2015 Ontario Budget
Foreword

Building Ontario Up

Ontario is moving forward with a plan for the economy focused on investing in modern public infrastructure such as roads, bridges and transit, creating an innovative and dynamic business environment, investing in people’s skills and talents, and building a strong and secure retirement income system.

We are building Ontario up by making investments that grow the economy and create jobs.

We are unlocking the value of Provincial assets in order to make unprecedented investments in modern infrastructure, which is essential to a 21st century economy.

The government’s plan is working. Performance indicators that measure economic progress prove this. Foreign direct investment remains strong, employment is up, youth employment is improving, graduation rates are up — and we are beating our deficit targets. The 2015 Ontario Budget builds on our plan by making key investments in priorities that matter to Ontarians.

Our plan rests on a foundation of fiscal responsibility. We are taking a deliberate and thoughtful approach to eliminating the deficit by 2017–18.

Ontario’s path to a balanced budget is focused on improving the quality of life of all Ontarians. As always, we must manage our limited resources in a way that is efficient and effective. As a government, this means doing some things differently. We will make the right investments to help grow the economy and to preserve and improve the vital services that our families and communities rely on.

That is why the government continues to invest in next-generation industries through, for example, our Jobs and Prosperity Fund.

We are investing in skills and training so we have the diverse workforce needed to take advantage of the job opportunities of tomorrow.

We are preparing youth for the jobs of today as well as for tomorrow’s opportunities.

We are also preserving and improving the programs and services that Ontarians expect and trust. At the same time, we are ensuring that people get the best possible value for every tax dollar spent.

Our society is compassionate and competitive. We will not let the vulnerable fall behind.

We have made significant progress. What comes next is further action on our plan to build Ontario up.

Maximizing the Value of Provincial Assets

A key part of strong fiscal management is making the most of the Province’s assets over the long term. Using them strategically is a cornerstone of good government. That is why Ontario is moving forward on a plan to unlock the value of certain Provincial assets, including the Liquor Control Board of Ontario (LCBO) head office lands, Ontario Power Generation’s head office building and Seaton and Lakeview lands.

In addition, the Premier’s Advisory Council on Government Assets has recommended ways to unlock the value of Provincial assets in a way that creates lasting public benefits. The Council recommended reforming Ontario’s beverage alcohol system, while maintaining a strong commitment to social responsibility. With respect to Hydro One, the Council recommended broadening ownership while ensuring ongoing consumer protection. It has done so in a way that is transparent, professional and independently validated.

Reforming Beverage Alcohol Sales

Ontario will permit the sale of beer in grocery stores for the first time in its history.

Ontario is also entering into a new agreement with the owners of the Beer Store that returns the framework closer to its original cooperative roots, opening up ownership to small and craft brewers.

At the same time, the LCBO will modernize its practices to improve the retail experience for all Ontarians.

The Premier’s Advisory Council on Government Assets will continue to refine its recommendations on how to maximize value in the wine retailing sector.

Selling alcohol is a public trust and the government will continue to adhere to the principle of social responsibility supporting the safe consumption of alcohol in light of the expansion of alcohol distribution channels in the province.

Broadening Ownership of Hydro One

The government intends to broaden ownership in Hydro One Inc., including through an initial public offering of approximately 15 per cent, in order to help strengthen its long-term performance.

The Province intends to ultimately retain 40 per cent of its Hydro One common shares and is proposing legislation so that no other shareholder or group of shareholders would be permitted to own more than 10 per cent.

The ability to set rates will continue to be at arm’s length from Hydro One management, with rates set by the independent regulator, the Ontario Energy Board (OEB).

Unlocked Value Placed in the Trillium Trust

Actions taken to unlock the value of Provincial assets will allow us to realize even more value than originally anticipated. An increased asset optimization target of $5.7 billion — a $2.6 billion increase over the 2014 Budget projection — will be reinvested to build bridges, transit, roads and other priority infrastructure throughout Ontario. This includes net proceeds from the sale of qualifying assets that will be placed in the Trillium Trust.

These projects will benefit Ontarians for years to come. The Trillium Trust has already received $1.35 billion from the sale of the Province’s shares in General Motors.

The Trillium Trust signifies the government’s commitment to building critically needed infrastructure.

Infrastructure: Building to Grow

Modern infrastructure is vital to Ontario’s growth and quality of life; it forms the backbone of a well-functioning economy and prosperous society. Infrastructure includes roads, bridges, public transit, water systems, hospitals and schools — in other words, important elements that help our economy grow and modern society thrive. We need efficient modes of transport to move goods to market, and to move commuters between their homes and workplaces.

That is why we are renewing and expanding Ontario’s infrastructure.

The government is investing more than $130 billion across the province over 10 years. These investments would support over 110,000 jobs per year on average. This investment will fund projects in public transit, highways, schools, health facilities, postsecondary institutions and other assets from Cornwall to Kenora and from Windsor to Moosonee.

Moving Ontario Forward is a plan to create jobs, boost productivity and revitalize communities. Unlocking the value of certain government assets will allow us to increase the dedicated funds available for Moving Ontario Forward by $2.6 billion, to $31.5 billion over 10 years. It will allow us to accelerate service enhancements on the GO Transit network, laying the foundation for Regional Express Rail. It will also allow us to enhance regional mobility by investing in new transit projects in Mississauga, Brampton and Hamilton. Outside the Greater Toronto and Hamilton Area (GTHA), it will allow us to invest in priority projects such as helping more communities gain access to natural gas, continuing to improve roads and highways and investing in the Ring of Fire in northern Ontario.

Infrastructure projects support jobs today while meeting our education, health care and transportation needs of the future. When Ontario invests in infrastructure, it is building — and when it is building, it is growing.

Creating an Innovative and Dynamic Business Environment

Through our four-part economic plan, we are supporting greater investment in productivity and innovation, providing a renewed focus on international exports, encouraging the transition to a low-carbon economy and creating more jobs for Ontarians.

These investments will help people achieve their full potential, so they can enjoy a better way of life, and help our province become an even better place to live.

The Jobs and Prosperity Fund allows us to partner with business to enhance productivity, increase innovation, grow exports and create jobs. We will enhance the Jobs and Prosperity Fund by an additional $200 million to attract more business investments and create jobs, and by making the forestry sector eligible.

We are ensuring that Ontario’s economy is resilient as we compete in the global environment by making strategic decisions to ensure our business supports are well targeted, effective and fiscally sustainable. The 2015 Budget highlights proposed measures to improve the effectiveness of supports to business and to achieve the best possible outcomes for every dollar we spend, while ensuring that Ontario remains one of the most attractive and competitive locations for business investment.

Improving Education and Skills Training Opportunities

We know that Ontario’s continued economic prosperity depends on a highly skilled workforce that is diverse, adaptable and innovative. That is how the Province attracts jobs and investments, which, in turn, improve our communities and the opportunities found in them. Studies suggest that seven of every 10 new jobs created are expected to require postsecondary education or training.

The success of Ontario’s workers is founded on a first-rate education system that starts in the earliest years. That is why the government is continuing to improve education and skills training, from preschool and full-day kindergarten through to postsecondary education and apprenticeship programs. We are building on past investments, including doubling child care funding since 2004 to more than $1 billion annually; continuously improving our education system with innovations such as experiential learning pilot programs; and providing more than $1.3 billion in grants and loans for student aid in 2013–14.

We are renewing the Ontario Youth Jobs Strategy by investing an additional $250 million over two years to provide employment and skills development opportunities for up to 150,000 youth. We are supporting the skilled trades by investing an additional $23 million over two years in the Apprenticeship Enhancement Fund for better equipment to help train more people.

A Fair Society: Living and Working in Ontario

Ontario’s most valuable resource is its people. Ontarians are the key to Ontario’s prosperity.

That is why the government is dedicated to ensuring all Ontarians can reach their full potential through access to high-quality education, excellent health care, rewarding employment opportunities and social services they can continue to rely on. We are also committed to ensuring that consumers are protected. Among other initiatives, Ontario is taking steps to keep auto insurance rates affordable and to assist low-income people with the cost of electricity.

Investments that focus on building a fair society for all Ontarians make economic sense. Focusing on early intervention programs supports good health, lifts people out of poverty, and enhances security for all Ontarians. This will, in turn, reduce government expenditures over the longer term.

National Leadership and a Strong Economic Union

Ontario will thrive when, working with other provinces and territories, as well as the federal government, we achieve a strong Canadian economic union.

As we adapt to the realities and challenges of the 21st century, we need stronger intergovernmental partnerships to create a stronger Canadian economic union. Ontarians, like all Canadians, expect their governments to work together to improve the economic well-being and quality of life of the people they serve.

Ontario is showing the necessary national leadership. Through the Council of the Federation, we are working with Canada’s premiers to promote international trade, reduce internal trade barriers, and develop a Canadian Energy Strategy. Ontario is a leader in helping to set up the Cooperative Capital Markets Regulatory System and to launch the renminbi trading hub in Toronto, serving all of North and South America. Ontario has also led the way in inviting the federal government to increase investment in public infrastructure and improve Canada’s economic competitiveness.

Ontario continues to be a strong voice at the national level — the challenges that Canada faces cannot be met by one order of government alone.

Retirement Security: Securing Our Future

The decisions we make today will help shape tomorrow.

Evidence shows that many Ontarians are not saving adequately for retirement. Unless action is taken now, the retirement undersaving challenge will worsen over time.

That is why the Province is leading the way to help Ontario workers secure the retirement future they deserve. Moving forward with strengthening workplace pension plans and introducing the Ontario Retirement Pension Plan by 2017 will ensure that today’s workers have a secure retirement income foundation.

Ontario’s retirement system should ensure that individual Ontarians can maintain their standard of living in retirement. For the economy as a whole, increased retirement savings will contribute to higher investment and strong economic growth over the long term. Higher incomes for retirees will lead to increased consumption, generating future economic growth and helping the Ontario economy better cope with an aging population.

Confronting Climate Change

Confronting climate change and protecting our environment will help ensure Ontario continues to be a great place to live. These actions will also help ensure that we have a strong economy.

The environmental, social and economic challenges of climate change are global issues. Ontario has been hit hard by the effects of climate change, including recent extreme weather events such as ice storms, severe thunderstorms and flash flooding. These events have caused unprecedented damage to the places Ontarians live, work and play, costing the government, businesses and families hundreds of millions of dollars. In the years to come, such damages and costs will likely be greater if current trends are left unchecked.

We will be moving ahead with a cap-and-trade system to protect the air we breathe, the water we drink, and the health of our children. We will take a balanced approach that protects both the environment and the economy. We will consult with experts, industry, environmental groups and the public, to determine what will work best for Ontario, with the intent to link with the cap-and-trade markets already in place in Quebec and California. This will be part of a comprehensive strategy to fight climate change.

Sound Fiscal Management

The government has a proven track record of strong fiscal management. We are not only meeting ­our deficit targets, but we are beating them. Our deficit for 2014–15 is projected to be $10.9 billion, an improvement of $1.6 billion, beating our deficit target set out in the 2014 Budget. For 2015–16, we are forecasting a deficit of $8.5 billion, which would be the lowest since the onset of the global recession.

We continue to overachieve on savings targets by managing expenses and making sure every dollar counts. The 2014 Budget outlined a plan to eliminate the deficit by 2017–18, and we remain committed to do so, based on managing growth in program spending while maintaining the integrity of Provincial revenues.

In fact, over the past four years, the Province has managed to hold average annual growth in program spending to 1.5 per cent, below inflation, without cutting vital services. Indeed, Ontario had the lowest per capita program spending of any province in 2013–14.

Achieving a balanced budget requires a disciplined focus on finding smarter, better ways to deliver the best possible value for every dollar spent, while continuing to make investments that create jobs, expand opportunities and secure prosperity for all Ontarians. To eliminate the deficit by 2017–18, the government will maintain a strong and unwavering commitment to fiscal discipline. Critical to this approach will be Program Review, Renewal and Transformation (PRRT). An internal process first discussed in the 2014 Ontario Economic Outlook and Fiscal Review, PRRT is focused on making smart and responsible choices while ensuring sustainable public services that serve Ontarians efficiently.

Program Review, Renewal and Transformation is a new approach to multi-year planning and budgeting. From an across-government perspective, ministries are working together to better deliver services to people. At the same time, the Province is making tough choices to transform or end programs that are not performing, do not link to government priorities or no longer clearly serve the public interest.

Making Progress

Most forecasters are predicting that Ontario will be among the provincial leaders in economic growth over the next two years, with growth outpacing the national average.

A combination of low oil prices, low interest rates, a lower Canadian dollar and the improving U.S. economy is giving Ontario’s economy new opportunities to grow. But we will not base our economic planning solely on these factors, which are volatile and difficult to predict. It is important to continue to build on our foundational strengths, rather than simply exploiting changes in circumstances.

Supported by the government’s sound fiscal management and favourable economic trends, Ontario continues to create jobs. Employment has rebounded strongly from the recessionary low in June 2009, with over half a million net new jobs created — the majority in industries paying above-average wages. These high-quality jobs provide opportunities for people to maximize their potential while also creating financial stability and securing prosperity for all Ontarians.

These conditions highlight Ontario’s advantage — its solid economic foundation.

What Is Important to Ontarians

The 2015 Budget sets out the government’s priorities for the coming year. But these are also Ontarians’ priorities. To make sure we have got it right, the Province undertook our most extensive budget consultation process to date. Through the new Budget Talks website, face-to-face sessions across the province and telephone town halls with tens of thousands of participants, we heard from more Ontarians than ever before.

For example, we heard that Ontarians want a world-class education and skills training system so that young people can compete for the jobs of tomorrow. We also heard that people are concerned about gridlock and want more public transit. People in northern and rural areas want better roads so they can more easily travel from community to community.

We listened to the views of Ontarians and their suggestions are reflected in the pages of this Budget.

Conclusion

Looking ahead, as we continue to invest in people’s talents and skills, build infrastructure, foster an innovative and dynamic business environment, and build retirement security, we are creating the conditions necessary for all Ontarians to succeed and enjoy a better life. At the same time, eliminating the deficit means securing the future of Ontario’s public services, such as health care and education, which make it possible for us to succeed.

Together, we are working hard to build Ontario up and help unlock the potential in our society and in each of us.

The Honourable Charles Sousa
Minister of Finance