: 2016 Ontario Economic Outlook and Fiscal Review
Foreword

Introduction

Like most jurisdictions around the world, Ontario was affected by the global economic recession that began in 2008. But instead of cutting jobs and services, we created a plan to build Ontario up. We chose to improve our schools, strengthen health care and invest in modern infrastructure. We chose to support our business community so it can rise to meet the challenges of a technology-driven, competitive global economy.

Our plan is working.

Ontario’s economy has continued to grow in an uncertain global environment. More than 641,000 net new jobs have been created since the low point of the global economic recession. Our economic growth in the past two years has outpaced Canada’s, and private-sector economists expect Ontario to continue to be a growth leader. Jobs are being created, more people are getting the training they need to participate in the workforce and the unemployment rate remains below the national average. We led the drive to a national consensus to enhance the Canada Pension Plan, which would narrow the savings gap for millions of Canadians, especially for those who lack the security of a workplace pension plan.

Our investments in infrastructure — the largest in Ontario’s history — are building better schools and hospitals. They are helping goods move faster to market, and families get home faster at night. And these investments are helping to grow the economy and create jobs.

Today, children are getting a head start in their education through full-day kindergarten. More Ontario students are graduating from high school than ever before. Two-thirds of all Ontario adults have a postsecondary credential — a rate higher than in any country in the Organisation for Economic Co-operation and Development (OECD). Changes in student financial aid will now ensure that thousands of students will obtain greater access to advanced education and graduate with lower levels of student debt.

We are providing quality health care faster and closer to home. Ninety-four per cent of Ontarians have a family health care provider. Since 2013 alone, we have opened seven new hospitals and completed 13 significant hospital redevelopment projects.

But we know that not all Ontarians are fully benefiting from our economic recovery. There are still too many Ontarians out of work or struggling to make ends meet. Even those with a steady income are concerned about everyday costs: thinking about how they will pay their monthly electricity bill, afford to send their kids to college or university or buy their first house.

We believe it is our collective responsibility to ensure that everyone shares in the prosperity we are building together. As evolving economic and social realities impact how Ontarians work, live and conduct business, more than ever, a balanced plan is needed.

That is our plan.

It is strengthening our economic foundation and embracing the opportunities of a low-carbon economy. It is built on our commitment to invest in the key public services on which Ontarians rely and to provide more people with access to education and training. It is helping us build a fair society and ensure everyone has the opportunity to achieve their full potential.

Fostering a More Innovative and Dynamic Business Environment

To grow the Ontario economy and create jobs, we are dedicated to fostering
a dynamic, competitive business climate in which innovation thrives. From reducing regulatory burdens to lowering electricity costs to helping businesses keep pace with technological change and expand their operations, the Province is working to create the conditions for economic growth, now and in the future.

As a result of the strategic steps we have taken since the global recession, Ontario offers a competitive tax environment for businesses, a highly skilled workforce and world-class research institutions. Investors from around the world continue to view Ontario as one of the most attractive places to invest.

To build on these advantages, the 2016 Budget announced our five-year, $400 million Business Growth Initiative, which will help create an innovation-driven economy; scale up Ontario firms into international leaders; and modernize the regulatory system, resulting in lower business costs. This fall, we are launching new programs that will provide access to the capital, resources and expertise that small and medium-sized enterprises need to grow into larger, export-oriented global firms. We are also establishing an Ontario Investment Office to provide an integrated set of services to those looking to invest in our province.

We have chosen to be at the forefront of the world’s transition towards a low-carbon economy. Our five-year Climate Change Action Plan will not only help us fight climate change, but also generate economic growth and jobs by supporting initiatives that reduce Ontario’s carbon footprint.

We are modernizing our regulations and looking at how to support growing sectors. We are developing a provincial framework designed to support the expansion of the sharing economy while ensuring consumer protection. The Ontario Securities Commission (OSC) is taking an innovative approach to helping financial technology companies navigate our regulatory requirements through the OSC LaunchPad. We are also introducing legislation to establish a new, independent financial services regulator that will be more consumer-focused and strengthen consumer and investor protection.

Building Tomorrow’s Infrastructure Now

Our government is making the largest infrastructure investment in Ontario’s history — more than $160 billion over 12 years. As a result, Ontarians will be able to access more child care spaces, study in modernized schools, learn and research in state-of-the-art labs and facilities, receive service in newly renovated hospitals and travel across the province on an integrated transportation network.

By making these investments today, we are helping to grow our economy, create jobs and improve the quality of life in our communities.

Since the 2016 Budget, we have committed to invest more in schools and child care services. As a first step to creating 100,000 additional licensed child care spaces by 2022, we plan to invest $65.5 million this school year to support the creation of 3,400 new spaces for infants, toddlers and preschoolers. This is on top of the funding that the Province has provided in the last three years to create 56,000 new child care spaces. These investments are promoting early learning and development and helping more parents find quality, affordable care.

As the second phase of our major expansion in postsecondary education infrastructure, we are building three new postsecondary sites in high-growth communities in York, Peel and Halton Regions.

We continue to move Ontario forward through investments in public transit, roads, bridges and priority infrastructure. And we are committed to creating a clean, reliable and affordable energy system. This is all part of our long-term economic plan.

Investing in People’s Talents and Skills

In today’s competitive global economy, our biggest strength is our talent. Good, high-paying jobs require advanced education and skills training. That is why we continue to choose to invest in high-quality education and training and to ensure more people than ever before have the opportunity to pursue the career of their choice.

From full-day kindergarten through elementary and secondary education, we are making the necessary investments to keep our education system world class and to help students achieve their full potential.

With the introduction of the Ontario Student Grant (OSG) in 2017, we are transforming student financial assistance to improve affordability and access.

The OSG will make average college or university tuition free for students from families with incomes of $50,000 or less, and will make tuition more affordable for lower-income and middle-income families. This is an investment in our collective future, building opportunity for more people.

Working with employers, educators, labour and other partners, we are developing an integrated strategy to meet the current and future needs of our dynamic economy. Our Highly Skilled Workforce Strategy will help us ensure we retain our competitive advantage of having one of the best-educated talent pools in the world.

Strengthening Retirement Security

With two-thirds of Ontario workers not participating in workplace pension plans and many families worried about how they will maintain their standard of living in retirement, strengthening retirement security has been a key component of our plan to build Ontario up.

Our leadership on the national stage helped facilitate a historic agreement between our province, the federal government and other provinces to enhance the Canada Pension Plan. This agreement, informed significantly by Ontario’s experience in developing the Ontario Retirement Pension Plan, will improve retirement security for future generations of Canadians.

The government is also working to ensure that workplace pension plans remain strong by continuing to modernize legislative and regulatory frameworks and that new opportunities for savings, including pooled registered pension plans, are made available to Ontarians.

Building a Fair Society and Helping People in Their Everyday Lives

Changing economic and social realities are impacting how Ontarians work, live and conduct business. We want to ensure everyone has an opportunity to thrive and reach their full potential.

We are taking action to build a fair society. We are focused on providing better supports to vulnerable populations and on fostering community inclusion.

Ontario’s new autism program will provide all children, regardless of age, with more flexible services based on their unique needs. Half a billion dollars is earmarked to significantly reduce wait times, deliver diagnoses earlier so children can access services sooner, and increase the number of children served.

We are taking steps to enable more stable and secure incomes by increasing social assistance rates and by ensuring that social assistance recipients can benefit from more of the income they receive through child support payments and the Canada Child Benefit.

We are on a journey of reconciliation with Ontario’s Indigenous peoples. We will invest more than $250 million over the next three years on programs and actions focused on reconciliation and we look to our Indigenous partners for guidance and leadership as we take these steps together.

We are dedicated to reducing electricity costs wherever possible. The debt retirement charge has been removed from residential electricity bills. Electricity has been made more affordable for lower-income families through the Ontario Electricity Support Program. Beginning January 1, 2017, we will rebate an amount equal to the eight per cent provincial portion of the Harmonized Sales Tax for five million residential, small business and farm electricity bills.

To enhance consumer protection, we are continuing to reform the auto insurance system with a focus on identifying ways to improve health outcomes and lower insurance costs.

A stable, affordable housing market is critical to Ontario’s economy. Strong job gains, low interest rates and growth in the number of households have been supporting increases in house prices in the Ontario housing market. To ensure Ontarians can better afford their first home, we are doubling the maximum Land Transfer Tax refund for first-time homebuyers to $4,000.

Improving housing affordability will help build Ontario up for everyone.

Transforming Health Care

Ontario’s action plan for health is centred on putting patients first. For patients and their families, this means faster access to an integrated health care system that keeps them as close to home as possible.

We have chosen to continue to build up our health care system. We have reduced wait times for surgery, increased the number of Ontarians who have a primary health care provider, and expanded services for Ontarians at home and in their communities.

To ensure Ontarians continue to get the care they deserve, we are investing more in our hospitals. Building on our investments in the 2016 Budget, we are providing an additional $140 million in new funding to support the needs of patients and reduce wait times. This will ensure all public hospitals receive a minimum two per cent base funding increase this year.

We are also providing more than $12 billion over the next 10 years to build new and improved hospitals; across the province, we are expanding or renovating 37  hospitals. An additional $50 million in annual funding to hospitals will help ensure needed renovations and repairs can occur.

And we are making the largest investment in Indigenous health care in the province’s history, with $222 million over the next three years to address critical health inequities and improve access to culturally appropriate health care services.

These investments will ensure all Ontarians can get quality health care faster, when and where they need it.

Economic Outlook

Despite an uncertain global environment, Ontario’s economy has continued to grow. Last year, Ontario’s real gross domestic product (GDP) increased by 2.5 per cent, comparable to growth in the United States and outperforming Canada and all other G7 countries.

Employment is up by over 641,000 net new jobs since the low point of the 2008–09 global economic recession. The unemployment rate is at an eight-year low.

Steady growth in the U.S. economy, along with the ongoing impacts of a more competitive Canadian dollar and low oil prices, continues to support Ontario’s economic growth. We are diversifying our export markets and Ontario’s real merchandise exports are now 5.4 per cent higher than they were a year ago.

Exports have increased, businesses are hiring more workers, productivity has improved and household incomes are rising. Ontario’s economy is expected to remain a provincial growth leader over the next two years, largely as projected at the time of the 2016 Budget.

The Ministry of Finance is forecasting growth in Ontario real GDP of 2.2 per cent on average over the 2016–19 period. For prudent fiscal planning, these real GDP growth projections are slightly below the average of private-sector forecasts.

Ontario’s Path to a Balanced Budget

For seven years in a row, our government has beaten our fiscal targets on the path to a balanced budget. The Public Accounts of Ontario 2015–2016 confirmed a deficit of $5.0 billion, an improvement of $3.5 billion compared to the 2015 Budget plan.

We have achieved this while helping to grow the economy, create jobs and ensure the sustainability of programs and services that help Ontarians in their everyday lives.

Consistent with the 2016 Budget, Ontario’s deficit for 2016–17 is projected to be $4.3 billion. We are on track to balance the budget in 2017–18 and remain balanced in 2018–19.

We will continue to implement our plan to eliminate the deficit by making investments to spur economic growth; transforming government and responsibly managing spending; and ensuring revenue integrity and addressing the underground economy.

Partnership for a Stronger Ontario and a Stronger Canada

A new era of collaboration between the federal government and the provinces and territories is yielding positive results. Ontario and the federal government are cooperating to deliver real benefits to people in their everyday lives, such as stronger pension benefits and renewed infrastructure. Together with its partners, the Province has also made progress in areas such as reducing barriers to interprovincial trade and fighting climate change. As well, the Province continues to move forward with municipalities and Indigenous partners on shared priorities and in building on solid partnerships.

Yet there continues to be a structural fiscal imbalance: provincial and territorial governments do not have the revenue resources required to meet their constitutional expenditure responsibilities.

The increasingly complex challenges facing Canada, such as uncertain global economic growth, climate change and impacts of an aging population, need to be addressed by more than one level of government.

Ontario looks forward to continued collaboration with the federal government and other partners in the federation to address these concerns, and to building a stronger Ontario within a stronger Canada.

Pre-Budget Consultations

The Ontario Budget affects every Ontarian. That is why the government gathers opinions and ideas from every corner of the province. Each year, the government conducts consultations across Ontario to help shape the Budget. This allows Ontarians to have their say on how the Budget can best represent their values and priorities.

We will once again be conducting consultations to solicit your feedback and ideas. Submissions can also be made via email or post.

Over the past few years, the use of modern technologies has made it easier for more Ontarians to participate in the budget-making process. Two years ago, the government launched Budget Talks, an interactive, online version of Budget consultations. In 2016, Ontarians shared 1,732 ideas, cast 53,402 votes and wrote 4,340 comments on the platform.

The 2017 Budget Talks will provide Ontarians the opportunity to put forward ideas on how to help make everyday life easier for their fellow citizens and improve the delivery of government services. We will implement a select group of these ideas based on the feedback we receive.

Conclusion

During the depths of the global economic recession, our government created a long-term plan to grow the economy and generate jobs. Sound fiscal management has taken us far along our path to return to balance.

We continue along that path with focus. The global economy may bring new challenges and we will respond to those together. We will stay true to our principles that have guided us along the way:

  • Ensuring that all Ontarians have the opportunity to succeed;
  • Ensuring that we strengthen our economic foundation in a way that benefits everyone; and
  • Ensuring that Ontario remains the best place in the world to live, work and raise a family.

Our balanced plan to grow the economy and create jobs is working.

It is helping the people of Ontario in their everyday lives.

It is building Ontario up for everyone.

Original signed by

The Honourable Charles Sousa
Minister of Finance