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.
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.
Key elements of the government’s plan to balance the budget by 2017–18 include:
|Plan||Medium-Term Outlook||Extended Outlook|
|Interest on Debt||10.0||11.1||12.5||13.3||14.4||15.4||15.9||16.2|
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).
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.
The government is constantly implementing efficiencies in the way it delivers services.
As the global recession took hold last year, the Province moved quickly to restrain its spending. The government:
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.
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.
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.
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:
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:
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.
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.
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.
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:
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 government will continue to improve the current system of benefits to increase support for those who need it and to simplify access.
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:
Employment Ontario encompasses training and employment programs and services provided by the government through the Ministry of Training, Colleges and Universities.
A transformation of the Employment Ontario service delivery structure is currently underway and includes a new one-stop service delivery model that will:
See Section A of this chapter for more information on Employment Ontario.