The balanced 2017 Budget means Ontario can increase investments in services and help with everyday costs, such as free prescription medications for children and youth, lower electricity bills and more affordable child care.
Ontario is balancing the budget for the first time since the 2008–09 global recession and maintaining a balanced budget for the next two years. A strong economy, together with a balanced budget, is creating more opportunities for individuals and businesses in Ontario to get ahead and stay ahead.
A balanced budget also gives the government the fiscal flexibility to do more to help people. For the 2017 Budget, this means additional investments over three years of $11.5 billion in health care ($7 billion more than planned in the 2016 Budget), and $6.4 billion in education and training ($5.5 billion more than planned in the 2016 Budget), and a $30-billion expenditure increase to the multi-year infrastructure plan published in the 2016 Budget.
Ontario eliminated its deficit in 2017 from more than $19 billion in 2009, all while investing in the programs and services people rely on most.
Economic Growth Leader
Ontario’s real GDP growth has outpaced all G7 countries over the last three years, supported by the government’s strategic investments.
A Responsible Plan
Ontario remains the province with the lowest per-capita program spending in Canada, effectively managing spending while transforming the delivery of public services like health care and education.
How we’re balancing the budget
- Making Ontario more tax competitive for new business investments by consistently bringing down the marginal effective tax rate, from 33 per cent in 2009 to 16.9 per cent in 2016.
- Stimulating economic growth by making historic investments in infrastructure with more than $190 billion over a 13-year period that started in 2014–15. Planned investments are expected to support 125,000 jobs, on average, each year.
- Combatting the underground economy, strengthening the integrity of the tax system and ensuring everyone pays their fair share of taxes.
- Implementing a realistic and responsible plan to strengthen the economy and balance the budget, resulting in increased provincial revenues.
How we’re managing debt
- Debt is incurred primarily for two reasons: to finance deficits and invest in building capital assets. A balanced budget means the government no longer needs to borrow to pay for its operating costs and can focus its borrowing on capital investments — which spur economic growth and improve the quality of life for people today and future generations.
- Rating agencies and other independent observers have identified that Canadian provinces have much greater responsibilities than subnational jurisdictions in other G7 countries, but also have much greater flexibility to take on debt because of their complete control over a wide range of revenue bases.
- Ontario’s debt-to-GDP ratio indicates its ability to pay back debt by comparing what it owes to what its economy produces. Ontario’s economy had a nominal GDP of almost $800 billion in 2016.
- The balanced budget and the government’s continued focus on capital investment will add to economic growth, resulting in GDP growing more quickly than debt, helping to lower the net debt-to-GDP ratio to the government’s pre-recession level of 27 per cent. In the balanced 2017 Budget, the government is setting an interim target to reduce the net debt-to-GDP ratio to 35 per cent by 2023–24.
- The balanced 2017 Budget continues the government’s focus on infrastructure investments over the next 10 years, including:
- $20 billion in new and renovated hospitals
- $16 billion in building and repairing schools
- $84 billion in transit and transportation infrastructure
- With a balanced budget, more revenue can be spent on priorities like health care and education, and less on interest. The government has locked in historically low interest rates, enabling it to cost-effectively manage debt and reduce refinancing risks.
- The 2010 Budget forecast that, by 2017–18, the Province would need to spend 11.3 cents of every revenue dollar received on interest. The current forecast is 3.1 cents lower, at 8.2 cents of interest costs for every dollar of revenue. This ratio is lower than it has been for the last 25 years and is forecast to remain even lower through the outlook period to 2019–20.
Net Debt Growth after Balance Is Due Only to Investments in Capital Assets
This bar chart shows the factors for growth in net debt from 2008–09 to 2019–20.
Between 2008–09 and 2016–17, the per cent increase in net debt is mainly due to the deficit, with net investments in capital assets responsible for the rest. Once a period of balanced budgets is reached in 2017–18 and onwards, growth in net debt will be 100 per cent due to investments in capital assets.