2016 Ontario Budget
Chapter II: A Balanced Path to a Balanced Budget

Section B: Transforming Government and Managing Costs

Program Review, Renewal and Transformation

Launched in 2014, Program Review, Renewal and Transformation (PRRT) introduced a new approach to planning and budgeting. Led by the President of the Treasury Board/Deputy Premier and supported by a sub-committee of Treasury Board/Management Board of Cabinet, PRRT is both the government’s ongoing fiscal planning and expenditure management approach and a continuous review of programs, including public services and internal administration. It is designed around four key principles:

  • Examining how every government dollar is spent;
  • Using evidence to inform better choices and improve outcomes;
  • Looking across government to find the best way to deliver services; and
  • Taking a multi-year approach to find opportunities to transform programs and achieve savings.

Program Review, Renewal and Transformation is about more than saving money — it is a continuous planning approach focused on improving outcomes for government programs and services to ensure they are effective, efficient and sustainable.

An important success factor of PRRT is increasing the government’s capacity for evidence-based decision-making. At its core, this is about identifying the outcomes government wants to achieve, ensuring the best available evidence and analysis informs the government’s decisions, and tracking the performance of public services to make sure Ontarians get the best results and value for money.

The Province is building this capacity in a number of ways. The new Centre of Excellence for Evidence-Based Decision-Making, launched in the 2015 Budget, is setting standards for the use of evidence and tracking of performance across government, and equipping public service staff with the necessary tools and training. Through PRRT, key performance indicators are being identified for major programs, and performance measurement data will be monitored to track whether the government is achieving success on its priorities — and where more work is needed.

What Does Success Look Like?

The government is already using key performance indicators to report on priorities, such as the Poverty Reduction Strategy, to track progress and demonstrate the impact of public investments. Education is key to breaking the cycle of poverty — high school graduation has increased from 68 per cent in 2004 to 84 per cent in 2014. Ongoing monitoring of key indicators is helping to better understand which investments are working and where additional efforts are needed to target the root causes of poverty.

By identifying desired outcomes, and tracking progress towards these outcomes, the government and Ontarians can better assess whether a program has worked as it should, was effective, and investments were worthwhile and efficient.

The government will leverage its relationships with experts across Ontario to build an external network that supports evidence-based policy making. This will include academic research and other types of organizations that can guide efforts to improve decision-making. It will also include the new academic Centre for Evidence in Health in All Policies and a new Institute for Fiscal Studies and Democracy Canada affiliated with the University of Ottawa.

The Behavioural Insights Unit (BIU) is helping ministries apply insights from the behavioural sciences to design and implement policies and programs that are more effective, efficient and human-centric, in alignment with PRRT goals. Building on recent successes, in 2016 the BIU will focus on supporting initiatives that:

  • Optimize digital services;
  • Advance the goals of the Poverty Reduction Strategy;
  • Improve the health and well-being of Ontarians; and
  • Promote regulatory approaches that are less burdensome to businesses.

Progress through Program Review, Renewal and Transformation

Program Review, Renewal and Transformation is helping the government achieve better outcomes while also lowering costs. The primary focus of this transformation is on ensuring that services are delivered efficiently and in a way that effectively meets Ontarians’ needs.

Achieving Savings Targets

The government continues to have a strong track record in managing spending. Prior to the development of PRRT, the 2014 Budget announced that the government was implementing a program review savings target, set at $250 million for 2014–15 and $500 million for 2015–16.

The government met its $250 million savings target for 2014–15.

In the 2015 Budget, the government identified a number of major initiatives to modernize public services, improve outcomes for Ontarians and support the Province’s fiscal objectives.

As a result of these initiatives and other opportunities identified through PRRT to manage expenditures and improve program effectiveness, efficiency and sustainability, the government will meet the $500 million target for 2015–16.

Achieving the 2015–16 Program Review Savings Target

The government will meet its $500 million program review savings target through such initiatives as:

  • Negotiating lower prices for goods and services, achieving savings of approximately $7 million from contracts related to government cellular phone plans and toll-free lines.
  • Achieving approximately $56 million in savings, through the consolidation of data centres, early vendor payments and lower contract costs, including for software and IT consulting services, laboratory supplies and security services.
  • Ensuring the sustainability of the Ontario Drug Benefit Program and patients’ access to drugs by continuing to make the program more efficient and effective. The changes enable the government to achieve savings of $106 million in 2015–16 and will enable over $200 million in savings annually when fully implemented, including optimizing the quantities of medication dispensed, adjusting some dispensing payments and practices, and maximizing the use of generic drugs.
  • Making changes to the Second Career program by removing client targets for service providers, while ensuring that funding supports all eligible clients. These changes are generating approximately $40 million per year in ongoing savings and will enable the government to invest in the Canada–Ontario Job Grant and the renewed Ontario Youth Jobs Strategy.
  • Reducing employee benefits costs by approximately $207 million.
  • Reducing the government’s office footprint. As of January 2016, the government had reduced its office footprint by approximately 820,000 rentable square feet. That is over 60 per cent of the Province’s target, with estimated savings of $24 million in 2015–16.
  • Achieving approximately $30 million in savings by leveraging and reusing existing assets and other one-time savings opportunities.
  • Effective contract management and operational efficiencies in business support programs, resulting in approximately $22 million in savings. Future savings may be realized through an ongoing review of business support programs.
  • Modernizing the delivery of programs in the Ministry of Natural Resources and Forestry, and the Ministry of Northern Development and Mines, saving $19 million.

Moving Forward with Program Review, Renewal and Transformation

Program Review, Renewal and Transformation will remain focused on improving outcomes for government programs and services to ensure they are effective, efficient and sustainable.

This may mean redesigning policies to support greater cooperation within government, modernizing program delivery, and changing or ending programs that do not meet people’s needs.

Through cross-ministry horizontal collaboration, the government is taking focused action on major transformation and efficiency initiatives that will improve outcomes for Ontarians while helping to free up resources to reinvest in key priorities, such as health care and education.

TABLE 2.1 Major Transformation and Efficiency Initiatives, 2016–17 to 2018–19
($ Millions)1
Government Modernization Initiatives $ Millions Expected Outcomes
Digital Action Plan   Transforming government service design and delivery, including creating Ontario’s first-ever digital service to drive change across government.
Modernizing Information & Information Technology (IT)   High-performing IT solutions that provide greater value for money, lower delivery risks and enable effective transformation of public services.
Transfer Payment Administration Modernization   An easier process for recipient organizations to work with government so they can focus on their core business, and enabling government to maximize outcomes by allocating resources based on evidence.
ServiceOntario Modernization   Improved digital service design and delivery for a better and more convenient service experience.
Annual Fiscal Impact, Subtotal 15–130  
Sector Transformation Initiatives $ Millions Expected Outcomes
Managing Health Care Spending and Growth   Improved patient experience and more equitable access to better integrated health services. Progress towards a redesigned public drug program that will be sustainable over the long term, simpler and easier to use, with a vision of increased fairness and equity among beneficiaries.
Benefits Transformation   Shifting from a program-by-program to a citizen-focused approach to benefits delivery will make it easier for people to access income-based benefits, while ensuring programs are administered efficiently.
Justice Sector Transformation   A more modern justice system that is client-centred, community-based and focused on prevention.
Annual Fiscal Impact, Subtotal 155–705  
Program Effectiveness and Sustainability Initiatives $ Millions Expected Outcomes
More Effective Business Supports   Business support programs that more effectively support economic growth, innovation and expanding exports.
Simpler, Better-Targeted Postsecondary Student Financial Assistance2   Reduced complexity and more timely and better-targeted student financial aid to those who need it most.
Service Fees and Non-Tax Revenue3   A consistent, well-managed fee system that balances end-user needs with the objective of sustaining public services.
Tax Expenditures   Ending tax credits that have low take-up or do not effectively achieve desired outcomes and overlap with support provided through other provincial programs.
Annual Fiscal Impact, Subtotal 375–690  
  $ Millions Expected Outcomes
Subtotal 545–1,525  
Annual Year-End Savings Target 800–1,000 As in past years, the Year-End Savings provision reflects efficiencies through in-year expenditure management and underspending due to factors such as program management, and changes in project startups and implementation plans.
Total 1,345–2,525  
1 Annual impact. Fiscal impact increases over time as initiatives mature. Savings estimates will be refined through implementation.  
2 Fiscal impact is generated through eliminating tax credits.  
3 Fiscal impact is generated through additional revenue.  
Note: Numbers may not add due to rounding.  
Government Modernization
Digital Action Plan

In today’s digital age, people expect to be able to connect with their government anytime, anywhere, on any device. The Ontario Digital Government Action Plan will serve as a public roadmap for Ontario’s digital transformation — setting new organizational standards, identifying key projects to drive change, empowering the next generation of digital talent and shifting government culture to deliver the best possible customer experience. See Chapter I, Section G: Making Everyday Life Easier for more information.

Modernizing Information and Information Technology

The government’s information and information technology (IT) systems are the backbone of many public services. Every year, the government processes 185 million OHIP medical claims, more than 14 million mobile Ontario Student Assistance Program (OSAP) views, and over 200,000 online driver’s licence renewals. While investment in government information technology has remained relatively stable at over $1 billion annually, the Province has made steady progress in improving IT operations while managing significantly increased demand for more and new services over the past decade. It has found efficiencies through negotiating better contract pricing, better management of fee-for-service consulting costs, consolidating data hosting operations, and more efficiently designed and delivered IT systems.

In the 2015 Budget, Ontario announced a benchmarking review of its IT capability, led by an independent third party. Based on the evidence and findings of this review, the government is undertaking a series of initiatives to further lower IT costs and improve how technology supports the delivery of government programs and services. Through the first phase, the government will improve IT productivity and cost efficiency to achieve $100 million in annual savings by 2020. The second phase will focus on modernizing how IT supports government business and citizen-centred service delivery, including management and oversight of projects, more agile technology development, risk management and procurement.

Transfer Payment Administration Modernization

There are thousands of transfer payment recipient organizations across Ontario, which provide a range of vital public services on behalf of the government. These include health services, social services, employment and cultural programs, to name a few.

The Province is modernizing the processes and rules for administering transfer payments so that delivery partners can spend more time planning, coordinating and enabling the outcomes they have committed to deliver.

The government is introducing a registration process through a one-window, online system. Recipient organizations will register once to create an online profile. They will be able to submit information and related documents online and easily update information on the system as required. This modernized approach will create administrative efficiencies and savings for recipients and for government.

In addition, requiring transfer payment recipients to provide their Canada Revenue Agency business number will allow a better view of the financial relationship between the government and recipient organizations. Recipient organizations will have much easier access to complete and accurate account information, and the government will have easy access to information that supports improved risk management and evidence-based decision-making.

“A single registration platform for all non-profits that receive provincial transfer payments will reduce the administration burden and ensure more efficient use of our resources. Simpler and more transparent for all of us!"

Cathy Taylor, executive director, Ontario Nonprofit Network.

ServiceOntario Modernization

ServiceOntario delivers efficient, high-quality services to people, businesses and other clients. As part of its modernization plan, ServiceOntario will apply customer-centric “digital-by-default” principles to redesign key online services, making them simpler and more convenient while ensuring the integrity of customer information. These design principles will help direct clients to more convenient service delivery channels, as recommended by the Commission on the Reform of Ontario’s Public Services.

At the same time, ServiceOntario will ensure high-quality service through its in-person and other delivery channels for those who cannot access services online. See Chapter I, Section G: Making Everyday Life Easier for more on ServiceOntario modernization.

Sector Transformation
Managing Health Care Spending and Growth

The government continues to work towards implementing system reforms that place patients at the centre of the health care system, while delivering services in a fiscally sustainable manner. Ontario has made significant progress in reducing annual growth in health care spending from about seven per cent to about two per cent.

To deliver a patient-centred health care system, the government must pursue systemic change to modernize health care and maximize the value of investments. For example, changes are underway to better integrate primary care with home and community care under Local Health Integration Networks (LHINs). Integration of the health system will improve patient care while achieving efficiencies in the overall health sector.

Ensuring the Sustainability of the Ontario Drug Benefit Program

Advances in pharmaceuticals and the increasing complexity of drug regimens are driving up the cost of drugs. To help ensure that Ontario’s public drug program benefits are sustainable over the long term, it will be important to target benefits to those most in need. Ontario’s six public drug programs have varying eligibility rules and co-payment arrangements that have not been revised for two decades.

As part of Ontario’s Patients First: Action Plan for Health Care, the government will introduce a redesigned public drug program by 2019. The new program will improve long-term sustainability while ensuring access to prescription drugs for people who need them. It will be simpler and easier, and increase fairness and equity among beneficiaries. The redesigned drug program would effectively coordinate with individuals’ private insurance benefits and increase equitable access to medications. The government will release a vision paper and launch public consultations in spring 2016 to inform the design of the new Patients First Drug Program.

Before transitioning to the Patients First Drug Program, the government will take steps to update the current Ontario Drug Benefit (ODB) Program for seniors by increasing the income-eligibility thresholds for the low-income seniors’ benefit and making changes to co-payments and deductibles for other seniors. With these changes to the ODB, seniors in Ontario will continue to have among the lowest out-of-pocket expenditures for prescription drugs in Canada.

Starting August 1, 2016, the income thresholds to qualify for the low-income seniors’ benefit will be increased from $16,018 to $19,300 for single seniors and from $24,175 to $32,300 for senior couples. Low-income seniors who receive public drug benefits will continue to pay up to a $2 co-payment per prescription with no annual deductible.

To help ensure Ontario’s public drug programs are sustainable, seniors with incomes at or above the updated income thresholds will see adjustments to their ODB contributions for their prescription drugs. Starting August 1, 2016, the annual deductible under the ODB for seniors will be increased from $100 to $170 and the co-payment per prescription will be increased from $6.11 to $7.11 per prescription.

Current cost-sharing arrangements will be maintained for people, including seniors, who receive their public drug benefits through Social Assistance, Long-Term Care Homes, Homes for Special Care, Home Care and the Trillium Drug Program.

Income Testing

Income testing helps target benefits to those most in need while helping to ensure that programs are sustainable over the long term. Over the next year, the government will continue to review programs to determine where benefits could be better targeted.

Assistive Devices and Supplies Program

The government will target benefits for its Assistive Devices and Supplies Program (ADSP) as program costs are projected to rise in the near future. The growth is primarily attributed to Ontario’s aging population and the increasing number of individuals requiring assistive devices. As a first step, the Province will examine funding criteria for the continuous positive airway pressure (CPAP) machines used for sleep apnea to ensure the benefit is targeted to individuals who need it.

Benefits Transformation

The Province provides a wide range of direct and in-kind benefits across a spectrum of needs including health, dental, housing and child care. To streamline access, Ontario is exploring initiatives that include online applications for multiple benefit programs and increased automation of back-office functions.

To support these initiatives and build on the positive steps taken to improve the way benefit programs are delivered, the government is proposing new legislation that would enable integrated program administration with broadened information sharing and modernized privacy frameworks.

Justice Sector Transformation

The justice sector is undergoing long-term transformation to create a justice system that is more modern, client-centred, community-based and focused on prevention. The government has successfully transformed Ontario’s youth justice system to fully align with the principles and provisions of the federal Youth Criminal Justice Act. Transformation has created a continuum of community-based and custodial programs and services to improve outcomes for youth, successfully transition them out of custody and create opportunities for youth at risk. The overall youth crime rate in Ontario has been reduced by 46 per cent since the introduction of the Act in 2003.

In line with youth justice transformation, the Province is repurposing the Roy McMurtry Youth Centre, an underused youth justice facility, to meet the unique environmental and programming needs of adult female offenders, including those who require specialized mental health services.

The government will be constructing smaller, strategically located and program-appropriate facilities to effectively and efficiently support the programming needs of the youth justice system.

The ministries will continue to work together on cross-sector transformation opportunities to ensure Ontario’s justice system provides programs and services that produce positive outcomes for individuals, local communities and public safety.

Program Effectiveness and Sustainability
More Effective Business Supports

The government is undertaking an ongoing review of business support programs through PRRT, building on the recommendations of both the Commission on the Reform of Ontario’s Public Services and the Ontario Auditor General, including an enhanced focus on measuring program performance, increasing transparency about how funding decisions are made, and improving coordination across the government’s business support programs. For example, moving forward, the Eastern Ontario Development Fund, the Southwestern Ontario Development Fund and the Rural Economic Development Program will be better integrated with the Jobs and Prosperity Fund to help improve the coordination of regional support programs.

The review has assessed programs for effectiveness, efficiency, relevance, sustainability and alignment with the objectives of the Business Growth Initiative announced in the 2015 Ontario Economic Outlook and Fiscal Review, with the goal of promoting a highly productive, innovation-based and export-focused economy. Based on these assessments, opportunities are being acted on to reduce spending in programs that are lower-performing or less aligned with government priorities.

Spending reductions will be reinvested in priority economic development opportunities, including the Business Growth Initiative outlined in Chapter I, Section A: Fostering a More Innovative and Dynamic Business Environment. The Province remains committed to delivering effective and targeted financial support through programs such as the Jobs and Prosperity Fund, marketing services, and collaboration with domestic and international partners. It also continues to foster the stability and development of Indigenous, rural and northern communities across the province.

Simpler, Better Targeted Postsecondary Student Financial Assistance

Ontario has made significant changes in recent years to enhance the Ontario Student Assistance Program (OSAP) to provide students with the financial support they need to get an education. Nevertheless, Ontario’s student financial assistance programs are complex, often do not provide support when students need it, and do not help many disadvantaged students who cannot overcome financial barriers to access postsecondary education.

To address these gaps, the government will introduce a redesigned student financial assistance program that will be easier for students and their families to understand and access, and will shift the financial support upfront to reduce the “sticker shock” that limits access for many. It will improve access for students from lower-income families who truly need help in accessing postsecondary education. This simplified system will include one single major upfront grant for OSAP — the Ontario Student Grant (OSG), starting in September 2017. The OSG will replace the 30% Off Ontario Tuition grant, Ontario Student Opportunity Grant, Ontario Access Grants, and other grants offered by OSAP. Ontario proposes to discontinue the tuition and education tax credits. This reform is in line with recommendations by stakeholders, including student groups and the Commission on the Reform of Ontario’s Public Services. All of the additional revenue from eliminating these tax credits would be reinvested to support the new OSG or other postsecondary, education, training and youth jobs programs. See Chapter V, Section A: Tax Measures for more information on the tax changes.

Further details will be available during 2016, with the redesigned OSAP program to be introduced for the 2017–18 school year. See Chapter I, Section C: Investing in People’s Talents and Skills for more information.

Service Fees and Non-Tax Revenue

Service fees provide a means of ensuring that the costs of providing a program or service that has an individual benefit are paid by the beneficiary of that program or service, rather than by taxpayers in general. Examples of service fees charged in Ontario include fees charged for driver and vehicle licensing, camping in Ontario parks, fishing and hunting licences, court applications, liquor licences and event permits.

As noted by the Auditor General in 2009, Ontario’s service fees, per capita, are among the lowest in Canada. Ontario is also one of the only jurisdictions in the country that does not regularly review service fees or index them to inflation. As a result, in most cases, service-fee revenue recovers only a portion of the associated expense, which results in the government having to subsidize a portion of the service from tax revenue. Managing service fees in a way that is fair, reasonable and balanced would ensure that fees are applied consistently and that the costs for providing these services are borne by those who use and benefit from them.

Service Fees and Non-Tax Revenue in Other Jurisdictions

The federal government, the provinces of Quebec and Nova Scotia, and the Northwest Territories have policies in place to permit indexation of service fees, where appropriate, to the rate of inflation. Saskatchewan and Newfoundland and Labrador have established processes to regularly review fee rates. In 2012, Quebec began to systematically review the costs of services to which existing or potential service fees apply, determine self-financing targets for each fee-based service, and index increases in fees annually at the same rate as any increase to the personal taxation system. In 2015, Alberta announced government-wide fee increases, including vehicle and driver licences, and introduced new court fees.

In the 2015 Budget, the government announced that it would move forward with a multi-year strategy of managing fees while balancing end-user needs, consistent with the Commission on the Reform of Ontario’s Public Services’ recommendations. The government will continue to move ahead in a strategic and measured way, just as it has over the last several years. The Province will review all fees in a way that is fair, reasonable and balanced, while eliminating certain fees that do not align with government priorities. Starting in 2017–18, fees will be adjusted annually to keep up with inflation, ensuring both the sustainability and quality of public services. This is consistent with what many other jurisdictions already do. As part of the government’s ongoing review, all fees will be examined to ensure that broad objectives, such as ensuring services for vulnerable Ontarians, are not affected.

With the 2016 Budget, some other important changes are being made. A review of court services produced a revised fee schedule and expanded access to mediation in family courts, while increasing the fee-waiver threshold to better ensure access to courts without impediment.

To support provincial roads and highways, the government will continue to update its licensing and vehicle validation fees. Other fees may be increased annually at the rate of inflation to keep up with the increasing costs of service delivery.

The government will be eliminating some fees, starting with licensing fees for adoption agencies or individuals to place children for adoption or to facilitate an intercountry adoption, and the Drive Clean emissions test fee.  

As the review proceeds, the government will continue to identify additional opportunities to update fees to remove hidden subsidies while ensuring potential impacts on vulnerable Ontarians are considered. This responsible approach to managing service fees will help ensure that the costs for providing these services are paid by those who use and benefit from them, leaving more funding for government priorities such as health care and education.

In 2014–15, approximately $2.1 billion of provincial revenue, or 1.8 per cent, was derived from service fees. Chart 2.6 provides a detailed breakdown of all provincial revenue sources.

Tax Expenditures

The government is proposing to end tax credits that do not effectively achieve desired outcomes and overlap with support provided through other provincial programs. See Chapter V, Section A: Tax Measures for further details.

  • The Healthy Homes Renovation Tax Credit has had lower take-up than expected. The government provides other programs to help people with mobility-related disabilities or impairments live safely in their homes.
  • The Children’s Activity Tax Credit primarily benefits higher-income families who are less likely to need it to pay for their children’s activities. Other existing programs support the objective of providing more opportunities for children and youth to stay healthy, such as the Healthy Kids Strategy.

Improving Outcomes and Evidence-Based Decision-Making

To improve programs, Ontario is moving towards a focus on evidence-based decision-making — gathering and analyzing the best available information to improve how outcomes are identified and achieved across government. Examples include:

  • The government plans to continue to fund growth in community-based care of about five per cent per year to 2017–18, so patients receive care at or close to home and to avoid unnecessary and costlier stays in the hospital. In recent years, hospitals have introduced evidence-based funding that has supported shorter patient stays and more outpatient care, while maintaining excellent patient outcomes.
  • Over the next three years, the government plans to invest an additional $75 million in community-based, residential hospice and palliative care, for a total investment of about $155 million over three years. This will bring the government’s commitment to residential hospices to almost $55 million annually at maturity. This investment, while supporting the government’s commitment for greater choice and access with respect to palliative and end-of-life care, funds a more cost-effective alternative than new hospital palliative-care beds.
  • The government is investing $333 million over five years, to support redesigning and consolidating autism services in Ontario, so that more children and youth receive critical interventions sooner and achieve improved outcomes through services that are better matched to their needs. This includes transitioning older children currently waiting for and receiving more costly Intensive Behavioural Interventions to more appropriate services, based on research evidence.
  • A shifting of resources from enforcement-driven to early, community-based interventions that implement programs and services to keep people out of the justice system and produce positive outcomes for individuals and local communities. This will, in turn, shift the focus from reactive policing to multi-sector initiatives involving both police and other local partners working together to reduce crime and help build safer, healthier communities.
Collective Impact for At-Risk Youth

The government is also exploring new ways to address complex social problems by piloting a Collective Impact (CI) approach to improve outcomes for youth not in employment, education or training.

Collective Impact is an innovative, outcomes-driven approach to making collaboration work between government, business, the philanthropic and not-for-profit sectors, and people to achieve significant and lasting social change. It is also a service delivery transformation approach that emphasizes integration across sectors, as well as within sectors for improved outcomes.

A number of jurisdictions are using CI to tackle complex social, economic and environmental issues that cannot be addressed by a single sector or program. One notable example of CI in Canada is Calgary’s Plan to End Homelessness, which has led to a coordinated system of care. Since 2008, the plan has successfully delivered a 15 per cent reduction in homelessness in Calgary.

The Province is currently assessing CI pilot communities and determining how it can best partner with and support others to improve outcomes for local youth not in employment, education or training.

Strategic Plan for Public Service Renewal

The government is working to strengthen its public service to meet the needs of Ontarians.

A Talented, Motivated and Equipped Workforce

Ontario has a strong, proud track record as a top employer. In the last five years, the Ontario Public Service (OPS) has been named one of Canada’s Top 100 Employers, one of Canada’s Top Family-Friendly Employers, one of Canada’s Best Diversity Employers and one of Canada’s Greenest Employers.

With over 60,000 employees, continued workforce planning and engagement of employees is essential to organizational success and leadership into the future. The question of how to enable and sustain the development of a modern and inclusive OPS is one with which the government is actively engaged.

To ensure the OPS is the talented, inclusive, empowered and equipped workforce the Ontario government needs to deliver a high level of performance for Ontarians, the Province will be developing a strategic plan for public service renewal to ensure the public service has the diversity, skills and leadership capacity required to support innovation in the OPS. This plan will build on:

  • The OPS HR Plan 2015–20: Building on our Strengths — Leading Change for the Future;
  • The OPS Sexual Harassment Prevention Action Plan;
  • The first-ever OPS Anti-Racism Action Plan;
  • Recommendations to be made by the Advisory Panel on Management and Non-Bargaining Staff Recruitment and Retention, chaired by Don Drummond; and
  • Digital, open government and evidence-based policy development approaches aimed at building capacity and skills and nurturing a positive, proactive and innovative culture in the organization.

Managing Compensation

Overview

The government remains committed to balancing the budget by 2017–18, and managing compensation costs remains a key element of achieving this goal. All public-sector partners must continue to work together to control current and future compensation costs.

Collective Agreements

The 2015 Budget required any modest negotiated wage increases to be offset by other measures to create a net-zero outcome. Since then, net-zero outcomes have been reached in a number of key sectors, including the education sector, Ontario Public Service (OPS) and provincial energy corporations. These results are the product of hard work by all parties, and support the government’s ongoing efforts to eliminate the deficit while protecting the valued public services on which Ontarians rely.

  • The first round of education sector central collective bargaining under the School Boards Collective Bargaining Act, 2014, concluded with the successful negotiation of nine three-year agreements. The agreements support the government’s net-zero compensation framework for the education sector.
  • On October 30, 2015, the government and the Ontario Public Service Employees Union (OPSEU) ratified a three-year, net-zero collective agreement applicable to most of the union’s OPS members. The agreement includes modest wage enhancements that are offset through changes to employee benefits and entitlements over the three-year term of the contract, including a freeze on salary progression in 2016 and 2017, and capping of termination payments.
  • In the electricity sector, the Power Workers’ Union ratified agreements with Ontario Power Generation in May 2015 and Hydro One in July 2015. Both three-year agreements will achieve a net-zero increase in total labour compensation cost over their term, largely through adjustments to workforce flexibility. The Society of Energy Professionals also ratified net-zero agreements with Hydro One in September 2015, and with Ontario Power Generation in November 2015.

On January 9, 2016, the government and OPSEU reached an agreement applicable to the union’s OPS correctional members. The outcome is consistent with the fiscal plan as outlined in the 2015 Budget. The agreement refers outstanding monetary issues to expedited mediation–arbitration. It also recognizes the critical work of correctional bargaining unit employees by providing a stand-alone collective agreement for future rounds of collective bargaining. Interest arbitration will be provided going forward as a dispute resolution mechanism, rather than the right to strike.

The government continues to work to improve the quality of care in the Ontario health system. In November 2014, the Honourable Warren Winkler was jointly appointed as a conciliator to assist the government and the Ontario Medical Association (OMA) in reaching a Physician Services Agreement. While an agreement was not reached, the conciliator urged the OMA to reconsider its rejection of the government’s proposal.

While negotiations with the OMA have not yet resulted in a new Physician Services Agreement, the government has taken steps to implement its plan for the responsible management of physician service payments, achieving the Province’s goal of staying within its fiscal framework. The government respects the OMA’s right to represent all of Ontario’s physicians and will continue to actively consult them on physician compensation. Responsible management of the health care system requires a predictable physician services budget so that the government can continue to make investments in other necessary services such as home and community care.

A significant achievement of the education sector agreements is that they build on the work of the Technical Working Group on Benefits led by Tony Dean, former Secretary of Cabinet, which brought key stakeholders together to establish a common understanding of the potential areas for benefits transformation. Included in these new three-year agreements is the realization of this transformation, through the streamlining of health, life and dental benefit plans in Ontario’s education sector. This will result in one of Canada’s largest consolidation and rationalization efforts to improve the cost-efficiency and delivery of benefits. Currently, there are more than 1,000 different benefit plans for teachers and education workers throughout Ontario’s 72 school boards.

The cost, inconsistency and inefficiency of maintaining such a high number of plans presented the Province, school boards and federations/unions with an opportunity to unlock long-term savings through a modernization of benefits management and delivery.

As a result, all individual benefit plans will be consolidated into a handful of provincial trusts, resulting in improved purchasing power and cost management. The goal of the trusts is to establish a harmonization of benefits throughout the education sector, eliminating the disparity that characterizes the current system and ensuring access to comparable benefits within the trusts.

To support this transformation of benefits in Ontario’s education sector, the government is providing upfront investments, as committed in the 2013 Budget, which will result in long-term efficiencies that extend well beyond these three-year agreements.

Ongoing Efforts

The government acknowledges the work of its public-sector partners to bargain responsibly and reach agreements that are consistent with the fiscal plan. This work has resulted in provincial public-sector average annual wage increases continuing to track below the municipal, federal and private sectors in Ontario since 2012.

Specifically, from July 2012 to the present, the provincial public-sector annual wage increases have averaged 0.6 per cent, compared to the municipal sector at 1.8 per cent, the private sector at 1.9 per cent and the federal public sector in Ontario at 1.7 per cent.

Over the coming year, the government will continue to work with sector-level partners to assist in identifying possible opportunities to support mutually beneficial bargaining outcomes that are consistent with the government’s Program Review, Renewal and Transformation priorities and the Province’s fiscal plan.

Executive and Management Compensation

The government has taken a number of steps to manage executive and management compensation in both the OPS and the broader public sector.

Ontario Public Service

A balanced compensation approach recognizes the need to attract and retain talented leaders and individuals to ensure a modern, sustainable and inclusive OPS, while also remaining competitive with other public-sector peers.

In December 2015, the government created the external Advisory Panel on Management and Non-Bargaining Staff Recruitment and Retention, led by Don Drummond. The panel has been tasked with providing advice to ensure the OPS remains a modern and inclusive organization that continues to deliver high-quality public services.

As part of this, the panel will provide advice regarding a fair and sustainable compensation structure for OPS management and non-bargaining employees, including a performance incentive program linked to delivering on government priorities to reward those who exceed performance expectations.

The panel’s advice will also inform an appropriate long-term compensation strategy to address retention, recruitment and succession planning.

Broader Public Sector Executive Compensation

In keeping with its commitment to manage executive compensation in the broader public sector, the government is developing sector-specific executive compensation frameworks.

Compensation information has been collected from all colleges and universities. Consultation, along with research on executive compensation at postsecondary institutions across Canada, is informing college and university frameworks that balance sector-specific considerations with the need to prudently manage public funds.

The government will continue to work with its partners in the broader public sector to collect compensation information and engage in consultation with affected sectors over the coming months.

Government Transparency, Financial Management and Fiscal Accountability

Ontario continues to act on opportunities to further strengthen government transparency, financial management and fiscal accountability, to help realize its fiscal plan and deliver government programs and services through enhanced stewardship of public funds.

Government Transparency

Continuing to Improve Agency Accountability, Transparency and Effectiveness

Effective agency management contributes to the efficient use of public funds and public confidence in agency service delivery. In 2015–16, the government introduced new measures to further strengthen its oversight of Provincial agencies and increase transparency and accountability across agencies.

Over the coming year, the Province will be taking steps to ensure that provincial agencies remain aligned with the expectations of the government and Ontarians. For example, the government plans to introduce “mandate letters” for every board-governed provincial agency, and make those mandate letters publicly available. By taking this step, Ontarians will be able to clearly understand the service and performance expectations their government has for Ontario agencies that provide goods or services to the people of the province.

In addition, all provincial agencies are now required to undergo a review of their mandate on a regular basis. By the end of 2015–16, mandate reviews for 57 provincial agencies will have been completed. By 2020–21, all provincial agencies will have undergone at least one mandate review.

In response to recommendations by the Auditor General in December 2015, the government is committed to making provincial agency annual reports publicly accessible in a more timely, streamlined and consistent fashion to enhance transparency and accountability.

Effective this year, the Integrity Commissioner has expanded authority to review the expenses of designated persons at all provincial agencies. These expenses are also required to be posted publicly on agencies’ websites.

To further support accountability to the public on agencies’ use of powers and public resources, the government has implemented the requirement, announced in the 2015 Budget, for board-governed agency Chairs and CEOs to attest to the integrity and reliability of their financial reports and their organization’s compliance with legislation, regulations and directives. These attestations form part of activities underway to continually enhance existing government-wide accountability, internal control and assurance frameworks.

Other Accountability Measures

Changes to the Lobbyists Registration Act, 1998, are anticipated to be proclaimed into force in summer 2016. This will bring in new investigative powers for the Integrity Commissioner as Lobbyist Registrar, and new rules for lobbyists to add to the existing accountability and transparency measures already in place.

Recent Developments in Public Sector Accounting Standards

The government continues to work with the Public Sector Accounting Board (PSAB) on a number of initiatives, including PSAB’s review of its standards on financial instruments and foreign currency translation. In 2015, PSAB extended the effective date for implementation of these new standards for senior governments by three more years to April 1, 2019.

The financial results of the Province’s rate-regulated Government Business Enterprises (Ontario Power Generation Inc. and Hydro One Ltd.) are included in the Province’s consolidated financial reports. The government is seeking clarification from PSAB as to whether, under its standards, the results of the entities under modified equity accounting can continue to be reflected on the same basis as they are prepared and filed for external reporting purposes to support consistency, transparency and accountability.

Financial Management

Interim Appropriation Act

The Interim Appropriation for 2016–2017 Act, 2015, received Royal Assent in December 2015 and will come into force on April 1, 2016, to provide interim legal spending authority for anticipated 2016–17 spending. All spending under this Act must be charged to the proper appropriation following the voting of supply for the 2016–17 fiscal year. This is expected to enable the government to continue operations until the Legislative Assembly has approved the 2016–17 Expenditure Estimates and a Supply Act is enacted.

Fiscal Accountability

Reporting and Designated Purpose Tracking

The government plans to propose amendments to the Financial Administration Act to support its financial reporting activities. This will include amendments developed as the government completes the appropriation accountability framework that supports tracking and reporting of cumulative revenue for designated-purpose commitments. This framework will provide assurance to the public that the government is delivering on its commitments to spend at least as much on identified purposes as it takes in through identified revenue streams.

Chart Descriptions

Chart 2.6: Sources of Provincial Revenue, 2014–15

This chart shows the share of total revenue collected by Ontario in 2014–15. Total revenue in 2014–15 was $118.5 billion.

The largest source of revenue was taxation revenue, which was $82.3 billion, accounting for 69.4 per cent of total revenue.

The remaining sources of total revenue included Government of Canada transfers at $21.6 billion, or 18.2 per cent; income from Government Business Enterprises at $5.6 billion, or 4.7 per cent; Other Non-Tax Revenue at $6.9 billion, or 5.8 per cent; and Service Fees at $2.1 billion, or 1.8 per cent of total revenue.

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Chart 2.7: Ontario Public/Private Wage Settlement Trends

This line chart shows average bargained-wage increases for the provincial public sector, the municipal public sector, the federal public sector in Ontario, and the private sector in two periods, from April 2010 to July 2012, and from July 2012 to January 2016. The provincial public sector average wage increase decreases sharply from 1.6 per cent to 0.6 per cent during the April 2010 to July 2012 period, and remains steady during the July 2012 to January 2016 period. The other three sectors remain steady between 1.7 per cent and 1.9 per cent.

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