2013 Ontario Budget
Chapter I: A Prosperous and Fair Ontario

Highlights

Ontario's Path to Balance

  • The government is on track to eliminate the deficit by 2017–18 in a way that is both fiscally responsible and fair, while creating a more prosperous Ontario.
  • The government is committed to reducing net debt-to-GDP to pre-recession levels once it eliminates the deficit.
  • The deficit for 2012–13 is estimated to be $9.8 billion — a $5.0 billion improvement compared with the 2012 Budget forecast.

Commission on the Reform of Ontario's Public Services

  • The government is moving forward with 60 per cent of the recommendations from the Commission on the Reform of Ontario's Public Services and studying the rest.

Making Healthy Change Happen

  • The government will continue to move forward with its Action Plan for Health Care to transform the health care system, provide better value for money, improve patient care and manage the average annual rate of growth in health care spending to two per cent over the medium term.
  • The creation of 23 Health Links across the province will strengthen the coordination of care for high-needs patients, helping to reduce unnecessary hospital visits and readmission rates.
  • The government is investing in more health care services in the community, including over $700 million by 2015–16, to continue to reduce wait times for home care and provide the people of Ontario with more options that are available closer to home.

Labour Relations and Pensions

  • All public-sector partners will need to continue to work together to effectively manage compensation costs within Ontario's existing fiscal framework, which includes no funding for incremental compensation increases for new collective agreements.
  • The government plans to establish a technical working group with expertise in the design, governance and transition issues related to a new pooled asset management entity. That entity will oversee pooled asset management for public-sector pension plans.

Municipal Sector

  • The Province will continue to work with municipal representatives on the redesign of the Ontario Municipal Partnership Fund (OMPF) while phasing down the program to $500 million by 2016.

Grants and Tax Support

  • The government will create a technical panel to identify savings in business support and consolidate remaining programs into a Jobs and Prosperity Fund.
  • The government will review benefit and tax programs to ensure that they are fair and affordable.

Section C: Fiscally Responsible and Accountable Government

Ontario's Path to Balance

The government is committed to eliminating the deficit by 2017–18 in a way that is both fiscally responsible and fair. Eliminating the deficit in this way will create a more prosperous Ontario. The government has already been able to demonstrate significant progress towards meeting this commitment and it is taking additional steps to ensure its achievement.

The deficit for 2012–13, the fiscal year just ended, is now estimated to be $9.8 billion — a $5.0 billion improvement compared with the 2012 Budget forecast. This marks the fourth year in a row that the Province has reported a deficit lower than forecast — the only government in Canada to achieve this level of success.

As a result, the Province's accumulated deficit is now almost $22 billion lower than it would otherwise have been had the government not beaten its fiscal targets in each of the past four years. Net debt-to-GDP, at 37.5 per cent in 2012–13, is almost two percentage points lower than the 39.4 per cent forecast at the time of the 2012 Budget.

Ontario is currently one of only two governments in Canada that is on track to beat its fiscal target for 2012–13. These results are due to the government's focus on deficit elimination by 2017–18 — a commitment that is reinforced by the goal of reducing net debt-to-GDP to the pre-recession level of 27 per cent once the budget is balanced.

Moving forward, the Province is on track to continue beating its targets. For 2013–14, the deficit projection of $11.7 billion is more than $1.0 billion ahead of the $12.8 billion deficit forecast in the 2012 Budget. Beyond 2013–14, the government is on track to meet the steadily declining deficit targets outlined in the 2012 Budget and to return to balanced budgets beginning in 2017–18.

Chart 1.22 Ontario's Plan to Eliminate the Deficit. Click for an accessible full description.

As the Commission on the Reform of Ontario's Public Services indicated, slowing the rate of growth in program spending is essential for balancing the budget by 2017–18. The government's plan for eliminating the deficit is to manage spending effectively. Growth in program spending is projected to be less than 1 per cent in 2012–13 for the second consecutive year. The majority of ministries, including Health and Education, contained growth in spending and managed well below their 2012–13 budgets. Ontario currently has the lowest program spending per capita among Canadian provinces.

Chart 1.23 Ontario is Projected to Have the Lowest Program Spending Per Capita in 2012-13. Click for an accessible full description.

Managing the growth in program spending will continue to be a key component of the Province's fiscal plan moving forward. Program spending in 2013–14 is unchanged from the 2012 Budget projection. Between 2012–13 and 2017–18, program spending is projected to grow at an average annual rate of less than 1 per cent.

Total expense is projected to be lower in each and every year compared to the projection in the 2012 Budget. This reflects the government's ability to effectively manage growth in program spending and lower interest on debt expense.

Actions to Eliminate the Deficit

The government's proven track record of beating its deficit targets is underpinned by concrete actions that will continue to generate results. Many of these actions stem from specific recommendations of the Commission on the Reform of Ontario's Public Services.

These and other actions will help the government control the rate of growth in program spending in a way that is fair and balanced, while also ensuring the integrity of Provincial revenues to fund public services and infrastructure. Key actions include:

  • Moving forward with a plan to transform public services by changing the way programs and services are delivered to give the people of Ontario better value for money and results. The government will continue to transform and modernize the delivery of programs and services in the most efficient and effective manner.
  • Further integrating recommendations from the Commission on the Reform of Ontario's Public Services into government plans by continuing to move forward with 60 per cent of the recommendations this year, while continuing to study the remaining recommendations.
  • Continuing to restrain compensation and achieve collective agreements that control public-sector compensation costs. All public-sector partners will need to continue to work together to effectively manage future compensation costs within Ontario's existing fiscal framework, which includes no funding for incremental compensation increases for new collective agreements. Ontario's recent public-sector settlements are below the average of those in the private sector, municipal sector and federal public sector.
  • Reaching agreements with all four of the jointly sponsored pension plans (JSPPs) consolidated in the Province's financial statements to protect taxpayers from higher contributions while ensuring long-term sustainability of the plans.
  • Encouraging public-sector, single-employer pension plans to adopt changes that improve sustainability in exchange for temporary solvency funding relief.
  • Encouraging public-sector pension plans to work towards equal cost-sharing and explore more sustainable models such as JSPPs.
  • Building on the recommendations of Bill Morneau, the government's Pension Investment Advisor, introducing a pooled asset management framework for public-sector pension plans.
  • Slowing the growth rate of health care spending — currently 42 per cent of Provincial program spending — to an annual average of 2 per cent. The government will continue to move forward with its Action Plan to transform the health care system and provide better value for money.
  • Establishing a technical panel to identify savings in Ontario's business support, including refundable tax credits, to ensure they are efficiently achieving desired outcomes.
  • Collaborating with the federal government to enhance compliance activities to address corporate tax avoidance and the underground economy.
  • Income-testing of the Ontario Drug Benefit program, effective August 2014, that will require high-income seniors to pay a larger share of their prescription drug costs.
  • Reviewing programs, including the Ontario Clean Energy Benefit, tax assistance, and other direct supports, to ensure that they are fair and affordable.
  • Proceeding with the centralization of the collection of outstanding tax and non-tax accounts within the Ministry of Finance and using a range of collection tools to realize revenue from the outstanding debt owed to the Crown.
TABLE 1.1 Ontario's Recovery Plan
($ Billions)
   Interim
2012–13
Plan
2013–14
Medium-Term
Outlook
Extended
Outlook
2014–15 2015–16 2016–17 2017–18
Revenue 114.2  116.8  120.5  124.9  130.1  134.4
Expense            
Programs 113.6  117.0  118.3  118.8  118.8  118.0
Interest on Debt 10.4  10.6  11.1  12.2  13.4  14.5
Total Expense 124.0  127.6  129.5  131.0  132.1  132.4
Reserve –  1.0  1.2  1.2  1.5  1.5
Surplus/(Deficit) (9.8) (11.7) (10.1) (7.2) (3.5) 0.5
Note: Numbers may not add due to rounding.

Engaging the Public on the Path to Balance

Holding program spending to less than 1 per cent a year, on average, from 2012–13 to 2017–18 is critical to balancing the budget by 2017–18. Achieving this, however, will require some difficult choices. As the Commission on the Reform of Ontario's Public Services noted, Ontario already has the lowest spending per capita in Canada. Across-the-board cuts would hurt public services and undermine programs that are providing high-quality services to the public, such as health care and education. Instead, the government will continue a careful review of spending to determine which programs should be enhanced or reduced, while transforming public services to increase efficiencies and improve outcomes.

This cannot be done in isolation. As part of the Province's plan to eliminate the deficit by 2017–18, the government will continue its consultations with the public after this Budget. Engaging the people of Ontario on the future of their public services requires an ongoing dialogue. The government will announce further details later this spring.

Commission on the Reform of Ontario's Public Services

The Commission on the Reform of Ontario‘s Public Services, led by Don Drummond, was established in 2011 to provide advice to the government on how to deliver the most effective and efficient public services possible and achieve a sustainable fiscal balance. The Commission's report was released on February 15, 2012.

Moving Forward on Recommendations

Over the last year, the government moved forward with about half the Commission's recommendations. This year, the Province will continue to move forward with a total of 60 per cent of the recommendations. The government will continue to study the remaining recommendations over the coming months.

The government's progress on implementing the Commission's recommendations crosses many critical areas of service delivery and government management. Significant transformation has been occurring in diverse areas ranging from health care and corporate tax compliance to environmental approvals and efficiencies in the justice system.

Examples of actions taken by the government to implement the Commission's recommendations include increasing investment and building capacity in lower cost health care settings such as home care and community services, implementing a different funding approach for successful high school credits beyond a 34-credit threshold, compliance activities to address both the underground economy and corporate tax avoidance, not funding incremental compensation increases and eliminating retirement gratuities for teachers. There are many more examples, some of which are highlighted on the following pages.

TABLE 1.2 Transformative Initiatives Being Implemented by Sector
Health Care
  • moving from a lump-sum payment to a new patient- and activity-based funding model for hospitals
  • increasing investments in home care and community services to improve patient experience and take pressure off acute care facilities
  • developing a narcotics monitoring system to reduce the abuse of prescription narcotics and controlled substance medications
  • negotiated a new compensation agreement with the Ontario Medical Association that manages costs and works towards quality health care
  • implementing key recommendations from Dr. Samir Sinha's report, "Living Longer, Living Well," to help seniors stay healthy and live at home longer, consistent with the Commission's recommendation to match seniors to the services that they need
  • releasing a series of recommendations by the Healthy Kids Panel, a group of experts the government assembled to provide advice on how best to reduce childhood obesity by 20 per cent over five years, consistent with the Commission's recommendation to reverse the trend of childhood obesity
  • expanding the scope of practice for pharmacists to administer routine injections and inhalations
  • implementing a new income-tested deductible under the Ontario Drug Benefit (ODB), effective August 2014, so that high-income seniors will pay more of their prescription drug costs, as per the Commission's recommendation to link the ODB more directly to income
Elementary and Secondary Education
  • protecting gains in the education sector, including improved student achievement and closing gaps in student outcomes, in alignment with the Commission's recommendation to stay the course with the current education agenda
  • implementing a different funding approach for successful secondary credits beyond a 34-credit threshold
  • eliminating banked sick days and retirement gratuities, and making changes to post-retirement health benefits for teachers
Postsecondary Education
  • increasing differentiation through focused strategies, including establishing mandate agreements with postsecondary institutions
  • harmonizing the variety of scholarships, grants and other assistance programs across postsecondary institutions
  • modernizing student aid programs
  • approving the collection of Key Performance Indicators (KPIs) to monitor and increase quality at Private Career Colleges
  • maintaining the Ontario Student Access Guarantee
  • supporting key projects in the sector, undertaken by universities and employee groups, to look at alternative models to the current single-employer pension plans
Social Programs
  • reforming social assistance to make the system more efficient, simplified and effective in order to deliver higher-quality services to social assistance recipients and help them return to the labour market
  • reducing barriers to employment for people with disabilities and engaging the private sector to both support their need for a skilled workforce while also accommodating the specific needs of the individual in the workplace, with the goal of ultimately improving employment outcomes
  • transforming child welfare by implementing a new funding model and enhanced outcome-based accountability measures
  • transforming mental health services to improve access through a better coordinated and responsive system for children, youth and their families
  • working to launch a single point of access, similar to the Open for Business initiative, for the non-profit sector to improve and broaden relationships across ministries that enter into contracts with the non-profit sector
Employment and Training Services
  • integrating employment and training services across government with Employment Ontario
  • working to improve data collection in employment and training programs
Immigration
  • setting a new direction for how Ontario selects, welcomes and assists immigrants to the province by launching Ontario's first immigration strategy
  • requesting that the federal government raise Ontario's Provincial Nominee Program (PNP) to 5,000 nominees, consistent with the recommendation to advocate for an expanded PNP
Business Support
  • creating a technical panel to provide recommendations to achieve savings in business support and consolidate remaining programs into a Jobs and Prosperity Fund, to respond to the Commission's recommendations to refocus the mandate of business support programs
Infrastructure and Real Estate
  • continuing to work with municipalities and members of the public to best create new revenue sources that further Metrolinx's Regional Transportation Plan, consistent with the recommendation to engage in an open dialogue on new revenue sources for future transportation needs
  • moving forward with a Realty Transformation Strategy to achieve greater value from existing assets and move to cost-recovery rates for the use of government real estate
Environment
  • moving towards full-cost recovery models for environmental programs and services
  • employing a risk-based approach for environmental approvals to improve protection
Justice Sector
  • using civilians for administrative duties, such as data entry, where possible
  • using alternative financing to meet the capital infrastructure needs of Ontario's justice system
  • streamlining operations by integrating programs and
    back-office functions across the justice sector
Labour Relations and Compensation
  • the existing fiscal framework includes no funding for incremental compensation increases for new collective agreements, consistent with the recommendation to provide zero budget increases for wage costs
  • consulting with bargaining agents and employer groups on how best to move towards more efficient and effective bargaining, including the creation of sectoral tables, where appropriate, in support of the recommendation to further rationalize bargaining
Operating and Back-Office Expenditures
  • consistent with the Commission's recommendation to achieve savings and efficiencies by coordinating existing horizontal supply chains across the broader public sector:
    • developing strategies for leveraging purchasing power at postsecondary institutions, hospitals and school boards; and
    • evaluating opportunities to drive efficiencies across the Ontario Public Service and broader public sector through an integrated procurement strategy for data network services
Government Business Enterprises
  • pursuing Liquor Control Board of Ontario (LCBO) store expansion, consistent with the recommendation to enhance LCBO profits while continuing to promote socially responsible consumption
  • modernizing gaming to optimize revenue from gaming assets in a responsible manner
  • working with the horse racing industry to support a smaller, but sustainable, market-driven racing industry, integrated with the provincial gaming strategy
Revenue Integrity
  • centralizing the collection of outstanding tax and non-tax accounts within the Ministry of Finance
  • working with the federal government to enhance compliance activities to address both the underground economy and corporate tax avoidance
  • improving oversight and ensuring better enforcement of Ontario's tobacco-related laws
Liability Management
  • mitigating the risk of future pension-expense increases until the deficit is eliminated in 2017–18 by negotiating agreements that would require the four consolidated jointly sponsored pension plans to reduce prospective benefits rather than increase contribution rates when faced with new funding shortfalls
  • establishing a working group to advise on the implementation of a pooled asset management entity, consistent with the 2012 Budget announcement to introduce a pooling framework for public-sector pension plans
Intergovernmental Relations
  • ensuring that municipalities collect more fines owed to them under the Provincial Offences Act by requiring payment of traffic tickets before renewing vehicle licence plates
  • phasing down the Ontario Municipal Partnership Fund (OMPF) to $500 million by 2016 while continuing to implement the upload of social assistance benefit programs and court security and prisoner transportation costs
  • advocating strongly for reforming federal programs that are not working effectively in Ontario's interests such as Equalization
Moving Forward with Productivity Teams

Based on recommendations on internal processes and structures outlined in the Commission's report, the 2012 Budget announced the government's plan to create multi-disciplinary teams to drive productivity and reform in the public sector. Four productivity teams made up of internal Ontario Public Service (OPS) and external experts have been established to undertake transformational activities in specific areas of focus.

  • The Transfer Payment Accountability Productivity Team has developed a model to enhance the accountability relationship with the community-based child and youth mental health sector through more effective accountability tools and defined performance and outcome measures.
    • When operationalized, this model will support better outcomes, including more predictable wait times, clarity of access and enhanced quality of services.
    • The model will enable an effective, transparent and outcome-focused contracting regime, including a set of robust accountability tools and supportive measures, as well as clear reporting and monitoring requirements.
    • The model will provide a methodology for strengthening the accountability relationship between the government and its transfer-payment partners in the broader public sector.
  • The Benefits Transformation Productivity Team is considering identification approaches recommended by experts to support the implementation of a My Benefits Account.
    • The My Benefits Account would make it easier for people to apply for the benefits they are entitled to receive, manage transactions and view specified information across multiple benefit programs.
    • It would also support more sophisticated policy analysis and planning that would lead to more effective solutions to meet clients' needs, and lay the groundwork for broader benefit transformation service delivery streamlining and administrative efficiency.
    • Advice and input on potential identification approaches were sought from an expert panel from various industries, jurisdictions and sectors, including those specializing in technology issues.
  • The Jobs and Prosperity Productivity Team has completed foundational work as part of the 2012 Budget commitment to consolidate existing business support programs into a Jobs and Prosperity Fund.
    • The team supported the work of the Jobs and Prosperity Council, including the recommendation that the sustainability and effectiveness of business support programs be evaluated according to three policy filters: innovation, productivity and increasing exports.
  • The Network Services Productivity Team is working with representatives across the broader public sector in municipalities, universities, school boards, colleges, hospitals and government business enterprises to evaluate opportunities for common procurement of data network services.
    • Results will be used to design a robust telecommunications network and business model that could generate cost savings and improve service delivery.
    • Considerable progress has been made in collaborating across government and with the vendor community to understand common requirements and identify potential options that could generate efficiencies. Findings and recommendations will be finalized during the summer of 2013.

Making Healthy Change Happen

The government's goal remains to make Ontario the healthiest place in North America to grow up and grow old. Providing the people of this province with access to high-quality, publicly funded health care services contributes to Ontario's overall productivity and quality of life.

Since launching Ontario's Action Plan for Health Care in January 2012, the government has made significant progress in transforming health care services to create a more sustainable, high-quality health care system to manage the growth in health care expenditures. Health care needs to be protected and strengthened so that it is there for future generations.

Patients come first in Ontario's health care system and the government will continue to work with health care partners to build a quality health care system that is responsive to patients and delivers better value for its health care investments.

Better Care, Better Value for Money

The Action Plan is the road map to transform the health care system to improve patient care, provide better value for money, and help manage the rate of growth in health care spending to an annual average of two per cent over the medium term. Significant progress has been made in moving ahead with this Plan. Actions include:

  • strengthening the coordination of care for high-needs patients — five per cent of the population that accounts for two-thirds of health care costs — through the creation of 23 Health Links to date. By encouraging greater collaboration among health care providers, Health Links will help reduce unnecessary hospital visits and readmission rates. The goal over time is to expand Health Links across the province;
  • encouraging more efficient delivery of services and treatments through a transparent, patient-centred funding model in hospitals;
  • shifting routine procedures conducted in hospitals to specialized not-for-profit community clinics. These clinics can serve more patients more quickly and at a lower cost, while achieving excellent patient outcomes. The government is planning to shift a range of routine procedures, including colonoscopies, dialysis, and vision care;
  • continuing to direct funding to where evidence shows the greatest value and where it improves quality and access to medically necessary services;
  • continuing efforts to control drug expenditures — which are saving over $500 million annually — through measures such as reducing the price the government pays for top generic drugs and substituting more brand-name drugs with generics that are equally effective;
  • improving fairness in the Ontario Drug Benefit (ODB) program by asking higher-income senior ODB recipients to pay a larger share of their prescription drug costs starting in August 2014;
  • investing $15 million over three years, starting in 2013–14, to accelerate the conversion of remaining red-and-white Ontario Health Insurance Plan cards to the more secure photo cards. The full conversion is expected to be completed by 2018, supporting a reduction in fraud in the health care system;
  • continuing to hold growth in hospitals' overall base operating funding to zero per cent in 2013–14. This is critical to managing health care expenditures, as funding to hospitals is the largest area of health spending;
  • negotiating and implementing a new Physician Services Agreement with the Ontario Medical Association. The agreement, which runs to March 2014, will help manage health spending and allow for reinvestments into better care for the people of Ontario, including adding 30,000 more house calls for seniors and others with complex conditions; and
  • modernizing the delivery of health care and lowering wait times through
    e-consultations that will enable patients to communicate with their doctor more easily, allowing for more virtual connections between family doctors and specialists, and an expansion of telemedicine services.

Improving Timely Access to Home and Community Care

Providing the right care, at the right time, in the right place is a key pillar of the Action Plan. This involves focusing resources to where they have the greatest health care benefit, while ensuring patients are treated in the most appropriate setting, in a timely manner, and at home whenever possible.

The government is investing in more health care services in the home and in the community, so that more options are available on a timely basis. This will help seniors and other people of this province live independently, in their communities and homes, for as long as possible.

In the 2012 Budget, the Province made a commitment to increasing investment in home and community care services by an average of four per cent per year. The government is building on this commitment by providing an additional one per cent per year to increase overall funding for home and community care services by an average of over five per cent annually over the next three years. Investments in these services would increase by over $700 million by 2015–16 above 2012–13 investments, including $260 million in 2013–14.

The government will be investing to reduce home care wait times for nursing services and improve personal support services for clients with complex care needs. All clients requiring nursing services, including hospital and community referrals, will be targeted to receive service within five days of Community Care Access Centre (CCAC) assessment. For complex care clients, referred by either community clinics or hospitals, in need of personal support services, the target will be first service within five days of CCAC assessment.

Other initiatives already underway to improve and enhance home and community care include:

  • providing three million more hours of personal support-worker care that will improve the quality of life for 90,000 more seniors;
  • implementing key recommendations from Dr. Samir Sinha's report — "Living Longer, Living Well" — to help seniors stay healthy and live at home longer, including adding 250 short-stay beds in long-term care homes to help up to 1,500 more seniors get out of hospital sooner. The government is committed to moving forward with additional recommendations from Dr. Sinha's report over the coming year;
  • providing long-term care homes with a two per cent annual increase in funding for direct resident care to address the increasingly complex care needs of patients;
  • creating 23 Health Links across the province to date to encourage greater collaboration and coordination by a patient's different health care providers, ensuring high-needs patients, such as seniors and people with complex conditions, receive more responsive care in the right place; and
  • continuing to provide the Healthy Homes Renovation Tax Credit to assist with the cost of home modifications to improve accessibility, functionality and mobility for seniors living at home, so they can live independently for as long as possible.

By ensuring the people of Ontario receive the care they need closer to home and when they need it, the government is better meeting patients' needs and managing health care costs. Care in the community and at home is more affordable than care in hospitals or long-term care homes.

Keeping Ontario Healthy

The government is continuing its focus on wellness and health promotion initiatives to help the people of this province stay healthy and productive, while also reducing future costs associated with preventable illnesses. These include:

  • releasing recommendations by the Healthy Kids Panel — a group of experts assembled by the government to provide advice on how best to reduce childhood obesity by 20 per cent over five years;
  • providing an additional $5 million annual investment in the Smoke-Free Ontario Strategy to support the 2012 Budget objective of achieving the lowest smoking rate in Canada. The new funding will help more people quit smoking;
  • introducing legislation to prohibit the sale of tanning services to youth under the age of 18 and advertising and marketing directed at them. This will help reduce the risk of skin cancer — the most common form of cancer — as exposure to tanning beds before the age of 35 increases the risk of melanoma by 75 per cent; and
  • providing better tools for cervical, breast and colorectal cancer screening, including screening reminders, and linking the people of this province who are at high risk to the appropriate screening programs, prevention supports and genetic testing.

Faster Access to Care

Providing faster access to health care services helps ensure that the people of Ontario receive the care they need when they need it and reduces pressure on other parts of the health care system. That is why the government is:

  • allowing pharmacists to administer the influenza vaccine to people over the age of five. This will enhance access to the vaccine, while also reducing potential future health care costs by preventing more serious and costly illnesses;
  • creating two new birth centres, led by midwives, to give expectant mothers with low-risk pregnancies more choice in where they deliver their babies. The centres, to be located in Toronto and Ottawa, will assist up to 1,000 births per year;
  • continuing to find ways to maximize the full potential of nurse practitioners, including creating 26 Nurse Practitioner-Led Clinics that will serve over 40,000 patients who did not have a family care provider; and
  • improving waitlists by expanding services at the Kensington Eye Institute, including glaucoma and retina surgery and cornea transplants, with approximately 300 cornea transplants being conducted each year, and moving forward with a province-wide expansion of specialized clinics for vision care.

School Board Efficiencies and Modernization

Ontario's education system is ranked among the best in the world and progress must continue. The achievements in educational excellence are a result of collaborative efforts between the government and its education partners. The Province will continue to engage teachers, support staff, principals and school boards to protect the progress made in the sector and build on its remarkable achievements to prepare Ontario students for the labour demands of the future.

To achieve long-term sustainability in school board funding, the government will introduce an efficiencies and modernization savings strategy. The Ministry of Education will engage education stakeholders and will work with school boards on the strategy. Savings under this strategy will start in the 2014–15 school year.

Labour Relations and Pensions

A Responsible, Respectful and Fair Approach to Public-Sector Compensation

Compensation costs account for more than 50 per cent 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 other public-sector partners. All public-sector partners — including employers and bargaining agents — need to work together to control current and future compensation costs, including wages, benefits and pensions.

Executive and MPP Compensation Restraint

The government has frozen salaries for designated executives at hospitals, universities, colleges, school boards and provincially owned electricity companies.

All aspects of compensation plans are frozen, and base salaries cannot be increased. In addition, the overall performance pay envelopes at designated employers are frozen. These restraint measures will be in place until the deficit is eliminated in 2017–18. Members of Provincial Parliament will also continue to see their wages frozen — bringing the current total length of the freeze to five years.

Additionally, an advisory panel will be appointed to review compensation practices for senior executives in the broader public sector. The panel's mandate will include the consideration of hard caps on compensation while recognizing the need to hold senior executives accountable for results. In the hospital sector alone, the government will look to redirect $3.5 million to front line care through actions to manage executive costs.

Bargaining Is Achieving Results and Protecting Services

The government respects collective agreements and the collective bargaining process. The government is not going to override existing collective agreements. Such actions would not only create significant legal risks, but they would also undermine the ability of responsible employers and bargaining agents to increase productivity, maintain services and ensure fiscal sustainability through respectful bargaining that reflects Ontario's economic circumstances.

Ontario public-sector settlements are now below the average of those in the private sector, municipal sector and federal public sector. Pension expense forecasts are down, in part, as a result of successful efforts to contain public-sector wage growth. These results have been achieved while at the same time protecting jobs and services.

Chart 1.24 Ontario Wage Settlements. Click for an accessible full description.

Agreements have been reached with bargaining agents representing nearly 50,000, or over three-quarters of Ontario Public Service employees.

  • The agreement reached with the Association of Management, Administrative and Professional Crown Employees of Ontario (AMAPCEO) includes a two-year wage freeze and the restructuring of merit pay, short-term sickness benefits and time-off provisions, which will result in cost avoidance of $24.6 million in 2012–13 and $30.4 million in 2013–14.
  • The agreement reached with the Ontario Public Service Employees Union (OPSEU) includes a two-year wage freeze, a reduction in the entry-level starting salary in wage grids by three per cent, elimination of termination payments upon retirement for new hires, restructuring of short-term sickness benefits, and changes to job security provisions. The agreement will avoid costs of $34.1 million in 2013 and $37.4 million in 2014.

In the health sector, the agreement reached between the government and the Ontario Medical Association helps manage health spending. This was achieved through fee reductions and other cost-saving measures.

In the education sector, the government reached negotiated agreements with the Ontario English Catholic Teachers' Association (OECTA) as well as with unions representing French teachers, some professionals and some education support staff. The parameters of those agreements formed the basis of contracts across the sector. Since those contracts were put in place, the government has made repairing the relationship with teachers and educational support workers a priority. Over the past weeks, discussions between the Province and education partners have already delivered results for students, parents, teachers and support staff, with the gradual return of extracurricular activities at both elementary and secondary schools.

In late March, the government was able to reach an agreement-in-principle with the Ontario Secondary School Teachers' Federation (OSSTF) that focused on the fair and consistent application of the existing collective agreements, while remaining within the ministry's funding envelope. The government is also in discussions with the Elementary Teachers' Federation of Ontario (ETFO).

In the 2012–13 Third Quarter Ontario Finances, the government reported $1.1 billion in one-time savings in the education sector associated with reducing liabilities carried by school boards for sick-day banking and retirement gratuities, and for grandfathering retiree benefits for education-sector workers. This Budget confirms the $1.1 billion estimate in one-time savings.

Agreements reached with education-sector workers included a commitment to establish a working group of education-sector representatives, the government and experts to explore the creation of one or more province-wide benefit plan(s) for education-sector workers. The working group is to complete its work before the next round of collective bargaining in 2014. Depending on the outcome of that work, the government will provide startup funding to support the new benefits plan(s).

The government will continue working with all of its education partners to establish a more effective bargaining process going forward. Part of that process will be informed by a review of collective-bargaining best practices. In addition, the government will consult with bargaining agents and employer groups across the broader public sector on how best to move towards more efficient and effective bargaining, including the creation of sectoral tables, where appropriate.

Going forward, compensation costs must be addressed within Ontario's existing fiscal framework, which includes no funding for incremental compensation increases for new collective agreements. The government is confident that broader public sector partners can work together to achieve outcomes that remain within the fiscal plan while protecting services. In future rounds of bargaining, the government is willing to work with employers and bargaining agents to look at mechanisms such as productivity improvements as a way to achieve fiscal and service-delivery goals.

Public-Sector Defined-Benefit Pension Plans

Pensions are a key part of the total compensation of public-sector workers. The government recognizes that pension plans are an important source of predictable retirement income for individuals working in both the public and private sectors, and remains committed to ensuring a modern retirement income system that helps to improve the quality of life for all of Ontario's seniors.

Many public-sector pension plans, like their private-sector counterparts, are facing sustainability challenges. The funded positions of many pension plans have been adversely affected by the current economic environment, particularly low long-term interest rates and volatile investment returns. Contributions made by transfer payment recipients to address funding shortfalls reduce funding available to deliver the programs and services on which the people of this province rely.

The government sponsors or provides indirect funding through transfer payments to many public-sector plans, and a number of the largest plans directly affect the government's fiscal plan. The Commission on the Reform of Ontario's Public Services noted that the government's pension obligations — known as pension expense — had risen significantly in recent years. It projected that, if no action were taken, pension expense would rise by 36 per cent from 2012–13 to 2017–18.

"Currently, pension expense is about two  per cent of total program spending growth and is responsible for much of the total increase in program spending…."

Commission on the Reform of Ontario's Public Services, Public Services for Ontarians: A Path to Sustainability and Excellence, February 2012.


TABLE 1.3 Difference in Projected Pension Expense versus Commission on the Reform of Ontario's Public Services Forecast
($ Billions)
  2012–13 2013–14 2014–15 2015–16 2016–17 2017–18
Commission Forecast 3.1  3.7  3.6  3.7  4.0  4.2 
Current Forecast 3.0  3.1  2.6  2.4  2.4  2.4 
Difference in Forecast (0.1) (0.6) (1.0) (1.4) (1.6) (1.8)
Note: Numbers may not add due to rounding.

The Commission forecast that pension expense would increase by $1.1 billion over the period from 2012–13 to 2017–18. The current government forecast of pension expense suggests a decline of $0.7  billion over the same period, resulting in a cumulative reduction of $6.5  billion compared to the Commission's forecast. This reduction can largely be attributed to the government's successful efforts to constrain public-sector wage growth and better-than-expected investment performance.

Chart 1.25 Difference in Projected Pension Expense versus Commission on the Reform of Ontario's Public Services Forecast. Click for an accessible full description.

The 2012 Budget announced a number of measures in response to the challenges faced by Ontario's public-sector pension plans. These measures built on the Province's leadership in pension reform and the Commission's recommendations.

Over the past year, the government has successfully collaborated with its public-sector partners to make longlasting progress towards achieving its policy objectives. There is, however, more work to be done. The 2013 Budget reaffirms the government's commitment to build on these successes and work with interested parties to support pension plan reforms that improve the sustainability and affordability of public-sector plans.

Jointly Sponsored Pension Plans (JSPPs)

Many of Ontario's largest public-sector pension plans are JSPPs. Decisions on benefit levels and contributions are made by representatives of employers and employees. Responsibility for funding shortfalls is shared by employers and plan members. If the joint sponsors cannot reach an agreement on how to address a funding shortfall, the Pension Benefits Act requires that contribution rates increase.

The 2012 Budget noted that contribution rates for many of these plans had risen significantly in response to recent funding challenges. The government announced its intention to consult on a legislative framework that would freeze contribution rates until the deficit is eliminated. During the freeze period, plans that experience new funding shortfalls would be required to reduce future benefits, subject to certain exceptions, instead of raising contribution rates.

After extensive consultations with each of the four JSPPs consolidated in the Province's financial statements, the sponsors have signed agreements with the government that meet its policy objectives. These agreements freeze contribution rates until the deficit is eliminated in 2017–18 and eliminate the need for legislation. They also demonstrate the government's commitment to engaging in constructive dialogue with its public-sector partners to meet its objectives while balancing the interests of plan members, employers and taxpayers. 

The agreements require reductions in future benefits to address new funding shortfalls. Any reductions in future benefits will help mitigate associated growth in pension expense and allow the government to continue to direct funds towards public services for people who rely on them and to eliminate the deficit.

Single-Employer Pension Plans (SEPPs)

Many Ontario public-sector employees, particularly in the university and electricity sectors, are members of SEPPs. Unlike JSPPs, contributions to these SEPPs are often borne disproportionately by employers. Employers also bear the risk of financing any funding shortfalls as required by the Pension Benefits Act.

In May 2011, the government provided temporary solvency funding relief to public-sector SEPPs. In exchange for this relief, these SEPPs were expected to negotiate plan changes that would improve sustainability and affordability over the long term. Unless SEPPs can demonstrate progress toward this objective, additional solvency funding relief would be denied.

The government's temporary solvency funding relief regime has been successful. Since the announcement of the regime, 17 plans have been granted relief — 15 of them in the university sector.

Funding relief has reduced the solvency payment requirements of these 17 plans by about $240 million annually, thereby protecting jobs and programs. To date, at least 10 plans have successfully negotiated changes resulting in higher member contribution rates and/or reduced benefits for future service.

The 2012 Budget announced that the government would consider additional tools to enhance the sustainability and affordability of public-sector SEPPs, including measures to encourage equal cost- and risk-sharing between employers and plan members.

The government remains committed to ensuring these SEPPs move to equal cost-sharing for ongoing contributions within five years and exploring opportunities to support joint sponsorship as the model for pension plan governance and funding in Ontario's public sector. To help realize efficiencies in plan administration and support joint sponsorship in the public sector, the government also intends to develop a framework that would, if specified conditions are met, permit the transfer of assets from SEPPs to JSPPs and allow SEPPs to be converted to JSPPs.

The government will also consider regulatory amendments that provide additional relief of solvency funding obligations, for public-sector SEPPs that have taken action to put their plan on a sustainable track, including movement to equal cost-sharing for ongoing contributions.

As announced in the 2012 Budget, the government is moving forward with proposed legislative amendments to eliminate barriers to the creation of new JSPPs in the electricity sector.

The government remains committed to engaging with both employer and labour representatives on the challenges facing electricity sector plans. To that end, the government intends to establish and chair a working group composed of employer and employee representatives to promote a common understanding of the pension challenges in the electricity sector and move towards a more sustainable framework.

The government will also explore whether further legislative amendments may be necessary to transform these plans.

Pooled Asset Management

Ontario's public-sector institutions administer more than 100 defined-benefit, defined-contribution and hybrid pension plans. With few exceptions, each of these plans procures external investment management services independently, resulting in duplication and higher costs. A pooled asset management framework would allow smaller public-sector pension plans to benefit from the lower investment management costs, improved access to alternative investments and enhanced risk management that larger pension funds typically enjoy. 

The 2012 Budget announced the government's intention to introduce such a pooling framework for public-sector pension plans. The government appointed Bill Morneau as Pension Investment Advisor to consult with interested parties and develop recommendations for consideration. Mr. Morneau estimated that, if fully implemented, savings of $75 million to $100 million annually could be realized.

The government greatly appreciates Mr. Morneau's recommendations, which were made public in November 2012, and continues to consult on his findings. Acknowledging the complexity of this undertaking, the government intends to establish a technical working group to advise on the design, governance and transition issues associated with the implementation of a new pooled asset management entity. The working group would report back to the Minister of Finance later this year with a detailed implementation plan. 

Fairness in Benefit and Tax Programs

In 2013–14, the government will provide over $11 billion in support to people through benefit and tax programs, not including social assistance. The government will review these programs, including the Ontario Clean Energy Benefit, tax assistance, and other direct supports to ensure that they remain fair and affordable.

"Given that many of these benefit programs are not sustainable in their current form, the government will need to decide how best to target benefits to those who need them most."

Commission on the Reform of Ontario's Public Services, Public Services for Ontarians: A Path to Sustainability and Excellence, February 2012.

Many government programs already include eligibility criteria that target support to low- to middle-income people. For example, the 2012 Budget announced changes to improve the fairness of the Ontario Drug Benefit program by asking higher-income seniors to pay a larger share of their prescription drug costs.

The review will complement work underway to transform benefit delivery through the introduction of the My Benefits Account that would streamline access to income-based benefit programs.

Sustainability of Business Tax Support

Ontario's business tax reforms will deliver $8.5 billion in tax cuts annually to business, improving Ontario's tax competitiveness and business investment climate. In addition to major business tax reductions, Ontario has also made significant improvements in tax administration that have reduced compliance costs for businesses by more than $635 million per year.

Refundable tax credits are paid out regardless of whether a business is profitable. To enhance transparency and accountability, and as recommended by the Public Sector Accounting Board (PSAB), refundable tax credits are now reported as government expenses. This change recognizes that refundable tax credits are, in substance, transfers or grants made through the tax system.

Tax credits can help attract new business investment to the province; however, the rate of growth in refundable tax credits is not sustainable. In 2003–04, refundable business tax credits provided almost $270  million in support, while in 2012–13, they are estimated to have provided over $940 million — an average annual growth rate of 15 per cent.

Chart 1.26 Refundable Business Tax Credits. Click for an accessible full description.

"The level of support provided through tax credits may have made sense at a time when provincial tax rates were high and credits could help make Ontario more competitive for business investment. It makes less sense when Ontario's tax system is already competitive for business investment because of major tax reforms."

Commission on the Reform of Ontario's Public Services, Public Services for Ontarians: A Path to Sustainability and Excellence, February 2012.

This Budget announces measures to reduce the cost of tax support to business. The 2012 Budget announced that the Apprenticeship Training Tax Credit (ATTC) would be reviewed for effectiveness and efficiency to better support the completion of apprenticeships. This Budget will better target ATTC support and help improve completion rates among ATTC-eligible trades. This measure will save $45 million in 2014–15, contributing to the government savings target for business support. See Chapter IV: Tax, Pension and Financial Services for additional details of this measure.

The Province currently exempts biodiesel from the 14.3 cent per litre tax under the Fuel Tax Act. Ontario is proposing to eliminate the biodiesel exemption effective April 1, 2014. This would save the Province about $4 million per year beginning in 2014–15. This exemption is no longer needed to encourage biodiesel consumption in Ontario as a result of the federal government's Renewable Fuels Regulations. The Province will also consult with stakeholders on a provincial mandate for greener diesel fuels. See Chapter IV: Tax, Pension and Financial Services for further details.

Reviewing Business Support Programs

The 2012 Budget announced the creation of a Jobs and Prosperity Council headed by Gord Nixon. The Council released its final report, "Advantage Ontario," in December 2012. Featuring 14 recommendations, the report is a call to action for government, business, the education sector, labour and others.

The government is already moving forward with three recommendations from the Council: creating Global Exporter Forums, piloting Commercialization and Innovation Vouchers, and working with the federal government on venture capital.

"In light of changing economic challenges and opportunities facing Ontario, the continuing evolution of global pressures, and difficult fiscal circumstances, the time has come to strategically evaluate and redesign Ontario's business supports."

Gord Nixon et al., "Advantage Ontario," Jobs and Prosperity Council, 2012.

The Council also recommended that the government consolidate all business support funding into a new, single Jobs and Prosperity Fund focused on innovation, productivity and exports. The Fund will be designed to ensure ease of access for businesses, with strengthened accountability and transparency.

To follow up on and implement this recommendation, the government is announcing a technical panel to identify savings in business support and consolidate remaining programs into a Jobs and Prosperity Fund. The panel will evaluate the sustainability and effectiveness of refundable tax credits and direct funding programs according to the three policy filters recommended by the Council — innovation, productivity and increasing exports.

The panel will provide direction on whether existing refundable business tax credits should be restructured, discontinued, maintained or replaced with grants, which can often provide more timely direct assistance to business. The panel will also be asked to identify savings of 25 per cent in the Province's administration of the programs. The panel will report back in six months. Further details will be announced by the Minister of Finance.

In 2013, Ontario businesses are planning to invest $103 billion in physical and intangible capital, while the government provided $2 billion in business support in 2012–13. Businesses invest more than 50 times what the Ontario government provides in direct business support and refundable tax credits every year. Business subsidies can shield the recipients from competitive pressure, create economic distortions and increase fiscal pressures.

Chart 1.27 Getting the Fundamentals Right Has a Greater Impact on Jobs and Growth. Click for an accessible full description.

Working in Partnership with Municipalities

The government remains committed to achieving greater efficiency and effectiveness in providing public services. This commitment is required from all levels of government, including municipalities.

Ontario Municipal Partnership Fund and Provincial Uploads

In early 2012, the government announced a review of the Ontario Municipal Partnership Fund (OMPF) and the phase-down of the program to $500 million by 2016 (i.e., $550 million in 2014, $525 million in 2015 and $500 million in 2016). As part of this review, the Province will be working with municipal partners on the redesign of the program.

The OMPF phase-down was part of the Province's agreement through the Provincial-Municipal Fiscal and Service Delivery Review with municipalities to upload social assistance benefit programs as well as up to $125 million in court security and prisoner transportation costs off the property tax base.

Despite the Province's fiscal challenges, the government will continue to honour its commitment to upload the municipal share of these costs off the property tax base. In 2013 alone, the benefit to municipalities as a result of the provincial uploads will total almost $1.4 billion. These uploads have ensured that more property tax dollars are available for important municipal priorities, including investments in infrastructure and economic development.

Together with the OMPF, the Province is providing municipalities with a combined benefit of over $1.9 billion in 2013 — more than three times the level of funding provided under the previous program.

The overall support to municipalities continues to increase, with provincial uploads more than offsetting the reduction to the program.

Ongoing Support to Municipalities

The Province is providing municipalities with ongoing support of approximately $3.4 billion in 2013 — an increase of 200 per cent from the level provided in 2003. This support includes funding provided through the OMPF, as well as the benefit from the provincial uploads and other initiatives benefiting the municipal sector.

Chart 1.28 Ongoing Support to Municipalities Will Increase to $3.7 Billion by 2016. Click for an accessible full description.

Strengthening Ontario's Property Tax System

Ontario's property tax system plays a fundamental role in supporting local municipal services as well as the province's elementary and secondary school system.

The Province has successfully implemented a number of important measures that have enhanced the stability and predictability of Ontario's property tax system for both property owners and municipalities. A prime example of these enhancements was the introduction, in 2009, of a four-year reassessment cycle complemented by a four-year phase-in program.

The Province will continue to work with key stakeholders to identify potential opportunities to further refine Ontario's property tax system. Building on recommendations made by the Ontario Ombudsman in 2006 and the Auditor General of Ontario in 2010, the Province will be working with the Municipal Property Assessment Corporation (MPAC), municipalities and taxpayer representatives to review options to further strengthen property assessment processes and the property tax system in Ontario.

This review will focus on areas where municipalities and taxpayer representatives have expressed an interest in working with the Province including:

  • reviewing the timelines for the assessment appeal process;
  • clarifying and refining the assessment methodologies applied to special-purpose business properties, such as mills, industrial lands, landfills and billboards; and
  • considering other opportunities to strengthen MPAC.

Improving Accountability

Improving accountability over the government's publicly funded agencies and other government organizations is a fundamental part of the Province's plan to manage responsibly. Over the past several years, the government has introduced a number of measures, strengthened policies and made legislative changes to enhance accountability. The Broader Public Sector Accountability Act, 2010, and subsequent amendments, introduced restrictions on the use of public funds to hire external lobbyists, expanded freedom-of-information legislation requirements to cover hospitals, required the public reporting of expenses of senior executives at hospitals and Local Health Integration Networks, established new rules for procurement and expenses for designated broader public-sector organizations, and brought in new rules to eliminate unnecessary perks for these entities. As well, new regulations and amendments to the Public Sector Salary Disclosure Act, 1996 have helped to strengthen accountability and reporting for the use of taxpayer funds.

Agency Accountability

Ontario continues to make progress in strengthening oversight of its agencies and other government organizations. Ministries will be required to undertake regular reviews of their agencies and other government organizations to ensure that achievement of results and value-for-money are obtained and that risks and required mitigation are addressed. The results of these reviews will be centrally assessed to ensure overall effectiveness of the ministries' oversight processes and that any concerns have been properly managed. The government has also undertaken a benchmarking review with its electricity organizations to improve overall operating performance, efficiency, value for money and accountability of these organizations.

An Efficient and Effective Electricity Sector

The electricity sector is a critical component of the Ontario economy. Recent investments in the sector have enabled development of a clean, modern and reliable electricity system.

Over the last 10 years, about 11,500 megawatts (MW) of new and refurbished capacity have come online, reflecting investments of over $21 billion in the sector. Nearly 2,200 MW of new grid-connected renewable resources are expected to come online over the December 2012 to April 2014 period.

The Province is replacing coal-fired generation, and moving forward the closure date for Lambton and Nanticoke stations to the end of 2013. Ontario's elimination of coal-fired electricity generation is the single largest greenhouse-gas reduction measure being undertaken in North America in this timeframe.

Ontario will continue to be a leader in smart-grid technology and energy conservation, and will see the creation of new-economy jobs through the deployment of leading energy-efficiency technologies in Ontario homes and businesses.

As new investments in renewable generation unfold, the government will seek the involvement of communities to inform the process and ensure projects are successfully integrated in these areas.

In 2012, the government launched an independent benchmarking review of Ontario Power Generation Inc. (OPG) and Hydro One Inc. Results of the review will help to improve efficiency as both companies continue to implement steps to reduce costs and operate more productively and smarter. Ontario Power Generation and Hydro One both have transformation initiatives in place that are delivering improvements to taxpayers and ratepayers.

  • OPG's business transformation initiative has already resulted in reduced headcount from operations by more than 1,000 over the period from 2011 to 2012, and OPG is targeting an additional about 1,000 headcount reduction for a total of 2,000 by the end of 2015.
  • OPG reported lower expenses related to operations, maintenance and administration of $133 million in 2012 compared to 2011, due in part to cost-reduction measures reflecting headcount reductions and thermal unit closures.
  • Hydro One incurred lower operation, maintenance and administration expenditures of $21 million in 2012 compared to 2011 by cost-effectively managing the work program within its transmission business.
  • Hydro One's new customer information system is being implemented in 2013 to improve customer service and corporate productivity, resulting in expected total savings of $24 million over two years.

The review also identified potential opportunities to further improve operating efficiency at OPG and Hydro One, and the government will work with OPG and Hydro One on their review and implementation, with a focus on Ontario-based solutions, such as the following:

  • OPG's supply chain operations could achieve greater savings through strategic sourcing of products and services.
  • Hydro One could reduce costs in grid operations by improving the productivity in station maintenance.
  • Hydro One could reduce capital costs through increased use of engineering, procurement, and construction suppliers.

The government is also committed to engaging with both employer and labour representatives of its electricity agencies on pension reform to move towards a more sustainable framework.

ServiceOntario

ServiceOntario provides the people of this province with fast and easy access to government information and services, including registrations, certifications and licensing — all through one point of contact.

The government is conducting ongoing information collection, consultations and analysis to determine where there are additional areas of opportunity in ServiceOntario for improved value and customer service.

Analysis supports continuing ServiceOntario's successful public-private partnership strategy and expanding it where it makes sense, pursuing further service integration opportunities and transformational initiatives such as the continued adoption of online services.

Ontario Northland Transportation Commission

The Province currently owns and operates the Ontario Northland Transportation Commission (ONTC), which provides transportation services to northern Ontario. The ONTC has been operating at a deficit, spending more money on operations and capital repairs than it makes in revenue, and Provincial funding has been increasing over time.

The Province remains committed to ensuring that northern communities and industries benefit from viable, efficient and sustainable transportation and communications systems. As part of the process of addressing ONTC's ongoing shortfalls, while recognizing the transportation and communications needs of the north, the government has already:

  • ensured that every community served by the former Northlander train service continues to be served by ONTC motor-coach service;
  • moved forward on transferring the Niska I ferry, which runs between Moosonee and Moose Factory Island, to the Owen Sound Transportation Company, with no changes in service;
  • maintained the Polar Bear Express service; and
  • received submissions responding to a Request for Proposals for the Ontera telecommunication assets.

The government continues to transform the ONTC. The government will ensure that the voices of northern municipalities, Aboriginal communities, and key industry stakeholders are heard. In March 2013, the Minister of Northern Development and Mines established the ONTC Advisory Committee, which provides a collaborative opportunity for the exchange of ideas so that any decisions made will recognize the economic development value of transportation services in the north.

The government also recognizes the need to have a pan-northern transportation strategy and the path forward for ONTC will be considered as part of a broader review being conducted by the Ministry of Transportation on a Northern Ontario Multimodal Transportation Strategy.

Delivering Better Value for Money from Information Technology (IT) Investments

The government continues to pursue opportunities to deliver greater efficiency and better value for money by standardizing processes and leveraging horizontal opportunities in IT. The current data centre technology environment is vast and complex including over 8,000 application servers on 3,600 physical devices in multiple locations in the Ontario Public Service.

Information Technology has undertaken a number of initiatives to control costs and achieve on-going savings, including the consolidation of IT infrastructure and effective management of network services, telecommunications, and desktop services, resulting in $135 million in annual reductions since 2007–08. Further savings are being realized through an initiative underway that will rationalize data centre and related infrastructure technology operations, generating more than $20 million in annual savings by 2015–16. The data centre initiative will result in a reduction of data centres across the province, consolidating from 20 to two data centres in Guelph and Kingston.

The government is also working with representatives across the broader public sector from municipalities, universities, school boards, colleges, hospitals and government business enterprises to evaluate opportunities for common procurement of data network services. Results from the Network Services Productivity Team will be used to design a robust telecommunications network and business model that could generate cost savings and improve service delivery.

Managing the Size of the Ontario Public Service

The new government recognizes the important work of the Ontario Public Service to deliver vital services to citizens and propel this province forward.

Transformation of public services continues to move forward — to change the way public services are delivered to give Ontario families better value for money and eliminate overlap and duplication wherever possible. Public servants are dedicated to ensuring that the citizens of Ontario get the services they need in an efficient manner.

The government also remains committed to managing the overall size of the Ontario Public Service, while ensuring that essential services are not compromised.

The 2009 Budget announced measures to make the Ontario Public Service more efficient by reducing its size by five per cent or approximately 3,400 full-time equivalent staff over three years through attrition and other measures. The government achieved the five per cent reduction by March 31, 2012.

In the 2011 Budget, the government expanded on this target by committing to a further reduction of 1,500 full-time equivalent staff by March 31, 2014. The government is well on its way to meeting this commitment.

Chart Descriptions

Chart 1.22: Ontario’s Plan to Eliminate the Deficit

Ontario’s deficits are projected to decline from 2009–10 through 2017–18. In the 2009 Ontario Economic Outlook and Fiscal Review, Ontario projected a $24.7 billion deficit for 2009–10. The actual result for 2009–10 was a deficit of $19.3 billion. The 2010 Budget projected deficits of $19.7 billion for 2010–11, $17.3 billion for 2011–12, $15.9 billion for 2012–13 and $13.3 billion for 2013–14. The actual result for 2010–11 was a deficit of $14.0 billion. The actual result for 2011–12 was a deficit of $13.0 billion. The interim projection for 2012–13 is a deficit of $9.8 billion.

For the medium-term and extended outlook, the current fiscal projections are a deficit of $11.7 billion for 2013–14, a deficit of $10.1 billion for 2014–15, a deficit of $7.2 billion for 2015–16, a deficit of $3.5 billion for 2016–17 and a surplus of $0.5 billion for 2017–18.

Return to Chart 1.22

Chart 1.23: Ontario Is Projected to Have the Lowest Program Spending Per Capita in 2012–13

This chart compares per-capita program spending in Ontario to the other nine provinces for 2012–13. In 2012–13, Ontario’s per-capita program spending is projected to be $8,414. This is the lowest projected per-capita program spending among the provinces. This is followed by British Columbia, Nova Scotia, Quebec, New Brunswick, Prince Edward Island, Saskatchewan, Alberta, Manitoba, and Newfoundland and Labrador.

Return to Chart 1.23

Chart 1.24: Ontario Wage Settlements

Average wage settlements for the Ontario public sector were 0.1 per cent — lower than the settlements for the private sector, which were 1.6 per cent, the municipal sector, which were 1.8 per cent, and the federal public sector in Ontario, which were 1.7 per cent.

Return to Chart 1.24

Chart 1.25: Difference in Projected Pension Expense versus Commission on the Reform of Ontario’s Public Services Forecast

This chart compares the pension expense forecast presented by the Commission on the Reform of Ontario’s Public Services with the current pension expense forecast of the government for the period from 2012–13 to 2017–18. The chart demonstrates a current forecast that is lower in each year than that of the Commission and a cumulative reduction in pension expense of $6.5 billion over the period.

Return to Chart 1.25

Chart 1.26: Refundable Business Tax Credits

This bar chart shows that Ontario’s refundable business tax credits support media production, research and development, and training. In 2003–04, business tax credits provided almost $270 million in business support and in 2012–13 they are estimated to have grown to over $940 million — representing an average annual growth rate of 15 per cent.

Return to Chart 1.26

Chart 1.27: Getting the Fundamentals Right Has a Greater Impact on Jobs and Growth

Getting the fundamentals right has more impact than business subsidies. Ontario businesses are planning to invest $103 billion in physical and intangible capital in 2013, which is 52 times greater than business support provided by the Ontario government in 2012–13. This suggests that business subsidies have a marginal impact on total business investment. Proposed tax reform, when fully implemented, will bring $8.5 billion in annual broad-based relief to businesses.

Return to Chart 1.27

Chart 1.28: Ongoing Support to Municipalities Will Increase to $3.7 billion by 2016

This chart illustrates that provincial ongoing support to municipalities will increase to $3.7 billion by 2016, from $0.8 billion in 2000.

The ongoing support reflects actuals for 2000 to 2012 and projections from 2013 onward.

Return to Chart 1.28