2010 Ontario Budget: Chapter I: Ontario's Plan for Prosperity
Section B: Managing Responsibly


  • The 2009–10 deficit is $21.3 billion, down from the $24.7 billion projected in the Fall 2009 Ontario Economic Outlook and Fiscal Review.
  • The government has a realistic and responsible plan to cut the deficit in half in five years and eliminate it in eight years.
  • To address the current fiscal challenge, while protecting public services, the government proposes to:
    • Extend the freeze on MPP pay from one year to three years.
    • Freeze the compensation structures of non-bargained political and Legislative Assembly staff for two years.
    • Freeze the compensation structures for the Broader Public Sector and the Ontario Public Service for all non-bargained employees for two years.
    • Respect all current collective agreements. However, the fiscal plan provides no funding for incremental compensation increases for any future collective agreements.
    • Work with transfer partners and bargaining agents, as agreements are renegotiated, to seek agreements of at least two years’ duration. These agreements should help manage spending pressures, protect public services that Ontarians rely on and provide no net increase in compensation.
  • The government is also:
    • Phasing construction of a number of major long-term capital projects.
    • Proposing to reform Ontario’s drug system to keep drugs affordable and permit savings from the program to be reinvested in health care.
    • Modernizing government services to improve customer service and efficiency.
    • Freezing internal operating expenses at or below 2010–11 levels.
    • Launching a comprehensive expenditure management review process.

The Plan to Eliminate the Deficit

Since 2003, the McGuinty government has laid the foundation for a stronger Ontario by investing in health care, education, families and infrastructure. It has made significant progress on delivering services that are targeted more effectively, are more responsive to the public’s needs and ensure the best value for money. It has made responsible fiscal choices that have led to the elimination of the $5.5 billion deficit it inherited in 2003–04 and three consecutive surpluses from 2005–06 to 2007–08.

Ontario’s economy was hard hit by the global economic recession relative to other provinces, and so too were Ontario government revenues. In 2009–10, Ontario government own-source revenues were $9.1 billion (10.5 per cent) below their pre-recession level.1 Own-source revenues are not expected to return to their pre-recession level until 2012–13.

The Plan:

In response to the economic crisis, the government took action by making short-term stimulus investments to create jobs and lessen the impact of the recession on families and businesses. It also made the decision to preserve public services that Ontarians rely on, particularly in these difficult economic times. The government’s infrastructure investments are creating and preserving more than 300,000 jobs over two years.

The Province’s actions have paid off. However, these necessary investments resulted in the Province projecting a deficit of $24.7 billion for 2009–10 at the time of the Fall 2009 Ontario Economic Outlook and Fiscal Review. The government has introduced measures to achieve fiscal savings both this year and over the medium term, which have allowed it to do better than the deficit projections published in the Fall 2009 Ontario Economic Outlook and Fiscal Review.

The Province is following a realistic and responsible plan to eliminate the deficit. There are now clear signs that the Ontario economy has stabilized and that recovery is taking shape. However, growth in the Ontario economy and revenues alone cannot bring the Province back to balance. The government has demonstrated its ability to manage program expense in the past and it will continue to demonstrate that restraint in order to return to a balanced budget. The government’s plan will cut the Provincial deficit in half in five years and balance the budget in 2017–18.

Chart 8: Bar Graph: Ontario’s Plan to Eliminate the Deficit

Key elements of the government’s plan to balance the budget by 2017–18 include:

  • holding the annual growth in program expense to an average of 1.9 per cent beyond 2012–13;
  • continually adopting efficiency practices, maximizing returns from government business enterprises and managing overall expenditures;
  • building on the government’s previous expenditure management measures and the recent work of the Treasury Board Working Group, the government will proceed with an ongoing comprehensive review of major government programs and services;
  • promoting principled and sustainable federal–provincial arrangements; and
  • maintaining a cautious and prudent fiscal plan, including contingency funds and a reserve.
Table 3
Ontario’s Fiscal Recovery Plan1
($ Billions)
  Plan Medium-Term Outlook Extended Outlook
  10–11 11–12 12–13 13–14 14–15 15–16 16–17 17–18
Revenue 106.9 107.7 112.0 117.6 123.4 129.6 136.1 142.9
Programs 115.9 112.9 114.3 116.5 118.7 121.0 123.3 125.7
Interest on Debt 10.0 11.1 12.5 13.3 14.4 15.4 15.9 16.2
Total Expense 125.9 124.1 126.9 129.9 133.2 136.5 139.3 141.9
Reserve 0.7 1.0 1.0 1.0 1.0 1.0 1.0 1.0
Surplus/ (Deficit) (19.7) (17.3) (15.9) (13.3) (10.7) (7.8) (4.2) 0.0
  • 1 Reflects the inclusion of the fiscally neutral accounting changes from incorporating the education property tax.
  • Note: Numbers may not add due to rounding.

The government’s plan is producing results. The Province is now projecting a $21.3 billion deficit in 2009–10, an improvement of $3.4 billion from the $24.7 billion deficit forecast published in the Fall 2009 Ontario Economic Outlook and Fiscal Review (see Chapter II, Section B).

2009 expenditure management review

The government launched an expenditure management review in the Fall 2009 Ontario Economic Outlook and Fiscal Review to ensure that every dollar spent on service delivery is spent more effectively. The review was led by the Treasury Board Working Group.

In this Budget, the Province is announcing new expenditure management measures to support its commitment to return to a stronger fiscal footing. It is also introducing measures that will help ensure the sustainability of public services and government resources in the decades ahead.

Expenditure Management Measures

The government is constantly implementing efficiencies in the way it delivers services.

The Results:

  • Since 2003–04, Ontario’s spending per capita on general government services has consistently remained in the bottom three among provincial governments. In 2008–09, general government services spending was $134 per person, 28 per cent below the $186 average per person of other provincial governments and the second lowest among the provinces.
  • Between 2004–05 and 2007–08, the government identified savings of $806 million through the creation of more streamlined processes, lowering administrative costs, making better use of technology, and establishing ongoing cost-avoidance and cost-reduction initiatives.

As the global recession took hold last year, the Province moved quickly to restrain its spending. The government:

  • froze the salaries of Members of Provincial Parliament in 2009–10;
  • froze the size of the Ontario Public Service (OPS) at 68,645 full-time equivalent staff and began to reduce the size of the OPS with a commitment to reduce it by five per cent by March 31, 2012 through attrition and other measures;
  • saved an estimated $111 million in the last five months of the 2008–09 fiscal year through expenditure management, including reducing travel and consulting costs; freezing the purchase of government vehicles and the existing government real estate footprint; and increasing green workplace practices to reduce printing, photocopying and fax costs; and will save approximately $100 million annually in salaries and overhead by moving to the Harmonized Sales Tax.

In the face of current fiscal challenges, the government is taking additional steps in this Budget to find efficiencies and reduce the overall cost of government administration.

Compensation Measures

The government is committed to maintaining the gains made in improving the public services that Ontarians value so highly, while addressing the fiscal challenges faced by Ontario. Central to meeting this commitment is the management of public-sector compensation costs.

Compensation costs account for the majority of Ontario-funded program spending, either paid directly through the Ontario Public Service (OPS) or as part of the government’s transfer payments to schools, hospitals and many other public-sector partners.

Protecting services requires limiting compensation growth to direct scarce resources to service delivery.

As an immediate step, the government would extend the existing freeze in the salaries of Members of Provincial Parliament for a total of three years. The compensation structures for non-bargaining political and Legislative Assembly staff would also be frozen for two years.

The government will also introduce legislation that would freeze compensation structures in the broader public sector and the OPS for two years for all non-bargained employees. The legislation would apply to substantially all organizations covered by the Public Sector Salary Disclosure Act, except for municipalities. It must be inclusive to be effective in controlling growth in compensation costs and in protecting services and jobs.

In two years, these measures would help redirect up to $750 million to sustaining service delivery in the public sector.

Going forward, the fiscal plan provides no funding for incremental compensation increases for any future collective agreements.

All existing collective agreements in the public sector will be honoured. As agreements are renegotiated, the government will work with transfer payment partners and bargaining agents to seek agreements of at least two years’ duration. These agreements should help manage spending pressures, protect public services that Ontarians rely on and provide no net increase in compensation.

Base Operating Expense Frozen

The government’s prudent and responsible plan to manage expenditures has a significant impact on base operating expenses, resulting in a decline. These expenditures will in effect be held at or below 2010–11 levels over the medium term.

Slowing the Pace of Long-Term Infrastructure Investments

The government recognizes the importance of balancing the need to continue to invest in infrastructure to help build a stronger economy with the need to be fiscally responsible.

It remains committed to delivering economic stimulus projects to help continue the drive towards economic recovery. These investments have played a critical role in creating jobs in Ontario. However, as the economic recovery takes a stronger hold, the Province is also focused on a plan to return to fiscal balance and expects its partners to ensure that stimulus funds are spent by March 31, 2011.

To ensure the right balance between infrastructure priorities and managing down the deficit, the government will undertake a comprehensive review of capital to be completed before the end of 2010.

Following this comprehensive review, the government will launch a 10-year capital plan in 2011.

In the current fiscal environment, the government has revised the scope and timing of some capital investments. To help manage infrastructure spending over the coming years, the government will:

  • working with Metrolinx, phase construction of transit projects, which would result in approximately $4 billion in appropriation savings and reduced borrowing over the next five years;
  • delay some investments in government office space by five years, resulting in appropriation savings of over $1.4 billion;
  • delay the construction of the Toronto West Courthouse by one year, resulting in appropriation savings of $130 million over four years; and
  • eliminate the Ontario Bus Replacement Program and include bus replacement costs as eligible expenses under the gas tax funding program, which supports municipal transit;
    • the government acknowledges that municipalities have current commitments under the Ontario Bus Replacement Program, and will work with them to ensure these commitments are met by providing one-time funding of almost $174 million in 2009–10.

Ongoing Comprehensive Expenditure Management Review

Building on the work of the government’s previous expenditure management measures and the recent work of the Treasury Board Working Group, the government will continue with a comprehensive review of all government programs and services. The comprehensive review will be overseen by Treasury Board and will ensure that the government’s resources are focused on delivering the programs and services that support:

  • jobs and economic growth;
  • access to high-quality health care and education; and
  • clean and strong communities, including effective supports for the most vulnerable.

The goal of the review is to move resources from low-priority areas to high-priority areas and to move forward the Open Ontario plan.

Transforming Public Services

The Province is dedicated to transforming government and modernizing the services it delivers to Ontarians. In this area, Ontario has been internationally recognized as a leading-edge government and is committed to building on its successes — most notably, ServiceOntario.


ServiceOntario is a one-stop delivery network that provides Ontarians with fast, easy access to government information and services including registrations, certifications and licensing. Services can be accessed online, in person, at kiosks and by phone. Ontario is the North American leader in offering service guarantees for basic transactions.

Transforming the Health Care System

Since 2003, the McGuinty government has taken significant steps to transform the delivery of public health care services, creating a system that is focused on patients.

However, the cost of delivering quality health care services is steadily increasing in Ontario and other jurisdictions. Increases are driven by demand and cost drivers, including changes in medical technology and demographics. For example, costs to the public system tend to rise with age and Ontario’s population aged 65 and over will more than double to 3.7 million by 2030.

Today, health sector spending accounts for about 46 cents of every program dollar.2 If left unchecked, cost drivers could push health care spending to 70 cents of every program dollar in 12 years. The Province will continue to face challenges in managing the growth in health care spending without crowding out other priorities such as investing in schools, helping the vulnerable, protecting the environment, and investing in infrastructure and economic development.

The Plan:

Under the Open Ontario plan, the government is committed to improving the quality and accountability of the health care system. Specifically, as part of this Budget, the government is proposing to:

  • introduce changes to the statutes governing Ontario’s drug system that would facilitate lower generic drug prices. Ontarians pay more for generic drugs than those in other countries. The government would also increase supports for pharmacies in rural and underserviced areas and support the expansion of clinical services provided by pharmacists;
  • increase the efficiency and effectiveness of the health care system by:
    • introducing legislation to make health care providers and executives more accountable for improving patient care;
    • reviewing the Public Hospitals Act to create a hospital system that taps into the expertise of community partners and health professionals;
    • creating an independent, expert advisory body to provide recommendations on clinical practice guidelines; and
  • strike a working committee composed of the Ministry of Health and Long-Term Care, Ministry of Finance, Local Health Integration Network representatives and Ontario Hospital Association. The committee will examine the hospital working capital issue and apply appropriate remedies for the hospitals struggling the most with inherited debt. The working committee would be responsible for putting in place an accountability structure to ensure that hospitals pulled out of negative working capital position stay on the right track.

Transforming Ontario’s Benefit Programs

Current Benefits Delivery System

The McGuinty government provides support through benefit programs that are designed to meet Ontarians’ needs arising from various circumstances. This support helps a variety of recipients, from children to seniors, and takes on many forms, including payments and in-kind benefits.

Over time, a wide range of programs has been designed to meet specific needs and different policy objectives. These programs are delivered by different administrators including ministries, other levels of government and third-party agents such as non-governmental organizations. As a result, people who need benefits often must navigate through a complex array of access points.

The Plan:

The government will continue to improve the current system of benefits to increase support for those who need it and to simplify access.

Chart 9: Diagram: Improving Client Access for Ontario’s Benefit Programs

The government will undertake a comprehensive review of other jurisdictions’ models of coordinated and integrated benefits administration. In transforming Ontario’s benefits systems, the government will:

  • create a new web portal to help centralize access to program information while improving client service;
  • implement an automated income verification process for those benefit programs whose eligibility criteria include income; and
  • consult with its key service delivery partners on new and innovative ways to further simplify client access to benefit programs while improving program fairness and integrity.

Transforming Employment Ontario

Employment Ontario encompasses training and employment programs and services provided by the government through the Ministry of Training, Colleges and Universities.

The Plan:

A transformation of the Employment Ontario service delivery structure is currently underway and includes a new one-stop service delivery model that will:

  • improve customer service by making it easier for job seekers, employers and communities to access the programs and services they need; and
  • ensure Employment Ontario remains responsive to local community needs and the changing demands of the global economy.

See Section A of this chapter for more information on Employment Ontario.

  • 1 Revenues excluding federal transfers.
  • 2 Controlling for time-limited investments and the presentation of education sector expense introduced in this Budget (see Addendum to the 2010 Ontario Budget: Ontario’s Plan to Enhance Accountability, Transparency and Financial Management), health sector expense would account for 46 per cent in 2009–10 and 45 per cent in 2010–11.