March 27, 2012
The 2012 Budget includes strong action to balance the budget and protect gains made in education and health care. A balanced budget will make the economy stronger and better able to create jobs.
In February 2012, both the Conference Board of Canada and the Commission on the Reform of Ontario′s Public Services released projections suggesting that, if no action was taken to control growth in provincial expense, Ontario′s deficit would continue to grow. The Conference Board report estimated that Ontario′s deficit could be $16 billion, while the Commission suggested it could be as high as $30 billion by 2017–18 if no action was taken to control spending.
The government used a similar “what-if” analysis and estimated that a fiscal gap of $13.9 billion would arise in 2014–15 against the government′s deficit target unless it takes strong action to manage growth in spending. Without the revenue and expense measures announced in this Budget, Ontario′s deficit would approach $25 billion in 2014–15.
Regardless of the difference in projections, it is clear that Ontario is facing a serious deficit problem. The status quo is not an option:
The McGuinty government′s five-year plan will result in a balanced budget by 2017–18. This Budget is the next step in that plan and proposes to reduce program spending by $17.7 billion over the next three years while increasing revenues by $4.4 billion without raising taxes. That means the accumulated deficit will be $22.1 billion lower in 2014–15 than if no action were taken.
The government will continue to make the right choices and build on its plan to have the world′s best-educated workforce to ensure future prosperity in the knowledge-based economy by:
The Ministry of Health and Long-Term Care is moving forward with a plan to transform the health care system that will help manage expenditure growth at an average of 2.1 per cent a year, over the next three years, by:
The government′s plan to balance the budget includes a broad range of measures:
The government is also moving forward with the transformation of public services — to change the way they are delivered to give Ontario families better value for money while protecting results. Examples include:
The government′s strong action also includes proposed new revenue measures:
For every dollar in new revenues outlined in the 2012 Budget, there are four dollars of savings and cost containment measures. This means that program spending will be reduced by $17.7 billion over the next three years compared to what it would have otherwise been:
Annual average growth in program spending will be held to 1.0 per cent between 2011–12 and 2014–15.
|Expense management measures1||(1.0)||(1.7)||(2.2)||(4.9)|
|Total Expense Measures||(2.0)||(5.3)||(10.4)||(17.7)|
|Freeze the Corporate Income Tax rate at 11.5 per cent, if passed||0.1||0.5||0.8||1.5|
|Freeze Business Education Tax reductions||0.1||0.2||0.3||0.6|
|Modernize Ontario Lottery and Gaming Corporation||(0.1)||0.2||0.5||0.6|
|Optimize Liquor Control Board of Ontario revenue potential||–||–||0.1||0.1|
|Enhance revenue integrity and other measures||0.1||0.3||0.5||1.0|
|Fee changes to move closer to full cost recovery||0.1||0.2||0.4||0.6|
|Total Revenue Measures||0.3||1.4||2.7||4.4|
|Total Direct Impact of Fiscal Actions||2.3||6.7||13.1||22.1|
|Interest on Debt Expense Avoided||0.1||0.3||0.8||1.1|
|Ratio of Expense Measures to Revenue Measures||4:1|
1For more information, please see the Addendum: Report on Expense Management Measures.
2Includes compensation restraint for school boards, payments to physicians and public servants..
Note: Numbers may not add due to rounding.
Other key elements of the government′s five-year plan to balance the budget include:
|Interim||Plan||Medium-Term Outlook||Extended Outlook|
|Interest on Debt||10.1||10.6||11.2||12.3||14.1||15.1||15.4|
Note: Numbers may not add due to rounding.
As the Ontario economy grows stronger, the government will transform public services so that the Province′s finances are firmly on a path towards a balanced budget and long-term sustainability.
While a return to balanced budgets is a key fiscal objective, it is not an end in itself — it is a means to an end: ensuring that Ontario families will continue to receive the best value through the best education and health care in the world, and a strong economy that creates jobs. In fact, even before the budget achieves balance in 2017–18, the measures in this Budget will help support the Province in improving fiscal health and sustainability — which will provide a strong foundation for the longer-term sustainability of core services like education and health care.
FOR MEDIA INQUIRIES ONLY:
Aly Vitunski, Minister′s Office, 416-325-9819
FOR PUBLIC INQUIRIES CALL: