Across Ontario, people access government information and services every day. Last year, for example, there were more than 14 million views of Ontario Student Assistance Program (OSAP) information on mobile devices, and the government processed 185 million OHIP medical claims and over 200,000 online driver’s licence renewals.
Through Program Review, Renewal and Transformation (PRRT), the government is supporting evidence-based decision-making, and identifying major short- and long-term transformational initiatives focused on modernizing services, finding savings and improving outcomes for Ontarians.
To support the sustainable funding of these public services, a fair and balanced tax system where everyone pays their share is essential. When businesses intentionally avoid meeting their tax obligations, the integrity of the tax system is compromised. This results in an uneven playing field for people and businesses, and in turn jeopardizes the government’s ability to deliver high-quality services that people deserve.
Transforming government delivery takes time, but recent initiatives are helping to accelerate that change:
- The Behavioural Insights Unit supports transformation by pilot testing new, human-centric approaches to improve outcomes and lower costs — and using evidence to inform what does and doesn’t work — before scaling up, which includes redesigning communications and access points to make programs and services easier to use.
- The government is modernizing program delivery by redesigning programs so that Ontarians can more easily access services such as income-based benefits and the new OSAP.
- The government has appointed its first Minister Responsible for Digital Government as well as its first Chief Digital Officer to transform government services and improve the online experience for citizens. Ontario’s Digital Government Action Plan will help drive the delivery of services, which are simpler, faster and better for Ontarians.
- Moving forward, the government will continue to place an emphasis on collective bargaining outcomes that maintain an affordable, stable and high-performing public-sector workforce.
- The Province continues to support transparency and effective decision-making in its financial reporting, including through the consistent application of accounting policies, reporting structures, and risk management and control activities.
Improving Programs and Services through Behavioural Science Research
Programs and services work best when they are designed with the people who use them in mind. Ontario’s Behavioural Insights Unit (BIU) is among the leaders in supporting the design and redesign of public services that better reflect how people respond to, engage with and use these services.
Applying behavioural science to public policy and service design enables a higher return on investment through low- to no-cost solutions and evidence generation about what does — and doesn’t work — before scaling up. This approach also accelerates public-sector innovation through low-risk experimentation that encourages behaviour change rather than enforcing it, improving outcomes and making programs more client-centred.
In 2017, the BIU will continue to focus on supporting initiatives that use behavioural science insights to improve outcomes and accelerate innovative program delivery.
Advancing the Goals of the Poverty Reduction Strategy
- Making it easier for parents to save more for their children’s education — from the very beginning, by presenting educational savings options when a baby’s birth is registered.
Improving the Health and Well-Being of Ontarians
- Improving the health of women living in Ontario through a pilot that will help increase the number of women who participate in regular cervical cancer screening.
Optimizing Digital Services
- Increasing Ontarians’ use of convenient, online public services by testing different ways to make these services more visible and user-friendly.
Transformation and Efficiency Initiatives
Transformation and efficiency initiatives are driving improvement across government. Being able to deliver effectively and efficiently on the things that matter most to Ontarians going forward involves adopting a two-pronged approach to support transformation.
Improving Sustainability and Value for Money for Existing Programs
The government has a strong track record in meeting its fiscal targets, and is building on the success of recent initiatives to support the Province’s fiscal objectives. Ontario will expand the review of current programs to identify opportunities for modernization and to ensure that expense growth is managed within the plan that is laid out in this Budget.
Using the PRRT lenses of effectiveness, efficiency and long-term sustainability, programs will be reviewed and redesigned to improve value for money. A coordinated and systematic approach will ensure that Ontarians will continue to get the supports they need in the most cost-effective way possible, and programs that no longer meet people’s needs will be changed or eliminated.
Outcome-Focused and User-Centred Transformation
A focus of government modernization is doing things differently. Key priorities include using evidence-based approaches to improve outcomes, harnessing innovative business practices and service delivery models, and maximizing the use of digital channels and solutions. The government is identifying opportunities to pilot and test new approaches, to find out what works. Steps will be taken to scale up new approaches where evidence shows that they help to improve outcomes or enhance service experience.
Government Made Simple
Every day across Ontario, people access government services and information online. The government is committed to making this process easier — whether it’s ordering a vehicle permit, applying for OSAP or finding health services near home.
In 2016, Ontario became the first province in Canada to appoint a Minister Responsible for Digital Government, demonstrating its commitment to deliver high-impact digital projects and give people a stronger voice in their government. Examples of projects include:
- A simple online immunization calendar that helps parents and families view and save vaccination schedules for young children;
- A digital consultation platform that has allowed thousands of people to provide input to government on topics ranging from fairness in ticket sales to a basic income pilot; and
- Budget Talks, an interactive web platform that empowered Ontarians to identify and vote on initiatives that are funded in the 2017 Budget.
The Ontario Digital Service
After a global search, the government introduced its first Chief Digital Officer (CDO) who will be responsible for shaping and executing Ontario’s Digital Government Action Plan, which will make services simpler, faster and better for Ontarians.
The CDO will lead the new Ontario Digital Service (ODS). The ODS will lead efforts to attract and nurture digital talent in the Ontario government, including new, paid digital internships for recent graduates, student co-op placements at the ODS outpost at the Communitech Innovation Hub in Kitchener-Waterloo, and greater access to training and support around digital skills for government staff.
Simpler, Better Digital Services
In 2017–18, a series of online services that millions of Ontarians use every year will be redesigned to visibly transform the experience with government, including applying for student assistance through the new OSAP, changing an address or renewing a driver’s licence.
A new Digital Service Standard for all public-facing transactions will also be introduced and published online to ensure that government services meet people’s needs, are easy to complete and can be accessed anytime, anywhere and on any device.
Digital Literacy and Inclusion
As Ontario’s economy, society and democracy become increasingly digitized, access to new technologies can connect people to their communities and each other, and remove barriers that prevent people from accessing job markets, education, health care and other public services.
To ensure everyone has the opportunity to participate in the new economy, the government’s focus on digital literacy and inclusion will:
- Expand access to technology in public places, including in Ontario’s schools and libraries;
- Support the launch of Code for Canada, an organization that will tackle civic technology and design challenges in local communities in Ontario and across the country, with partners like Shopify and Google Canada; and
- Improve the design of digital government services so they are inclusive and accessible.
Transforming the Delivery of Income-Based Benefits
The government is transforming the way income-based benefit programs are delivered to Ontarians to ensure programs and services are effective, efficient and sustainable.
Since the release of the 2016 Budget, Ontario has introduced and passed new framework legislation that will allow for information sharing across benefit programs, which will improve client access and the delivery of benefits. Once fully implemented, clients will no longer be required to provide personal information multiple times when applying to different benefit programs.
Ontario has also partnered with the Canada Revenue Agency (CRA) so that applicants to a growing number of programs can choose to have their income verified automatically. These applicants will no longer be required to bring paper-based proof of income.
Managing Health Care Spending and Growth
Health care represents the government’s largest single expense. As part of PRRT, Ontario continues to transform the health care system and redesign programs to better meet the needs of patients, caregivers and their families. For example, going forward, Local Health Integration Networks (LHINs) will assume responsibility for the planning and performance of primary care and the delivery of home and community care services.
To support investments in public drug funding, Ontario will also continue to ensure rigorous evidence-based assessment of pharmaceuticals and build on the success of the pan-Canadian Pharmaceutical Alliance (pCPA). This will also increase access to clinically and cost effective drug treatment options and achieve better value by delivering lower drug costs on brand, generic and emerging biosimilar medicines. As of December 31, 2016, these collaborative efforts between provinces and territories have resulted in 122 completed joint negotiations on brand drugs and price reductions on 18 generic drugs. This has resulted in over $710 million in combined savings annually across all participating jurisdictions.
The government is proposing amendments to the Ontario Drug Benefit Act that, if passed, would enable it to adjust pharmacy payments and would support its work with the pharmacy sector since 2015 to obtain greater value for money. These actions would align with previous initiatives the government has undertaken to reduce drug costs, and allow the Province to invest more in new drug coverage for Ontarians.
Transformations such as this enable the government to invest in services for Ontarians like the new OHIP+: Children and Youth Pharmacare program. For further information, please see Chapter II: Helping You and Your Family.
Simpler, More Targeted Postsecondary Student Financial Assistance
The government is building on previous successes to make postsecondary education more accessible and affordable. Students enrolled in college and university for September 2017 will be the first to benefit from the new OSAP. With applications now open for college and university programs, Ontario has launched a new online calculator, enabling students and their families to find out quickly and easily whether they qualify for free tuition or other grants and supports from the Province. Try the online OSAP calculator.1 See Chapter II: Helping You and Your Family for additional details.
Ensuring Everyone Pays Their Fair Share
Addressing the Underground Economy
The government is delivering on its commitment to combat the underground economy and reduce the loss of tax revenues. Since 2013–14, this government has moved forward with key initiatives that aimed at levelling the playing field for legitimate businesses. Highlights include:
- Enhanced compliance-focused activities (e.g., auditing) that have generated over $1.2 billion — a $350 million increase over the amount reported in the 2016 Budget. These activities, undertaken in partnership with the Canada Revenue Agency (CRA), help ensure everyone’s tax obligations are met.
- Focused pilot initiatives in residential roofing and auto body repair that have promoted compliance with broader regulatory obligations, helping to protect Ontario’s consumers and workers.
- The introduction of penalties for the sale, use or distribution of electronic sale suppression devices.
- Amendments made to the Ministry of Revenue Act to enable information sharing and allow for enhanced targeting of sectors in which underground economic activity is most prevalent.
Moving forward, the government will continue to support revenue integrity by:
- Using enhanced data analytics to better identify and address high-risk areas for underground economy activity;
- Introducing a sales integrity pilot project in the retail and hospitality sectors to test and evaluate security software that will identify businesses using electronic sales suppression technology; and
- Launching a campaign to increase public awareness of the risks and liabilities associated with participation in the underground economy.
Addressing Unregulated Tobacco
The presence of low-cost, unregulated tobacco undermines the Province’s health objectives and results in less revenue for important public services. It also compromises the public safety of communities through links to organized crime and illicit activities.
Since the 2016 Budget, the Province has successfully delivered on a number of key initiatives to address unregulated tobacco, including:
- Working with the Ontario Provincial Police to create the Contraband Tobacco Enforcement Team. The Team has a number of ongoing tobacco investigations targeting organized crime groups and has assisted other police forces with their major investigations.
- Working with the Ministry of Health and Long-Term Care and the Public Health Units of Toronto, Niagara Region, Simcoe-Muskoka and Thunder Bay to pilot cross-designation of tobacco retailer inspectors under both the Tobacco Tax Act and the Smoke-Free Ontario Act.
- Enhancing Provincial oversight of raw leaf tobacco by implementing measures to more effectively monitor its movement through the supply chain, and impede its flow to unlicensed manufacturers. The government continues to work with raw leaf tobacco registrants, providing ongoing education to demonstrate a flexible and balanced approach as the government implements the regulatory amendments.
Building on these measures, the government is taking further steps to reduce the prevalence of unregulated tobacco by proposing amendments to the Tobacco Tax Act in order to:
- Enable the forfeiture of items acquired from, or used to, engage in offences under the Act;
- Restrict the importation and possession of cigarette filter components, such as acetate tow, to registered manufacturers;
- Further enhance Ontario’s oversight of raw leaf tobacco, including with increased penalties and fines for non-compliance;
- Create new penalty and offence provisions related to the maintenance of books and records;
- Require that tobacco retailers in Ontario that currently hold a permit under the Retail Sales Tax Act transition to the tobacco retail dealer’s permit, effective July 1, 2018; and
- Publish convictions under the Act, and other Acts in the future, to promote compliance.
Ontario will continue to collaborate with its federal partners to ensure a consistent and coordinated approach to addressing tobacco issues.
The Province recognizes that a balanced and reciprocal approach is critical in addressing tobacco issues. This is why Ontario’s approach to tobacco includes building collaborative relationships with First Nation communities to support a dialogue on ways to address this challenge as partners. To read more on Ontario’s commitment to partnerships with First Nations, please see Chapter V: Working with Our Partners.
Over the past seven years, the government has been successful in moderating wage growth across the provincial public sector. Through a deliberate approach to managing compensation, the government met its fiscal commitments without compromising the quality of critical public services.
Wage outcomes in the provincial public sector continue to track below the municipal, federal and private sectors in Ontario.
Recent Negotiations and Compensation Outcomes
Since the 2016 Budget, the government has reached a number of outcomes that are consistent with the fiscal plan:
- In May 2016, the government received an interest arbitration award for correctional staff represented by the Ontario Public Service Employees Union (OPSEU). This award provides modest wage increases that are offset through a freeze on salary grid progression.
- Similarly, the government recently received an arbitration decision for the Ontario Provincial Police Association, which provides outcomes below police-sector norms.
- The government also reached a four-year agreement with the Professional Engineers Government of Ontario (PEGO) in which wage increases were offset through changes to benefits and termination pay.
- In February, the government and the Ontario Medical Association took steps to re-initiate negotiations of the Physician Services Agreement, beginning with negotiations of a process for binding interest arbitration. Re-engagement will ensure that the government maintains a strong and productive relationship with physicians and will help enhance access, reduce wait times and improve the overall patient experience.
- The government successfully negotiated two-year contracts in the education sector, which are set to expire in August 2019, and will continue to help achieve positive results for students and those who work in the sector. The contracts will help build upon the gains made in Ontario’s publicly funded education system. These gains include the highest graduation rate in the province’s history, strong literacy results, and students who are equipped with the skills and knowledge they need today for tomorrow’s rapidly changing world.
Broader Public-Sector Executive Compensation
The government is committed to ensuring transparency and accountability in how broader public sector employers set executive compensation. In keeping with this commitment, all designated employers under the Broader Public Sector Executive Compensation Act, 2014 are developing executive compensation programs that will be posted publicly.
Designated employers will have salary and performance-related payments for executives capped at no more than the 50th percentile of appropriate comparators. In addition, signing bonuses, retention bonuses, cash housing allowances and pay in lieu of perquisites will not be authorized. As part of these measures, designated employers will also consult with the public on their programs.
The government is enhancing its approach to ensure that employers are not only held accountable to specific requirements, but that they also must be consistent with responsible and transparent administration of executive compensation. This means that government will direct employers to revisit any proposed compensation program that is not reasonable.
This enhanced approach will ensure that broader public-sector organizations are accountable for compensation decisions and are able to attract and retain the necessary talent to deliver high-quality public services while managing public dollars responsibly.
Going Forward: Leveraging Collective Bargaining to Promote Transformation
The government will continue to take a balanced approach to managing compensation. This approach will recognize the need to maintain a stable, flexible and high-performing public-sector workforce that supports the government’s transformational priorities and at the same time ensures that public services continue to remain affordable.
Over the upcoming year, negotiations will be undertaken within key areas of the public and broader public service, including health care, postsecondary education and social services.
Ontario’s public-sector labour relations framework will focus on maintaining and enhancing the positive and productive working relationships with its public-sector partners and bargaining agents.
Going forward, the government will focus on addressing longer-term workforce challenges that affect the sustainability of public services. Sector- and service-wide transformation opportunities will underpin the development of a dynamic and skilled public-sector workforce that is best positioned to meet the needs of Ontarians, now and in the future. To achieve this goal, the government is committed to delivering collective bargaining outcomes across all key areas of the public and broader public service that align with the current public-sector wage trend and support the Province’s transformation objectives.
Government Transparency, Financial Management and Fiscal Accountability
Ontario continues to further strengthen government transparency, financial management and fiscal accountability in supporting its fiscal plan and exercising effective stewardship of public funds.
Changes in Provincial Reporting Policies
The 2016–17 consolidated financial results of the Province will reflect a number of changes consistent with the requirements of Public Sector Accounting Standards (PSAS) and the Introduction to the PSA Handbook. Specifically, the Province’s 2016–17 Public Accounts will reflect:
- Recognition of net pension assets for the Ontario Teachers’ Pension Plan (OTPP) and the Ontario Public Service Employees’ Union Pension Plan (OPSEUPP), the Province’s jointly sponsored pension plans;
- A change in the basis of consolidation of the financial results for Ontario Power Generation and Hydro One on the Province’s financial statements to reflect International Financial Reporting Standards (IFRS); and
- Line-by-line presentation of the annual operating results for hospitals, school boards and colleges on the Statement of Operations.
Accounting for Pensions of Jointly Sponsored Pension Plans
Consistent with the accounting policy the Province adopted in 2001 for jointly sponsored pension plans and the results of the Pension Asset Expert Advisory Panel,2 the Province’s 2016–17 Public Accounts will report the net pension assets for the jointly sponsored pension plans, OTPP and OPSEUPP, in accordance with PSAS.
In last year’s Public Accounts, the government adopted a time-limited regulatory amendment to reflect the Auditor General’s interpretation for the treatment of net pension assets for 2015–16 (the “Pension Adjustment”), and subsequently established an independent Pension Asset Expert Advisory Panel to further analyze and confirm the appropriate accounting policy for the Province’s jointly sponsored pension plans.
Earlier this year, the Panel released its report3 and recommendations related to the accounting for OTPP and OPSEUPP, which concluded that the net assets for the jointly sponsored plans should be recognized on the Province’s financial statements. The government accepted the Panel’s advice, which will be reflected in the 2016–17 Public Accounts.
The Panel subsequently reviewed the Province’s accounting for Healthcare of Ontario Pension Plan (HOOPP) and Colleges of Applied Arts and Technology Pension Plan (CAATPP). The Panel concluded that based on the difference in the governance structure of these plans as compared to OTPP and OPSEUPP, a full valuation allowance should be applied to any net pension asset for CAATPP or HOOPP until the surpluses are used to reduce contributions. For both of these plans, the government does not have control or joint control over the decisions regarding contribution levels or benefit changes, as the government is not a member of the committees responsible for those decisions. To date, no net pension asset has been reported under either HOOPP or CAATPP; however, it is possible that a net asset may result in future years for one or both plans.
Accounting for Government Business Enterprises
The financial results of the Province’s rate-regulated Government Business Enterprises (Ontario Power Generation Inc. and Hydro One Ltd.) are consolidated in the Province’s consolidated financial reports using the modified equity method. As permitted by securities regulators, the entities’ stand-alone financial statements are reported based on U.S. Generally Accepted Accounting Principles (US GAAP). Under PSAS, the results of government business enterprises are required to be reflected on the Province’s financial statements based on International Financial Reporting Standards (IFRS). As of April 1, 2016, the Province will consolidate the results of these two rate-regulated entities as they would be reported under IFRS (including IFRS 14 – Regulatory Deferral Accounts). The entities themselves will continue to issue financial statements prepared on a US GAAP-basis.
Presentation of Hospitals, School Boards and Colleges
Starting with the 2016–17 Public Accounts, the Province’s Statement of Operations will reflect the revenues and expenses of hospitals, school boards and colleges on a line-by-line basis. Previously, the results of these sectors were presented on a net-expense basis, netting third-party revenues against the sector expenses. This change in presentation will not impact the Province’s reported net annual surplus or deficit; however, third-party revenues will be reported with other government revenues and will no longer be netted against sector expenses, including interest expense, which will be presented on a gross basis.
Recent Developments in Public-Sector Accounting Standards
The government continues to provide input to Public Sector Accounting Board (PSAB) on a number of initiatives, including PSAB’s review of its conceptual framework; employment benefits, such as pensions; and accounting for financial instruments and foreign currency translation. PSAB has also initiated projects to review the accounting for asset retirement obligations, revenue reporting and public–private partnerships.
Users, including the legislature and the public, need accountability in government reporting and decision making. As a result, it is essential that public-sector financial statements reflect the economic substance of the government’s activities.
Interim Appropriation Act
The Interim Appropriation for 2017–2018 Act, 2016 received Royal Assent in December 2016 and came into force on April 1, 2017, to provide interim legal spending authority for anticipated 2017–18 spending. All spending under this Act must be charged to the proper appropriation following the voting of supply for the 2017–18 fiscal year. This is expected to enable the government to continue operations until the Legislative Assembly has completed its consideration of the 2017–18 Expenditure Estimates and a related supply bill.
Enterprise Risk Management
The government is transforming and modernizing public services by finding new and smarter ways to both improve outcomes for Ontarians and to meet the Province’s fiscal commitments. Government decisions must be focused on the need to both create and protect value, informed by an understanding of internal and external contexts and stakeholder needs, supported by evidence, and guided by a full consideration of both threats and opportunities.
The Province continues to implement enterprise risk management (ERM) across the Ontario Public Service. This implementation will support the achievement of Provincial objectives through the enterprise-wide integration of risk management into decision-making, policy development, operations and transformation activities of ministries and Provincial agencies.
Reporting and Designated Purpose Tracking
With the 2017 Budget, the government is reporting on the first investments to be tracked through a Designated Purpose Account. The Trillium Trust, along with the Greenhouse Gas Reduction Account, are the first two examples that use the new accountability framework to track and report on the progress of designated-purpose spending commitments based on identified revenue streams.
Chart 6.1: Ontario Public/Private Wage Settlement Trends
This line chart shows average bargained-wage increases for the provincial public sector, the municipal public sector, the federal public sector in Ontario, and the private sector in three periods, from April 2010 to July 2012, July 2012 to April 2015, and from April 2015 to March 2017. The provincial public sector average wage increase decreases sharply from 1.6 per cent to 0.6 per cent during the April 2010 to July 2012 period, and remains steady during the July 2012 to April 2015 period. The other three sectors remain steady between 1.7 per cent and 1.9 per cent over this same period. Between April 2015 and March 2017, average wages in the provincial public sector increased from 0.6 to 1.3 per cent, while increases in the other three sectors were between 1.6 to 1.9 per cent.