The government is dedicated to a fiscally sound approach to managing the Province’s finances, which will provide the foundation for the long-term well-being and prosperity of Ontarians. An important aspect of this fiscal approach is its continued commitment to balance the budget by 2017–18. The government is taking deliberate and responsible steps to achieve that goal.
Through strong fiscal management, the Province is achieving its targets while continuing to invest in the economy, its people and a healthy, clean and prosperous low-carbon future. These investments will help enhance the public services that Ontarians rely on, as well as stimulate growth. A growing economy and new jobs are the best way to support Ontario families and generate revenues on the path to balance and long-term prosperity.
Ontario’s plan to eliminate the deficit includes:
The government is projecting a deficit of $5.7 billion in 2015–16 — an improvement of $2.8 billion compared with the 2015 Budget forecast and $1.8 billion compared with the projection laid out in the 2015 Ontario Economic Outlook and Fiscal Review. It is also a $4.6 billion improvement compared with the 2014–15 deficit of $10.3 billion. This represents the Province’s largest year-over-year reduction in the deficit in the last five years.
Ontario is on track to beat its deficit target for the seventh year in a row. By continuing to beat its fiscal targets, the government’s accumulated deficit is $30 billion lower than it otherwise would have been.
The government is projecting a deficit of $4.3 billion in 2016–17, which reflects an improvement of $0.5 billion compared with the 2015 Budget forecast.
Ontario is also projecting it will meet its commitment to return to balance in 2017–18 — the result of a plan to eliminate the deficit that was first laid out in the 2010 Budget. Achieving balance will put net debt-to-GDP on a declining track.
With the economy expected to continue to grow, and the Province’s ongoing commitment to transform government programs and services, Ontario is well positioned for long-term sustainability and is projecting to remain balanced in 2018–19.
As an indication of greater sustainability in the Province’s management of its debt, net debt-to-GDP is expected to peak at 39.6 per cent in 2015–16, remain level in 2016–17 and begin to decline in 2017–18.
Ontario will continue to build on its proven track record of responsible fiscal management.
Supported by the outlook for continued economic growth, revenue is projected to grow by an average annual rate of 4.6 per cent between 2014–15 and 2018–19. An increasingly competitive global economic environment and ongoing uncertainty pose risks to these projections.
The program expense outlook over the medium term is projected to be higher in each fiscal year than forecast in the 2015 Budget, growing at an average annual rate of 1.9 per cent over the 2014–15 to 2018–19 period. This reflects the government’s commitment to invest in priority areas to enhance public services, support economic growth and a low-carbon economy, and create jobs.
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 Commission indicated that, in the absence of measures to slow growth in spending, program expense would grow at an average annual rate of 3.5 per cent. Between 2010–11 and 2014–15, responsible fiscal management resulted in the Province’s total expense growth being held to an average annual rate of 1.5 per cent — in line with the Commission’s recommended growth rate of 1.4 per cent. In addition, program spending has fallen to 16.4 per cent of GDP in 2014–15, lower than the 17.9 per cent reached in 2009–10. Even with the government’s planned investments, program expense-to-GDP is expected to fall to 15.0 per cent by 2018–19. Ontario was the leanest government in Canada, with the lowest per-capita program spending of any province in 2014–15, and is projected to remain so in 2015–16.
The Province is projected to spend nine cents of every revenue dollar received on interest in 2016–17. Ontario’s ratio of interest on debt-to-revenue continues to be stable. This ratio is lower than in the 1990s and 2000s, and is forecast to remain lower through the outlook period in 2018–19.
The following sections of this chapter outline measures the government is taking to achieve a balanced budget by 2017–18 and secure the Province’s long-term fiscal sustainability.
This bar chart shows Ontario’s actual deficits versus deficit targets from 2009–10 through 2014–15, and the interim projection for 2015–16.
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 deficits over the same period were $14.0 billion for 2010–11, $13.0 billion for 2011–12, $9.2 billion for 2012–13 and $10.5 billion for 2013–14.
The 2014 Budget projected a deficit of $12.5 billion for 2014–15. The actual deficit was $10.3 billion. The 2015 Budget projected a deficit of $8.5 billion for 2015–16. The deficit is currently projected to be $5.7 billion.
This bar chart shows projections for Ontario’s fiscal outlook in 2016–17, 2017–18 and 2018–19.
In 2016–17, Ontario’s deficit is projected to be $4.3 billion. This is compared to a projected deficit of $4.8 billion for 2016–17 laid out in the 2015 Budget.
Ontario is projected to balance in both 2017–18 and 2018–19.
This line chart shows Ontario’s net debt-to-GDP from 1990–91 to 2018–19.
The net debt-to-GDP ratio is projected to peak at 39.6 per cent for 2015–16 before levelling off in 2016–17 and beginning to decline in 2017–18. It is projected to be 39.6 per cent in 2016–17, 38.9 per cent in 2017–18, and 38.5 per cent in 2018–19.
This line chart shows the ratio of Ontario’s program expense to nominal GDP from 2009–10 to 2018–19.
For 2015–16, the ratio is 16.2 per cent, based on the interim expense projection for 2015–16. The ratio is projected to be 15.7 per cent in 2016–17; 15.3 per cent in 2017–18 and 15.0 per cent in 2018–19.
For past years, the ratio is based on actual program expense amounts: it is 17.9 per cent in 2009–10; 17.7 per cent in 2010–11; 17.1 per cent in 2011–12; 16.5 per cent in 2012–13; 16.7 per cent in 2013–14; and 16.4 per cent in 2014–15.
This line chart shows the ratio of Ontario’s interest on debt to total revenue from 1990–91 to 2018–19.
The ratio has been at various levels between 8.6 per cent and 9.2 per cent since 2006–07. It is projected to be 8.9 per cent in 2015–16; 9.0 per cent in both
2016–17 and 2017–18; and 9.2 per cent in 2018–19.