2016 Ontario Budget
Chapter III: Economic and Fiscal Outlook

Section B: Fiscal Outlook

The government is projecting a deficit of $5.7 billion in 2015–16 — an improvement of $2.8 billion compared with the 2015 Budget forecast and $1.8 billion compared with the projection laid out in the 2015 Ontario Economic Outlook and Fiscal Review. It is also a $4.6 billion improvement compared with the 2014–15 deficit of $10.3 billion. This represents the Province’s largest year-over-year reduction in the deficit in the last five years.

Looking forward, the government is now projecting a deficit of $4.3 billion in 2016–17, a return to balance in 2017–18 and continued balance in 2018–19. This reflects an improvement of $0.5 billion in 2016–17 compared with the deficit target laid out in the 2015 Budget.

Ontario’s record of strong fiscal management is achieving results. Based on the government’s plan, net debt-to-GDP is expected to peak at 39.6 per cent in 2015–16, remain level in 2016–17 and begin to decline in 2017–18, supporting greater sustainability in the Province’s management of its debt.

TABLE 3.7 Ontario’s Fiscal Plan and Outlook
($ Billions)
  Actual
2014–15
Interim
2015–16
Plan
2016–17
Outlook
2017–18
Outlook
2018–19
Revenue 118.5 126.5 130.6 137.7 141.9
Expense - Programs 118.2 120.9 122.1 124.2 127.6
Expense - Interest on Debt1 10.6 11.2 11.8 12.5 13.1
Total Expense 128.9 132.1 133.9 136.6 140.7
Surplus/(Deficit) Before Reserve (10.3) (5.5) (3.3) 1.1 1.2
Reserve 0.2 1.0 1.1 1.2
Surplus/(Deficit) (10.3) (5.7) (4.3) 0.0 0.0
Net Debt as a Per Cent of GDP 39.4 39.6 39.6 38.9 38.5
Accumulated Deficit as a Per Cent of GDP 26.0 25.9 25.4 24.3 23.3
1  Interest on debt expense is net of interest capitalized during construction of tangible capital assets of $0.2 billion in 2014–15, $0.1 billion in 2015–16, $0.2 billion in 2016–17, $0.4 billion in 2017–18 and $0.6 billion in 2018–19.
Note: Numbers may not add due to rounding.

2015–16 Interim Fiscal Performance

Ontario’s deficit for 2015–16 is projected to be $5.7 billion — an improvement of $2.8 billion compared with the 2015 Budget forecast and $1.8 billion compared with the projection laid out in the 2015 Ontario Economic Outlook and Fiscal Review.

TABLE 3.8 2015–16 In-Year Fiscal Performance
($ Millions)
  Budget Plan Interim In-Year Change
Total Revenue  124,390  126,547 2,157
Expense - Programs 120,492 120,883 391
Expense - Interest on Debt 11,410 11,200 (210)
Total Expense 131,902 132,083 181
Reserve 1,000 150 (850)
Surplus/(Deficit) (8,512) (5,686) 2,826
Note: Numbers may not add due to rounding.

Total revenue is projected to be $2.2 billion above the 2015 Budget Plan due to higher revenue from asset optimization in 2015–16, higher taxation revenues, and stronger overall performance from Government Business Enterprises (GBEs).

Total expense in 2015–16 is projected to be $0.2 billion higher than forecast in the 2015 Budget. This includes the impact of $0.2 billion in lower interest on debt expense, resulting primarily from lower-than-forecast interest rates, the lower forecast deficit and cost-effective debt management.

Ontario’s program expense is projected to be $0.4 billion higher than outlined in the 2015 Budget, consistent with the forecast laid out in the 2015 Ontario Economic Outlook and Fiscal Review. This is primarily due to the Green Investment Fund — a $325 million down payment that is targeted at reducing greenhouse gas (GHG) emissions while strengthening the economy and creating jobs.

The fiscal plan outlined in the 2015 Budget included a $1.0 billion reserve in 2015–16 to protect the fiscal outlook against adverse changes in the Province’s revenue and expense forecasts. The 2015–16 outlook maintains a $150 million reserve to protect the fiscal plan against any potential adverse changes that may occur before year-end.

Given the preliminary nature of these estimates, the interim forecast is subject to change as actual provincial revenue and expense are finalized in the Public Accounts of Ontario 2015–2016 in summer 2016.

In-Year Revenue Performance

Total revenue in 2015–16 is estimated to be $126.5 billion. This is $2.2 billion, or 1.7 per cent, above the amount projected in the 2015 Budget. The increase is largely due to higher net revenues from asset optimization in 2015–16, higher taxation revenues and stronger overall performance from GBEs, which also accounts for estimated Hydro One Limited (Hydro One) net income changes unrelated to the asset optimization strategy.

TABLE 3.9 Summary of Revenue Changes since the 2015 Budget
($ Millions)
  Interim
2015–16
Asset Optimization 1,149
Other Revenue Changes Interim 2015–16
Taxation Revenue - Sales Tax 504
Taxation Revenue - Land Transfer Tax  311
Taxation Revenue - Personal Income Tax (112)
Taxation Revenue - All Other Taxes (73)
Total Taxation Revenue 630
Total Government of Canada (17)
Income from Government Business Enterprises - Ontario Power Generation Inc./Brampton Distribution Holdco Inc./Hydro One Ltd. 218
Income from Government Business Enterprises - Ontario Lottery and Gaming Corporation 159
Income from Government Business Enterprises - Liquor Control Board of Ontario  58
Total Income from Government Business Enterprises 435
Total Other Non-Tax Revenue (40)
  Interim 2015–16
Total Revenue Changes since the 2015 Budget 2,157
Note: Numbers may not add due to rounding.
Revenue Changes

Highlights of key 2015–16 revenue changes from the 2015 Budget forecast are as follows:

  • Asset Optimization is $1,149 million higher than the total included in Sales and Rentals in the 2015 Budget, mainly due to an increase in the estimated impact of a deferred tax benefit for Hydro One.
  • Sales Tax revenues are estimated to be $504 million higher, largely reflecting an increase to Harmonized Sales Tax (HST) revenues due to Ontario’s strong housing market, particularly housing completions in 2015, and one-time positive adjustments to estimates of Ontario’s prior-year HST entitlements.
  • Land Transfer Tax revenues are estimated to be $311 million higher, due to the strength of the Ontario housing market in 2015.
  • Personal Income Tax revenues are estimated to be $112 million lower, reflecting one-time negative adjustments arising from assessment of
    past-years’ tax returns and slightly slower 2015 wages and salaries growth.
  • All Other Tax revenues combined are estimated to be $73 million lower, mainly due to lower revenues from electricity payments in lieu (PIL) of taxes unrelated to the asset optimization strategy, Tobacco Tax, Education Property Tax and Mining Profit Tax, partially offset by higher revenues from Employer Health Tax.
  • Government of Canada transfers are estimated to be $17 million lower than the 2015 Budget forecast, largely reflecting lower transfers for infrastructure projects, mainly due to revised Building Canada Fund timelines. These lower transfers are partially offset by the higher Canada Health Transfer, Canada Social Transfer and other federal transfers.
  • The change in the combined net incomes of Ontario Power Generation Inc. (OPG), Brampton Distribution Holdco Inc., and Hydro One (for the portion of its net income change unrelated to the impacts of the asset optimization strategy) are projected to be $218 million above the 2015 Budget forecast, largely reflecting higher-than-projected returns from OPG’s nuclear funds and lower-than-forecast operating costs for OPG.
  • Net income from the Ontario Lottery and Gaming Corporation (OLG) is estimated to be $159 million higher than projected in the 2015 Budget, largely reflecting higher-than-projected sales in national lotteries.
  • Net income from the Liquor Control Board of Ontario (LCBO) is estimated to be $58 million higher than projected in the 2015 Budget, primarily due to strong sales during summer 2015 that were boosted by favourable weather, stronger tourism and extraordinary sporting and cultural events.

In-Year Expense Performance

Total expense in 2015–16 is currently projected to be $0.2 billion higher than the 2015 Budget forecast. This is primarily due to the Green Investment Fund — a $325 million down payment that is targeted at reducing GHG emissions while strengthening the economy and creating jobs. This is partially offset by lower-than-projected interest on debt expense.

The 2015 Budget included a $1.0 billion year-end savings target in addition to a $0.5 billion program review savings target. The government is once again on track to achieve its savings targets. See Chapter II, Section B: Transforming Government and Managing Costs for details on achievement of the 2015–16 program review savings target.

TABLE 3.10 Summary of Expense Changes since the 2015 Budget
($ Millions)

Program Expense Changes Reported in the 2015 Ontario Economic Outlook and Fiscal Review
2015–16
Green Investment Fund 325
Strategic Asset Management and Transformation Related to Hydro One IPO 63
Legislative Offices 9
All Other Program Expense Changes Reported in the 2015 Ontario Economic Outlook and Fiscal Review 0
Total Program Expense Changes Reported in the 2015 Ontario Economic Outlook and Fiscal Review 397
Savings Targets Included in the 2015 Budget and the 2015 Ontario Economic Outlook and Fiscal Review 2015–16
Year-End Savings Target 1,000
Program Review Savings Target 490
Total Savings Targets Included in the 2015 Budget and the 2015 Ontario Economic Outlook and Fiscal Review 1,490
Increase/(Decrease) in Program Expense since the 2015 Ontario Economic Outlook and Fiscal Review1 2015–16
Health Sector 12
Education Sector2 (430)
Postsecondary and Training Sector (51)
Children’s and Social Services Sector 153
Justice Sector 49
Other Programs (1,230)
Total Increase/(Decrease) in Program Expense since the 2015 Ontario Economic Outlook and Fiscal Review (1,496)
  2015–16
Net Program Expense Increase/(Decrease) after Applying Savings to Meet Total Savings Targets Included in the
2015 Budget and the 2015 Ontario Economic Outlook and Fiscal Review
391
Interest on Debt (210)
Total Expense Changes since the 2015 Budget 181
1 Expense change by sector, restated for fiscally neutral transfers of programs between sectors.
2 Excludes Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.
Note: Numbers may not add due to rounding.
Expense Changes

The following expense changes have occurred since the 2015 Ontario Economic Outlook and Fiscal Review:

  • Health sector expense is projected to increase by $12 million, primarily due to new hepatitis C treatments, higher drug programs utilization, and increased demand for cancer treatment and dialysis services. This is partially offset by lower uptake in some programs.
  • Education sector expense is projected to be $430 million lower than forecast, due in part to slightly lower-than-projected enrolment and as a result of a higher share of funding being spent on capital projects that are amortized. Higher-than-anticipated revenues from Education Development Charges further reduced Provincial funding requirements.
  • Postsecondary and training sector expense is projected to be $51 million lower than anticipated, mainly due to lower spending on postsecondary operating grants and lower student financial assistance as a result of lower-than-forecast enrolment. As well, spending on employment and training programs is expected to be below plan, partially offset by higher expense on tax credits to employers to support training.
  • Children’s and social services sector expense is projected to increase by $153 million, primarily due to additional investments to address demand for the Ontario Disability Support Program and the cost of prescription drugs for social assistance recipients.
  • Justice sector expense is expected to increase by $49 million, primarily due to settlements under the Proceedings Against the Crown Act, higher-than-expected bad debt provisions related to unpaid fines, and higher-than-expected leasing costs across the sector.
  • Other programs expense is projected to decrease by $1,230 million, due to implementation delays related to the Building Canada Fund; underspending from the 2015 Pan/Parapan American Games; restraining compensation growth in line with the government’s “net-zero” policy; reduced spending on information technology; lower fees paid to the Canada Revenue Agency; as well as a variety of other administrative savings across government.

Interest on debt expense is projected to be $210 million lower than forecast in the 2015 Budget, primarily due to lower-than-forecast interest rates, the lower forecast deficit and cost-effective debt management.

Medium-Term Fiscal Outlook

The government is now projecting a deficit of $4.3 billion in 2016–17, a return to balance in 2017–18 and continued balance in 2018–19. This reflects an improvement of $0.5 billion in 2016–17 compared with the deficit target laid out in the 2015 Budget.

Key Changes since the 2015 Budget

Total revenue is projected to be higher in each year over the medium term compared with the 2015 Budget, reflecting strength in the housing market, particularly in 2015; additional revenues reflecting prudent assumptions related to the current federal government’s commitments for additional funding for infrastructure, home care, and jobs and training; and projected proceeds from the Province’s cap-and-trade program.

Over the medium term, total expense is projected to increase from $132.1 billion in 2015–16 to $140.7 billion in 2018–19. Total expense is projected to be higher than forecast at the time of the 2015 Budget as a result of program expense increases, partially offset by interest on debt savings.

The program expense outlook over the medium term is projected to be higher in each of 2016–17 and 2017–18, compared with the medium-term forecast in the 2015 Budget. This increase reflects the government’s commitment to invest in priority areas to enhance public services, support economic growth and a low-carbon economy, and create jobs.

Ontario’s medium-term outlook for interest on debt is currently below the 2015 Budget estimate, primarily as a result of lower-than-forecast interest rates.

The fiscal plan also includes a reserve of $1.0 billion in 2016–17, $1.1 billion in 2017–18 and $1.2 billion in 2018–19, largely in line with the 2015 Budget.

TABLE 3.11 Change in Medium-Term Fiscal Outlook since the 2015 Budget
($ Billions)
  2015–16 2016–17 2017–18
Surplus/(Deficit) from the 2015 Budget (8.5) (4.8)
Total Revenue Changes 2.2 1.2 3.3
Expense Changes - Net Program Expense Changes 0.4 1.6 4.2
Expense Changes - Interest on Debt (0.2) (0.7) (0.7)
Total Expense Changes 0.2 0.9 3.4
Change in Reserve (0.9) (0.2) (0.1)
Fiscal Improvement/(Deterioration) 2.8 0.5 0.0
2016 Budget Surplus/(Deficit) (5.7) (4.3) 0.0
Note: Numbers may not add due to rounding.

Ontario’s Revenue Outlook

Ontario’s revenues rely heavily on the level and pace of economic activity in the province, with growth expected to be roughly in line with nominal gross domestic product (GDP). For example, taxes are collected on the incomes and spending of Ontarians, and on the profits generated by businesses operating in Ontario.

However, there are important qualifications to this general relationship.

The impact of housing completions and resales on HST and Land Transfer Tax revenues is proportionately greater than their contribution to GDP.

Growth in several tax revenue sources, such as volume-based gasoline and fuel taxes, is more closely aligned to real GDP. These revenue sources are less influenced by changes in prices. Similarly, some revenues, such as vehicle and driver registration fees, tend to more closely track demographic factors, such as growth in the driving-age population.

Growth in some revenue sources, such as the Corporations Tax and Mining Tax, can diverge significantly from economic growth in any given year due to the inherent volatility of business profits, as well as the use of tax provisions such as the option to carry losses forward or backward across different tax years.

The revenue forecast also often includes significant one-time adjustments, usually due to lags between the period in which revenues are earned and when the actual amounts are finally reported. For example, the Ministry of Finance will use the latest available information on Personal Income Tax (PIT) revenue earned by the Province for the 2015 tax year as the basis for the 2015–16 PIT revenue estimate to be published later in 2016 in the Public Accounts of Ontario 2015–2016. Actual PIT revenue entitlements for 2015 and 2016, however, will not be known until early 2017 and 2018, respectively, after most PIT returns for those tax years have been filed with and assessed by the Canada Revenue Agency.

Moreover, additional tax information continues to arrive for years following the actual tax year due to late tax assessments and reassessments. The result is that even after the Public Accounts of Ontario 2015–2016 is released, new and updated tax assessment information will lead to revisions of the estimate for 2015–16 PIT revenues. Under Public Sector Accounting Board (PSAB) standards, revenue estimates already published in the Public Accounts are not restated for updated assessment information. Instead, these revisions are reported as prior-year adjustments in the current open year.

Medium-Term Revenue Outlook

Total revenue is projected to increase from $126.5 billion to $141.9 billion between 2015–16 and 2018–19, or at an average annual rate of 3.9 per cent, which is modestly lower than the forecast growth of nominal GDP. Revenue growth largely reflects the Ministry of Finance’s outlook for economic growth outlined in Section A of this chapter: Economic Outlook. The medium-term revenue outlook includes prudent assumptions related to the current federal government’s commitments for additional funding for infrastructure, home care, and jobs and training. It also includes projected proceeds from the Province’s cap-and-trade program and projected net revenues from the Province’s asset optimization strategy.

TABLE 3.12 Summary of Medium-Term Revenue Outlook
($ Billions)
  Interim
2015–16
Plan
2016–17
Outlook
2017–18
Outlook
2018–19
Revenue - Personal Income Tax 30.3 32.2 34.2 36.4
Revenue - Sales Tax 23.5 24.0 24.8 25.6
Revenue - Corporations Tax 11.4 12.1 12.7 13.2
Revenue - Ontario Health Premium 3.5 3.6 3.8 4.0
Revenue - Education Property Tax 5.7 5.8 6.0 6.1
Revenue - All Other Taxes 16.5 14.2 14.5 15.0
Total Taxation Revenue 90.8 91.8 95.9 100.2
Government of Canada 22.9 24.6 25.8 26.6
Income from Government Business Enterprises 4.3 5.0 5.3 5.7
Other Non-Tax Revenue 8.6 9.1 10.6 9.4
Total Revenue 126.5 130.6 137.7 141.9
Note: Numbers may not add due to rounding.

The medium-term taxation revenue growth profile reflects growth in the economy, but may also incorporate prior-year adjustments and the impacts of past and proposed tax measures. These latter impacts may result in a taxation revenue growth profile for a specific revenue source that appears to be inconsistent with the growth profile of the main related economic driver. To help explain the medium-term growth profile of the major taxation revenues, the following three tables adjust total projected revenues for each of Personal Income Tax, Sales Tax and Corporations Tax, to remove prior-year adjustments and impacts of measures to arrive at “base revenue.” This base revenue measure is shown to be more closely aligned to the main economic driver for the specific taxation revenue source.

TABLE 3.13 Personal Income Tax Revenue Outlook
($ Billions)
Revenue Interim
2015–16
Plan
2016–17
Outlook
2017–18
Outlook
2018–19
Total Projected Revenue 30.3 32.2 34.2 36.4
Tax Measures1 0.1 0.1 0.1 0.3
Adjustments for Prior Years (0.2)
Base Revenue2 30.3 32.1 34.0 36.0
Base Revenue Growth (Per Cent) 5.8 6.0 6.0
Compensation of Employees3 (Per Cent Change) 4.4 4.5 4.5
1 Represents the revenue impact of all tax measures, announced previously or proposed in this Budget.
2 Total Projected Revenue less the impact of tax measures or other one-time factors such as prior-year adjustments. Base Revenue reflects the impact of underlying macroeconomic factors.
3 Includes wages, salaries and employers’ social contributions.
Note: Numbers may not add due to rounding.

The primary economic driver of the forecast for Personal Income Tax (PIT) revenue is the outlook for growth in the compensation of employees. The PIT revenue projection also reflects the impact of tax measures and prior-year adjustments. Tax measures include measures announced in past Budgets and those proposed in this Budget. See Chapter V: A Fair and Sustainable Tax System for further details. Tax measures also reflect the impact of federal policy commitments such as ending the taxable Universal Child Care Benefit and introducing a tax-free Canada Child Benefit. Adjustments for prior years in 2015–16 reflect a slight overestimation of PIT revenues in the Public Accounts of Ontario 2014–2015. Excluding the impacts of tax measures and prior-year adjustments, the PIT revenue base is projected to grow at an average annual rate of 5.9 per cent over the forecast period. This compares with average annual growth of 4.5 per cent in compensation of employees over this period. Personal Income Tax revenue tends to grow at a faster rate than incomes due to the progressive structure of the PIT system.

TABLE 3.14 Sales Tax Revenue Outlook
($ Billions)
Revenue Interim
2015–16
Plan
2016–17
Outlook
2017–18
Outlook
2018–19
Total Projected Sales Tax Revenue1 23.5 24.0 24.8 25.6
Tax Measures2 0.4 0.3 0.1 0.0
Other Adjustments 0.6
Base Revenue3 22.5 23.7 24.7 25.6
Base Revenue Growth (Per Cent) 5.2 4.1 3.6
Nominal Consumption Growth (Per Cent) 4.4 4.1 3.5
1 Beginning July 1, 2010, most of the Retail Sales Tax was replaced with a value-added tax and combined with the federal Goods and Services Tax to create a federally administered Harmonized Sales Tax. Sales Tax Revenue is reported net of both the Ontario Sales Tax Credit and the energy component of the Ontario Energy and Property Tax Credit.
2 Represents the revenue impact of all tax measures, announced previously or proposed in this Budget.
3 Total Projected Revenue less the impact of tax measures or other one-time factors such as prior-year adjustments. Base Revenue reflects the impact of underlying macroeconomic factors.
Note: Numbers may not add due to rounding.

The Sales Tax revenue projection is based primarily on growth in consumer spending. The Sales Tax revenue projection also reflects the impact of tax measures and prior-year adjustments. Tax measures of $0.4 billion in 2015–16 primarily reflect the impact of transition measures such as input tax credits, which are being phased out by 2018–19. Other adjustments reflect a one-time adjustment of $0.6 billion in 2015–16 related to strong housing completions during 2015 and a variance from Sales Tax Revenue reported in the Public Accounts of Ontario 2014–2015. Excluding the impacts of measures and other adjustments, the Sales Tax revenue base is projected to grow at an average annual rate of 4.3 per cent, consistent with the average annual growth rate in nominal consumption of 4.0 per cent over this period.

TABLE 3.15 Corporations Tax Revenue Outlook
($ Billions)
Revenue Interim
2015–16
Plan
2016–17
Outlook
2017–18
Outlook
2018–19
Total Projected Revenue 11.4 12.1 12.7 13.2
Tax Measures1 0.1 0.2 0.2 0.2
Other Adjustments2 (0.3)
Base Revenue3 11.6 11.9 12.5 13.0
Base Revenue Growth (Per Cent) 2.6 5.3 3.7
Net Operating Surplus – Corporations Growth (Per Cent) 3.7 8.5 5.7
1  Represents the revenue impact of all tax measures, announced previously or proposed in this Budget.
2  Other Adjustments include the one-time impact of stronger net refunds assessed for years before 2009.
3 Total Projected Revenue less the impact of tax measures or other one-time factors such as prior-year adjustments. Base Revenue reflects the impact of underlying macroeconomic factors.
Note: Numbers may not add due to rounding.

The forecast for Corporations Tax (CT) revenue is based on annual growth in the net operating surplus of corporations. The CT revenue projection reflects the impact of tax measures, as well as prior-year and other adjustments. Tax measures include those announced in past federal and Provincial budgets and those proposed in the current Budget. See Chapter V: A Fair and Sustainable Tax System for further details. After accounting for tax measures and other adjustments, the CT revenue base grows at an average annual rate of 3.9 per cent over the forecast period, compared with 6.0 per cent average annual growth in the net operating surplus of corporations. Corporations Tax revenue tends to grow more slowly than corporate profits due to the use of tax provisions by corporations, including the carry-forward of losses for up to 20 years.

Ontario Health Premium revenue is based on the outlook for the growth in the compensation of employees. Ontario Health Premium revenue is projected to increase at an average annual rate of 4.8 per cent over the forecast period.

Education Property Tax revenue is projected to increase at an average annual rate of 2.5 per cent over the forecast period. This is largely due to growth in the property assessment base resulting from new construction activities and also reflects measures announced in the 2016 Budget. See Chapter V: A Fair and Sustainable Tax System for further details of current proposed tax measures.

Revenues from All Other Taxes include a significant one-time PIL of taxes from Hydro One as a result of the initial public offering (IPO) in 2015–16. Excluding electricity PIL of taxes, other taxes are projected to increase at an average annual rate of 2.8 per cent over the forecast period. This includes revenues from volume-based taxes such as Gasoline Tax, Fuel Tax, Tobacco Tax, and Beer and Wine Tax, as well as other taxes such as Land Transfer Tax and Mining Tax.

The forecast for Government of Canada transfers is based on existing federal–provincial funding arrangements. Government of Canada transfers are projected to grow at an average annual rate of 5.1 per cent over the forecast period, largely reflecting projected increases in major ongoing Government of Canada transfers such as the Canada Health Transfer and the Canada Social Transfer. The forecast also includes prudent assumptions related to federal government commitments for additional funding for infrastructure, home care, and jobs and training.

The forecast for Income from Government Business Enterprises (GBEs) is based on Ministry of Finance estimates for Hydro One and information provided by OPG, LCBO and OLG. Overall revenue from GBEs is projected to increase by $1.4 billion between 2015–16 and 2018–19, or at an average annual rate of 9.5 per cent, largely reflecting lower net income in 2015–16 from Hydro One due to significant one-time PILs of tax expenses as a result of the Hydro One IPO in November 2015, and higher projected net income from the rest of the GBEs over the medium term.

The forecast for Other Non-Tax Revenue is based on information provided by government ministries and provincial agencies. Between 2015–16 and 2018–19, Other Non-Tax Revenues are projected to be higher by $883 million. This increase largely reflects estimates of the proceeds from the auctioning of cap-and-trade allowances beginning in 2017, higher revenue from vehicle and driver registration fees, and other miscellaneous sources. This is partially offset by lower, fiscally neutral, power supply contract recoveries, the removal of the debt retirement charge from electricity bills in 2018–19, and the projected net impact of the Province’s planned asset optimization strategy as discussed in Chapter I: Building Prosperity and Creating Jobs and Chapter III, Section C: Borrowing and Debt Management.

Key Changes in the Medium-Term Revenue Outlook since the 2015 Budget

Compared with the 2015 Budget, revenues are higher over the 2015–16 to 2017–18 period.

TABLE 3.16 Summary of Medium-Term Revenue Changes since the 2015 Budget
($ Billions)
  2015–16 2016–17 2017–18
Economic Growth (0.6) (0.4) (0.3)
Housing Market 0.7 0.3 0.2
Tax Data During 2015 and One-Time Impacts 0.5 0.2 0.1
Tax Measures (0.0) 0.1 0.2
New Federal Funding 0.7 1.3
Government Business Enterprises (non-asset optimization changes) 0.4 0.0 0.0
Cap-and-Trade Proceeds 0.5 1.9
Asset Optimization Strategy 1.1 (0.3) (0.2)
Other Non-Tax Revenue (0.0) 0.1 0.2
Total Revenue Changes 2.2 1.2 3.3
Note: Numbers may not add due to rounding.

The revised economic growth outlook, particularly slower growth in 2015, lowers revenues over the medium term.

Higher revenues from the strong housing market include higher HST in 2015–16 due to strong housing completions in 2015 and higher projected Land Transfer Taxes over the medium term, reflecting strength in Ontario housing prices and resales.

Tax data during 2015 provided a slight increase to the tax revenue base upon which growth is applied. In particular, stronger 2014 PIT returns more than offset the impact of slightly weaker 2014 corporate tax returns. One-time impacts that increased revenues in 2015–16 include net adjustments to estimates of prior-year HST estimates. There is also a positive adjustment to CT revenue in 2015–16, as a result of having reported the expected weakness in 2014 taxes assessed in the Public Accounts of Ontario 2014–2015, thereby eliminating a negative prior-year adjustment to 2015–16 revenues assumed in the 2015 Budget forecast.

Tax measures include the combined impacts of new tax measures proposed in this Budget. See Chapter V: A Fair and Sustainable Tax System for further details of current proposed tax measures and the impact of federal policy commitments, such as ending the taxable Universal Child Care Benefit and introducing a tax-free Canada Child Tax Benefit.

New federal funding largely reflects prudent assumptions related to federal government commitments for additional funding for infrastructure, home care, and jobs and training.

Income from Government Business Enterprises, excluding impacts related to the asset optimization strategy, is projected to be higher in 2015–16, reflecting stronger overall performance from the enterprises. The increase in 2016–17 and 2017–18 is due to the projected higher net income from the LCBO.

The medium-term revenue outlook also includes projected cap-and-trade proceeds from the auctioning of carbon allowances beginning in 2017. The current estimate for 2017 is $1.9 billion, with $478 million occurring in 2016–17. This estimate is based on a program design that is currently being discussed with stakeholders and a projected price of roughly $18 per tonne. The actual proceeds generated could vary based on the final design of the program, future auction price and Canada–U.S. exchange rate.

The change in the medium-term revenue forecast under asset optimization strategy reflects the higher upfront benefits from the strategy due to the Hydro One IPO. The government remains on track in its multi-year asset optimization initiative to generate $5.7 billion over time.

The decrease in Other Non-Tax Revenue in 2015–16 largely reflects lower miscellaneous revenue. The increase in 2016–17 and 2017–18 is mainly due to higher revenue from sales and rentals and miscellaneous revenue categories.

Risks to the Revenue Outlook

Ontario’s revenue outlook is based on reasonable assumptions about the pace of growth in Ontario’s economy. There are both positive and negative risks to the economic projections underlying the revenue forecast. Some of these risks are discussed in Section A: Economic Outlook of this chapter.

The following section highlights some of the key sensitivities and risks to the fiscal plan that could arise from unexpected changes in economic conditions. These estimates are only guidelines; actual results will vary depending on the composition and interaction of the various factors. The risks are those that could have the most material impact on the largest revenue sources. A broader range of additional risks are not included because they are either less material or difficult to quantify. For example, the outlook for Government of Canada transfers is subject to changes in economic variables that affect federal funding, as well as changes by the federal government to the funding arrangements themselves.

TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities
Total Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Nominal GDP 4.0 per cent growth in 2016 $890 million revenue change for each percentage point change in nominal GDP growth. Can vary significantly, depending on composition and source of changes in GDP growth.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Total Taxation Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base1 4.3 per cent growth in 2016–17  
Nominal GDP 4.0 per cent growth in 2016 $615 million revenue change for each percentage point change in nominal GDP growth. Can vary significantly, depending on composition and source of changes in GDP growth.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Personal Income Tax (PIT) Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 5.8 per cent growth in 2016–17  
Compensation of Employees 4.4 per cent growth in 2016 $316 million revenue change for each percentage point change in compensation of employees growth.
2015 Tax-Year Assessments2 $28.3 billion $283 million revenue change for each percentage point change in 2015 PIT assessments.2
2014 Tax-Year and Prior Assessments $1.5 billion $15 million revenue change for each percentage point change in 2014 and prior-year PIT assessments.2
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Sales Tax Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 5.2 per cent growth in 2016–17  
Nominal Household Consumption 4.4 per cent growth in 2016 $185 million revenue change for each percentage point change in nominal household consumption growth.
2014 Gross Revenue Pool3 $24.7 billion $247 million revenue change for each percentage point change in 2014 gross revenue pool.
2015 Gross Revenue Pool3 $26.2 billion $262 million revenue change for each percentage point change in 2015 gross revenue pool.
2016 Gross Revenue Pool3 $26.9 billion $269 million revenue change for each percentage point change in 2016 gross revenue pool.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Corporations Tax Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 2.6 per cent growth in 2016–17  
Net Operating Surplus — Corporations 3.7 per cent growth in 2016 $90 million change in revenue for each percentage point change in net operating surplus — corporations growth.
2015 Tax Assessments2 $9.6 billion $96 million change in revenue for each percentage point change in 2015 Tax Assessments.
2016 Ontario Corporate Taxable Income $111.1 billion $128 million change in revenue for each percentage point change in the federal estimate of 2016 Ontario Corporate Taxable Income.
2017 Ontario Corporate Taxable Income $118.3 billion $45 million change in revenue for each percentage point change in 2017 Ontario Corporate Taxable Income.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Employer Health Tax Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 4.6 per cent growth in 2016–17  
Compensation of Employees 4.4 per cent growth in 2016 $60 million revenue change for each percentage point change in compensation of employees growth.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Ontario Health Premium (OHP) Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 4.7 per cent growth in 2016–17  
Compensation of Employees 4.4 per cent growth in 2016 $24 million revenue change for each percentage point change in compensation of employees growth.
2015 Tax-Year Assessments $3.2 billion $32 million revenue change for each percentage point change in 2015 OHP assessments.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Gasoline Tax Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 1.4 per cent growth in 2016–17  
Gasoline Pump Prices 99.3 cents per litre in 2016 $3 million revenue decrease (increase) for each cent per litre increase (decrease) in gasoline pump prices.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Fuel Tax Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 1.8 per cent growth in 2016–17  
Real GDP 2.2 per cent growth in 2016 $11 million revenue change for each percentage point change in real GDP growth.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Land Transfer Tax Revenues
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Revenue Base 2.0 per cent decline in 2016–17  
Housing Resales 5.9 per cent decline in 2016–17 $20 million revenue change for each percentage point change in both the number and prices of housing resales.
Resale Prices 2.7 per cent increase in 2016–17  
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Canada Health Transfer
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Ontario Population Share 38.4 per cent in 2016–17 $36 million revenue change for each tenth of a percentage point change in Ontario’s population share.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Canada Social Transfer
Item/Key Components 2016–17 Assumption 2016–17 Sensitivities
Ontario Population Share 38.4 per cent in 2016–17 $13 million revenue change for each tenth of a percentage point change in Ontario’s population share.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Equalization Entitlements
Item/Key Components 2017–18 Assumption 2017–18 Sensitivities
Three-Year Weighted-Average Population 0.9 per cent growth over 2016–17 1.0 per cent relative increase (decrease) in the three-year weighted-average population for Ontario will result in $0.5 billion higher (lower) Equalization entitlement for Ontario.
Three-Year Weighted-Average Fiscal Capacity 3.2 per cent growth over 2016–17 1.0 per cent relative increase (decrease) in Ontario’s three-year weighted average fiscal capacity will result in $0.5 billion lower (higher) Equalization entitlement for Ontario.
TABLE 3.17 Selected Economic and Revenue Risks and Sensitivities (cont'd)
Cap-and-Trade Proceeds
Item/Key Components 2017–18 Assumption 2017–18 Sensitivities
Carbon Price ($ Canadian/tonne of carbon dioxide emissions) $18 in 2017 A one per cent increase (decrease) in the carbon price would result in a $19 million increase (decrease) in cap-and-trade proceeds.
1 Revenue Base is revenue excluding the impact of measures, adjustments for past Public Accounts estimate variances and other one-time factors.
2 Ontario 2015 Personal Income Tax and Corporations Tax are estimates because 2015 tax returns are yet to be assessed by the Canada Revenue Agency.
3 The Gross Revenue Pool is a federal Department of Finance estimate and excludes the impact of Ontario measures.

Medium-Term Expense Outlook

The Province’s program expense outlook is projected to grow at an average annual rate of 1.9 per cent between 2014–15 and 2018–19. This reflects the government’s commitment to invest in priority areas to enhance public services, support economic growth and a low-carbon economy, and create jobs.

TABLE 3.18 Summary of Medium-Term Expense Outlook
($ Billions)
  Actual
2014–15
Interim
2015–16
Plan
2016–17
Outlook
2017–18
Outlook
2018–19
Average
Annual
Growth
2014–15 to
2018–19
Programs - Health Sector 50.0 50.8 51.8 52.8 53.7 1.8%
Programs - Education Sector1 24.6 24.8 25.6 25.8 25.9 1.2%
Programs - Postsecondary and Training Sector 7.7 7.8 7.9 7.9 8.0 1.1%
Programs - Children’s and Social Services Sector 14.7 15.6 15.8 16.1 16.3 2.7%
Programs - Justice Sector 4.4 4.5 4.5 4.5 4.6 1.2%
Programs - Other Programs 16.9 17.5 16.5 17.2 19.1 3.2%
Total Programs 118.2 120.9 122.1 124.2 127.6 1.9%
Interest on Debt 10.6 11.2 11.8 12.5 13.1 5.4%
Total Expense 128.9 132.1 133.9 136.6 140.7 2.2%
1 Excludes Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.
Note: Numbers may not add due to rounding.

Highlights of the program expense outlook over the medium term include the following:

  • Total health sector expense is projected to grow on average by 1.8 per cent per year between 2014–15 and 2018–19. Growth will be managed in part by a continued shift in the hospital funding model from a global funding approach to an activity-based funding approach, and continued emphasis on the sustainability of Ontario’s drug programs. These measures would allow for investments in other areas of the health sector that are critical to the Patients First: Action Plan for Health Care, such as ongoing investments in home and community care. See Chapter II, Section B: Transforming Government and Managing Costs for more on managing health care spending and growth.
  • Total education sector expense is projected to grow on average by 1.2 per cent per year between 2014–15 and 2018–19, mainly due to increased funding to school boards to support student enrolment; increased funding for the child care sector to support child care modernization; and continued implementation of a wage increase for front-line child care workers. The growth rate also reflects actions being taken to modernize and transform the education system, and manage costs through more efficient use of school space by consolidating schools, sharing space among school boards and fostering community partnerships, where appropriate.
  • Total postsecondary and training sector expense is projected to grow on average by 1.1 per cent per year between 2014–15 and 2018–19, mainly due to investments in student financial assistance programs, increases related to Ontario’s contribution to the Canada–Ontario Job Grant, and capital investments.
  • Total children’s and social services sector expense is projected to grow on average by 2.7 per cent per year between 2014–15 and 2018–19, primarily reflecting the government’s support for vulnerable Ontarians through investments in social assistance and developmental services, as well as funding to support transformation and expansion of autism services.
  • Total justice sector expense is projected to grow on average by 1.2 per cent per year between 2014–15 and 2018–19, mainly due to the continuing upload of court security costs from municipalities, the expansion of access to legal aid for low-income Ontarians and planned capital investments.
  • Other programs expense is projected to grow, on average, by 3.2 per cent per year between 2014–15 and 2018–19, mainly due to investments in transit, transportation and community infrastructure, enhancement of GO Transit services, the Long-Term Affordable Housing Strategy and initiatives to support Ontario’s Climate Change Strategy.

The total expense outlook includes interest on debt expense, which is projected to increase on average by 5.4 per cent per year between 2014–15 and 2018–19. This increase is mainly due to the forecast increase in net debt from borrowing required to fund deficits and investment in capital assets.

Key Changes in the Medium-Term Expense Outlook since the 2015 Budget

TABLE 3.19 Summary of Medium-Term Expense Changes since the 2015 Budget
($ Billions)
  2015–16 2016–17 2017–18
Program Expense for the 2015 Budget 120.5 120.6 120.0
Program Expense Changes - Projected Cap-and-Trade Investments 0.3 0.2 1.9
Program Expense Changes - Moving Ontario Forward (0.0) 0.1 0.0
Program Expense Changes - Adjustments for Demand, Demographics and Other Infrastructure 0.1 0.7 2.3
Program Expense Changes - Contingency Funds1,2 0.6
Net Program Expense Changes 0.4 1.6 4.2
2016 Budget Program Expense 120.9 122.1 124.2
Annual Growth in Program Expense (per cent) 2.2 1.0 1.7
1 Unused contingency funds for 2015–16 drawn down at interim, with remaining balance of $15 million.
2 In the 2015 Budget, combined operating and capital contingency funds for 2015–16 were $650 million. In the 2016 Budget, combined contingency funds for 2016–17 are $1,200 million.
Note: Numbers may not add due to rounding.

Compared with the 2015 Budget, program expense is projected to be $1.6 billion higher in 2016–17 and $4.2 billion higher in 2017–18. These changes primarily reflect projected emissions reduction initiatives offset by cap-and-trade revenue, small changes to Moving Ontario Forward projects, adjustments for changes in demand and demographics across many programs, and other investments in infrastructure. In addition, the 2016 Budget includes combined operating and capital contingency funds for 2016–17 that are $0.6 billion higher than the combined contingency funds included in the 2015 Budget for the 2015–16 fiscal year. These increased contingencies provide flexibility to allow the government to respond to changing needs and help mitigate expense risks that may otherwise adversely affect Ontario’s fiscal performance.

Risks to the Expense Outlook

The government has proven to be a strong fiscal manager, having held average annual growth in program spending to 1.4 per cent between 2010–11 and 2014–15. It will manage risks prudently to ensure it can continue to invest in the economy, people and a healthy, clean and prosperous low-carbon future, while also balancing the budget by 2017–18 in a fair and responsible way.

Although Ontario’s economic growth is outpacing national growth, an increasingly competitive global economic environment and ongoing uncertainty pose risks to the Province’s expense projections.

The following table provides a summary of key expense risks and sensitivities that could result from unexpected changes in economic conditions and program demands. A change in these factors could affect total expense, causing variances in the overall fiscal forecast. These sensitivities are illustrative and can vary, depending on the nature and composition of potential risks.

TABLE 3.20 Selected Expense Sensitivities
Program/Sector 2016–17 Assumption 2016–17 Sensitivity
Health Sector Annual growth of 2.0 per cent. One per cent change in health spending: $518 million.
Hospitals’ Sector Expense Annual base growth of 1 per cent. One per cent change in hospitals’ sector expense: $226 million.
Drug Programs Annual growth of 3 per cent. One per cent change in program expenditure of drug programs: $39 million.
Long-Term Care Homes 78,233 long-term care home beds. Average Provincial annual operating cost per bed in a long-term care home is $52,000. One per cent change in number of beds: approximately $41 million.
Home Care Approximately 27 million hours of personal support services.

Approximately 8.4 million nursing and professional visits.
One per cent change in hours of personal support services: approximately $8.7 million.

One per cent change in nursing and therapy visits: approximately $5.6 million.
Elementary and Secondary Schools Approximately 1,952,000 average daily pupil enrolment. One per cent enrolment change: approximately $150 million.
University Students 374,000 full-time undergraduate and graduate students. One per cent enrolment change: $32 million.
College Students 192,000 full-time students. One per cent enrolment change: $13 million.
Ontario Works 251,313 average annual caseload. One per cent caseload change: $25 million.
Ontario Disability Support Program 345,821 average annual caseload. One per cent caseload change: $48 million.
Interest on Debt Average cost of 10-year borrowing in 2016–17 is forecast to be approximately 3.1 per cent. The impact of a 100 basis-point change in borrowing rates is forecast to be approximately $350 million.
Contingent Liabilities

In addition to the key demand sensitivities and economic risks to the fiscal plan, there are risks stemming from the government’s contingent liabilities. Whether these contingencies will result in actual liabilities for the Province is beyond the direct control of the government. Losses could result from legal settlements, defaults on projects, and loan and funding guarantees. Provisions for losses that are likely to occur and can be reasonably estimated are expensed and reported as liabilities in the Province’s financial statements. Any significant contingent liabilities were disclosed as part of the 2014–2015 Annual Report and Consolidated Financial Statements, released in September 2015.

Fiscal Prudence

As required by the Fiscal Transparency and Accountability Act, 2004, Ontario’s fiscal plan incorporates prudence in the form of a reserve to protect the fiscal outlook against adverse changes in the Province’s revenue and expense. The reserve has been set at $1.0 billion in 2016–17, $1.1 billion in 2017–18 and $1.2 billion in 2018–19.

The fiscal plan also includes contingency funds (both operating and capital) to help mitigate expense risks — particularly in cases where health and safety may be compromised or services to the most vulnerable are jeopardized — that may otherwise adversely affect Ontario’s fiscal performance.

In keeping with sound fiscal practices, the Province’s revenue outlook is based on prudent economic assumptions. Three economic experts reviewed the Ministry of Finance’s economic assumptions in February 2016 and found the assumptions to be reasonable. The three experts are from the Policy and Economic Analysis Program at the Rotman Institute for International Business; Rotman School of Management, University of Toronto; the Centre for Spatial Economics; and the Conference Board of Canada.

Details of Ontario’s Finances

The following tables and charts provide information on the Province’s historical financial performance, key fiscal indicators, and details of Ontario’s fiscal plan and outlook.

TABLE 3.21 Revenue
($ Millions)
Taxation Revenue 2013–14 Actual
2014–15
Interim
2015–16
Plan
2016–17
Personal Income Tax 26,929 29,313 30,265  32,167
Sales Tax1  20,481  21,689  23,486  23,976
Corporations Tax  11,423 9,557 11,368 12,050
Education Property Tax2 5,457 5,561 5,666 5,834
Employer Health Tax 5,283 5,415 5,742 6,007
Ontario Health Premium 3,128 3,366 3,451 3,604
Gasoline Tax 2,363 2,447 2,468 2,522
Land Transfer Tax 1,614 1,778 2,093 2,051
Tobacco Tax 1,110 1,163 1,208 1,221
Fuel Tax 718 739 751 790
Beer and Wine Tax 557 560 579 611
Electricity Payments in Lieu of Taxes 543 180 3,232 515
Other Taxes 360 507 457 471
Total Taxation Revenue 79,966 82,275 90,766 91,819
Government of Canada 2013–14 Actual 2014–15 Interim 2015–16 Plan 2016–17
Canada Health Transfer 11,940 12,408 13,084 13,858
Canada Social Transfer 4,689 4,847 4,984 5,128
Equalization 3,169 1,988 2,363 2,304
Infrastructure Programs 123 137 168 1,017
Labour Market Programs 909 896 927 989
Social Housing 474 465 448 434
Wait Times Reduction Fund 96  –  –
Other Federal Payments 877 874 899 914
Total Government of Canada 22,277 21,615 22,873 24,644
Government Business Enterprises 2013–14 Actual 2014–15 Interim 2015–16 Plan 2016–17
Ontario Lottery and Gaming Corporation 2,009 1,995 2,079 1,953
Liquor Control Board of Ontario 1,723 1,831 1,938 2,025
Ontario Power Generation Inc./Hydro One Ltd./Brampton Distribution Holdco Inc. 1,605 1,789 330 1,049
Total Government Business Enterprises 5,337 5,615 4,347 5,027
Other Non-Tax Revenue 2013–14 Actual 2014–15 Interim 2015–16 Plan 2016–17
Reimbursements 962 985 979 983
Vehicle and Driver Registration Fees 1,248 1,433 1,592 1,751
Electricity Debt Retirement Charge 954 956 868 625
Power Supply Contract Recoveries 1,296 950 784 643
Sales and Rentals 1,160 2,336 2,174 2,421
Cap-and-Trade Proceeds 478
Other Fees and Licences 759 693 940 987
Net Reduction of Power Purchase Contract Liability 243 217 172 129
Royalties 242 275 271 287
Miscellaneous Other Non-Tax Revenue3 1,467 1,196 781 795
Total Other Non-Tax Revenue 8,331 9,041 8,561 9,099
  2013–14 Actual 2014–15 Interim 2015–16 Plan 2016–17
Total Revenue 115,911 118,546 126,547 130,589
1 Sales Tax revenue is net of the Ontario Sales Tax Credit and the energy component of the Ontario Energy and Property Tax Credit.
2 Education Property Tax revenue is net of the property tax credit component of the Ontario Energy and Property Tax Credit and the Ontario Senior Homeowners’ Property Tax Grant.
3 Relatively high Miscellaneous Other Non-Tax revenue in 2013–14 reflects the gain on the sale of the Province’s shares of General Motors Company and higher recoveries of prior-year expenditures.
Note: Numbers may not add due to rounding.
TABLE 3.22 Total Expense
($ Millions)
Ministry Expense 2013–14 Actual
2014–15
Interim
2015–16
Plan
2016–17
Aboriginal Affairs1 63 67 74.8 77.0
Agriculture, Food and Rural Affairs1 800 805 943.2 915.9
Attorney General 1,812 1,782 1,816.5 1,867.8
Board of Internal Economy2 199 264 220.1 219.9
Children and Youth Services 3,973 4,112 4,257.6 4,346.1
Citizenship, Immigration and International Trade 152 157 169.4 220.8
Community and Social Services 9,977 10,551 11,304.6 11,467.5
Community Safety and Correctional Services1 2,380 2,524 2,537.5 2,649.5
Economic Development, Employment and Infrastructure / Research and Innovation1 992 1,076 1,195.4 1,177.0
Education1 23,645 24,630 24,801.4 25,635.8
Energy1 311 326 329.9 322.1
Environment and Climate Change1 480 486 502.6 531.4
Executive Offices 30 43 36.7 44.0
Finance1 907 951 960.6 963.1
Francophone Affairs, Office of 5 5 8.4 5.7
Government and Consumer Services 594 573 610.0 607.6
Health and Long-Term Care 48,933 50,039 50,785.4 51,785.2
Labour 303 305 307.5 309.5
Municipal Affairs and Housing1 845 889 916.9 900.0
Natural Resources and Forestry1 720 714 710.6 750.6
Northern Development and Mines 719 804 740.8 790.7
Tourism, Culture and Sport1 1,337 1,246 1,262.3 1,250.8
Training, Colleges and Universities 7,599 7,684 7,782.1 7,876.8
Transportation1 2,823 2,944 3,365.5 3,850.9
Treasury Board Secretariat1 222 227 220.5 316.9
Interest on Debt3 10,572 10,635 11,200.0 11,756.0
Other Expense1 5,972 5,022 5,022.8 4,056.8
Year-End Savings4 (800.0)
Total Expense 126,364 128,860 132,083.2 133,895.4
1 Details on other ministry expense can be found in Table 3.23, Details of Other Expense.
2 The 2014–15 amount includes expenses for the 2014 general election.
3 Interest on debt is net of interest capitalized during construction of tangible capital assets of $134 million in 2013–14, $202 million in 2014–15, $131 million in 2015–16 and $183 million in 2016–17.
4 As in past years, the Year-End Savings provision reflects efficiencies through in-year expenditure management and underspending due to factors such as program management, and changes in project startups and implementation plans.
Note: Numbers may not add due to rounding.
TABLE 3.23 Details of Other Expense
($ Millions)
Ministry Expense 2013–14 Actual
2014–15
Interim
2015–16
Plan
2016–17
Aboriginal Affairs - One-Time Investments including Settlements 12 3 4.5
Aboriginal Affairs - Green Investment Fund Initiatives 5.0
Agriculture, Food and Rural Affairs - Time-Limited Investments in Infrastructure 132 36 21.2
Agriculture, Food and Rural Affairs - Time-Limited Assistance 17 7
Community Safety and Correctional Services - Time-Limited Support for 2015 Pan/Parapan American Games Security 5 44 123.5
Economic Development, Employment and Infrastructure / Research and Innovation - Green Investment Fund Initiatives 99.0
Economic Development, Employment and Infrastructure / Research and Innovation - Federal–Provincial Infrastructure Programs 618.7
Education - Teachers’ Pension Plan1 873 564 112.0 (452.0)
Energy - Green Investment Fund Initiatives 108.0
Energy - Ontario Clean Energy Benefit 1,006 1,078 860.0
Energy - Strategic Asset Management and Transformation Related to Hydro One 52.0 70.9
Environment and Climate Change - Green Investment Fund Initiatives 1.0
Finance - Ontario Municipal Partnership Fund 569 542 512.5 505.0
Finance - Power Supply Contract Costs 1,296 920 783.6 643.1
Municipal Affairs and Housing - Green Investment Fund Initiatives 92.0
Municipal Affairs and Housing - Time-Limited Investments in Municipal, Social and Affordable Housing 155 153 163.1 160.3
Municipal Affairs and Housing - Time-Limited Investments 208 7 0.3
Natural Resources and Forestry - Emergency Forest Firefighting 92 78 96.1 69.8
Tourism, Culture and Sport - Time-Limited Investments to Support 2015 Pan/ Parapan American Games 332 405 871.2 88.6
Transportation - Green Investment Fund Initiatives 20.0
Treasury Board Secretariat - Capital Contingency Fund 100.0
Treasury Board Secretariat - Operating Contingency Fund 14.6 1,100.0
Treasury Board Secretariat - Employee and Pensioner Benefits 1,275 1,186 1,083.2 1,152.5
Total Other Expense 5,972 5,022 5,022.8 4,056.8
1 Numbers reflect Public Sector Accounting Board pension expense. Ontario’s matching contributions to the plan grow from $1,466 million in 2013–14 to $1,664 million in 2016–17.
Note: Numbers may not add due to rounding.
TABLE 3.24 2016–17 Infrastructure Expenditures
($ Millions)
Sector Total
Infrastructure
Expenditures
2015–16 Interim1
2016–17 Plan:
Investment
in Capital
Assets2
2016–17 Plan:
Transfers and
Other Infrastructure
Expenditures3
2016–17 Plan:
Total
Infrastructure
Expenditures4
Transportation - Transit 3,293 4,701 688 5,389
Transportation - Provincial Highways 2,206 2,108 43 2,150
Transportation - Other Transportation, Property and Planning 815 603 166 768
Health - Hospitals 2,174 2,621 263 2,884
Health - Other Health 258 60 248 308
Education 1,930 1,834 171 2,005
Postsecondary - Colleges and Other 385 608 4 613
Postsecondary - Universities 209 187 187
Social 373 8 305 312
Justice 198 58 197 255
Other Sectors5 1,101 436 934 1,369
Total Infrastructure Expenditures 12,941 13,037 3,203 16,240
1 Includes provincial investment in capital assets of approximately $8.5 billion.
2 Includes $183 million in interest capitalized during construction.
3 Includes transfers to municipalities, universities and non-consolidated agencies.
4 Includes third-party investments in hospitals, colleges and schools; and provisional federal contributions to provincial infrastructure investments.
5 Includes government administration, natural resources, culture and tourism sectors.
Note: Numbers may not add due to rounding.
TABLE 3.25 Ten-Year Review of Selected Financial and Economic Statistics1
($ Millions)
  2007–08 2008–09 2009–102 2010–11 2011–12
Revenue 104,115 97,532 96,313 107,175 109,773
Expense - Programs 94,601 95,375 106,856 111,706 112,660
Expense - Interest on Debt3 8,914 8,566 8,719 9,480 10,082
Total Expense 103,515 103,941 115,575 121,186 122,742
Surplus/(Deficit) Before Reserve 600 (6,409) (19,262) (14,011) (12,969)
Reserve
Surplus/(Deficit) 600 (6,409) (19,262) (14,011) (12,969)
Net Debt4 156,616 169,585 193,589 214,511 235,582
Accumulated Deficit 105,617 113,238 130,957 144,573 158,410
Gross Domestic Product (GDP) at Market Prices 601,735 608,446 597,882 630,989 659,743
Primary Household Income 403,408 414,724 412,847 424,251 444,076
Population — July (000s) 12,764 12,883 12,998 13,135 13,264
Net Debt per Capita (dollars) 12,270 13,164 14,894 16,331 17,762
Household Income per Capita (dollars) 31,605 32,193 31,763 32,299 33,481
Interest on Debt as a Per Cent of Revenue 8.6 8.8 9.1 8.8 9.2
Net Debt as a Per Cent of GDP 26.0 27.9 32.4 34.0 35.7
Accumulated Deficit as a Per Cent of GDP 17.6 18.6 21.9 22.9 24.0
1 Revenue and expense have been restated to reflect a fiscally neutral accounting change for the revised presentation of education property taxes, as described in the 2010 Ontario Budget; a fiscally neutral accounting change related to the reclassification of government agencies and organizations, as described in the 2011 Ontario Economic Outlook and Fiscal Review; and a fiscally neutral reclassification of a number of tax measures that are transfers or grants, as described in the 2012 Ontario Budget.
2 Starting in 2009–10, investments in minor tangible capital assets owned by the Province were capitalized and amortized to expense. All capital assets owned by consolidated organizations are being accounted for in a similar manner.
3 Interest on debt is net of interest capitalized during construction of tangible capital assets of $134 million in 2013–14, $202 million in 2014–15, $131 million in 2015–16 and $183 million in 2016–17.
4 Starting in 2009–10, Net Debt includes the net debt of hospitals, school boards and colleges, consistent with Public Sector Accounting Board standards. For comparative purposes, Net Debt has been restated from 2007–08 to 2008–09 to conform with this revised presentation.
Sources: Statistics Canada and Ontario Ministry of Finance.
TABLE 3.25 Ten-Year Review of Selected Financial and Economic Statistics1 (cont'd)
($ Millions)
  2012–13 2013–14 Actual
2014–15
Interim
2015–16
Plan
2016–17
Revenue 113,369 115,911 118,546 126,547 130,589
Expense - Programs 112,248 115,792 118,225 120,883 122,139
Expense - Interest on Debt3 10,341 10,572 10,635 11,200 11,756
Total Expense 122,589 126,364 128,860 132,083 133,895
Surplus/(Deficit) Before Reserve (9,220) (10,453) (10,314) (5,536) (3,306)
Reserve 150 1,000
Surplus/(Deficit) (9,220) (10,453) (10,314) (5,686) (4,306)
Net Debt4 252,088 267,190 284,576 296,109 308,315
Accumulated Deficit 167,132 176,634 187,511 193,447 197,753
Gross Domestic Product (GDP) at Market Prices 680,084 693,210 721,970 748,207 778,417
Primary Household Income 459,111 473,905 490,412 506,462 529,083
Population — July (000s) 13,410 13,551 13,678 13,792 13,949
Net Debt per Capita (dollars) 18,798 19,717 20,806 21,470 22,103
Household Income per Capita (dollars) 34,236 34,972 35,855 36,721 37,930
Interest on Debt as a Per Cent of Revenue 9.1 9.1 9.0 8.9 9.0
Net Debt as a Per Cent of GDP 37.1 38.5 39.4 39.6 39.6
Accumulated Deficit as a Per Cent of GDP 24.6 25.5 26.0 25.9 25.4
1 Revenue and expense have been restated to reflect a fiscally neutral accounting change for the revised presentation of education property taxes, as described in the 2010 Ontario Budget; a fiscally neutral accounting change related to the reclassification of government agencies and organizations, as described in the 2011 Ontario Economic Outlook and Fiscal Review; and a fiscally neutral reclassification of a number of tax measures that are transfers or grants, as described in the 2012 Ontario Budget.
3 Interest on debt is net of interest capitalized during construction of tangible capital assets of $134 million in 2013–14, $202 million in 2014–15, $131 million in 2015–16 and $183 million in 2016–17.
4 Starting in 2009–10, Net Debt includes the net debt of hospitals, school boards and colleges, consistent with Public Sector Accounting Board standards. For comparative purposes, Net Debt has been restated from 2007–08 to 2008–09 to conform with this revised presentation.
Sources: Statistics Canada and Ontario Ministry of Finance.

Support from Gaming

Proceeds from gaming activities in Ontario continue to support Provincial priorities. Net Provincial revenue generated from Ontario Lottery and Gaming Corporation (OLG) lotteries, casinos, Internet gaming and slot facilities support the operation of hospitals, charitable and not-for-profit organizations, amateur sports, problem gambling prevention, treatment and research and horse racing. Ontario Lottery and Gaming Corporation also makes payments directly from its revenues to support municipalities and Ontario First Nations.

TABLE 3.26 Support for Health Care, Charities, Problem Gambling and Related Programs, Municipalities and Ontario First Nations
($ Millions)
  Interim
2015–16
Plan
2016–17
Revenue for Provincial Purposes - Operation of Hospitals 1,755 1,648
Revenue for Provincial Purposes - Ontario Trillium Foundation 115 115
Revenue for Provincial Purposes - Problem Gambling Prevention, Treatment and Research 38 38
Revenue for Provincial Purposes - Ontario Amateur Sports 10 10
Revenue for Provincial Purposes - General Government Priorities, including Horse Racing Support 161 143
Subtotal — Net Profit to Province from OLG 2,079 1,953
Support for Municipalities and Ontario First Nations1 - Municipalities and First Nations Host Payments2 117 117
Support for Municipalities and Ontario First Nations1 - Ontario First Nations3 122 122
Total Support from Gaming 2,318 2,192
1 Operating expenses of the Ontario Lottery and Gaming Corporation (OLG) include payments to host municipalities and Ontario First Nations payments under the Gaming Revenue Sharing and Financial Agreement.
2 Includes Ontario Lottery and Gaming Corporation (OLG) operated casinos, slot facilities and resort casinos, municipality host payments, the Rama First Nations Fee for Casino Rama and the Mississaugas of Scugog Island First Nation Fee for Great Blue Heron Casino.
3 Revenues paid to First Nations resulting from the Gaming Revenue Sharing and Financial Agreement.
Note: Numbers may not add due to rounding.

Chart Descriptions

Chart 3.23: Composition of Revenue, 2016–17

This pie chart shows the composition of Ontario’s revenue in 2016–17, which totals $130.6 billion. The largest taxation revenue source is Personal Income Tax revenue at $32.2 billion, accounting for 24.6 per cent of total revenue. This is followed by Sales Tax at $24.0 billion, or 18.4 per cent of total revenue, and Corporations Tax at $12.1 billion, or 9.2 per cent of total revenue. Total taxation revenue accounts for $91.8 billion, or 70.3 per cent of total revenue. The other major non-taxation sources of revenue are Federal Transfers of $24.6 billion, or 18.9 per cent of total revenue, Income from Government Business Enterprises at $5.0 billion, or 3.8 per cent of total revenue, and various Other Non-Tax Revenues at $9.1 billion, or 7.0 per cent of total revenue.

Return to Chart 3.23

Chart 3.24: Composition of Total Expense, 2016–17

This pie chart shows the share of total expense and dollar amounts by sector in 2016–17. Total expense in 2016­–17 is $133.9 billion.

The largest expense is the Health Sector at $51.8 billion, accounting for 38.7 per cent of total expense.

The remaining sectors of total expense include the Education Sector at $25.6 billion or 19.1 per cent; the Postsecondary and Training Sector at $7.9 billion or 5.9 per cent; the Children’s and Social Services Sector at $15.8 billion or 11.8 per cent; the Justice Sector at $4.5 billion or 3.4 per cent; and Other Programs at $16.5 billion or 12.3 per cent. Interest on Debt, included as part of Total Expense, is $11.8 billion or 8.8 per cent.

Note that the Education Sector excludes the Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.

Return to Chart 3.24