Introduction: Continued Collaboration with Our Partners
Ontario has embraced a collaborative approach with its partners across the country to address the increasingly complex challenges facing governments in Canada — challenges such as uncertain global economic growth, the perils of climate change and demographic changes.
The need for collaboration within the federation has never been greater.
Ontario believes that the best results for Canadians come from working together with all levels of government — driven by shared values and a shared sense of responsibility to address the needs of all Canadians equally. Along with its partners, the Province is making the investments necessary to help Ontarians adapt and excel in the changing global economy.
The Province is committed to continue building constructive partnerships with the federal government, other provinces and territories, municipalities and Indigenous communities to achieve meaningful improvements in the lives of people in Ontario.
Working in Partnership with Municipalities
Everyone benefits when governments work together, and the Province has a very strong record of supporting and working in partnership with municipalities.
The Province collaborates and consults with municipalities on policy issues of mutual interest, including on the potential impact of changes to provincial legislation and regulations. Two important mechanisms for this collaboration are the Memorandum of Understanding with the Association of Municipalities of Ontario (AMO-MOU) and the Toronto-Ontario Cooperation and Consultation Agreement (T-OCCA).
Ontario continues to increase support for municipalities, fostering a mature and sustainable provincial–municipal financial relationship. In 2017 alone, the Province is providing municipalities with ongoing support of more than $4 billion. This funding will grow to approximately $4.2 billion by 2018 — an increase of $3.1 billion above the 2003 level.
This support includes:
- Provincial uploads of social assistance benefit costs, as well as court security and prisoner transportation costs (up to $125 million annually by 2018). Ontario is fulfilling its commitment to municipalities to fully implement these uploads by 2018. This represents a significant milestone in the provincial–municipal relationship, and has helped put municipalities on a financially sustainable footing.
- Maintaining unconditional funding under the Ontario Municipal Partnership Fund (OMPF) at $505 million, which will provide support to 388 municipalities across the province. The Province is working with municipalities to ensure this funding is targeted to northern and rural municipalities with the most challenging fiscal circumstances.
- Funding to support cost-sharing of land ambulance costs and an increased provincial share of public health care costs.
- Steady support to small, rural and northern communities through the Ontario Community Infrastructure Fund (OCIF), including tripling funding to $300 million per year by 2018–19 to support renewal of critical road, bridge, water and wastewater infrastructure.
The Province has also taken steps to increase fairness in funding support and property tax flexibility for municipalities. For example, it has increased municipal flexibility to manage business property taxes, including the Business Property Tax Capping Program and Business Vacant Unit Rebate and Vacant/Excess Land Subclasses.
Going forward, the Province will focus on investing in the infrastructure that is vital to the health, prosperity and quality of life of Ontarians.
As announced earlier this year, Ontario will increase gas tax funding starting in 2019, doubling the municipal share from two to four cents per litre by 2021 with an estimated funding of $642 million in 2021–22, with no added tax at the gas pump. This program provides eligible municipalities with a guaranteed source of funding to address priorities, such as building capacity, and improving and expanding transit services.
In partnership with the federal government and local communities, the Province is making strategic investments to revitalize municipal infrastructure. In fall 2016, the Province announced a bilateral agreement with the federal government that will make available more than $1.1 billion under the Clean Water and Wastewater Fund (CWWF). Under the agreement with the federal government, the Province has submitted over 1,300 projects for federal approval. Forty-one initial projects were approved under the CWWF for federal and provincial funding, including:
- $3.2 million for upgrading of the water main line under Spruce Street in the City of Greater Sudbury;
- $3.0 million for upgrading the Hespeler Wastewater Treatment Plant in the Regional Municipality of Waterloo; and
- $1.4 million for supporting the City of Barrie’s Water, Wastewater and Stormwater Master Plans and Needs Studies.
Partnerships with Indigenous Communities
Ontario remains committed to transforming relationships with Indigenous peoples to move forward on the journey of reconciliation. The Province is working with First Nations, Métis, Inuit and urban Indigenous partners to close gaps and remove barriers, through the creation of culturally relevant and responsive supports. This includes continuing to collaborate to implement initiatives outlined in The Journey Together: Ontario’s Commitment to Reconciliation with Indigenous Peoples, Walking Together: Ontario’s Long-Term Strategy to End Violence Against Indigenous Women and the First Nations Health Action Plan. See Chapter IV, Section A: Strengthening Health Care for more details.
The Journey Together: Ontario’s Commitment to Reconciliation with Indigenous Peoples
The Journey Together, released in May 2016, details Ontario’s efforts with partners to support the journey of reconciliation with funding of $250 million over three years. The Province, in partnership with Indigenous communities and organizations, has delivered on the first year of its commitment to the calls to action of the Truth and Reconciliation Commission of Canada (TRC). Together, the government and Indigenous partners will continue to advance a range of initiatives in the following five program/action areas:
- Understanding the legacy of residential schools through developing a shared understanding of mutual histories and addressing the overt and systemic racism that Indigenous people continue to face.
- Closing gaps and removing barriers to address the social and economic challenges.
- Creating a culturally relevant and responsive justice system by closing service gaps and ensuring the development and availability of community-led restorative justice programs.
- Supporting Indigenous culture by celebrating and promoting Indigenous languages and cultures.
- Reconciling relationships with Indigenous peoples through trust, mutual respect and shared benefits.
The Province is committed to acting on the recommendations provided by the TRC and takes a whole-of-government approach when designing policy or delivering programs, and is moving forward with funding in 2017–18 and 2018–19, including:
- Strengthening health care through dedicated funding to support a First Nations Health Action Plan, providing culturally appropriate health services (see Chapter IV, Section A: Strengthening Health Care);
- Supporting up to six new or expanded Indigenous Mental Health and Addictions Healing and Treatment Centres;
- Expanding child care and early years programming provided by Indigenous communities and organizations (see Chapter II: Helping You and Your Family);
- Improving access to financing, skills training and community economic planning supports by enhancing the Aboriginal Economic Development Fund (see Chapter III: Creating Opportunities and Security);
- Enhancing the capacity and sustainability of nine publicly funded Aboriginal institutes in Ontario (see Chapter IV, Section B: Investing in Education);
- Supporting the development of a province-wide anti-racism strategy, including a youth-leading-youth program (see Chapter IV, Section D: Building Inclusive Communities and Improving the Justice System);
- Expanding or establishing programs that support a culturally relevant and responsive justice system (see Chapter IV, Section D: Building Inclusive Communities and Improving the Justice System);
- Honouring residential school survivors and victims through commemoration efforts; and
- Taking active steps to apply a model of reconciliation in its daily business, including acknowledging treaties within Ministers’ statements, the Public Service Oath of Office and government-issued documents.
Walking Together: Ontario’s Long-Term Strategy to End Violence against Indigenous Women
In March 2017, the Province released an update on its work with Indigenous partners to implement Walking Together: Ontario’s Long-Term Strategy to End Violence Against Indigenous Women. The Provincial strategy, released last year, focuses on raising awareness of and preventing violence against Indigenous women, providing more effective community services, improving socioeconomic conditions that support healing, and keeping communities safe.
Today, more Indigenous women, children, youth and families are getting the support they need in their communities. Some key accomplishments include:
- Providing more than 200 communities with supports and services through the Family Well-Being program, which includes hiring and training more front-line service workers, developing community-based programs and creating safe spaces;
- Expanding the Kizhaay Anishinaabe Niin: I Am a Kind Man program from five to 26 friendship centres across Ontario, to support Indigenous men and boys through healing and violence prevention programs;
- Launching the Indigenous Anti-Human Trafficking Liaisons program with partners to support the development of culturally relevant services for survivors in Indigenous communities throughout the province; and
- Hosting the fifth National Indigenous Women’s Summit in March 2017, with over 250 participants from across Canada, including representatives from the five national Indigenous organizations.
As announced in September 2016, Ontario is also supporting the National Inquiry into Missing and Murdered Indigenous Women and Girls. Ontario has passed an Order-in-Council to ensure the inquiry can investigate areas of provincial jurisdiction, such as policing and social services. Support is also being provided to families of murdered and missing Indigenous women and girls.
Partnering with First Nations on Tobacco
In the 2016 Budget, the government reiterated its commitment to a dialogue with First Nation communities and leaders on tobacco and gasoline. The government remains committed to this dialogue and has been meeting with numerous First Nation communities including working closely with the Mohawk Council of Akwesasne and the Chippewas of the Thames First Nation on pilot projects supporting self-regulation of tobacco on-reserve and revenue-sharing, as well as with the Anishinabek Nation on a framework for tobacco and gasoline.
Working together towards community-based regulation of gasoline and tobacco provides a basis for mutually beneficial outcomes for the Province and First Nation communities. This cooperation builds relationships and trust, supports economic development and diversification of First Nation communities, and improves business certainty for on-reserve sales. It also demonstrates the commitment set out in the Political Accord to collaborate on shared priorities in a spirit of respectful co-existence.
As part of this dialogue with First Nation communities across Ontario, the government is discussing sharing a portion of provincial tobacco tax revenues with communities that agree to regulate tobacco sales on-reserve.
The government is prepared to collaborate with First Nations on amendments to the Tobacco Tax Act and other pieces of legislation to support effective coordination and integration of provincial legislation with First Nation tobacco laws in the future.
Modernizing the Ontario Gas Card Program
Based on input received in fall 2016 through engagement on modernizing the Ontario Gas Card Program, the government will replace the current Ontario Gas Card in 2017–18 with a more secure card. The Province will also work with First Nations and industry stakeholders to identify and implement the best technological solution to make it easier and faster for authorized First Nation gasoline retailers to receive their refunds.
Protecting Sensitive and Confidential Information
Indigenous communities often share sensitive information with the Province and municipalities for a variety of reasons, such as facilitating resource management discussions, designing consultation processes, and negotiating land claim settlements and other agreements. To protect this information, the Province is proposing legislative amendments to the Freedom of Information and Protection of Privacy Act and the Municipal Freedom of Information and Protection of Privacy Act.
Amendments to these Acts would enable Provincial and municipal institutions to protect from disclosure information received in confidence from Indigenous communities, or information reasonably expected to prejudice the conduct of relations between institutions and Indigenous communities. These changes are an important step toward facilitating open discussions that will strengthen relationships while enhancing Provincial and municipal efforts to engage with Indigenous communities as full partners.
Achieving Federal–Provincial Fiscal Sustainability in the Federation
Ontario and the federal government share a commitment to an ongoing and constructive partnership. This collaboration is vital to ensuring that Ontarians continue to receive the high quality services expected of their government, and a dynamic economy in which they can thrive. Together, Ontario and the federal government need to develop the solutions to address demographic and economic risks.
The strength and sustainability of the federal system face rising challenges, including an aging population and long-term economic uncertainty. These issues will likely impose significant fiscal pressure on the provinces and territories, as they are predominantly responsible for programs and services sensitive to demographic changes.
The Province is already responding to these demographic and economic shifts by transforming the delivery of public services such as health care and social services. See Chapter VI, Section A: Transforming Government for Sustainability and Fairness for more details.
However, a number of studies1 have shown that the provinces and territories as a whole are in a fiscally unsustainable position over the long term. At the same time, the federal government, though it is currently in a deficit position, has a greater ability to raise revenue relative to the services it delivers, and is projected to be fiscally sustainable. In fact, the recent Department of Finance Canada report, Update of Long-Term Economic and Fiscal Projections, projected that federal net-debt-to-GDP will decline over time.
Owing to the interconnectedness of federal, provincial and territorial governments in Canada, strong social programs and robust action to support economic growth depend on the ability of governments to tackle key challenges together — to meet the needs of Ontarians and Canadians. This partnership should be based on shared principles: ensuring agreements are adequate, sustainable and flexible enough to respond to unique local priorities, while respecting the experience and expertise of provinces and territories.
Sustainability of the federation depends on both orders of government sharing equally in the opportunities and risks facing the country.
Ontario’s Growing Contribution to the Federation
In an environment of federal–provincial fiscal imbalance, Ontario continues to be a significant net financial contributor to the Canadian federation — and this contribution is expected to grow as the Ontario economy strengthens.
As research by the Mowat Centre and others has shown, the people of Ontario have consistently contributed more to the federal government in total tax revenue than the federal government has invested back in Ontario. The Mowat Centre has recently estimated that this shortfall was $7.7 billion, or equal to 1.1 per cent of provincial GDP in 2014–15. This gap has been increasing since it was measured by the Mowat Centre in 2009–10.2
When looking at the composition of Ontario’s significant net contribution, the Equalization program is a major factor. For example, in 2017–18, Ontarians are estimated to contribute about $7.1 billion to help fund the Equalization program, but the Province will receive about $1.4 billion in Equalization payments (Chart 5.2).
Ontario’s economy continues to perform well. After being below the national average in GDP per capita following the global recession, the province’s economy is projected to exceed the average in the near term (Chart 5.3). As its economic growth strengthens relative to the national average, Ontario’s contribution to the federation will continue to grow.
Ontario recognizes its long-standing role as a net contributor to the Canadian federation. However, there is a need for critical assessment of current federal–provincial fiscal arrangements to ensure they are responding efficiently and effectively to the changing needs in the federation, and to align resources and jurisdictional responsibilities in a more equitable manner.
Federal–Provincial Collaboration: Effective, Efficient and Equitable Intergovernmental Relations in Canada
Ontario firmly believes that building strong partnerships allows the federation to share risks while providing an opportunity to focus on what brings Canadians together. The Province’s vision for an effective, efficient and equitable system of fiscal federalism in Canada emphasizes strong partnerships in key areas.
Protecting the Canadian Health System
Over the past year, Ontario worked with provincial and territorial partners to find evidence-based solutions with the federal government to help sustain core services and commit to long-term investments to meet the demands of health care systems across the country.
Provinces and territories are on the front lines providing health services in an era of rising costs and tight fiscal constraints. Ontario has invested in strengthening the health system to better serve the patients of today and tomorrow (See Chapter IV, Section A: Strengthening Health Care for more detail). Ensuring that Ontarians have access to the care they need, when and where they need it, is a key component of the government’s plan to put patients first. In support of this goal, the Province has increased funding for home and community care, and mental health and addiction services to nearly $9 billion annually.
In March, the federal government and the Province agreed to new federal funding of $4.2 billion over 10 years in support of home care and mental health initiatives in Ontario. This funding builds on investments the Province is already making in these health priorities (see Chapter IV, Section A: Strengthening Health Care for more detail).
This new agreement with the federal government means that the Province can move forward on its work to transform the health care system.
At the same time, this agreement also means that the federal government’s share of health care funding is likely to decrease, particularly at a time when the cost pressures and demand for health care services are set to increase.
As provinces and territories continue to invest in adapting to a growing and aging population and implementing new procedures and technologies, it is critical that the federal government provide a consistent and adequate level of support over the long term.
A collaborative and national approach for long-term sustainable funding and a fair and equal federal partner at the table is the best way to protect Canada’s universal, publicly funded system and ensure that all Canadians receive the support they need.
Taking a Balanced Approach to the Next Phase of the Federal Infrastructure Investment
Over the past year, a number of bilateral infrastructure agreements have been reached between the Province and the federal government, including the Social Infrastructure Fund, Clean Water and Wastewater Fund, and Public Transit Infrastructure Fund, to connect people and enhance the lives of Ontarians. This reflects the fact that infrastructure is a top priority for both Ontario and the federal government.
Federal funding is an important component of Ontario’s long-term infrastructure plan, which includes investments of more than $190 billion over 13 years, starting in 2014–15.
However, to maximize the benefits of federal investments, support sound infrastructure planning and build on Ontario’s plan — as well as to ensure that the Province can make investments in a timely manner — it is essential that the federal government adopt a flexible approach to funding as it rolls out the next phase of its infrastructure investment plan. Agreements should allow provinces and territories to direct federal funding towards existing priorities and programs without additional unexpected fiscal costs to the Province and municipalities.
A more flexible overall approach is necessary for a fairer and more appropriate recognition of the many years of critical capital planning and prioritization work already undertaken by Ontario and municipalities.
Further, this funding must be allocated in an equitable manner and with respect to provincial and municipal relationships.
Altogether, this approach will allow Ontario to build more infrastructure. For example, with the recently announced $1.9 billion in federal funding in support of Ontario’s $13.5-billion GO Regional Express Rail project, the Province now has the ability to invest even more in other priority projects.
Ontario looks forward to partnering with the federal government as it develops the Canada Infrastructure Bank (CIB) in a way that builds on best practices and ensures affordable financing to support public infrastructure in Canada. It is important that the CIB allows provinces and territories to set their own infrastructure priorities, ensure alignment with existing plans and maximize positive impacts on the economy.
Renewing Labour Market Transfers to Meet Modern Labour Market Demands
Ontario has already embarked on multifaceted, long-term transformation of employment and training programs and services that aim to support a highly skilled and inclusive workforce in the province (See Chapter III: Creating Opportunities and Security and Chapter IV, Section B: Investing in Education for more detail). The federal government has committed to significantly reform labour market transfer agreements in collaboration with provinces and territories. This presents an opportunity to align federal support with the needs of Ontario’s labour market.
For many years, the primary challenge for Ontario has been the requirement, in existing federal funding arrangements, to direct about 70 per cent of funding for training to current or recent Employment Insurance (EI) recipients. As only 28 per cent of unemployed Ontarians received EI regular benefits in 2016, the majority of Ontario’s unemployed workers were not eligible for federally funded training.
Ontario welcomes the federal government’s announcements to improve and strengthen labour market funding, including the proposed new Workforce Development Agreements, as well as proposed amendments to the Employment Insurance Act to broaden worker eligibility for programs and services under the Labour Market Development Agreements.
Ontario will continue to work closely with the federal government and other partners to ensure labour market agreements meet the needs of Ontarians today and in the future. As part of labour market transfers reform, the renewed agreements should:
- Maximize flexibility in labour market transfers to give the Province freedom to design and deliver inclusive labour market programs to help all Ontarians;
- Increase overall federal investment in national labour market transfers, fully delivering on federal platform commitments; and
- Allocate a proportional and fair share of new federal investments to Ontario.
1 Office of the Parliamentary Budget Officer, “Fiscal Sustainability Report 2016,” (2016); Conference Board of Canada, “A Difficult Road Ahead: Canada’s Economic and Fiscal Prospects” (2014). ↵
2 Mowat Centre, “Mind the Gap (2017)”. Findings from Mowat Centre’s 2013 Filling the Gap study revealed an $11.1 billion imbalance between what the Province contributes to the federal government in total tax revenue compared to what it gets back in federal spending. In January 2017, following Statistics Canada’s conversion to Government Finance Statistics, the Mowat Centre found that, in 2014–15, Ontarians made a net contribution of $7.7 billion to the federation, equivalent to 1.1 per cent of provincial GDP. When extending Statistics Canada’s new data methodology to past years to ensure comparability, the currently estimated gap for 2014–15 is greater than in 2009–10. In other words, Ontario’s net contribution to the federation is increasing.↵
Chart 5.1: Growth in Ongoing Provincial Support for Municipalities
This bar chart shows the growth in ongoing provincial support to municipalities from 2003 to 2018. In 2003, the figure shown is $1.1 billion to municipalities. This growth increases each year and is projected to reach $4.2 billion in support to municipalities in 2018.
Chart 5.2: Net Contribution to the Equalization Program, 2017–18
This chart shows that in 2017–18, Ontario is expected to be the largest net contributor to the Equalization program, with a net contribution of $5.7 billion. Ontario is followed by Alberta, British Columbia, Saskatchewan, and Newfoundland and Labrador. All other provinces receive more in Equalization payments than their taxpayers contribute through federal taxes.
Chart 5.3: Ontario’s Economy Is Strengthening Relative to the Canadian Average
This chart shows Ontario’s per capita Gross Domestic Product (GDP) as a percentage of national per capita GDP each year from 2012 to 2016. Between 2012 and 2015, the per capita GDP of Ontario is lower than the average per capita GDP of Canada. In 2016, however, the Province’s per capita GDP surpasses that of Canada.