As outlined in the Fall 2009 Ontario Economic Outlook and Fiscal Review, lower 2008–09 results and a weaker economy in 2009 led to a significant reduction in projected revenues for 2009–10. Total expense increased as the Province invested to support job creation and lessen the impact of the economic downturn on Ontarians.
Since the fall of 2009, Ontario’s economy has stabilized and begun to recover while the Province’s finances have improved and strengthened. There are clear signs that Ontario’s economic recovery is taking shape. Jobs, gross domestic product (GDP), merchandise exports and manufacturing sales have all improved from lows posted during the recession. However, the pace of recovery has been moderate and these key indicators remain below pre-recession levels (see Section C of this chapter). The economic recovery has improved the Province’s finances through a modest increase in taxation revenues.
In addition, as the global recession took hold, the government took immediate action to manage spending while protecting the quality and sustainability of public services. Building on its track record of fiscal responsibility, the government tasked the Treasury Board Working Group with leading the 2009 expenditure management review to ensure taxpayers’ dollars are spent effectively. Going forward, the Province will continue implementing expenditure management measures to support its commitment to return to fiscal balance (see Chapter I, Section B).
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.
The improved fiscal projection is mainly due to a $1.9 billion reduction in program expense resulting from the government’s prudent management of expense, as well as lower costs associated with the Provincial response to the H1N1 flu virus. In addition, the Province’s interest on debt expense projection is $0.5 billion below the fall forecast.
Starting with this Budget, a number of items will be presented differently for improved transparency in reporting. These changes are being made to comply with recently revised Public Sector Accounting Board standards. These presentation changes do not impact the Province’s annual surplus/deficit results or underlying revenues and expenses.
The principal change is the treatment of Education Property Tax. Previously, Education Property Taxes collected by municipalities for local school boards were netted against (i.e., subtracted from) Education expense. Under the new presentation, Education Property Taxes are included in Provincial revenue and are no longer netted against Education expense.
To facilitate comparisons, the Province’s historical revenues and expenses have been restated to account for this reporting change. The following table illustrates how this change affects the Province’s 2008–09 financial results.
|Presentation in the Fall 2009 Economic Outlook and Fiscal Review||New Presentation in the 2010 Budget|
|($ Billions)||Actual 2008–09||($ Billions)||Actual 2008–09|
|Taxation Revenue||62.4||$6.5 B ↑||Taxation Revenue||68.9|
|Total Revenue||90.5||Total Revenue||96.9|
|Health Sector||40.7||Health Sector||40.7|
|Education Sector||13.2||$6.5 B ↑||Education Sector||19.6|
|Total Expense||96.9||Total Expense||103.3|
|Surplus / (Deficit)||(6.4)||Surplus / (Deficit)||(6.4)|
Note that while the surplus/deficit of the Province as well as the accumulated deficit are unaffected by this change in presentation, there has been a change in the calculation of net debt. See Addendum to the 2010 Ontario Budget: Ontario’s Plan to Enhance Accountability, Transparency and Financial Management for more information.
|Interest on Debt||9,406||8,930||(476)|
The interim outlook for 2009–10 projects that revenue will be 0.2 per cent below the forecast in the Fall 2009 Ontario Economic Outlook and Fiscal Review. Total expense for 2009–10 is projected to decrease by 2.0 per cent from the fall forecast.
The reserve has been drawn down to help offset the impact of slower economic growth on the Province’s fiscal performance.
The 2009–10 interim results are based on the best information available as of early March 2010. Given the preliminary nature of the interim forecast, these projections are subject to change as actual Provincial revenue and expense are finalized in the 2009–10 Public Accounts.
Total revenue in 2009–10 is estimated to be $96,409 million. This is $239 million or 0.2 per cent below the Fall 2009 Ontario Economic Outlook and Fiscal Review forecast.
|Gouvernement du Canada|
|Income from Government Business Enterprises|
|Ontario Power Generation Inc. and Hydro One Inc.||(186)|
|Ontario Lottery and Gaming Corporation||(83)|
|Liquor Control Board of Ontario||93|
|All Other Government Business Enterprises||7|
|Other Non-Tax Revenue|
|Other Non-Tax Revenue||(118)|
|Total Revenue Changes||(239)|
Highlights of key 2009–10 revenue changes from the Fall 2009 Ontario Economic Outlook and Fiscal Review forecast are as follows:
Total expense in 2009–10 is currently projected to be $117,739 million, a decrease of $2,424.7 million, or 2.0 per cent, from the Fall 2009 Ontario Economic Outlook and Fiscal Review forecast.
|Program Expense Changes|
|Postsecondary and Training Sector||(237.9)|
|Children's and Social Services Sector||141.0|
|Other Program Expense Changes||(1,142.3)|
|Total Program Expense Changes||(1,948.7)|
|Interest on Debt||(476.0)|
|Total Expense Changes||(2,424.7)|
Highlights of key 2009–10 expense changes from the Fall 2009 Ontario Economic Outlook and Fiscal Review forecast are as follows: