Notes for Remarks by The Honourable Greg Sorbara Minister of Finance To the Economic Club of Toronto

October 1, 2004

Notes for Remarks by
The Honourable Greg Sorbara
Minister of Finance
To the Economic Club of Toronto

check against delivery

Good morning. Thank you for being here early on a Friday morning.

You might be looking forward to the weekend on this bright sunny morning.

I hope you don't think that I'm about to ruin it for you with tales of doom and gloom. It's certainly not my intention.

I've spent much of the past year delivering bad news, warning of challenges and pitfalls ahead.

But I have reason to believe that those days will come to an end.

There are challenges ahead, but you, of all people, know what they are.

You're certainly not shy about telling me.

What brings hope is that we've set in motion a plan to bring a new level of responsibility, accountability and transparency to the public finances of Ontario.

The Ontario economy is in good shape and when our fiscal plan is fully implemented, Ontario will be poised to lead North America in economic growth.

One year ago, many of you were the first to recognize that our fiscal house was in serious disarray.

My first year as finance minister has been a test.

It has been as rewarding as it has been difficult, but I'm proud of the progress we've made.

Tomorrow, is the first anniversary of our election victory.

We have accomplished a great deal and done much to stop the decline of public services.

We are turning the energy sector around.

We are building a new partnership with our cities and towns.

1,100 new teachers started work this fall, reducing class sizes in the early grades.

There are specially trained lead teachers in literacy and numeracy in every school.

A new infrastructure fund has been set up to repair crumbling schools.

The work has begun on a program to add 7,000 apprenticeships within our mandate.

We are tackling the nursing shortage.

We are making investments to create 2,400 full-time nursing positions - as we work towards hiring 8,000 new nurses.

Goto the top of this page.

Our first budget will provide another 95,000 Ontarians with home care.

It will establish 150 new family health teams, to help people who can't find a family doctor.

We are phasing in free vaccinations for children against pneumococcal disease, chicken pox and meningitis.

This will save lives at the same time it saves families up to $600 per child.

We have stopped the decline in public services that posed such a clear threat to Ontarians' quality of life.

And we have delivered a Budget that constitutes a road map to fiscal health in Ontario.

Today I'm here to reassure you that we are going to stick to our fiscal plan.

I'm here to tell you about an important undertaking I'm embarking on to ensure we meet the targets in that plan.

The May Budget laid out a four-year strategy to achieve a balanced budged through a mix of revenue generation, cost-containment measures and economic growth initiatives.

Much has been said about our revenue measure - the Ontario Health Premium.

Much has also been said about our investments in health and education.

But not much has been said about our cost containment initiatives.

But those initiatives -- to keep spending growth under control - are central to our Plan.

They are absolutely necessary for the future prosperity of this province.

And they must be accompanied by a new level of transparency and accountability.

If Enron and the Magna Budget taught us anything, it's that transparency and accountability are mandatory.

On Monday, the government issued its consolidated financial statements and annual report for 2003-04.

I know those of you in publicly traded corporations will find it rather amazing - as I did -- that when the Ontario government reports its year-end financial results, it doesn't get much media attention.

But these financial statements deserve attention.

They close the book on the previous administration and highlight some serious financial mismanagement on their part.

The actual deficit for 2003-04, as verified by the Provincial Auditor, was $5.5 billion -- $5.5 billion more than estimated in the Magna Budget.

The Leader of the Opposition finally admitted that the effects of SARS, BSE and the black-out would have made it impossible for his government to balance the budget in 2003-04.

But he refuses to acknowledge that the Conservative government's revenue forecasts were misleading or just plain wrong.

Personal income tax projections were off by $1.6 billion because they assumed Ontario wages and salaries would grow by 6 per cent -- they grew by only 2.7 per cent.

Retail sales tax revenues were off by $0.6 billion because they assumed that retail sales would grow by 5.5 per cent - they grew by only 2.8 per cent.

And in the most disturbing case of revenue misrepresentation, they forecast that they would take in $1.7 billion more from asset sales than proved to be the case.

Of course, they needed to overstate this because it was clear even to them that the Province's actual revenues could not support the volume of spending that was contemplated in the 2003 Budget.

At the end of the day, actual revenue was down $5.7 billion from the 2003 Budget. Let me repeat that: $5.7 billion below Budget.

Over the past four years spending rose 29 per cent while revenues increased only five per cent.

If you narrow it down to the last three years, revenues actually declined by 0.7 per cent.

In short, the conservative era ended with a serious structural deficit.

Goto the top of this page.

The good news is we finally have a clear fiscal picture.

We know what needs to be done.

The decisions are difficult, but the logic is straightforward.

We must transform spending, we must balance our books, we must stick to our plan or risk the future prosperity of this province.

Many of you may ask, how can things be so bad?

  • You just raised revenues.
  • You got more money from the Federal Government for health care.
  • Ralph Goodale is talking about how much money is rolling into Ottawa.

Surely the situation in Ontario is looking better - right?

Yes and No. Let me explain.

It would certainly be nice to be in the federal government's position.

Much has been made lately of their bountiful treasury.

Much has also been said about fiscal imbalance between Ottawa and the provinces - but that's a whole other speech.

If Ontario had seven years of real surpluses and a growing revenue base, we'd be in good shape too.

Unfortunately, for the past nine years, Ontario has had unaffordable tax cuts and a declining revenue base.

There are other pressures as well.

There are pressures in the health system that if left unchecked would cause health costs to continue to grow at about 7 per cent annually.

Drug costs are rising about 15 per cent a year.

Hospitals are loudly claiming their costs are growing at 10 per cent a year.

All of these are growing much more quickly than our ability to pay for them.

You can't pick up the paper lately without staring at a front-page story on the rising price of oil.

Combined with the surge in the Canadian dollar, the oil-price surge has hit our manufacturing sector hard, particularly the majority focused on exports.

It's estimated that each $10 US increase in a barrel of oil takes a 0.3 per cent chunk out of our GDP growth.

We are still feeling the effects of SARS, the power blackout and the BSE scare that has crippled our cattle producers.

Compensation costs and wage settlements are key cost drivers and have a substantial impact on the finances of Ontario's public sector.

A one-per-cent increase in Broader Public Sector compensation costs an additional $350 million.

We continue to face substantial pressures in this regard.

And this is just an abbreviated list of risks and pressures!

Goto the top of this page.

In spite of these challenges, Ontario's economy is strong.

The fundamentals are in good shape, and I predict they'll improve as our government rebuilds faith in our fiscal position.

The average private sector forecast for growth in Ontario is steady at 2.6 per cent, slightly higher than our budget forecast of 2.3 per cent growth.

The unemployment rate for August was 6.8 per cent, lower than the Canadian rate of 7.2 per cent.

Exports are up 6.1 per cent thus far compared to last year.

And most importantly, 78,000 new jobs have been created since we took office.

Although our economy is in good shape, that alone will not solve our structural problem.

It will not mitigate the risks I've talked about.

We face difficult choices ahead.

Our fiscal plan puts us on the right track to overcome the risks and rebuild the province.

I'd like to tell you that we can erase the deficit in one year, but I can't.

I can tell you that we're committed to balancing the budget in four years.

The gloom of deficit will recede, but only if we stay on the road of better management and more transparency in government.

We can - and will -- have a balanced budget by the 2007-08 fiscal year.

We are determined to meet our target.

The prosperity of Ontario depends on it.

Over the coming months, our plan will attack Ontario's structural deficit.

The first step of our plan was the flat-lining of 15 ministries' budgets and a commitment to keep average annual program spending increases under control.

The next step is well underway.

The Premier has asked me to lead the next phase - an in-depth program review and government transformation strategy to ensure that we stick to our plan and deliver real, measurable results in the areas that matter most to Ontarians.

This program review is a critical step to improve our finances. and improving our finances is a critical component of building a stronger economy.

To do this, we will modernize government to provide Ontarians with full value-for-money for the programs and services they receive.

And we will live within our means by ensuring that the cost of programs and services are in line with revenues.

Spending decisions will be based on the positive results they produce for Ontario families.

Investments will target programs that are essential to our long-term prosperity and quality of life. These include:

  • better access for universities, colleges and training programs like apprenticeships.
  • improved municipal and transportation infrastructure,
  • better public education,
  • more nurses, doctors and teachers,

Inevitably we will have to stop doing some things all together in order to invest in the priorities that matter most.

We will develop new ways for existing programs and services to become more efficient.

Beyond that, we are in the midst of an exhaustive review of provincial assets.

As I've said before, we will not look to sell assets to fund the ongoing operations of government.

But like every large organization, the Province's asset base should be delivering the highest possible value to Ontarians.

Goto the top of this page.

How will all of this work?

How will we communicate our results?

Much of my time will be taken up sitting across the table from other Ministers doing a line-by-line review of every program and service. It is that serious.

Results of this review will be communicated through announcements in the legislature but much of it will be contained in next year's budget.

And of course from time to time the press might manage to eke out a small progress report from me - despite my best efforts.

Another essential part of our commitment to get Ontario working again is accountability.

We're committed to transparency and good business practices - our future depends on it.

One of our government's proudest pieces of legislation to date is The Fiscal Transparency and Accountability Act.

The FTAA will ensure that the current. and successive governments, present long-term projections for revenue and spending and disclose precisely how they account for these projections.

It will also make it mandatory for the government to publish a pre-election financial statement validated by the provincial auditor.

In essence, we're talking straight with the people of Ontario.

I'd like to end by telling you about what I see as the essence of my job.building confidence. Confidence among taxpayers, among markets and among employers.

One year ago, Ontarians expressed their lack of confidence in a government that told them they could have lower taxes, more health care and education and balanced budgets at the same time.

We know that confidence is the foundation of a prosperous economy.

That confidence will spur a new generation of investment which will give shape to the next Ontario economy.

I'm immensely proud of what we've accomplished thus far.

I'm proud of the leadership role that our Premier played last month at the health summit.

I'm proud that we had the courage to correct our course and acknowledge - not withstanding the fallout - that without new revenues, Ontario would spin endlessly deeper into the debt spiral.

I'm proud that our Budget choices favoured education, health care, seniors and Ontario's most vulnerable.

And, I'm proud of the mission we have set for ourselves:

To be the North American Leader in:

  • financial management
  • the quality and efficiency of our services; and,
  • the strength of our economy.

And in three years, I intend to be proud of our new architecture in government.

Of the new strength in our balance sheet. And of Ontarians' new faith in government.

Thank you.

Goto the top of this page.
Page: 1981  |