the Organized Crime Summit.
    
    
  • Ministry of Education: A decrease of $24 million based on updated estimates of improved Teachers' Pension Plan funding gains.
    
    
  • Ministry of Energy, Science and Technology: An additional $283 million to reflect the operating component of the consolidation of the Independent Electricity Market Operator as a government organization, consistent with the treatment in the 1999-00 Public Accounts.
    
    
  • Ministry of Environment: An additional $12 million for Operation Clean Water; and an additional $10 million for the launch of the Environmental SWAT Team Initiative, partially offset by $5 million from the Contingency Fund.
    
    
  • Ministry of Finance: Consistent with the principles of electricity restructuring, an amount of $275 million has been added to the Provision for the Electricity Sector. This amount is equal to the net income of Ontario Power Generation and Hydro One in excess of the Province's interest expenditure on its equity investment in the electricity sector, consistent with the treatment in the 1999-00 Public Accounts.
    
    
  • Ministry of Health and Long-Term Care: An additional $398 million for the Hospitals' Comprehensive Strategy to support extensive modernization of hospital services; an investment of $100 million to improve access to emergency health services and to implement the flu vaccination program; an expenditure increase of $21 million in the Long-Term Care program, for increased utilization in community services and to extend School Health Support services to children attending private schools or schooled at home, fully offset from the Contingency Fund; and savings of $3 million arising from the signing of a new contract for the Ontario Health Network.
    
    
  • Management Board Secretariat: An additional $11 million for the Smart Card Project, fully offset from the Contingency Fund; an additional $1 million to investigate possible new facilities for the Archives of Ontario; and an additional $138 million for providing various benefit improvements and a contribution holiday to members of the Public Service Pension Plan, similar to changes in the OPSEU Pension Plan.
    
    
  • Ministry of Municipal Affairs and Housing: An expenditure increase of $1 million as a result of the transfer from the Ontario Native Affairs Secretariat of the Off-Reserve Housing initiative to build and renovate off-reserve native housing in Northern Ontario.
    
    
  • Ontario Native Affairs Secretariat: An expenditure decrease of $1 million as a result of the transfer of the Off-Reserve Housing initiative to the Ministry of Municipal Affairs and Housing.
    
    
  • Ministry of Natural Resources: An increase of $25 million to implement and expand Ontario's Living Legacy, fully offset from the Contingency Fund; an additional $4 million to fund new responsibilities resulting from electricity restructuring, including the development of water management plans and a new business relationship with the water power industry; and an additional $1 million for resource-based tourism diversification, fully offset from the Contingency Fund.
    
    
  • Ministry of the Solicitor General: An additional $3 million for OPP municipal policing services contracts (County of Brant, Town of Tillsonburg and Township of Red Rock, offset by revenue) and the Anishnabek First Nations Policing Agreement; and an increase of $1 million for enforcement and effective use of domestic violence intervention orders.
    
    
  • Ministry of Tourism: An increase of $48 million as a result of the consolidation of the Metro Toronto Convention Centre as a government organization, consistent with the treatment in the 1999-00 Public Accounts.
    
    

PUBLIC DEBT INTEREST

• The Public Debt Interest forecast of $9,430 million, consisting of $8,910 million related to the Province's borrowing on its own behalf and $520 million related to the interest on debt issued for investment in the Electricity Sector, is down $30 million from the Budget Plan and the First Quarter Ontario Finances, due to lower-than-expected interest rates.
  
  

CAPITAL EXPENDITURE

• Capital expenditure at $2,209 million is up $134 million from the Budget Plan and up $142 million from the First Quarter Ontario Finances. The major changes this quarter were:
  
  
  • Ministry of Energy, Science and Technology: An additional $140 million to reflect the capital component of the consolidation of the Independent Electricity Market Operator as a government organization, consistent with the treatment in the 1999-00 Public Accounts.
    
    
  • Ontario Native Affairs Secretariat: An additional $2 million for the Aboriginal Community Capital Infrastructure Program.
    
    

VIBRANT ONTARIO ECONOMY IN 2000

• The Ontario economy continued to grow strongly in the second quarter of the calendar year (April-June period), with real GDP up 5.3 per cent at annual rates. This followed growth of 5.2 per cent in the first quarter.
  
  

STRONG JOB GROWTH IN 2000

• During the first eleven months of 2000, Ontario employment was up 184,000 compared to the same period in 1999.
  
  
• In November, Ontario employment rose 35,400 following a 27,400 job gain in October. The unemployment rate was 6.0 per cent.
  
  

STRONG CONSUMER SPENDING GROWTH IN 2000

• Over the first nine months of 2000, Ontario retail sales were up 7.9 per cent from a year ago and unit auto sales jumped 6.5 per cent.
  
  

HOUSING MARKET REMAINS STRONG

• Over the first ten months of 2000, housing starts in Ontario rose 8.7 per cent from a year ago.
  
  
• Over the first ten months of 2000, Toronto new home sales increased 16.5 per cent from a year ago.
  
  

BUSINESS GROWING

• Over the first nine months of 2000, Ontario manufacturing shipments rose 7.9 per cent from a year ago.
  
  
• Ontario international merchandise exports increased 6.4 per cent over the same period.
  
  

ONTARIO INFLATION MODERATE IN 2000

• Ontario's inflation rate as measured by the Consumer Price Index (CPI) was 2.9 per cent in October 2000. Excluding energy prices, the CPI increase was 1.9 per cent in October.