2012 Ontario Economic Outlook and Fiscal Review

Chapter I: Protecting Jobs and Public Services

Highlights

Section A: Jobs and the Economy

  • Ontario’s plan to eliminate the deficit is working, on track and achieving results.
  • Ontario is keeping the cost of postsecondary education affordable through the 30% Off Ontario Tuition grant and has introduced a streamlined application process for over 300,000 Ontario Student Assistance Program (OSAP) applicants and recipients.
  • Since 2003, Ontario has invested about $75 billion in long-overdue improvements to its schools, hospitals, highways and transit systems. These investments have created or preserved close to 100,000 jobs on average each year.
  • Ontario’s tax system is one of the most competitive in the industrialized world for new business investment with its Harmonized Sales Tax, reduced Corporate Income Tax rates for large and small businesses, and elimination of the Capital Tax.
  • Since 2003, the Province has added over 10,000 megawatts of new and refurbished capacity for a stronger and more reliable supply of electricity. 
  • The Industrial Electricity Incentive, a program beginning in January 2013, will reduce electricity costs for new and expanded industrial facilities. 
  • As announced in the 2012 Budget, the Jobs and Prosperity Council will advise the government on a path to sustainable growth and on the development of a Jobs and Prosperity Fund, with a focus on productivity growth.
  • The government launched its first four new teams to drive productivity and reform in the administration of key government programs and services.
  • Ontario is working with First Nation communities, the federal government and Cliffs Natural Resources to develop the largest chromite mine and processing facility in North America.
  • Ontario continues to take significant steps to enhance revenue integrity and tax administration, including provincial oversight of raw leaf tobacco, which came into force on October 1, 2012, as well as working with the federal government to address situations where corporations use tax planning techniques to avoid paying their fair share of Ontario’s taxes.
  • As a result of the government’s 2010 automobile insurance reforms, auto insurance rates have declined by 0.28 per cent in the first three quarters of this year.
  • An important area of continuing focus is tackling fraudulent and abusive practices in auto insurance. In July 2012, the government released a status update from the Auto Insurance Anti-Fraud Task Force; the final report and recommendations from the Task Force are expected later this fall.
  • Ontario’s financial services sector employs 370,000 Ontarians and is growing more quickly than employment in the economy. Toronto is one of the top 10 financial centres in the world based on the Global Financial Centres Index.
  • The government is strengthening the securities regulatory framework by encouraging the Ontario Securities Commission to become a more responsive and efficient regulator.

Section B: Public-Sector Compensation

  • The Putting Students First Act, 2012 will protect full-day kindergarten, keep class sizes at current levels and protect nearly 20,000 education jobs, and would support savings of $2 billion over two years
  • The proposed Protecting Public Services Act would, if passed, restrain compensation for unionized employees of the broader public sector for two years; freeze earnings for two years for managers who are eligible for performance pay; introduce a permanent salary cap for new executives at no more than double the Premier’s salary; support avoiding increased spending of $2.8 billion over three years; and help to protect roughly 55,000 public-sector jobs.
  • To ensure that public-sector pension plans are sustainable and affordable for members and Ontarians, the government continues to engage in extensive consultations with relevant plans on freezing contribution rates until the deficit is eliminated.

Section C: Transforming Public Services

  • The government has made significant progress on its plan for transformation to a sustainable health care system that continues to provide high-quality patient care
  • The government has a record of achieving savings and improving the efficiency of public services. Planned savings measures from the 2011 Budget and 2012 Budget are on track.

Section A: Jobs and the Economy

Jobs and the Economy

The Ontario government continues to take strong action for a stronger Ontario. The government has been encouraging economic growth and prosperity by focusing on five key economic fundamentals:

  • renewing the focus on eliminating the deficit, while protecting gains in education and health care;
  • investing in Ontario’s highly skilled, educated and diverse workforce;
  • investing in modern, sustainable and efficient public infrastructure;
  • creating an internationally competitive tax and regulatory environment; and
  • strengthening Ontario’s electricity system.

Eliminating the Deficit

Ontario has laid out a plan to eliminate the deficit. The plan is working, on track and achieving results. The results from the 2011–2012 Public Accounts of Ontario confirmed a $13.0 billion deficit for 2011–12, $3.3 billion ahead of the 2011 Budget Plan and 47 per cent lower than the 2009–10 deficit of $24.7 billion forecast in the fall of 2009. Ontario will continue to hit its fiscal targets while protecting the gains made in education and health care.

Education

Ontario’s postsecondary education and training system is fundamental to economic growth and the province’s future prosperity. At 64 per cent, the province has one of the highest rates of postsecondary education attainment in the world.

Ontario continues to make significant investments in the education and skills development of Ontarians, ranging from full-day kindergarten to more spaces for graduate students in universities. Ontario is keeping the cost of postsecondary education affordable by continuing to provide the 30% Off Ontario Tuition grant. The government has also introduced OSAP Express, a streamlined application process for over 300,000 Ontario Student Assistance Program (OSAP) applicants and recipients. In addition, the government recently consulted on a postsecondary education discussion paper to solicit ideas on ways to improve learning options, enhance quality and ensure long-term financial sustainability of the sector.

Infrastructure

Another key driver of Ontario’s economic growth and long-term prosperity is modern, sustainable and efficient public infrastructure. The government continues to support Ontario’s public infrastructure, having already invested about $75 billion since 2003. These investments have created or preserved close to 100,000 jobs on average each year and have made long-overdue improvements to the province’s schools, hospitals, highways and transit systems. The government’s strong track record of building infrastructure will continue, with investments that are focused and that align with the commitment to eliminate the deficit by 2017–18.

Tax System

The government has also transformed Ontario’s tax system into one of the most competitive in the industrialized world for new business investment by moving to the Harmonized Sales Tax, reducing Corporate Income Tax rates for large and small businesses, and eliminating the Capital Tax. It has also eliminated thousands of business regulatory requirements.

Clean Energy

A strengthened and more reliable supply of electricity supports a growing economy. The province has added over 10,000 megawatts (MW) of new and refurbished capacity since 2003. Hydro One Inc. has invested more than $9 billion to improve, expand and replace equipment in its transmission and distribution systems, including upgrades to more than 7,500 kilometres of power lines.

Ontario is on track to phase out coal-fired electricity by 2014. In 2011, more than 80 per cent of the power generated in Ontario came from clean energy sources such as nuclear, water and other renewables. This is helping to improve air quality and protect the health of families. Over 20,000 clean energy jobs have already been created as a result of the government’s plan for clean energy and conservation.

Economic Challenges

Ontario is not immune to a changing global economy. Ontario’s economy is growing modestly and faces significant challenges due to a difficult global economic setting. Higher oil prices and a strong Canadian dollar have affected the competitiveness of many Ontario firms. Slower growth in U.S., European and Asian markets has also affected business and consumer confidence and trade.

A major challenge facing Ontario’s economy is low productivity growth compared to key competitors, including the United States.

Business investment in research and development (R&D) and information and communications technologies (ICT) is a key driver of productivity performance. However, Ontario businesses are underinvesting in both areas relative to businesses in the United States.

Entrepreneurship is another important driver of innovation and productivity. Although entrepreneurs everywhere face a degree of risk, and there is potential for failure, there is some evidence that entrepreneurs in Ontario may encounter additional hurdles and disincentives to growth. These include more restrictive access to early-stage financing and entry into certain regulated industries. Often, many small, innovative firms also lack the necessary business expertise and networks to break into export markets and global supply chains.

Increasing exports can also help boost productivity and the shift to high value-added manufacturing and services. Ontario’s exports to the United States have fallen over the past decade, lowering total exports. To help grow and diversify Ontario’s exports, it is important to make greater inroads into fast-growing emerging economies, while increasing and building on Ontario’s exports to the United States. Premier McGuinty will take part in his fourth trade mission to China in early 2013 to help the economy and create more jobs.

A highly educated and skilled workforce is one of Ontario’s key competitive advantages. However, there are challenges that require a coordinated response by governments, employers and educational institutions. For example, although Ontario’s youth unemployment rate has declined since the recession, it remains high. As well, compared to international competitors, Canadian employers invest less in training on a per capita basis and Canadian workers have a lower rate of participation in workplace training.

Update on 2012 Budget

Jobs and Prosperity Council

Spurring strong and sustainable economic growth requires the combined efforts of business, labour and the public sector. That is why the government has brought together these key players into a Jobs and Prosperity Council, announced in the 2012 Budget. Reporting to the Premier and headed by RBC President and CEO Gordon Nixon, the Council will give the government advice in the next few months on a path to sustainable growth that will also help inform the 2013 Budget.

The Council will advise the government on the development of a Jobs and Prosperity Fund, with a focus on productivity growth. It will also advise on finding $250 million in savings and a 25 per cent reduction in administrative costs for business support programs.

As part of its report, the Council will explore opportunities in the following areas as well:

  • how to build a culture of entrepreneurship and innovation by improving the linkages between corporate leaders and problem solvers such as engineers and scientists in Ontario’s universities and colleges;
  • how to expand the pool of risk capital that is available to innovative entrepreneurial firms;
  • how the government can further reduce the regulatory burden on business;
  • how to encourage businesses to expand into faster-growing
    markets; and
  • how to leverage the global contacts and international knowledge that newcomers bring to Ontario, taking into consideration recommendations from Ontario’s Expert Roundtable on Immigration.

Productivity Teams

The government launched its first four new teams to drive productivity and reform in the administration of key government programs and services. The productivity teams consist of internal central agency and ministry staff working in partnership with external experts to undertake transformational activities in specific areas of focus. The four productivity teams are focused on work in the following areas:

  • Transfer Payment Accountability, led by the Ministry of Children and Youth Services. This project aims to enhance accountability with the ministry’s transfer payment agencies through more effective contracting of services. Contracting will be based on a robust accountability framework with defined performance and outcome measures. This will lead to better client outcomes;
  • Transformation of Delivering Benefits to People, led by the Ministry of Finance. This project aims to develop a common client identifier for use across Ontario’s income-based benefits programs while protecting privacy. It will support the implementation of the “My Benefits Account” to provide simplified one-stop access to multiple income-based benefits and programs and support more efficient program administration and delivery;
  • Jobs and Prosperity — Restructure Existing Business Support Programs, led by the Ministry of Economic Development and Innovation. This project aims to provide advice to the government on consolidating and refocusing existing business support programs through the Jobs and Prosperity Council; and
  • Information Technology Transformation — Consolidation of Government Network Services Procurement, led by the Ministry of Government Services. This will develop a multi-service provider business model to improve service flexibility of data network services across the Ontario government while enhancing cost effectiveness.

Reporting to the Treasury Board/Management Board of Cabinet, the initial productivity teams are expected to complete their work in the fourth quarter of 2012–13. Additional teams will be established to focus on other priority areas on a year-round basis to support the effective implementation of reform in the public sector.

Northern Ontario and the Ring of Fire

Ontario is a hotbed of mineral development and is benefiting from global demand for resources. Ontario ranks among the top 10 world producers of nickel and platinum. The mining industry in the province is valued at more than $10 billion and it creates over 77,000 direct and indirect jobs in Ontario.

Ontario’s Ring of Fire, an area in the Far North with deposits of important minerals, offers a unique economic development opportunity for northern Ontario.

In May 2012, Cliffs Natural Resources Inc., an international mining and natural resources company, announced a $3.3 billion investment including a chromite mine, a transportation corridor and a $1.8 billion ferrochrome processing facility in Capreol, near Sudbury.

The mine and mill development, as well as the construction and operation of transportation infrastructure, will create up to 750 direct jobs, plus hundreds of indirect employment opportunities for northern Ontarians and First Nations communities.

Ontario wants to ensure a strong partnership with First Nations on proposed developments. The Province is working with First Nations and the federal government to discuss environmental monitoring, socioeconomic and community development, regional infrastructure and resource revenue sharing opportunities. The Province has signed and renewed memorandums of understanding or cooperation with First Nations communities, including Marten Falls and Webequie First Nations.

Industrial Electricity Incentive

The Industrial Electricity Incentive is a program that will reduce electricity costs for new and expanded industrial facilities, in exchange for the creation of new jobs and for new business investment in the province. The program will launch in January 2013 and is designed to encourage industrial companies to make use of Ontario’s strong energy supply and promote long-term economic development.

Enhancing Revenue Integrity

Ontario is continuing to take significant steps to enhance revenue integrity and tax administration:

  • Provincial oversight of raw leaf tobacco came into force on October 1, 2012. A regulated grace period until April 1, 2013, will help facilitate a smooth transition and allow the Province to discuss administrative requirements with stakeholders and First Nations partners. Consultations and discussions will also take place with key stakeholders and First Nations partners regarding potential Tobacco Tax Act amendments intended to provide additional enforcement and compliance tools. The Province is also working with First Nations to explore ways to modernize the system for allocating untaxed tobacco products as well as options related to First Nation self-regulation of tobacco on reserve.
  • The Province continues to work with the federal government to address the underground economy. In addition, the Province is working with the federal government to address situations where corporations use aggressive tax planning techniques to avoid paying their fair share of Ontario’s taxes.
  • The Ministry of Finance is also working with other ministries and broader public service entities with respect to compliance audit opportunities, including making greater use of the ministry’s risk assessment system and redeploying audit resources to generate additional revenues. Similarly, the ministry is pursuing opportunities with other ministries to collect amounts owed to them on their behalf beginning in 2013–14.

Employment and Training Services Integration

The 2012 Budget announced measures to further modernize employment and training services, including plans to undertake integration of employment and training services across the government with Employment Ontario. The Ministry of Training, Colleges and Universities is working with a number of ministries to develop options on the best way to implement this initiative.

Service Delivery Efficiencies

The Ministry of Finance is working with municipal partners to improve service delivery and administrative efficiency, and has implemented a shared delivery model for the housing allowance component of the Investment in Affordable Housing for Ontario program. Approximately 4,500 clients will be assisted throughout the duration of the program, which ends in December 2017.

Automobile Insurance

The government’s 2010 automobile insurance reforms continue to stabilize premiums for drivers across Ontario. Auto insurance rates declined by 0.28 per cent in the first three quarters of this year. An important area of continuing focus that builds on the government’s reforms has been to tackle fraudulent and abusive practices in auto insurance.

In July 2012, the government released a status update from the Auto Insurance Anti-Fraud Task Force. The update sought public comment on potential recommendations and reported on research results. Since then, the Task Force has held extensive consultations. The government looks forward to receiving the final report and recommendations from the Task Force later this fall.

Financial Services

The financial services sector continues to grow and remains a major part of Ontario’s economy. The sector directly employs 370,000 Ontarians and is growing more quickly than employment in the economy. Toronto is the financial capital of Canada and, with the help of the government’s Open Ontario plan, has become one of the top 10 financial centres in the world based on the Global Financial Centres Index.

Ontario’s financial institutions are world class. They withstood the challenges brought on by the global economic crisis, helping Canada gain international recognition. In fact, for five consecutive years, the World Economic Forum has ranked Canada as having the soundest banks in the world.

The financial services sector is vital as it supports capital and investment opportunities in all other sectors of the province’s economy.

TABLE 1.1 Top 10 Global Financial Centres
1. London 6. Seoul
2. New York 7. Tokyo
3. Hong Kong 8. Chicago
4. Singapore 9. Geneva
5. Zurich 10. Toronto
Z/Yen Group Ltd., Global Financial Centres Index. Annual figures as of September 2012.

The government is strengthening the securities regulatory framework by encouraging the Ontario Securities Commission (OSC) to become a more responsive and efficient regulator. As set out in the 2012 Budget, the Province has enacted amendments to the Securities Act that would allow the OSC to conduct hearings on a timelier basis and play a greater role in educating investors and strengthening financial literacy.

In its 2012 Statement of Priorities, the OSC identified improving access to capital, particularly for startup and small businesses in Ontario, as a key deliverable. It plans to put forward new streamlined regulations designed to make the raising of capital less costly and less time consuming for both new and smaller companies. The Commission is also considering broadening the range of exemptions available to companies wishing to raise capital without incurring the time and expense of undertaking a public offering of securities. In addition, the OSC will be undertaking comparative research on capital-raising regimes in other jurisdictions to identify additional potential initiatives.

In order to have safer, more efficient and more competitive capital markets for all Canadians, Ontario continues to work with the federal and other provincial governments to restructure and improve Canada’s securities regulatory framework.

Section B: Public-Sector Compensation

Protecting Jobs and Public Services

The 2012 Budget laid out a long-term plan for managing public-sector compensation costs –– including wages, salaries, benefits and pensions — as a key part of the government’s plan to eliminate the deficit by 2017–18.

With over half of all government spending going to compensation, managing public-sector compensation costs is essential to eliminating the deficit and to protecting the health and education services that Ontario families rely on.

Ontarians expect their government and its broader public-sector (BPS) partners to work together and reach agreements that deliver on shared objectives.

The fiscal plan provides no funding for incremental compensation increases for new collective agreements. To achieve the fiscal plan, the government is taking a balanced approach that includes an appreciation of the links between labour relations, compensation, productivity and services; a commitment to dialogue; respect for Charter rights; and the resolve to ensure that long-term sustainability of public services is put ahead of short-term goals.

“Where agreements cannot be reached that are consistent with the government’s plan to eliminate the deficit and protect priority public services, or in the face of significant disruption, the government is prepared to propose necessary administrative and legislative measures.”

2012 Ontario Budget, p. 74.

Protecting Jobs and the Gains Made in Public Education

The Putting Students First Act, 2012 — based on the memorandum of understanding between the government and the Ontario English Catholic Teachers Association (OECTA) — gives school boards, teachers and support staff until December 31, 2012, to engage in local collective bargaining and reach agreements consistent with the government’s fiscal and policy priorities. These priorities include maintaining investments in full-day kindergarten, keeping class sizes small and protecting funds earmarked for the classroom.

By protecting full-day kindergarten, keeping class sizes at current levels and continuing to focus on students and classrooms, the government is protecting nearly 20,000 education jobs, including 3,800 for full-day kindergarten.

Over the next two years, the Putting Students First Act, 2012 would support savings of $2 billion.

Further Action to Eliminate the Deficit and Protect Jobs and Public Services

On September 26, 2012, the government announced it would consult on draft legislation that proposes to freeze compensation for all executives and managers across the Ontario Public Service (OPS), board-governed agencies and the BPS who are eligible for performance pay. It also proposes to ensure future BPS collective agreements are consistent with the Province’s goals to eliminate the deficit and protect jobs and public services.

The Protecting Public Services Act would, if passed:

  • restrain compensation for two years for unionized employees of the BPS and require employers to negotiate agreements that protect key services;
  • freeze earnings for two years for managers who are eligible for performance pay in the OPS, agencies and BPS so they would not earn more this year and next than they did last year; and
  • introduce a permanent salary cap for new executives at no more than double the Premier’s salary — a cap of $418,000 per year.

If passed, the draft legislation would apply its compensation restraint measures upon proclamation, but not to existing collective agreements. It would respect the bargaining process for future collective agreements while ensuring that the next agreement that any bargaining parties reach after the law is in force would cover at least two years and would be subject to review and approval for consistency with the Province’s fiscal plan and protection of services. These provisions would sunset when the provincial budget is balanced.

All parties in the BPS would be encouraged to engage in a full collective bargaining process and employers would confirm whether resulting agreements meet the Province’s fiscal goals without reducing services.

When the Finance Minister or delegate determines that collective agreements do not meet these goals, parties would be given another opportunity to collectively bargain. After consultation, a collective agreement consistent with the government’s goals may be set by the Province.

The proposed legislation would support avoiding increased spending in the BPS of $2.8 billion over three years and help to protect roughly 55,000 public-sector jobs.

The Province is taking strong action to achieve its fiscal targets by reducing costs while protecting front-line services. The proposed draft legislation would build on other initiatives:

  • a wage freeze for MPPs of five years;
  • pay restraint measures for designated executives at Ontario’s hospitals, colleges, universities, school boards and designated agencies; and
  • ongoing negotiations with the Ontario Medical Association (OMA) on a new Physician Services Agreement.

Public-Sector Defined Benefit Pension Plans

As part of the 2012 Budget, the government proposed measures to promote the sustainability, affordability and efficiency of Ontario’s public-sector pension plans. These measures build on recent pension reforms, recommendations of the Commission on the Reform of Ontario’s Public Services and the Province’s temporary solvency funding relief framework, and fall into three categories:

  • those affecting jointly sponsored pension plans (JSPPs);
  • those affecting single-employer pension plans (SEPPs); and
  • those achieving efficiencies in pension fund management.

Jointly Sponsored Pension Plans

Many of Ontario’s largest public-sector pension plans are jointly sponsored. Decisions on benefit levels and contributions, as well as responsibility for funding shortfalls, are shared between representatives of employers and plan members. If the joint sponsors cannot reach an agreement on how to address a funding shortfall, the Pension Benefits Act requires that the funding gap be addressed through contribution increases.

The 2012 Budget noted that contribution rates for many of these plans had risen significantly in response to recent funding challenges. To ensure that JSPPs are sustainable and affordable for members as well as other Ontarians, who as taxpayers fund employer contributions, the government announced its intention to consult on a legislative framework that would freeze contribution rates until the deficit is eliminated. During the freeze period, plans that experience new funding shortfalls would be required to reduce future benefits, subject to certain exceptions.

The government continues to engage in extensive consultations with affected plans on this matter. The Province will continue to work with these plans to meet the objectives laid out in the 2012 Budget while balancing the interests of members, employers and taxpayers.

Single-Employer Pension Plans

Many of Ontario’s public-sector employees, particularly those in the university and electricity sectors, are members of SEPPs. Under these plans, the publicly funded employer is solely responsible for funding shortfalls and typically contributes more than plan members — in some cases, two or three times more.

The 2012 Budget announced that the government would consider various tools to enhance the sustainability of public-sector SEPPs, including adjustments to the temporary solvency relief measures to encourage more equal contribution sharing between employers and plan members. The government expects that public-sector SEPPs will move to a 50/50 cost sharing formula for ongoing contributions within five years.

In the coming months, the government will announce the measures that it believes will help achieve this objective. It will also be consulting with those affected on removing barriers to the creation of JSPPs in the electricity sector.

Pooled Investment Management

Other countries, Canadian provinces and U.S. states have identified the benefits of pooling pension fund investments and several have created new entities to manage these assets. The 2012 Budget announced the government’s intention to introduce a legislative framework that would facilitate pooled investment management for public-sector pension plans.

In May 2012, Bill Morneau was appointed as Pension Investment Advisor to consult with interested parties and develop recommendations for government. Mr. Morneau is Executive Chairman of Morneau Shepell, the largest Canadian firm providing human resource support, pension plan consulting and administration services, and works extensively with organizations in the design and delivery of their employee benefits and compensation programs.

Implementing a pooled investment management framework would allow public-sector pension plans to benefit from reduced investment management costs, improved access to alternative investments and enhanced risk management. These changes are an important step towards improving the sustainability of these plans to the benefit of plan members and taxpayers. Participating plans would continue to retain ownership of their assets. The government looks forward to receiving Mr. Morneau’s recommendations.

Section C: Transforming Public Services

Health Care

Since 2003, the government has made significant progress in improving Ontarians’ access to care. These improvements include:

  • more than 3,400 additional doctors are practising in the province;
  • over 2.1 million more Ontarians now have access to a family physician;
  • more than 12,600 nursing positions have been created;
  • 200 Family Health Teams have been created, providing care to over 2.8 million Ontarians;
  • 26 Nurse Practitioner-Led Clinics have opened, which will serve the needs of over 40,000 patients who did not have a family care provider;
  • more than 260 first-year undergraduate medical school spaces have been added and four new medical education campuses are successfully operating;
  • the number of educational spaces for primary care nurse practitioners has doubled; and
  • wait times have been reduced for cancer and cataract surgeries, cardiac procedures, hip and knee replacements, and MRI/CT scans, and Ontario is leading the nation with these reductions.

These investments and results have provided a strong foundation for transformation to a sustainable and high-quality health care system.

In January 2012, the government released Ontario’s Action Plan for Health Care, which establishes the road map for this transformation. The government has made significant progress over the first half of the year to establish the groundwork required to implement initiatives that deliver on the three key goals of the Action Plan:

  • keeping Ontario healthy;
  • faster access and a stronger link to family health care; and
  • providing the right care, at the right time, in the right place.

Keeping Ontario Healthy

On May 18, 2012, the government announced the Healthy Kids Panel, which will bring together a group of experts to develop a strategy to reduce childhood obesity in Ontario by 20 per cent over five years. The Panel is working with health care leaders, non-profit organizations and industry to develop evidence-based recommendations to minimize the factors that contribute to obesity during childhood. The Healthy Kids Panel will report back with these recommendations in late 2012.

Faster Access and a Stronger Link to Family Health Care

Increasing access to care by enhancing the potential of health care workers will help ensure Ontarians receive the right care and reduce pressure on other parts of the health care system.

To support this goal, the government is allowing pharmacists to administer the influenza vaccine to Ontarians over the age of five beginning this fall. This will enhance Ontarians’ access to the vaccine, while also reducing potential future health care costs by preventing more serious and costly illnesses.

Providing the Right Care, at the Right Time, in the Right Place

Providing Ontarians with timely access to the right care at the right time, in the right place, is an essential component of health care transformation. This means ensuring patients, particularly seniors, receive the care they need as close to home as possible. The government has taken action to improve seniors’ quality of life at home and to help reduce pressures on more costly hospital and long-term care services.

On May 24, 2012, the government appointed Dr. Samir Sinha, Director of Geriatrics at Mount Sinai and the University Health Network Hospitals, to lead the development and implementation of the Seniors Care Strategy. Dr. Sinha is consulting broadly and will provide recommendations to the government in the fall on how to support seniors at home and in their community, reducing hospital readmission rates and pressure on long-term care homes.

The Healthy Homes Renovation Tax Credit will assist with the cost of permanent home modifications to improve accessibility and mobility for seniors at home, so they can live independently for as long as possible. The cost of the new tax credit will be fully offset by savings and efficiencies from other government programs. This tax credit is expected to support 10,500 jobs and $800 million in economic activity throughout the economy.

To support an additional 90,000 seniors who receive care at home, the government has also committed to an additional three million Personal Support Worker hours over the next three years.

Funding Reform

Changing the way health care services are funded is another key component of the plan to transform health care. As of April 2012, the government has moved forward with implementing a patient-centred funding model. This approach will be phased in over a three-year timeframe, beginning with hospitals and extending to long-term care homes and Community Care Access Centres.

The new model bases funding on the types and volume of services and treatments that providers deliver. Funding is directed to providers that deliver more efficient services and treatments.

Education

Exceptional teachers and support staff are the driving force that has made Ontario’s schools among the best in the world. By working with its education partners, the government has achieved remarkable gains in education over the past nine years including:

  • smaller class sizes, with 91 per cent of primary classes having 20 or fewer students compared to 31 per cent in 2003;
  • more than 13,400 additional teaching positions funded since 2003;
  • more than 27,000 renewal projects and 570 new schools completed or underway across the province since 2003;
  • 70 per cent of Grade 3 and 6 students mastering reading, writing and math — Education Quality and Accountability Office (EQAO) results have increased by 16 percentage points since 2003;
  • more high school students graduating — 82 per cent in 2010–11, up from 68 per cent in 2003–04; and
  • 210,000 more postsecondary students, including 60,000 more apprentices since 2003.

The government has also made tremendous progress on its commitment to deliver full-day kindergarten in every publicly funded elementary school by September 2014. This fall, the program is available in 1,700 schools, benefiting 122,000 children. Almost half of Ontario’s four- and five-year-olds are now getting the best possible start by attending full-day kindergarten. By September 2013, about 184,000 children will be able to participate in the program, which will reach approximately 250,000 children across Ontario when fully implemented.

The Putting Students First Act, 2012 was passed on September 11, 2012. Over the next two years, it would support savings of $2 billion, while ensuring the Province remains on track to building the best-educated workforce, rolling out full-day kindergarten and protecting student achievement. It provides the right balance between reducing the deficit and ensuring Ontario’s students continue to learn and thrive in world-class schools.

Strengthening the Children’s and Social Services Sector

Protecting social services while ensuring that these services are sustainable over the long term remains a priority for the government. As outlined in the 2012 Budget, ongoing changes in the children’s and social services sector will ensure that support is available to help individuals and families reach their social and economic potential.

Youth Action Plan

In August 2012, the government launched Ontario’s Youth Action Plan — a balanced approach to keeping neighbourhoods safe for families by helping young people find jobs, succeed and contribute positively in their communities.

By taking immediate action to expand employment and mentorship opportunities for young people living in underserved and disadvantaged communities, the Youth Action Plan will benefit an additional 13,000 young people each year.

Ontario continues to work with communities and other levels of government to develop a province-wide, evidence-based youth strategy. As part of this strategy, the Province will conduct a cross-government review of programs to ensure that resources are aligned and effectively targeted to achieve intended outcomes.

Improving Child Welfare Outcomes

The Commission to Promote Sustainable Child Welfare completed its work in September 2012. Building on the Commission’s work, the government will continue to work with children’s aid societies to better focus resources on improving outcomes for children and youth receiving child protection services, while containing costs through agency amalgamations, back-office consolidations and shared service delivery. These changes will be complemented by developing a new funding model, establishing new approaches to accountability, and improving service delivery and financial management by implementing the Child Protection Information Network.

Reforming Social Assistance

As announced in the 2012 Budget, the government is committed to reforming social assistance into a system that more effectively serves the people it is intended to help, and better supports the social and economic health of communities.

Transforming Natural Resources Services

The government is modernizing the Province’s role in natural resources management to operate on a more cost-efficient basis. The review process includes public consultations on automating the ministry’s approvals process for permits and licences.

Update on Planned Savings Measures

The government has a record of achieving savings and improving the efficiency of public services. Building on past successes, the government is committed to reforming Ontario’s public services by identifying new ways to achieve value and better ways to deliver the core services that Ontarians depend on.

In both the 2011 Budget and 2012 Budget, Ontario committed to taking strong actions across government to manage growth in expense while protecting the gains made in education and health care.

Planned Savings of Nearly $1.5 Billion Over Three Years

The 2011 Budget announced savings of nearly $1.5 billion across government between 2011–12 and 2013–14. These savings were planned in three key areas: operational efficiencies and consolidation; streamlining programs; and further efficiencies in the health care system.

The government remains on target to achieve these savings measures, which include $0.4 billion in 2012–13 and $0.6 billion in 2013–14. Savings of $0.6 billion are also projected to continue into 2014–15.

Update on Expense Management Measures — $4.9 Billion Over Three Years

The 2012 Budget included an Addendum, Report on Expense Management Measures, that provided a detailed list of planned savings totalling $4.9 billion between 2012–13 and 2014–15.

These measures will be achieved by removing overlap and duplication, delivering services more efficiently, and focusing on core business. The government is on track to achieve these savings.

Additional Savings Announced Since the 2012 Budget

On April 25, 2012, the government announced updates to the 2012 Budget that included proposals to:

  • generate an additional $55 million annually in savings by further lowering the price the government pays for the most popular generic drugs; and
  • further reduce spending on consultants by $20 million in 2012–13.
TABLE 1.2 Planned Savings
($ Billions)
  2012–13 2013–14 2014–15 Update
2011 Budget Savings Strategies (0.4) (0.6) (0.6) On track
2012 Budget — Addendum Measures (1.0) (1.7) (2.2) On track
Additional Savings since the 2012 Budget (0.1) (0.1) (0.1) On track
Total Savings (1.5) (2.3) (2.9) On track
Notes: The 2011 Budget savings of nearly $1.5 billion over three years included $0.4 billion in 2011–12.
Numbers may not add due to rounding.

By taking action to manage expense and building these savings into the fiscal plan, the government has succeeded in meeting part of the challenge to ensure that it remains on track to eliminate the deficit by 2017–18.

Smart Approaches to Infrastructure Investment

The use of Alternative Financing and Procurement (AFP) is one way the Province is making smart investments in infrastructure that work within the current economic and fiscal environment. A made-in-Ontario success story, the AFP model effectively delivers large infrastructure projects using the best of private-sector resources and expertise to attain on-time and on-budget results. Infrastructure Ontario is managing 79 capital projects valued at about $30 billion for the Ontario government using the AFP method. The value for money savings of the projects that Infrastructure Ontario has brought to market are about $3 billion.

The Province has also embarked on a Realty Transformation Strategy as announced in the 2012 Budget. When fully implemented, this will reduce the Ontario Public Service’s footprint by about one million square feet in Toronto, which is comparable to 43 storeys in an office tower. As part of the Realty Transformation Strategy, the government will divest itself of ownership of buildings where it makes sense, which will generate significant savings and free up resources for government priorities. The Province is still committed to operations in the communities where it currently has offices. Within the next few months, Infrastructure Ontario is expected to move forward with the sale and leaseback of various government-owned buildings across the province.

Ontario Northland Transportation Commission Divestment

The end of Provincial subsidies for the Ontario Northland Transportation Commission (ONTC) will help eliminate the deficit and protect the Province’s gains in health care and education. The ONTC has historically operated at a deficit, spending more money on operations and capital repairs than it makes in revenue. For example, ridership on the Northlander train is not commercially viable, and taxpayers can no longer afford the $400 per-passenger subsidy needed to maintain this service. Moreover, based on current trends, supporting the ONTC would require approximately $100 million annually.

Divestment provides the ONTC and its workforce with an opportunity to become commercially viable and compete to win contracts. Savings will also help the government to continue to support valuable northern Ontario job creation and infrastructure programs, such as the Northern Ontario Heritage Fund Corporation and the Northern Highways Program.

On March 23, 2012, the Province announced its plans to divest the ONTC. Important steps are now being taken in that process, including:

  • shutting down the Northlander train from Cochrane to Toronto on September 28, 2012. Every community served by the Northlander train is also served by the ONTC bus service, which continues to provide reliable service to northerners;
  • transferring the Niska I ferry, which runs between Moosonee and Moose Factory Island, to the Owen Sound Transportation Company, with no changes in service; and
  • starting a fair and competitive sale process, led by Infrastructure Ontario, for Ontera telecommunications.

The Polar Bear Express train will continue to provide the same service to rural and remote communities between Cochrane and Moosonee.

ServiceOntario

ServiceOntario provides Ontarians with fast, easy access to government information and services, including registrations, certifications and licensing. This innovative government organization already has an exceptional track record, but there is still room for improvement. For example, greater efficiencies can be gained by providing customers with lower-cost, secure online options to conduct their business with government. However, unlocking these benefits entails a substantial, upfront investment.

The government has passed legislation to enable both public–private partnerships and the ongoing transformation of services, including the continued adoption of online services. The government is exploring potential options and will draw upon lessons learned and successes from previous public–private partnerships to the development of a preferred approach for ServiceOntario. The Province will be moving forward with a competitive process in the coming months.