Ministry of Finance Public Accounts of Ontario 2012-2013

Consolidated Financial Statements

Auditor’s Report
Consolidated Statement of Operations
Consolidated Statement of Financial Position
Consolidated Statement of Change in Net Debt
Consolidated Statement of Change in Accumulated Deficit
Consolidated Statement of Cash Flow
Notes to the Consolidated Financial Statements
Schedules to the Consolidated Financial Statements
Glossary
Sources of Additional Information

 

Logo: Bureau du vérificateur général de l'Ontario

Office of the Auditor General of Ontario
Bureau du vérificateur général de l'Ontario

INDEPENDENT AUDITOR'S REPORT

To the Legislative Assembly of the Province of Ontario

I have audited the accompanying consolidated financial statements of the Province of Ontario, which comprise the consolidated statement of financial position as at March 31, 2013, and the consolidated statements of operations, change in net debt, change in accumulated deficit and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

The Government of Ontario is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as the Government determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Government, as well as evaluating the overall presentation of the consolidated financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Opinion

In my opinion, these consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Province of Ontario as at March 31, 2013 and the consolidated results of its operations, change in its net debt, change in its accumulated deficit, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

 
Signature of Gary Peall
Toronto, Ontario
August 14, 2013
Gary Peall, CPA, CA, LPA
Acting Auditor General
Province of Ontario
Consolidated Statement of Operations
($ Millions) 2012–13
Budget1
2012–13
Actual
2011–12
Actual
Revenues (Schedules 1 and 2)
Personal Income Tax 26,085 25,574 24,548
Sales Tax 21,135 20,957 20,159
Corporations Tax 10,798 12,093 9,944
Education Property Tax 5,631 5,511 5,765
Employer Health Tax 5,149 5,137 5,092
Gasoline and Fuel Taxes 3,095 3,100 3,090
Ontario Health Premium 3,098 3,067 2,916
Other Taxes 4,132 3,979 4,084
Total Taxation 79,123 79,418 75,598
Transfers from Government of Canada 21,776 21,661 21,305
Income from Investment in Government Business Enterprises (Schedule 9) 4,065 4,469 4,413
Other 7,609 7,821 8,457
  112,573 113,369 109,773
Expenses (Schedules 3 and 4)      
Health 48,334 47,582 46,476
Education 24,742 22,629 23,454
Children's and Social Services 14,047 13,921 13,472
Environment, Resources and Economic Development 10,859 11,069 10,711
Interest on Debt 10,619 10,341 10,082
Post-Secondary Education and Training 7,509 7,362 7,261
Justice 4,047 3,962 3,873
General Government and Other 6,236 5,723 7,413
Total 126,393 122,589 122,742
Reserve 1,000
Annual Deficit (14,820) (9,220) (12,969)
1 Amounts reported as "Plan" in 2012 Budget, as presented in the April 25, 2012 fiscal update, restated for presentation changes.
See accompanying Notes and Schedules to the Financial Statements.

Province of Ontario
Consolidated Statement of Financial Position
As at March 31
($ Millions)
2013 2012
Liabilities    
Accounts Payable and Accrued Liabilities (Schedule 5) 21,554 21,128
Debt (Note 3) 281,065 257,278
Other Long-Term Financing (Note 5) 11,534 10,193
Deferred Revenue and Capital Contributions (Note 6) 9,117 8,553
Pensions and Other Employee Future Benefits (Note 7) 4,362 4,802
Other Liabilities (Note 8) 3,749 2,794
  331,381 304,748
Financial Assets    
Cash and Cash Equivalents 18,497 16,380
Investments (Note 9) 20,841 14,298
Accounts Receivable (Schedule 6) 8,425 9,263
Loans Receivable (Schedule 7) 11,110 10,381
Other Assets 1,873 1,585
Investment in Government Business Enterprises (Schedule 9) 18,547 17,259
  79,293 69,166
Net Debt (252,088) (235,582)
Non-Financial Assets    
Tangible Capital Assets (Note 10) 84,956 77,172
Accumulated Deficit (167,132) (158,410)
Contingent Liabilities (Note 12) and Contractual Obligations (Note 13).
See accompanying Notes and Schedules to the Financial Statements.

Province of Ontario
Consolidated Statement of Change in Net Debt
For the year ended March 31
($ Millions)
2013 2012
Annual Deficit   (9,220)   (12,969)
Acquisition of Tangible Capital Assets (Note 10) (11,787)   (11,033)  
Amortization of Tangible Capital Assets (Note 10) 3,930   3,647  
Proceeds on Sale of Tangible Capital Assets 150   105  
(Gain)/Loss on Sale of Tangible Capital Assets (77)   47  
    (7,784)   (7,234)
Increase/(Decrease) in Fair Value of Ontario Nuclear Funds (Note 11) 639 (3)
Increase in Net Debt (16,365) (20,206)
Net Debt at Beginning of Year (235,582) (214,511)
IFRS Transitional Impact (758)
PSAB Transitional Impact (Note 2) (141) (107)
Restated Net Debt at Beginning of Year (235,723) (215,376)
Net Debt at End of Year (252,088) (235,582)
See accompanying Notes and Schedules to the Financial Statements.

Province of Ontario
Consolidated Statement of Change in Accumulated Deficit
For the year ended March 31
($ Millions)
2013 2012
Accumulated Deficit at Beginning of Year (158,410) (144,573)
IFRS Transitional Impact (758)
PSAB Transitional Impact (Note 2) (141) (107)
Restated Accumulated Deficit at Beginning of Year (158,551) (145,438)
Annual Deficit (9,220) (12,969)
Increase/(Decrease) in Fair Value of Ontario Nuclear Funds (Note 11) 639 (3)
Accumulated Deficit at End of Year (167,132) (158,410)
See accompanying Notes and Schedules to the Financial Statements.

Province of Ontario
Consolidated Statement of Cash Flow
For the year ended March 31
($ Millions)
2013 2012
Operating Transactions
Annual Deficit (9,220) (12,969)
Non-Cash Items:    
Amortization of Tangible Capital Assets (Note 10) 3,930 3,647
(Gain)/Loss on Sale of Tangible Capital Assets (77) 47
Income from Investment in Government Business Enterprises (Schedule 9) (4,469) (4,413)
PSAB Transitional Impact (141) (107)
Cash Items:    
Decrease/(Increase) in Accounts Receivable (Schedule 6) 838 (937)
Increase in Loans Receivable (Schedule 7) (729) (1,163)
Increase in Accounts Payable and Accrued Liabilities (Schedule 5) 426 1,029
(Decrease)/Increase in Liability for Pensions and Other Employee Future Benefits (Note 7) (440) 352
Increase/(Decrease) in Other Liabilities (Note 8) 955 (1,445)
Increase in Deferred Revenue and Capital Contributions (Note 6) 564 514
Remittances from Investment in Government Business Enterprises (Schedule 9) 3,820 3,962
(Increase)/Decrease in Other Assets (288) 40
Cash Provided by/(Applied to) Operating Transactions (4,831) (11,443)
Capital Transactions    
Acquisition of Tangible Capital Assets (Note 10) (11,787) (11,033)
Proceeds from Sale of Tangible Capital Assets 150 105
Cash Applied to Capital Transactions (11,637) (10,928)
Investing Transactions    
Increase in Investments (Note 9) (6,543) (181)
Cash Provided by/(Applied to) Investing Transactions (6,543) (181)
Financing Transactions    
Long-Term Debt Issued 37,301 35,276
Long-Term Debt Retired (16,522) (14,086)
Net Change in Short-Term Debt 3,008 (541)
Increase in Other Long-Term Financing 1,341 711
Cash Provided by/(Applied to) Financing Transactions 25,128 21,360
Net Increase/(Decrease) in Cash and Cash Equivalents 2,117 (1,192)
Cash and Cash Equivalents at Beginning of Year 16,380 17,572
Cash and Cash Equivalents at End of Year 18,497 16,380
See accompanying Notes and Schedules to the Financial Statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Accounting

The Consolidated Financial Statements are prepared by the Government of Ontario in compliance with legislation and in accordance with the accounting principles for governments recommended by the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants (CICA) and, where applicable, the recommendations of the Accounting Standards Board (AcSB) of the CICA.

Reporting Entity

These financial statements report the activities of the Consolidated Revenue Fund combined with those organizations that are controlled by the Province.

Government business enterprises, significant broader public sector (BPS) organizations (i.e., hospitals, school boards and colleges) and other government organizations controlled by the Province are included in these financial statements. Controlled organizations are consolidated if they meet one of the following criteria: i) their revenues, expenses, assets or liabilities are greater than $50 million, or ii) their outside sources of revenue, deficit or surplus are greater than $10 million. However, in accordance with PSAB, the Province also applies the “benefit versus cost constraint” in determining which organizations should be consolidated in the Province’s financial statements. A listing of consolidated government organizations is provided in Schedule 8.

The activities of organizations that do not meet the materiality thresholds for consolidation or that do not meet the PSAB “benefit versus cost constraint,” such as Children’s Aid Societies and Community Care Access Centres, are reflected in these financial statements through the accounts of the ministries responsible for them.

Trusts administered by the Province on behalf of other parties are excluded from the reporting entity but are disclosed in Note 14.

Principles of Consolidation

Government business enterprises are defined as those government organizations that i) are separate legal entities with the power to contract in their own name and that can sue and be sued; ii) have the financial and operating authority to carry on a business; iii) have as their principal activity and source of revenue the selling of goods and services to individuals and non-government organizations; and iv) are able to maintain their operations and meet their obligations from revenues generated outside the government reporting entity. The activities of government business enterprises are recorded in the financial statements using the modified equity method. Under this method, government business enterprises are reported in accordance with the accounting principles generally accepted for business enterprises. Their combined net assets are included in the financial statements as Investment in Government Business Enterprises on the Consolidated Statement of Financial Position and their net income is shown as a separate item, Income from Investment in Government Business Enterprises, on the Consolidated Statement of Operations.

The assets and liabilities of the BPS organizations are consolidated with those of the Province on a line-by-line basis on the Consolidated Statement of Financial Position. As such, the net debt of hospitals, school boards and colleges is included in the consolidated net debt of the Province. The total annual expenses of these BPS organizations, net of revenues they receive directly from the public, such as tuition fees, patient fees, donations and other recoveries, are included with the consolidated expenses of the Province. The expenses of hospitals are included with Health expenses, school boards with Education expenses, and colleges with Post-Secondary Education and Training expenses on the Consolidated Statement of Operations. Where necessary, adjustments are made to present the accounts of these organizations on a basis consistent with the accounting policies of the Province, and to eliminate significant inter-organizational accounts on the Consolidated Statement of Financial Position and to remove inter-organizational gains/losses from the Consolidated Statement of Operations.

Other government organizations are included on a line-by-line basis with the consolidated assets, liabilities, revenues and expenses of the Province. Where necessary, adjustments are also made to present the accounts of these organizations on a basis consistent with the accounting policies of the Province, and to eliminate significant inter-organizational accounts and transactions.

Measurement Uncertainty

Uncertainty in the determination of the amount at which an item is recognized or disclosed in the financial statements is known as measurement uncertainty. Such uncertainty exists when there could be a material variance between the recognized or disclosed amount and another reasonably possible amount.

Measurement uncertainty in these financial statements and notes thereto exists in the valuation of pensions and other employee future benefits obligations, the value of tangible capital assets, the estimation of personal income tax, corporations tax and harmonized sales tax revenue accruals, and the valuation of the Canada Health Transfer and Canada Social Transfer entitlements.

Uncertainty related to pensions and other employee future benefits accruals arises because actual results may differ significantly from the Province’s best estimate of expected results (for example, the difference between actual results and actuarial assumptions regarding return on investment of pension fund assets and health care cost trend rates for retiree benefits). Uncertainty in the value of tangible capital assets exists because of differences between estimated useful lives of the assets and their actual useful lives. Uncertainty related to the accrual for personal income tax, corporations tax and harmonized sales tax revenues arises due to possible subsequent revisions of estimates based on information available in the future related to past-year tax return processing. Uncertainty in the estimation of the Canada Health Transfer and Canada Social Transfer entitlements arises from variances between the estimated and actual Ontario shares of the Canada-wide personal income and corporations tax base and population.

Estimates are based on the best information available at the time of preparation of the financial statements and are reviewed annually to reflect new information as it becomes available. By their very nature, estimates are subject to measurement uncertainty. Therefore, actual results may differ from the government’s estimates.

Revenues

Revenues are recognized in the fiscal year that the events giving rise to the revenues occur and they are earned. Amounts received prior to the end of the year, which relate to revenues that will be earned in a subsequent fiscal year, are deferred and reported as liabilities.

Expenses

Expenses are recognized in the fiscal year that the events giving rise to the expenses occur and resources are consumed.

Transfer payments are recognized in the year that the transfer is authorized and all eligibility criteria have been met by the recipient. Any transfers paid are deemed to have met all eligibility criteria.

Interest on debt includes: i) interest on outstanding debt net of interest income on investments and loans; ii) amortization of foreign exchange gains or losses; iii) amortization of debt discounts, premiums and commissions; iv) amortization of deferred hedging gains and losses; and v) debt servicing costs and other costs.

Employee future benefits such as pensions, other retirement benefits and entitlements upon termination are recognized as expenses over the years in which the benefits are earned by employees. These expenses are the government’s share of the current year’s cost of benefits, interest on the net benefits’ liability or asset, amortization of actuarial gains or losses, cost of or gain on plan amendment, and other adjustments.

Other employee future benefits are recognized in the period when the event that obligates the government occurs or in the period when the benefits are earned and accumulated by employees.

The costs of buildings, transportation infrastructure, vehicles, aircraft, leased assets, machinery, equipment and information technology infrastructure and systems owned by the Province and its consolidated organizations are amortized and recognized as expenses over their estimated useful lives on a straight-line basis.

Liabilities

Liabilities are recorded to the extent that they represent present obligations of the government to outside parties as a result of events and transactions occurring prior to the end of the fiscal year. The settlement of liabilities will result in the sacrifice of economic benefits in the future.

Liabilities include obligations to make transfer payments to organizations and individuals, present obligations for environmental costs, probable losses on loan guarantees issued by the government, and contingencies when it is likely that a loss will be realized and the amount can be reasonably determined.

Liabilities also include obligations to government business enterprises.

Deferred revenue represents unspent externally restricted receipts from the federal government or other third parties. Amounts received prior to year-end that relate to funding for a subsequent fiscal year are reported as deferred revenue. Deferred revenues are recorded into revenue in the period in which the amounts received are used for the purposes specified or all external restrictions are satisfied. Deferred capital contributions represent the unamortized amount of contributions received from the federal government and other third parties to construct or acquire tangible capital assets. These contributions are recognized as deferred capital contributions and recorded into revenue over the useful life of the tangible capital assets based on the relevant stipulations of the contributions taken together with the actions and communications of the Province.

Alternative Financing and Procurement (AFP) refers to the Province using private-sector partners to procure and finance infrastructure assets. Assets procured via AFP are recognized as tangible capital assets and the related obligations are recognized as other long-term financing liabilities in these financial statements as the assets are constructed.

Debt

Debt consists of treasury bills, commercial paper, medium- and long-term notes, savings bonds, debentures and loans.

Debt denominated in foreign currencies that has been hedged is recorded at the Canadian dollar equivalent using the rates of exchange established by the terms of the hedge agreements. Other foreign currency denominated debt is translated to Canadian dollars at year-end rates of exchange and any exchange gains or losses are amortized over the remaining term to maturity.

Derivatives are financial contracts, the value of which is derived from underlying instruments. The Province uses derivatives for the purpose of managing risk associated with interest cost. The Province does not use derivatives for speculative purposes. Gains or losses arising from derivative transactions are deferred and amortized over the remaining life of the related debt issue.

Pensions and Other Employee Future Benefits

The liabilities for pensions and other employee future benefits are calculated on an actuarial basis using the government’s best estimates of future inflation rates, investment returns, employee salary levels and other underlying assumptions, and, where applicable, the government’s borrowing rate. When actual plan experience of pensions, other retirement benefits and termination pay differs from that expected, or when assumptions are revised, actuarial gains and losses arise. These gains and losses are amortized over the expected average remaining service life of plan members.

Liabilities for selected employee future benefits (such as pensions, other retirement benefits and termination pay) represent the government’s share of the actuarial present values of benefits attributed to services rendered by employees and former employees, less its share of the assets of the plans. In addition, the liability includes the Province’s share of the unamortized balance of actuarial gains or losses, and other adjustments primarily for differences between the fiscal year-end of the pension plans and that of the Province.

Assets

Assets are resources controlled by the government from which it has reasonable expectation of deriving future benefit. Assets are recognized in the year the events giving rise to the government’s control of the benefit occur.

Financial Assets

Financial assets are resources that can be used to discharge existing liabilities or finance future operations. They include cash and cash equivalents, investments, accounts receivable, loans receivable, advances, and investments in government business enterprises.

Investments include temporary investments, investments in the auto sector, asset-backed term notes and portfolio investments. Temporary investments are recorded at the lower of cost or market value. Investments in the auto sector, asset-backed term notes and portfolio investments are recorded at the lower of cost or their estimated net realizable value.

Accounts receivables are recorded at cost. A valuation allowance is recorded when collection of the receivable is considered doubtful.

Loans receivable include loans to government business enterprises and loans under the student loans program, advanced manufacturing investment program, and the automotive investment strategy fund. Loans receivable with significant concessionary terms are considered in part to be grants and are recorded on the date of issuance at face value discounted by the amount of the grant portion. The grant portion is recognized as an expense at the date of issuance of the loan or when the concession is provided. The amount of the loan discount is amortized to revenue over the term of the loan.

Investment in government business enterprises represents the net assets of government business enterprises recorded on the modified equity basis as described under Principles of Consolidation.

Tangible Capital Assets

Tangible capital assets are recorded at historical cost less accumulated amortization. Historical cost includes the costs directly related to the acquisition, design, construction, development, improvement or betterment of tangible capital assets. Cost includes overheads directly attributable to construction and development, as well as interest related to financing during construction. Estimated historical cost was used to record existing tangible capital assets if actual cost was unknown when the Province first implemented tangible capital assets accounting. Tangible capital assets, except land, are amortized over the estimated useful lives of the assets on a straight-line basis.

Maintenance and repair costs are recognized as an expense when incurred. Betterments or improvements that significantly increase or prolong the service life or capacity of a tangible capital asset are capitalized. External contributions for acquisition of tangible capital assets are recorded as deferred capital contributions and amortized to revenue consistent with the amortization to expense of the related tangible capital assets, reflecting the intent of the external contributors that the grants be used to construct or acquire assets that will provide public services over the useful lives of the underlying assets.

Future Changes in Accounting Standards

PSAB 3450 – Financial Instruments and PSAB 2601 – Foreign Currency Translation

PSAB has introduced new sections on Financial Instruments and Foreign Currency Translation that categorize items to be accounted for at either fair value, cost or amortized cost. Fair value measurement applies to derivatives and portfolio investments in equity instruments that are quoted in an active market. Other financial assets and financial liabilities will generally be measured at cost or amortized cost. Until an item is derecognized (for example, through disposition), any gains and losses arising due to changes in fair value (remeasurements) will be reported in the Statement of Remeasurement Gains and Losses. Under PSAB, senior governments are required to adopt these standards in fiscal year 2015–16 or earlier. The Province is currently assessing the impact of these standards on its financial statements and will provide input to PSAB’s review of the standard planned for completion by December 2013.

PSAB 3260 – Liabilities for Contaminated Sites

During 2009–10, PSAB published a new standard on Liabilities for Contaminated Sites that provides additional guidance on how to apply the standard for liabilities (PSAB 3200) when it relates to environmental contamination of land. The new standard will apply to fiscal years beginning on or after April 1, 2014. The Ministry of Finance is currently working with relevant ministries to assess the effects of this new standard. The impact of any changes on the Province’s Consolidated Financial Statements is not reasonably determinable at this time.

Future Decision on Rate Regulated Entities

The financial results of Ontario Power Generation Inc. and Hydro One Inc. are prepared on a U.S. GAAP basis, but are consolidated in the Province’s financial statements on a Canadian GAAP basis, both bases reflecting rate regulated accounting. In December 2009, PSAB approved a standard requiring that government business enterprises adopt International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. As a result of concerns raised by the rate regulated sector, the IFRS implementation date for entities with qualifying rate regulated activities was extended by the Accounting Standards Board to January 1, 2015, while standard setters assess the requirements for rate regulated accounting.

PSAB/AcSB Statement of Principles on Not-for-Profit Accounting

In December 2010, not-for-profit accounting standards were incorporated into PSAB standards for use by government not-for-profit organizations for fiscal years beginning on or after January 1, 2012. In April 2013, AcSB and the Public Sector Accounting Board issued a joint Statement of Principles on Improvements to the Not-for-Profit Standards that proposes to change the way not-for-profit organizations recognize revenue, report controlled organizations, and record other activities. The Province’s Consolidated Financial Statements may be affected by any changes in the standards to the extent that government organizations are impacted by any final changes. The Ministry of Finance will continue to consult with consolidated entities and their respective ministries to identify concerns and comments to share with standard setters.

Concepts Underlying Financial Performance

PSAB is currently in the process of revisiting its conceptual framework. The conceptual framework establishes principles for the development of standards used for financial reporting by governments. The conceptual framework is important to ensure public sector standards appropriately reflect the economic substance of government transactions and to support transparency and accountability in public sector reporting. PSAB expects to complete its review by 2016.

2. Accounting and Financial Statement Presentation Changes

During the fiscal period, many consolidated government organizations reporting on a not-for-profit basis were required by PSAB to implement changes to the standards they follow. These changes more effectively aligned their standards with those followed by governments. The change, which primarily impacts the accounting for pension and other employee future benefits by consolidated government organizations, has resulted in an adjustment to the opening net debt, accumulated deficit and other liabilities of $141 million.

3. Debt

The Province borrows in both domestic and international markets. Debt of $281.1 billion, as at March 31, 2013 (2012, $257.3 billion), is composed mainly of bonds and debentures issued in both the short- and long-term public capital markets and non-public debt held by certain federal and provincial public sector pension funds. Debt comprises Debt Issued for Provincial Purposes of $253.7 billion (2012, $230.3 billion) and Ontario Electricity Financial Corporation (OEFC) Debt of $27.4 billion (2012, $27.0 billion). The following table presents the maturity schedule of the Province’s outstanding debt, by currency of repayment, expressed in Canadian dollars, and reflects the effects of related derivative contracts.

Debt
As at March 31
($ Millions) 2013 2012
Currency Canadian
Dollar
U.S.
Dollar
Japanese
Yen
Euro Other
Currencies1
Total Total
Maturing in:
2013             $33,705
2014 $28,640 12,593 163 2,345 1,621 $45,362 24,993
2015 11,787 9,022 54 752 21,615 21,671
2016 8,449 9,811 1,033 1,798 21,091 16,723
2017 11,227 7,107 496 18,830 18,857
2018 11,110 4,729 385 16,224
1–5 years 71,213 43,262 1,250 2,730 4,667 123,122 115,949
6–10 years 47,480 7,527 474 6,277 2,048 63,806 52,904
11–15 years 18,796 18,796 16,963
16–20 years 14,227 14,227 14,200
21–25 years 21,913 21,913 17,091
26–502 years 39,201 39,201 40,171
Total3, 4 $212,830 50,789 1,724 9,007 6,715 $281,065 $257,278
Debt Issued for Provincial
Purposes5
188,721 48,835 1,724 8,828 5,621 253,729 230,314
OEFC Debt 24,109 1,954 179 1,094 27,336 26,964
Total $212,830 50,789 1,724 9,007 6,715 $281,065 $257,278
Effective Interest Rates (Weighted Average)
2013 4.42% 2.75% 1.40% 4.29% 3.80% 4.08%
2012 4.74% 2.99% 1.27% 4.24% 3.79% 4.35%
1 Other currencies comprise Australian dollar, New Zealand dollar, Norwegian krone, UK Pound sterling, Swiss franc, Hong Kong dollar and South African rand.
2 The longest term to maturity is to June 2, 2062.
3 Total foreign currency denominated debt as at March 31, 2013, was $68.2 billion (2012, $65.3 billion). Of that, $66.3 billion or 97.1 per cent (2012, $63.0 billion or 96.4 per cent) was fully hedged to Canadian dollars. The remaining 2.9 per cent (2012, 3.6 per cent) of foreign debt was unhedged as follows: $1.5 billion (2012, $1.8 billion) Japanese yen denominated debt and $486 million (2012, $500 million) Swiss franc denominated debt.
4 Total debt includes issues totalling $0.75 billion (2012, $0.75 billion), which have embedded options exercisable by either the Province or the bondholder under specific conditions.
5 Debt denominated in Canadian dollars as at March 31, 2013 includes $4.9 billion (2012, $3.4 billion) long-term debt and $1.4 billion (2012, $0.05 billion) short-term debt purchased and held by the Province.

Debt
As at March 31
($ Millions) 2013 2012
Debt Payable to/of:    
Public Investors $267,448 $242,295
Canada Pension Plan Investment Fund 10,233 10,233
Ontario Immigrant Investor Corporation 1,108 1,185
School Board Trust Debt 739 759
Public Service Pension Plan Fund 656 1,048
Canada Mortgage and Housing Corporation 569 635
Ontario Public Service Employees Union Pension Fund 312 498
Ontario Teachers' Pension Plan Fund 625
Total $281,065 $257,278

Fair value of debt outstanding approximates amounts at which debt instruments could be exchanged in a current transaction between willing parties. In valuing the Province’s debt, fair value is estimated using discounted cash flows and other valuation techniques and is compared to public market quotations where available. These estimates are affected by the assumptions made concerning discount rates and the amount and timing of future cash flows.

The estimated fair value of debt as at March 31, 2013 was $318.4 billion (2012, $292.3 billion). This is higher than the book value of $281.1 billion (2012, $257.3 billion) because current interest rates are generally lower than the interest rates at which the debt was issued. The fair value of debt does not reflect the effect of related derivative contracts.

School Board Trust Debt

A School Board Trust was created in June 2003 to permanently refinance debt incurred by 55 school boards. The Trust issued 30-year sinking fund debentures amounting to $891 million, and provided $882 million of the proceeds to the 55 school boards in exchange for the irrevocable right to receive future transfer payments from the Province related to this debt. An annual transfer payment is made by the Ministry of Education to the Trust’s sinking fund under the School Board Operating Grant program to retire the debt over 30 years.

4. Risk Management and Derivative Financial Instruments

The Province employs various risk management strategies and operates within strict risk exposure limits to ensure exposure to risk is managed in a prudent and cost-effective manner. A variety of strategies are used, including the use of derivative financial instruments (“derivatives”).

Derivatives are financial contracts, the value of which is derived from underlying instruments. The Province uses derivatives to hedge and to minimize interest costs. Hedges are created primarily through swaps, which are legal contracts under which the Province agrees with another party to exchange cash flows based on one or more notional amounts using stipulated reference interest rates for a specified period. Swaps allow the Province to offset its existing obligations and thereby effectively convert them into obligations with more desirable characteristics. Other derivative instruments used by the Province include forward foreign exchange contracts, forward rate agreements, futures and options.

Foreign exchange or currency risk is the risk that foreign currency debt principal and interest payments and foreign currency transactions will vary in Canadian dollar terms due to fluctuations in foreign exchange rates. To manage currency risk, the Province uses derivative contracts including forward foreign exchange contracts, futures, options and swaps to convert foreign currency cash flows into Canadian dollar cash flows. Most of the derivative contracts hedge the underlying debt by matching all the critical terms to achieve effectiveness. In the instances where the term of forward foreign exchange contracts used for hedging is shorter than the term of the underlying debt, the effectiveness is maintained by continuously rolling the forward foreign exchange contract over the remaining term of the underlying debt, or until replaced with a long-term derivative contract.

The current market risk policy allows the amount of unhedged foreign currency debt principal net of foreign currency holdings to reach a maximum of 5 per cent of Total Debt Issued for Provincial Purposes and OEFC. At March 31, 2013, the respective unhedged levels were 0.8 and nil per cent (2012, 1.0 and nil per cent). A one Japanese yen appreciation of the Japanese currency, relative to the Canadian dollar, would result in unhedged debt denominated in Japanese yen increasing by $16.2 million (2012, $22.2 million) and a corresponding increase in interest on debt of $6.4 million (2012, $7.0 million). A one Swiss rappen appreciation of the Swiss currency, relative to the Canadian dollar, would result in unhedged debt denominated in Swiss franc increasing by $5.1 million (2012, $5.6 million) and a corresponding increase in interest on debt of $0.7 million (2012, $0.9 million). Total foreign exchange gains/losses recognized in the Statement of Operations for 2012–13 were losses of $5.0 million (2011–12, losses of $53.2 million).

Interest on debt expense may also vary as a result of changes in interest rates. In respect of Debt Issued for Provincial Purposes and OEFC debt, the risk is measured as interest rate resetting risk, which is the net of floating rate exposure, liquid reserves and fixed rate debt maturing within the next 12-month period as a percentage of Debt Issued for Provincial Purposes and OEFC debt respectively. Depending on market conditions, the Province creates or reduces its exposure to interest rate changes by issuing or retiring short-term debt, or by entering into or closing out derivative positions.

The current market risk policy limits net interest rate resetting risk for Debt Issued for Provincial Purposes and OEFC debt to a maximum of 35 per cent. At March 31, 2013, the net interest rate resetting risk for Debt Issued for Provincial Purposes and OEFC debt was 8.9 per cent and 28.0 per cent respectively (2012, 8.3 per cent and 13.2 per cent). Based on floating rate interest-bearing financial instruments on hand at March 31, 2013, plus planned refinancing of maturing debt in the coming year, a one per cent (100 basis point) increase in interest rates would result in an increase in interest on debt of $308 million (2012, $232 million).

Liquidity risk is the risk that the Province will not be able to meet its current short-term financial obligations. To reduce liquidity risk, the Province maintains liquid reserves, that is, cash and temporary investments (Note 9), adjusted for collateral (Note 12), at levels that will meet future cash requirements and give the Province flexibility in the timing of issuing debt. Pledged assets are considered encumbered for liquidity purposes while collateral held that can be sold or repledged is a source of liquidity. In addition, the Province has short-term note programs as alternative sources of liquidity.

The table below presents a maturity schedule of the Province’s derivatives, by type, outstanding as at March 31, 2013, based on the notional amounts of the contracts. Notional amounts represent the volume of outstanding derivative contracts and are not indicative of credit risk, market risk or actual cash flows.

Derivative Portfolio Notional Value
As at March 31
($ Millions) 2013 2012
Maturity in
Fiscal Year
2014 2015 2016 2017 2018 6-10
Years
Over 10
Years
Total Total
Swaps:  
Interest Rate1 $15,398 $23,687 $19,272 $17,812 $10,730 $22,752 $7,385 $117,036 $112,799
Cross Currency 11,702 9,650 8,649 8,349 3,676 19,848 61,874 65,780
Forward Foreign Exchange Contracts 19,303 19,303 11,877
Swaption2 100 150 500 750 750
Total $46,503 $33,487 $27,921 $26,661 $14,406 $42,600 $7,385 $198,963 $191,206
1 Includes $3.7 billion (2012, $3.2 billion) of interest rate swaps related to loans receivable held by a consolidated entity.
2 See glossary for definition.

The use of derivatives introduces credit risk, which is the risk of a counterparty defaulting on contractual derivative obligations in which the Province has an unrealized gain. The table below presents the credit risk associated with the derivative financial instrument portfolio, measured through the replacement value of derivative contracts, at March 31, 2013.

Credit Risk Exposure
As at March 31
($ Millions) 2013 2012
Gross Credit Risk Exposure $4,774 $4,866
Less: Netting (3,977) (3,962)
Net Credit Risk Exposure 797 904
Less: Collateral Received (Note 12) (456) (616)
Net Credit Risk Exposure (Net of Collateral) $341 $288

The Province manages its credit risk exposure from derivatives by, among other things, dealing only with high credit quality counterparties and regularly monitoring compliance to credit limits. In addition, the Province enters into contractual agreements (“master agreements”) that provide for termination netting and, if applicable, payment netting with most of its counterparties. Gross Credit Risk Exposure represents the loss that the Province would incur if every counterparty to which the Province had credit risk exposure were to default at the same time, and the contracted netting provisions were not exercised or could not be enforced. Net Credit Risk Exposure is the loss including the mitigating impact of these netting provisions. Net Credit Risk Exposure (Net of Collateral) is the potential loss to the Province further mitigated by the collateral received from counterparties.

5. Other Long-Term Financing

Other long-term financing comprises the total debt of the Broader Public Sector (BPS) and obligations under Alternative Financing and Procurement (AFP) arrangements.

Other Long-Term Financing of $11.5 billion, as at March 31, 2013 (2012, $10.2 billion) includes BPS Debt of $5.7 billion (2012, $5.8 billion), BPS AFP obligations of $4.0 billion (2012, $2.8 billion) and direct provincial AFP obligations of $1.8 billion (2012, $1.6 billion).

6. Deferred Revenue and Capital Contributions

Deferred Revenue and Capital Contributions
As at March 31
($ Millions) 2013 2012
Deferred Revenue:    
Teranet $1,022 $1,054
Vehicle and Driver Licences 687 649
Other 1,790 1,653
Total Deferred Revenue 3,499 3,356
Deferred Capital Contributions1 5,618 5,197
Total $9,117 $8,553
1 Most federal transfers have been reclassified to deferred capital contributions.

In 2010–11, the Province renewed its long-standing business partnership with Teranet Inc. by extending Teranet’s exclusive licences to provide electronic land registration and writs services in Ontario for an additional 50 years. The Province received approximately a $1 billion upfront payment for the transaction, which is amortized into revenue over the life of the contract.

The Province provides a two-year vehicle licence plate renewal option and multi-year driver licence renewals (two years for seniors and five years for all others). Amounts received under these multi-year renewals are recognized as revenue over the periods covered by the licences.

Deferred capital contributions represent the unamortized portion of tangible capital assets or liabilities to construct or acquire tangible capital assets from specific-purpose funding received from the Government of Canada, municipalities or third parties. Deferred capital contributions are recorded in revenue over the estimated useful life of the underlying tangible capital asset once constructed or acquired by the Province.

7. Pensions and Other Employee Future Benefits

Pensions and Other Employee Future Benefits Liability (Asset)
As at March 31
2013 2013 2013 2012
($ Millions)
  Pensions Other Employee
Future Benefits
Total Total
Obligation for benefits $103,500 $12,607 $116,107 $113,741
Less: plan fund assets (108,400) (515) (108,915) (103,740)
Unamortized actuarial gains (3,552) (1,385) (4,937) (7,242)
Adjustments1 2,100 7 2,107 2,043
Total ($6,352) $10,714 $4,362 $4,802
1 Adjustments for pensions consist of:
i) differences for amounts reported by the pension plans at December 31, instead of the Province's year-end of March 31
ii) unamortized difference between employer and employee contributions for jointly sponsored pension plans
iii) unamortized employee contribution reductions for solely sponsored plans
iv) amounts payable by the Province that are reflected as contributions in the pension plan assets.

Pensions and Other Employee Future Benefits Expense
For the year ended March 31
($ Millions) 2013 2013 2013 2012
  Pensions Other Employee
Future Benefits
Total Total
Cost of benefits $2,166 $529 $2,695 $2,528
Amortization of actuarial losses 255 205 460 162
Employee contributions (304) (304) (307)
Interest (income) expense (275) 313 38 (121)
Adjustments1 (102) (1) (103) (88)
Total2,3 $1,740 $1,046 $2,786 $2,174
1 Adjustments for Pensions consist of amortization of:
i) the difference between employer and employee contributions for jointly sponsored pension plans
ii) employee contribution reductions for solely sponsored plans.
2 Total Pensions and Other Employee Future Benefits Expense is reported in Schedule 3. The Teachers' Pension expense of $895 million (2011–12, $523 million) is included in the Education expense in the Consolidated Statement of Operations and is disclosed separately in Schedule 4. The Public Service and OPSEU Pension expense of $845 million (2011–12, $706 million) and Other Employee Future Benefits — Retirement Benefits expense of $674 million (2011–12, $594 million) are included in the General Government and Other expense in the Consolidated Statement of Operations. The combined total of Public Service and OPSEU Pension and Other Employee Future Benefits — Retirement Benefits expense of $1,519 million (2011–12, $1,300 million) is disclosed separately in Schedule 4. The remainder of Other Employee Future Benefits expense is included in the relevant ministries' expenses in Schedule 4.
3 The Pensions and Other Employee Future Benefits Expenses for the hospitals, school boards and colleges sectors (except for the Ontario Teachers' Pension Plan) are not included in the table above. These expenses are included in the Salaries, Wages and Benefits of BPS organizations (Schedule 10) and in the expenses of the BPS ministries (Education, Health and Long-Term Care, and Training, Colleges and Universities) in Schedule 4.

Pensions

The Province sponsors several pension plans. It is the sole sponsor of the Public Service Pension Plan (PSPP) and joint sponsor of the Ontario Public Service Employees Union (OPSEU) Pension Plan and the Ontario Teachers’ Pension Plan (OTPP).

These three plans are contributory defined benefit plans that provide Ontario government employees and elementary and secondary school teachers and administrators with a guaranteed amount of retirement income. Benefits are based primarily on the best five-year average salary of members and their length of service, and are indexed to changes in the Consumer Price Index to provide protection against inflation. Plan members normally contribute seven to eleven per cent of their salaries to these plans. The Province matches these contributions.

The obligation for benefits and plan fund assets of these plans is based on actuarial accounting valuations that are performed annually. The government’s best estimate of the long-term annual inflation rate used in the pension and other employee future benefits calculations disclosed in these financial statements is 2.5 per cent; the salary escalation rate is 3.5 per cent; and the discount rate and expected rate of return on pension plan assets are 6.75 per cent for OTPP, 6.5 per cent for PSPP and 6.75 per cent for OPSEU Pension Plan. Salary assumptions incorporate recent bargaining agreements reached including the Province of Ontario’s two-year legislated teachers’ salary freeze for 2012 and 2013. Actuarial gains or losses are amortized over the expected average remaining service life of the employees of 10.6 to 14.6 years.

Funding of these plans is based on statutory actuarial funding valuations undertaken at least once every three years. The Province contributed $1,395 million to OTPP in 2012–13 (2011–12, $1,346 million), $366 million (including a $127 million special payment) to PSPP (2011–12, $359 million including a $127 million special payment), and $231 million to OPSEU Pension Plan (2011–12, $212 million). During calendar year 2012, OTPP paid benefits, including transfers to other plans, of $4.9 billion (2011, $4.7 billion), PSPP paid $1,023 million (2011, $937 million) and OPSEU Pension Plan paid $745 million (2011, $664 million). Under agreements between the Province and OPSEU, and between the Province and the Ontario Teachers’ Federation (OTF), gains and losses arising from statutory actuarial funding valuations are shared by the co-sponsors.

The Province is also responsible for sponsoring the Public Service Supplementary Benefits Plan and the Ontario Teachers’ Retirement Compensation Arrangement. Expenses and liabilities of these plans are included in the Pensions Expense and Pensions Liability reported in the above tables.

Pension benefits for employees in the hospital and colleges sectors are provided by the Healthcare of Ontario Pension Plan (HOOPP) and the Colleges of Applied Arts and Technology Pension Plan (CAATPP).

HOOPP is a multi-employer pension plan covering employees of Ontario’s health care community. CAATPP is a multi-employer pension plan covering employees of the Colleges of Applied Arts and Technology in Ontario, the Board of Trustees, the Ontario College Application Services and the Ontario College Library Services. Both of these plans are accounted for as joint contributory defined benefit plans that provide eligible members with a retirement income based on a formula that takes into account a member’s earnings history and length of service in the plan. The plans are financed by contributions from participating members and employers, and by investment earnings. As organizations covered under these plans are in the government’s reporting entity, the Province includes 56 per cent of BPS organizations’ portion1 of the net obligation of HOOPP and includes 50 per cent of the net obligation of CAATPP.

The obligation for benefits and plan fund assets of these plans is based on actuarial accounting valuations that are performed annually. The government’s best estimate of the long-term annual inflation rate used in the pension calculations for BPS organizations disclosed in these financial statements is 2.5 per cent; the salary escalation rate is 4.75 per cent for HOOPP and 3.5 per cent for CAATPP; and the discount rate and expected rate of return on pension plan assets are 6.25 per cent for HOOPP and 6.5 per cent for CAATPP. Actuarial gains or losses are amortized over the expected average remaining service life of the employees of 12.3 years for HOOPP and 10.6 years for CAATPP.

Expenses for HOOPP of $1,036 million (2011–12, $995 million) and CAATPP of $213 million (2011–12, $179 million) are included in the Salaries, Wages and Benefits expenses of the hospital and colleges sectors respectively (Schedule 10) and in the expenses of the related ministries (Schedule 4). The related liabilities are included in the Pensions and Other Employee Future Benefits liability on the Consolidated Statement of Financial Position.

Funding of these plans is based on statutory actuarial funding valuations undertaken at least once every three years. The employers contributed $847 million to HOOPP in 2012–13 (2011–12, $827 million) and $169 million to CAATPP (2011–12, $153 million). During calendar year 2012, HOOPP paid benefits of $1,486 million (2011, $1,335 million), and CAATPP paid $332 million (2011, $303 million).

1 BPS organizations are represented in HOOPP at 86 per cent in 2012–13 (2011–12, 87 per cent).

Other Employee Future Benefits

Other Employee Future Benefits are non-pension retirement benefits, post-employment benefits, compensated absences and termination benefits.

Non-Pension Retirement Benefits

The Province provides dental, basic life insurance, supplementary health and hospital benefits to retired employees through a self-insured, unfunded defined benefit plan. The liability for non-pension retirement benefits of $7.8 billion as at March 31, 2013 (2012, $7.5 billion) is included in the Other Employee Future Benefits Liability. The expense for 2012–13 of $674 million (2011–12, $594 million) (excluding the expense for BPS organizations) is included in the Other Employee Future Benefits Expense. The BPS expense of $349 million in 2012–13 (2011–12, $757 million) includes a plan curtailment for school boards that resulted in a one-time gain of $464 million, due to changes to employee retirement gratuity plan benefits associated with vested sick leave and retiree health, life and dental plans. The BPS expense is included in the Salaries, Wages and Benefits expense of BPS organizations (Schedule 10) and in the expenses of the related ministries (Schedule 4).

The discount rate used in the non-pension retirement benefits calculation for 2012–13 is 4.20 per cent (2011–12, 4.85 per cent). The discount rate used by BPS organizations in the non-pension retirement benefits calculation for 2012–13 ranges from 2.75 per cent to 4.00 per cent (2011–12, 4.00 per cent to 5.00 per cent).

Post-Employment Benefits, Compensated Absences and Termination Benefits

The Province provides, on a self-insured basis, workers’ compensation benefits, long-term disability benefits and regular benefits to employees who are on long-term disability. For employees who have completed five years of service, the Province provides termination pay equal to one week’s salary for each year of service up to a maximum of 50 per cent of their annual salary. Employees who have completed one year of service but less than five years are also entitled to termination pay in the event of death, retirement or release from employment. The total post-employment benefits liability of $2.9 billion as at March 31, 2013 (2012, $3.6 billion) is included in the Other Employee Future Benefits Liability. The total post-employment benefits expense for 2012–13 of $372 million (2011–12, $351 million) (excluding the expense for BPS organizations) is included in the Other Employee Future Benefits Expense. The BPS post-employment benefits recovery of $17 million in 2012–13 (2011–12, BPS post-employment benefit expense of $746 million) includes a plan curtailment for school boards that resulted in a one-time gain of $981 million, due to changes to post-employment and compensated absence benefits associated with non-vested, accumulated sick leave. The BPS expense is included in the Salaries, Wages and Benefits expense of BPS organizations (Schedule 10) and in the expenses of the related ministries (Schedule 4).

The discount rate used in the post-employment benefits, compensated absences and termination benefits calculations for 2012–13 is 3.70 per cent (2011–12, 4.30 per cent). The discount rate used by BPS organizations in the post-employment benefits for 2012–13 ranges from 2.75 per cent to 4.00 per cent (2011–12, 3.00 per cent to 5.00 per cent).

8. Other Liabilities

Other Liabilities
As at March 31
($ Millions) 2013 2012
Power Purchase Contracts $939 $1,202
Other Funds and Liabilities 2,810 1,592
Total $3,749 $2,794

Power Purchase Contracts

Power supply contracts include both power purchase contracts and power supply support agreements. Power purchase contracts and related loan agreements were entered into by Ontario Hydro with non-utility generators (NUGs) located in Ontario. As the legal continuation of Ontario Hydro, Ontario Electricity Financial Corporation (OEFC), a consolidated government organization, is the counterparty to these contracts. The contracts, expiring on various dates to 2048, provided for the purchase of power at prices that were expected to be in excess of the market price. Accordingly, a liability was recorded at $4.3 billion on a discounted cash-flow basis when Ontario Hydro was continued as OEFC on April 1, 1999.

Under legislated reforms to the electricity market, OEFC began receiving actual contract prices for power from ratepayers effective January 1, 2005, and no longer incurs losses on these contracts. At that time, it was estimated that the bulk of the liability would be eliminated over 12 years as existing electricity contracts expired. The decrease in the liability for power purchase contracts for 2012–13 was $263 million (2011–12, $317 million). This results in a liability of $0.9 billion as at March 31, 2013 (2012, $1.2 billion).

In addition, effective January 1, 2009, OEFC entered into a support contract with Ontario Power Generation Inc. (OPG) whereby OPG agreed to maintain the reliability and availability of Lambton and Nanticoke coal-fired stations following implementation of a greenhouse gas emissions-reduction strategy. Under the contract, OEFC agreed to ensure OPG would recover the actual costs of operating the stations after implementing this strategy. Any costs to OEFC under this agreement, which expires December 31, 2014, are fully recovered from electricity ratepayers. In March 2013, the contract was amended to support the decision to advance the closure of these plants by one year to the end of 2013. Under the amended contract, OPG is allowed to recover actual costs that cannot reasonably be avoided or mitigated, during the period from the early shutdown date until December 31, 2014, consistent with the original end date of the contract.

During the year ended March 31, 2013, OEFC’s cost under power supply contracts totalled $1,323 million (2011–12, $1,375 million), including purchases of power from NUGs of $1,026 million (2011–12, $1,020 million) and OPG support contract costs of $297 million (2011–12, $355 million). These costs were recovered from electricity ratepayers (as shown in Schedules 1, 3 and 4).

Other Funds and Liabilities

Other funds and liabilities include pension and benefit funds related to the Provincial Judges’ Pension Fund, the Public Service and the Deputy Ministers’ Supplementary Benefit Accounts, externally restricted funds and other long-term liabilities.

9. Investments

Investments
As at March 31
($ Millions) 2013 2012
Temporary Investments $15,534 $10,247
Add: Assets Purchased under Resale Agreements 2,587 1,818
Less: Assets Sold under Repurchase Agreements (273) (823)
Total Temporary Investments $17,848 $11,242
Auto Sector Investments at Net Realizable Value 737 737
Other Investments 1,833 1,881
Asset-Backed Term Notes 423 438
Total Investments $20,841 $14,298

Temporary Investments

Temporary investments primarily consist of investments in government bonds. The fair value of temporary investments, including assets purchased and sold under resale and repurchase agreements at March 31, 2013, is $17.8 billion (2012, $11.2 billion). Fair value is determined using quoted market prices.

A resale agreement is an agreement between two parties where the Province purchases and subsequently resells a security at a specified price on a specified date. A repurchase agreement is an agreement between two parties where the Province sells and subsequently repurchases a security at a specified price on a specified date.

Investments in the Auto Sector

In 2009, the Province committed to provide one-third of the total Canadian financial assistance, to a maximum of $4.8 billion, as part of a co-ordinated response with the Canadian and U.S. federal governments to support the restructuring of the North American automotive industry. The Province’s one-third interest was initiated through a Loan Participation Agreement with Export Development Canada (EDC), a federal Crown corporation. Interest-bearing loans of $13.7 billion were issued by the Canadian government through EDC, of which the Province’s interest in the loans issued was $4.6 billion.

During 2010, EDC agreed to transfer $9.1 billion of the $13.7 billion of outstanding loans to the Canada Development Investment Corporation (CDIC), another federal Crown corporation, through a transfer agreement for nominal consideration. These loans were exchanged by CDIC for common and preferred shares of the borrower. The rights of the Province to a one-third interest in the proceeds of these shares are governed under Memoranda of Understanding between the Canadian government and the Province.

The Province has accounted for its participative interests in the auto sector as investments in these financial statements. The balance as at March 31, 2013 of $737 million (2012, $737 million) includes $603 million (2012, $603 million) of marketable securities with a quoted market value of $1.3 billion (2012, $1.2 billion).

Asset-Backed Term Notes

On January 21, 2009, the restructuring of the frozen Canadian third-party asset-backed commercial paper (ABCP) was completed. Upon completion, the Province received long-term notes issued by the Master Asset Vehicle (MAV). As at March 31, 2013, the Province held $545 million (2012, $576 million) at par with an estimated net realizable value of $423 million (2012, $438 million) in these restructured long-term notes that were issued by the MAV.

Other Investments

Other investments represent the investments of BPS organizations. These investments primarily consist of fixed income securities. The fair value of these investments approximates book value.

10. Tangible Capital Assets

Tangible Capital Assets
As at March 31

($ Millions)
  Land Buildings Transportation
Infrastructure
Machinery and
Equipment
Information
Technology
Other Total
Cost
Opening Balance 11,400 59,960 25,588 10,550 3,291 4,426 115,215
Additions and Valuation Adjustments1 632 5,754 3,142 839 432 988 11,787
Disposals (17) (194) (2,933) (240) (139) (50) (3,573)
Closing Balance 12,015 65,520 25,797 11,149 3,584 5,364 123,429
Accumulated Amortization
Opening Balance 16,538 10,185 7,723 1,995 1,602 38,043
Additions 1,718 909 709 271 323 3,930
Disposals (148) (2,937) (235) (131) (49) (3,500)
Closing Balance 18,108 8,157 8,197 2,135 1,876 38,473
Net Book Value
2013 12,015 47,412 17,640 2,952 1,449 3,488 84,956
2012 11,400 43,422 15,403 2,827 1,296 2,824 77,172
1 Includes write-downs and other adjustments.

Land includes land acquired for transportation infrastructure, parks, buildings and other program use, and land improvements that have an indefinite life and are not being amortized. Land excludes Crown lands acquired by right.

Buildings includes administrative and service structures, and construction in progress.

Transportation Infrastructure includes provincial highways, railways, bridges and related structures and facilities, but excludes land and buildings.

Machinery and Equipment consists mainly of hospital equipment.

Information Technology consists of computer hardware and software.

Other includes leased assets, vehicles, aircraft and other miscellaneous tangible capital assets owned by the government and its consolidated organizations.

Works of art and historical treasures are excluded from tangible capital assets.

All tangible capital assets, except assets under construction, land and land improvements with an indefinite life, are being amortized on a straight-line basis over their estimated useful lives. Amortization expense for the fiscal year 2012–13 totalled $3.9 billion, of which $1.5 billion (2011–12, $1.3 billion) relates to the Province and $2.4 billion (2011–12, $2.3 billion) relates to the BPS. The latter expense is included under the BPS expense reported on Schedule 10. The useful lives of the Province’s tangible capital assets have been estimated as:

Buildings 20 to 40 years
Transportation Infrastructure 10 to 60 years
Machinery and Equipment 3 to 30 years
Information Technology 3 to 10 years
Other 3 to 25 years

11. Changes in the Fair Value of Ontario Nuclear Funds

The Ontario Nuclear Funds Agreement (ONFA) Funds were established by Ontario Power Generation Inc. (OPG) and the Province to ensure that sufficient funds will be available to pay for the costs of nuclear station decommissioning and nuclear used fuel waste management. Effective January 1, 2007, OPG adopted the new accounting standards issued by the Canadian Institute of Chartered Accountants on the recognition and measurement of financial instruments. As a result, the ONFA Funds are carried at fair value in OPG’s financial statements.

Since April 1, 2007, the fair value of ONFA Funds has been reflected in the Province’s Consolidated Financial Statements. Unrealized gains and losses of ONFA Funds are included in Investment in Government Business Enterprises and recorded as an Increase (Decrease) in Fair Value of Ontario Nuclear Funds in the Consolidated Statement of Change in Net Debt and the Consolidated Statement of Change in Accumulated Deficit. Realized gains and losses of ONFA Funds are included in Income from Investment in Government Business Enterprises. Inter-organizational balances related to ONFA Funds are eliminated.

ONFA Funds incurred unrealized gains in 2012–13 of $639 million (unrealized losses in 2011–12, $3 million) that resulted in an increase in Investment in Government Business Enterprises, and a corresponding decrease in Net Debt and Accumulated Deficit.

12. Contingent Liabilities

Obligations Guaranteed by the Province

The authorized limit for loans guaranteed by the Province as at March 31, 2013, was $1.5 billion (2012, $1.1 billion). The outstanding loans guaranteed and other contingencies amounted to $1.2 billion as at March 31, 2013 (2012, $931 million). A provision of $8 million (2012, $12 million) based on an estimate of the likely loss arising from guarantees under the Student Support Programs has been reflected in these financial statements.

Ontario Nuclear Funds Agreement (ONFA)

Under ONFA, the Province is liable to make payments should the cost estimate for nuclear used fuel waste management rise above specified thresholds, for a fixed volume of used fuel. The likelihood and amount by which the cost estimate could rise above these thresholds cannot be determined at this time. The cost estimate will be updated periodically to reflect new developments in the management of nuclear used fuel waste.

As well, under ONFA, the Province guarantees a return of 3.25 per cent over the Ontario Consumer Price Index for the portion of the nuclear used fuel waste management segregated fund related to the fixed volume of used fuel. If the earnings on assets in that fund related to the fixed volume exceed the guaranteed rate, the Province is entitled to the excess.

Two agreements are in place to satisfy the Canadian Nuclear Safety Commission (CNSC) licensing requirements for financial guarantees in respect of OPG’s nuclear station decommissioning and nuclear waste management obligations. One agreement gives the CNSC access (in prescribed circumstances) to the segregated funds established under ONFA. The other agreement between the Province and the CNSC provides a direct provincial guarantee to the CNSC on behalf of OPG. This guarantee, for up to $1.551 billion, effective January 1, 2013, previously $1.545 billion, relates to the portion of the decommissioning and waste management obligations not funded by the estimated value of ONFA funds as at January 1, 2013. In return, the Province receives from OPG an annual fee equal to 0.5 per cent of the value of the guarantee. The provincial guarantee is in effect through the end of 2017, when the next reference plan for the CNSC is planned to be approved.

Social Housing — Loan Insurance Agreements

For all non-profit housing projects in the provincial portfolio, the Province is liable to indemnify and reimburse the Canada Mortgage and Housing Corporation (CMHC) for any net costs, including any environmental liabilities, incurred as a result of project defaults through the Ministry of Municipal Affairs and Housing or the Ontario Mortgage and Housing Corporation.

At March 31, 2013, there were $6.3 billion (2012, $6.7 billion) of mortgage loans outstanding. As operating subsidies provided by the Province are sufficient to ensure that all mortgage payments can be made when due, default is unlikely. To date, there have been no claims for defaults on insured mortgage loans.

Claims Against the Crown

There are claims outstanding against the Crown of which 62 (2012, 65) are for amounts over $50 million. These claims arise from legal action, either in progress or threatened, in respect of aboriginal land claims, breach of contract, damages to persons and property, and like items. The cost to the Province, if any, cannot be determined because the outcome of these actions is uncertain.

Canadian Blood Services

The provincial and territorial governments of Canada have entered into a Canadian Blood Services Excess Insurance Captive Support Agreement (the “Captive Support Agreement”) with Canadian Blood Services (CBS) and Canadian Blood Services Captive Insurance Company Limited (CBSI), a wholly owned subsidiary of CBS. Under the Captive Support Agreement, each government indemnifies CBSI for its pro-rata share of any payments that CBSI becomes obliged to make under a comprehensive blood risks insurance policy it provides to CBS. The policy has an overall limit of $750 million, which may cover settlements, judgments and defence costs. The policy is in excess of, and secondary to, a $250 million comprehensive insurance policy underwritten by CBS Insurance Company Limited, a subsidiary of CBS. Given current populations, Ontario’s maximum potential liability under the Captive Support Agreement is approximately $376 million. The Province is not aware of any proceedings that could lead to a claim against it under the Captive Support Agreement.

Legal Aid Ontario – Certificates

Legal Aid Ontario (LAO) issues certificates to individuals seeking legal aid assistance. Each certificate issued authorizes legal services to be performed within the tariff guidelines. At March 31, 2013, a potential $53.6 million (2012, $50.4 million) could still be incurred on certificates issued on or before March 31, 2013, over and above the billings received to date.

Pan/Parapan American Games

On November 6, 2009, Pan American Sports Organization (PASO) members voted to award Toronto and the Golden Horseshoe region the hosting rights of the 2015 Pan/Parapan American Games. Under the Ontario Support Agreement (OSA), the Province has agreed to act as the deficit guarantor. The deficit guarantee will be applicable to the activities of Toronto 2015 in performing its Pan Am-related commitments. The deficit guarantee stipulates that payments of any approved expenses in excess of the aggregate agreed contribution to the Games by all parties are the responsibility of the Province, provided that such expenses have been incurred in an agreed manner and approved by the Province in accordance with the terms and conditions of the OSA. Any future expense associated with this guarantee is undeterminable as at March 31, 2013.

General Real Estate Portfolio – Lease Obligation

Prior to the amalgamation of Stadium Corporation of Ontario Limited (STADCO) with Infrastructure Ontario and the Ontario Realty Corporation on June 6, 2011, all assets, liabilities and operations of STADCO were transferred to the General Real Estate Portfolio (GREP), including ground leases dated June 3, 1989, with Canada Lands Company (CLC) for the SkyDome Lands and the sublease to Rogers Stadium Limited Partnership (sub-tenant). Under the terms of the ground lease, GREP is responsible for base rent, realty taxes, utilities and certain operating costs, which are assumed by the sub-tenant under the terms of the sub-lease. In the event of a default by the sub-tenant, the potential financial impact to GREP is estimated to be the base rent, in the range of $300 million to $400 million annually, plus realty taxes, utilities and certain operating costs.

Collateral

The Province has entered into securities repurchase agreements and collateralized swap agreements with certain counterparties. Under the terms of those agreements, the Province may be required to pledge and/or receive assets relating to obligations to the counterparties. In the normal course of business, these pledged securities will be returned to the pledgor when there are no longer any outstanding obligations.

As at March 31, 2013, the Province pledged assets in the carrying amount of $1.9 billion (2012, $2.6 billion), which are included in Investments and/or Cash and Cash Equivalents.

13. Contractual Obligations

Contractual Obligations
as at March 31
  Minimum Payments to be made in:
($ Millions) 2013 2012 2014 2015 2016 2017 2018 2019 and
thereafter
Transfer Payments $9,326 $8,967 $4,479 $2,999 $796 $454 $295 $303
Alternative Financing Contracts 20,076 14,738 1,637 2,200 2,321 555 1,364 11,999
Ontario Power Generation 6,689 6,091 1,181 861 619 336 329 3,363
Leases 3,435 4,581 608 497 412 330 254 1,334
Construction Contracts 4,120 1,940 1,809 436 223 176 160 1,316
Other 10,423 9,756 6,280 947 592 673 382 1,549
Total Contractual Obligations $54,069 $46,073 $15,994 $7,940 $4,963 $2,524 $2,784 $19,864

Ontario Power Generation Inc.’s contractual obligations include future contributions under ONFA of $3.7 billion, fuel supply agreements of $1.1 billion and Lower Mattagami River construction of $908 million.

In November 2009, the Pan American Sports Organization selected the City of Toronto and the Golden Horseshoe region to host the 2015 Pan/Parapan American Games. The Government of Ontario is investing funds to help plan and stage the Games, and to support the construction of the Athletes Village. Transfer payments and alternative financing contracts in the table above include $982 million in commitments that are still to be provided for the Games and the Athletes Village project.

The Province has entered into a number of multiple-year alternative financing contracts for the construction of assets and delivery of services. The contractual obligations represent the unperformed capital and operating portion of the contracts and will become liabilities in the future when the terms of the contracts are met.

14. Trust Funds Under Administration

Summary financial information from the most recent financial statements of trust funds under administration is provided below.

Workplace Safety and Insurance Board (WSIB)1
As at December 31
($ Millions)
  2012 2011
Assets $19,384 $17,382
Liabilities 30,580 29,699
Deficiency of Assets (11,196) (12,317)
Unfunded Liability attributable to WSIB stakeholders ($13,299) ($14,222)
1 The financial statements have been prepared in accordance with IFRS.

Other Trust Funds
As at March 31, 2013
($ Millions)
  Assets Liabilities Fund Balance
(Unfunded Liability)
The Public Guardian and Trustee for Province of Ontario $1,556 $58 $1,498
Motor Vehicle Accident Claims Fund 58 215 (157)
Pension Benefits Guarantee Fund 486 230 256
As at December 31, 2012 Assets Liabilities Fund Balance
Deposit Insurance Corporation of Ontario $162 $15 $147

Unfunded liabilities of trusts under administration are not included in the Province’s consolidated financial statements as it is intended that they will be discharged by external parties. The most recent financial statements of these trusts are reproduced in Volume 2 of the Public Accounts of Ontario.

15. Comparative Figures

The comparative figures have been reclassified as necessary to conform to the 2013 presentation.

Schedules to the Consolidated Financial Statements

Schedule 1 Revenues by Source

Schedule 2 Revenues by Sector

Schedule 3 Expenses by Sector

Schedule 4 Expenses by Ministry

Schedule 5 Accounts Payable and Accrued Liabilities

Schedule 6 Accounts Receivable

Schedule 7 Loans Receivable

Schedule 8 Government Organizations

Schedule 9 Government Business Enterprises

Schedule 10 Broader Public Sector Organizations

Province of Ontario
Schedule 1: Revenues by Source
($ Millions) 2012–13
Budget
2012–13
Actual
2011–12
Actual
Taxation      
Personal Income Tax 26,085 25,574 24,548
Sales Tax 21,135 20,957 20,159
Corporations Tax1 10,798 12,093 9,944
Education Property Tax 5,631 5,511 5,765
Employer Health Tax 5,149 5,137 5,092
Ontario Health Premium 3,098 3,067 2,916
Gasoline Tax 2,371 2,390 2,380
Land Transfer Tax 1,374 1,484 1,432
Tobacco Tax 1,185 1,142 1,150
Fuel Tax 724 710 710
Beer and Wine Tax 557 560 561
Electricity Payments-In-Lieu of Taxes 555 324 367
Other Taxes 461 469 574
  79,123 79,418 75,598
Transfers from Government of Canada      
Canada Health Transfer 11,378 11,315 10,705
Canada Social Transfer 4,596 4,591 4,469
Equalization Payments 3,261 3,261 2,200
Labour Market Development Agreement 617 607 609
Social Housing 476 483 489
Indian Welfare Services Agreement 210 220 220
Labour Market Agreement 194 190 194
Infrastructure Programs 204 116 353
Wait Times Reduction Fund 97 97 97
Bilingualism Development 81 88 92
Labour Market Agreement for Persons with Disabilities 76 76 76
Youth Criminal Justice 65 66 67
Legal Aid Criminal 50 50 54
Federal Transition Assistance 1,300
Other 471 501 380
  21,776 21,661 21,305

Province of Ontario
Schedule 1: Revenues by Source (cont'd)
($ Millions) 2012–13
Budget
2012–13
Actual
2011–12
Actual
Income from Investment in Government Business Enterprises (Schedule 9) 4,065 4,469 4,413
Other      
Power Supply Contract Recoveries 1,262 1,323 1,372
Sales and Rentals 1,068 1,188 1,193
Vehicle and Driver Registration Fees 1,163 1,125 1,075
Electricity Debt Retirement Charge 946 939 952
Other Fees and Licences 819 760 776
Net Reduction of Power Purchase Contracts (Note 8) 263 263 317
Royalties 204 226 200
Independent Electricity System Operator Revenue 173 120 114
Local Services Realignment 89 88 89
Miscellaneous 1,622 1,789 2,369
  7,609 7,821 8,457
Total Revenues 112,573 113,369 109,773
1 Corporations tax revenue is subject to uncertainty, which may be material to these Consolidated Financial Statements. 2012–13 corporations tax revenue includes $1,998 million due to higher-than-estimated tax assessments for tax years 2011 and prior (Note 1).

Province of Ontario
Schedule 2: Revenues by Sector
Sectors Health1 Education2 Children's and Social Services3 Environment,
Resources and Economic Development4
For the year ended March 31
($ Millions)
2013 2012 2013 2012 2013 2012 2013 2012
Revenues                
Taxation (Schedule 1) 2
Transfers from Government of Canada (Schedule 1) 74 99 81 84 310 312 928 964
Income from Investment in Government Business Enterprises (Schedule 9) 932 872
Other (Schedule 1) 460 394 27 29 77 44 3,212 2,834
Total 534 493 108 113 387 356 5,074 4,670
1 Includes the activities of the Ministry of Health and Long-Term Care.
2 Includes the activities of the Ministry of Education.
3 Includes the activities of the Ministries of Children and Youth Services, and Community and Social Services.
4 Includes the activities of the Ministries of Aboriginal Affairs, Agriculture and Food/Rural Affairs, Citizenship and Immigration, Consumer Services, Economic Development, Trade and Employment/Research and Innovation, Energy, Environment, Labour, Municipal Affairs and Housing, Natural Resources, Northern Development and Mines, Tourism, Culture and Sport, and Transportation.

Province of Ontario
Schedule 2: Revenues by Sector
Sectors Post-Secondary Education
and Training5
Justice6 General
Government and
Other7
Total
For the year ended March 31
($ Millions)
2013 2012 2013 2012 2013 2012 2013 2012
Revenues                
Taxation (Schedule 1) 79,416 75,598 79,418 75,598
Transfers from Government of Canada (Schedule 1) 868 934 95 100 19,305 18,812 21,661 21,305
Income from Investment in Government Business Enterprises (Schedule 9) 3,537 3,541 4,469 4,413
Other (Schedule 1) 68 92 713 737 3,264 4,327 7,821 8,457
Total 936 1,026 808 837 105,522 102,278 113,369 109,773
5 Includes the activities of the Ministry of Training, Colleges and Universities.
6 Includes the activities of the Ministries of Attorney General, and Community Safety and Correctional Services.
7 Includes the activities of the Ministries of Government Services, Infrastructure, Finance, the Board of Internal Economy, Executive Offices and the Office of Francophone Affairs.

Province of Ontario
Schedule 3: Expenses by Sector1
Sectors Health2 Education3 Children's and Social Services4 Environment, Resources and Economic Development5
For the year ended March 31
($ Millions)
2013 2012 2013 2012 2013 2012 2013 2012
Expenses                
Transfer Payments 46,430 45,605 24,005 23,262 13,191 12,728 5,799 5,438
Interest on Debt
Salaries and Wages 605 571 186 195 444 454 1,663 1,696
Services 1,021 934 107 111 151 159 1,282 1,298
Pensions and Employee Future Benefits (Note 7) 6 6 895 523 6 7 10 10
Power Supply Contract Costs
Amortization of Tangible Capital Assets 75 64 8 8 3 2 1,177 1,101
Employee Benefits 105 98 39 30 69 71 294 292
Supplies and Equipment 296 293 9 10 10 12 192 202
Transportation and Communication 76 84 13 17 21 20 97 91
Impact of Broader Public Sector Organizations on Provincial Expenses (Schedule 10) (1,132) (1,241) (2,659) (720)
Other 100 62 26 18 26 19 555 583

Total10

47,582 46,476 22,629 23,454 13,921 13,472 11,069 10,711
1 The information in the sectors' columns represents activities of ministries and consolidated agencies after adjustments to eliminate transactions between sectors.
2 Includes the activities of the Ministry of Health and Long-Term Care.
3 Includes the activities of the Ministry of Education.
4 Includes the activities of the Ministries of Children and Youth Services, and Community and Social Services.
5 Includes the activities of the Ministries of Aboriginal Affairs, Agriculture and Food/Rural Affairs, Citizenship and Immigration, Consumer Services, Economic Development, Trade and Employment/Research and Innovation, Energy, Environment, Labour, Municipal Affairs and Housing, Natural Resources, Northern Development and Mines, Tourism, Culture and Sport, and Transportation.

Province of Ontario
Schedule 3: Expenses by Sector1
Sectors Post-Secondary
Education and Training6
Justice7 General Government
and Other8
Interest on Debt9 Total
For the year ended March 31
($ Millions)
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Expenses                    
Transfer Payments 7,144 7,116 338 315 946 2,443 97,853 96,907
Interest on Debt 10,341 10,082 10,341 10,082
Salaries and Wages 97 96 2,134 2,142 973 1,051 6,102 6,205
Services 67 54 839 23 58 420 3,525 2,999
Pensions and Employee Future Benefits (Note 7) 18 17 1,851 1,611 2,786 2,174
Power Supply Contract Costs 1,323 1,375 1,323 1,375
Amortization of Tangible Capital Assets 1 1 9 7 221 186 1,494 1,369
Employee Benefits 13 14 276 277 164 125 960 907
Supplies and Equipment 2 1 162 150 49 62 720 730
Transportation and Communication 4 4 69 68 68 20 348 304
Impact of Broader Public Sector Organizations on Provincial Expenses (Schedule 10) (22) (60) (3,813) (2,021)
Other 56 35 117 874 70 120 950 1,711
Total10 7,362 7,261 3,962 3,873 5,723 7,413 10,341 10,082 122,589 122,742
6 Includes the activities of the Ministry of Training, Colleges and Universities.
7 Includes the activities of the Ministries of Attorney General, and Community Safety and Correctional Services.
8 Includes the activities of the Ministries of Government Services, Infrastructure, Finance, the Board of Internal Economy, Executive Offices and the Office of Francophone Affairs.
9 Includes the activities related to the management of the debt of the Province.
10 The comparative figures have been reclassified to conform to the 2013 presentation.

Province of Ontario
Schedule 4: Expenses by Ministry
($ Millions) 2012–13
Budget
2012–13
Actual
2011–12
Actual
Aboriginal Affairs 76 65 96
Agriculture and Food/Rural Affairs 1,136 1,038 1,287
Attorney General 1,732 1,678 1,699
Board of Internal Economy 197 197 271
Children and Youth Services 4,083 3,999 3,943
Citizenship and Immigration 435 471 170
Community and Social Services 9,964 9,922 9,529
Community Safety and Correctional Services 2,315 2,284 2,174
Consumer Services 20 20 19
Economic Development, Trade and Employment/Research and Innovation 955 954 961
Education 23,892 21,734 22,931
Teachers' Pension (Note 7) 850 895 523
Energy 1,432 1,335 1,531
Environment 486 577 537
Executive Offices 31 30 31
Finance 1,093 896 2,451
Contingency Fund1 400
Interest on Debt 10,619 10,341 10,082
Municipal Partnership Fund 592 592 598
Power Supply Contract Costs 1,262 1,323 1,375
Transition Fund 500
Government Services 998 1,097 1,051
Public Service/OPSEU Pension and Other Employee Future Benefits (Note 7) 1,545 1,519 1,300
Health and Long-Term Care 48,334 47,582 46,476
Infrastructure 278 66 331
Capital Contingency Fund 100
Labour 300 282 185
Municipal Affairs and Housing 803 841 728
Natural Resources 752 855 908
Northern Development and Mines 771 720 729
Office of Francophone Affairs 5 5 5
Tourism, Culture and Sport 1,106 1,432 1,221
Training, Colleges and Universities 7,509 7,362 7,261
Transportation 2,587 2,477 2,339
Year-End Savings2 (765)
Total Expenses 126,393 122,589 122,742
1 See glossary for definition.
2 For Budget purposes, these items were not allocated to individual ministries.

Province of Ontario
Schedule 5: Accounts Payable and Accrued Liabilities
As at March 31
($ Millions)
2013 2012
Transfer Payments 6,077 4,330
Interest on Debt 4,686 4,642
Salaries, Wages and Benefits 2,584 2,373
Liability for CRA1 Overpayment 133 266
Other 8,074 9,517
Total Accounts Payable and Accrued Liabilities 21,554 21,128
1 CRA – Canada Revenue Agency.

Province of Ontario
Schedule 6: Accounts Receivable
As at March 31
($ Millions)
2013 2012
Taxes 4,348 5,522
Transfer Payments1 663 690
Other Accounts Receivable2 3,754 3,319
  8,765 9,531
Less: Allowance for Doubtful Accounts3 (1,092) (1,208)
  7,673 8,323
Government of Canada 752 940
Total Accounts Receivable 8,425 9,263
1 The Transfer Payment receivable consists primarily of recoverables of $534 million (2012, $552 million) for the Ontario Disability Support Program – Financial Assistance.
2 Other Accounts Receivable includes trade receivables.
3 The Allowance for Doubtful Accounts includes a provision of $463 million (2012, $488 million) for the Ontario Disability Support Program – Financial Assistance.

Province of Ontario
Schedule 7: Loans Receivable
As at March 31
($ Millions)
2013 2012
Government Business Enterprises1 4,038 4,146
Municipalities2 4,581 3,997
Students3 2,851 2,638
Industrial and Commercial4 529 591
Pension Benefit Guarantee Fund5 231 242
Universities6 36 29
Other 99 86
Total 12,365 11,729
Unamortized Concession Discounts7 (323) (357)
Allowance for Doubtful Accounts8 (932) (991)
Total Loans Receivable 11,110 10,381
1 Loans to government business enterprises bear interest at rates of 2.32 per cent to 6.33 per cent (2012, 1.31 per cent to 6.33 per cent).
2 Loans to municipalities bear interest at rates up to 8.00 per cent (2012, 8.00 per cent).
3 Loans to students bear interest at rates of 1.45 per cent to 3.00 per cent (2012, 2.00 per cent to 3.00 per cent).
4 Loans to industrial and commercial enterprises bear interest at rates up to 6.24 per cent (2012, 8.01 per cent).
5 The loan to the Pension Benefit Guarantee Fund is interest-free.
6 Loans to universities are mortgages bearing interest at rates of 5.88 per cent to 7.13 per cent (2012, 2.77 per cent to 11.04 per cent).
7 Unamortized concession discounts related to loans made to municipalities of $85 million (2012, $104 million), loans to the Pension Benefit Guarantee Fund of $113 million (2012, $119 million), and loans to industrial and commercial enterprises and other of $125 million (2012, $134 million).
8 Allowance for doubtful accounts related to loans made to students of $600 million (2012, $632 million), municipalities of $158 million (2012, $158 million), industrial and commercial enterprises and other of $56 million (2012, $78 million), and the Pension Benefit Guarantee Fund of $118 million (2012, $123 million).

Repayment Terms Principal Repayment
($ Millions)
Years to Maturity 2013 2012
1 year 1,134 941
2 years 430 490
3 years 513 376
4 years 1,324 498
5 years 463 1,309
1–5 years 3,864 3,614
6–10 years 2,025 2,109
11–15 years 751 577
16–20 years 1,299 1,256
21–25 years 1,303 1,106
Over 25 years 632 632
Subtotal 9,874 9,294
No fixed maturity 2,491 2,435
Total 12,365 11,729

Province of Ontario
Schedule 8: Government Organizations1
Government Business Enterprises2 Responsible Ministry
Hydro One Inc. Energy
Liquor Control Board of Ontario Finance
Ontario Lottery and Gaming Corporation Finance
Ontario Power Generation Inc. Energy
Other Government Organizations2 Responsible Ministry
Agricorp Agriculture and Food/Rural Affairs
Agricultural Research Institute of Ontario Agriculture and Food/Rural Affairs
Algonquin Forestry Authority Natural Resources
Cancer Care Ontario Health and Long-Term Care
Education Quality and Accountability Office Education
eHealth Ontario Health and Long-Term Care
Forest Renewal Trust Natural Resources
General Real Estate Portfolio Infrastructure
Independent Electricity System Operator Energy
Legal Aid Ontario Attorney General
Local Health Integration Networks  
Central East Local Health Integration Network Health and Long-Term Care
Central Local Health Integration Network Health and Long-Term Care
Central West Local Health Integration Network Health and Long-Term Care
Champlain Local Health Integration Network Health and Long-Term Care
Erie St. Clair Local Health Integration Network Health and Long-Term Care
Hamilton Niagara Haldimand Brant Local Health Integration Network Health and Long-Term Care
Mississauga Halton Local Health Integration Network Health and Long-Term Care
North East Local Health Integration Network Health and Long-Term Care
North Simcoe Muskoka Local Health Integration Network Health and Long-Term Care
North West Local Health Integration Network Health and Long-Term Care
South East Local Health Integration Network Health and Long-Term Care
South West Local Health Integration Network Health and Long-Term Care
Toronto Central Local Health Integration Network Health and Long-Term Care
Waterloo Wellington Local Health Integration Network Health and Long-Term Care
Metrolinx Transportation
Metropolitan Toronto Convention Centre Tourism, Culture and Sport
Niagara Parks Commission Tourism, Culture and Sport
Northern Ontario Heritage Fund Corporation Northern Development and Mines
Ontario Agency for Health Protection and Promotion Health and Long-Term Care
Ontario Arts Council Tourism, Culture and Sport
Ontario Capital Growth Corporation Economic Development, Trade and Employment/Research and Innovation
Ontario Clean Water Agency Environment
Ontario Educational Communications Authority Education
Ontario Electricity Financial Corporation Finance
Ontario Energy Board Energy
Ontario Financing Authority Finance
Ontario French-Language Educational Communications Authority Education
Ontario Immigrant Investor Corporation Economic Development, Trade and Employment/Research and Innovation
Ontario Infrastructure and Lands Corporation Infrastructure
Ontario Mortgage and Housing Corporation Municipal Affairs and Housing
1 The schedule of government organizations is updated on an annual basis to reflect any amalgamations or dissolutions of consolidated organizations in the year. This listing represents all consolidated organizations included in the Province's financial statements as at March 31, 2013.
2 The most recent audited financial statements of these organizations are included in Volume 2, Public Accounts of Ontario.

Province of Ontario
Schedule 8: Government Organizations
Other Government Organizations (cont'd) Responsible Ministry (cont'd)
Ontario Northland Transportation Commission Northern Development and Mines
Ontario Place Corporation Tourism, Culture and Sport
Ontario Power Authority Energy
Ontario Racing Commission Agriculture and Food/Rural Affairs
Ontario Science Centre Tourism, Culture and Sport
Ontario Securities Commission Finance
Ontario Student Loan Trust Training, Colleges and Universities
Ontario Tourism Marketing Partnership Corporation Tourism, Culture and Sport
Ontario Trillium Foundation Tourism, Culture and Sport
Ornge Health and Long-Term Care
Ottawa Convention Centre Tourism, Culture and Sport
Royal Ontario Museum Tourism, Culture and Sport
Toronto Organizing Committee for the 2015 Pan American and Parapan American Games Citizenship and Immigration
Transmission Corridor Program Infrastructure
Waterfront Toronto Infrastructure
Broader Public Sector Organizations
Public Hospitals – Ministry of Health and Long-Term Care
Alexandra Hospital Ingersoll Grey Bruce Health Services
Alexandra Marine & General Hospital Groves Memorial Community Hospital
Almonte General Hospital Guelph General Hospital
Anson General Hospital Haldimand War Memorial Hospital
Arnprior and District Memorial Hospital Haliburton Highlands Health Services Corporation
Atikokan General Hospital Halton Healthcare Services Corporation
Baycrest Centre for Geriatric Care Hamilton Health Sciences Corporation
Bingham Memorial Hospital Hanover & District Hospital
Blind River District Health Centre Headwaters Health Care Centre
Bluewater Health Health Sciences North
Brant Community Healthcare System Holland Bloorview Kids Rehabilitation Hospital
Bridgepoint Hospital Hôpital Général de Hawkesbury and District General Hospital Inc.
Brockville General Hospital Hôpital Glengarry Memorial Hospital
Bruyère Continuing Care Inc. Hôpital Montfort
Cambridge Memorial Hospital Hôpital Notre Dame Hospital (Hearst)
Campbellford Memorial Hospital Hornepayne Community Hospital
Carleton Place and District Memorial Hospital Hospital for Sick Children
Casey House Hospice Hôtel-Dieu Grace Hospital
Chatham-Kent Health Alliance Hôtel-Dieu Hospital, Cornwall
Children's Hospital of Eastern Ontario Humber River Regional Hospital
Clinton Public Hospital Joseph Brant Hospital
Collingwood General and Marine Hospital Kemptville District Hospital
Cornwall Community Hospital Kingston General Hospital
Deep River and District Hospital Corporation Kirkland and District Hospital
Dryden Regional Health Centre Lady Dunn Health Centre
Englehart and District Hospital Inc. Lady Minto Hospital at Cochrane
Espanola General Hospital Lake of the Woods District Hospital
Four Counties Health Services Lakeridge Health
Georgian Bay General Hospital Leamington District Memorial Hospital
Geraldton District Hospital Lennox and Addington County General Hospital
Grand River Hospital Listowel Memorial Hospital
London Health Sciences Centre Smooth Rock Falls Hospital
Mackenzie Health South Bruce Grey Health Centre
Manitoulin Health Centre South Huron Hospital Association
Manitouwadge General Hospital Southlake Regional Health Centre
Markham Stouffville Hospital St. Francis Memorial Hospital
Mattawa General Hospital St. Joseph's Care Group
McCausland Hospital St. Joseph's Continuing Care Centre of Sudbury
Mount Sinai Hospital St. Joseph's General Hospital, Elliot Lake
Muskoka Algonquin Healthcare St. Joseph's Health Care, London
Niagara Health System St. Joseph's Health Centre (Guelph)
Nipigon District Memorial Hospital St. Joseph's Health Centre (Toronto)
Norfolk General Hospital St. Joseph's Healthcare Hamilton
North Bay Regional Health Centre St. Mary's General Hospital
North Wellington Health Care Corporation St. Mary's Memorial Hospital
North York General Hospital St. Michael's Hospital
Northumberland Hills Hospital St. Thomas - Elgin General Hospital
Orillia Soldiers' Memorial Hospital Stevenson Memorial Hospital
Ottawa Hospital Stratford General Hospital
Pembroke Regional Hospital Inc. Strathroy Middlesex General Hospital
Perth and Smiths Falls District Hospital Sunnybrook Health Sciences Centre
Peterborough Regional Health Centre Temiskaming Hospital
Providence Care Centre (Kingston) Thunder Bay Regional Health Sciences Centre
Providence Healthcare Tillsonburg District Memorial Hospital
Queensway-Carleton Hospital Timmins and District Hospital
Quinte Healthcare Corporation Toronto East General Hospital
Red Lake Margaret Cochenour Memorial Hospital Corporation Trillium Health Partners
Religious Hospitallers of St. Joseph of the Hôtel Dieu of Kingston University Health Network
Religious Hospitallers of St. Joseph of the Hotel Dieu of St. Catharines University of Ottawa Heart Institute
Renfrew Victoria Hospital Weeneebayko Area Health Authority
Riverside Health Care Facilities Inc. West Haldimand General Hospital
Ross Memorial Hospital West Lincoln Memorial Hospital
Rouge Valley Health System West Nipissing General Hospital
Royal Victoria Regional Health Centre West Park Healthcare Centre
Runnymede Healthcare Centre West Parry Sound Health Centre
Salvation Army Toronto Grace Hospital William Osler Health System
Sault Area Hospital Wilson Memorial General Hospital
Scarborough Hospital Winchester District Memorial Hospital
Seaforth Community Hospital Windsor Regional Hospital
Sensenbrenner Hospital Wingham and District Hospital
Services de santé de Chapleau Health Services Women's College Hospital
Sioux Lookout Meno-Ya-Win Health Centre Woodstock General Hospital Trust
Specialty Psychiatric Hospitals – Ministry of Health and Long-Term Care
Centre for Addiction and Mental Health Royal Ottawa Health Care Group
Ontario Shores Centre for Mental Health Sciences Waypoint Centre for Mental Health Care
School Boards – Ministry of Education
Algoma District School Board Lambton Kent District School Board
Algonquin and Lakeshore Catholic District School Board Limestone District School Board
Avon Maitland District School Board London District Catholic School Board
Bloorview MacMillan School Authority Moose Factory Island District School Area Board
Bluewater District School Board Moosonee District School Area Board
Brant Haldimand Norfolk Catholic District School Board Near North District School Board
Bruce-Grey Catholic District School Board Niagara Catholic District School Board
Campbell Children's School Authority Niagara Peninsula Children's Centre School Authority
Catholic District School Board of Eastern Ontario Nipissing-Parry Sound Catholic District School Board
Conseil des écoles publiques de l'Est de l'Ontario Northeastern Catholic District School Board
Conseil scolaire de district catholique Centre-Sud Northwest Catholic District School Board
Conseil scolaire de district catholique de l'Est ontarien Ottawa Catholic District School Board
Conseil scolaire de district catholique des Aurores boréales Ottawa Children's Treatment Centre School Authority
Conseil scolaire de district catholique des Grandes Rivières Ottawa-Carleton District School Board
Conseil scolaire de district catholique du Centre-Est de l'Ontario Peel District School Board
Conseil scolaire de district catholique du Nouvel-Ontario Penetanguishene Protestant Separate School Board
Conseil scolaire de district catholique Franco-Nord Peterborough Victoria Northumberland and
Conseil scolaire de district des écoles catholiques du Sud-Ouest Clarington Catholic District School Board
Conseil scolaire de district du Grand Nord de l'Ontario Rainbow District School Board
Conseil scolaire de district du Nord-Est de l'Ontario Rainy River District School Board
Conseil scolaire Viamonde Renfrew County Catholic District School Board
District School Board of Niagara Renfrew County District School Board
District School Board Ontario North East Simcoe County District School Board
Dufferin-Peel Catholic District School Board Simcoe Muskoka Catholic District School Board
Durham Catholic District School Board St. Clair Catholic District School Board
Durham District School Board Sudbury Catholic District School Board
Grand Erie District School Board Superior North Catholic District School Board
Greater Essex County District School Board Superior-Greenstone District School Board
Halton Catholic District School Board Thames Valley District School Board
Halton District School Board Thunder Bay Catholic District School Board
Hamilton-Wentworth Catholic District School Board Toronto Catholic District School Board
Hamilton-Wentworth District School Board Toronto District School Board
Hastings and Prince Edward District School Board Trillium Lakelands District School Board
Huron-Perth Catholic District School Board Upper Canada District School Board
Huron-Superior Catholic District School Board Upper Grand District School Board
James Bay Lowlands Secondary School Board Waterloo Catholic District School Board
John McGivney Children's Centre School Authority Waterloo Region District School Board
Kawartha Pine Ridge District School Board Wellington Catholic District School Board
Keewatin-Patricia District School Board Windsor-Essex Catholic District School Board
Kenora Catholic District School Board York Catholic District School Board
KidsAbility School Authority York Region District School Board
Lakehead District School Board  
Colleges – Ministry of Training, Colleges and Universities
Algonquin College of Applied Arts and Technology Humber College Institute of Technology and Advanced Learning
Cambrian College of Applied Arts and Technology Lambton College of Applied Arts and Technology
Canadore College of Applied Arts and Technology Loyalist College of Applied Arts and Technology
Centennial College of Applied Arts and Technology Mohawk College of Applied Arts and Technology
Collège Boréal d'arts appliqués et de technologie Niagara College of Applied Arts and Technology
Collège d'arts appliqués et de technologie La Cité collégiale Northern College of Applied Arts and Technology
Conestoga College Institute of Technology and Advanced Learning Sault College of Applied Arts and Technology
Confederation College of Applied Arts and Technology Seneca College of Applied Arts and Technology
Durham College of Applied Arts and Technology Sheridan College Institute of Technology and Advanced Learning
Fanshawe College of Applied Arts and Technology Sir Sandford Fleming College of Applied Arts and Technology
George Brown College of Applied Arts and Technology St. Clair College of Applied Arts and Technology
Georgian College of Applied Arts and Technology St. Lawrence College of Applied Arts and Technology

Province of Ontario
Schedule 9: Government Business Enterprises

Summary financial information of Government Business Enterprises is provided below.
For the year ended March 31, 2013
($ Millions)
Hydro One
Inc.1
Liquor
Control
Board of
Ontario2
Ontario
Lottery and
Gaming
Corporation2
Ontario
Power
Generation
Inc.3
Total
Assets          
Cash and Temporary Investments 9 317 603 568 1,497
Accounts Receivable 966 42 108 573 1,689
Inventories 25 378 26 576 1,005
Prepaid Expenses 119 13 28 73 233
Long-Term Investments 251 251
Fixed Assets 15,816 340 1,440 16,483 34,079
Other Assets 3,860 2 17,301 21,163
Total Assets 21,046 1,090 2,207 35,574 59,917
Liabilities          
Bank Indebtedness 39 39
Accounts Payable 737 572 380 1,480 3,169
Deferred Revenue 10 12 22
Long-Term Debt 7,879 108 89 5,756 13,832
Other Liabilities 5,443 3 144 18,718 24,308
Total Liabilities 14,098 683 623 25,966 41,370
Net Assets 6,948 407 1,584 9,608 18,547
Revenue 5,836 4,939 6,684 4,768 22,227
Expenses 5,040 3,218 4,868 4,632 17,758
Net Income (Loss) 7964 1,721 1,816 1364 4,469
Net Assets at Beginning of Year 6,369 386 1,671 8,833 17,259
Increase in Fair Value of Ontario Nuclear
Funds (Note 11)
639 639
Remittances (to) Consolidated Revenue Fund (217) (1,700) (1,903) (3,820)
Net Assets 6,948 407 1,584 9,608 18,547
1 Total assets and total liabilities for Hydro One are reported using standards recommended by the U.S. Financial Accounting Standards Board (FASB) and net assets approximate Canadian GAAP.
2 Amounts reported using IFRS.
3 Amounts reported using Canadian GAAP standards as recommended by the AcSB.
4 Existing policy and practice is to have the hydro sector's net income remain in the hydro sector to pay down the debt of Ontario Electricity Financial Corporation, an agency of the Province responsible for managing the stranded debt and other liabilities of the former Ontario Hydro.

Province of Ontario
Schedule 9: Government Business Enterprises
Hydro One Inc.
The principal business of Hydro One Inc. is the transmission and distribution of electricity to customers within Ontario. It is regulated by the Ontario Energy Board.
Liquor Control Board of Ontario
The Liquor Control Board of Ontario regulates the purchase, sale and distribution of liquor for home consumption and liquor sales to licensed establishments through Liquor Control Board stores, Brewers’ Retail stores and winery retail stores throughout Ontario. The Board buys wine and liquor products for resale to the public, tests all products sold and establishes prices for beer, wine and spirits.
Ontario Lottery and Gaming Corporation
The Corporation conducts lottery games and operates commercial casinos, charity casinos, and slot machines at Ontario racetracks.
Ontario Power Generation Inc.
The principal business of Ontario Power Generation Inc. is the generation and sale of electricity in the Ontario wholesale market and in the interconnected markets of Quebec, Manitoba and the northeast and midwest United States.

Province of Ontario
Schedule 10: Broader Public Sector Organizations
Summary financial information of Broader Public Sector Organizations is provided below.
For the year ended March 31, 2013 Hospitals School
Boards
Colleges Total
($ Millions)
Expense        
Salaries, Wages and Benefits1 16,846 16,862 2,260 35,968
Amortization Expense 1,289 899 248 2,436
Interest Expense2 102 418 17 537
Other Expense 6,734 3,390 1,118 11,242
Fees, Donations and Other Recoveries (3,749) (1,273) (1,945) (6,967)
Total Sector Expense 21,222 20,296 1,698 43,216
Transfers from the Province (22,354) (22,955) (1,720) (47,029)
Impact on Provincial Expense – (Decrease) (1,132) (2,659) (22) (3,813)
1 The School Boards sector's salaries, wages and benefits include a one-time net savings of $1,296 million primarily as a result of a curtailment in the compensated absences of retirement benefits plans.
2 Interest revenue is netted with Interest Expense.

Glossary

Note: The descriptions of the terms in the glossary are provided for the purpose of assisting readers of the 2012–13 Public Accounts. The descriptions do not affect or alter the meaning of any term under law. The glossary does not form part of the audited consolidated financial statements.

Accumulated Amortization: the total amortization that has been recorded over the life of an asset to date. The asset’s total cost less the accumulated amortization gives the asset’s net book value.

Accumulated Deficit: the difference between liabilities and assets. It represents the total of all past annual deficits minus all past annual surpluses, including prior period adjustments.

Amortization: expensing a portion of an asset’s cost in an accounting period by allocating its cost over its estimated useful life. This is applicable to tangible capital assets and items such as expenses relating to a debt issue.

Appropriation: an authority of the Legislative Assembly to pay money out of the Consolidated Revenue Fund or to incur a non-cash expense.

Broader Public Sector (BPS): public hospitals, specialty psychiatric hospitals, school boards and colleges. For financial statement purposes, universities and other organizations such as municipalities are excluded because they do not meet the criteria of government organizations as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.

Canada Health Transfer (CHT): a federal transfer provided to each province and territory in support of health care.

Canada Social Transfer (CST): a federal transfer provided to each province and territory in support of post-secondary education, social assistance and social services, including early childhood development, early learning and child care.

Capital Gain: the profit arising from the sale or transfer of capital assets or investments. For accounting purposes, it is the proceeds or market value received less the net book value of the capital asset or investment.

Capital Lease: a lease that, from the point of view of the lessee, transfers substantially all the benefits and risks incident to ownership of property to the lessee.

Cash and Cash Equivalents: cash or other short-term liquid low-risk instruments that are readily convertible to cash, typically within three months or less.

Consolidated Revenue Fund (CRF): the aggregate of all public monies on deposit to the credit of the Minister of Finance or in the name of any agency of the Crown approved by the Lieutenant Governor in Council. Payments made from the CRF must be appropriated by a statute. See Appropriation.

Consolidation: the inclusion of the financial results of government-controlled organizations in the Province’s consolidated financial statements.

Consumer Price Index (CPI): a broad measure of the cost of living. Through the monthly CPI, Statistics Canada tracks the retail price of a representative shopping basket of goods and services from an average household’s expenditure: food, housing, transportation, furniture, clothing, and recreation. The percentage of the total basket that any item occupies is termed the “weight” and reflects typical consumer spending patterns. Since people tend to spend more on food than clothing, changes in the price of food have a bigger impact on the index than, for example, changes in the price of clothing and footwear.

Contingency Fund: an amount of expense that is approved by the Legislative Assembly at the beginning of the year to cover higher spending due to unforeseen events. This approved spending limit is allocated during the year to ministries for their programs and activities. The actual costs incurred are charged to the respective programs and activities and not to the contingency fund. Therefore, the contingency fund as at the end of the Province’s fiscal year is nil. See Reserve.

Contingent Liabilities: possible obligations that may result in the future sacrifice of economic benefits arising from existing conditions or situations involving uncertainty, that will ultimately be resolved when one or more future events not wholly within the government’s control occur or fail to occur. Resolution of the uncertainty will confirm the incurrence or non-incurrence of a liability.

Contractual Obligations: obligations of a government to others that will become liabilities when the terms of any contract or agreement, which the government had entered into, are met.

Debenture: a debt instrument where the issuer promises to pay interest and repay the principal by the maturity date. It is unsecured, meaning there is no lien on any specific asset.

Debt: an obligation resulting from the borrowing of money.

Deferred Capital Contribution: the unamortized portion of tangible capital assets or liabilities to construct or acquire tangible capital assets from specific funding received from other levels of government or third parties. Deferred capital contribution is recorded in revenue over the estimated useful life of the underlying tangible capital assets once constructed or acquired by the Province.

Deferred Revenue: unspent externally restricted grants from other levels of government and third parties for operating activities. Deferred revenues are recorded into revenue in the period in which the amount received is used for the purposes specified.

Deficit: the amount by which government expenses exceed revenues in any given year. On a forecast basis, a reserve may be included.

Derivatives: financial contracts that derive their value from other underlying instruments. The Province uses derivatives including swaps, forward foreign exchange contracts, forward rate agreements, futures and options to hedge and minimize interest costs.

Expected Average Remaining Service Life: total number of years of future services expected to be rendered by that group of employees divided by the number of employees in the group.

Fair Value: the price that would be agreed upon in an arm’s length transaction and in an open market between knowledgeable, willing parties who are under no compulsion to act. It is not the effect of a forced or liquidation sale.

Financial Assets: assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations. Financial assets include cash; an asset that is convertible to cash; a contractual right to receive cash or another financial asset from another party; a temporary or portfolio investment; a financial claim on an outside organization or individual; and inventory.

Financial Instrument: liquid asset, equity security in an entity, or a contract that gives rise to a financial asset of one contracting party and a financial liability or equity instrument of the other contracting party.

Fiscal Plan: an outline of the government’s consolidated revenue and expense plan for the upcoming fiscal year and the medium term, including information on the projected surplus/deficit. The plan is formally presented in the Budget, which the government presents in the spring of each year and is updated, as required, during the year. The fiscal plan numbers can be different from the expenditures outlined in the Printed Estimates.

Fiscal Year: the Province of Ontario’s fiscal year runs from April 1 of a year to March 31 of the following year.

Floating Rate Notes (FRNs): debt instruments that bear a variable rate of interest.

Forgivable Loan: advances where the terms and conditions of the loan agreement allow for the non-repayment of the principal or accrued interest when certain conditions are met.

Forward Contract: a contract that obligates one party to buy, and another party to sell, a specified amount of a particular asset at a specified price, on a given date in the future.

Forward Rate Agreement: a forward contract in which one party pays a fixed interest rate and receives a floating interest rate.

Fund: fiscal and accounting entity segregated for the purpose of carrying on specific activities, or attaining certain objectives in accordance with special regulations, restrictions or limitations.

Futures: an exchange-traded contract that confers an obligation to buy or sell a physical or financial commodity at a specified price and amount on a future date.

Gross Domestic Product (GDP): the total unduplicated value of the goods and services produced in the economy of a country or region during a given period of time such as a quarter or a year. Gross domestic product can be measured three ways: as total income earned in current production, as total final expenditures, or as total net value added in current production.

Hedging: a strategy to minimize the risk of loss on an asset (or a liability) from market fluctuations such as interest rate or foreign exchange rate changes. This is accomplished by entering into offsetting commitments with the expectation that a future change in the value of the hedging instrument will offset the change in the value of the asset (or the liability).

Indemnity: an agreement whereby one party agrees to compensate another party for any loss suffered by that party. The Province can either seek or provide indemnification. 

Infrastructure: the facilities, systems and equipment required to provide public services and support private-sector economic activity including network infrastructure (e.g., roads, bridges, water and wastewater systems, large information technology systems), buildings (e.g., hospitals, schools, courts), and machinery and equipment (e.g., medical equipment, research equipment).

Loan Guarantee: an agreement to pay all or part of the amount due on a debt obligation in the event of default by the borrower.

Net Book Value of Tangible Capital Assets: historical cost of tangible capital assets less both the accumulated amortization and the amount of any write-downs.

Net Debt: the difference between the Province’s total liabilities and financial assets. It represents the Province’s future revenue requirements to pay for past transactions and events.

Nominal: an amount expressed in dollar terms without adjusting for changes in prices due to inflation or deflation. It is not a good basis for comparing values of GDP in different years, for which a “real” value expressed in constant dollars (i.e., adjusted for price changes) is needed. See Real GDP.

Non-Financial Assets: assets that normally do not generate cash capable of being used to repay existing debts. The non-financial assets of the Province are tangible capital assets.

Non-Tax Revenue: revenue received by the government from external sources. This also includes revenues from the sale of goods and services, fines and penalties associated with the enforcement of government regulations and laws; fees and licences; royalties; profits from a self-sustaining Crown agency; and asset sales.

Ontario Disability Support Program (ODSP): a program designed to meet the unique needs of people with disabilities who are in financial need, or who want and are able to work and need support. Ontarians aged 65 years or older who are ineligible for Old Age Security may also qualify for ODSP supports if they are in financial need.

Option: a contract that confers the right, but not the obligation, to buy or sell a specific amount of a commodity, currency or security at a specific price, on a certain future date.

Pension Actuarial Accounting Valuation: a valuation performed by an actuary to measure the pension benefit obligations at the end of the period or a point in time. The valuation attributes the cost of the pension benefit obligations to the period the related services are rendered by the members.

Pension Statutory Actuarial Funding Valuation: a valuation performed by an actuary to determine whether a pension plan has sufficient money to pay for its obligations when they become due. The valuation determines the contributions required to meet the pension benefit obligations.

Present Value: the current worth of one or more future cash payments, determined by discounting the payments using a given rate of interest.

Program Expense: total expense excluding interest on debt.

Public Accounts: the Consolidated Financial Statements of the Province along with supporting statements and schedules as required by the Financial Administration Act.

Real GDP: gross domestic product measured to exclude the impact of changing prices.

Recognition: the process of including an item in the financial statements of an entity.

Reserve: an amount included in the fiscal plan to protect the plan against unforeseen adverse changes in the economic outlook, or in the Provincial revenue and expense. Actual costs incurred by the ministry, which pertains to the reserve, are recorded as expenses of that ministry. See Contingency Fund.

Segment: a distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to help users of the financial statements identify the resources allocated to support the major activities of the government.

Sinking Fund Debenture: a debenture that is secured by periodic payments into a fund established to retire long-term debt.

Straight-Line Basis of Amortization: a method whereby the annual amortization expense is computed by dividing i) the historical cost of the asset by ii) the number of years the asset is expected to be used.

Surplus: the amount by which revenues exceed government expenses in any given year. On a forecast basis, a reserve may be included.

Swaption: an option granting its owner the right but not the obligation to enter into an underlying swap. Although options can be traded on a variety of swaps, the term swaption typically refers to options on interest rate swaps.

Tangible Capital Assets: physical assets including land, buildings, transportation infrastructure, vehicles, leased assets, machinery, furniture, equipment and information technology infrastructure and systems, and construction in progress.

Temporary Investments: investments that are transitional or current in nature and generally capable of reasonably prompt liquidation.

Total Debt: the Province’s total borrowings outstanding.

Total Expense: sum of program expense and interest on debt expense.

Transfer Payments: grants to individuals, organizations or other levels of government for which the government making the transfer does not

  • receive any goods or services directly in return, as would occur in a purchase or sale transaction;
  • expect to be repaid, as would be expected in a loan; or
  • expect a financial return, as would be expected in an investment.  

Treasury Bills: short-term debt instrument issued by governments on a discount basis.

Unrealized Gain or Loss: an increase or decrease in the fair value of an asset accruing to the holder. Once the asset is disposed of or written off, the gain or loss is realized.

Sources of Additional Information

The Ontario Budget

The Ontario government presents a Budget each year, usually in the early spring. This document outlines expected expense and revenue for the upcoming fiscal year.

The Estimates of the Province of Ontario

The government’s spending Estimates for the fiscal year commencing April 1 are presented to members of the Legislative Assembly following the presentation of the Ontario Budget by the Minister of Finance. The Estimates outline the spending plans of each ministry and are submitted for approval to the Legislative Assembly according to the Supply Act.

Ontario Finances

This is a quarterly report on the performance of the government’s Budget for the fiscal year. It covers developments during a quarter and provides a revised outlook for the remainder of the year.

Ontario Economic Accounts

This quarterly report contains data on Ontario’s economic activity.

PUBLIC ACCOUNTS OF ONTARIO - ANNUAL REPORT