Professional Documents
Culture Documents
ONTARIO BUDGET
2014
Charles Sousa
Minister of Finance The Honourable
BUDGET PApERS
ONTARIO BUDGET
2014
Charles Sousa
Minister of Finance The Honourable
BUDGET PApERS
For general inquiries regarding the 2014 Ontario Budget: Budget Papers, please call: Toll-free English & French inquiries: 1-800-337-7222 Teletypewriter (TTY): 1-800-263-7776 For electronic copies of this document, visit our website at www.ontario.ca/budget By phone through the ServiceOntario Contact Centre Monday to Friday, 8:30 AM to 5:00 PM 416 326-5300 416 325-3408 (TTY) 1 800 668-9938 Toll-free across Canada 1 800 268-7095 TTY Toll-free across Ontario Queens Printer for Ontario, 2014 ISBN 978-1-4606-4014-2 (Print) ISBN 978-1-4606-4015-9 (HTML) ISBN 978-1-4606-4016-6 (PDF) Ce document est disponible en franais sous le titre : Budget de lOntario 2014 Documents budgtaires
TableofContents
Contents
Foreword ..............................................................................................xvii
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Fostering a Culture of Innovation and Entrepreneurship ................................ 96 Investing in Venture Capital Funds ......................................................... 96 Commercializing Leading-Edge Discoveries .............................................. 97 Increasing Access to Capital .................................................................. 98 Growing Small Businesses in Ontario ...................................................... 98 Supporting Regional Investments Helps Create Jobs .................................. 100 Reducing Regulation for Business to Enhance Productivity ........................... 103 Going Global ........................................................................................ 105 Attracting Foreign Direct Investment .................................................... 105 Expanding Exports ............................................................................. 106
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Ontario Needs a Committed Federal Partner to Invest in the Provinces Economy ...................................................................... 283 Providing Better Retirement Income Security for Ontarians ...................... 284 Federal Government Needs to Invest More in Infrastructure ..................... 285 Investment in Transportation Priorities.................................................. 287 Ring of Fire ....................................................................................... 288 Immigration ...................................................................................... 290 Ontario Needs a Committed Federal Partner to Invest in Stronger Ontario Health Care .............................................................. 291
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Revenue Integrity ................................................................................. 329 Underground Economy ........................................................................ 329 Corporate Tax Avoidance .................................................................... 330 Enhanced Audit Activity ...................................................................... 331 Ontarios Tobacco Strategy .................................................................. 331 Land Transfer Tax .............................................................................. 334 Federal Tax Measures ............................................................................ 335 Paralleling Federal Tax Measures .......................................................... 335 Taxation of Graduated Rate Trusts........................................................ 335 Other Measures .................................................................................... 336 Provincial Land Tax ............................................................................ 336 Hospices ........................................................................................... 336 Tax Credit for Farmers Who Donate to Community Food Programs ............ 337 Summary of Measures ........................................................................... 337 Technical Amendments .......................................................................... 338
TableofContents
List of Tables
Chapter I: Ontarios Decade A 10-Year Plan for the Economy
Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 1.5 Table 1.6 Table 1.7 Table 1.8 Table 1.9 Table 1.10 Dedicated Funding for Public Transit and Transportation Infrastructure (201415 to 202324)................................... 45 Examples of Major Hospitals Built, Underway or in Planning ............................................ 54 Examples of School Projects Built or Underway ...................... 57 Expansion Projects at Postsecondary Institutions Built, Underway or in Planning ............................................ 60 Industrial Electricity Incentive Program Examples of Successes ...................................................... 93 Industrial Conservation Initiative Potential Savings Examples ................................................ 95 Innovative Companies Supported by the Ontario Venture Capital Fund .............................................. 97 Difference in Projected Pension Expense versus Commission on the Reform of Ontarios Public Services Forecast ............. 156 Provincial Support to Municipalities Continues to Increase ...................................................... 168 Power Dam Special Payment Program Annual Funding .......... 169
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Table 2.9 Table 2.10 Table 2.11 Table 2.12 Table 2.13 Table 2.14 Table 2.15 Table 2.16 Table 2.17 Table 2.18 Table 2.19 Table 2.20 Table 2.21 Table 2.22 Table 2.23 Table 2.24 Table 2.25 Table 2.26 Table 2.27 Table 2.28 Table 2.29 Private-Sector Forecasts for Ontario Real GDP Growth .......... 218 Changes in Ministry of Finance Key Economic Forecast Assumptions: 2013 Budget Compared to 2014 Budget .......... 221 Summary of Medium-Term Outlook.................................... 225 Personal Income Tax Revenue Outlook ............................... 226 Sales Tax Revenue Outlook............................................... 227 Corporations Tax Revenue Outlook .................................... 228 Summary of Medium-Term Revenue Changes since the 2013 Budget ..................................................... 230 Selected Economic and Revenue Risks and Sensitivities ........ 235 Ontarios 201516 Equalization Entitlement Sensitivities ....... 239 Medium-Term Fiscal Plan and Outlook ................................ 242 Summary of Medium-Term Expense Outlook ....................... 244 Selected Expense Risks and Sensitivities............................. 247 Change in Medium-Term Fiscal Outlook since the 2013 Budget ............................................................. 250 Ontarios Recovery Plan.................................................... 258 Medium-Term Fiscal Plan and Outlook ................................ 261 Revenue ........................................................................ 262 Total Expense ................................................................. 263 Other Expense ................................................................ 264 201314 Infrastructure Expenditures ................................. 265 Ten-Year Review of Selected Financial and Economic Statistics .......................................................... 266 Support for Health Care, Charities, Problem Gambling and Related Programs, Municipalities and Ontario First Nations .... 271
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2014OntarioBudget
List of Charts
Chapter I: Ontarios Decade A 10-Year Plan for the Economy
Chart 1.1 Chart 1.2 Chart 1.3 Chart 1.4 Chart 1.5 Chart 1.6 Chart 1.7 Chart 1.8 Chart 1.9 Chart 1.10 Chart 1.11 Chart 1.12 Chart 1.13 Chart 1.14 Chart 1.15 Chart 1.16 Chart 1.17 Support from Early Years to Adulthood .................................10 Full-Day Kindergarten Implementation ................................12 Key Achievements ............................................................15 Apprenticeship Registration Nearly Doubled since 2003 ........... 20 Unemployment Rate by Age Category, Ontario, 200614 (Year to Date) .....................................................22 Supporting More Patients at Home .......................................26 Annual Average Provincial Infrastructure Investment Per Capita ........................................................................40 Highlights of Infrastructure Projects Completed or Underway .....................................................41 Alternative Financing and Procurement Accomplishments ........ 63 Ontario Children Below the Low Income Measure ................. 112 Supporting Working Families. ............................................ 114 Comparison of Electricity Prices for Residential Consumers ..................................................... 134 Residual Stranded Debt since April 1, 1999 ......................... 136 Auto Insurance Rates Held Below Inflation .......................... 138 Program Spending Per Capita in 201213 ........................... 149 Total Revenue Per Capita in 201213 ................................. 150 Ontario Wage Settlements ................................................ 154
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Chart 2.5 Chart 2.6 Chart 2.7 Chart 2.8 Chart 2.9 Chart 2.10 Chart 2.11 Chart 2.12 Chart 2.13 Chart 2.14 Chart 2.15 Chart 2.16 Chart 2.17 Chart 2.18 Chart 2.19 Chart 2.20 Chart 2.21 Chart 2.22 Chart 2.23 Chart 2.24 Chart 2.25 Chart 2.26 Chart 2.27 Chart 2.28 Employment Gains Concentrated in Full-Time, Private-Sector, Above-Average Wage Jobs .......................... 193 Ontario Job Recovery Ahead of U.S. and OECD Average ........ 194 Ontario Job Recovery Stronger than Other Jurisdictions ........ 195 Global Economic Growth to Improve .................................. 197 Strengthening U.S. Recovery ............................................ 199 Oil Prices to Remain High ................................................. 200 Canadian Dollar to Remain Below Parity ............................. 201 Interest Rates to Rise Gradually ........................................ 203 Inflation Expected to Remain Moderate .............................. 207 Employment Expected to Rise over the Medium Term ........... 208 Ontario Housing Prices Expected to Stabilize ....................... 210 Housing in Ontario to Remain Affordable ............................ 211 Although Elevated, Canadian Household Debt Remains Affordable ......................................................... 212 Ontario Business Machinery and Equipment Investment Lags the United States ..................................................... 213 Exports to Other Provinces and Service Exports Have Grown Strongly............................................................... 214 Ontario Goods Exports Expanding to New Markets ............... 215 Private-Sector Outlook for Growth Weaker in 2014 but Stronger in 2015 to 2017............................................ 219 Government of Canada Transfers Changes since the 2013 Budget ............................................................. 231 Medium-Term Revenue Outlook Has Declined since the 2010 Budget ............................................................. 233 Ontarios Record Against Deficit Targets ............................. 253 Ontarios Plan to Eliminate the Deficit................................. 255 Composition of Revenue, 201415..................................... 268 Composition of Total Expense, 201415 ............................. 269 Composition of Program Expense, 201415 ........................ 270
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Foreword
Foreword
Building Opportunity, Securing Our Future
The2014OntarioBudgetlaysoutaplanforOntariotoday.ForastrongOntario, withmorejobs,moreopportunityandamoresecurefuture. Yourgovernmenthasaplantocreatejobsandgrowtheeconomybyinvesting inpeople,buildingmoderninfrastructure,andsupportingadynamicand innovativebusinessclimate. In2009,globalforcesbatteredtheworldeconomy.Therecessionmeantnot onlythelossofjobsaroundtheworld,butalsothefundamentalreshapingof theglobaleconomy.Manufacturingdeclinedinsomeplaces,andgrewinothers. Financialservicesflounderedinsomeplaces,andflourishedinothers.Herein Ontario,theuncertaintyleftinthewakeofallthosechangeshaspeople wonderinghowwewillkeepoureconomystrong.Ourgovernmenthasaplan. Executingthisplanwilltakedetermination,becauseitwillnotbeeasy.Itwill takevision,becauseitwillnothappenovernight.AnditwilltakeallOntarians, workingtogether,becausegovernmentcannotdoitalone. Sowhatthegovernmentcando,wewilldo.Makingtherightinvestmentsin ourfutureandstickingtoourplantobalancethebudgetby201718means, quitesimply,thattherearesomethingswewillnolongerdo.Insteadwewill choosetoinvestinthosethingsthatstrengthenourcompetitiveadvantage, createjobsandprovidevitalpublicservicesforourfamilies.Ourgovernmenthas madeourschoolsandhospitalsamongthebestintheworldandwewillcontinue tomaketheinvestmentsnecessarytostrengthenthembecausetheyareatop priority.Fromthismomenton,ourcollectiveenergy,talentandresourcesasa governmentwillcontinuetobespentcreatingopportunityandjobs buildingOntariosDecade.
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2014OntarioBudget Aspartofthisplan,ourgovernmentalsorecognizestheneedforappropriate restraint.Itwillnotgodowntheroadofrecklessacrosstheboardcutsto programsandservices.Whereexpensescanbecut,wewillcutthem.Where servicescanbeprovidedmoreefficiently,wewilldoso.Wewillnotsacrifice importantpublicservices,likeschools,hospitals,socialservicesandmeasures thatcreatejobsandhelpmiddleclassfamilies. Ontarianshavegreatresolve.Tappingintotheresolveanddeterminationof Ontarianswilldriveourgrowthandprosperity. ThisisaBudgetbythepeopleofOntarioforthepeopleofOntario.
Creating Jobs
Ontarios Decade: A 10-Year Economic Plan
Ontariohasworldclassschoolsandhospitals,isoneofthemoststableand attractiveplacesintheworldfornewbusinessinvestment,andcontinuesto beoneofthebestplacestoliveandwork. Oureconomycontinuestogrowandcreatejobsbutitischanging.Weare enteringaneweconomyanewindustrialage.Wewillseizethisopportunity. Our10yearEconomicPlanprovidesthetoolsforOntariotobecomeaglobal powerhouse. WewanttoprovideOntarianswiththeopportunitiestomoveintonewcareers andhigherpayingjobs.Alltheactionsinour10yearEconomicPlan,includinga newjobsfundtoanchorbusinessinvestmentfortheneweconomy,investingin infrastructureforamoreproductiveeconomyandfocusingonnewexport marketsaredesignedtocreatethesenew,highpayingjobsforOntariofamilies. Together,wewillprosperandbuildOntariosDecade.
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Foreword
Jobs Plan
Thereisfiercecompetitionforglobalinvestment.Tohelpsecurethese newinvestments,wearecreatinganew$2.5billionJobsandProsperity Fundtocompeteontheworldstage.Thenewfundwillhelpsecurebusiness investmentsparticularlyingrowingsectors,suchasadvancedmanufacturing, agrifoodandagriproducts,andinformationandcommunications technology(ICT).
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Foreword
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2014OntarioBudget
Leadership
Ontarianssharestrongvalues.Webelieveinbeingcompetitiveaswellas compassionate.Fairaswellasresponsible.Webelievenotjustinbuildinga tolerantsociety,butinsomethingbigger:webelieveinbuildingafairsociety. Sowhenwelooktogovernment,welookforleadershipthatembodiesthose values.Thosevaluesarealsothevaluesofyourgovernment. Somebelievetheycandeliverstronghealthcareandeducation,byrecklessly spendingandincreasingtaxesthatwouldundermineoureconomy.Othersthink theycancreateastrongeconomy,byrecklesslyacceleratingcutsthatwould underminehealthcareandeducation.Ontariansknowthatyouneedbalance. Onlyourgovernmentwillkeephealthcareandeducationstrongwhilebuilding astrongereconomybecauseweknowyoucannothavestrongpublicservices withoutastrongeconomy,andyoucannothaveastrongeconomywithout strongpublicservices. Agovernmentthatleadsensuresthateveryonehastheopportunitytorealize theirfullpotentialandfeelsecureabouttheirfuture.Thisisakeycomponent ofOntarios10yearEconomicPlan.Ontarioisagreatplacetoliveandwork, withastrongrecordofrespondingtotheneedsofthemiddleclassandthose mostvulnerable.Thisgovernmentbelievesinholdingtheladdersteadyand providingeveryonetheopportunitytoclimbupwithoutleavinganyonebehind.
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Foreword
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Foreword
Low-Cost Government
Ontariohasthelowestpercapitaprogramspendingamongprovinces,whilestill providinghighqualitypublicservices.Itisrootingoutwaste,focusing onpriorities,andmakingsurethateverydollarspent,counts. Thegovernmenthasachievedallthiswhilehavingthelowesttotalgovernment revenueperpersonamongallCanadianprovinces. Goingforward,thegovernmentwillcontinuetoreviewexpensesthroughaspecial TreasuryBoardsubcommittee.Weareintroducinganewannualprogramreview savingstargetof$250millionfor201415and$500millionforeachofthenext twoyears.Thistargetwillfocusonmaintainingorenhancingthedeliveryofpublic serviceswhilereducingcoststhatarenotessentialtodeliveringservices. Wearealsocontrollingthecompensationofseniorexecutivesinthebroader publicsector,which,throughproposedlegislation,wouldprovidethegovernment withtheauthoritytoestablishcompensationframeworks,includingtheuseof sectorspecifichardcaps.Thegovernmenthasalsointroducedlegislationto continuethesalaryfreezeofMembersofProvincialParliament.Thisbeganin 2009andwouldcontinueuntilafterthebudgetisbalanced.Thegovernmentis continuingtomakeagenciesmoreaccountabletotheministriestofurtherensure thatcostsarecontrolledacrossgovernment. Makingeverydollarcountwillproduceamoreefficientgovernment,whichisa keycomponentofourgovernments10yearEconomicPlan.
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Conclus sion
Ontarioisstrongerwhenweareallwo orkingtogeth her,asoneOn ntario. Whenweea achlookoutfor f ourneighb boursanddo whatwecan ntohelp themalong. Thatisourro oleasgovern nmentaswell. Wewillcont tinuetobemindfulofhow wwespendea achdollar.W Wewillcontinu ue tobefocuse edoneliminat tingthedeficitsothatfutu uregeneratio onsarenot burdenedby ymoredebt. Theinvestmentswearemaking m today yarenecessar ry.Theyareb boosting opportunityforpeoplein nthefaceofachallenging globalecono omy. Our10yearplanwillhelp pcreateastro ongerOntario o. Itwillbuildopportunities o s.Itwillsecurethenextde ecadeOnta ariosDecade e andourfutu ure.
Originally signed by
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CHAPTER
ChapterI:OntariosDecadeA10YearPlanfortheEconomy
2014OntarioBudget
ChapterI:OntariosDecadeA10YearPlanfortheEconomy
Economic Co-operation and Development (OECD) through sales tax reform and corporate tax cuts;
Retooling the workforce through investments in education and skills development,
such as full-day kindergarten, improved worker training, and more effective apprenticeship programs; and
Taking action to support employment, transform social assistance, enhance support
for low-income families and Aboriginal communities, and protect the most vulnerable. Under the 10-year economic plan, Ontario will be:
Focusing efforts to develop opportunities in Northern Ontarios resource and mineral
Northleaf Venture Catalyst Fund and the Youth Investment Accelerator Fund.
2014OntarioBudget
Highlights
Fulldaykindergartenwillbeavailabletoallfourandfiveyearoldsby September2014andwillsavefamiliesupto$6,500ayearperchildonchild carecosts. Ontariowillimplementanewvisionforeducationwiththerenewedgoalsof achievingexcellence,ensuringequity,promotingwellbeingandenhancing publicconfidenceinamodernsystemthatprepareslearnersforarapidly changing,technologydriven,globalizedworld. Ontarioiswellonitswaytomeetingitstargetofraisingpostsecondary educationattainmentto70percentby2020. Ontarioisinvestingover$750millioninadditionalfundingby201617 inmorehomeandcommunitycareservices,includingover$270millionin 201415,tostrengthenaccesstocareinthehomeandcommunity,where peoplewantit. Ontarioismakingiteasierforseniorstostaysafe,activeandengagedintheir communitiesbydoublingtheSeniorsCommunityGrantProgram.
ChapterI:OntariosDecadeA10YearPlanfortheEconomy
Section A: InvestinginPeople
Investing in Hard-Working Ontarians
Ontarioscompetitiveadvantageisincreasinglydependentonahighlyskilled, diverseandadaptiveworkforce. Ontarios10yeareconomicplanisfocusedondevelopingtheeconomyof tomorrowbyinvestinginpeopletodayandgivingOntariansthesupporttheyneed togettherightskillsandtherightjobs.ThiswillgiveallOntarianstheopportunity tohavegood,highpayingjobsandcontributetotheprosperityoftheprovince. Recentinitiativesinclude: Investing$295millionintheOntarioYouthJobsStrategy,whichgives youngpeopletheopportunitytogainafootholdinthejobmarket; InvestinginOntarioseducationsystemtogiveyouththeskillsandknowledge theyneedtocreateandfillthejobsofthefuture; Raisingtheminimumwageto$11.00perhourandproposinglegislationto indexittoinflationtohelpensurethatworkersreceiveadecentwage;and Reformingsocialassistance,whichwillreducebarrierstoentering theworkforce. Ontariosnewplanwillcontinuetobuildonasolidemploymentandtraining networkthatgiveslearners,jobseekersandemployersseamlessaccesstothe programsandservicestheyneedtoeffectivelymeetrapidlychanginglabour marketdemands.Ontariowillcontinuetobuildaninnovative,studentcentred educationsystemfromkindergartenthroughtopostsecondary,fosteringcritical thinking,problemsolving,collaborationandentrepreneurialskills.Aswell,the Provincewillcontinuetoaddmorepostsecondaryspacestoensurethat,as enrolmentgrows,Ontariosstudentswillhaveaccesstothehighestquality postsecondaryeducationclosertohome.
2014OntarioBudget
ChapterI:OntariosDecadeA10YearPlanfortheEconomy Ontariosrenewedgoalsforeducationare: AchievingExcellence:Childrenandstudentsofallageswillachievehigh levelsofacademicperformance,acquirevaluableskillsanddemonstrate goodcitizenship.Educatorswillbesupportedinlearningcontinuouslyand willberecognizedasamongthebestintheworld; EnsuringEquity:Allchildrenandstudentswillbeinspiredtoreachtheirfull potential,withaccesstorichlearningexperiencesthatbeginsatbirthand continuesintoadulthood; PromotingWellBeing:Allchildrenandstudentswilldevelopenhanced mentalandphysicalhealth,apositivesenseofselfandbelonging,andthe skillstomakepositivechoices;and EnhancingPublicConfidence:Ontarianswillcontinuetohaveconfidencein apubliclyfundededucationsystemthathelpsdevelopnewgenerationsof confident,capableandcaringcitizens.
Tosupportthenewvisionforeducation,theProvincewillbeinvesting $150millionoverthreeyearsintechnologyandlearningtoolssuchasnewdigital tablets,netbooks,cameras,softwareandprofessionaldevelopmentforteachers. By2025,Ontariowillhaveaneducationsystemthatseamlesslyintegratesservices fromearlyyearstoadulthood.Ontariowillbeaworldleaderinhigherorderskills, suchascriticalthinkingandproblemsolving,whichwillallowOntariotothrivein theincreasinglycompetitiveglobalmarketplace. Ontariowillbelookedatgloballyashavingahighperformingeducationsystem withengagededucators,supportivestaff,andadministrativeandother professionalswhoarecommittedtocontinuouslearning.
2014Ontario oBudget
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy
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CHART 1.2
Children in Full-Day Kindergarten 300,000 250,000 200,000 150,000 100,000 50,000 0 2011
Source: Ontario Ministry of Education.
2012
2013
2014
12
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2014OntarioBudget Adecadeago,only54percentofchildreninGrades3and6metprovincial standardsinliteracyandnumeracy.Thatnumberhasgrownsignificantly,and today,71percentofGrade3and6studentsareachievinghighprovincial standards,a17percentagepointincrease.2Inaddition,only68percentof studentsweregraduatingfromhighschooladecadeago.Now,83percentof studentsaregraduating,a15percentagepointincrease.Thatmeanstherearean additional138,000highschoolgraduatesinOntariobecauseoftheeducation reformsofthepast10yearsanumberthatisroughlyequivalenttothe populationofthecityofGuelph. Performancegapsbetweengroupsofstudentshavealsonarrowed,andinsome casesbeeneliminated.Forexample,elementarystudentsparticipatinginEnglish asaSecondLanguage(ESL)programsnowperformalmostaswellasthegeneral studentpopulation.Inaddition,92percentofstudentsaremeetingorexceeding internationalstandardsinreading,regardlessofsocioeconomicbackgroundor firstlanguage.
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Cha apter I: Ontar rios Decade A 10-Year P Plan for the E Economy
Ontario rem mains among g the best jurisdictions in N North America for talent, t training and skills development. d . With more Ontarians O pur rsuing postsecondary educ cation, the Provinc ce is focusing g on supportin ng programs t that provide young people e with e. the best sk kills and traini ing they need d to create an nd fill the jobs s of the future To position n Ontario as a leader in postsecondary education, th he Province re ecently implement ted a number r of initiatives s that will hel p transform t the postsecon ndary system. These include: Wor rking with Ontarios univer rsities and co lleges on Stra ategic Manda ate Agre eements to en nsure that each institution n focuses and d builds on its s stren ngths and off fers the best possible p prog grams in its ar reas of specia alization. Thes se agreement ts will: Improve the learning expe erience for st udents; ary system; Reduce duplication in the postseconda
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2014OntarioBudget Raise the global competitiveness of Ontarios postsecondary system; and Create centres of excellence in specific subject areas.
Continuing to improve the credit transfer system so that students can take their credits with them when they move between postsecondary institutions and not have to retake courses. Investing $42 million over three years to implement Ontario Online, a new Centre of Excellence for Online Learning. Ontario Online will give students across the province one-window access to high-quality, transferable online courses and will also help reduce course duplication in the system. Ontario Online will be fully operational and begin online course offerings in 201516. Continuing to give students a range of credential options that meet the demands of the economy now and in the future. Increasing co-op, work placements and experiential learning for students, as well as supporting young entrepreneurs so they have the skills and experience needed to secure jobs or start their own businesses once they graduate.
The Province is also focused on closing achievement gaps for underrepresented groups including Aboriginal students, students with disabilities and students new to Canada. The government is providing more options for francophone students to study in French. These initiatives will improve the access and success rates for underrepresented groups. Ontario would put in place a new system that allows the collection and use of student-level information to track progress and evaluate the effectiveness of provincial funding on education outcomes. This initiative would build on the recent extension of the Ontario Education Number (a unique student identifier used in Ontarios elementary and secondary schools since 2003) to college and university students to make student records consistent from kindergarten to postsecondary education. As of the fall of 2013, postsecondary institutions have successfully extended OEN coverage for over 447,000 new students.
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OECD countries;
A modern, forward-looking postsecondary education sector, where students have
Developing the talent and skills of Ontarios people is the foundation of the Provinces plan to create jobs. In March 2014, the Province hosted a summit with educators, labour, business and the not-for-profit sector to build partnerships and better collaborate on talent and skills development. Premier Kathleen Wynne challenged each participant to implement one new initiative that will contribute to skills and talent development in the province.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy Introduce an improved and more consistent approach to assessing the needs of clients, to better match clients to services based on individual needs and readiness to work; Better serve Ontarios most vulnerable populations, including social assistance recipients, people with disabilities, new Canadians, Aboriginal people and at-risk youth; and Offer a variety of modern services and supports, including a series of new skills training programs that are developed in partnership with local employers and tailored to industry needs. These include sector-specific skills and postsecondary training towards industry-recognized credentials as well as training with pre- and post-employment supports for unemployed individuals. To ensure that the new system reflects the diverse needs of clients and key employment and training partners, the Province will continue to engage a broad range of stakeholders at key stages of this transformation. These include Aboriginal people, client-specific advocacy groups and umbrella organizations, municipalities and employers.
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2014OntarioBudget
CHART 1.4
201213
for small businesses) to businesses that hire eligible apprentices in construction, motive power, industrial and certain service trades.
Approximately 80 per cent of Ontarios apprenticeship trades are supported by
the ATTC.
The ATTC is providing over $250 million in support in 201314. As part of the ongoing review of business support programs, ATTC support
for large businesses will be reviewed (see Chapter V: A Fair and Efficient Tax System for more details).
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy The Province is also enhancing the made-in-Ontario Alternative Financing and Procurement (AFP) model by ensuring that, beginning with the Eglinton Crosstown, future infrastructure projects include plans for providing opportunities for apprentices and supporting the completion of apprenticeships, with focused programs for at-risk youth, local communities and veterans.
The Ontario Construction Secretariat supports Infrastructure Ontarios initiative to provide good jobs for today and at the same time build the skilled workforce of tomorrow. By requiring contractors to maximize the use of registered apprentices, young workers will have more opportunities to gain the skills required to successfully complete their training and enhance the competitiveness of the Ontario economy.
Sean W. Strickland, Chief Executive Officer, Ontario Construction Secretariat, December 2013.
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2014OntarioBudget These numbers underscore the importance of helping Ontarios youth now. Long spells of unemployment can lead to a scarring effect where youth can experience lower wages and a higher likelihood of becoming unemployed later in life. Helping youth gain the skills and experience to obtain stable employment also supports Ontarios Poverty Reduction Strategy and gives everyone the opportunity to achieve their full potential.
CHART 1.5
Per Cent
20 17.5 13.3 13.0 13.7 17.2 16.9
15.8
16.1
15.4
15
7.7
7.3
6.4
6.3
6.2
6.5
0 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD
Note: Year to Date (YTD) includes January to March. Source: Statistics Canada, Labour Force Survey.
Employment Ontario serves Ontarios youth with a range of employment and training programs. About 35 per cent of Employment Ontarios clients were under age 30 in 201213. Recognizing the persistently high youth unemployment rate, the Province announced an additional investment of $295 million over two years for Ontarios Youth Jobs Strategy in 2013. This is helping young people find jobs, start their own businesses and gain valuable skills.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy A key element of the strategy, the Youth Employment Fund, was launched in September 2013 through the Provinces network of employment services across Ontario. To date, the fund has already helped over 10,000 young people gain work experience and find jobs. It is also well on its way to meeting its two-year target of creating 25,000 job opportunities. Ontario is also investing in three additional funds to support its Youth Jobs Strategy: the Youth Innovation Fund, the Youth Entrepreneurship Fund and the Youth Skills Connections Fund, which were launched in October 2013. As part of the Youth Entrepreneurship Fund, the Province also created the Youth Investment Accelerator Fund (Youth IAF), and is investing up to $250,000 per eligible technology-focused firm founded by entrepreneurs under age 30. This initiative will help more young people, students and researchers who choose to become entrepreneurs and support innovative companies to grow their businesses. The Province will assess long-term commitments by reviewing the effectiveness of these youth employment programs going forward. To help young people and employers get more information on accessing youth jobs programs, Ontario has launched a new website: Ontario.ca/ReadySetWork.
business performance.
Soapbox An innovation management tool that helps maximize employee engagement
through ideas.
Greengage Mobile A platform that uses mobile engagement to help organizations
meet sustainability goals, such as decreasing their environmental footprint or improving the local community.
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2014OntarioBudget
Programs that Help Immigrants Settle and Prepare to Enter the Labour Market
To help foster the seamless integration of skilled immigrants in Ontario, the Province continues to offer a variety of programs, including:
More than 300 bridge training programs since 2003, targeting over 100 professions and
trades that have helped about 50,000 immigrants integrate into Ontarios workforce;
Tuition-free adult language programs to help immigrants improve their English and
French; and
The Newcomer Settlement Program, which helps over 80,000 newcomers annually by
providing information on key services such as housing, language, employment and job training.
Ontarios ability to attract highly skilled immigrants has contributed to the provinces overall high educational attainment and productive workforce. More than two-thirds of working-age (25 to 64) immigrants arriving in Ontario have a postsecondary education. The Province understands the important role immigration plays in Ontarios economy and greatly values the social, cultural and economic contributions that immigration provides. This is why, in the fall of 2012, Ontario introduced its first Immigration Strategy.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy The Immigration Strategy positions Ontario to continue attracting the best and brightest to the province. This strategy builds on Ontarios vision of a greater provincial role in immigrant selection and the creation of a seamless and comprehensive support and training system for immigrants once they arrive. Ontario will release its first Immigration Strategy Progress Report this year. The government recently introduced the Ontario Immigration Act, 2014, a key element of the Immigration Strategy. Making the most of the provinces diverse workforce is part of Ontarios Immigration Strategy and supports the governments efforts to build a prosperous economy and a fair society. If passed, the legislation would help the Province work with the federal government to maximize the social, cultural and economic benefits of immigration by: Allowing the Province to set immigration targets to attract more skilled immigrants; Enabling Ontario to work more closely with the federal government on the recruitment, selection and admission of skilled immigrants to the province; and Preventing fraud by improving compliance and enforcement measures in the immigrant selection process, such as introducing penalties for applicants who misrepresent personal information or people who take advantage of immigrants.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy Ontario is investing in more health care services in the home and in the community so that more community options are available to patients when and where they need them. In the 2013Budget, the Province committed to increasing investments in home and community care services by an average of five per cent per year to support initiatives such as the achievement of the five-day home care service targets. These investments include $15 million per year in new funding to support meeting the five-day wait time target for patients with complex needs to receive nursing services. Half of Ontarios Local Health Integration Networks (LHINs) have consistently met the five-day service target for community-referred patients. Ontario continues to deliver on this commitment by increasing investments in these services by over $750 million by 201617, including over $270 million in 201415. These investments will improve the health systems capacity and ability to care for individuals after hospital discharge, and, where possible, avoid costly hospitalization or long waits in the emergency room. This will help free up hospital and long-term care beds for those who need them. As part of the strategy to build capacity at the community level, Ontario is investing in front-line care. Many personal support workers (PSWs) are at the front line of health care delivery in the home and community, providing services to the most vulnerable. But they are also some of the lowest-paid workers in the broader public sector and are earning significantly less than PSWs in hospitals and long-term care homes. This makes it difficult to attract and retain high-quality PSWs, with the sector currently seeing a 60 per cent turnover rate. To support the high-quality care that PSWs provide, the Province is proposing to give PSWs in the publicly funded home and community care sector a $1.50 per hour wage increase in 201415, an additional $1.50 per hour increase in 201516, and a further $1.00 per hour increase in 201617. This increase would bring up the base wage to $16.50 per hour by 2017. By strengthening recruitment and retention of PSWs in this sector, Ontario is building capacity to help transform the health care system by delivering high-quality care to patients in the most appropriate setting.
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2014OntarioBudget
Self-Directed Care
The Province is determined to help as many Ontarians as possible live at home for as long as they can. An important part of this is giving people the tools to customize their own care. As part of the governments community investment, Ontario will commit to supporting demonstration projects that empower people or their designates to choose the care that best suits their needs, instead of the system choosing it for them. This responds to a report entitled LivingLonger,LivingWell by Dr. Samir Sinha, Director of Geriatrics at Mount Sinai Hospital and the University Health Network Hospitals, and is an important next step in Ontarios Seniors Strategy.
Community Paramedicine
Ontarios paramedics are essential to ensuring that patients get the right care, at the right time and in the right place. The Province will invest $6 million to help paramedics across Ontario expand their efforts to proactively care for frequent users of emergency services and connect them to appropriate community supports.
Palliative/End-of-Life Care
The government is committed to improving the quality of end-of-life care for Ontarians by promoting advanced care planning and palliative services supports. This means supporting community-based providers, formal and informal caregivers, and patients to promote dignified palliative care.
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In addition, the government is proposing an amendment to the AssessmentAct, which, if passed, would provide consistent and equitable property tax treatment by exempting all charitable and non-profit LTC homes from property taxation, allowing homes to devote more of their resources to front-line care services. All together, these enhancements will contribute to the stability and capacity of Ontarios LTC home sector.
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2014OntarioBudget To improve access to care, Ontario is expanding Community Health Links, which bring together health care providers to better and more quickly coordinate care for high-needs patients such as seniors and people with complex conditions. Health Links are a new, made-in-Ontario innovation that will help patients transition within the health system, ensuring patients receive more responsive care that addresses their specific needs with the support of a team of providers. To date, 54 Health Links have been created, with plans to create more than 90 in total. Other steps Ontario is taking to improve access to care include: Making progress towards providing a family doctor for every senior who wants one. As of February 2014, 91 per cent of high-needs seniors who registered with Health Care Connect have been referred to a family health care provider; and Expanding the scope of practice for a number of health care providers, such as allowing pharmacists to give flu shots and authorizing registered nurses and registered practical nurses to dispense drugs in certain circumstances.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy Ontario is now building on this Strategy, expanding it to include improved transition between youth and adult services, people with addictions and adults, through additional investments of over $65 million in 201415, growing to about $83 million annually by 201617. The expanded Strategy will help to ensure Ontarians and their families have better access to quality services and supports for their mental well-being. It will also achieve better value for these investments by linking funding directly to the quality care that is needed. The Strategy envisions that all Ontarians deserve to enjoy good mental health and well-being throughout their lifetime and those with mental health illnesses or addictions can recover or participate in welcoming and supportive environments. The Strategy will: Promote mental health and well-being for all Ontarians investing in evidence-based prevention initiatives in the workplace, schools and communities; Ensure early identification and intervention equipping service providers and clients to respond to symptoms and intervene early and appropriately; Expand housing and employment supports providing stability and supports to empower people to manage in the community; Expand an integrated health and social service coordination model for people coping with mental illness and addictions; and Provide funding based on need and quality delivering a new funding model that links population need, quality improvements and sector integration to service delivery.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy
Highlights
Planningtoinvestover$130billioninpublicinfrastructureoverthenext 10years,including: Dedicatingfundingtomakenearly$29billionavailableoverthenext 10yearsfortransportationinfrastructure. Investingatotalof$2.5billionin201415forhighwayrehabilitation andexpansionprojectsacrosstheprovince. Supportingmunicipalroadsandbridgesthroughanewpermanent $100millionfund. Makingcriticalrepairsinhospitalstohelpbetterprovidehighqualityhealth caretopatientsbyprovidingadditionalfundingofalmost$700millionover thenext10years. Providingmorethan$11billionoverthenext10yearsforelementary andsecondaryeducationinfrastructure. Fundingcriticalmaintenancerepairsinthepostsecondarysectorbyproviding additionalfundingofapproximately$500millionoverthenext10years. Committingupto$1billiontowardsinfrastructuredevelopmentfortheRing ofFirecontingentonmatchinginvestmentbythefederalgovernment. DeliveringmoreinfrastructureprojectsthroughtheAlternativeFinancingand Procurementmodel.
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Section B: BuildingModernInfrastructure
Ontarioscontinuedinvestmentsininfrastructurehavehelpedtomakethe provinceoneofthebestplacesintheworldtolive,workandinvest.Since2003, Ontariohasinvestednearly$100billioninhospitals,schoolsandtransportation infrastructure,whichhasmadeOntarioasafer,morecompetitiveandmore productiveprovince,andresultedinalargeanddiverseprovincial infrastructuresystem. Since2003,theProvincesinfrastructureinvestmentshavesupportedanaverage of100,000jobseachyear,inconstructionandrelatedindustries.Thesestrategic investments,focusedinareasconsistentwiththeProvinceslongterm infrastructureplan,BuildingTogether,haveresultedin: 100majorhospitalprojectsbuiltorunderway,including23newhospitals; Nearly650newschoolsopened,plannedorunderconstruction; Morethan27,000schoolrenewalprojectscompletedorunderway, includingreplacingleakyroofs,draftywindowsandoldboilersinschools acrosstheprovince; Over7,900kilometresofneworrepairedprovincialhighwaysmorethan twicethedrivingdistancebetweenTorontoandCalgary,includingover 4,000kilometresinNorthernOntario; Morethan950neworrepairedbridgesonprovincialhighways,which represents34percentofallprovincialbridgesandstructures; Anoverallincreaseof63percentintheGOTransitfleetsize,including morethan200newGOTransitcommuterrailcarsand47newdoubledeck GObuses;and Fivenewconsolidatedcourthouses,providingeasieraccesstocourts.
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2014OntarioBudget Evenwithalltheseinvestments,theProvincerecognizesthatchallengeslieahead. AssuggestedinOntariosLongTermReportontheEconomy,theProvinces projectedpopulationgrowthwillresultinsignificantdemandforalltypesof infrastructure,includingtransportation,healthcareandeducation.Thatiswhy theProvincehasintroducedanew10yeareconomicplantoinvestover $130billioninpublicinfrastructure.Worldclassinfrastructuredriveseconomic growthandprosperityandenhancesOntariansqualityoflifeby: Directlysupportingjobstodayinconstructionandindirectlythrough relatedindustries; Creatingjobsinthefuturebyattractingprivatesectorinvestment; Reducingbusinesscostsbymakingthemovementofgoodsmoreefficient; Allowingfirmstoaccessmoretalentedemployees; Helpingmanagecongestionandcommutetimesbyprovidingmore transportationchoices; Providingamodernandefficienthealthcaresystemthatmeetstheneeds ofanagingpopulation; Buildingschools,collegesanduniversitiestosupportaneducated workforce;and MakingOntarioscommunitiesbetterforfamiliesandindividuals.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy
Ontarians in 2014 and lowers the unemployment rate by about one percentage point compared to what it would have been in the absence of these investments.
A 2009 Statistics Canada report estimated that on average roughly 50 per cent of
Canadas multifactor productivity growth, representing about 10 per cent of labour productivity growth overall, in the private sector between 1962 and 2006 was the result of growth in public infrastructure.
Between 1995 and 2006, U.S. business sector productivity growth outpaced that of
Canada and Ontario by about 20 per cent in total. This occurred while the stock of U.S. infrastructure rose by almost 25 per cent compared to a 3.5 per cent decline in Canada.
Underinvestinginpublicinfrastructureintimesofstrongeconomicgrowthhas madeinvestinginmorechallengingtimesmoredifficult. InvestingininfrastructurethroughOntariosnew10yeareconomicplanwill continuetohelpstimulatetheeconomy,createjobs,andincreaseprosperity andfairnessforOntarians.Ontariosplannedinfrastructureinvestments wouldsupportover110,000jobsonaverageeachyearinconstructionand relatedindustries. Ontarioscommitmenttosupportlongterminfrastructureplanninganda strongereconomywillgoevenfurther.TheProvincehasintroducedBill141, theInfrastructureforJobsandProsperityAct,2014,which,ifpassed,would setoutprinciplesandcriteriatohelpimproveinfrastructureplanningand prioritization,promotehighqualityinfrastructuredesign,andenhancethe involvementofapprenticesincertainprovincialinfrastructureprojects.
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CHART 1.7
$830
$250
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CHART 1.8 Northern Ontario
Southern Ontario
Notes: For additional information on infrastructure projects in Ontario, visit http://www.ontario.ca/buildingtoday. Source: Ontario Ministry of Infrastructure.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy Keyprojectsscheduledtostartconstructionthisyearinclude: Highway407EastPhase2,fromHarmonyRoadinOshawatoHighway 35/115inClarington,includingtheEastDurhamLink; HOVlaneprojectsonsectionsofHighway410,throughMississaugaand Brampton,andonHighway427,throughMississaugaandVaughan; WideningHighway401nearCobourg; Wideninganadditional11kilometresofHighway69betweenParrySound andSudbury,aspartoftheongoingexpansionofHighway69;and RealignmentofHighway66throughthecommunityofVirginiatown, eastofKirklandLake.
Extending Highway 427 from Highway 7 to Major Mackenzie Drive in York Region
This project is currently planned to start construction in 201617. The Ministry of Transportation has completed the preliminary design and received environmental assessment clearance for the project, and is moving forward as quickly as possible with obtaining the required property and making arrangements for utility relocations.
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Ontarios new plan for dedicated funds for public transit, transportation infrastructure, and other priority infrastructure projects is based on the following principles:
The two new dedicated funds should be supported by dedicated sources of revenue; New dedicated revenue sources should not increase taxes on low- to middle-income
individuals;
Allocating dedicated funds proceeds between the Greater Toronto and Hamilton Area
(GTHA) and the rest of the province should be done in a way that is fair, accountable and transparent;
Dedicated funds proceeds should be substantially applied to specific transportation and
accountability mechanisms.
Thegovernmentwillnotincreasethetaxongasoline,theHarmonizedSales Tax(HST),educationpropertytaxes,orpersonalincometaxesonlowto middleincomeindividuals. Twonewdedicatedfundswouldbecreatedtosupportinfrastructureprojects thatareessentialtoOntariosimmediateandlongtermeconomicgrowthand jobcreation: TheProvincewoulddedicateanewfundtohelpaddresscongestionin theGTHA;and Newdedicatedfundingwouldalsobesetasidetoinvestinroads,bridges, publictransitandothercriticalinfrastructureoutsidetheGTHA.
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TABLE1.1 ($Billions)
DedicatedFundingforPublicTransitandTransportation Infrastructure(201415to202324)
201415
Available for Investment in the GTHA Available for Investment Outside the GTHA Total 1.7 1.6 3.3
201516
1.7 1.6 3.3
201617
1.6 1.4 3.0
10 Years
15.0 13.9 28.9
Note: Totals include available net new borrowing for public transit, transportation infrastructure and other priority projects.
Committingtodedicatedfundingforpublictransitandtransportation infrastructuredeliversonakeyrecommendationmadebyMetrolinxinits InvestmentStrategy,releasedinMay2013,andbytheTransitInvestment StrategyAdvisoryPanelinitsfinalreport,releasedinDecember2013. Dedicatedfundingwouldsupportinfrastructureinvestmentsthatwouldimprove thequalityoflifeofOntariansbyaddressingcongestion,helpingcommutersget hometotheirfamiliessooner,connectingpeoplewithexistingandfuturejobs, andmeetingtheneedsoffuturegenerations. Dedicatedfundsforpublictransitandtransportationinfrastructurewouldbe supportedby: Dedicatingproceedsfrom7.5centsoftheexistingprovincialgasolinetax topublictransitandtransportationinfrastructurepriorities,startingin 201415.Thiswouldbeoverandabovetheexistinggastaxfunding providedtomunicipalities,withnoincreasetothetaxratefromits currentlevel.
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Thededicatedfundswouldalsobesupplementedby: Leveragingprovincialborrowing,whenneeded,andincludingproceeds fromgreenbondstohelpfinancetransitandotherenvironmentallyfriendly infrastructureprojectsacrosstheprovince. Allocatingnetrevenuegainsfromcertainassetsalesthroughtheproposed TrilliumTrust,aspecialfundtobededicatedtoOntarioskeyinfrastructure. Workingwiththefederalgovernmenttosecurefederalfundingthrough theBuildingCanadaPlanforkeytransportationrelatedprojectsthroughout theprovince. Dedicatingnetrevenuegainsfromhighoccupancytolllaneswhenthey becomeavailable.
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The Big Move identifies additional GO service as critical to developing the regional rapid
transit network, and all-day, two-way express rail service as part of the solution. The Province has asked Metrolinx to begin work immediately to examine opportunities to move GO service towards a regional express rail, providing fast and frequent electrified service on all corridors at intervals as frequent as 15 minutes. This would represent a game-changer in how people move about the region, and enhance ridership and efficiency on GO Transit and other projects that connect to the network as well.
Priority Projects within the Greater Toronto and Hamilton Area (GTHA)
Beyond the existing GO network, priority projects within the GTHA would be drawn from the Next Wave of Metrolinx projects included in The Big Move:
GO Rail Service Expansion (more two-way, all-day and rush-hour service); GO Lakeshore Express Rail Service (including electrification); Electrification of the GO Kitchener line and Union Pearson Express; Brampton Queen Street Rapid Transit; Dundas Street Bus Rapid Transit; Durham-Scarborough Bus Rapid Transit; Hamilton Rapid Transit; Hurontario-Main LRT linking Mississauga and Brampton; Relief Line; and Yonge North Subway Expansion to York Region.
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Priority Projects Outside the Greater Toronto and Hamilton Area (GTHA)
The new dedicated fund would be used to support initiatives outside the GTHA, such as:
Local and regional transit, roads, bridges and other critical infrastructure; Infrastructure development in the Ring of Fire; Funding for bus and rail infrastructure for the Ontario Northland Transportation
Commission;
Strategic highway improvements; and Other projects to be identified through Building Canada Plan negotiations with the
federal government.
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Projects Underway
ThefirstwaveofprojectsinMetrolinxsRegionalTransportationPlan,TheBig Move,currentlyfundedandunderwayincludes: ModernrapidtransitinToronto,beginningwiththeEglintonCrosstown LRTproject.TunnellingforthisprojectbeganinJune2013; RevitalizationofUnionStation,includingimprovedplatformaccess,anew trainshedroof,andanewconcourse.ThenewYorkStreetconcourseis expectedtoopenbytheendof2014,andthetrainshedroofisexpected tobecompletedin2016; DedicatedrapidtransitbuslanesinbothYorkRegionandMississauga. PortionsoftherapidtransitlanesopenedinYorkRegioninAugust2013, andwillopeninMississaugathisyear; UnionPearsonExpress,adedicatedraillink,betweenTorontoPearson InternationalAirportandUnionStation,whichisexpectedtobeginservice in2015,intimeforthePan/ParapanAmericanGames.Constructiononthe newTerminal1stationbeganinMarch2013andisnearingcompletion;and PreliminarydesignandengineeringworkontheSheppardEastLRTand FinchWestLRT.
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2014OntarioBudget
pedestrian safety;
Sault Ste. Marie and Prince Township: Rehabilitation of single-lane bridges; Wasaga Beach: Widening Schoonertown Bridge to four lanes and adding full sidewalks
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TABLE1.2
Cornwall Community Hospital
ExamplesofMajorHospitalsBuilt,UnderwayorinPlanning
Ontario is consolidating acute and rehabilitation hospital services from two separate locations onto one site for the Cornwall Community Hospital. Construction is currently underway on renovations and a new hospital wing. Ontario is moving forward with the new Mackenzie Vaughan Hospital, with construction scheduled to start in the fall of 2015. This project will include a state-of-the-art emergency department and technologically advanced diagnostic imaging. Ontario is making progress on Mount Sinai Hospitals Womens and Infants Project in Toronto, which will add six new floors and renovate existing space to meet patient needs. The project involves the construction of a new labour and delivery unit, new neonatal intensive care unit, as well as support service areas and expanded ambulatory care space. Ontarios investment to expand the dialysis facility at Renfrew Victoria Hospital will reduce the need for patients to commute to Ottawa to meet their dialysis needs. The project will expand patient treatment and support areas, including an increased number of hemodialysis treatment stations. Ontarios investment in the Royal Victoria Regional Health Centres Expansion Project doubled the size of the existing facility and added the Simcoe Muskoka Regional Cancer Centre. The new cancer centre is providing comprehensive care to cancer patients throughout Simcoe County and the District of Muskoka. The project included space for two future patient care units, which will help the hospital continue to meet the health care needs of a growing and aging community. Ontario recently completed construction of a state-of-the-art facility for Woodstock General Hospital, with expanded programs and improved delivery of quality health care. At three storeys high and 350,000 square feet, the new hospital is more than double the size of the previous facility and allows health care professionals to offer a full range of clinical services and programs, from critical care to outpatient acute mental health services.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy TheProvincesplanforbuildingasustainablepublichealthcaresystemis deliveringtherightcare,attherighttime,intherightplace.Tosupportthis transformation,thegovernmentisprovidingadditionalfundingof$300million over10yearstohelpshiftcarefromhospitalstocommunitysettingsandensure adequateinfrastructurecapacityinthehealthcaresector. ThisincludesthecreationofadedicatedCommunityInfrastructureRenewalFund thatwouldhelpcommunityorganizationssuchasPublicHealthUnits,Family HealthTeamsandNursePractitionerLedClinics.Thisdedicatedfundwillgive communitypartnersthecapitalsupportneededtoprovideOntarianswithmore healthcareoptions. TheProvincewillalsoincreaseinfrastructurefundingforCommunityHealth Centres,communitybasedmentalhealthandaddictionprograms,andAboriginal HealthAccessCentres.
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TABLE1.3
ExamplesofSchoolProjectsBuiltorUnderway
Ontario built a new elementary and secondary school in Pickering that added a total of 676 pupil places for more students to better serve French-language rights-holders, and introduced full-day kindergarten to the community. Ontario built a new elementary school in Scarborough that added 334 new elementary pupil places for more students and allowed the retirement of an inadequate facility. Ontario built a new elementary school in Scarborough that added a total of 201 pupil places for more students to better serve Frenchlanguage rights-holders and introduced full-day kindergarten to the community. Ontario is building a new elementary school in Mississauga that will add 615 new elementary pupil places for more students to accommodate local growth and introduce full-day kindergarten to the community. Ontario is building a new elementary school in Brampton that will add 800 new elementary pupil places for more students to accommodate local growth and introduce full-day kindergarten to the community. Ontario is building a new school in Halton that will add 1,194 new secondary pupil places for more students to accommodate local growth. Ontario has built a new secondary school in London that accommodates 1,008 pupil places.
CS Viamonde P/SP Ronald-Marion Pickering (JK12) CS Viamonde P Laure-Rise Scarborough CSDC Centre-Sud C Saint-Michel Scarborough Peel DSB Dundas Fairview
Peel DSB Fletchers Meadow Halton DSB Dr. Frank J Hayden Secondary School London Catholic DSB Saint Andre Bessette Catholic Secondary School Rainbow DSB MacLeod PS CC du Centre-Est C Sainte-Kateri Barrhaven Ottawa Carleton DSB South March Elementary
Ontario has built a new elementary school in Sudbury that opened in March 2014. The new school accommodates 600 elementary pupil places. Ontario built a new elementary school in Barrhaven that added a total of 388 pupil places for more students to accommodate growth, and introduced full-day kindergarten to the community. Ontario is making a new addition to South March PS in Kanata that will add 285 new elementary pupil places for more students, address overcrowding and introduce full-day kindergarten to the community.
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TABLE1.4
ExpansionProjectsatPostsecondaryInstitutions Built,UnderwayorinPlanning
Ontario helped to support the expansion and renovation of the MacOdrum Library at Carleton University, which opened in December 2013. The library expansion will help promote Ontario as a leader in research and innovation, giving researchers across the country the opportunity to access, collect and share information. Ontario is supporting the relocation of Centennial Colleges aerospace training programs to Downsview Park, providing opportunities for future expansion in the aerospace industry, including by Bombardier, and helping to create the next generation of manufacturing in the province. Ontario supported the construction of Lakehead Universitys new Faculty of Law, Northern Ontarios first law school, which welcomed its inaugural class in September 2013. The Faculty of Law focuses on issues such as access to justice in northern and rural communities as well as Aboriginal and natural resource law. Ontario is investing in Laurentian Universitys new School of Architecture. The new bilingual school will help northern architecture students study closer to their families and the communities where they grew up. The first phase of the new School of Architecture was completed in 2013. Ontario is supporting a permanent Industry Innovation Centre at Niagara College. The state-of-the-art facility will allow Ontario-based manufacturers to access business services, equipment, research and expertise provided by the faculty and students at Niagara College. This new Centre, which opened in the fall of 2013, will play an important role in helping to provide Northern Ontario with well-trained health professionals. The new Health and Wellness Centre will feature modern labs and health facilities and will be used to deliver specialized health programs to a growing number of students. Ontario is helping Seneca College build new classrooms, state-of-the-art learning labs and study spaces for students at their King Campus. More classrooms and labs will allow new courses to be offered at the King Campus to better serve the growing needs of York Region families.
Laurentian Universitys New School of Architecture in Sudbury Niagara Colleges Industry Innovation Centre
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Lakeview Redevelopment
TheProvinceandtheCityofMississaugaarefocusedonrealizingthepotential oftheLakeviewlandsinsoutheasternMississauga.Asafirststep,amemorandum ofunderstandingwassignedin2011betweentheCity,theProvinceandOntario PowerGenerationthatcommittedtoworkingtogetheronasharedvisionfor thefutureoftheLakeviewlands.Movingforward,thesepartnerswillcontinue toworkwithlocalresidentstoplananddesigntheirfuturecommunitywith abalancedmixofcommercial,residentialandrecreationaldevelopment. TheCityexpectsthemasterplanfortheareatobefinishedbythesummerof 2014.ActingtodaytobuildLakeviewsfuturewillhelprealizethefullpotential ofanimportantassetforOntario.
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CHART 1.9
To date, the AFP model has been applied most extensively to social infrastructure projects.
HEALTH CARE
Including projects that support:
JUSTICE
Including projects such as:
8 8 5 3
18 5 2 1
Ontario Provincial Police facilities including new detachments, regional command centres and forensic units Courthouses including over 90 courtrooms
Emergency services
Correctional facilities
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2014OntarioBudget
build, finance and maintain the new facility for 30 years after completion. It contains a complex of different buildings including the old Don Jail, which is used for offices. The centre won Canadian Architect magazines Award of Excellence in 2008. Durham Region Courthouse
The first provincial consolidated courthouse project delivered by IO was awarded a
Royal Architectural Institute of Canada Award of Excellence in 2011. 2015 Pan/Parapan American Athletes Village
The Athletes Village is the largest infrastructure project associated with the 2015
Pan/Parapan American Games. The village is expected to house 10,000 athletes, coaches and team officials for the duration of the Games. After the Games, the village will become a mixed-use neighbourhood with affordable housing, new condominiums, a YMCA and a residence for George Brown College students. This project won
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Its not every day that clear solutions are found to fund infrastructure projects. Public-private partnerships provide a win-win solution for solving our infrastructure deficit and provide immediate and sustainable economic growth.
Joseph Mancinelli, Labourers International Union of North America, Vice President and Regional Manager for Central & Eastern Canada, November 7, 2013.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy
Highlights
Establishinganew10year,$2.5billionJobsandProsperityFundthatwill improveOntariosabilitytoattractsignificantbusinessinvestments, strengthenOntariosstrategicsectorsandsupporttheprovincesfuture economicgrowth. Committing$40millionannuallytoafoodprocessingstreamunderthenew JobsandProsperityFund. Maintainingacompetitivebusinesstaxsystem,anintegralpartofthe Provincesnew10yeareconomicplantostrengthenOntariosabilitytogrow andprosper. ExpandingtheIndustrialConservationInitiativeandintroducinganewstream oftheIndustrialElectricityIncentiveprogramtohelplargebusinesseswith theirelectricitycosts. Ensuring,throughOntariosfivepointbusinessenergysavingsplan,that smallbusinesseshavethetoolstheyneedtounderstandtheirbill,conserve energy,managecostsandsavemoney. Eliminatingandreducingredtapetohelpbusinessessavemillionsofhoursin timeand$100millionincostsby201617. ExpandingthereachofOntariosexportstofastgrowingemergingmarkets, tohelpmanysmallandmediumsizedbusinessesgrowandcreatejobs. ContinuingtosupportworldleadingresearchthroughtheOntarioResearch Fundwith$250millionoverthenextthreeyearsforleadingedgeresearch infrastructure. Providingfinancingtoearlystagelifesciencesfirmsatacriticalstageoftheir development,throughaproposedLifeSciencesSeedVentureCapitalFund.
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Recent Measures Ontario Has Taken to Support a More Competitive Tax System
Sales tax and corporate tax cuts totalling more than $9 billion per year: The Harmonized Sales Tax (HST) will remove $4.7 billion per year in embedded sales
machinery and equipment was extended to 2015, providing a benefit of $265 million over three years.
Harmonization with the federal Corporate Income Tax and Goods and Services Tax has
reduced business compliance costs by more than $635 million per year.
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Were approached, and visited, every day by governors, presidents, and country leaders who would like Cisco to bring the kind of knowledge-based jobs that we are bringing to Ontario. We look at these investments, and opportunities to partner, through a filter do we see a supportive government, rich capabilities in the university system, a competitive tax rate, a predictable business climate, a stable employment base. We get all of that in Ontario, which is exactly why we chose Ontario over all the other places.
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Cambridge plant, helping secure assembly of advanced vehicles like the Lexus RX 450h hybrid sport utility vehicle, and investment in the Woodstock plant to expand capacity.
Ford Motor Company: Supporting 2,800 jobs through investment in the upgrading of
the Oakville assembly plant to introduce global processes and increase R&D activity.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy
CentennialCollege
ThePotential
Theglobalaerospace sectorispoisedfor substantialgrowthover thenext20years. TheProvincewantsto helpensureOntarios aerospacesectorisready tocompete.
ThePlanfor TomorrowsEconomy
Ontarioissupporting CentennialCollegeasit partnerswiththeprivate sectortotrainthenext generationofaerospace workers.
TheResult
Apartnershipbetween BombardierandCentennial willhelpbuildcapacityin Ontariosaerospacesector, providingtheentiresupply chainwithbothnewand experiencedgraduatesand skillsupdatingprograms.
NiagaraCollege
TheChallenge
Manysmallandmedium sizedmanufacturersin Ontariodonothavethe inhousecapacityto performresearchand developmentorsolve operationalproblems.
ThePlanfor TomorrowsEconomy
Ontarioisinvestingin apermanent,stateof theartIndustryInnovation CentreintheNiagara regionthatwillallow Ontariobased manufacturerstoaccess businessservices,suchas 3Dprintingprovidedbythe facultyandstudents atNiagaraCollege.
TheResult
Theseserviceswillhelp Ontariomanufacturers increasetheirproductivity, reshoreproduct development,reduce productioncosts,and minimizeproductiontime, helpingtocreatethe nextgenerationof manufacturingin theprovince.
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Ontario is helping St. Albert Cheese Co-operative, which was established in 1894, build a new state-of-the-art cheese manufacturing operation that will support 110 local jobs and strengthen the economy. Their former factory was lost to a fire in 2013. A provincial investment of $1 million will help the co-operative purchase equipment and establish a computerized production line for their new facility. The new operation will process 50 million litres of local milk a year, create 10 new jobs and support the more than 100 jobs that were displaced as a result of the fire. At 76,000 square feet, the building will be 30 per cent larger and will feature a manufacturing plant, an observation deck for visitors, a retail store and a restaurant. Production on the new line will start in the summer of 2014.
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Ontario is supporting leading baked-goods producer Fiera Foods $34 million investment to increase production and enable the company to expand into new domestic and international markets. The Provinces $1.5 million investment will help retain 1,000 existing jobs and create 52 new jobs. Fiera Foods was started more than 25 years ago. My partner, Alex Garber, COO, and I established a culture at Fiera that focuses on innovation, quality and excellence, which set us on a path to achieve the success weve experienced to date. The Ontario governments support enhances our ability to continue to grow and reach new markets both here at home and around the world.
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2014OntarioBudget Thegovernmentiscommittedtoworkwithallpartnersinthissectortoaccelerate theadoptionofnewhealthtechnologiesandinnovationsthatdemonstratevalue throughthedevelopmentofinitiativesincluding: Implementingaframeworkforstrategic,valuebasedprocurement; ClearlyarticulatingOntariohealthsystemprioritiestobuyersandsellers ofhealthtechnologies; Definingrequirementsforassessingthevalueofpotentialinnovations; Creatingstructuredpathwaysfortheadoptionofproveninnovations;and Exploringtransformativesolutionsofferedbyhealthtechnologyinnovations (e.g.,mobilehealth,remotemonitoring).
Tosupportincreasedacquisitionofinnovativehealthproducts,thegovernment hasdevelopedanInnovationProcurementFramework,providing$20million overthenextfouryears.Thefundingwillidentifybarrierstoinnovationand provideguidanceonearlymarketengagementandinnovationprocurement modelstofurtheracceleratelifesciencesandhealthcaretechnology. TheOHICwillbecontinuingitsworktoencourageproveninnovationsthat willcontributetoamoreproductiveandsustainablehealthcaresystem, andbetterhealthoutcomesforOntariopatients. Duetothetimeneededforproductdevelopmentandregulatoryapprovals, theProvinceissupportingearlystagelifesciencesfirmsthroughanewLife SciencesSeedVentureCapitalFund.Theproposedfund,ofupto$30million, wouldbeapartnershipinvolvingtheProvince,theprivatesectorandhospital foundations.ItwouldinvestinOntariobasedlifesciencescompaniesthatneed financingatthecriticalearlystagesoftheirdevelopment,helpingtobolster OntariospositionasalifesciencesleaderinNorthAmerica.
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CiscoSystems,Inc.
Today
Ciscosellsinternetbased routingandnetworking productsandservices. OntarioishometoCiscos Canadiansubsidiary, conductingR&D,sales andmarketing.
ThePlanfor TomorrowsEconomy
$4billioninvestmentto makeOntariooneofits globalR&Dcentres, includingdeveloping technologyusedinmobile computingandvideo technology.
TheResult
Creatingupto5,000jobs overthenextdecade, mainlyinOttawaand Toronto.
Communitech
Today
Communitechisthe WaterlooRegionshub forthecommercialization ofinnovativetechnologies.
ThePlanfor TomorrowsEconomy
TheCommunitechHub createdasignificant publicprivatepartnership, engaginghundredsof companies,thelocal community,andthe federalgovernment. In2013,theProvince announcedarenewed commitmentof$15million overthreeyears.
TheResult
Leveragedmorethan $25millionfromthe federalgovernmentand over$125millionfrom theprivatesector, andwillcreate approximately 7,000newjobs.
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Communitech is proud to be a partner in the Ontario Innovation Agenda. This additional support will help us to expand programming at the Communitech Hub to meet the significant demand for startup assistance and support Ontario firms as they scale. Were thrilled with the support from the Province its a testament to the strength of the Waterloo Region technology cluster.
AnExpandingInformationand CommunicationsTechnologySector
IBM
IBMisexpandingitshigh performancecomputing infrastructure,partnering withgovernmentsand universitiestoformthe IBMCanadaResearchand DevelopmentCentrein Toronto.Itiscreating145 newR&Djobsandan additional100jobsrelated tothedesignandbuilding ofanewdatacentrein Barrie.
Ericsson
ASwedishbased multinationalcorporation recentlyopenedanew researchanddevelopment labinOttawawith provincialsupport,creating andretaining140jobs.
ChristieDigital
AKitchenerbaseddigital projectionanddisplay systemscompanyrecently investedcloseto$140 milliontofurther modernizeitsplantand developnewtechnologies, withsupportfromthe Ontariogovernment, creatingandretaining 100jobs.
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Culture,TourismandEvents
Ontarios unique local festivals and events celebrate the provinces diversity, heritage and culture, and make it a more attractive place to visit. Supporting festivals and events across the province is part of Ontarios efforts to build a strong economy and vibrant communities, drawing tourists and creating over 22,000 jobs in Ontario every year. 2015 Pan/Parapan American Games Ontario Music Fund In the summer of 2015, Ontario will host the Pan/Parapan American Games, the largest sporting event in Ontario history. It will be an opportunity to showcase Ontario to an international audience that will include more than 250,000 visitors. The three-year, $45 million Ontario Music Fund announced in the 2013 Budget allows the sector to drive innovation and employment, while seizing opportunities in both the domestic and international markets. The government is investing to bring the JUNO Awards back to Ontario in 2015, a year when the global spotlight will shine on the province as it hosts the Pan/Parapan American Games. The Toronto International Film Festival has become North Americas largest film festival, and one of the top three in the world. The Provinces support of the signature fall festival helps focus the global spotlight on Ontario, promote cinema, stimulate growth in related industries, and attract thousands of tourists to the province. In June 2013, the government announced the development of the Urban Park and Waterfront Trail on the Ontario Place site, including linking the park to the existing waterfront trail system. Work on the park and trail is underway and is expected to be complete and open to the public in 2015. The provinces Celebrate Ontario program helps over 200 festivals and events, such as the Taste of Toronto, the Stratford Festival and the Ottawa Bluesfest, enhance their programs, activities and services every year. Starting in 201415, the government will provide $2 million per year to support international amateur sports events. The Tourism Development Fund encourages strategic new investments in the tourism industry by building the capacity and sustainability of tourism businesses, associations and regions. The government will provide $1 million per year to help the tourism industry develop innovative tourism products and attract private-sector investment to Ontario. Recognizing the key role that public libraries play in delivering and supporting important community programs, the government will provide an additional $10 million over the next three years to help achieve IT improvements across the public library sector, improve service delivery, and encourage more research and innovation. In 2015, Ontario will commemorate Samuel de Champlains passage through the province and celebrate the 400th anniversary of French presence in Ontario. This celebration will bring together people from around the world to focus on the important cultural, social and economic contributions that Franco-Ontarians have made to the province.
JUNO Awards
Ontario Place
Celebrate Ontario
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Toronto is the financial capital of Canada and a global financial centre home to many leading banks, securities dealers, insurers and pension funds. As a global financial centre, Toronto ranks as one of the best in the world number nine on The Banker magazines ranking and fourteenth on the U.K.-based Global Financial Centres Index.
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Changes to the SecuritiesAct and the CommodityFuturesAct that would: Increase scope of OSC compliance and continuous disclosure reviews; Facilitate extension of freeze orders; and Broaden OSCs ability to preserve assets in an enforcement context.
These changes would help modernize and strengthen Ontarios securities regulatory framework, enhance the competitiveness of Ontarios capital markets and facilitate increased investment.
Credit Unions
Credit unions and caisses populaires play an important role in Ontarios economy. They have over 1.5 million members and, at the end of 2013, had provided $33.4 billion in loans to households and businesses throughout the province. A modern regulatory framework that enables the credit union system to flourish and protect members is essential.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy A review of the CreditUnionsandCaissesPopulairesAct,1994, will be launched in the fall. This will provide an opportunity to update the legislation and regulations so credit unions can continue to meet the needs of their members and the economy into the future. Online Promotion of Insurance In recent years, credit unions and other deposit-taking institutions have been providing an increasing array of online services to their customers. Many services that used to be exclusively accessed in a credit unions bricks and mortar branches are now being accessed by consumers online. It is important to ensure that Ontarios policies regarding the online insurance activities of credit unions keep consumers best interests in mind. To this end, in late 2013, the Province initiated an examination of insuranceproduct promotion on credit union websites. In addition to seeking the views of the insurance and credit union sectors, recent federal government action affecting federally incorporated financial institutions was also considered. As a result, the Province is proposing to prohibit credit unions from online promotion of insurance products such as home and auto insurance, which they are not permitted to promote in their branches.
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2014OntarioBudget The northwestern region of the province is expected to experience significant growth in mineral exploration and mining development over the coming decades. The regions Ring of Fire area, rich with chromite, nickel, gold and other deposits, will create enormous business and growth opportunities for the local mining and supporting industries. More than 20 companies and individuals hold active mining claims in the Ring of Fire area and 265 companies are exploring 400 projects in Ontario, laying the foundation for significant future mining development and job creation. Emerging market nations will continue to support demand for Ontarios minerals, in turn driving continuing exploration and development in northern Ontario. By 2025, significant output will be produced from Ontarios Ring of Fire area, making the province one of the major world producers of chromite and strengthening Ontarios position as a world leader in nickel production. As part of Ontarios ongoing modernization of the MiningAct, the Province is modernizing Ontarios claims staking system going from paper-based to online. Ensuring a fast, efficient system is in place is good for business, affected landowners and Aboriginal communities.
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Ontario, First Nations and Industry Working Together to Realize the Potential of the Ring of Fire Area
In March 2014, a historic framework agreement was signed by the Province of Ontario and the Chiefs of the nine Matawa-member First Nations to engage in a community-based regional negotiation process. The agreement commits First Nations and Ontario to work together to advance Ring of Fire opportunities, including regional long-term environmental monitoring and enhanced participation in the environmental assessment process, resource revenue sharing, economic supports, and regional and community infrastructure. In February 2014, Deloitte LLP was brought on to help establish a development corporation that would be responsible for infrastructure in the Ring of Fire region. Deloitte LLP will act as a third-party resource for key partners, including First Nations, industry, and the provincial and federal governments.
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Giant Tiger operates over 200 stores across Canada and employs over 7,000 employees. Through a project funded by the Ontario Power Authority (OPA) and Hydro Ottawa, an Embedded Energy Manager (EEM) was hired within Giant Tiger to find energy reduction opportunities, resulting to date in average annual electricity savings of about $7,500 per store, or about six per cent of its bill, across about 40 stores in Ontario.
TABLE1.5
IndustrialElectricityIncentiveProgram ExamplesofSuccesses
Sector Pulp and Paper Steel Pulp and Paper Pulp and Paper Estimated New Jobs 140 45 80 78
Applicant Name Pembroke MDF ASW Steel Atlantic Packaging Products Resolute Forest Products
As part of Ontarios efforts to support a dynamic business climate, drive local economic growth and support job creation, the government will direct the OPA to run a new IEI stream to accept applications for discounted electricity rates. The new stream will make available up to four terawatt hours of electricity per year. Program guidelines and eligibility criteria will be expanded to encourage participation from more diverse economic sectors, and contracts will be available for a longer term, with an end date of December 31, 2024.
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2014OntarioBudget This stream will build on the previous successful intakes, and the OPA will aim to complete the procurement process in time to award contracts by December 31, 2014.
Vision Extrusions, an extrusions manufacturing company in York region employing 325 workers, could expect to save approximately $560,000, or 17 per cent, on its annual electricity costs under proposed changes to the Industrial Conservation Initiative, assuming the company reduces its electricity consumption by 15 per cent during times of highest system demand.
Consumers with an average monthly peak demand greater than five megawatts (MW) are defined as Class A consumers, and those with an average monthly peak demand of less than five MW are defined as Class B consumers. In the updated Long-Term Energy Plan (LTEP), a large industrial consumer with a five megawatt demand and a 75 per cent capacity factor is projected to pay about $3 million less in the next five years, and about $11 million less to 2030, compared to the 2010 LTEP forecast. The Ministry of Energy will expand the definition of Class A consumers, lowering the threshold from five MW to three MW, thereby increasing the number of Ontario businesses eligible to participate in the ICI. This will save participants on average 15 to 20 per cent on their energy bill.
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TABLE1.6
IndustrialConservationInitiative PotentialSavingsExamples
Average Monthly Peak Demand 4.1 MW 3.2 MW Annual Estimated Savings ~ $400,000 ~ $900,000 Reduction to Total Bill 12% 23%
Notes: Values are illustrative. Actual savings will depend on multiple factors, including actual contribution to peak demand and levels of electricity consumption. Annual estimated savings rounded to the nearest $100,000.
The ICI program expansion supports both increased business competitiveness as well as the governments conservation goals by: Enhancing the efficiency and competitiveness of a larger number of industrial firms; Helping reduce emissions by promoting energy conservation during peak demand periods; Improving the reliability of the electricity system, especially during critical peak demand periods; and Reducing the need for and costs associated with the building of new electricity power plants in the future to cope with periods of high demand.
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TABLE1.7
InnovativeCompaniesSupportedbytheOntarioVenture CapitalFund
Shopify (Ottawa) Achievers (Toronto)
Provides a cloudbased platform to engage and recognize employees and their performance.
newterra (Brockville)
A leader in the design and manufacture of modular water treatment systems.
Business
A leading ecommerce platform used by retailers to sell goods and services online.
Achievements
Ontarios support for venture capital is having a positive effect. In 2013, Ontario-based companies received $675 million in venture capital investments, the fourth consecutive annual increase. Through the Provinces ongoing commitment to improving access to capital, Ontario is well positioned to be in the top five North American jurisdictions for venture capital investment by 2025.
2014OntarioBudget The field of quantum computing seeks to apply the principles of quantum mechanics to develop a new generation of computers. This technology could result in radically improved computing speeds, and potentially impact such areas as medicine and resource discovery. The Institute for Quantum Computing, at the University of Waterloo, continues to make significant discoveries in this field, positioning Ontario at the forefront of this exciting technology. Building on its previous support, the government will commit $25 million over the next five years to continue supporting the Institutes research and commercialization activities. The government recognizes the strategic importance of the Perimeter Institute as a global leader in theoretical physics, advanced training and postgraduate research. The Province will continue to support its research, training and outreach activities.
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Chapter I: Ontarios Decade A 10-Year Plan for the Economy Reducing Red Tape reducing burdens on businesses through renewal of the Open for Business initiative. Each year, ministries will identify, measure and report on at least one additional burden that can be reduced; Venture Capital creating a new venture capital fund in collaboration with the federal government and private-sector partners that will help innovative startups and other emerging companies get the financing they need to build competitive businesses and create tomorrows jobs; Expanding SME Exports providing opportunities for Ontarios small businesses to diversify exports beyond the United States to fast-growing markets, through the Going Global Trade Strategy; and Corporate Income Tax (CIT) maintaining a low CIT rate for small business at 4.5 per cent, a full seven percentage points below the general CIT rate. Small and medium-sized enterprises also continue to benefit from enhanced tax credit rates for employee training and a 10 per cent refundable R&D tax credit.
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Through the Communities in Transition program, the government helps communities and industries facing sudden economic challenges such as closures, job losses and industry-wide restructuring. The government also offers assistance for drafting new economic strategies to build strong communities. Since 2006, the Ontario government has committed over $17 million in Communities in Transition funding to assist 67 communities and industry groups. Although major closures are a normal part of the economic cycle, the government will engage early to help prevent closures, where possible. In the event of a closure, the government will help to mitigate the impact on workers and communities. Working with business and labour, Ontario will strengthen worker protection when major closures do occur, building on the success of the Communities in Transition program and Rapid Response Teams. 100
and robotic cameras for use in broadcast and live event production, received a $513,600 grant. The project will leverage $5.1 million in private investment, create 25 jobs and retain 160 jobs.
Flying Colours Corp., located in Peterborough and specializing in aircraft completions,
received a $1.2 million grant to expand its avionics facility. This project is leveraging $12 million in private investment and the company is committing to create 60 new jobs and retain 169 jobs. Northern Ontario Heritage Fund Corporation:
Rotacan received a $1 million grant and loan for its rotary, blast-hole, drill-bit
manufacturing operation in North Bay. The project leveraged $1 million in private investment and created 16 new jobs.
Geraldton Community Forest Inc. received a $1.75 million grant towards the
construction of a Regional Skills Centre at the Greenstone Regional Airport. The training centre will provide training for employment opportunities in the forestry and mining sectors for Aboriginal people. The project leveraged $2.85 million in other investment and will create and retain 27 jobs. Southwestern Ontario Development Fund:
NASG Canada Inc., a Woodstock-based supplier of stampings and welded assemblies to
the automotive industry, received a $1.5 million grant to expand its facility, and create 50 jobs and retain 210 jobs. The project leveraged $12 million in private investment.
Natra Chocolate America Inc., a manufacturer of chocolate bars, spreads and other
specialty products, received a loan of $2.8 million to help invest $19 million in its new London facility, creating 56 new jobs in the community.
The Rural Economic Development (RED) Program helps rural communities plan and build a foundation for economic growth, and strengthens rural businesses through support for projects related to business development and diversification, regional marketing, and attraction and retention of skilled labour. Since 2003, RED has invested $167 million in 468 economic development projects, generating over $1.2 billion in new economic activity while creating and retaining over 35,000 jobs.
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The provinces commitment to introduce red tape accountability legislation is in line with CFIBs recommendations to government. By legislating annual reporting from all ministries and by regularly measuring the cost of regulations on businesses, Ontario is expecting to join the best in class in regulatory reform.
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The following are examples of burden reduction projects that have helped reduce cost for businesses and stakeholders.
even if the injury does not result in the employee losing time from work (known as WSIB Form 7).
By working with the small business sector, WSIB was able to reduce the length of
Form 7 by 60 per cent. WSIB also launched electronic and tele-claim services to make filing a claim more convenient.
These changes save an average of eight minutes per claim, which multiplied out to the
thousands of Form 7 submissions every year, translates into more than 10,000 hours and half a million dollars in cost savings annually.
way to generate renewable energy from farm waste (manure). However, in the past, the approval process was prohibitively long and expensive, stunting the development of these facilities.
The Ministry of Agriculture and Food, working with the Ministry of the Environment,
has worked to streamline approvals for on-farm anaerobic digesters, making it substantially easier and less costly for lower-risk facilities to be established.
Under the new framework, the approval times have gone from around two years to
an average of three months. Other fees and unnecessary requirements have also been reduced, resulting in estimated average savings of almost $89,000 per operator, or $1.77 million for all stakeholders in one year.
were facing costs and time commitments disproportionate to the size and risk of their projects.
To address this, the Ministry of the Environment worked with stakeholders to streamline
the approvals process for low-risk, small-scale solar facilities that have minimal environmental impact when complying with standard regulatory requirements.
These changes reduced the preparation time for approvals from an average of
17 months to less than 30 days, with final approvals being granted online in less than 10 minutes.
This move from a one-size-fits-all process to one based on risk will deliver more than
$1.9 million in savings to ground-mounted solar facilities operators in a one-year period (based on registrations to date).
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Going Global
Attracting Foreign Direct Investment
Ontario has experienced considerable success in attracting FDI, and has proven to be a leading destination within North America for investment. fDi Intelligence, a leading industry resource for research and analysis on FDI trends globally, published in its 2012 report on FDI trends in Ontario and North America that Ontario was a destination for global foreign direct investment. It: Received the third highest number of investment projects in the United States and Canada; and Ranked number one for FDI projects per capita among major North American states/provinces.
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(IT) services spanning various sectors, and its sister company Tech Mahindra are setting up a development centre and research and development facility in Toronto, planning to hire up to 130 IT engineers and financial experts, and investing approximately $10 million over the next five years.
U.S.-based XPO Logistics provides third-party logistics services using a network of
relationships with ground, sea and air carriers in the United States, Mexico and Canada. XPO Logistics opened a carrier procurement office in Ontario that will focus on the procurement of full truckload-focused companies that can move their clients goods throughout Canada. The project secured 200 jobs and is resulting in an approximate investment of $24 million.
Gizeh, a food packaging company from Germany, made a $4 million investment in the
food processing/advanced manufacturing sector in Ontario. This investment will create 20 to 25 new jobs and, within three years, the company expects an additional investment of $25 million and 60 to 70 new jobs.
Newgen Software Technologies Limited from India has entered into a strategic
partnership with HP Canada to offer solutions particularly with respect to the financial services market. Newgen Software is a leader in business process management, enterprise content management and customer communication management. The company has also procured its first project from a municipal government in Ontario and a bank. The investment is $3 million and 10 jobs.
Expanding Exports
Demand for Ontarios high value-added goods and services is expanding around the world. Emerging markets such as China and India will continue to grow quickly, while advanced regions such as the United States and Europe will continue to provide steady demand for Ontarios resources, high-technology exports, and professional and technical services. One of the greatest sources of opportunity for Ontarios small businesses lies in expanding and diversifying exports overseas, beyond the U.S. market. Over the past decade, many of Ontarios small and medium-sized businesses have started to build on their export success to the United States by pursuing new export markets abroad. 106
Chapter I: Ontarios Decade A 10-Year Plan for the Economy The Province continues to move forward with its Going Global Trade Strategy, which will expand the reach of Ontarios exports, including to fast-growing emerging markets that are quickly increasing their share of the global economy. It will help Ontario companies especially SMEs increase their success in exporting to global markets and creating jobs. The Ontario government continues to: Promote Ontario companies quality goods and services, by opening Ontarios eleventh International Marketing Centre (IMC) in So Paulo earlier this year to help companies explore export opportunities and connect with international buyers and investors in Brazil. Further expand representation to include South Korea, Chongqing in China, and Israel, adding to the existing IMCs in New York, San Francisco, Mexico City, London, Paris, Munich, Beijing, Shanghai, Tokyo and New Delhi (including a satellite office in Mumbai). Expand the number of trade missions to increase the number of companies exporting and increase employment by connecting more businesses to more foreign buyers, while increasing Ontarios global reputation as a source of innovative goods and services. Help exporters find new markets. Last year alone, Ontario led over 70 outbound trade missions in priority sectors and emerging markets. These outbound missions are helping almost 500 SMEs to export and have identified almost $450 million in potential exports. They are part of a plan to help triple exports to emerging economies and diversify exports over the next 10 years. Expand the opportunities for foreign buyers to connect with potential Ontario exporters. Ontario has hosted over 80 foreign buyers and international delegations. A Global Export Forum focused on opportunities in the Asia Pacific region was held in Ontario last fall. Another Global Export Forum, focused on Latin America, will be held in May 2014. Connect Infrastructure Ontario with Ontarios international trade offices to create export opportunities for Ontario firms that have participated in Alternative Financing and Procurement (AFP) projects. Infrastructure Ontario is showcasing the made-in-Ontario AFP model through its involvement with the National Governors Association in the United States.
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2014OntarioBudget It is projected that, over the next 10 years, Canada will negotiate a diverse collection of comprehensive trade agreements with most of its major trading partners, including India and Japan. Ontario will continue to support trade agreements that benefit its economy while supporting strategic sectors. Concluding new trade agreements will also help Ontario businesses become more productive and involved in global competition, supporting the international transfer of new ideas, innovation and competitive techniques.
Successful Missions
Ontarios in-market trade representation in Mexico, Chile and Brazil has helped Ontario
companies secure 25 contracts (April to October 2013). Ontario software, ICT, mining, tooling, construction and clean energy firms are among those that have achieved this new business.
Electrovaya, a clean technology company, has received a purchase order for
approximately $1.0 million US from an original equipment manufacturer in the United Arab Emirates. The order is for a high-value application for strategic portable power systems and is the first order from the Middle East. Electrovaya exhibited in the Ontario pavilion at the World Future Energy Summit.
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Highlights
Raisingtheminimumwageto$11.00,andtyingittoinflationtoprovide fairnesstolowincomeworkersandpredictabilitytobusinesses. Investinginaffordablehousingandhomelessnesspreventioninitiatives. IncreasingandproposingtoindextheOntarioChildBenefit. Establishinganewhealthbenefitprogramforlowincomechildren. Continuingtoreformthesocialassistancesystemthrougharateincrease andbystreamliningemploymentbenefits. ExpandingtheStudentNutritionProgramtoservemorechildrenin lowincomeneighbourhoodsandonFirstNationreserves. Enhancingsupportsforadultswithdevelopmentaldisabilities. Creatingamoreaccessiblejusticesystemwherelowincomefamiliesand vulnerablegroupshaveaccesstothelegalsupportstheyneed. SupportinggreateropportunitiesforAboriginalpeoplethroughavariety ofnewinitiatives. Takingfurtheractiontoreduceautoinsurancerates. Improvingconsumerprotectionthroughamodernizedregulatorysystem. ProposingtoremovetheDebtRetirementChargecostfromresidentialusers electricitybillsafterDecember31,2015,tosaveatypicalresidential ratepayerabout$70peryear.
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Section D: AFairSociety
A Fair Society
Ontariohasastrongreputationforpromotinggreaterfairnessbyinvestingin people,ensuringequalaccesstokeypublicservicessuchashealthcareand education,andsupportingtheneedsoflowincomechildren,familiesandthe mostvulnerable.Byprovidingmoreprotection,securityandequalopportunity forOntarians,thegovernmentprovidesindividualswithagreatersenseofdignity andindependence. Overthepastdecade,Ontariohasseensubstantialincreasesintheminimum wage,theintroductionandexpansionoftheOntarioChildBenefit,andnew investmentsinsocialassistanceafteryearsofneglect. Ontarioisintroducinganew10yeareconomicplantocreatetheconditionsto helpliftpeopleoutofpoverty.Throughthetaxandtransfersystem, thegovernmentisabletoprovidevaluableservicesandbenefitstoallOntarians, includingeducation,healthcareandchildrensbenefits.Thiscreatesnew opportunitiesforeventhemostvulnerable,whileincreasingtheprovinceslong termeconomicprospects.Ontarioisworkingwithallsectorpartnersinthefight againstpoverty.ThegovernmentbelievesthatallOntarians,regardlessoftheir economicstatusorbackground,shouldhaveanequalopportunitytoreachtheir fullpotentialandcontributetotheprosperityoftheprovince.
We should strive for an economy that draws on all peoples capabilities and creates economic success for everybody. Equality is not simply a measure of outcomes; it is also a measure of opportunities to contribute.
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CHART 1.10
Per Cent
30 25 20 15 10 5 0
22.5
15.2 15.2
15.4
15.9 13.6
2008
2009
2010
2011
*The Low Income Measure is half of median household Income adjusted for size. In this chart, it is fixed to a base year of 2008 and adjusted for inflation for subsequent years. Note: 2010 and 2011 include the Ontario Sales Tax Transition Benefit. Source: Ontario Ministry of Finance Based on Statistics Canadas Survey of Labour and Income Dynamics.
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But for every dollar that poverty takes from these low-income households, the province as a whole loses an additional 50 cents. It shows up in extra costs to our health care system, the costs of crime, the cost of social assistance, the loss of tax revenue that accompanies low earnings, and the intergenerational costs that flow from the likelihood that a significant number of children from poor families will also be poor when they grow up.
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CHART 1.11 Annual Income ($)
35,000 30,000 25,000 20,000 15,000
$13,358 $19,468
Ontario Child Benefit and Other Ontario Tax-Based Benefits and Credits $396 in 2003 Change Since 2003 +$13,181 (+68%)
$13,358
$13,358
Gross Employment Income at 2003 Minimum Wage Federal Child Benefits & Other Federal Tax-Based Benefits and Credits
10,000 5,000
$5,715
$8,984
$8,876
0
Notes: 1) Other Ontario Tax-Based Benefits and Credits consist of Ontario Property and Sales Tax Credits in 2003, and Ontario Energy and Property Tax Credit and Ontario Sales Tax Credit after 2009. Federal Child Benefits and Other Federal Tax-Based Benefits and Credits consist of Canada Child Tax Benefit, National Child Benefit Supplement, Universal Child Care Benefit, Goods and Services Tax Credit and Working Income Tax Benefit. 2) Incomes, rents and benefits are annualized as at the end of the calendar year shown. 3) Gross Employment Income calculated for parent earning $6.85/hour in 2003, $10.25/hour in 2013 and $11.00/hour in 2014, and working for 37.5 hours per week for 52 weeks. 4) Ontario Child Benefit monthly payments began in 2008; maximum per child rate increased from $1,100 in July 2012 to $1,210 in July 2013 and to $1,310 in July 2014. 5) In 2014, the family in this example would receive $2,504 in Ontario Child Benefit, and $1,270 in Other Ontario Tax-Based Benefits and Credits. Source: Ontario Ministry of Finance.
2003
2013
2014
Thegovernmentwillmaintaintheseinvestmentsandbuildonthemtohelpkeep thesefamiliesontrackforabrighterfuture.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy InJuly2014,thegovernmentwillincreasethemaximumannualOCBperchildto $1,310,enhancingtheincomesofhalfamillionfamilies. InvestmentsintheOCBthatimprovetheincomesoflowtomoderateincome familiesalsohelptheeconomyasawhole,sincethesefamiliesusetheadditional supporttopurchaseneededgoodsandservicesintheircommunities. TomaintainthegainsmadebytheOCB,thegovernmentproposestobegin indexingtheOCBmaximumbenefit,andtheincomethresholdatwhichthe OCBstartstobereduced,toannualincreasesintheOntarioConsumerPriceIndex (CPI).ThiswouldtakeeffectinJuly2015,andwouldsafeguardthepurchasing poweroftheOCBfromerosionduetoinflation.
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117
2014OntarioBudget In2013,thegovernmentappointedtheMinimumWageAdvisoryPanelwith representationfrombusinesses,workersandyouthtoprovideadviceonhow todeterminefutureincreasestotheminimumwage.Aftercarefulconsideration, thegovernmentannouncedthattheminimumwagewillincreaseto$11.00 onJune1,2014.Respondingtotheadviceofthepanel,thegovernmenthas introducedlegislationtotietheminimumwagetotheOntarioCPIrateof inflation,beginninginOctober2015.Thiswouldbringconsistencyand transparencytosettingtheminimumwage,whichhelpsbusinessesand workersplanforthefuture. ThesignificantincreasesinOntariosminimumwagesince2003havemadeareal differencetotheeconomicwellbeingoflowincomeworkersandtheirfamilies. Asingleparentwithayoungchildworking37.5hoursaweekattheupcoming $11.00perhourminimumwageandaccessingallavailabletaxandbenefit programswillhaveanestimatedaftertaxincomenearlythreepercentabove theLowIncomeMeasure(LIM)threshold.In2003,attheminimumwageof $6.85perhour,thisparentwas15percentbelowtheLIM.
People at the bottom of the income spectrum spend all the money they have, and more. Increase their pay, they spend more money, raise demand, boost the economy.
Armine Yalnizyan, Senior Economist, Canadian Centre for Policy Alternatives. Boosting Minimum Wage Would Also Boost Economy, from the Bottom Up, The Globe and Mail, (February 27, 2013).
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Income Inequality in Canada: An Overview, Report of the Standing Committee on Finance, December 2013.
119
120
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy Inaddition,thecomfortallowanceforlowincomeresidentsoflongtermcare homeswillalsoincreasebyonepercent.Lowincomeresidentsusethecomfort allowancefordiscretionarypersonalexpenses. ThesesocialassistancerateincreaseswilltakeeffectinSeptember2014for ODSPandinOctober2014forOntarioWorks.Municipalitieswillnotberequired tocostsharetheOntarioWorksrateincreaseuntilJanuary2015. Greatersupportforlowincomefamilieswouldalsohelptheeconomyasawhole, sincethesefamiliesusetheadditionalsupporttopurchaseneededgoodsand servicesintheircommunities. Streamlining Employment Benefits ConsistentwiththeCommissionsrecommendation,theProvinceismoving forwardwithaplantostreamlinesocialassistanceemploymentbenefits. Thegovernmentisreplacingsevenseparateemploymentbenefitswitha consolidatedbenefitstructurewithineachofODSPandOntarioWorks. Thiswillreducethecomplexityofthesocialassistancesystemandimprove programefficiency.Itwillalsomakeiteasierforclientstoknowwhathelpis availableandgivecaseworkersmoreflexibilitytobettermeettheunique needsofindividualclients. Aspartofthischange,theWorkRelatedBenefit(WRB)inODSPwillbe consolidatedintothenewemploymentbenefit,whichwillbeavailableto ODSPrecipientswithdisabilitiesbasedontheiremploymentrelatedneeds andexpenses.Toassistwiththeadjustmenttoanewbenefitstructure, thegovernmentwillprovideasixmonthtransitionbenefitforWRBrecipients withadisability.
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Progress on Implementing Recommendations of the Lankin-Sheikh Commission for the Review of Social Assistance in Ontario
With the initial steps taken in the 2013 Budget and the proposed changes for 2014, the government continues to transform the social assistance system by increasing benefits for recipients with the lowest level of support, harmonizing program rules and reducing barriers to employment. Progress on transforming the social assistance benefit structure in the first two years includes:
Increasing the support for single Ontario Works recipients without children by
$50 per month an important step in meeting the Commissions recommendation of a $100 rate increase for Ontario Works single adults without children, who experience the lowest level of support in social assistance;
Introducing an earnings exemption of $200 monthly to reduce employment barriers
harmonizing the treatment of employment income for full-time students and selfemployed individuals, and by increasing asset limits for singles receiving Ontario Works from $606 to $2,500, and from $1,043 to $5,000 for couples. Moving forward, the government will continue to reform social assistance guided by the Commissions advice.
124
Engaging Employers: The Partnership Council on Employment Opportunities for People with Disabilities, composed of corporate leaders and accessibility changemakers, was announced in the 2013 Budget.
Valuing Ability Campaign: This targeted outreach and marketing initiative will increase awareness of the Accessibility for Ontarians with Disabilities Act, 2005, and its standards among small and medium-sized enterprises, improve compliance, and highlight tools and resources available to recruit and retain people with disabilities.
Supporting Compliance: The Accessibility Directorate of Ontario will continue to work with businesses by providing the tools and assistance they need to meet Ontarios accessibility standards.
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We heard clearly from First Nations that social assistance rates do not reflect the realities of northern and remote communities, such as the high cost of food and transportation.
Final Report, Commission for the Review of Social Assistance in Ontario, 2012.
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CHART 1.12
25 20
Cents/kWh
15 10 5
Montreal, QC
Vancouver, BC
Nashville, TN
Moncton, NB
Portland, OR
Toronto,ON ON Toronto,
Seattle, WA
Ottawa,ON ON Ottawa,
Miami, FL
Edmonton, AB
Charlottetown, PE
New York, NY
St. Johns, NL
Winnipeg, MB
Calgary, AB
Houston, TX
Boston, MA
Chicago, IL
Regina, SK
Halifax, NS
Detroit, MI
Note: Prices as of April 1, 2013. Source: Hydro-Quebec 2013 Comparison of Electricity Prices in Major North American Cities. www.hydroquebec.com/publications/en/comparison_prices/
134
San Francisco, CA
Chapter I: Ontarios Decade A 10-Year Plan for the Economy The Province has taken other steps to mitigate the impact of electricity costs on Ontario families and seniors, including: EnergyConsumerProtectionAct,2010 tough new rules to protect consumers from unfair practices in the retail energy sector; and Moved off-peak rates to start at 7 p.m. instead of 9 p.m.: 10 more hours per week at the lowest-cost, off-peak electricity rates.
135
2014OntarioBudget The Minister of Finance will continue to report annually on the residual stranded debt and the estimated date range for retirement of residual stranded debt and the end of the DRC for all non-residential electricity users. The Auditor General audits OEFCs annual financial statements and has provided an unqualified opinion every year since the initial 19992000 financial statements. This includes OEFCs interest expense, which is currently about $1.5 billion per year and has totalled about $29.2 billion between April 1, 1999, and March 31, 2014. The Auditor Generals 2012 and 2013 Annual Reports also noted that the Auditor was pleased to see an increased level of transparency with respect to public reporting on the residual stranded debt.
5.6
5.4
5.8
4.5
3.9
* OEFCs unfunded liability as at April 1, 1999, was $19.4 billion, which is the initial stranded debt of $20.9 billion adjusted for $1.5 billion of additional OEFC assets as of that date, including primarily an accounting asset for deferred debt charges. Note: Unfunded Liability amounts are from OEFC Annual Reports from 19992000 to 2012, and the Annual Financial Statements for 2013. Residual Stranded Debt value for April 1, 1999, as announced on April 1, 1999. Values for the period from March 31, 2000, to March 31, 2010, as estimated by the Ministry of Finance in the 2012 Budget and for March 31, 2011, to March 31, 2013, as determined by the Minister of Finance in accordance with a regulation made under the Electricity Act, 1998.
136
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CHART 1.14
Note: Data from 2004 to 2013 reflect rate change approvals. General Insurance Statistical Agency data regarding premiums in 2013 will not be available until summer 2014. Sources: General Insurance Statistical Agency and Financial Services Commission of Ontario.
Ontario continues to take action to achieve the average rate reduction target of 15 per cent within two years. The most recent rate approval of April 15, 2014, indicates a total rate reduction of more than 5.6 per cent since the Strategy was launched in August 2013. While progress has been achieved to date, further actions will be required to meet the average rate reduction targets. Ontario is working hard to reduce rates for consumers but industry also has a responsibility to contribute to these efforts. It is critical that industry play its part and take concrete steps to lower costs, control overhead, and manage claims effectively and fairly. The government will continue to review industrys efforts as the Cost and Rate Reduction Strategy progresses.
138
Transforming the Dispute Resolution System and Fighting Fraud to Reduce Rates
In March 2014, the government introduced Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, a key element of the Cost and Rate Reduction Strategy. The Bill proposes a number of initiatives to tackle major sources of costs and uncertainty in the system that prevent rates from coming down. The Bill includes legislative amendments for the transformation of the dispute resolution system, and further action to crack down on fraud and abuse, as well as other cost-saving measures. Fighting fraud is an important part of the Cost and Rate Reduction Strategy. To date, the government has taken action to address half of the recommendations made by the Auto Insurance Anti-Fraud Task Force in late 2012. The government is building on the steps it has taken by developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud. The development of this fraud office would be based on the Task Forces principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.
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As a next step, the Province will introduce legislation in the spring of 2014 that, if passed, would establish mandatory qualifications for condominium managers and create a modern dispute resolution system. These new measures would allow condominium owners to use an alternative to the court system, saving money and resolving disputes more quickly, and would increase protection for condominium owners, tenants and buyers by improving condominium management standards.
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Highlights
Thegovernmentisontracktobeatitsdeficittargetforthefifthyearinarow, whichwouldresultintheaccumulateddeficitbeingmorethan$24billion lowerthanitotherwisewouldhavebeen. TheProvinceistakingafairandbalancedapproachtoeliminatingthe deficitby201718bymanagingoverallprogramspendinggrowthrateswhile continuingtosupportpriorityprogramsandservicespeopledependon. Ontariohasthelowestpercapitaprogramspendingamongprovincesand thelowesttotalgovernmentrevenueperpersonamongallCanadian provinces,includingfundingfromfederaltransfers. Thegovernmenthasundertakenanexpenditurereviewtofindgreater efficienciesandisprojectedtoexceedits201314yearendsavingstarget byover50percent. Thegovernmentcontinuestotakestrongbutfairactiontomanage publicsectorcompensationandbenefitscosts. Thegovernmentiscontinuingtomoveaheadwithrecommendationsofthe CommissionontheReformofOntariosPublicServices.Over80percentof therecommendationsarenowbeingactedon. Thegovernmentismovingforwardtounlockvaluefromitsinterestinshares inGeneralMotorsandcertainProvincialrealestateassetstoreinvestin publicinfrastructure,andhasestablishedthePremiersAdvisoryCouncilon GovernmentAssetstoassessoptionsforotherProvincialassets,withpriority giventomaximizingtheannualrevenuefortheProvince.
145
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Section E:
MakingEveryDollarCount
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CHART 1.15
$ Per Capita
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 ON BC QC NS NB AB PE MB NL SK
Note: Due to differences in accounting standards, figures may not be directly comparable. Sources: 201213 Provincial Public Accounts and Statistics Canada.
149
CHART 1.16
$ Per Capita
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 ON BC AB NB NS PE MB QC SK NL
Own-Source Revenue Federal Transfers
Note: Due to differences in accounting standards, figures may not be directly comparable. Sources: 201213 Provincial Public Accounts and Statistics Canada.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy
Giventhesuccessofthisreview,andtosupportthegovernmentscommitmentto balancethebudgetby201718,thereviewwillbeanongoingpartofthe Provincesbalancedapproachtofiscalmanagement. TheProvinceisimplementinganannualprogramreviewsavingstarget.Thistarget issetat$250millionfor201415and$500millionforeachof201516and 201617.Thetargetwillfocusonmaintainingorenhancingthedeliveryofpublic serviceswhilereducingcoststhatarenotessentialtodeliveringservice. Findingefficienciesinpublicservicesdeliveryisalreadyunderwayinmanysectors. Thegovernmentwillfocusonenhancingthesesuccessfulmodelsbyadoptingbest practices;drivingefficiencies;eliminatingduplicationtoreducecostsinthe OntarioPublicService(OPS)andbroaderpublicsector(BPS);andadopting technologyandothertoolstoimprovecustomerserviceandacceleratesector transformationthatisalreadyshowingresults.
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Public-Sector Compensation
Thegovernmentcontinuestotakestrongbutfairactiontomanagepublicsector compensationcosts.Withoverhalfofgovernmentspendinggoingtosalariesand benefitsintheOPSandBPS,managingpublicsectorcompensationcostsisan importantpartoftheProvincesplantocontrolspendingandprotect frontlinegovernmentservices.Compensationcostsmustbeaddressedwithin Ontariosexistingfiscalframework.Allpublicsectorpartnersneedtocontinue toworktogethertocontrolcurrentandfuturecompensationcosts. Thegovernmentcontinuestorespectthecollectivebargainingprocess.Collective bargainingenhancestheabilityofresponsibleemployersandbargainingagentsto increaseproductivity,deliverservicesandensurefiscalsustainability.Anymodest wageincreasesthatarenegotiatedmustbeabsorbedbyemployerswithin availablefundingandwithinOntariosexistingfiscalplanthroughefficiencyand productivitygainsorothertradeoffssothatservicelevelscontinuetomeet publicneeds.
153
CHART 1.17
Per Cent
2.5 2.0 1.5 1.0 0.5 0.0
Ontario Public Sector Ontario Private Sector Ontario Municipalities
Note: Data are for agreements with over 150 employees, ratified between July 17, 2012, and March 26, 2014. Sources: Ontario Ministry of Government Services and Ontario Ministry of Labour.
154
ChapterI:OntariosDecadeA10YearPlanfortheEconomy ThecontributionagreementsapplytotheCollegesofAppliedArtsand TechnologyPensionPlan,HealthcareofOntarioPensionPlan,OntarioPublic ServiceEmployeesUnionPensionPlan,andOntarioTeachersPensionPlan. Theyprovidedafreezeinemployercontributionsuntil2017andavoidedthe potentialofupto$1.5billioninadditionalemployercontributions. Thesolvencyfundingreliefmeasuresaredirectedtosingleemployerplansin thepublicsectorthathaveafundingshortfallandarerequiredtomakespecial payments.Employersreceivetimelimitedrelieffrommakingspecialpayments. Thisreliefresultedina$700millioncumulativereductioninrequiredpayments bytheendof2013.Totalsolvencyfundingreliefisexpectedtoreachanestimated $1.3billionbytheendof2015. Inexchangeforthisrelief,planscommittomakingchangesintheircontribution orbenefitstructure.Asaresult,thesolvencyfundingreliefmeasureshaveledto permanentimprovementstotheplanssustainabilityandaffordability.Todate, atleast17planshavesuccessfullynegotiatedchangeswithmembersresultingin highermembercontributionratesand/orreducedbenefitsforfutureservice. TheCommissionontheReformofOntariosPublicServicesforecastthatpension expensewouldincreaseby$1.1billionovertheperiodfrom201213to201718. Thecurrentgovernmentforecastofpensionexpensesuggestsadeclineof $1.5billionoverthesameperiod,resultinginacumulativereductionof$8.7billion comparedtotheCommissionsforecast.Thisalsoreflectsanimprovementinthe pensionexpenseforecastascomparedtothe2013Budget(seesectionentitled PathtoBalance,inChapterII,SectionE:OntariosFiscalPlanformoreinformation).
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TABLE1.8
($Billions)
DifferenceinProjectedPensionExpenseversusCommission ontheReformofOntariosPublicServicesForecast
201213
Commission Forecast Current Forecast Difference in Forecast 3.1 3.0* (0.1)
201314
3.7 3.0 (0.8)
201415
3.6 2.5 (1.1)
201516
3.7 2.0 (1.7)
201617
4.0 1.7 (2.3)
201718
4.2 1.5 (2.7)
*Actual expense for 201213. Note: Numbers may not add due to rounding. Source: Ontario Ministry of Finance.
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Centralized Collections
Anumberofministrieshaveadopteddifferentapproachestothecollectionof nontaxprovincialdebt.Someministrieshaveestablishedinhousecollection units,whileothershavereliedextensivelyonprivatecollectionagencies. LeveragingthecollectionexpertiseoftheMinistryofFinance,whichisresponsible forthecollectionoftaxdebt,acentralizedcollectionmodelhasbeendeveloped thatisfocusedonactivemanagementofoutstandingaccounts,increasing cash/revenuerecoveriesandreducingrelianceonprivatecollectionagencies. During201314,theMinistryofFinancesignedagreementswithseveral ministriestocollectoutstandingnontaxdebtofmorethan$1billionontheir behalf.Withthetransferoftheoutstandingnontaxcollectionportfolio,the MinistryofFinancenowcollectsmorethan85percentofallnontaxdebtand, by2015,itisexpectedtocollectabout98percentofallnontaxdebt. Onceappropriateregulatoryauthoritiesareinplace,thestrategicapplication ofabroaderrangeofcollectiontoolsshouldgenerateadditionalproceedsof $25millionannuallyby201516.
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161
2014OntarioBudget Toincreaseclassifiedagencytransparency,thegovernmenthasintroduced legislationthat,ifpassed,wouldprovidetheIntegrityCommissionerwiththe abilitytoreviewexpenseclaimsofappointeesandseniorexecutivesona selectivebasis.ThescopeoftheCommissionersreviewwouldbeexpanded toall197classifiedagencies. Inaddition,tofurtherdrivetransparency,inMarchofthisyear,thegovernment madeacommitmentthatallclassifiedagencieswouldberequiredtopubliclypost businessplansandothergovernancedocuments,andtheexpenseinformationfor appointeesandseniorexecutivesinthoseagencies. Thegovernmentwillensureclassifiedagenciescontinuetobewellgovernedand mindfulofthebestinterestsofthepeopleofOntario.Overthecomingmonths, allappointeestoclassifiedagencieswillberequiredtoreceivegovernance trainingrelatedtotheirresponsibilitiesoverseeingOntariosclassifiedagencies. Thegovernmentwillcontinuetoinstilariskmanagementcultureacrossthe classifiedagenciessectorbyrequiringthatministriesundertakeongoingrisk assessmentevaluationsoftheiragencies.Thecurrentriskframeworkwillbe refinedandenhancedtoensurethatclassifiedagencieshavecomprehensive andtransparentriskmitigationplans. Finally,toimproveaccountabilityatthemostseniorlevelsinclassifiedagencies, theChairs/CEOsofallagencieswillberequiredtoannuallyattestthattheir organizationsareinfullcompliancewithallgovernmentdirectives.Thiswill helpensurethatagenciesstayontrackandremainalignedwiththeneedsand expectationsofOntariansandtheirgovernment.
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163
2014OntarioBudget Asannouncedinthe2013OntarioEconomicOutlookandFiscalReview, thegovernmenthasbeenexploringopportunitiestounlockeconomicvalue fromLiquorControlBoardofOntarios(LCBO)headquartersandOntarioPower Generations(OPG)headoffice.Thegovernmentwillnowmoveforwardon divestingthoseassets.Otherrealestateassetsarebeingrevitalized,including theformerLakeviewgeneratingstationpropertyinsoutheasternMississauga, whichisexpectedtoseeabalancedmixofcommercial,residentialand recreationaldevelopmentoverthenextdecade;andtheSeatonLandsin Pickering,whereoneofthelargestnewurbancommunitiesinCanadawillbe developedoverthenext20years.Thegovernmentwillexploreopportunitiesto divesttheseassets.Itisalsoconsideringdivestingsomeofitsnoncoredowntown Torontoassets,primarilyofficespace,locatedonprimecommercialland.Selling theseandsimilarnoncoreassetsfreesupresourcestoinvestinnewpublic infrastructure,buildingastrongerfoundationforincreasedeconomicgrowth. TheProvincesvaluableassetsincludelargeandcomplexGovernmentBusiness Enterprises(GBEs)suchastheLCBO,HydroOneandOPG.Toidentify opportunitiestooptimizethefullvalueandperformanceofthesecoreassets, thegovernmentwilllaunchanindepthreviewprocess. ThePremiersAdvisoryCouncilonGovernmentAssetswillexaminehowtoget themostoutofkeygovernmentassetstogeneratebetterreturnsandrevenues forOntarians.TheCouncilwillreportdirectlytothePremierofOntarioandbe supportedbyexistingresourceswithinthegovernment.TheCouncilhas beengivenamandatetomaximizethevalueoftheseGBEstotheProvince, includingsuchmeasuresasefficientgovernance,growthstrategies, corporatereorganization,mergers,acquisitionsandpublicprivatepartnerships. TheCouncilwillgivepreferencetocontinuedgovernmentownershipofall corestrategicassets. Thegovernmentiscommittedtostrengtheningtheaccountability,financial management,andtransparencyofitsbusinessenterprises.TheCouncilwillreport tothePremierontheLCBO,HydroOneandOPG,bytheendof2014inorderto feedintothe2015Budgetprocess.
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ChapterI:OntariosDecadeA10YearPlanfortheEconomy Theconceptofassetrecyclingiscommonaroundtheworld,andwillhelpthe governmentusescarceresourcestotheirbestpossibleeffectbuildingpublic infrastructurethatwillimproveprivatesectorproductivityandOntarians qualityoflife. Inallitsactivities,thecouncilwillbeguidedbythreeprinciples: Thepublicinterestremainsparamountandprotected; DecisionsalignwithmaximizingvaluetoOntarians;and Thedecisionprocessremainstransparent,professionaland independentlyvalidated.
Finaldecisionswouldbemadebythegovernment.
dollars) in government assets and use the proceeds to invest in new infrastructure projects, potentially including a new International Airport in Sydney, that would create jobs and grow the economy.
In 2010, the United Kingdom sold the high-speed train that connects London to the
Chunnel for 2.1 billion. The Ontario Municipal Employees Retirement System (OMERS) and Ontario Teachers Pension Plan (OTPP) were the successful bidders on the 30-year concession to operate the rail line. The U.K. government has since made significant investments in transportation infrastructure including the Crossrail a new subway line in London that is the largest project currently underway in Europe.
In 2013, the United Kingdom conducted an initial public offering of the British Royal
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167
2014OntarioBudget Thegovernmentwillcontinuetoprovideunconditionalsupporttomunicipalities throughtheOMPFandproceedwiththephasedownto$500million.However, tomanageprogramspending,andinlightofthesignificantlevelofsupport providedtomunicipalities,thephasedownschedulefortheOMPFwillbe adjustedfor2015.Undertherevisedschedule,municipalitieswillreceive $515millionthroughtheprogramin2015. Ontariowillcontinuetoworkcloselywithmunicipalitiestomanagethephase downoftheprogram,andensurethatdetailsofthe2015allocationsareavailable assoonaspossibletosupportmunicipalbudgetplanning. EvenwiththephasedownoftheOMPF,thegovernmentscommitmenttothe provincialuploadsmeansthatoverallsupporttomunicipalitieswillcontinue toincrease,withtheprovincialuploadsmorethanoffsettingthereductionto theprogram.
TABLE1.9
($Millions)
ProvincialSupporttoMunicipalitiesContinuestoIncrease
2013
1,368 575 1,943
2014
1,560 550 2,110
2015
1,630 515 2,145
2016
1,770 500 2,270
168
TABLE1.10 PowerDamSpecialPaymentProgramAnnualFunding
($Millions)
2014
18.7
2015
18.1
2016
16.8
2017
14.3
TheProvincewillworkwithmunicipalitiesonwaystoimplementthephasedown inamannerthatisfairandmanageable.
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CHAPTER
II
ChapterII:OntariosEconomicOutlookandFiscalPlan
Highlights
Governmentprojected2014realGDPgrowth:2.1percent. Privatesectoraverageprojected2014realGDPgrowth:2.2percent. Governmentprojected2015realGDPgrowth:2.5percent. Privatesectoraverageprojected2015realGDPgrowth:2.6percent. NetnewjobsinOntariosincerecessionarylowinJune2009:459,500. 201314deficitisprojectedtobe$11.3billion,animprovementof $0.4billioncomparedwiththe2013Budgetforecast. Ontariohasthelowestprogramspendingpercapitaandraisesthelowest totalrevenuepercapitaamongCanadianprovinces,includingfundingfrom federaltransfers. TheProvinceisprojectingdeficitsof$12.5billionin201415,$8.9billionin 201516,and$5.3billionin201617withareturntoabalancedbudget in201718. Overthemediumterm,thegovernmentwillcontinuetotakeresponsible actionstoensureeverydollarspentcounts,andmanageprogramexpense growthtobalancethebudgetby201718. TheLegislaturepassedtheFinancialAccountabilityOfficerAct,2013, toestablishaFinancialAccountabilityOfficerwhowillprovideindependent analysistoMembersofProvincialParliamentonthestateofthe Provincesfinances.
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Section A: Overview
TABLE2.1 2014BudgetNumbersataGlance
Provincial Finances:
2.1% 2.2% 2.5% 2.6% 459,500 14.9% 28.9% 201415 Deficit Projection 201415 Revenue Plan 201415 Expense Plan 201415 Reserve Deficit-to-GDP Ratio (201314) Accumulated Deficit-to-GDP Ratio (200304) Accumulated Deficit-to-GDP Ratio (201314) $12.5 billion $118.9 billion $130.4 billion $1.0 billion 1.6% 24.6% 25.6%
Ontarios Economy:
Projected Real GDP Growth, 2014 Avg. Private-Sector Growth, 2014 Projected Real GDP Growth, 2015 Avg. Private-Sector Growth, 2015 Jobs since June 2009 Increase in Real GDP (2013 above 2003) Increase in Real Household Disposable Income (2013 above 2003)1
1
Ontarioseconomycontinuestogrowatamoderatepace,contributingtonew jobsandbusinessopportunities.Theglobaleconomicenvironment,however, remainschallenging.Thatiswhythegovernmentismovingforwardwitha10year planfortheeconomyfocusedonstrategicinvestmentsinpeople,modern infrastructure,andadynamicandinnovativebusinessclimate.Theseactionswill puttheprovinceanditspeopleinapositiontosucceedbyhelpingtospur economicgrowthandcreatethenewjobsnecessarytosupporteliminating thedeficit. SincetherecessionarylowinJune2009,459,500netnewjobshavebeencreated inOntario.ThepaceofjobcreationinOntariosinceJune2009hasbeenstronger thaninmostdevelopedeconomies,includingtheUnitedStates,theaveragefor membercountriesintheOrganisationforEconomicCooperationand Development(OECD),andtherestofCanadacombined. Thedeficitfor201314isnowestimatedtobe$11.3billiona$0.4billion improvementcomparedwiththe2013Budgetforecast.Thismarksthefifthyear inarowthattheProvinceisreportingaprojecteddeficitlowerthanforecast.
175
2014OntarioBudget Ontariosperformanceagainstitsfiscaltargetstodateistheresultofa responsibleandbalancedapproachtofiscalmanagement,andthegovernments commitmenttoensurevaluefortaxpayersmoneybymakingeverydollarcount. Thegovernmenthasmanagedspendinginawaythathasresultedinlowerthan forecastprogramexpenseineachofthelastfiveyears.Ontarioalsohasthe lowestprogramspendingpercapitaamongCanadianprovinces,andraisesthe lowesttotalrevenuepercapita,includingfundingfromfederaltransfers,while stillprovidinghighqualitypublicservicesthatsupportthewellbeingofOntarians. WhileOntarioremainscommittedtocontinuingtomanagespendingamid challengesinthebroadereconomicenvironment,theseconditionsmeanthe governmentmustcontinuetoinvest. Ontarioisnotaloneinfacingthesechallengesmostotherprovinceshavehad toextendtheirbalancedbudgettimelines,andthefederalgovernmenthasalso seendecliningrevenueprojections.Thesechallengesmeanthegovernmentmust thinklongtermaboutthechoicesitmakes.Acrosstheboardcutsatthistime wouldharmOntarioseconomicandfiscalprospects.
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CHART 2.1
$ Billions
140 135 130 125 120 115 110 105 100 201011 201112 201213 201314 201415 201516 201617
Note: 2010 Budget amounts have been restated for 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. Source: Ontario Ministry of Finance.
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CHART 2.2
$ Billions
145 140 135 130 125 120 115 110 105 201011 201112 201213 201314 201415 201516 201617
Note: 2010 Budget amounts have been restated for 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. Source: Ontario Ministry of Finance.
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Transparency
Environmental Liabilities
TheProvincecurrentlyreportsfinancialliabilitiesthatarebasedonits environmentalobligationsresultingfromfederallegislation.Thegovernment planstoenhanceitsreportingonenvironmentalliabilitiesinaccordancewith thePublicSectorAccountingBoards(PSAB)newstandardonaccountingfor contaminatedland,whichiseffectivefor201415.Underthenewstandard, theProvincesownlegislationmustalsobeconsideredwhenidentifyingliabilities tobereported.Thenewstandardwillbereflectedinthegovernmentsstatement offinancialpositionreportedinthePublicAccountsofOntario20142015. Thegovernmentisconsideringrelatedlegislativechangesrequiredtosupport applicationofthenewstandard.
WilliamB.P.RobsonandColinBusby,Credibilityonthe(Bottom)Line:TheFiscal AccountabilityofCanadasSeniorGovernments,2013,C.D.HoweInstitute,(2014).
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Financial Management
ThegovernmentwillproposeanInterimAppropriationfor201415Act,2014. IfapprovedbytheLegislature,thiswouldprovidetheinterimlegalspending authorityforanticipated201415spending,pendingfinalizationofthe201415 Supplyprocess.Thisproposedlegislationisrequiredforthegovernmentto continueoperationsuntiltheLegislativeAssemblyhasapprovedtheExpenditure EstimatesandaSupplyActisproposedandpassed.
Fiscal Accountability
Designated Revenue Reporting
Accountablefinancialmanagementrequirestransparentreportingonthe Provincesdeliveryofitsfinancialcommitments.Forexample,theproposed TrilliumTrustwoulddedicatenetrevenuegainsfromcertainassetsalesto financekeyinfrastructureprojectsaspartofthegovernments10yearplan fortheeconomy,whichincludesinvestmentsinpublictransit,transportation infrastructureandotherpriorityinfrastructure.Toensureaccountabilityforthe useofdedicatedfunds,thegovernmentisexploringproposednewreporting mechanismsandassociatedlegislativechangestosupportthesecommitments.
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TABLE2.2
($Millions)
201314InYearFiscalPerformance
Budget Plan In-Year Change
(1,521) (235) 272 292 (1,192)
Interim
80,454 22,240 4,751 8,208 115,653
Revenue Taxation Revenue Government of Canada Income from Government Business Enterprises Other Non-Tax Revenue Total Revenue Expense Programs Interest on Debt Total Expense Reserve Surplus/(Deficit)
Note: Numbers may not add due to rounding.
181
2014OntarioBudget Totalrevenuein201314isprojectedtobe$1,192millionbelowthe 2013BudgetPlan,primarilyduetolowertaxationrevenue. Ontariosprogramexpenseisprojectedtobe$587millionlowerthan outlinedinthe2013Budget,thefifthyearinarowthatspendingis projectedtobelowerthanforecast.Managinggrowthinspendingisthe primarycontributortotheProvincebeingontracktobeatitsdeficittarget thisyear,despiteexperiencinglowerthanforecastrevenue. Totalexpensein201314isprojectedtobe$636millionlowerthan forecastinthe2013Budget.Thisincludestheimpactofaslightlylower interestondebtexpenseprojection,primarilyreflectingOntarios lowerthanforecastcostofborrowingrelativetoCanadain the2013Budgetandcosteffectivedebtmanagement.
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TABLE2.3
($Millions)
SummaryofRevenueChangessincethe2013Budget
Interim 201314
Taxation Revenue Sales Tax Land Transfer Tax Corporations Tax All Other Taxes Government of Canada Canada Health Transfer and Canada Social Transfer Other Income from Government Business Enterprises Ontario Power Generation Inc./Hydro One Inc. Other Government Business Enterprises Other Non-Tax Revenue Gain on Sale of GM Shares All Other Non-Tax Revenue Total Revenue Changes since 2013 Budget
Note: Numbers may not add due to rounding.
(1,475) 222 100 (368) (1,521) (175) (60) (235) 256 16 272 249 43 292 (1,192)
183
2014OntarioBudget
Revenue Changes
Highlightsofkey201314revenuechangesfromthe2013Budgetforecastare asfollows: SalesTaxrevenuesareestimatedtobe$1,475millionlower,largely reflectinglowerestimatesofOntariosHarmonizedSalesTaxentitlements for2012and2013.Aboutonehalfofthedecreaseisaonetimeadjustment duetoanoverestimationofSalesTaxrevenuesinthePublicAccountsof Ontario20122013. LandTransferTaxrevenuesareestimatedtobe$222millionhigher, reflectingcontinuedstrengthintheOntariohousingmarket. CorporationsTaxrevenuesareestimatedtoincreaseby$100millionasa highertaxbaseandonetimeamountsmorethanoffsettheimpactoflower growthinnetoperatingsurplusofcorporations. AllOtherTaxrevenuescombinedareestimatedtodecreaseby $368million,mostlyduetolowerthanexpectedMiningTaxandEducation PropertyTaxrevenues.MiningTaxrevenueis$122millionbelowthe 2013Budgetforecastbecauseoflargeprioryearrefundsandweakerthan expectedcommodityprices.EducationPropertyTaxis$163millionlower mostlybecauseofinyeartaxreductionsduetoanumberoffactors includingslowerthanprojectedassessmentgrowthfromnewlyconstructed orrenovatedpropertiesandpropertyassessmentappeals. GovernmentofCanadatransfersundertheCanadaHealthTransferand CanadaSocialTransferprogramsare$175millionlower,mainlydueto downwardrevisionsbyStatisticsCanadatohistoricpopulationestimates thatloweredOntariosshareofCanadawidepopulation.Ashistoric populationestimateswererevised,the201314changealsoincludes onetimeadjustmentsforprioryears. AllOtherGovernmentofCanadatransfersare$60millionbelowthe 2013Budgetforecast,mainlyduetolowertransferstoconsolidated governmentagenciesandrevisedtimelinesforcapitalprojects. Thesereductionsarelargelyoffsetbycorrespondinglowerspending. ThecombinednetincomesofOntarioPowerGenerationInc.(OPG) andHydroOneInc.(HydroOne)areestimatedtobe$256millionhigher, largelyduetoloweroperatingcostsandhighergenerationrevenuesat OPGandhighertransmissionanddistributionrevenuesatHydroOne.
184
ChapterII:OntariosEconomicOutlookandFiscalPlan For201314,netincomefromtheOntarioLotteryandGaming CorporationandtheLiquorControlBoardofOntarioisprojectedtobe largelyinlinewiththe2013Budgetprojection. OtherNonTaxRevenueisprojectedtobe$292millionhigher, largelyreflecting: A$249milliongainonthesaleoftheProvincesinterestin 10millionsharesofGeneralMotorsCompany,announcedon September10,2013;and Higherrecoveriesfrompowersupplycontracts,whicharefullyoffset bypowersupplycontractcosts,andhighersalesandrentalsrevenues fromconsolidatedgovernmentagencies.
185
Expense Changes
Asinpreviousyears,the2013Budgetincludeda$1.0billionyearendsavings target.Thetablebelowshowsthattheactionstakenbythegovernmenthave producedresults.Thegovernmentisontracktoexceedtheyearendsavings targetby$586.7million,ormorethan50percent.Aspartofthis,16outof 25ministriesareprojectedtospendbelowtheirtotalexpenseallocation.
TABLE2.4
($Millions)
SummaryofExpenseChangessincethe2013Budget
201314
Year-End Savings Target included in 2013 Budget Increase/(Decrease) since 2013 Budget1 Health Sector Education Sector2 Postsecondary and Training Sector Childrens and Social Services Sector Justice Sector Other Programs Total Increase/(Decrease) since 2013 Budget Net Program Expense Increase/(Decrease) after Applying Savings to Meet $1.0 Billion Year-End Savings Target Interest on Debt Total Expense Changes since 2013 Budget
Expense change by sector, restated for fiscally neutral transfers of programs between sectors. Excludes Teachers Pension Plan. Teachers Pension Plan expense is included in Other Programs. Note: Numbers may not add due to rounding.
1 2
1,000.0
186
ChapterII:OntariosEconomicOutlookandFiscalPlan Actionsrecommendedbythegovernmentsexpenditurereviewthatwas announcedinthe2013OntarioEconomicOutlookandFiscalReviewlastfall contributedtomanagingdowngrowthinprogramspendingin201314. Theseincludedimmediatestepstofreezenonessentialspendingforthelast quarterofthe201314fiscalyear. Keyexpensechangessincethe2013Budget,includingthoseresultingfrom governmentactionsthatcontributedtolowerthanforecastspending, includethefollowing: Healthsectorexpenseisprojectedtodecreaseby$72.3million, primarilyduetosavingsintheOntarioDrugProgramasaresultof negotiatingreducedpricingforsixgenericdrugs;savingsinthepublic healthimmunizationprogramduetoenhancedinventorymanagement ofvaccines;lowerspendinginvariousprograms,suchasclinicaleducation; andlowerthanprojectedamortizationexpenseforhospitalsduetominor constructiondelaysformajorhospitalprojects. Educationsectorexpenseisprojectedtodecreaseby$400.0million, primarilyduetolowerthanexpectedschoolboardexpenseandsavings inministryadministration.Schoolboardexpensesavingsaremainlydue tolowerthanprojectedgrowthintotalstudentenrolment,construction delaysonschoolprojects,andmeasurestakenbyschoolboardsto balancebudgetswhileprotectingthegainsinstudentachievement. Ministryefficienciesarebeingrealizedthroughlowercostsassociated withinformationandinformationtechnology,andmanagingstaff vacancies,withoutaffectingtheministrysabilitytodeliverprograms andfulfilcommitments. Postsecondaryandtrainingsectorexpenseisprojectedtodecreaseby $128.2million,mainlyduetolowerthanforecastspendingonemployment andtrainingprogramsasaresultofimprovingjobopportunities,andlower thanexpectedspendingonstudentfinancialassistanceduetolower programdemand.
187
2014OntarioBudget Childrensandsocialservicessectorexpenseisprojectedtodecrease by$165.6million,dueinparttooverallimprovementsintheeconomy, resultinginlowerthanexpectedtakeupofOntarioWorksandlowincome benefits,suchastheOntarioChildBenefit.Inaddition,lowerexpense requirementsintheOntarioDrugBenefitprogramforsocialassistance recipientsresultedfromthegovernmentseffortstonegotiatereduced pricingfordrugs. Justicesectorexpenseisexpectedtoincreaseby$106.1million,primarily asaresultofsettlementagreementstoprovidecompensationtothe formerresidentsoftheHuronia,RideauandSouthwesternRegional Centres,compensationfundingforvictimsofaninternationalinvestment fraudcasefullyoffsetfromrevenuerecoveredthroughOntarioscivil forfeiturelawandthedecisiontokeeptheSarniaJailfacilityopen followinganevaluationofoperationalneeds. Otherprogramsexpenseisprojectedtodecreaseby$926.7million, asaresultofadditionalrestraintmeasurestoalignpublicserviceretiree benefitswiththoseintheprivatesectorandotherjurisdictions;pension savingsduetomanagingcompensationcoststhroughthelastroundof collectiveagreements,alowerthanprojectedincreaseinactivemembers, andcontinuedimprovementininvestmentreturnsandmarketperformance since2010.Thedecreasealsoreflectsanumberofconstraintmeasures implementedacrossministriestomanagespendingresponsiblywhile protectingcorepublicservices.
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Section C: OntariosEconomicOutlook
Theriskstoglobaleconomicgrowth,includingfinancialmarketvulnerabilities, havepersistedthroughtherecoveryandhavetranslatedintoweakerthan expectedgrowth.Ontarioisnotimmunetotheseglobaldevelopmentsand needstocontinuetobuildagloballycompetitive,resilientanddiverseeconomy. Ontarioseconomycontinuestogrowatamoderatepaceinachallengingglobal economicenvironment.StrongerU.S.growthandthedeclineinthevalueofthe CanadiandollarwillhelpboostOntarioexportsandencouragestrongerbusiness investment.Householdspending,whichaccountsforcloseto60percentofthe economy,isalsoexpectedtostrengthen. TheMinistryofFinanceisforecastinggrowthinrealgrossdomesticproduct(GDP) todoublefrom1.3percentin2013to2.6percentby2017.1
TABLE2.5
(PerCent)
OntarioEconomicOutlook
2011 2012
1.3 3.0 0.8 1.4
2013
1.3 2.7 1.4 1.0
2014p
2.1 3.5 1.1 1.5
2015p
2.5 4.4 1.5 1.9
2016p
2.5 4.4 1.6 2.0
2017p
2.6 4.6 1.4 2.0
Real GDP Growth Nominal GDP Growth Employment Growth CPI Inflation
p = Ontario Ministry of Finance planning projection. Sources: Statistics Canada and Ontario Ministry of Finance.
BasedoninformationavailabletoApril8,2014.
189
CHART 2.3
Exports
$337.1 Billion
(2008 Q3)
$274.9 Billion
(2009 Q2)
$353.8 Billion
(2013 Q4)
+28.7%
Employment
6,708,600
(September 2008)
6,442,800
(June 2009)
6,902,300
(March 2014)
+7.1%
$414.3 Billion
(2008 Q2)
$410.3 Billion
(2009 Q2)
$476.2 Billion
(2013 Q4)
+16.1%
$342.3 Billion
(2008 Q3)
$335.6 Billion
(2009 Q2)
$394.8 Billion
(2013 Q4)
+17.6%
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191
2014OntarioBudget
Ontarios Recovery
Allmajoreconomiesaroundtheworldfacedsetbacksduringthe200809 recession.InOntario,realGDPdeclinedby4.8percentfromthesecondquarter of2008tothesecondquarterof2009.Employmentdroppedby265,800netjobs fromSeptember2008totherecessionarylowinJune2009. TheProvincecontinuestotakemeasurestostrengthentheeconomyandsupport jobsbystrategicallyinvestingingloballycompetitivesectors.Ontarioseconomic recoveryhasbeensupportedbyhouseholdspendingandresidentialconstruction, aswellasgovernmentinvestmentininfrastructureandbusinessinvestmentin plantandequipment.Majorindicators,includingrealGDPandemployment,are nowwellaboveprerecessionlevels.Asofthefourthquarterof2013,Ontarios realGDPhadincreasedby10.3percentfromtherecessionarylowandwas 5.1percentaboveitsprerecessionpeak.
CHART 2.4
$ Billions, 2007
650
Pre-recession level: $602.0B in 2008Q2 $632.6B in 2013Q4
600
550
500
2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3
Sources: Statistics Canada and Ontario Ministry of Finance.
192
CHART 2.5
Notes: Numbers may not add due to rounding. Above-average wage industries are defined as those with earnings above the average hourly earnings of all industries. Sources: Statistics Canada and Ontario Ministry of Finance.
193
CHART 2.6
Note: Based on quarterly data. Pre-recession peak was 2008Q3 for Ontario, 2008Q2 for the OECD average and 2008Q1 for the U.S. Sources: Organisation for Economic Co-operation and Development, U.S. Bureau of Labor Statistics and Statistics Canada.
OrganisationforEconomicCooperationandDevelopment.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.7
1.0
1.3
1.4
* The OECD average is based on quarterly data and represents growth since the second quarter of 2009. Note: Total U.S. employment is taken from the Current Employment Statistics Survey, while state employment is from Local Area Unemployment Statistics. Sources: Organisation for Economic Co-operation and Development, U.S. Bureau of Labor Statistics and Statistics Canada.
195
2014OntarioBudget
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.8 Real GDP Growth (Per Cent Change)
8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
3.9 3.2 3.0 3.6 3.9 2.2 1.4 1.3 2.3
Global Economy Advanced Economies Emerging and Developing Economies
1.7
p = International Monetary Fund projection. Note: Advanced economies include Ontario and Canada. Source: International Monetary Fund (April 2014).
U.S. Economy
TheUnitedStatesisOntarioslargesttradingpartner,areflectionofgeography andbusinessties.Morethan160millionconsumerscanbereachedwithina daysdriveofsouthernOntario.TheU.S.marketisparticularlyimportantfor manyOntarioindustries,accountingfor80percentofexportsofmotorvehicles, furniture,plasticsandsteel. TheU.S.economyacceleratedinthesecondhalfof2013,withrealGDPgrowth averaging3.4percent(annualized)comparedtoaveragegrowthof1.8percent overthefirsttwoquarters.Employmentgainsaveraged194,000jobspermonth in2013,whiletheunemploymentratefellfrom7.9percentinJanuary2013to 6.7percentbyyearend.
197
2014OntarioBudget TheU.S.FederalReservehasjudgedunderlyingeconomicconditionstobestrong enoughtobeginreducingmonetarystimulus.Atthesametime,U.S.fiscalpolicy isexpectedtobelessofadragoneconomicgrowthin2014.Moreimportantly, thepoliticaluncertaintysurroundingtheU.S.federalgovernmentsbudgetand debtceilinghasabated,providingmuchneededsupporttoconsumerand businessconfidence. TheU.S.tradedeficitnarrowedsharplyin2013,largelyduetoreductionsin energyimports.StrongernetexportsshouldprovideafurtherlifttoU.S.growth in2014,aidedbyimprovingglobaleconomicprospects. U.S.householdnetwealthhasmorethanrecoveredfromlossesexperienced duringtherecession,supportedbystrongequitymarketgainsandrisinghouse prices.Improvedhouseholdwealth,combinedwithgrowingemploymentand risingwages,willlifthouseholdincomesandsupportstrongerconsumerspending.
198
2.5 1.8
2.8 1.9
2.7
3.0
2.9
2.8
2010
2011
2012
2013
2014p
2015p
2016p
2017p
p = projection. Sources: U.S. Bureau of Economic Analysis and Blue Chip Economic Indicators (March and April 2014).
199
2014OntarioBudget
Oil Prices
Oilpricesfluctuatedthrough2013,reflectingsupplyinterruptionsand geopoliticaltensions.ThepriceofWestTexasIntermediate(WTI)crudeoil averaged$98USperbarrelin2013,upfrom$94USin2012. Crudeoilproductionisexpectedtoincreasefurtherin2014,supportedby increasedpipelineandrailwayflowswithinNorthAmerica.However,despite higherproduction,strengtheningglobaleconomicgrowth,ongoingpolitical turbulenceandhighrecoverycostsareexpectedtokeepoilpricesatrelatively highlevelsovertheforecastperiod.Oilpricesareforecasttoaverage $97USperbarrelin2014,withprivatesectorforecastsrangingfrom$95US to$104USperbarrel.
CHART 2.10
200
ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.11
Cents US
110 100 90 80 70 60 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014p 2016p
p = Ontario Ministry of Finance planning projection. Sources: Bank of Canada, Ontario Ministry of Finance Survey of Forecasters (April 2014) and Ontario Ministry of Finance.
201
2014OntarioBudget
Financial Markets
TheBankofCanada,likeothercentralbanksaroundtheworld,hascontinued tomaintainaccommodativepoliciestosupporteconomicgrowth.TheBank hasmaintainedthetargetfortheovernightrateatthelowlevelof1.0percent sinceSeptember2010.InrecentstatementstheBankofCanadahasexpressed concernaboutthesoftnessinconsumerpriceinflationandtheweaknessin Canadasbusinessinvestmentandtradebalance.Asaresult,economistsbelieve thattheBankwilldelayanyincreasetopolicyinterestrates.Privatesector forecastersexpectthethreemonthCanadianTreasurybillyieldtoaverage 1.0percentthisyear,littlechangedfrom2013,andthenriseto1.3percentin 2015andreach3.3percentin2017. LongterminterestratesbegantoriseinMay2013asglobalfinancialmarkets anticipatedthegradualeasingoftheFederalReservesmonetarystimulus. ThegradualreductionortaperingoftheFederalReservespurchasesofU.S. treasurybondsandmortgagebackedsecuritiesbeganinJanuaryandisexpected tocontinuethrough2014.However,longtermbondyieldshavedeclinedsince December,asconcernoveremergingmarketeconomiesincreaseddemandfor safeassets.Inthecurrentenvironment,longterminterestratesarelikelyto remainvolatile.Theyieldon10yearGovernmentofCanadabondsisexpectedto risegraduallyfromanaverageof2.3percentin2013to2.8percentin2014and 3.5percentin2015,andtoreach4.3percentby2017.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.12
Per Cent
14 12 10 8 6 4 2 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014p 2016p
p = Ontario Ministry of Finance planning projection. Sources: Bank of Canada and Ontario Ministry of Finance.
203
TABLE2.6
OutlookforExternalFactors
2011 2012
3.2 2.8 94 100.1 0.9 1.9
2013
3.0e 1.9 98 97.1 1.0 2.3
2014p
3.6 2.7 97 90.0 1.0 2.8
2015p
3.9 3.0 96 91.0 1.3 3.5
2016p
4.0 2.9 96 92.0 2.4 3.9
2017p
3.9 2.8 98 93.0 3.3 4.3
World Real GDP Growth (Per Cent) U.S. Real GDP Growth (Per Cent) West Texas Intermediate Crude Oil ($US/bbl.) Canadian Dollar (Cents US) Three-Month Treasury Bill Rate1 (Per Cent) 10-Year Government Bond Rate1 (Per Cent)
e = estimate. p = Ontario Ministry of Finance planning projection based on external sources. 1 Government of Canada interest rates. Sources: IMF World Economic Outlook (April 2014), U.S. Bureau of Economic Analysis, Blue Chip Economic Indicators (March and April 2014), U.S. Energy Information Administration, Bank of Canada, Ontario Ministry of Finance Survey of Forecasts (April 2014) and Ontario Ministry of Finance.
204
TABLE2.7
ImpactsofSustainedChangesinKeyExternalFactors onOntariosRealGDPGrowth
First Year Second Year
+0.2 to +0.9 0.1 to 0.3 +0.4 to +0.8 0.2 to 0.6
(PercentagePointChange)
Canadian Dollar Depreciates by Five Cents US Crude Oil Prices Increase by $10 US per Barrel U.S. Real GDP Growth Increases by One Percentage Point Canadian Interest Rates Increase by One Percentage Point
Source: Ontario Ministry of Finance.
205
2014OntarioBudget
206
ChapterII:OntariosEconomicOutlookandFiscalPlan Overthelasttwoyears,inflationhasbeentrendinglowerinmanyadvanced economies.InOntario,theConsumerPriceIndex(CPI)increasedby1.0percent in2013,thelowestpaceofinflationinfouryears.ThemodestpaceofOntario consumerpriceinflationreflectedrelativelymoderatefoodpriceincreasesas wellasintensecompetitionintheretailsector.Strongereconomicgrowthand thelowerCanadiandollarwhichwillincreasepricesforimportedgoods areexpectedtoresultinamoderateincreaseinconsumerpriceinflation. Consumerpriceinflationisexpectedtobe1.5percentin2014,1.9percent in2015,and2.0percentin2016and2017.
CHART 2.13
3.0
2.5 1.9 1.4 1.5 1.0 2.0 2.0
2.0
1.0
207
2010
2011
2012
2013
2014p
2015p
2016p
2017p
p = Ontario Ministry of Finance planning projection. Sources: Statistics Canada and Ontario Ministry of Finance.
208
ChapterII:OntariosEconomicOutlookandFiscalPlan Therewere61,100housingstartsinOntarioin2013,downfrom76,700startsin 2012.Existinghomesalesedgedup0.5percentin2013,whiletheaverageprice ofanOntarioresalehomeincreasedby4.7percent. HomebuildingisanimportantindustryinOntario,accountingforabout 120,000jobsin2013.DemandfornewhomesinOntariowillcontinuetobe supportedbysteadygrowthinthepopulation.Housingstartsareexpectedto average63,500unitsperyearbetween2014and2017.Ontariohomeresalesare expectedtogrowbyanaverageof0.8percentperyearbetween2014and2017. Amorebalancedmarketforresalehomesisexpectedtocontributetorelatively stablehomepricesoverthenextseveralyears.
209
CHART 2.15
p = Ontario Ministry of Finance planning projection. Sources: Canadian Real Estate Association and Ontario Ministry of Finance.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.16
Mortgage Carrying Cost as a Share of Disposable Income per Household (Per Cent)
45 40 35 30 25 20 15
p = Ontario Ministry of Finance planning projection. Note: Carrying cost is based on the average five-year mortgage rate, a 25-year amortization and a 25 per cent down payment. Sources: Statistics Canada, Bank of Canada, Canadian Real Estate Association and Ontario Ministry of Finance.
211
2014OntarioBudget Canadashouseholddebttoincomeratiowas164.0percentinthefourthquarter of2013.Althoughtherateofincreasehasmoderated,thelevelofhousehold debtinCanadaremainselevated.Debtservicecostsasapercentofhousehold disposableincomeisameasureoftheaffordabilityofinterestpaymentsondebt. Thisratiodeclinedfromahighof9.2percentinthefourthquarterof2007to 7.1percentinthefourthquarterof2013itslowestlevelonrecordanda reflectionoflowinterestrates.Althoughinterestratesareexpectedtorise modestly,debtservicecostsareexpectedtoremainaffordableasincomes continuetorise.
CHART 2.17
150
Household Debt
110
7.0 6.5
90
2000Q1 2002Q1 2004Q1 2006Q1 2008Q1 2010Q1 2012Q1
6.0
212
ChapterII:OntariosEconomicOutlookandFiscalPlan BusinessinvestmentcontributestoOntarioseconomicgrowth,jobsandprosperity. OntariosTaxPlanforJobsandGrowthincludingtheHarmonizedSalesTax hasimprovedthecompetitivelandscapeoftheprovinceandprovidedincentives forbusinessinvestment.However,businessinvestmentinOntariohastendedto lagthepaceofinvestmentintheUnitedStates.Jobcreationandeconomicgrowth couldbeevenstrongerifcompaniestookadvantageofthecompetitivebusiness climateandincreasedinvestment.Businessesareexpectedtoboostinvestment inmachineryandequipment(M&E)by3.5percentthisyearandbyanaverage of5.7percentannuallyoverthe2015to2017period.However,Ontariospace ofM&EinvestmentgrowthisexpectedtocontinuetolagtheUnitedStatesover the2014to2017period.
CHART 2.18
Ontario Business Machinery and Equipment Investment Lags the United States
($ US Billions, 2009)
U.S. (Right Axis)
($ Billions, 2007)
40 38 36 34 32 30 28 26 24 22 20 2007 2008 2009 2010 2011 2012
1,300 1,200 1,100 1,000 900 800 700 600 500 400
p = projection. Sources: Statistics Canada, U.S. Bureau of Economic Analysis, IHS Global Insight (March 2014) and Ontario Ministry of Finance.
213
2014OntarioBudget ThecompositionanddestinationofOntariosexportshaveevolvedand diversified,inpartaresultofthegovernmentstradepolicyinitiatives. ThisevolutioninOntariosexportshasincludedstronggainsinbothexports tootherprovincesaswellasexportsofhighvalueaddedservices.Thisbenefits Ontarioexporters,whichcangrowandprosperinotherkeymarkets,while becominglessreliantonanysingletradingpartner. From2003to2013,OntariostotalexportstootherCanadianprovinces increasedbyover36percent,whileexportstoothercountriesincreasedby about3percent.Overthesameperiod,exportsofservicesincludingfinancial, professionalandinformationandculturalservicesincreasedbyabout 49percent,themajorityofwhichweredestinedforotherprovinces. Exportsofgoodswereessentiallyunchangedoverthisperiod.
400
$310B
300
Interprovincial $92.3B
200
International $217.8B International $224.1B Goods $228.6B Goods $228.9B
100
2003
2013
2003
2013
214
CHART 2.20
100 80 60 40
91.5
15 12 9 6 3 0
3.8
4.7
20 0 United States
Source: Statistics Canada.
European Union
215
2014OntarioBudget TheshiftinOntariosexportsisexpectedtocontinue,supportedbyagrowing worldeconomyandnewtradeagreements.Forexample,theproposedtrade agreementwiththeEuropeanUnionwillmakeOntariocompaniesmore competitiveinEuropeanmarketsaneconomywith500millionconsumers andGDPofcloseto$17trillion.AresurgentU.S.economyand,inparticular, areboundinU.S.consumerdemand,includingmotorvehiclesales,willalso supportstrongergrowthinOntariosexports.Exportstofastgrowingemerging marketeconomies,suchasChinaandIndia,arealsoexpectedtoaccelerate. Importantly,anincreasingshareofOntarioexportsareintegratedintoglobal supplychains,whichwillhelpsupportexportgrowthovertheforecastperiod. Ontariosexportdiversificationwillallowcompaniestoreachnewmarkets, boostingeconomicgrowthandjobcreation.Overall,Ontariosrealexports areprojectedtoincreasebyanaverageof3.5percentannuallybetween2014 and2017,outpacinga2.5percentincreaseinimports.
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TABLE2.8
TheOntarioEconomy,2012to2017
Actual 2012 2013
1.3 1.8 (2.2) (8.0) (3.8) 1.1 (0.6) 2.7 1.8 61.1 0.5 2.9 2.6 (1.3) 1.0 1.4 96 7.5 1.9 98 97.1 1.0 2.3
2015
2.5 2.2 0.9 5.6 6.0 4.1 2.7 4.4 4.0 60.0 (0.5) 4.4 4.6 4.2 1.9 1.5 107 6.9 3.0 96 91.0 1.3 3.5
2016
2.5 2.6 1.2 3.0 5.8 3.4 2.7 4.4 4.4 67.0 0.5 4.7 4.6 5.0 2.0 1.6 110 6.5 2.9 96 92.0 2.4 3.9
2017
2.6 2.7 2.0 3.4 5.4 3.3 2.5 4.6 4.4 69.0 2.1 4.7 4.7 4.7 2.0 1.4 102 6.2 2.8 98 93.0 3.3 4.3
Real Gross Domestic Product Household Consumption Residential Construction Non-residential Construction Machinery and Equipment Exports Imports Nominal Gross Domestic Product Other Economic Indicators Retail Sales Housing Starts (000s) Home Resales Primary Household Income Compensation of Employees Net Operating Surplus Corporations Consumer Price Index Employment Job Creation (000s) Unemployment Rate (Per Cent) Key External Variables U.S. Real Gross Domestic Product WTI Crude Oil ($ US per Barrel) Canadian Dollar (Cents US) 3-month Treasury Bill Rate1 10-year Government Bond
1
1.3 1.4 4.7 (1.6) 2.0 1.7 2.0 3.0 1.6 76.7 (2.1) 3.4 3.2 (1.0) 1.4 0.8 52 7.8 2.8 94 100.1 0.9 1.9
Rate1
Government of Canada interest rates (per cent). Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Canadian Real Estate Association, Bank of Canada, U.S. Bureau of Economic Analysis, Blue Chip Economic Indicators (March and April 2014), U.S. Energy Information Administration and Ontario Ministry of Finance.
217
2014OntarioBudget
Private-Sector Forecasts
TheMinistryofFinanceconsultswithprivatesectoreconomistsandtrackstheir forecaststoinformthegovernmentsplanningassumptions.Intheprocessof preparingthe2014OntarioBudget,theMinisterofFinancemetwithprivate sectoreconomiststodiscusstheirviewsontheeconomy.Additionally,members oftheOntarioEconomicForecastCouncil,establishedundertheFiscal TransparencyandAccountabilityAct,2004,reviewedtheMinistryofFinances economicassumptionsinFebruary2014.Allcouncilmembersfoundthe assumptionstobereasonable. PrivatesectoreconomistsareprojectingcontinuedgrowthforOntariooverthe forecasthorizon.Onaverage,privatesectoreconomistsarecallingforgrowthof 2.2percentin2014,2.6percentinboth2015and2016,and2.7percentin2017. Forprudentfiscalplanning,theMinistryofFinancesrealGDPgrowthprojections areslightlybelowtheaverageprivatesectorforecast.
TABLE2.9
(PerCent)
PrivateSectorForecastsforOntarioRealGDPGrowth
2014 2015
2.5 2.4 2.7 2.3 2.4 2.6 2.7 2.5 2.5 2.9 2.2 2.7 3.0 2.6 2.5
2016
2.7 2.5 2.2 2.5 2.5 2.7 2.9 2.6 2.5
2017
3.0 2.9 2.4 2.5 2.6 2.9 2.7 2.6
BMO Capital Markets (March) Central 1 Credit Union (March) Centre for Spatial Economics (January) CIBC World Markets (April) Conference Board of Canada (February) Desjardins Group (March/January) IHS Global Insight (January) Laurentian Bank Securities (January) National Bank (January) RBC Financial Group (March) Scotiabank Group (March) TD Bank Financial Group (April) University of Toronto (January) Private-Sector Survey Average Ontarios Planning Assumption
2.3 1.9 2.2 2.0 2.1 2.1 2.3 2.3 2.1 2.5 1.9 2.2 2.2 2.2 2.1
Sources: Ontario Ministry of Finance Survey of Forecasts (April 2014) and Ontario Ministry of Finance.
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CHART 2.21
Private-Sector Outlook for Growth Weaker in 2014 but Stronger in 2015 to 2017
1.6 1.3
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2014p
2013 Budget 2014 Budget
2015p
2013 Budget 2014 Budget
2016p
2013 Budget 2014 Budget
Real Gross Domestic Product Nominal Gross Domestic Product Retail Sales Housing Starts (000s) Primary Household Income Compensation of Employees Net Operating Surplus Corporations Employment Job Creation (000s) Consumer Price Index Key External Variables U.S. Real Gross Domestic Product WTI Crude Oil ($ US per Barrel) Canadian Dollar (Cents US) 3-month Treasury Bill Rate1 (Per Cent) 10-year Government Bond Rate1 (Per Cent)
2.4 4.2 3.8 65.0 4.2 4.3 4.0 1.5 107 2.0
2.5 4.4 4.0 60.0 4.4 4.6 4.2 1.5 107 1.9
2.4 4.2 3.8 68.0 4.5 4.3 4.0 1.5 107 2.0
2.5 4.4 4.4 67.0 4.7 4.6 5.0 1.6 110 2.0
p = Ontario Ministry of Finance planning projection. 1 Government of Canada interest rates. Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Bank of Canada, U.S. Energy Information Administration, U.S. Bureau of Economic Analysis, Blue Chip Economic Indicators (March and April 2014) and Ontario Ministry of Finance.
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Section D: OntariosRevenueOutlook
TheProvincesrevenuestendtogrowroughlyinlinewiththeOntarioeconomy (thatis,nominalgrossdomesticproduct[GDP]),sinceitiseconomicactivitythat generatesthemajorityofrevenues.Forexample,taxesarecollectedonthe incomesandspendingofOntariansandontheprofitsgeneratedbyOntario corporations. However,thereareimportantqualificationstothisgeneralrule. Growthinseveraltaxrevenuesources,suchasvolumebasedfuelandgasoline taxes,ismorecloselyalignedtotherealeconomy(thatis,realGDP)thanthe nominaleconomy.Inotherwords,theserevenueresourcesarelessinfluenced bychangesinprices.Similarly,somenontaxrevenues,suchasvehicleanddriver registrationfees,tendtomorecloselytracktherealeconomyanddemographic factorssuchasgrowthinthedrivingagepopulation. Growthinotherrevenuesources,suchasCorporationsTaxandMiningTax,can differsignificantlyfromgrowthinnominalGDPinanygivenyear,duetothe inherentvolatilityofbusinessprofitsaswellastheuseoftaxprovisions,suchas losscarrying. TheOntariorevenueforecastalsooftenincludessignificantonetimeadjustments, usuallyduetolagsbetweentheperiodinwhichrevenuesareearnedandwhen theactualamountsarefinallyknown. Forexample,theMinistryofFinancewillusethelatestavailableinformationon PersonalIncomeTax(PIT)revenueearnedbytheProvinceforthe2013taxyear asthebasisforthe201314PITrevenueestimatetobepublishedlaterthisyear inthePublicAccountsofOntario20132014.ActualPITrevenueearnedfor 2013and2014,however,willnotbeknownuntiltheendof2014and2015, respectively,afterthemajorityofPITreturnshavebeenassessedbytheCanada RevenueAgency.
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2014OntarioBudget Moreover,additionaltaxinformationcontinuestoarriveforyearsfollowingthe actualtaxyearduetolatetaxfilingsandreassessments.Theresultisthateven aftertheOntarioPublicAccounts20132014arereleased,new,updatedtax assessmentinformationwillleadtorevisionsoftheestimatefor201314PIT revenues.UnderPublicSectorAccountingBoardstandards,revenueestimates alreadypublishedintheOntarioPublicAccountsarenotrestatedforupdated information.Instead,theserevisionsarereportedasprioryearadjustments inthecurrentyearsPublicAccounts. Forthe2014Budget,theMinistryofFinanceretainedDonDrummond,oneof Canadastopeconomists,toreviewtherevenueforecastandprovideanopinion onitsreasonableness.Hisreviewemployedthreemethodologies.First,an independentmacroprojectionwasdevelopedandcomparedtotheMinistrys forecast.Thismacroprojectionwasbasedonthehistoricalrelationshipbetween growthintheOntarioeconomyandprovincialrevenues.Second,the methodologiesandforecastsofeachrevenuesourcewereexaminedindividually. Finally,changessincerecentbudgetswereexaminedtounderstandthenatureof pastvariancesandwhethertheremaystillbebiasesinthecurrentforecast. Fromallthreeperspectivesaddressedinthereview,Drummondconcluded thattheOntarioMinistryofFinancerevenueforecastisasoundbasisfor budgetplanning.
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TABLE2.11 SummaryofMediumTermOutlook
($Billions) Interim 201314
27.5 20.4 11.4 3.2 5.5 12.5 80.5 22.2 4.8 8.2 115.7
Revenue
Personal Income Tax Sales Tax Corporations Tax Ontario Health Premium Education Property Tax All Other Taxes Total Taxation Revenue Government of Canada Income from Government Business Enterprises Other Non-Tax Revenue Total Revenue
Note: Numbers may not add due to rounding.
Plan 201415
29.2 21.9 10.3 3.3 5.7 13.0 83.4 21.9 5.0 8.6 118.9
Outlook 201516
30.9 23.0 11.4 3.5 5.7 13.7 88.1 22.7 5.0 8.6 124.5
201617
32.6 23.9 12.0 3.7 5.8 14.1 92.0 24.0 5.5 7.9 129.4
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TABLE2.12 PersonalIncomeTaxRevenueOutlook
($Billions) Revenue
Total Projected Revenue Measures Included in Total1 Adjustments for Prior Years Base Revenue2 Base Revenue Growth (Per Cent) Compensation of Employees3 (Per Cent Change)
1
Interim 201314
27.5 0.3 27.2
Plan 201415
29.2 0.5 28.7 5.4 3.5
Outlook 201516
30.9 0.5 30.4 5.7 4.6
201617
32.6 0.6 32.0 5.6 4.6
Represents the incremental revenue impact of all tax measures, announced previously or proposed in this Budget, relative to their impact on revenue in 201314. 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 Formerly referred to as Wages and Salaries. Note: Numbers may not add due to rounding.
TheprimaryeconomicdriveroftheforecastforPersonalIncomeTaxrevenueis theoutlookforgrowthincompensationofemployees.Totalprojectedrevenue includesimpactsofmeasuresandadjustmentsforprioryears.Measuresinclude impactsofchangestothetaxationofhighincomeearnersproposedinthis Budget(seeChapterV:AFairandEfficientTaxSystem).AdjustmentsforPrior Yearsof$0.3billionin201314reflecttheunderestimationofPITrevenuesinthe OntarioPublicAccounts20122013.Afteraccountingfortheimpactsofmeasures andprioryearadjustments,thePITrevenuebaseisprojectedtogrowatan averageannualrateof5.5percentovertheforecastperiod.Thiscomparesto averageannualgrowthof4.2percentincompensationofemployeesoverthis period.PersonalIncomeTaxrevenuetendstogrowatafasterratethanincomes duetotheprogressivestructureofthePITsystem.
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TABLE2.13 SalesTaxRevenueOutlook
($Billions) Revenue
Total Projected Sales Tax Revenue1 Measures Included in Total2 Adjustments for Prior Years Base Revenue3 Base Revenue Growth (Per Cent) Nominal Consumption Growth (Per Cent)
1
Interim 201314
20.4 (0.6) 21.0
Plan 201415
21.9 0.2 21.8 3.7 3.6
Outlook 201516
23.0 0.2 22.8 4.5 4.1
201617
23.9 0.1 23.8 4.6 4.5
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 incremental revenue impact of all tax measures, announced previously or proposed in this Budget, relative to their impact on revenue in 201314. 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.
SalesTaxrevenueisprojectedtorisebasedprimarilyongrowthinconsumer spendingafteradjustmentsformeasuresandprioryearamounts.Measures includethoseannouncedinthisandpreviousBudgets,andprimarilyreflect theimpactoftransitionmeasures,suchasrestrictedinputtaxcredits,aswellas measurestoaddresstheundergroundeconomy.Thereisaonetimeadjustment forprioryearsof$0.6billionin201314,mainlyreflectingoverestimationof SalesTaxrevenueintheOntarioPublicAccounts20122013.Afteraccountingfor theimpactsofmeasuresandadjustments,theSalesTaxrevenuebaseisprojected togrowatanaverageannualrateof4.3percentovertheforecastperiod,roughly consistentwiththeaverageannualgrowthinnominalconsumptionof4.0percent overthisperiod.
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TABLE2.14 CorporationsTaxRevenueOutlook
($Billions) Revenue
Total Projected Revenue Measures Included in Total1 Other Base Adjustments2 Revenue3
Interim 201314
11.4 0.8 10.6
Plan 201415
10.3 0.2 (0.8) 10.9 3.3 4.4
Outlook 201516
11.4 0.2 11.3 3.3 4.2
201617
12.0 0.2 11.8 4.4 5.0
Base Revenue Growth (Per Cent) Net Operating Surplus Corporations Growth (Per Cent)
1
Represents the incremental revenue impact of all tax measures, announced previously or proposed in this Budget, relative to their impact on revenue in 201314. 2 Other Adjustments include net timing of payments adjustments due to the difference between projected Corporations Tax (CT) revenue entitlements and projected federal CT remittances. 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.
TheforecastforCorporationsTax(CT)revenueisbasedlargelyonprojected annualgrowthinthenetoperatingsurplusofcorporations.Totalprojected revenueincludestheimpactofmeasuresandprioryearandotheradjustments. MeasuresincludethoseannouncedinthisandpreviousBudgetssuchasproposed changestotheOntarioSmallBusinessDeductionandmeasurestoenhanceCT compliance.Afteraccountingfortaxmeasuresandotheradjustments,theCT revenuebaseisprojectedtogrowatanaverageannualrateof3.7percentover themediumterm,comparedtoaverageannualgrowthinnetoperatingsurplusof corporationsof4.6percent.CorporationsTaxrevenuetendstogrowmoreslowly thancorporateprofitsduetotaxprovisions,includingthecarryforwardoflosses forupto20years. TheOntarioHealthPremiumrevenueisbasedontheoutlookforemployment andhouseholdincomegrowth.OntarioHealthPremiumrevenueisprojected toincreaseatanaverageannualrateof4.8percentovertheforecastperiod. EducationPropertyTaxrevenueisprojectedtoincreaseatanaverageannual rateof1.5percentovertheforecastperiod,largelyduetogrowthintheproperty assessmentbaseasaresultofnewconstruction.Theforecastalsoreflectsthe ongoingimpactsofmeasuresannouncedinthe2012Budgettofreezethe BusinessEducationTaxreductionplan. 228
ChapterII:OntariosEconomicOutlookandFiscalPlan RevenuesfromAllOtherTaxesareprojectedtoincreaseatanaverage annualrateof4.1percentovertheforecastperiod.Thisincludesrevenues fromvolumebasedtaxessuchasGasolineTax,FuelTax,TobaccoTax,andBeer andWineTax,aswellasothertaxessuchasElectricityPaymentsInLieuof TaxesandMiningTax. TheforecastforGovernmentofCanadatransfers,includingCanadaHealth Transfers,CanadaSocialTransfersandEqualization,isbasedonexisting federalprovincialfundingarrangements.GovernmentofCanadatransfersare projectedtoincreaseatanaverageannualrateof2.6percentoverthe forecastperiod. TheforecastforIncomefromGovernmentBusinessEnterprisesisbased oninformationprovidedbytheindividualenterprises.Overallrevenuefrom governmententerprisesisprojectedtoincreaseby$0.7billionbetween 201314and201617,oratanaverageannualrateof4.8percent. TheforecastforOtherNonTaxRevenueisbasedoninformationprovidedby governmentministriesandprovincialagencies.Between201314and201617, othernontaxrevenuesareprojectedtodecreaseby$0.3billion,largelyreflecting theonetimegainin201314onthesaleoftheProvincesinterestin10million sharesofGeneralMotorsCompany,andlowerelectricitysectorrelatedrevenues, overtheforecastperiod,includingfiscallyneutralpowersupplycontract recoveries.
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2014OntarioBudget
Key Changes in the Medium-Term Revenue Outlook since the 2013 Budget
Revenuesarelowerthanprojectedinthe2013Budgetduetoslowereconomic growth,alowertaxbaseandlowerGovernmentofCanadatransfers.
201415
(0.7) (0.6) (1.0) (1.3) 0.1 (0.1) (3.5) 1.9 (1.6)
201516
(0.3) (0.5) (1.3) (0.5) 0.2 (2.4) 1.9 (0.5)
Slowereconomicgrowthin2013and2014loweredthetaxationrevenueoutlook. Theoutlookfornominalgrossdomesticproduct(GDP)growthis0.3percentage pointslowerin2013and0.6percentagepointslowerin2014comparedtothe 2013Budgetoutlook. Taxassessmentandtaxreceiptsdatareceivedduring2013loweredthetax revenuebaseuponwhichgrowthisprojected.Inparticular,PITandSalesTax baseswerebothlowerthanprojectedinthe2013Budget. Onetimeimpactsinclude: Lower201314SalesTaxrevenuesduetorevisedHarmonizedSalesTax entitlementestimatesforprioryears;and Arepaymenttothefederalgovernmentin201415duetoaprojected overpaymentofCorporateIncomeTaxtotheProvincebytheCanada RevenueAgencyforthe2013taxyear.
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CHART 2.22
$ Billions
24.5 24.0 23.5 23.0 22.5 22.0 21.5 21.0 20.5 201314
Source: Ontario Ministry of Finance.
2014 Budget
201415
201516
GovernmentofCanadatransfersareloweroverthemediumtermduetoa numberoffactors. DownwardrevisionsbyStatisticsCanadatohistoricalpopulationestimates loweredOntariosprojectedentitlementsundereachoftheCanadaHealth Transfer,CanadaSocialTransferandEqualizationprograms. TheclosureofHydroQuebecsGentilly2nuclearpowerplanttemporarily lowersQuebecsfiscalcapacity,asmeasuredundertheEqualization program,whichinturnlowersOntariosEqualizationentitlementovera threeyearperiod. Otherchangesincludeupdatedfiscalcapacityandeconomicdata, particularlyfor201213,whichincreasedOntariosrelativefiscalcapacity comparedtothe2013Budgetprojection,therebyloweringOntarios Equalizationentitlementoutlook.
231
2014OntarioBudget ThechangeintheIncomefromGovernmentBusinessEnterprisesoutlookreflects higherrevenuesfrommostgovernmentbusinessenterprises.Theslightincrease in201415islargelyduetohighercombinednetincomefromOntarioPower GenerationInc.andHydroOneInc.,whichcarriesforwardto201516.Thedecline in201516largelyreflectslowernetincomefromtheOntarioLotteryandGaming Corporation(OLG). TheOLGscumulativenetincomebetween201314and201516isprojectedto be$0.8billionlowerthanpreviouslyprojectedinthe2013Budget.Thisislargely duetoOLGmodernizationprocurementdelays,theintegrationofhorseracing andgaming,andmunicipaldecisionsregardinggamingsites. ThechangeintheOtherNonTaxRevenueoutlookin201314largelyreflects theonetimegainonthesaleoftheProvincesinterestin10millionsharesof GeneralMotorsCompany,announcedonSeptember10,2013.Thevariancein 201415and201516reflectssmallchangesinavarietyofOtherNonTax Revenuesources. InadditiontothetaxmeasuresoutlinedinChapterV:AFairandEfficientTax System,the2014Budgetmeasuresincludenetrevenuegainsofasset optimization(discussedinChapterI,SectionE:MakingEveryDollarCount) totalling$0.9billionin201415and$1.0billionin201516,andtherevenue implicationsoftheproposedremovaloftheelectricityDebtRetirementCharge costfromresidentialusersbills(discussedinChapterI,SectionD:Fosteringa FairSociety).
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$ Billions
140 135 130 125 120 115 110 105 100 201011 201112 201213 201314 201415 201516 201617
Note: 2010 Budget amounts have been restated for 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. Source: Ontario Ministry of Finance.
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TABLE2.16 SelectedEconomicandRevenueRisksandSensitivities
Item/Key Components
Total Revenues Nominal GDP 3.5 per cent growth in 2014 $845 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.
201415 Assumption
201415 Sensitivities
Total Taxation Revenues Revenue Base1 Nominal GDP 3.7 per cent growth in 201415 3.5 per cent growth in 2014 $565 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.
Personal Income Tax (PIT) Revenues Revenue Base Compensation of Employees 5.4 per cent growth in 201415 3.5 per cent growth in 2014 $326 million revenue change for each percentage point change in compensation of employees growth. $253 million revenue change for each percentage point change in 2013 PIT assessments.2 $14 million revenue change for each percentage point change in 2012 and prior PIT assessments.2
$25.3 billion
$1.4 billion
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201415 Assumption
201415 Sensitivities
$22.5 billion
$23.7 billion
$24.4 billion
Corporations Tax Revenues Revenue Base Net Operating Surplus Corporations 3.3 per cent growth in 201415 4.4 per cent growth in 2014 $90 million change in revenue for each percentage point change in net operating surplus corporations growth. $84 million change in revenue for each percentage point change in 2013 Tax Assessments. $118 million change in revenue for each percentage point change in the federal estimate of 2014 Canada Corporate Taxable Income. $31 million change in revenue for each percentage point change in 2015 Canada Corporate Taxable Income.
$8.4 billion
$269.2 billion
$285.3 billion
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201415 Assumption
201415 Sensitivities
Ontario Health Premium (OHP) Revenues Revenue Base Primary Household Income 4.2 per cent growth in 201415 3.3 per cent growth in 2014 $30 million revenue change for each percentage point change in primary household income growth. $30 million revenue change for each percentage point change in 2013 OHP assessments.
$3.0 billion
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2014OntarioBudget
201415 Assumption
201415 Sensitivities
Fuel Tax Revenues Revenue Base Real GDP 1.0 per cent growth in 201415 2.1 per cent growth in 2014 $11 million revenue change for each percentage point change in real GDP growth.
Land Transfer Tax Revenues Revenue Base Housing Resales Flat growth in 201415 1.0 per cent increase in 2014 $17 million revenue change for each percentage point change in both the number and prices of housing resales.
1.5 per cent increase in 2014 38.5 per cent in 201415 $32 million revenue change for each tenth of a percentage point change in Ontarios population share. $13 million revenue change for each tenth of a percentage point change in Ontarios population share.
Canada Social Transfer Ontario Population Share 38.5 per cent in 201415
Revenue Base is revenue excluding the impact of measures, adjustments for past Public Accounts estimate variances and other one-time factors. Ontario 2013 Personal Income Tax and Corporations Tax are estimates because 2013 tax returns are yet to be assessed by the Canada Revenue Agency. The Gross Revenue Pool is a federal Department of Finance estimate and excludes the impact of Ontario measures.
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TABLE2.17 Ontarios201516EqualizationEntitlementSensitivities
Item/Key Components
Three-year WeightedAverage Population
201516 Assumption
1.0 per cent growth over 201415
201516 Sensitivities
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. 1.0 per cent relative increase (decrease) in Ontarios average per capita fiscal capacity will result in $0.5 billion lower (higher) Equalization entitlement for Ontario.
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Section E:
OntariosFiscalPlan
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TABLE2.18 MediumTermFiscalPlanandOutlook
($Billions)
Total Revenue Expense Programs Interest on Debt1 Total Expense Surplus/(Deficit) Before Reserve Reserve Surplus/(Deficit)
1
Interim 201314
115.7
Plan 201415
118.9
Outlook 201516
124.5
201617
129.4
Interest on debt expense is net of interest capitalized during construction of tangible capital assets of $0.2 billion in 201314, $0.3 billion in 201415, $0.3 billion in 201516 and $0.4 billion in 201617.
Totalrevenueisprojectedtogrowfrom$115.7billionto$129.4billionover the201314to201617period,resultinginanaverageannualgrowthrateof 3.8percent.Themediumtermrevenueoutlookisbelowthe2013Budget outlook,largelyduetolowerfederaltransfersresultinginpartfromthefederal governmentsdecisiontoallowOntariosmajortransferstodeclinein201415 andslowerthanforecasteconomicgrowthin2013and2014.Formore informationonthedeclineinfederaltransfers,seeChapterIII:Federal UnderfundingofOntarians. Overthesameperiod,totalexpenseisprojectedtoincreasefrom$127.0billion to$133.5billion,oranaverageannualgrowthrateof1.7percent.Thisincrease reflectsstrategicinvestmentsaspartofOntarios10yearplanfortheeconomy andthegovernmentscommitmenttofosteramoresecurefutureandfair societyforallOntarians.Italsoreflectsaresponsibleapproachtomanaging programspendinggrowth. Inrecognitionofongoingrisksintheglobaleconomy,thefiscalplanincludes additionalprudenceintheformofcontingencyfundstotalling$0.5billionin 201415,andareserveof$1.0billionin201415,and$1.2billioninboth 201516and201617.
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TABLE2.19 SummaryofMediumTermExpenseOutlook
($Billions) Average Annual Growth Interim 201314
Programs Health Sector Education Sector1 Postsecondary and Training Sector Childrens and Social Services Sector Justice Sector Other Programs Total Programs Interest on Debt Total Expense
1
Plan 201415
50.1 24.8 7.8 15.0 4.3 17.4 119.4 11.0 130.4
Outlook 201516
51.0 25.3 7.8 15.5 4.4 16.1 120.1 12.0 132.1
201314 to 201617
2.2% 2.3% 1.0% 3.5% 0.8% 6.0% 1.1% 7.9% 1.7%
201617
52.1 25.6 7.8 15.6 4.3 14.9 120.2 13.3 133.5
Excludes Teachers Pension Plan. Teachers Pension Plan expense is included in Other Programs. Note: Numbers may not add due to rounding.
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ChapterII:OntariosEconomicOutlookandFiscalPlan Totaleducationsectorexpenseisprojectedtoincreaseby$1.7billion between201314and201617,mainlyduetoincreasedfundingtoschool boardstosupportfullimplementationoffulldaykindergarten,growthin studentenrolment,increasedcapitalexpensesassociatedwithcompleted schoolprojects,andotherschoolboardsectorexpensestoimplement Ontariosrenewedvisionforeducation.Theincreasealsoreflectshigher fundingforthechildcaresectortosupportchildcaremodernization, helpstabilizechildcareoperatorsandprovideincreasedsupportfor frontlinechildcareworkers. Totalpostsecondaryandtrainingsectorexpenseisprojectedtoincrease by$0.2billionbetween201314and201617,mainlyduetocontinued fundingtosupportenrolmentgrowthinpostsecondaryinstitutions,growth instudentfinancialassistanceprograms,andsupportforcapitalprojectsat collegesanduniversitiesannouncedaspartofBuildingTogether,Ontarios longterminfrastructureplan.Growthin201415alsotakesintoaccount thesecondyearofOntariosYouthJobsStrategy. Totalchildrensandsocialservicessectorexpenseisprojectedtoincrease by$1.5billionbetween201314and201617.Thisincreaseprimarily reflectsthegovernmentssupportforvulnerableOntariansthrough investmentsinsocialassistanceanddevelopmentalservices.These increasedinvestmentswillalsocontributetoeconomicgrowth,asthe supportsprovidedareusedtopurchasebasichouseholdgoodsandservices thatareusuallypurchasedlocally. Totaljusticesectorexpenseisprojectedtoincreaseby$0.1billionbetween 201314and201617,primarilyduetothecontinuinguploadofcourt securitycostsfrommunicipalitiesandtheProvincesstrategytoexpand accesstolegalaidservicesforlowincomeOntarians.Thedecreasein justicesectorexpensefrom201516to201617reflectstheconclusion ofProvincialsupportforsecurityservicesforthe2015Pan/Parapan AmericanGames.
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TABLE2.20 SelectedExpenseRisksandSensitivities
Program/Sector
Health Sector Hospitals Sector Expense
201415 Assumption
Annual growth of 2.6 per cent. Annual growth of 0.7 per cent.
201415 Sensitivity
One per cent change in health spending: $500 million. One per cent change in hospitals sector expense: $219 million. One per cent change in program expenditure of drug programs: $36 million. One per cent change in number of beds: approximately $39 million. One per cent change in hours of homemaking and support services: approximately $7.5 million. One per cent change in nursing and professional visits: approximately $5.3 million. One per cent enrolment change: approximately $150 million. One per cent enrolment change: $32 million. One per cent enrolment change: $13 million. One per cent caseload change: $24 million. One per cent caseload change: $44 million. One per cent change in inmate days: $5.9 million. The 201415 impact of a 100 basis-point change in borrowing rates is forecast to be approximately $400 million.
Drug Programs
78,000 long-term care home beds. Average Provincial annual operating cost per bed in a longterm care home is $50,032. Approximately 24 million hours of homemaking and support services. Approximately 7 million nursing and professional visits.
Home Care
Elementary and Secondary Schools University Students College Students Ontario Works Ontario Disability Support Program Correctional System
1,970,000 average daily pupil enrolment. 378,000 full-time undergraduate and graduate students. 196,000 full-time students. 254,678 average annual caseload. 327,799 average annual caseload. 3.2 million adult inmate days per year. Average cost of $184 per inmate per day. Average cost of 10-year borrowing in 201415 is forecast to be approximately 4.1 per cent.
Interest on Debt
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2014OntarioBudget
Contingent Liabilities
Inadditiontothekeydemandsensitivitiesandeconomicriskstothefiscal plan,therearerisksstemmingfromthegovernmentscontingentliabilities. WhetherthesecontingencieswillresultinactualliabilitiesfortheProvinceis beyondthedirectcontrolofthegovernment.Lossescouldresultfromlegal settlements,defaultsonprojects,andloanandfundingguarantees.Provisionsfor lossesthatarelikelytooccurandcanbereasonablyestimatedareexpensedand reportedasliabilitiesintheProvincesfinancialstatements.Anysignificant contingentliabilitiesweredisclosedaspartofthe20122013AnnualReport andConsolidatedFinancialStatements,releasedinSeptember2013.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
Key Changes in the Medium-Term Fiscal Outlook since the 2013 Budget
Despitealowerrevenueoutlookcomparedtothe2013Budgetforecast, thegovernmentisprojectedtobeatits201314fiscaltargetasaresultofa responsibleandbalancedapproachtofiscalmanagementandacommitment toensurevaluefortaxpayersmoneybymakingeverydollarcount. Continuedchallengesinthebroadereconomicenvironmentareholdingback economicgrowthinOntarioandtheoutlookforProvincialrevenue.Ontariois notaloneinfacingthesechallengesseveralprovinceshavehadtoextendtheir balancedbudgettimelines,andthefederalgovernmenthasalsoseendeclining revenueprojections.However,Ontariocontinuestomoveforwardwithplansto meetitsoriginalbalancedbudgettargetdateof201718.
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201415
(10.1)
201516
(7.2)
(11.7)
250
ChapterII:OntariosEconomicOutlookandFiscalPlan Totalexpenseandprogramexpenseareprojectedtobelowerin201314 comparedwiththe2013BudgetPlan,reflectingthegovernmentseffortsto managespendinginafairandresponsibleway.Totalexpenseandprogram expenseareprojectedtobehigherin201415and201516comparedwiththe mediumtermforecastinthe2013Budget.Thisreflectstheinvestmentsinpeople, moderninfrastructure,andadynamicandinnovativebusinessclimateaspartof thegovernments10yearplanfortheeconomy,aswellasinvestmentsaimedat promotingafairsociety.Theseinvestmentsmadenowwillspureconomic growthandcreatethenewjobsnecessarytosupporteliminatingthedeficit. AcrosstheboardcutsatthistimewouldharmOntarioseconomicandfiscal prospectsintheshortandlongterm.Cutstotransferstoindividualsorincome supportprogramswouldresultinadampeningofconsumerspending,akey driverofeconomicgrowth.Cuttingbackoninfrastructureinvestmentswould resultinaneconomythatcannotgrowtoitsfullpotentialinthelongterm. Publicinvestments,especiallyintransportationinfrastructure,providea foundationforeconomicgrowthandincreasedproductivity. Ontarioismanagingprogramexpensegrowthwhilemaintainingitsinvestments incoreservices.In201415,thegovernmentisinvesting$1.1billionmorein programsthanoutlinedinthe2013Budgetdespitea$3.5billionweakeningin theunderlyingrevenueforecastbeforemeasures. Theoutlookforprogramspendingalsoincludesanannualprogramreview savingstarget,whichreflectsthegovernmentscommitmenttocontinueto reviewprogramsthatwillfocusonmaintainingorenhancingthedeliveryof publicserviceswhilereducingcoststhatarenotessentialtodeliveringservice. Thistargetissetat$250millionin201415and$500millionineachof201516 and201617. For201415and201516,interestondebtexpenseisprojectedtobelowerthan forecastinthe2013Budget,primarilyreflectinglowerforecastsforOntarios interestrates.
251
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.24
Fiscal Balance ($ Billions)
200910
Actual
Interim
201011
201112
201213
201314
(10.0)
(14.0)
(11.3) (13.3)
(15.0)
(19.3)
(20.0) (25.0)
1 2
(17.3) (19.7)
(24.7)
Fiscal Forecast2
Represents current forecast for 201314. For 200910 to 201213, actual results are presented. Forecast for 201011 to 201314 based on the 2010 Budget. Projection for 200910 from the 2009 Ontario Economic Outlook and Fiscal Review.
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2014OntarioBudget
Responsible Choices
Whilethegovernmentremainscommittedtocontinuemanagingspendingina fairandresponsibleway,itcannotignoretheongoingchallengesinthebroader environment,whichareholdingbackeconomicgrowthinOntarioandtheoutlook forProvincialrevenues. Thesechallengesmeanthegovernmentneedstothinklongtermaboutthe choicesitmakes.Ontarioalreadyhasthelowestpercapitaprogramspending amongCanadianprovinces.AstheCommissionontheReformofOntariosPublic Servicesnoted,acrosstheboardcutswouldhurtpublicservicesandundermine programsthatareprovidinghighqualityservicestoOntarians.Suchacrossthe boardcutsatthistimewouldalsoharmOntariosprospectsforstronger economicgrowth. Nowisthetimetobemakingsmartinvestmentsinpeople,moderninfrastructure, andadynamicandinnovativebusinessclimateinvestmentsthatwillhelpto spureconomicgrowthandcreatethenewjobsnecessarytosupporteliminating thedeficit.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.25
Fiscal Balance ($ Billions) 5.0 1.2 0.0 (4.1) (5.0) (10.0) (15.0) (20.0) (25.0)
2014 Budget Outlook 2014 Budget Outlook before reserve
Plan
Medium-Term Outlook
201415
201516
201617
201718
0.0
(5.3)
255
2014OntarioBudget ContinuingtomoveaheadwiththeCommissionontheReformof OntariosPublicServicesrecommendationsover80percentofthe recommendationsarenowbeingactedon,enablingsustainable transformationandsupportingsuccessfulexpendituremanagement. Managingthegrowthrateofhealthcarespending,currentlymorethan 40percentofProvincialprogramspending,toanannualaverageof 2.2percentoverthemediumterm.ThroughimplementationofOntarios ActionPlanforHealthCare,thegrowthrateofspendinghasbeenreduced toaprojected2.5percentin201314from5.8percentin200910. Buildingonthesuccessofthegovernments201314expenditurereview byintroducinganannualprogramreviewsavingstargetof$250millionin 201415and$500millionin201516and201617,withaparticularfocus onmaintainingorenhancingthedeliveryofpublicserviceswhilereducing coststhatarenotessentialtodeliveringservice. EndingtheOntarioCleanEnergyBenefitonDecember31,2015,and replacingitwithaplannedratebaseprogram,withtheOntarioEnergy Boardtoreportbackonprogramoptionsthatwouldbetargetedto Ontariosmostvulnerable,whospendahigherproportionoftheir disposableincomeonenergyandelectricity. ManagingpublicsectorandexecutivecompensationfromwithinOntarios existingfiscalframeworksothatanymodestwageincreasesthatare negotiatedwillneedtobeabsorbedwithinfundingenvelopes,andwithin Ontariosoverallfiscalplan,throughefficiencyandproductivitygains,or othertradeoffsthatcontinuetodelivertheservicelevelstomeetpublic needs.Thisactionreducesfundingpressuresonthegovernmentasover halfoftheProvincestotalprogramspendingisforcompensation.Byway ofexample,aonepercentincreaseincompensationcostswouldamount toapproximately$600millionwithoutproductivityorotheroffsets. Modernizingandmanagingpublicsectorbenefitcostsbybringingpublic serviceretirementbenefitsinlinewithpracticesintheprivatesectorand otherjurisdictions,whichwillsaveover$1.4billionby201718. Continuingtotakeactiontoreducepensioncostsandenhancethe affordabilityofpublicsectorpensionplans.Thegovernmentssuccessful effortstodatetoconstrainpublicsectorwagegrowth,alongwith betterthanexpectedinvestmentperformance,havereducedtotalpension expensecostsoverthemediumtermby$1.1billionsincethe2013Budget.
256
Keyactionsincludeensuringthatthosewiththegreatestabilitytopaycontribute morethroughtheirtaxes.TheProvinceisproposingtoincreasePersonalIncome Taxontaxableincomeabove$150,000,whichwouldraise$0.7billionby201617. KeyactionstounlockthevalueofProvincialassetsinclude: Exploringoptionstounlockthefullvalueofawiderangeofvaluable Provincialassets,includingthoseoflargeandcomplexGovernment BusinessEnterprises(GBEs)specifically,theLCBO,HydroOneand OntarioPowerGeneration. EstablishingthePremiersAdvisoryCouncilonGovernmentAssetsto examinekeygovernmentassetsandgeneratebetterreturns.
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2014OntarioBudget
TABLE2.22 OntariosRecoveryPlan
($Billions) Extended Outlook 201718
134.8
Revenue Expense Programs Interest on Debt Total Expense Surplus/(Deficit) Before Reserve Reserve Surplus/(Deficit)
Interim 201314
115.7
Plan 201415
118.9
201617
129.4
Fiscal Prudence
Thegovernmentcontinuestomaintainabalancedapproachtomanagingthe fiscalplanandmakingresponsiblechoicesaboutstrategicinvestmentstosupport theeconomicprosperityoftheprovince.Thegovernmenthasalsoincluded prudenceaspartofthefiscalplantohelpensureitmeetsfuturefiscaltargetsas itmovestowardsabalancedbudgetin201718. AsrequiredbytheFiscalTransparencyandAccountabilityAct,2004(FTAA), thefiscalplanincorporatesprudenceintheformofareservetoprotectthefiscal outlookagainstadversechangesintheProvincesrevenueandexpense,including thoseresultingfromchangesinOntarioseconomicperformance.Thereservehas beensetat$1.0billionin201415,and$1.2billionineachof201516,201617 and201718. Thefiscalplanalsoincludescontingencyfunds(bothoperatingandcapital)tohelp mitigateexpenserisksthatmayotherwisehaveanegativeimpactonresults.Inan efforttocontrolthegrowthinprogramexpense,thecontingencyfundswillonly beusedtofundministryexpensepressuresincaseswherehealthandsafety mightbecompromisedorservicestothemostvulnerablearejeopardized.
258
Intergenerational Fairness
ThepeopleofOntarioexpecttheirgovernmenttobeabletocontinueto providehighqualitypublicservicesandopportunitiesnowandforgenerationsto come.Therefore,thereisanobligationtoensurethatthecostofthesesupports doesnotleadtounsustainabledebtlevelsandhighinterestcostsfor futuregenerations. Thegovernmentistakingafairandbalancedapproachtoeliminatingthedeficit by201718,andmaintainsatargetofreducingOntariosnetdebttoGDPratio toitsprerecessionlevelof27percent.Thiswillhelpkeepinterestondebtata manageablelevelandprotectfuturegenerationsfromrisinginterestcosts, whichcouldotherwisecrowdoutspendingongovernmentpriorities.Takinga balancedapproachtoeliminatingthedeficitandreducingnetdebttoGDP willhelpstrengthentheeconomysoitcancreatejobs.Itisgoodfiscalpolicyand itisfairtofuturegenerations.
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Section F:
DetailsofOntariosFinances
TABLE2.23 MediumTermFiscalPlanandOutlook
($Billions) Interim 201314
Revenue Expense Programs Interest on Debt1 Total Expense Surplus/(Deficit) Before Reserve Reserve Surplus/(Deficit) Net Debt Accumulated Deficit
1
Plan 201415
118.9 119.4 11.0 130.4 (11.5) 1.0 (12.5) 289.3 189.8
Outlook 201516
124.5 120.1 12.0 132.1 (7.7) 1.2 (8.9) 305.3 198.6
201617
129.4 120.2 13.3 133.5 (4.1) 1.2 (5.3) 317.2 204.0
Interest on debt expense is net of interest capitalized during construction of tangible capital assets of $0.2 billion in 201314, $0.3 billion in 201415, $0.3 billion in 201516 and $0.4 billion in 201617. Note: Numbers may not add due to rounding.
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2014OntarioBudget
TABLE2.24 Revenue
($Millions)
201112
Taxation Revenue Personal Income Tax Sales Tax1 Corporations Tax Education Property Tax2 Employer Health Tax Ontario Health Premium Gasoline Tax Land Transfer Tax Tobacco Tax Fuel Tax Beer and Wine Tax Electricity Payments-In-Lieu of Taxes Other Taxes Government of Canada Canada Health Transfer Canada Social Transfer Equalization Infrastructure Programs Labour Market Programs Social Housing Wait Times Reduction Fund Other Federal Payments Government Business Enterprises Ontario Lottery and Gaming Corporation Liquor Control Board of Ontario Ontario Power Generation Inc./Hydro One Inc. Other Non-Tax Revenue Reimbursements Vehicle and Driver Registration Fees Electricity Debt Retirement Charge Power Supply Contract Recoveries Sales and Rentals Other Fees and Licences Net Reduction of Power Purchase Contract Liability Royalties Miscellaneous Other Non-Tax Revenue3 Total Revenue
1
Actual 201213
25,574 20,957 12,093 5,511 5,137 3,067 2,390 1,484 1,142 710 560 324 469 79,418 11,315 4,591 3,261 116 897 483 97 901 21,661 1,816 1,721 932 4,469 932 1,125 939 1,323 1,188 760 263 226 1,065 7,821 113,369
Interim 201314
27,512 20,381 11,369 5,531 5,343 3,178 2,365 1,604 1,111 726 556 397 381 80,454 11,930 4,689 3,169 128 909 468 96 851 22,240 2,038 1,745 968 4,751 966 1,273 941 1,348 1,123 776 243 247 1,291 8,208 115,653
Plan 201415
29,172 21,937 10,254 5,661 5,551 3,321 2,395 1,604 1,300 734 572 329 536 83,365 12,350 4,841 1,988 296 902 458 1,047 21,882 2,053 1,779 1,194 5,026 996 1,442 940 959 2,058 795 217 274 917 8,598 118,871
24,548 20,159 9,944 5,765 5,092 2,916 2,380 1,432 1,150 710 561 367 574 75,598 10,705 4,469 2,200 362 904 489 97 2,079 21,305 1,882 1,659 872 4,413 831 1,075 952 1,372 1,193 776 317 200 1,741 8,457 109,773
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 (HST). 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 Miscellaneous Other Non-Tax Revenue in 201112 is higher than other years due to one-time revenues including Chryslers repayment of an Ontario loan and higher-than-usual recoveries of prior-year expenditures from government ministries. Note: Numbers may not add due to rounding.
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TABLE2.25 TotalExpense
($Millions)
Ministry Expense Aboriginal Affairs1 Agriculture and Food / Rural Affairs1 Attorney General Board of Internal Economy2 Children and Youth Services Citizenship and Immigration Community and Social Services Community Safety and Correctional Services1 Consumer Services Economic Development, Trade and Employment / Research and Innovation1 Education1 Energy1 Environment1 Executive Offices Finance1 Francophone Affairs, Office of3 Government Services1 Health and Long-Term Care Infrastructure1 Labour Municipal Affairs and Housing1 Natural Resources1 Northern Development and Mines Tourism, Culture and Sport1 Training, Colleges and Universities1 Transportation Interest on Debt4 Other Expense1 Program Review Savings Target5 Year-End Savings6 Total Expense
1
201112 67 1,038 1,705 271 3,855 130 9,347 2,170 19 973 23,041 498 524 31 933 5 1,104 46,491 331 184 823 719 726 1,170 7,113 2,339 10,082 7,054 122,742
Actual 201213 65 1,016 1,683 197 3,912 130 9,720 2,280 20 963 23,141 341 485 30 849 5 1,143 47,571 66 281 825 694 718 1,424 7,346 2,478 10,341 4,863 122,589
Interim 201314 63.4 854.3 1,829.5 204.3 4,023.0 116.7 10,062.6 2,347.3 22.5 871.5 23,845.7 319.9 480.6 30.8 947.2 4.8 878.9 48,766.7 282.2 304.8 837.3 715.0 757.6 1,333.5 7,604.7 2,774.3 10,556.0 6,117.1 126,952.3
Plan 201415 70.7 1,137.4 1,774.2 204.8 4,222.0 120.7 10,791.0 2,433.9 25.2 1,011.9 24,839.9 332.8 490.2 32.8 1,015.4 4.1 1,028.8 50,054.8 279.6 311.2 879.6 713.2 754.3 1,235.7 7,838.8 3,024.9 11,010.0 6,088.2 (250.0) (1,100.0) 130,376.0
Details on other ministry expense can be found in Table 2.26, Other Expense. 2 The 201112 amount includes expenses for the 2011 general election. 3 Reduction beginning in 201314 reflects that, effective January 1, 2014, the office of the French Language Services Commissioner is part of the Board of Internal Economy. 4 Interest on debt is net of interest capitalized during construction of tangible capital assets of $234 million in 201112, $232 million in 201213, $225 million in 201314 and $336 million in 201415. 5 For details on the program review savings target, see Chapter l, Section E: Making Every Dollar Count. 6 As in past years, the Year-End Savings provision reflects anticipated underspending that has historically arisen at year-end due to factors such as program efficiencies, and changes in project startups and implementation plans. Note: Numbers may not add due to rounding.
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2014OntarioBudget
TABLE2.26 OtherExpense
($Millions)
Ministry Expense
Aboriginal Affairs One-Time Investments including Settlements Agriculture and Food / Rural Affairs Time-Limited Investments in Infrastructure Time-Limited Assistance Community Safety and Correctional Services Time-Limited Support for 2015 Pan/Parapan American Games Security Economic Development, Trade and Employment / Research and Innovation Time-Limited Investments for Youth Education Teachers Pension Plan1 One-Time Savings Labour Savings Energy Ontario Clean Energy Benefit Environment Time-Limited Investments Finance Harmonized Sales Tax Transitional Support Ontario Municipal Partnership Fund Operating Contingency Fund Power Supply Contract Costs Transition Fund Government Services Pension and Other Employee Future Benefits Infrastructure Federal-Provincial Infrastructure Programs Capital Contingency Fund Municipal Affairs and Housing Time-Limited Investments in Municipal Social and Affordable Housing Time-Limited Investments Natural Resources Emergency Forest Firefighting Tourism, Culture and Sport Time-Limited InvestmentsSport Program One-Time Investments Time-Limited Investments to Support 2015 Pan/Parapan American Games Training, Colleges and Universities Time-Limited Investments
201112
28 247
Actual 201213
19
Interim 201314
12.0 136.3 16.5
Plan 201415
47.1 6.5
6.0
44.9
50.0 507.0 1,100.0 541.5 415.0 959.1 80.0 1,170.0 241.7 100.0
59 9 209 37 3 59 133
7,054
4,863
6,117.1
6,088.2
Numbers reflect Public Sector Accounting Board pension expense. Ontarios matching contributions to the plan grow from $1,344 million in 201112 to $1,532 million in 201415. Note: Numbers may not add due to rounding.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
TABLE2.27 201314InfrastructureExpenditures
($Millions)
Total Infrastructure Expenditures 201314 Interim 201415 Plan Investment in Capital Assets1 Transfers and Other Infrastructure Expenditures2 Total Infrastructure Expenditures
Sector
Transportation Transit Provincial Highways Other Health Hospitals Other Health Education Postsecondary Colleges Universities Water/Environment Municipal and Local Infrastructure Justice Other Subtotal Less: Other Partner Funding4 Total Excluding Partner Funding Less: Other Capital Total Provincial
1
2,726 2,052 698 3,157 480 1,884 391 155 135 693 319 391 13,083 1,893 11,190 376 10,814
2,630 2,472 750 3,341 206 1,724 368 57 8 129 481 12,167 1,666 10,500 284 10,216
519 95 287 203 58 168 96 643 125 132 2,326 2,326 262 2,064
3,150 2,472 845 3,629 409 1,781 368 168 153 651 254 613 14,493 1,666 12,826 546 12,280
Transportation3
Contributions5
Expenditure6
Investment in Capital Assets includes interest capitalized during construction of tangible capital assets of $336 million. 2 Mainly consists of transfers for capital purposes to municipalities and universities, and expenditures for capital repairs. 3 Other transportation includes highway planning activities, property acquisition, highway service centres and other infrastructure programs (e.g., winter roads, remote airports). 4 Third-party contributions to capital investment in consolidated schools, colleges, hospitals and provincial agencies. 5 Mostly federal government transfers for capital investments. 6 Total Provincial Infrastructure Expenditure includes Investment in Capital Assets of $9 billion for 201314. Note: Numbers may not add due to rounding.
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2014OntarioBudget
200607
97,120 86,020 8,831 94,851 2,269 2,269 153,742 106,776 574,292 382,688 12,662 12,142 30,224 9.1 26.8 18.6
200708
104,115 94,601 8,914 103,515 600 600 156,616 105,617 597,803 401,978 12,764 12,270 31,493 8.6 26.2 17.7
90,738 81,421 9,019 90,440 298 298 152,702 109,155 552,769 363,479 12,528 12,189 29,013 9.9 27.6 19.7
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 200910, 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 $234 million in 201112, $232 million in 201213, $225 million in 201314 and $336 million in 201415. 4 Starting in 200910, 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 200506 to 200809 to conform with this revised presentation. Net Debt has also been restated in 200506 to reflect the value of hydro corridor lands transferred to the Province from Hydro One Inc. Sources: Statistics Canada and Ontario Ministry of Finance.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
200809
97,532 95,375 8,566 103,941 (6,409) (6,409) 169,585 113,238 604,282 413,032 12,883 13,164 32,061 8.8 28.1 18.7
2009102
96,313 106,856 8,719 115,575 (19,262) (19,262) 193,589 130,957 595,433 413,152 12,998 14,894 31,787 9.1 32.5 22.0
201011
107,175 111,706 9,480 121,186 (14,011) (14,011) 214,511 144,573 629,500 425,140 13,135 16,331 32,367 8.8 34.1 23.0
201112
109,773 112,660 10,082 122,742 (12,969) (12,969) 235,582 158,410 654,715 443,501 13,264 17,762 33,438 9.2 36.0 24.2
Actual 201213
113,369 112,248 10,341 122,589 (9,220) (9,220) 252,088 167,132 674,485 458,683 13,412 18,796 34,199 9.1 37.4 24.8
Interim 201314
115,653 116,396 10,556 126,952 (11,300) (11,300) 269,155 177,260 692,418 472,122 13,538 19,881 34,874 9.1 38.9 25.6
Plan 201415
118,871 119,366 11,010 130,376 (11,505) 1,000 (12,505) 289,251 189,765 716,933 487,720 13,762 21,019 35,441 9.3 40.3 26.5
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2014OntarioBudget
CHART 2.26
Ontario Health Premium 2.8% $3.3B Gasoline and Fuel Taxes 2.6% $3.1B Other Taxes 3.7% $4.3B Employer Health Tax 4.7% $5.6B
Corporations Tax 8.6% $10.3B Personal Income Tax 24.5% $29.2B Sales Tax 18.5% $21.9B
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ChapterII:OntariosEconomicOutlookandFiscalPlan
CHART 2.27
1 Excludes
Teachers Pension Plan. Teachers Pension Plan expense is included in Other Programs. Note: Numbers may not add due to rounding.
269
2014OntarioBudget
CHART 2.28
Program expense equals total expense minus interest on debt. 2 Excludes Teachers Pension Plan. Teachers Pension Plan expense is included in Other Programs. Note: Numbers may not add due to rounding.
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ChapterII:OntariosEconomicOutlookandFiscalPlan
Plan 201415
1,771 115 39 10 118 2,053 115 123 2,291
Operating expenses of the Ontario Lottery and Gaming Corporation (OLG) include payments to host municipalities and Ontario First Nations under the Gaming Revenue Sharing and Financial Agreement. Note: Numbers may not add due to rounding.
271
2014OntarioBudget
272
CHAPTER
III
ChapterIII:FederalUnderfundingofOntarians
Highlights
TheProvinceprovidesefficientpublicservicesresultingincompetitivetaxesfor Ontarians.Infact,Ontarioalreadyhasthelowestprogramspendingpercapita amongprovinceswhile,atthesametime,itraisesthelowesttotalrevenueper capitaincludingfederaltransfers.However,astheProvincecontinuestocarefully managecosts,takeactiontoincreaseprosperityandimplementitsfairand responsibleplantoreturntobalance,unilateralactionsbythefederalgovernment areputtingthisatrisk. Since2006,thefederalgovernmenthastakenmorethan110unilateralactions thathavehurtpeopleandbusinessesacrossOntarioandunderminedthe Provincesfiscalplan.Eachandeveryyear,theshareoffederalrevenueraisedin OntarioishigherthantheshareoffederalspendinginOntario.Thisresultsinan $11billiongapaccordingtomostrecentlyavailablefigures.In201415,Ontarians willbecontributing$4.5billionmoretoEqualizationthantheProvinceisreceiving inpayments.WhilethismoneycouldbeusedinOntariotofundmorehospitals, nursesorpublictransit,itisredistributedtootherregionsofCanadatosubsidize programsandservicesthatOntariansthemselvesmaynotenjoy. Asthefederalgovernmentplanstobalanceitsbudgetbeginningin201516, itisinapositiontomakeinvestmentsthatwillhelpgrowOntarioseconomy andprotectservices.Ontariocallsonthefederalgovernmentto: TreatOntariansthesamewayittreatsresidentsofallotherprovinces; ProtecttheProvincefromthe$641milliondecreaseinpaymentsfrommajor transfersin201415,asithasdonewithotherprovincesinthepast; StopunilateralactionsthatimpacttheProvincespublicservicesandfiscal planandinsteadworkwithOntarioonimportantissuesthataffectOntarians; Significantlyincreasefundingforinfrastructure,giventhatOntarioplansto investnearlyfivetimesmorepercapitaininfrastructurethanthefederal governmentplanstoinvestoverthenext10years;and MatchtheProvinces$1billioncommitmenttoadvanceregional infrastructuredevelopmentintheRingofFirearea.
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2014OntarioBudget
CHART 3.1
$ Millions
800 700 600 500 400 300 200 100 0 QC MB NS NB NL SK PE ON
Source: Ontario Ministry of Finance.
201011
201112
201213
201314
In 201415, Ontario would have qualified for $641 million in Total Transfer Protection payments
276
ChapterIII:FederalUnderfundingofOntarians
Because of the unprincipled nature of Canadian federal fiscal arrangements and funding agreements, Ontarians and Ontario businesses are often short-changed. The federal government needs to reform Equalization and create a national standard for EI access, and fix the funding gaps in infrastructure, training, housing, and regional economic development funds.
Ontario Chamber of Commerce, Emerging Stronger, 2013.
TABLE3.1
ExamplesofUnilateralFederalActionsAffectingOntarians
Description Federal government decided to shut down consideration of a modest enhancement to the Canada Pension Plan, and increased the Old Age Security age of eligibility from 65 to 67. Federal government did not renew $205.4 million to Ontario for wait-time reductions. Federal government did not renew $117 million to Ontario for immunizations. Federal government did not renew $156 million to support the hiring of 329 front-line police officers in Ontario. Federal government eliminated ELCC Agreement and cut $1.3 billion over three years in support for Ontario.
Patient Wait Times Guarantee Trust Human Papillomavirus Vaccine Trust Police Officers Recruitment Fund Early Learning and Child Care (ELCC) Agreement
TheProvincehastakenmeasurestoprotectOntariansfromsomeofthese actionsincluding: Steppinginwith$63.5millionannuallytoaddressthegapleftbythe eliminationoftheEarlyLearningandChildCareAgreement; Investing$20millionannuallytofillgapsinhealthcarecoveragefor refugeesleftbythescalingdownoftheInterimFederalHealthProgram; and Providing$4millionayeartofundthe40FirstNationspoliceofficers previouslysupportedbythefederalgovernmentunderthePoliceOfficers RecruitmentFund.
277
2014OntarioBudget However,theProvincecannotstepineverytimethefederalgovernment abandonsitsresponsibilities. AsdiscussedinOntariosLongTermReportontheEconomy,in2011,thefederal governmentunilaterallychangedthegrowthrateoftheCanadaHealthTransfer, beginningin201718,whichwillremoveanestimated$21billioninsupportfor healthcarenationally $8billionofthatinOntario by202324.Thiswillhave arealeffectonthequalityofhealthcareprovidedtoOntarians.Asconfirmedby thefederalParliamentaryBudgetOfficer,thistransferringoffiscalburdencreates afiscallysustainablefederalgovernment,butfiscallyunsustainableprovincesand territories.Unlessactionistaken,thefiscalpositionofprovincesandterritories willdeteriorateinthelongterm.
CHART 3.2
Net Debt as a Per Cent of GDP (200) (100) 0 100 200 300 400
1991 2001
Reducing Federal Health Transfers Downloads Fiscal Burden to Provinces and Territories
Federal Government
2011
2021
2031
2041
2051
2061
2071
Note: Negative figures indicate net assets. Source: Ontario Ministry of Finance calculations based on data from the Parliamentary Budget Officer.
The federal fiscal structure has been transformed from unsustainable in 2011 to sustainable with substantial fiscal room largely through spending restraint and reform of the Canada Health Transfer (CHT) escalator. However, the federal fiscal room created by the change in the CHT escalator has transferred the fiscal burden to provinces and territories. Parliamentary Budget Officer, 2013
278
ChapterIII:FederalUnderfundingofOntarians Lastyear,sevenoftenprovincespushedbacktheirexpectedbalancedbudget yearfromtargetsoutlinedinpreviousbudgets.Atthesametime,the2014federal budgetannouncedthatthefederaldebttoGDPratioisexpectedtofallto 25.5percentby201819,puttingthefederalgovernmentwellonitswayto achievingitstargetof25percentby2021. Notonlydoimbalancesexistbetweenthefederalgovernmentandprovinces, butinequitablefederalprogramsandpoliciesalsocauseimbalancesbetween OntariansandCanadiansinotherprovinces.AccordingtotheMowatCentre, thepeopleofOntariocontributed$11billionmoretothefederalgovernment thantheyreceivedinreturnin200910(theyearwiththelatestavailabledata). Thisrepresentsabout$850perOntarian.
86.2
Notes: Federal revenue collected from Ontarians and federal spending in Ontario are adjusted to assume a balanced federal budget. Federal spending in Ontario includes Ontarians share of federal public debt interest charges. Sources: Ontario Ministry of Finance calculations based on data from the Mowat Centre.
279
2014OntarioBudget
Ontarians transfer approximately $11B on net to the rest of Canada. This transfer is equivalent to 1.9% of the provinces GDP. This can be referred to as the gap between what Ontarians contribute to the federal government and what is returned to the province in the form of transfers and spending.
Noah Zon, Filling the Gap: Measuring Ontarios Balance with the Federation, Mowat Centre, (2013).
280
ChapterIII:FederalUnderfundingofOntarians
Federal Underfunding
Thecurrentsystemoffederalprovincialfiscalarrangementsisworkingagainst, notfor,thepeopleofOntario.Agoodexampleofanarrangementthatworks againstOntarioandneedstobemodernizedistheEqualizationprogram.While OntarioiscommittedtotheprinciplesoftheEqualizationprogram,theProvince doesnotsupportasystemoftransfersthatputsOntariospublicservicesatrisk andprovidesinequitablelevelsofsupporttodifferentpartsofCanada.
In2009,whenOntariofirstenteredEqualization,thefederalgovernment unilaterallyimposedaceilingtolimitannualgrowthontotalEqualization paymentstotherateofgrowthofnationalgrossdomesticproduct(GDP). ThecumulativeimpactoftheGDPceilingonEqualizationonOntariospayments isapproximately$6.7billionbetween200910and201415.In201415alone, theGDPceilingreducedOntariospaymentbynearly$670millionoverthree timesmorethanin201314. OntariosEqualizationpaymentwillbe$1.2billionlowerin201415thanthe previousyear,partlyduetofactorsthathavenorelationtoOntarioseconomic performance.Forinstance,$300millionofthereductioninOntariosentitlement in201415isduetotheclosureofQuebecsGentilly2nuclearpowerplant anactionthathasnobearingontherelativestrengthofOntarioorQuebecs economicbase.But,duetotheEqualizationformula,theclosureofGentilly2will increaseQuebecspaymentbetween201415and201617.Underthefederally imposedGDPceiling,oneprovincesincreasingEqualizationentitlementsarepaid forbyreductionsinpaymentstoothers.Inthiscase,largerpaymentstoQuebec reducepaymentstoOntario.
281
CHART 3.4
$ Billions
6 4.5 4 2.7 2 0 (2) (4) (6) ON AB BC SK NL PE NS MB NB
Source: Ontario Ministry of Finance.
(1.2)
(1.3)
(1.4)
(5.9) QC
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ChapterIII:FederalUnderfundingofOntarians
TABLE3.2
ImprovingProsperityinOntario
Benefit to Ontarians
Would ensure that todays workers are able to enjoy their retirement years. Would better meet the needs of communities and provide economic returns to Canada. Improvement in commuting times, economic competitiveness, and regional productivity. Ontario Chamber of Commerce estimates that Ring of Fire development would sustain 5,500 jobs.
283
2014OntarioBudget
RecentstudiesthathaveexaminedtheadequacyofretirementsavingsinCanadainclude: KeithHorner,RetirementSavingbyCanadianHouseholds,(2009);McKinsey&Company, AreCanadiansReadyforRetirement? (2012); Kevin D. Moore, William Robson and Alexandre Laurin, C.D. Howe Institute, Canadas Looming Retirement Challenge, (2010); Michael C. Wolfson, Projecting the Adequacy of Canadians Retirement Incomes, (2011); and CIBC, Canadians Retirement Future: Mind the Gap, (2013).
284
285
2014OntarioBudget Inadequate federal investment means fewer improvements to transit systems, roads, bridges, and water and wastewater systems. To support jobs and economic growth, federal funding for infrastructure should be closer to the level being invested by Ontario.
CHART 3.5
Provincial* (Ontario)
286
287
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Ring of Fire
OntarioisCanadasleadingjurisdictionfortheexplorationandproductionof mineralsandamajorplayeraroundtheworld.TheProvincesRingofFirearea, locatedabout535kilometresnortheastofThunderBay,holdssignificantdeposits ofminerals.Recentestimatessuggestthatthevalueofmineralresourcesinthe RingofFireareacouldbeupto$60billionforknownchromite(akeymaterialin theproductionofstainlesssteel)andnickeldeposits.
Key Facts
Ontario is Canadas leading destination for mineral exploration investment.
Upto
$60B
Almost
in known chromite and nickel deposits in the Ring of Fire area. of the metals mined in Ontario are processed here. Capital investment in mining is expected to increase to $3.8 billion in Ontario in 2012.
60% $3.8B
The Plan
Arrived at a regional framework agreement with the Matawa-member First Nations. Establish a development corporation to accelerate infrastructure development and collaborate with key partners. The Province is willing to commit up to $1 billion towards infrastructure development, contingent on matching investment by the federal government.
Ontario: Federal Government:
In GDP generated in Ontario For Ontarios Mining industry Jobs sustained annually in Ontario In additional revenues divided among federal, provincial and municipal governments
$1B
$1B?
Source: Ontario Chamber of Commerce, Beneath the Surface: Uncovering the Economic Potential of Ontarios Ring of Fire, (2014).
288
Chapter III: Federal Underfunding of Ontarians By 2025, significant output will be produced from the Ring of Fire, making the province one of the major world producers of chromite and strengthening Ontarios position as a world leader in nickel production. This would have a positive economic impact not only for Northern Ontario, but also for Canada as a whole.
There is a strong business case for governments to invest in this economic opportunity. We think the federal government has an obligation to be actively involved in this development, as it has for other transformative projects including the oil sands, the St. Lawrence Seaway, and Churchill Falls.
Ontario Chamber of Commerce, Beneath the Surface: Uncovering the Economic Potential of Ontarios Ring of Fire, (2014).
Ontario is playing a leadership role in the development of the Ring of Fire, and calls on the federal government to advance regional infrastructure development in the Ring of Fire, just as it has supported industry development in other provinces and territories.
TABLE3.3
Newfoundland and Labrador and Nova Scotia
ExamplesofFederalInvestmenttoEncourageDevelopment ofResourceIndustriesinOtherProvinces
To encourage the commercial development of offshore oil and gas, the federal government signed the 2005 Atlantic Accords with Newfoundland and Labrador and Nova Scotia. Newfoundland and Labrador received $2 billion from the federal government through the Accord. Nova Scotia received $1.1 billion between 200405 and 201415. In 2013, the federal government finalized a loan guarantee with Newfoundland and Labrador to develop the Muskrat Falls Hydroelectric Project. According to Newfoundland and Labrador, the loan guarantee is projected to result in savings of $1 billion in interest costs. The Commission on the Reform of Ontarios Public Services reported that federal support for the oil and gas sectors is worth $1.4 billion annually in addition to $2 billion for carbon capture and storage.
The Province is willing to commit up to $1 billion towards infrastructure development, contingent on matching investment by the federal government. This would ensure that the necessary infrastructure investments, estimated to be over $2 billion, would proceed.
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Immigration
Ontario remains the top destination for immigrants to Canada. Over the last 10 years, Ontario has received close to 1.2 million landed immigrants 46 per cent of all those who came to Canada. However, in recent years, economic immigration to other provinces has increased at Ontarios expense. This is due to growth in regional economic selection programs implemented by the federal government (e.g., Provincial Nominee Programs and Quebec Skilled Workers) that place Ontario at a disadvantage. In 2012, Ontario was limited to less than four per cent of landed economic immigrants through its Provincial Nominee Program, compared to an average of 54 per cent for other provinces (excluding Quebec). The lack of federal support for a more flexible selection process inhibits Ontarios ability to select the right combination of newcomers and undermines immigrants ability to contribute to the economy. This is why, in the fall of 2012, Ontario released its first Immigration Strategy, responding to the provinces demographic and economic realities. The Immigration Strategy called on the federal government to increase its Provincial Nominee Program levels to 5,000 by 2014. The federal government took a step in the right direction by increasing Ontarios Provincial Nominee Levels from 1,300 in 2013 to 2,500 in 2014. However, it still falls short of the 5,000 nominations Ontario has been seeking. A more flexible immigration selection system would allow Ontario to meet changing labour market needs and help the province grow. Ontario calls on the federal government to increase the nomination target and to bring Ontarios share of economic immigration up to 70 per cent, from the current share of only 50 per cent.
290
Ontario Needs a Committed Federal Partner to Invest in Stronger Ontario Health Care
The unilateral federal decision to limit the growth of the Canada Health Transfer (CHT) will have a significant impact on Ontarios delivery of quality health care. Instead of maintaining the CHT annual growth rate at six per cent, the transfer is now expected to increase at the rate of nominal economic growth nationally, approximately 4.3 per cent, starting in 201718. By 202324, this federal action will remove an estimated $8 billion from health care in Ontario and $21 billion nationally. The cumulative impact would be equivalent to reducing federal funding of health care by about $550 for every Ontarian by 2023. The federal funding that is being reduced could instead be used to help support Ontarios ongoing efforts to decrease wait times for surgical and diagnostic services, hire more doctors and nurses who provide Ontarians with access to primary care, and improve investments in the provinces home care initiatives that help older Ontarians live healthier, more independent lives.
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CHAPTER
IV
ChapterIV:StrengtheningRetirementSecurityinOntario
Highlights
MovingforwardwithamandatorypensionplantheproposedOntario RetirementPensionPlanthefirstofitskindinCanadathatbuildsonthe strengthsoftheCanadaPensionPlan; Introducingalegislativeframeworkforpooledregisteredpensionplansthat isbroadlyconsistentwiththemodelintroducedbythefederalgovernment andadoptedbyvariousprovinces; Enhancinginvestmentopportunitiesforbroaderpublicsectorpensionplans throughpooledassetmanagement;and Enablingtheconversionofemployersponsored,singleemployerpension planstojointlysponsoredpensionplans.
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Introduction
Thegovernmentiscommittedtoastrongandsecureretirementincomesystemto helpensurethatOntariansarebetterabletoenjoytheirretirementyears. CanadaspubliclyadministeredCanadaPensionPlan(CPP)isfundamentaltothe retirementincomesecurityofallCanadians,butitsbenefitsalonearetoolowtomeet theneedsofmiddleincomeearners.AsnotedinOntariosLongTermReportonthe Economy(2014),twothirdsofworkersdonotparticipateinworkplacepensionplans. Severalstudieshaveshownthat,unlessactionistaken,asignificantportionof todaysworkerswillfaceadeclineintheirlivingstandardinretirement,andthat thisproblemwilllikelyworsenovertime. The
Undersaving Problem
Jim Leech & Jacquie McNish, The Third Rail, (McClelland & Stewart, 2013), p. 25.
For middle-income Canadians, as you project ahead, the Canada Pension Plan is not going to be able to do that which it must The role of government is not only to deal with today.
CIBC World Markets Inc., Canadians Retirement Future: Mind the Gap, 2013.
296
CHART 4.1
Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series Series 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Notes: CPP amounts assume the individual contributes for 40 years, begins collecting CPP at age 65 and had steady career before-tax earnings of $45,000, $70,000 and $90,000, expressed in 2014 dollars. OAS benefit amounts are based on estimates for 2014 and assume the individual has been a resident of Canada for 40 years after the age of 18, and begins collecting benefits at age 65. The target income levels are based on 70 per cent of pre-retirement income. Figures do not take into account the impact of income tax. Source: Ontario Ministry of Finance.
297
2014OntarioBudget Inadequatesavingnotonlyputsfutureretireesincomesatrisk,butwillalsohave negativelongtermimpactsontheeconomiesofOntarioandCanada. Increasingsavingstodaywouldmeanhigherincomesandincreasedspending byretireesthatwouldhelpgeneratefutureeconomicgrowthandemployment. ThiswouldhelptheOntarioeconomybettercopewithpopulationagingand couldhelpreduceintergenerationaltransfersfromfutureworkerstoretirees. AsnotedintherecentlypublishedpaperbytheformerGovernoroftheBankof Canada,DavidDodge,higherretirementsavingswouldalsomakemorecapital availableintheeconomyforinvestment.1Increasedinvestmentwouldresultin higherproductivity,leadingtostrongereconomicgrowthandjobcreation.
298
ChapterIV:StrengtheningRetirementSecurityinOntario
Scotiabanknewsrelease,AreYouOnTracktoAchieveYourRetirementGoals? (February6,2014).
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CHART 4.2
Years
Notes: The chart simulates stock and bond rates of return over a 40-year horizon based on estimates reported in Richard Guay and Laurence Allaire Jean, Long-Term Returns: A Reality Check for Pension Funds and Retirement Savings, C.D. Howe Institute, Commentary 395 (2013). The illustrated investment portfolio is composed of 50 per cent Canadian equities and 50 per cent Canadian bonds, with management expense ratios (MERs) of 0, 1, and 2.4 per cent. The 2.4 per cent MER is derived from the weighted average MER for mutual funds with $25 million or more in assets in 2013. Annual rates of return change with the number of years invested. The compounded annual growth rate without fees reaches about 4.9 per cent after 40 years but only 3.8 per cent with a 1 per cent MER and 2.5 per cent with a 2.4 per cent MER. The investment is assumed to be held in an RRSP. Sources: C.D Howe Institute and Ontario Ministry of Finance.
300
ChapterIV:StrengtheningRetirementSecurityinOntario
24
History
Projection
20
Females
Males
16
12
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033
2014OntarioBudget
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ChapterIV:StrengtheningRetirementSecurityinOntario However,thebasicstructureoftheCPPhasnotchangedsincetheplanwas createdin1966.TheCPPsreplacementrateisonly25percentofpensionable earningsandworkerscannotcontributeonamountsaboveamaximumearnings threshold.4Theselimitsmeanthatthecurrentmaximumbenefitisonlyabout $12,500peryear,andtheaverageannualbenefitpaidisfarbelowthat,atabout $6,400inCanadaand$6,800inOntario.Theseamountsarenothighenoughto allowworkers,particularlymiddleincomeearners,tomaintaintheirstandardof livinginretirement. EnhancingtheCPPiscriticaltoensuringOntariansandCanadians,particularly middleincomeearners,havegreaterfinancialsecurityinretirement.Ontarios preferredapproachtostrengtheningtheretirementincomesystemisthroughan enhancementtotheCPP. Ontariohaslongplayedaleadershiproleinretirementincomesecurityandhas beenadvocatingforanenhancementtotheCPPsince2010.In2013,aschairof theCounciloftheFederation,Ontarioelevatedthepressingneedforpension reformtoanationaldialogue.Throughthisrole,Ontarioleddiscussionsamong provincialandterritorialfinanceministersonwaystoimproveCanadas retirementincomesystem,includinganenhancementtotheCPP.Duringthese discussions,provincesandterritoriesagreedtocontinueworkonapossibleCPP enhancement;forexample,byengagingfurtherwithbusinessandemployer communities. Despitetheconsensusamongprovincesandterritoriestocontinuethis collaborativeeffort,inDecember2013,thefederalgovernmentunilaterally shutdownCPPenhancementdiscussions. Thisactionbythefederalgovernmentnotonlycurtailedworkonapotential enhancement,buthasalsocrowdedoutdiscussionsonotherpossiblereformsto modernizetheCPP.
Theyearsmaximumpensionableearnings(YMPE)is$52,500in2014.TheYMPEisindexed toannualincreasesintheaveragewage.
303
2014OntarioBudget First-of-Its-Kind Provincial Pension Plan: The Ontario Retirement Pension Plan TheProvinceisnotpreparedtowaitforthefederalgovernmenttostepupto addresstheretirementincomechallengecurrentlyfacedbytodaysworking Canadians.Unlessactionistakennow,thereisariskthattheretirementsavings problemwillworsenovertime.Theretirementincomesystemwillbecome increasinglyoutoftouchwiththechangingworkforce,placingyounger generationsatasignificantdisadvantagerelativetotheirparents. Giventhefederalgovernmentsdecisiontoshutdowndiscussionsonan enhancementtotheCPP,Ontarioisproposingtomoveforwardwithanew mandatoryprovincialpensionplantheOntarioRetirementPensionPlan (ORPP)thatwouldbecosteffective,responsibleanddesignedtomeetthe needsofa21stcenturyworkforce. TheORPPwouldbethefirstofitskindinCanadaandwouldexpandpension coverageinitiallytomorethanthreemillionworkingOntarianswhocurrentlyrely ontheCPP,OASandtheirownsavingsforretirementincome.Itwouldbuildon thekeyfeaturesoftheCPP,andcouldlaterbeintegratedwiththeCPPshould negotiationsonanenhancementbesuccessfulinthefuture.
304
ChapterIV:StrengtheningRetirementSecurityinOntario Key Design Features of the Ontario Retirement Pension Plan Bytargetingthosemostatriskofundersaving,particularlymiddleincome earners,theORPPwouldhelpOntarioworkingfamiliesbuildamoresecure retirementfuture. TheORPPwouldincludethefollowingdesignfeatures: Provideapredictablestreamofincomeinretirementbypoolinglongevity andinvestmentrisk,andindexingbenefitstoinflation,similartotheCPPs retirementbenefit. Requireequalcontributionstobesharedbetweenemployersand employees,notexceeding1.9percenteach(3.8percentcombined)on earningsuptoamaximumannualearningsthresholdof$90,000.TheORPP maximumearningsthresholdwouldincreaseeachyear,consistentwith increasestotheCPPmaximumearningsthreshold. Aimtoprovideareplacementrateof15percentofanindividualsearnings, uptoamaximumannualearningsthresholdof$90,000.
WhencombinedwiththeretirementbenefitprovidedthroughtheCPP: Anindividualwithsteadycareerearningsover40yearsof$52,500 themaximumannualearningscoveredbyCPPwouldreplaceabout 40percentofpreretirementincomeandwouldreceiveanannuallifetime benefitofapproximately$19,935.Thisrepresentsa60percentincrease overthemaximumCPPbenefit. Anindividualwithsteadycareerearningsover40yearsof$90,000 themaximumannualearningsthresholdundertheORPPwouldreplace about30percentofpreretirementincomeandwouldreceiveanannual lifetimebenefitofabout$25,275.Thisisroughlydoubletheretirement benefittheindividualwouldreceiveundertheCPPalone.
For illustrative examples in this chapter, earnings levels are stated in 2014 dollars. Steady career earnings means that the individual earned the equivalent of the stated earnings in each of the 40 years, taking into account annual increases in the average wage.
305
2014OntarioBudget TheORPPwouldbepubliclyadministeredatarmslengthfromgovernment, haveastronggovernancemodelandberesponsibleformanaginginvestments associatedwithannualcontributionsofapproximately$3.5billion.Benefitswould beearnedascontributionsaremadetoensurethatthesystemisfair, andyoungergenerationsarenotburdenedwithadditionalcosts. SincetheORPPisintendedtoassistindividualsmostatriskofundersaving, particularlymiddleincomeearnerswithoutworkplacepensions,thosealready participatinginacomparableworkplacepensionplanwouldnotberequiredto enrolintheORPP. Toreducetheburdenonlowerincomeworkers,earningsbelowacertain thresholdwouldbeexemptfromcontributions,similartotheCPP.Currently, theCPPhasanannualbasicexemptionof$3,500.Thegovernmentwillconsulton whethertheORPPslowerincomethresholdwouldmirrorthatoftheCPP. Thegovernmentrecognizestheuniquestatusofselfemployedindividualsin thelabourmarketasbothemployeeandemployer.Thegovernmentwillconsult todeterminehowbesttoassistselfemployedindividualsinachievingasecure retirementfuture. RecognizingthatretirementincomesecurityiscriticallyimportanttoOntario familiesandforthefutureprosperityoftheprovince,thegovernmentwillbe movingforwardwithimplementationoftheORPPasapriority.TheORPPwould beintroducedin2017tocoincidewiththeexpectedreductionsinEmployment Insurancepremiums. EnrolmentofemployersandemployeesintotheORPPwouldoccurinstages, beginningwiththelargestemployers.Contributionrateswouldbephasedinover twoyears.
306
ChapterIV:StrengtheningRetirementSecurityinOntario Illustrative Examples of the Ontario Retirement Pension Plan TheORPPnumericalexamplesarebasedonanalysisofrecentCPPenhancement proposals.5TheseexamplesmayhelpshowhowtheORPPmightaddressthe undersavingproblem.SincethedesignandstructureoftheORPPmayvaryfrom theCPP,actuarialanalysiswouldberequiredtofinalizeelementsoftheORPP.6 Barbara,BonnieandBerniceareabouttoenterthelabourforceandplantowork for40yearsandretireat65.Forillustrativepurposes,atage65,Barbara,Bonnie andBernicewillhavehadsteadycareerearningsof$45,000,$70,000and$90,000 respectively,in2014dollars.Chart4.4illustratestheannualORPPretirement benefit,thebenefitlevelwhencombinedwithCPPbenefits,andtheannualCPP andORPPcontributions.7 Withacontributionrateof1.9percent,Barbara(earning$45,000)would contributeabout$788annuallytotheORPP,matchedbyheremployeroverher workingcareer.Inretirement,Barbarawouldreceive: AmaximumORPPbenefitof$6,410annuallyforlife;and CombinedORPPandCPPbenefitsofabout$17,090annuallyforlife, replacingabout40percentofherpreretirementincome.
CPPenhancementestimatesarebasedonthe25thCPPActuarialReportasatDecember31, 2009. 6 DifferencesbetweenCPPassumptionsandthoseoftheORPPcouldaffecttheestimated contributionratesandbenefitlevelsoftheORPPdiscussedabove.Inadditiontopotential differencesinplandesign,otherfactorsthatcouldvarybetweentheCPPandtheORPP includethedemographicprofileofmembers(suchaslongevity),anddifferencesinlabour forcegrowth,realwagegrowth,inflation,therealrateofreturnandadministrativecosts. 7 TheestimatedvaluesoftheCPPandORPPbenefitsshownintheillustrativeexamplesdonot exactlyequalthenotedreplacementratemultipliedbythenotedearningslevel.SeeChart 4.4notes.
307
CHART 4.4
$22,430
$9,970
Max. annual combined contributions = $2,525
$25,275
$12,815
Max. annual combined contributions = $3,285
$17,090
$6,410
Max. annual combined contributions = $1,575
ORPP
Replacement rate = 15% Maximum earnings threshold = $90,000 Combined contribution rate = 3.8%
$10,680
Max. annual combined contributions = $4,110
$12,460
Max. annual combined contributions = $4,850
$12,460
Max. annual combined contributions = $4,850
CPP
Replacement rate = 25% Maximum earnings threshold = $52,500 Combined contribution rate = 9.9%
$70,000 Bonnie
Notes: CPP and ORPP amounts assume 40 years of contributions on steady career earnings (before tax). All figures are expressed in 2014 dollars. The estimated value of the CPP and ORPP benefits shown above do not exactly equal the noted replacement rate multiplied by the noted earnings level. In the above chart, the identified income levels reflect the individuals career earnings. However, the value of benefits is based on the workers career earnings adjusted for the average of the ORPPs maximum earnings threshold in the year of retirement and four previous years. This approach is consistent with the CPP. All figures are rounded.
308
ChapterIV:StrengtheningRetirementSecurityinOntario Implementation and Next Steps Todate,thegovernmenthasbenefitedtremendouslyfromtheadviceofformer PrimeMinisterPaulMartin,drawingonhisextensiveexperienceinretirement incomesecurityandCPPreform.InJanuaryofthisyear,thegovernment establishedaTechnicalAdvisoryGrouponRetirementSecurity,bringingtogether arangeofpensionexpertiseandperspectives. Asnotedearlier,aprovincialpensionplanofthisscalewouldbethefirstofits kindinCanada.ThegovernmentwillcontinuetoengagetheTechnicalAdvisory Groupon,amongotherissues,theappropriatelowerincomethresholdandhow besttoassisttheselfemployed.Furtherwork,includingactuarialanalysis,isalso requiredtofinalizetheORPPdesigndetails. OntarioishometosomeofCanadaslargestandmosthighlyregardedpension funds.Considerationwillbegiventohowtoleveragetheexpertiseofthese publicsectorpensionplanswithrespecttotheirstronggovernanceandproven investmenttrackrecord.Inaddition,thegovernmentwillconsiderhowto leveragetheprovincesstrongfinancialservicessectorandOntarios proposednewassetpoolingentityintheadministrationoftheplanand investmentmanagement. OntariowillworkwithotherprovincestoexaminewhethertheORPPcould beexpandedtoenhancetheretirementincomesecurityofthoseliving outsideOntario. ToensuretheORPPwouldeffectivelybalanceprovidingbenefitsecurityin retirementwithminimizingtheimpactonbusiness,thegovernmentwillconsult withOntarioemployersandlabour.Thegovernmentalsoplanstoworkwiththe federalgovernment,wherenecessary,tofacilitateaseamlessimplementation oftheORPPforOntarians. Furthertechnicaldetailswillbereleasedlaterthisyearpriortointroducing legislation.
309
2014OntarioBudget Impact on the Undersaving Challenge TheORPPwouldbeamajorstepinaddressingtheundersavingchallengeand modernizingtheretirementincomesystem. TheORPPwouldexpandpensioncoverageinOntarioatatimewhenworkplace pensioncoverageisonthedecline.Itwouldbuildonadvantageousfeaturesof theCPPsuchasbenefitpredictability,pooledlongevityandinvestmentrisk,and lowcostadministration.TheORPPwouldassistOntariosmodernworkforce inpreparingforretirementwhilesupportingastrongandprosperousOntario.
310
ChapterIV:StrengtheningRetirementSecurityinOntario Key Design Features Afterreviewingfeedbackfromavarietyofstakeholders,includingmembersof thepublic;labourandemployerrepresentatives;retireeorganizations;pension experts;andvariouspublicandprivatesectorentities,thegovernmenthas decidedtomoveforwardwithalegislativeframeworkforPRPPsthatisbroadly consistentwiththemodelintroducedbythefederalgovernmentandadoptedby variousprovinces.Inparticular,anOntarioPRPPframeworkwouldincludethe followingkeydesignfeatures: VoluntaryparticipationandcontributionsbyemployersEmployers wouldchoosewhethertooffertheiremployeesaPRPPandwhetherto contributetotheiremployeesPRPP; AutomaticenrolmentofemployeesWhereanemployerelectstooffer aPRPP,enrolmentofemployeeswouldbeautomaticunlessanemployee choosestooptoutwithinaspecifiedperiod;and LowcostAdministratorswouldberequiredtoprovidePRPPsatalow costtoplanmembers.
Implementation ThegovernmentintendstointroducePRPPlegislationinthefallof2014. Ontariocontinuestosupportnationaleffortstoimprovetheretirementincome systemandrecognizesthevalueinworkingwithotherjurisdictionstodevelop innovativesolutionsthatadvancethisimportantgoalforallCanadians.AnOntario PRPPframeworkthatisharmonizedwiththoseofotherjurisdictionswouldassist increatingacoordinatedapproachtoadministrationandregulationacrossthe country.Notonlywouldthishelptocreateeconomiesofscaleandminimizecosts, butitwouldalsofostergreaterportability,supportingamodern,mobile workforce.
311
312
ChapterIV:StrengtheningRetirementSecurityinOntario Thegovernmentplanstoenactregulationsthatdefinethefundinglevelatwhich acontributionholidaycanbetakenandtheduration.Inaddition,proposednew regulationswouldsetparametersforacceleratedfundingofbenefit improvementsinunderfundedpensionplans.Thesenewruleswouldensureplans canmanagefuturefundingpressuresandcontinuetopayforthebenefitsthey offerinthelongerterm. Thegovernmentwillalsocarefullyconsider,inconsultationwithaffected stakeholders,theimplementationofotherfundingruleschangestosupportthe longtermsustainabilityofDBpensionplansinOntario. Aswell,thegovernmentintendstoaddresstheregulationsthattemporarily exemptspecifiedOntariomultiemployerpensionplansandjointlysponsored pensionplans(JSPPs)notsubjecttosolvencyfundingrequirementsfromthe solvencyconcernstest.Thistestcurrentlyrequiresplanswithsolvencyfunded ratiosoflessthan85percenttofileplanvaluationswiththeregulatorannually, ratherthantriennially. Thegovernmentintendstoextendtheexemptionthatwouldotherwiseexpireon December31,2014,toDecember31,2017,toallowsufficienttimefor consultationonanappropriatetestforallnonsolvencyfundedplans.This wouldincludetargetbenefitpensionplans,forwhichaframeworkiscurrently underdevelopment. Thegovernmentisalsocurrentlyseekingfeedbackfromstakeholdersbefore puttinginplacenewregulationstofurtherenhancetransparencyand accountabilitywithrespecttoplanfundingandinvestmentstrategiestoplan membersaswellasformerandretiredmembers.
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CHAPTER V
A Fair and Efcient Tax System
ChapterV:AFairandEfficientTaxSystem
Highlights
AproposedPersonalIncomeTaxincreaseontaxableincomesabove $150,000,affectingthetoptwopercentofOntariotaxfilers. Legislativeamendmentsthatwouldimprovethefairnessofdividend taxcredits. Tosupportpublictransit,transportationinfrastructureandotherpriority projects: Aproposedchangetobettertargetthesmallbusinessdeduction;and Aproposedincreasetothetaxrateonaviationfuel. Anincreasetothetobaccotaxratefrom12.350centsto13.975cents percigaretteandpergramofothertobaccoproducts. Enhancedcompliancemeasurestopreservetheintegrityofthetax administrationsystem. Ataxcreditforfarmerswhodonatetocommunityfoodprogramsto encouragethedonationofagriculturalproductstothoseinneed. Continuedreviewoftaxexpenditures,includingresearchanddevelopment taxcredits,theApprenticeshipTrainingTaxCreditandtheCooperative EducationTaxCredit,toachievebetteroutcomesandimprovecost effectiveness.
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Introduction
Ontariohastakenmanystepsinthelastfiveyearstofosteramorecompetitive businessclimate,positioningtheprovinceasoneofthemostattractivelocations intheindustrializedworldfornewbusinessinvestment.Thegovernmenthas reducedCorporateIncomeTax(CIT)ratesforlargeandsmallbusinesses, eliminatedtheCapitalTaxandintroducedtheHarmonizedSalesTax(HST), removingembeddedsalestaxesandprovidingsavingstobusinessesthatcan beusedtohelpthemgrowandcreatejobs.Thesemeasuresprovidesavingsto businessesofmorethan$9billionperyear. Thegovernmenthasalsomadechangestohelplowtomoderateincomepeople withtheirexpenses.Forexample,thegovernmentenhancedpropertyandsales taxcreditsandcombinedpaymentofthecreditsintotheOntarioTrilliumBenefit. OntariohasaprogressivePersonalIncomeTax(PIT)structurewherehighertax ratesapplyastaxableincomesincrease.In2012,thegovernmentincreasedPIT onthetop0.2percentoftaxfilers.Tocontinuefundingprogramsinafairand balancedway,theProvinceproposesthatthosewiththegreatestabilitytopay contributemorethroughtheirtaxes.ThePITchangesproposedinthisBudget wouldonlyaffectthetoptwopercentofOntariotaxfilersthosewithtaxable incomesover$150,000. Thegovernmentisproposingtocreatetwodedicatedfundstosupportpublic transitandtransportationinfrastructureprojects.Proposedrevenuesourcesfor thesefundsincluderestrictinglargecorporationsfromclaimingthesmallbusiness deductionandphasinginameasuredincreasetothetaxrateonaviationfuel. TheProvincewouldalsodedicatetheproceedsfrom7.5centsperlitreofthe existingprovincialgasolinetaxtothesefunds,withoutincreasingthecurrentrate of14.7centsperlitre,andrepurposerevenuesfromtheexistingHSTchargedon thecurrentprovincialtaxesongasolineandroaddiesel.Thiswouldbeinaddition tothesignificantongoingfundingOntariocurrentlyprovidestomunicipaltransit systemsacrosstheprovincebysharingtwocentsperlitreofprovincialgastax revenues.AdditionaldetailsonthesenewinvestmentscanbefoundinChapterI, SectionB:BuildingModernInfrastructure.
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ChapterV:AFairandEfficientTaxSystem ATechnicalPanelhasbeenestablishedtoreviewOntariosbusinesssupport programsandprovideaframeworkforongoingevaluation.ThePanelsfinal reportisexpectedthisspring.TheProvincewillcontinuetoreviewexistingtax creditstoensurethattheyareeffectiveandefficient. Aspartofitscommitmenttohavingafairandefficienttaxadministration system,thegovernmentwilltakeadditionalmeasurestoaddressthe undergroundeconomy,corporatetaxavoidanceandcontrabandtobacco. Similarly,thegovernmentwillcontinuetoexploreopportunitiesforimproving servicestotaxpayers,suchasimplementingenhancedelectronicservices. ThegovernmentwillalsoreviewitstaxcollectionarrangementswiththeCanada RevenueAgencyonaregularbasistoensurethatqualityservicesareprovided toOntariansandthatoptimalrevenuesarerealizedthroughtaxadministration andcomplianceactivities.
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2014OntarioBudget
Table5.1
OntarioPersonalIncomeTax:TaxableIncome ThresholdsandRates
Proposed, 2014 and Subsequent Years Taxable Income Range ($) Above 220,000 150,000220,000 Tax Rate (Per Cent) 13.16 12.16 Share of tax filers
Current, 2014 Taxable Income Range ($) Above 514,090 Tax Rate (Per Cent) 13.16
80,242514,090
11.16
40,12080,242 Up to 40,120
9.15 5.05
Up to 150,000
No Change
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ChapterV:AFairandEfficientTaxSystem Thenewincomethresholdswouldnotbeadjustedforinflationeachyear, unlikethecurrenttaxableincomethresholds. ThesemeasureswouldonlyapplytothetoptwopercentofOntariotaxfilers thosewithtaxableincomesabove$150,000andwouldnotapplyto98percent oftaxfilers.About220,000peoplewouldpaymoreOntarioPITin2014ontheir taxableincomeabove$150,000.Ofthese: About115,000peoplewithtaxableincomebetween$150,000and $220,000wouldpay$425moreOntarioPIT,onaverage,orabout 0.2percentoftheaveragetaxableincomeofthisgroup;and Theremaining105,000people,withtaxableincomeabove$220,000, wouldpayabout$5,500moreOntarioPIT,onaverage,orabout onepercentoftheaveragetaxableincomeofthisgroup.
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324
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2014OntarioBudget
UndertheFuelTaxAct,taxexemptdieselfuelmaybeusedinunlicensed commercialvehicles,suchasroadbuildingmachines.AmendmentstotheHTA wouldincludeimposingregistrationandlicensingrequirementsonroadbuilding machinesthatusepublicroadsandhighways.Assuch,additionalfueltaxrevenue wouldresultfromlicensedroadbuildingmachinesthatwouldnotbepermittedto usetaxexemptfuel. TheMinistryofFinancewillworkwiththeMinistryofTransportationonreviewing theregistrationandlicensingrequirementsofthesevehicles. Therevenuegeneratedbythischangewouldbededicatedtopublictransit, transportationinfrastructureandotherpriorityprojectsacrosstheprovince. SeeChapterI,SectionB:BuildingModernInfrastructureformoreinformation.
326
ChapterV:AFairandEfficientTaxSystem
CHART 5.1
Sources: U.S. Bureau of Economic Analysis, National Science Foundation and Statistics Canada.
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328
ChapterV:AFairandEfficientTaxSystem
Revenue Integrity
Intodaysglobalenvironment,acompetitivetaxsystemisfundamentalto economicgrowthandprosperity.Equallyimportantistheneedtohaveafair andefficienttaxadministrationsystemthatensureseveryonepaystheirfair shareoftaxes.Iftheintegrityofthetaxadministrationsystemiscompromised, ithasseveralconsequences,including,mostdirectly,thelossoftaxrevenues andthelossofconfidenceintheoveralltaxsystem.TheOntariogovernmentis determinedtotackleareaswherethereareschemesandpracticesthatavoid thepaymentofrequiredprovincialtaxes.
Underground Economy
ArecentstudybyStatisticsCanadarevealedthattheundergroundeconomy remainsasignificantissue.Itisestimatedthattheundergroundeconomy accountsforapproximately2.3percentofgrossdomesticproduct(GDP), whichtranslatesintoapproximately$15billionfortheOntarioeconomy. Whilethemostdirectimpactoftheundergroundeconomyisthelossof significantrevenuetogovernments,therearealsoimplicationsforbusiness competitiveness,vulnerableworkersareexposedtounsafeworkingconditions, andconsumersmaybeputatriskwheretherearecashtransactions. TheministriesofFinance,LabourandConsumerServicesarecollaboratingto developanactionplanfocusedonaddressingillegalactivitiesinhighrisksectors. Theapproachwillfocusonincreasingpublicawareness,coordinatingenforcement activitiesandworkingwithindustrypartnerstoencouragebusinessestooperate inaccordancewiththeProvinceslaws. ThegovernmentisalsoworkingwiththeCanadaRevenueAgency(CRA)on enhancingcomplianceactivitiestoaddresstheundergroundeconomy.Aspartof amultiyearagreementnegotiatedin2013,theCRAhasbeenabletogenerate morethan$60millioninadditionaltaxrevenuesforOntarioin201314. Inaddition,throughtheTenderContractTaxComplianceinitiativelaunchedin February2014,businessesthatareengagedinprocurementactivitywiththe Ontariogovernmentmustdemonstrate(viacertificationoftaxcompliance)that theyarecompliantwiththeirprovincialtaxobligationspriortobeingawarded governmentcontracts.
329
330
ThroughthemultiyearenhancedcomplianceagreementsignedwiththeCRAlast yeartoaddressaggressiveinternationaltaxplanning,Ontarioreceivedincreased revenuesofmorethan$150millionin201314. Ontarioremainsconcernedaboutthelackofactionbythefederalgovernment ontheissueofinterprovincialincomeshiftingthatallowscorporationstoshift profitsandlossesacrossprovincialboundaries,oftenresultinginsignificantloss ofcorporatetaxrevenuesforprovinces,butnotforthefederalgovernment. InMarch2013,FinanceMinisterCharlesSousawrotetothefederalgovernment urgingthemtoaddresstheissueofinterprovincialprofitandlossshiftingbut, todate,thatrequesthasnotbeenaddressed.
2014OntarioBudget
Thesestudiesinclude:CigaretteTaxesandSmokingParticipation:EvidencefromRecentTax IncreasesinCanada,ConcordiaUniversity(2011);TheImpactofthe2009FederalTobacco ExciseTaxIncreaseonYouth Tobacco Use, University of Illinois at Chicago (2012); Differential Effects of Cigarette Price Changes on Adult Smoking Behaviours, Washington University School of Medicine (2012); and Global Effects of Smoking, of Quitting, and of Taxing Tobacco, Centre for Global Health Research, sponsored by St. Michaels Hospital and the University of Toronto (2014).
332
333
2014OntarioBudget To protect youth from cheap illegal products, improve community health and safety, and ensure appropriate taxes are paid, the government will be strengthening tobacco enforcement. Accordingly, the government will be proceeding with the implementation of the raw leaf oversight system effective January 1, 2015. This is consistent with the governments intent from Bill 186, SupportingSmokeFreeOntariobyReducingContrabandTobaccoAct,2011. The government also plans to introduce amendments to the TobaccoTaxAct that will increase fines for offences related to marked tobacco products, impound vehicles used to transport illegal tobacco and strengthen other enforcement measures.
334
Under the terms of the CanadaOntario Tax Collection Agreement, Ontario will adopt these measures and their effective dates once federal legislative and regulatory changes have been approved. Similarly, the 2014 federal budget proposed an exemption from HST for certain health-related services and medical devices, that, once federal legislative changes are made, will apply in Ontario.
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2014OntarioBudget
Other Measures
Provincial Land Tax
The government is moving forward with its plan to reform the Provincial Land Tax (PLT). Provincial Land Tax is a property tax that applies in unincorporated areas outside municipal boundaries in Northern Ontario. The Province has not adjusted PLT revenues in several decades and, as a result, PLT rates in unincorporated areas are now significantly lower than municipal property tax rates in neighbouring municipalities. The 2013OntarioEconomicOutlookandFiscalReviewannounced that the Province would be reviewing the PLT to address the inequities that northern municipalities have identified between taxpayers within their boundaries and those outside. While the review is underway, PLT rates for 2014 have been frozen at 2013 levels. The Province will ensure PLT reform addresses the concerns of northern municipalities in a fair and balanced manner. In addition to consulting northern municipalities, the Province will seek input from residents and other stakeholders in the unincorporated areas. The consultations will be completed in 2014 and solutions will be brought forward to address tax fairness in Northern Ontario for the 2015 tax year.
Hospices
Ontario recognizes that end-of-life or palliative care encompasses a spectrum of activities beyond administering medicine. It is therefore making regulatory amendments to clarify the scope of the property tax exemption announced in the 2011OntarioBudget for non-profit hospices providing end-of-life care. The amendments would ensure that facilities providing supportive services for the care of terminally ill patients continue to receive fair treatment from the property tax system.
336
Summary of Measures
TABLE5.2 ($Millions) 2014BudgetTaxMeasures
201415
Income Tax Changes for People Personal Income Tax Rate Changes Tax Changes for Business Small Business Deduction Tax on Aviation Fuel Registration Requirements for Road-Building Machines1 Revenue Integrity Tobacco Tax Increase2 Federal Tax Measures Paralleling Federal Tax Measures Total
1
Amount shown is the additional fuel tax revenue that would result from changing registration and licensing requirements for road-building machines (made through amendments to the Highway Traffic Act). Impacts reflect an estimated decrease in smoking prevalence over time.
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2014OntarioBudget
Technical Amendments
To improve administrative effectiveness and enforcement, and maintain the integrity and equity of Ontarios tax and revenue collection system, as well as enhance legislative clarity and regulatory flexibility to preserve policy intent, amendments will be proposed to various statutes, including: AlcoholandGamingRegulation andPublicProtectionAct,1996 AssessmentAct BroaderPublicSector AccountabilityAct,2010 BuildingCodeAct,1992 ChildrensLawReformAct CommodityFuturesAct CompulsoryAutomobile InsuranceAct ElectricityAct,1998 EnvironmentalBillofRights,1993 FamilyLawAct FamilyResponsibilityandSupport ArrearsEnforcementAct,1996 FinancialAdministrationAct HousingDevelopmentAct IncomeTaxAct InsuranceAct LandTransferTaxAct LegislationAct,2006 LiquorControlAct LobbyistsRegistrationAct,1998 LongTermCareHomesAct,2007 MinistryofEnergyAct,2011 MinistryofMunicipalAffairsand HousingAct MinistryofRevenueAct OntarioEnergyBoardAct,1998 OntarioMortgageandHousing CorporationAct PensionBenefitsAct PrepaidHospitalandMedical ServicesAct SecuritiesAct TaxationAct,2007 TaxpayerProtectionAct,1999 TobaccoTaxAct
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CHAPTER VI
Borrowing and Debt Management
ChapterVI:BorrowingandDebtManagement
Highlights
Totallongtermpublicborrowingfor201415isforecasttobe$35.0billion, $1.0billionlowerthantheamountborrowedin201314and$2.6billion lowerthanforecastfor201415inthe2013Budget. Thetotalfundingrequirementfor201415is$1.6billionhigherthanforecast inthe2013Budgetprimarilybecauseofahigherprojecteddeficit.Thishigher projecteddeficitislargelyduetolowerfederaltransfersandslowerthan forecasteconomicgrowth,andstrategicinvestmentsintheeconomy. Cumulatively,sincethe2012Budget,longtermpublicborrowingis forecasttobelowerby$4.5billionforthethreeyearperiodfrom201213 to201415.Thislowerforecastisreflectedina$6.2billionreductionin projectednetdebtoverthesamethreeyearperiod. TheweightedaveragetermtomaturityoflongtermProvincialdebtissued was13.6yearsfor201314.Overthepastfouryears,theProvincehas extendedthistermsignificantly. Netdebtisprojectedtobe$269.2billionasofMarch31,2014,lowerthan the$272.8billionforecastinthe2013Budget,andthe$279.8billionforecast inthe2012Budget. ThenetdebttoGDPratioisprojectedtobe38.9percentattheendof fiscal201314,comparedtothe39.3percentforecastinthe2013Budget andthe40.8percentforecastinthe2012Budget.Thisratioisexpectedto peakat40.8percentin201516,slightlyhigherthanthe40.4percent forecastinthe2013Budget,butlowerthanthe41.3percentforecastinthe 2012Budget. ThegovernmentcontinuestomaintainatargetofreducingOntariosnet debttoGDPratiotoitsprerecessionlevelof27percent.
341
2014OntarioBudget Interestondebt(IOD)expenseisprojectedtobe$10,556millionfor 201314,whichis$49millionlowerthanforecastinthe2013Budget. For201415,IODisprojectedtobe$11,010million,whichis$138million lowerthanforecastinthe2013Budget. For201415,theimpactofaonepercentagepointchangeininterestrates onIODisapproximately$400millionfortheProvince. TheProvinceplanstoissuegreenbonds,whichwillbeanimportanttoolto helpOntariofinancetransitandotherenvironmentallyfriendlyprojects acrosstheprovince,andwillbenefitfromOntariosabilitytoraisefundsat lowinterestrates. Ontariocontinuestohavepreferredaccesstointernationalanddomestic financialmarkets.TheProvincewillremainflexibleinitsborrowingapproach bymonitoringallmajormarketsandseekingthemostcosteffectivemeans, overthelongterm,tofinanceOntariosborrowingprogram. TheProvincemaintainshighlevelsofunrestrictedliquidreserves,which averaged$24.9billionfor201314toensureOntariowillalwayshave sufficientliquiditytomeetitsfinancialobligations. Thestrandeddebtoftheelectricitysectorisestimatedtobereducedfrom $11.3billionasofMarch31,2013,to$10.1billionasofMarch31,2014. Thisisthetenthconsecutiveyearofstrandeddebtreduction,followingthe periodbetween1999and2004whenitincreased. ThegovernmentisproposingtoremovetheDebtRetirementCharge(DRC) costfromresidentialelectricityuserselectricitybills,afterDecember31, 2015.TheDRCwouldremainonallotherelectricityusersbillsuntilthe residualstrandeddebtisretiredcurrentlyestimatedtooccurbythe endof2018.
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ChapterVI:BorrowingandDebtManagement
Introduction
Ontariosuccessfullycompleteditsannualborrowingprogramin201314, despitetheongoingchallengesthatlingerintheglobalfinancialmarkets. TheProvinceborrowed$36.0billionin201314,capitalizingonthecontinuing lowinterestrateenvironmentandstrongdemandforOntariobonds. TheProvincestotalfundingrequirementin201415hasbeenincreasedby $1.6billioncomparedtothe2013Budgetforecastprimarilybecauseofahigher projecteddeficitandborrowingonbehalfofInfrastructureOntario(IO).This higherprojecteddeficitislargelyduetolowerfederaltransfersresulting,inpart, fromthefederalgovernmentsdecisiontoallowOntariosmajortransfersto declinein2014andslowerthanforecasteconomicgrowthin2013and2014,as wellasstrategicinvestmentsmadeaspartofthe10yearplanfortheeconomy toputtheProvinceanditspeopleinapositiontosucceed.However,longterm publicborrowingin201415willbe$2.6billionlowerthanthe2013Budget forecast,primarilyasaresultofpreborrowingin201314andanincreasein shorttermborrowingtofundIOsshorttermfundingrequirements. Cumulatively,sincethe2012Budget,longtermpublicborrowingisforecastto belowerby$4.5billionforthethreeyearperiodfrom201213to201415.This lowerforecastisreflectedina$6.2billionreductioninprojectednetdebtoverthe samethreeyearperiod. StrongglobalinvestordemandforCanadiandollarassets,theliquidityofOntario benchmarkbondsandcontinuingconfidenceintheProvinceallowedOntarioto borrow82percentintheCanadiandollarmarketin201314,whichwaswell abovethetargetofatleast70percentsetoutinthe2013Budget.TheProvince completed72percentofitsborrowingintheCanadiandollarmarketin201213 and81percentin201112. TheProvincesdomesticandinternationalborrowingtargetswillremainthesame in201415asOntarioonceagainplanstoborrowatleast70percentinthe Canadiandollarmarket.Thisisinlinewiththehistoricalaverage,andcontinuesto representadeclineintherelianceonforeignmarketsseenduringthefinancial crisis.In200910,atthepeakofthecrisis,only49percentoftheProvinces issuancewasintheCanadiandollarmarket.
343
2014OntarioBudget
Term of Borrowing
CHART 6.1
Years
16 14 12 10 8 6 4 2 0 200809 200910 201011 201112 201213 201314 8.6 8.1 12.8 13.0 13.6 12.4
Giventhelowinterestratesexperiencedinrecentyears,Ontariohasbeen proactiveinextendingthetermofitsborrowingprogram.Theweightedaverage termtomaturityoflongtermProvincialdebtissuedhasbeenextended significantlyoverthepastfouryears. OntariowasoneofthefirstCanadiangovernmentstoissueultralongdebt(bond issueswithmaturitiesgreaterthan30years)totakeadvantageoftheselowrates, andhasbeenverysupportiveofthedevelopmentofthismarket.Since1998, Ontariohasissuedover$3.8billionofultralongdebt,including$475millionof 50yeardebtoverthepasttwoyears. Extendingthetermtomaturity,inpartthroughtheuseofultralongbonds, allowstheProvincetolockinlowinterestratesforalongerperiod,whichreduces refinancingrisksandhelpsoffsettheimpactofexpectedhigherinterestrateson theProvincesinterestondebt(IOD)costs.
344
201314 Borrowing
Domestic Bond Auction, $1.1B 3%
Ontario Savings Bonds, $0.4B 1% Domestic Medium-Term Note, $0.02B 0% U.S. Dollar Global Bonds, $6.6B 18%
345
2014OntarioBudget Forthesecondconsecutiveyear,Ontariodidnotborrowincurrenciesotherthan CanadianorU.S.dollars.Aspartofits30percentinternationalissuancetargetfor 201415,theProvincewilllooktoborrowinothercurrenciesincludingeuros, Japaneseyen,Swissfrancs,AustraliandollarsandU.K.poundssterlingifcost effectiveopportunitiesbecomeavailable.Thepurposeofborrowingincurrencies otherthanCanadiandollarsistocontinuetodiversifytheProvincesinvestor base.ThishelpsreduceOntariosoverallborrowingcostsandensuresthatthe Provincewillcontinuetohaveaccesstocapitalifmarketconditionsbecome morechallenging.
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ChapterVI:BorrowingandDebtManagement
201314BorrowingProgram: ProvinceandOntarioElectricityFinancialCorporation
2013 Budget
11.7 11.1 (3.9) 0.6 0.9 23.7 0.3 44.5 (1.5) (5.8) (3.7) 33.4
Deficit Investment in Capital Assets Non-Cash Adjustments Loans to Infrastructure Ontario Other Net Loans/Investments Debt Maturities Debt Redemptions Total Funding Requirement Decrease/(Increase) in Short-Term Borrowing Increase/(Decrease) in Cash, Cash Equivalents and Temporary Investments Maturity of Debt Buybacks Preborrowing for 201415 Total Long-Term Public Borrowing
Note: Numbers may not add due to rounding.
Interim
11.3 9.0 (3.6) 0.6 0.6 23.6 0.2 41.7 (1.5) (3.0) (3.7) 2.6 36.0
In-Year Change
(0.4) (2.1) 0.3 (0.3) (0.1) (0.1) (2.8) 2.8 2.6 2.6
347
MediumTermBorrowingOutlook: ProvinceandOntarioElectricityFinancialCorporation
201415
12.5 10.2 (4.5) 1.8 (0.5) 21.7 0.3 41.5 (2.4) (1.4) (2.6) 35.0
Deficit Investment in Capital Assets Non-Cash Adjustments Loans to Infrastructure Ontario Other Net Loans/Investments Debt Maturities Debt Redemptions Total Funding Requirement Canada Pension Plan Borrowing Decrease/(Increase) in Short-Term Borrowing Increase/(Decrease) in Cash, Cash Equivalents and Temporary Investments Preborrowing from 201314 Total Long-Term Public Borrowing
Note: Numbers may not add due to rounding.
201516
8.9 10.3 (4.9) 1.4 1.1 20.6 0.3 37.6 37.6
201617
5.3 10.2 (5.1) 0.8 0.2 21.3 0.3 33.0 (0.1) 32.9
348
ChapterVI:BorrowingandDebtManagement InfrastructureOntarioborrowsfromthemarketstoprovideloansfor infrastructuredevelopmenttothebroaderpublicsector,includingmunicipalities. From201415onwards,IOsborrowingwillbeundertakendirectlybythe ProvincethroughtheOntarioFinancingAuthority.Thiscentralizationwillallow borrowingtobeconductedinamorecosteffectivemanner,resultinginoverall interestsavings.WhiletheProvincesfundingrequirementwillincreaseinorder tofundIOsloans,netdebtwillnotbeaffectedasIOsborrowinginthepublic marketswillbereducedbyanidenticalamount. Tomeetitsfundingrequirements,Ontariowillcontinuetobeflexible,monitoring Canadiandollarandinternationalmarkets,issuingbondsindifferenttermsand currencies,andrespondingtoinvestorpreferences. ThegovernmentwillseekapprovalfromtheLegislatureforborrowingauthorityto meettheProvincesrequirement.
349
2014OntarioBudget
350
ChapterVI:BorrowingandDebtManagement
$ Billions
45 40 35 30 25 20 15 10 5 0 200506 200607 200708 200809 200910 201011 201112 201213 201314
19.8 14.2 23.8 4.0 18.7 4.5 18.0 2.6 19.0 21.4 23.5 43.8
28.4
26.4
29.4
15.4
Note: Numbers may not add due to rounding. Source: Ontario Financing Authority.
351
2014OntarioBudget Whileaccessremainedparticularlystrongduring201314inthedomesticmarket, wheretheProvincehastraditionallydonemostofitsborrowing,theU.S.dollar marketcontinuedtoprovideanexcellentplatformtocompletetheremaining 18percentofthe201314borrowingrequirement.TheProvinceregularly accessestheU.S.dollarmarket,havingborrowed$23.0billioninU.S.dollarsover thepastthreeyears.OntariosmostrecentU.S.dollarissuancewasahighly successful,fiveyearbenchmarkbondfor$2.0billioninJanuary2014,which attractedover90investorsandhadstronginterestfromofficialinstitutionsinthe AmericasandEurope.OntariosU.S.dollarbondstendtobelargebenchmark issuesthatareactivelytradedandhighlyliquid. WhileOntariohasnotborrowedincurrenciesotherthanCanadianandU.S. dollarsforthepasttwoyears,theProvincecontinuestoremainvigilantfor costeffectiveborrowingopportunitiesinothercurrencies.Ontarioalsoworks tostrengthenitsdiverseinvestorbasethroughitsinvestorrelationsinitiatives. Itmaintainsstrongworkingrelationshipswithglobalinvestmentdealers,issuers andotherindustryexperts.Inaddition,theProvinceprovidesuptodateinvestor informationproductsandregularupdatesonthestatusofOntariosborrowing programthroughtheOntarioFinancingAuthorityswebsite. Thisvigilance,combinedwithattentiontointernationalmarketsandinvestors, hasbeenrewardedduringtimesofchallengingmarketconditions,suchasin 200910atthepeakofthefinancialcrisis,whenborrowinginthedomestic marketwasdifficult.Ontariocompleted51percentofits$43.8billion,200910 borrowingrequirementininternationalmarketsthroughglobalissuesinU.S. dollars,euros,SwissfrancsandHongKongdollars.Overall,theProvincemaintains adiverseinternationalinvestorbase,havingissuedbondsinmorethan10different currenciesoverthepastdecadeandattractinginvestorsfromallovertheglobe. TheProvincewillremainflexibleinitsborrowingapproachbymonitoringall majormarkets,andseekingthemostcosteffectivemeans,overthelongterm, tofinanceOntariosborrowingprogram.Thiswillincludecontinuingtoreachout toinvestorsandinvestmentbanks,domesticallyandglobally,toensurethat Ontariobondissueswillremainhighlyattractive,liquidandsoughtafter,asthey havebeensinceOntariofirstbeganaccessingpublicmarketsalmost25yearsago.
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ChapterVI:BorrowingandDebtManagement
CHART 6.4
$ Billions
30 25 20 15 10 5 0 200809 200910 201011 201112 201213 201314
8.3 14.4 19.4 20.2 23.3 24.9
353
2014OntarioBudget
This is the tenth consecutive year of stranded debt reduction, following the period between 1999 and 2004, when OEFCs unfunded liability increased by about $1 billion and while there was underinvestment in electricity supply and transmission infrastructure.
354
ChapterVI:BorrowingandDebtManagement
5.6
5.4
5.8
4.5
3.9
* OEFCs unfunded liability as at April 1, 1999, was $19.4 billion, which is the initial stranded debt of $20.9 billion adjusted for $1.5 billion of additional OEFC assets as of that date, including primarily an accounting asset for deferred debt charges. Notes: Unfunded Liability amounts are from OEFC Annual Reports from 19992000 to 2012, and the Annual Financial Statements for 2013. Residual Stranded Debt value for April 1, 1999, as announced on April 1, 1999. Values for the period from March 31, 2000, to March 31, 2010, as estimated by the Ministry of Finance in the 2012 Budget and for March 31, 2011, to March 31, 2013, as determined by the Minister of Finance in accordance with a regulation made under the Electricity Act, 1998.
Since2004,thegovernmentselectricitysectorreformsintheElectricity RestructuringAct,2004,andothers,haveputthestrandeddebtrecoveryplan backontrack,whileatthesametimeresultinginsignificantinvestmentsinthe electricitysector. Aspublishedinthe2013OntarioEconomicOutlookandFiscalReview,the MinisterofFinancedeterminedtheresidualstrandeddebttobe$3.9billion asofMarch31,2013.UnderOntarioRegulation89/12,thedeterminationof residualstrandeddebtasofMarch31,2014,willbemadebytheMinisterof FinanceaftertheOEFCsubmitstotheMinisteritsannualreport,includingthe auditedfinancialstatements,andbynolaterthanMarch31,2015. TheAuditorGeneralauditsOEFCsannualfinancialstatementsandhasprovided anunqualifiedopinioneveryyearsincetheinitial19992000financialstatements. ThisincludesOEFCsinterestexpense,whichiscurrentlyabout$1.5billion peryearandhastotalledabout$29.2billionbetweenApril1,1999,and March31,2014.
355
2014OntarioBudget AsconfirmedintheAuditorGenerals2011AnnualReport,theDRCisused exclusivelybyOEFCtomeetitsmandate,asprovidedforundertheElectricityAct, 1998,whichincludesservicingandretiringitsdebtandotherliabilities. TheAuditorGenerals2012and2013AnnualReportsalsonotedthattheAuditor waspleasedtoseeanincreasedleveloftransparencywithrespecttopublic reportingontheresidualstrandeddebt. AspartofOntariosplantolowerpressureonelectricityratesforresidential customers,thegovernmentisproposingtoremovetheDRCcostfromresidential electricityuserselectricitybills,afterDecember31,2015,oncetheOntarioClean EnergyBenefit(OCEB)ends. Thechargewouldremainonallotherelectricityusersbillsuntiltheresidual strandeddebtisretiredcurrentlyestimatedtooccurbytheendof2018, inlinewiththepreviousestimatedrangeinthe2013OntarioEconomicOutlook andFiscalReview. Theestimatedtimingforresidualstrandeddebtretirementissubjectto uncertaintyinforecastingfutureOEFCresultsanddedicatedrevenuestoOEFC, whichdependonthefinancialperformanceofOntarioPowerGeneration,Hydro Oneandmunicipalelectricalutilities,aswellasotherfactorssuchasinterestrates andelectricityconsumption.
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ChapterVI:BorrowingandDebtManagement
Provincial Debt
Totaldebt,whichrepresentsallborrowingwithoutoffsettingfinancialassets, isprojectedtobe$295.8billionasofMarch31,2014,comparedto$281.1billion asofMarch31,2013,andaforecastof$290.9billioninthe2013Budget. Totaldebtishigherthanthe2013Budgetforecastasaresultofthe$2.6billion inpreborrowingfor201415completedduringthe201314fiscalyear,aswell asdebtissuedatadiscountandforeignexchangedebtrevaluations. Ontariosnetdebtisthedifferencebetweentotalliabilitiesandtotalfinancial assets.Ontariosnetdebtisprojectedtobe$269.2billionasofMarch31,2014 (March31,2013,$252.1billion).ThisprojectionforMarch31,2014,is$3.6billion belowtheforecastof$272.8billioninthe2013Budget,andlowerthanthe forecastof$279.8billioninthe2012Budget.Thisincludesthebroaderpublic sectorsnetdebtof$14.2billion(March31,2013,$13.9billion).
357
2014OntarioBudget
Debt-to-GDP Ratios
TheProvincesnetdebttoGDPratioisprojectedtobe38.9percentattheend offiscal201314,comparedtothe39.3percentforecastinthe2013Budget, andthe40.8percentforecastinthe2012Budget.Thisratioisexpectedtopeak at40.8percentin201516,slightlyhigherthanthe40.4percentforecastinthe 2013Budget,butlowerthanthe41.3percentforecastinthe2012Budget. ThegovernmentcontinuestomaintainatargetofreducingOntariosnet debttoGDPratiotoitsprerecessionlevelof27percent.
CHART 6.6
Net Debt-to-GDP
Per Cent
45 40 35 30 25 20 15 10 5 0
21.2 17.1 13.4 26.9 32.2 31.5 30.7 30.3 29.7 29.5 28.6 28.4 32.5 27.1 27.5 26.6 27.7 26.8 26.2 28.1 34.1 36.0 37.4 40.8 40.6 39.7 38.9 40.3
Actual
Outlook
Note: Net Debt has been restated to include Broader Public Sector Net Debt, starting in 200506. Source: Ontario Ministry of Finance.
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ChapterVI:BorrowingandDebtManagement
CHART 6.7
Accumulated Deficit-to-GDP
Per Cent
35 30 25 20 15 10 5 0
17.1 13.4 21.2 26.9 28.6 30.3 31.5 30.7 32.2 29.7 29.5 28.4 24.3 24.6 23.7 19.8 18.6 18.7 23.0 25.6 24.2 24.8 26.5 26.5 26.1 25.0
22.0 17.7
Actual
Outlook
359
2014OntarioBudget
Cost of Debt
Theeffectiveinterestrate(onaweightedaveragebasis)ontotaldebtis estimatedtobe3.9percentasofMarch31,2014(March31,2013,4.1percent, andMarch31,2012,4.4percent).Thisratehascontinuedtodropinspiteofthe Provinceextendingthetermofitsdebtissuedtoreducerefinancingrisks. Forcomparison,onMarch31,1991,theeffectiveinterestrateontotaldebt was10.9percent. For201415,theimpactofaonepercentagepointchangeininterestrateson IODisapproximately$400millionfortheProvince.
CHART 6.8
Per Cent
12 10 8 6 4 2 0
10.9 10.7
10.1
9.5
9.8
9.4
9.0
9.0
8.6
8.4
8.2
7.6
7.2
6.7
6.4
6.1
6.0
5.8
5.2
4.6
4.5
4.4
4.1
3.9
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ChapterVI:BorrowingandDebtManagement
CHART 6.9
Note: Numbers may not add due to rounding. Source: Ontario Financing Authority.
361
2014OntarioBudget
As a Percentage of Debt Issued for Provincial Purposes (Interest Rate Exposure Limit Set at 35 Per Cent)
35 30 25 20 15 10 5 0
March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 March 31, 2014 (Interim)
8.9
11.0
362
ChapterVI:BorrowingandDebtManagement
CHART 6.11
As a Percentage of Debt Issued for Provincial Purposes (Foreign Exchange Exposure Limit Set at 5 Per Cent)
5 4 3 2 1 0
0.1
March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013
1.0
1.0
0.8 0.4
March 31, 2014 (Interim)
TheProvinceusesderivatives,whichareatypeoffinancialcontract,tomanage riskexposureandminimizeinterestcosts.Theuseofderivativesallowsthe Provincetooffsetexistingobligationsandconvertthemintoobligationswith moredesirablecharacteristics.Specifically,theProvinceusesinterestrateswaps andcurrencyswapstoreducetherisksassociatedwithissuingbondsindifferent currenciesandhedgeinterestcosts. ThishedgingprocessmaybecomemorecomplexduetotheDoddFrankActand BaselIIIregulations.Hedgingmayalsobecomemoreexpensiveifproposalssuch asfinancialtransactiontaxesormarktomarketderivativestaxesarelegislated andimplementedinEuropeortheUnitedStates. Initiativesthatassistregulatorsinensuringthefuturestabilityofcapitalmarkets arewelcome.However,itmustberecognizedthattheseinitiativesmayincrease thecostofhedgingthroughsubstantiallyhighertransactioncostsandcapital chargesontheProvincescounterparties.
363
364
ChapterVI:BorrowingandDebtManagement
NetDebtandAccumulatedDeficit
200910 201011 201112 201213 Interim 201314 Plan 201415
Debt1 Publicly Held Debt Bonds2 Treasury Bills U.S. Commercial Paper2 Infrastructure Ontario (IO)3 Other Non-Public Debt Canada Pension Plan Investment Fund Ontario Immigrant Investor Corporation 55 School Board Trust Public Service Pension Fund Canada Mortgage and Housing Corporation Ontario Public Service Employees Union Pension Fund (OPSEU) Ontario Teachers Pension Fund
175,899 13,914 3,087 1,920 296 195,116 201,074 13,925 3,242 1,989 353 220,583 223,468 11,925 4,701 1,854 347 242,295 245,544 13,024 6,611 1,909 360 267,448 259,721 12,787 8,388 1,625 346 282,867 273,439 15,227 8,388 950 336 298,340
10,233
10,233
10,233
10,233
10,233
10,233
842 704
755
696
635
569
501
430
312
107
12,209 310,549
13,617 281,065
12,903 295,770
Total Debt
212,122
365
2014OntarioBudget
TABLE6.3
($Millions)
NetDebtandAccumulatedDeficit(contd)
200910 201011
236,629 (22,416)
201112
257,278 (21,180)
201213
281,065 (29,037)
Interim 201314
295,770 (23,518)
Plan 201415
310,549 (20,250)
Total Debt Cash and Temporary Investments Total Debt Net of Cash and Temporary Investments Other Net (Assets)/Liabilities4 Broader Public Sector (BPS) Net Debt Net Debt Non-Financial Assets5 Accumulated Deficit
1 2
212,122 (17,102)
Includes debt issued by the Province and Government Organizations, including OEFC. All balances are expressed in Canadian dollars. The balances above reflect the effect of related derivative contracts. 3 Infrastructure Ontario's (IO) interim 201314 debt is composed of Infrastructure Renewal Bonds ($950 million) and shortterm commercial paper ($675 million). IO's debt is not guaranteed by the Province. 4 Other Net (Assets)/Liabilities include accounts receivable, loans receivable, investments in government business enterprises, other assets, accounts payable, accrued liabilities, deferred revenue and capital contributions, pensions and other employee future benefits, and other liabilities. 5 Non-financial assets include the tangible capital assets of the Province and broader public sector. Source: Ontario Ministry of Finance.
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ChapterVI:BorrowingandDebtManagement
TABLE6.4
($Billions)
MediumTermOutlook:NetDebtandAccumulatedDeficit
201516 201617 337.8 (20.2) 317.5 (13.5) 13.2 317.2 (113.2) 204.0
Total Debt Cash and Temporary Investments Total Debt Net of Cash and Temporary Investments Other Net (Assets)/Liabilities Broader Public Sector (BPS) Net Debt Net Debt Non-Financial Assets Accumulated Deficit
Note: Numbers may not add due to rounding.
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2014OntarioBudget
TABLE6.5
($Millions)
DebtMaturitySchedule
Currency
Canadian Dollar U.S. Dollar
17,429 10,126 9,763 4,879 5,142 47,339 6,517
Japanese Yen
54 1,001
Euro
385
Other Currencies1
758 1,807 507
201213 Total
45,362 21,615 21,091 18,830 16,224 123,122 63,806 18,796 14,227 21,913 39,201 281,065
Fiscal Year Payable Year 1 Year 2 Year 3 Year 4 Year 5 15 years 610 years 1115 years 1620 years 2125 years 2650 years2 Total3 Debt Issued for Provincial Purposes OEFC Debt Total
1
25,329 8,422 11,202 12,248 10,140 67,341 59,153 20,550 9,500 22,760 49,118 228,422
76 1,131 400
385 6,373
53,856
1,531
6,758
5,203
1,531
1,531
2 3
Other currencies include Australian dollar, New Zealand dollar, Norwegian kroner, Swiss franc, Hong Kong dollar and South African rand. The longest term to maturity is to June 2, 2062. The foreign currency denominated debt for Interim 201314 is $67.3 billion (201213, $68.2 billion). Of that, $65.9 billion or 97.9 per cent (201213, $66.3 billion or 97.1 per cent) was fully hedged to Canadian dollars.
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ChartDescriptions
Chart Descriptions
Chart 1.1: Support From Early Years to Adulthood ThechartshowstheOntariogovernmentsupportsforOntariansfromearlyyears toadulthood. UnderAge6 Earlylearningandliteracyprograms Parentingandfamilyliteracycentres Qualitychildcare,includingchildcaresubsidies Fulldaykindergarten ChildrensActivityTaxCredit(under16) HealthyChildDevelopmentPrograms HealthySmilesOntario OntarioChildBenefit(under18) 18publiclyfundedvaccinesstartingat2monthsofage Age6to13(ElementaryEducation) Programsthatfostercreativityandcriticalthinking 90percentofprimaryclasseswith20orfewerstudents Increasinglevelsofliteracyandnumeracyachievement StudentNutritionProgramprovideshealthbreakfasts,snacksandlunches Age13to18(SecondaryEducation) Initiativestoincreasegraduationrates OntariosStudentSuccessStrategy Learningoptionsincludingexpandedcooperativeeducation,SpecialistHigh SkillsMajors,dualcreditsandelearningprograms Age18to24(PostsecondaryEducation) Accessgrants,30%OffOntarioTuitiongrant,anewtuitionfeeframeworkand CooperativeEducationTaxCredit OntarioSummerJobsStrategy OntarioOnline Age15to29 YouthJobsStrategy(employment,entrepreneurshipandinnovation) EmploymentOntarioServices Apprenticeshipsupports ReturntoChart1.1
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2014OntarioBudget Chart 1.2: Full-Day Kindergarten Implementation Barchartshowsthenumberofchildrenenrolledinfulldaykindergartenbetween theyears2011and2014.Inthe2011schoolyear,about50,000childrenwere enrolledinfulldaykindergarten.Astheprogramisimplementedacrossthe province,thenumberofchildrenroseto122,000in2012and184,000in2013. Enrolmentisprojectedtoriseto265,000inSeptember2014,whentheprogram isfullyimplemented. ReturntoChart1.2 Chart 1.3: Key Achievements ThechartliststhekeyachievementsinOntariospostsecondaryeducation. 41percentincreaseormorethan160,000studentsenrolledin postsecondaryeducationsince200203. 59percentincreaseinenrolmentingraduateprogramsbetween200203 and201213. Over370,000studentsreceivedfinancialassistancein201213,withover $1billioningrantsandloanstostudents,includingthe30%OffOntario Tuitiongrant. 77percentundergraduatestudentsfromuniversityaregraduating,upfrom 74percentin200203. 65percentofcollegestudentsaregraduating,upfrom57percentin 200203. 66percentofadultsaged2564haveuniversity,collegeorcollegebased apprenticeshipcertificationin2013. 87percentofuniversitygraduatesand83percentofcollegegraduates wereemployedwithinsixmonthsofgraduationin201011.
ReturntoChart1.3 Chart 1.4: Apprenticeship Registration Nearly Doubled since 2003 BarchartshowsthenumberofnewannualapprenticeshipregistrationsinOntario almostdoubled,from17,000in200203tomorethan30,000in201203. ReturntoChart1.4
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ChartDescriptions Chart 1.5: Unemployment Rate by Age Category, Ontario, 200614 (Year to Date) Linechartshowsunemploymentratesforyouth(aged15to24years)andprime workingagepopulation(2554years)betweentheyears2006and2014yearto date(YTD).Unemploymentratesarehigherforyouthsthanfortheprime workingagepopulationgroupeveryyear,withyouthsaveraging15.4percent in2014YTD,higherthantheprimeworkingagegroupof6.5percent. ReturntoChart1.5 Chart 1.6: Supporting More Patients at Home Thechartshowsthatmorepatientsaregoinghomefromthehospitalwith support,andfewerpeoplearegoingtolongtermcarehomesandinstead receivingcareathome. Since200910,18percentmorepatientsaregoinghomefromhospital withsupport,from8,223in200910to9,674patientsin201213. 37percentfewerpeoplearegoingtolongtermcarehomes,from9,080 patientsgoingtolongtermcarein200910to5,680in201213.
ReturntoChart1.6 Chart 1.7: Annual Average Provincial Infrastructure Investment Per Capita Thisbarchartcomparestheaverageprovincialinfrastructureinvestmentper capitabetweentwotimeperiods:199495to200304and200405to202324. Theaverageprovincialinfrastructureinvestmentgrewfromapproximately $250percapitatoanestimated$830percapitafromthefirsttimeperiodto thesecond. ReturntoChart1.7 Chart 1.8: Highlights of Infrastructure Projects Completed or Underway Thesetwomapshighlightthelocationsofinfrastructureprojectscompletedor underwayacrosstheprovinceofOntario.Thefirstmapillustratesinfrastructure projectsinNorthernOntario,andthesecondmapreferencesprojectsin SouthernOntario. ReturntoChart1.8
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2014OntarioBudget Chart 1.9: Alternative Financing and Procurement Accomplishments ThischartillustratestheProvincesaccomplishmentsusingtheAlternative FinancingandProcurement(AFP)modelinthehealthcareandjusticesectors. Inthehealthcaresector,Ontariohasredevelopedorbuilthospitalprojects, includingeightcomplexcontinuingcare/rehabilitationservices,eightemergency services,fivecancertreatmentservicesandthreementalhealthservices.The Provincehasalsocompletedjusticeprojects,including18OntarioProvincialPolice facilities,comprisingofnewdetachments,regionalcommandcentresandforensic units,fivecourthouses(withover90courtrooms),twocorrectionalfacilitiesand oneyouthjusticedetentionfacility. ReturntoChart1.9 Strengthening Ontarios Sectors Aerospace 2ndlargestaerospacesectorinCanada. Partneringwithindustryandacademiatohelpbuildaleadingaerospacecluster aroundDownsviewParkinToronto. AgriFood 6thlargestinfoodandbeverageprocessinginNorthAmerica. Supportingfarmersthroughfundingforbusinessriskmanagementandinnovation programswhilepartneringwithmanufacturers,likeDr.OetkerinLondon,toadd valuetoOntariogrownfood. Auto AtopsubnationalNAFTAjurisdictioninvehicleassembly. Workingwithmajorautocompaniestosupportassemblyfacilitiesthatwillanchor theautomotiveclusterinOntario,includingsupportforFordMotorCompanyin Oakville. Chemistry SarniaLambtonisCanadaslargestchemistrycluster. Supportingtheproductionofinnovativeandnewproductsincludingbasicorganic andinorganicchemicals,syntheticresinsandfertilizers.
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ChartDescriptions CleanTech Ontarioscleantechsectorhas10,100jobsand200firms. Workingwithindustryonresearchanddevelopmentandmanufacturingofbio basedtechnologies,processesandproducts.Also,OntariosWaterSectorStrategy willhelptostrengthenthewatersectorandhelpinnovativefirmscompetein globalmarketsandprovidesolutionstoglobalwaterchallenges. FinancialServices Torontois2ndlargestbyemploymentinNorthAmerica. Workingwithindustryandotherlevelsofgovernmenttoimplementafinancial servicessectorgrowthandcompetitivenessstrategy.Ontario,BritishColumbia andthefederalgovernmenthavesignedanagreementinprincipletoestablisha CooperativeCapitalMarketsRegulatorySystem(CCMR).Ontarioisworkingwith BritishColumbiaandthefederalgovernmenttomeetthemilestonessetoutinthe agreement. Forestry In2013,forestproductsexportswerevaluedat$3.6B. Supportingthetransformationoftheforestsectortowardsproductionofhigher valueaddedproductstopreserveandcreatejobsthroughexistingfunding programsandreformstothetenureandpricingsystemforCrownforest resources. InformationandCommunicationsTechnology 2ndinICTinNorthAmerica. PartneringwithCiscoCanadatolaunchthelargestjobcreatinginvestmentinthe historyoftheprovincestechnologysectorandworkingwithCommunitechto supportentrepreneurialactivityinKitchenerWaterloo. LifeSciences 2ndinlifesciencesinNorthAmerica. Fosteringhealthcareadvancementsandtheircommercializationbyestablishing theOntarioHealthInnovationCouncilwithprivateandpublicpartnersaswellas fundingresearchingenomicsandpersonalizedmedicineinpartnershipwiththe OntarioGenomicsInstitute.
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2014OntarioBudget Mining Top10worldproducerofnickelandplatinummetals. Providingincentivesandspecialdeductionsthroughtheminingtaxsystemto encourageinvestment. EntertainmentandCreativeCluster LargestinCanadaand3rdlargestinNorthAmerica. GrowingOntariosmusicproductionanddistributionthroughthenewOntario MusicFundandprovidingsupporttothefilmindustrytoensurethatOntario remainsatoplocationforfilmproduction. ReturntoStrengtheningOntariosSectorschart Chart 1.10: Ontario Children Below the Low Income Measure Thisbarchartshowsthatthegovernment'sPovertyReductionStrategyishelping tolowerchildpoverty.For2011,thepovertyrateforchildrenwas22.2percent beforetaxesandtransfers.Afteraccountingfortheimpactoftaxesandtransfers, thepovertyratefor2011declinedto15.9percent.Theimpactofthepoverty reductionstrategywastofurtherlowerthechildpovertyrateto13.6percent. ReturntoChart1.10 Chart 1.11: Supporting Working Families. Thischartshowstotalannualizedincomeforasingleparentwithtwochildren (ages9and10)in2003,2013and2014.Thechartshowstheincreaseinincome between2003and2014duetoincreasesin:theOntarioChildBenefitandother OntarioTaxBasedBenefitsandCredits,FederalChildBenefitsandotherFederal TaxBasedBenefitsandCredits,andtheminimumwagerate. ReturntoChart1.11 Chart 1.12: Comparison of Electricity Prices for Residential Consumers Thisbarchartcomparesaverageelectricitypricesforresidentialconsumersas ofApril1,2013,in22selectedCanadianandU.S.cities.Electricitypricesrange from6.87centsperkilowatthour(kWh)inMontrealto22.94centsperkWhin SanFrancisco.InOntario,OttawaandTorontoaverageelectricityratesare 12.39centsperkWhand12.48centsperkWh,respectively. ReturntoChart1.12
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ChartDescriptions Chart 1.13: Residual Stranded Debt Since April 1, 1999 AsatMarch31,2013,asdeterminedbytheMinisterofFinance,theresidual strandeddebtwas$3.9billion,adecreaseofabout$0.6billioncomparedto residualstrandeddebtof$4.5billionasatMarch31,2012,andadecreaseof about$8billionfromtheestimatedpeakasatMarch31,2004. ReturntoChart1.13 Chart 1.14: Auto Insurance Rates Held Below Inflation ThisbarchartshowsthatinOntariofrom2004to2013,autoinsurancerates increasedmoreslowlythantherateofinflation.From1990to1994,theconsumer priceindexincreasedby7.6percent,whileautoinsurancepremiumsincreased by10.2percent.From1995to2003,theconsumerpriceindexincreasedby 18.3percent,whileautoinsurancepremiumsincreasedby44.9percent. From2004to2013,theconsumerpriceindexincreasedby17.6percent, whileautoinsuranceratesincreasedby6.6percent. ReturntoChart1.14 Chart 1.15: Program Spending Per Capita in 201213 ThischartcomparespercapitaprogramspendinginOntariototheothernine provincesfor201213.In201213,Ontariospercapitaprogramspendingwas $8,369.Thisisthelowestpercapitaprogramspendingamongtheprovinces.This isfollowedbyBritishColumbia,Quebec,NovaScotia,NewBrunswick,Alberta, PrinceEdwardIsland,Manitoba,NewfoundandLabrador,andSaskatchewan. ReturntoChart1.15 Chart 1.16: Total Revenue Per Capita in 201213 ThischartcomparesOntariostotalrevenuepercapitatotheothernineprovinces for201213.In201213,Ontariostotalrevenuepercapitathatincludeditsown sourceandfederaltransferswas$8,453.Thisisthelowesttotalpercapita revenueamongtheprovinces.ThisisfollowedbyBritishColumbia,Alberta,New Brunswick,NovaScotia,PrinceEdwardIsland,Manitoba,Quebec,Saskatchewan, andNewfoundlandandLabrador. ReturntoChart1.16
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2014OntarioBudget Chart 1.17: Ontario Wage Settlements Thischartshowstheaverageannualbasewageincreasesfromwagesettlements ratifiedbetweenJuly17,2012andMarch26,2014.Theaverageannualwage settlementsfortheOntariopublicsectorwere0.4percentlowerthanthe settlementsfortheprivatesector,whichwere2.0percent,themunicipalsector, whichwere2.0percent,andthefederalpublicsectorinOntario,whichwere 1.7percent. ReturntoChart1.17 Chart 2.1: Medium-Term Revenue Outlook Has Declined since the 2010 Budget ThischartshowsthedeclineinthemediumtermoutlookforOntariogovernment revenuessincethe2010Budgetprojection. Sincethe2010Budget,themediumtermoutlookforrevenueshasdeclined, reflecting,inpart,slowereconomicgrowthinachallengingglobalenvironment. Beforetheimpactofnewrevenuemeasures,therevenueoutlookinthe 2014Budgetis$2.9billionbelowthe2010Budgetprojectionin201314 and$8.8billionbelowby201617. ReturntoChart2.1 Chart 2.2: Medium-Term Expense Outlook Has Declined since the 2010 Budget ThischartshowsthedeclineinthemediumtermoutlookforOntarioexpense sincethe2010Budget. Inthe2010Budget,expensewasprojectedtoincreasefromapproximately $127billionin201011toapproximately$140billionin201617.Inthe 2014Budget,expenseisprojectedtoincreasefrom$121billionin201011 toapproximately$134billionin201617.Ineachyearbetween201011and 201617,the2014Budgetexpenseprojectionisbelowthe2010Budgetexpense projection. ReturntoChart2.2
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ChartDescriptions Chart 2.3: Ontario Emerging Stronger from 200809 Recession ChartshowsOntariorealGDPreacheditsprerecessionpeakat$602.0billionin 2008Q2andfelltotherecessionarylowof$573.3billionin2009Q2.Thecurrent levelofrealGDPis$632.6billionin2013Q4,10.3percenthigherthanthe recessionarylow. Ontarioexportsreacheditsprerecessionpeakat$337.1billionin2008Q3 andfelltotherecessionarylowof$274.9billionin2009Q2.Thecurrentlevel ofOntarioexportsis$353.8billionin2013Q4,28.7percenthigherthanthe recessionarylow. Ontarioemploymentreacheditsprerecessionpeakat6,708,600inSeptember 2008andfelltotherecessionarylowof6,442,800inJune2009.Thecurrent employmentlevelis6,902,300inMarch2014,7.1percenthigherthanthe recessionarylow. HouseholdincomeinOntarioreacheditsprerecessionpeakat$414.3billionin 2008Q2andfelltotherecessionarylowof$410.3billionin2009Q2.Thecurrent levelofhouseholdincomeis$476.2billionin2013Q4,16.1percenthigherthan therecessionarylow. HouseholdconsumptioninOntarioreacheditsprerecessionpeakat$342.3billion in2008Q3andfelltotherecessionarylowof$335.6billionin2009Q2.Thecurrent levelofhouseholdconsumptionis$394.8billionin2013Q4,17.6percenthigher thantherecessionarylow. Ontariopoliciessupportingtherecoveryincludecompetitivetaxes,infrastructure investments,businessandregionalsupport,skillstraining,YouthJobsStrategyand PovertyReductionStrategy. ReturntoChart2.3
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2014OntarioBudget Chart 2.4: Ontario Real GDP since 200809 Recession LinechartshowsthelevelofOntariorealGDPbetweenthefirstquarterof2008 andthefourthquarterof2013.OntariorealGDPreacheditsprerecessionpeakof $602.0billioninthesecondquarterof2008anddeclinedtoitsrecessionarylowof $573.3billioninthesecondquarterof2009.Asofthefourthquarterof2013,real GDPhadrisento$632.6billion. ReturntoChart2.4 Chart 2.5: Employment Gains Concentrated in Full-Time, Private-Sector, Above-Average Wage Jobs BarchartshowsOntarioemploymentgainssinceJune2009.Totalemployment increasedby460,000sinceJune2009.Fulltimeemploymentincreasedby 463,000,whileparttimeemploymentdeclinedby4,000.Privatesector employmentincreasedby330,000,whilepublicsectoremploymentincreasedby 75,000andselfemploymentroseby55,000.Employmentinaboveaveragewage industriesincreasedby319,000,whileemploymentinbelowaverageindustries increasedby140,000. ReturntoChart2.5 Chart 2.6: Ontario Job Recovery Ahead of U.S. and OECD Average Linechartcomparesthepercentagechangeinemploymentrelativetoits prerecessionpeakinOntario,theaverageforthemembercountriesofthe OrganisationforEconomicCooperationandDevelopment(OECD)andtheUnited Statesbetweenthefirstquarterof2008andthefirstquarterof2014(forOntario andtheU.S.)andthethirdquarterof2013fortheOECD. Asofthefirstquarterof2014,employmentinOntariohasrecoveredtowell aboveitsprerecessionpeakwhiletheUnitedStatesisbelowitsprerecession peak.Asofthethirdquarterof2013,theOECDisslightlyhigherthanitspre recessionpeak. ReturntoChart2.6
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ChartDescriptions Chart 2.7: Ontario Job Recovery Stronger than Other Jurisdictions BarchartshowsthepercentchangeinOntariosemploymentsinceJune2009 comparedtoGreatLakeStates,theOECDaverage,theU.S.averageandtherest ofCanada.Ontariosemploymenthasincreasedby7.1percentsinceJune2009. Illinoiswasup1.0percent,NewYorkwasup1.3percent,Ohiowasup 1.4percent,Wisconsinwasup1.7percent,Pennsylvaniawasup2.3percent, Michiganwasup3.9percent,Indianawasup4.7percent,Minnesotawasup 5.3percent,theOECDaveragewasup3.5percent,theU.S.averagewasup 5.3percentandtherestofCanadawasup6.0percent. ReturntoChart2.7 Chart 2.8: Global Economic Growth to Improve BarchartshowsrealGDPgrowthfortheglobaleconomy,advancedeconomies, andemerginganddevelopingeconomiesfrom2011to2015. RealGDPgrowthfortheglobaleconomywas3.9percentin2011,3.2percentin 2012and3.0percentin2013.AccordingtotheInternationalMonetaryFund (IMF),growthisprojectedtobe3.6percentin2014and3.9percentin2015. RealGDPgrowthforadvancedeconomieswas1.7percentin2011,1.4percent in2012and1.3percentin2013.AccordingtotheIMF,growthisprojectedtobe 2.2percentin2014and2.3percentin2015. RealGDPgrowthforemerginganddevelopingeconomieswas6.3percentin 2011,5.0percentin2012and4.7percentin2013.AccordingtotheIMF,growth isprojectedtobe4.9percentin2014and5.3percentin2015. ReturntoChart2.8
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2014OntarioBudget Chart 2.9: Strengthening U.S. Recovery BarchartshowsU.S.realGDPgrowthfrom2009to2017.U.S.realGDPdeclined 2.8percentin2009andgrewby2.5percentin2010,1.8percentin2011, 2.8percentin2012and1.9percentin2013.AccordingtoBlueChipEconomic IndicatorsfromMarchandApril2014,U.S.realGDPisprojectedtogrowby 2.7percentin2014,3.0percentin2015,2.9percentin2016and2.8percent in2017. ReturntoChart2.9 Chart 2.10: Oil Prices to Remain High LinechartshowsthepriceofWTIcrudeoilfrom2000to2017.ThepriceofWest TexasIntermediate(WTI)crudeoilrosefrom$30USperbarrelin2000to$100US perbarrelin2008,declinedto$62USperbarrelin2009andincreasedto$98US perbarrelin2013.TheOntarioMinistryofFinanceprojectsoilpriceswilldecline to$97USperbarrelin2014,average$96USperbarrelin2015and2016,and thenincreaseto$98USperbarrelin2017. ReturntoChart2.10 Chart 2.11: Canadian Dollar to Remain Below Parity LinechartshowingtheCanadianexchangeratefrom1990to2017andthelow andhighprivatesectorprojectionsfor2014to2017.TheCanadiandollarfellfrom 87centsUSin1991toalowof64centsUSin2002.Ittrendedupoverthe2003to 2011period,reaching101centsUSin2011.In2013,thedollarwas97centsUS. TheMinistryofFinanceprojectstheCanadiandollarwillrisefrom90centsUSin 2014to93centsUSin2017.Privatesectorprojectionsrangefromahighof 98centsUStoalowof89centsUSin2017. ReturntoChart2.11
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ChartDescriptions Chart 2.12: Interest Rates to Rise Gradually LinechartshowingthethreemonthGovernmentofCanadaTreasurybillrate andthe10yearGovernmentofCanadabondyieldfrom1990to2017.Thethree monthTreasurybillratehasdeclinedfromcloseto13percentin1990to1.0per centin2013.Itisexpectedtorisegraduallyto3.3percentin2017.The10year GovernmentofCanadabondyieldhasdeclinedfromover10percentin1990to alowof1.9percentin2012.The10yearbondyieldmovedupto2.3percentin 2013andisexpectedtorisegraduallyto4.3percentin2017. ReturntoChart2.12 Chart 2.13: Inflation Expected to Remain Moderate BarchartshowspercentagechangeintheOntarioConsumerPriceIndex(CPI) from2010to2017.OntarioCPIincreasedby2.5percentin2010,3.1percent in2011,1.4percentin2012and1.0percentin2013.TheOntarioMinistryof FinanceprojectsCPIinflationtobe1.5percentin2014,1.9percentin2015 and2.0percentin2016and2017. ReturntoChart2.13 Chart 2.14: Employment Expected to Rise over the Medium Term BarchartshowstheannuallevelofOntarioemploymentfrom2009to2017. Ontarioemploymentrosefrom6.5millionin2009to6.9millionin2013.The OntarioMinistryofFinanceprojectsemploymentwillincreaseto7.3million in2017. ReturntoChart2.14 Chart 2.15: Ontario Housing Prices Expected to Stabilize Linechartshowingaveragehousepricesfrom1980to2017.Averagehouse priceshavetrendedsteadilyupwardfrom$155,200in1995to$402,500in2013. In2014,theaverageresalepriceisexpectedtoincreaseto$408,600andremain closetothislevelovertherestoftheforecastperiod. ReturntoChart2.15
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2014OntarioBudget Chart 2.16: Housing in Ontario to Remain Affordable Linechartshowsthemortgagecarryingcostasashareofdisposableincome perhouseholdinOntariofrom1981to2017.Thelineincreasedtoahighofover 37percentin1990andthendeclinedtoalowof19percentin1998.Ithassince trendedhigher,reachingalmost27percentin2013.TheOntarioMinistryof Financeprojectsthesharetoremaincloseto27percentoverthe2014to 2017period. ReturntoChart2.16 Chart 2.17: Although Elevated, Canadian Household Debt Remains Affordable Linechartshowshouseholddebtanddebtservicecostsasapercentageof householddisposableincomeinCanadafromthefirstquarterof2000tothe fourthquarterof2013. Thelineforhouseholddebtasapercentageofhouseholddisposableincome increasedsteadilyfrom108percentinthefirstquarterof2000to164percentin thefourthquarterof2013.Thelineforthedebtservicecostsasapercentageof householddisposableincomedeclinedfrom8.5percentinthefirstquarterof 2000to7.5percentinthesecondquarterof2002,stayedatthisleveluntilthe endof2005,increasedto9.2percentinthefourthquarterof2007anddeclined to7.1percentinthefourthquarterof2013. ReturntoChart2.17 Chart 2.18: Ontario Business Machinery and Equipment Investment Lags the United States Thelinechartshowsbusinessmachineryandequipmentinvestmentin $2007billionsforOntarioand$2009billionsfortheUnitedStatesfrom2007to 2017.RealmachineryandequipmentinvestmentinbothOntarioandtheU.S. declinedduringthe200809recession.Sincetherecession,machineryand equipmentinvestmenthasbeenrisinginbothjurisdictions.However,machinery andequipmentinvestmenthasbeenrisingfasterintheU.S.thaninOntariosince 2009.Overtheforecastperiod,Ontariospaceofmachineryandequipment investmentgrowthisexpectedtocontinuetolagtheU.S. ReturntoChart2.18 382
ChartDescriptions Chart 2.19: Exports to Other Provinces and Service Exports Have Grown Strongly ThefirsttwobarsshowthatOntariostotalexportstootherprovincesincreased to$125.9billionin2013from$92.3billionin2003,anincreaseof$33.6billionor 36percent.Overthesameperiod,exportstoothercountriesincreasedfrom $217.8billionin2003to$224.1billionin2013. ThelasttwobarsshowthatOntariosexportsofservicesincreasedto $121.1billionin2013from$81.5billionin2003,up$39.6billionor49percent. Exportsofgoodsincreasedto$228.9billionin2013from$228.6billionin2003. ReturntoChart2.19 Chart 2.20: Ontario Goods Exports Expanding to New Markets ThebarchartshowsthattheshareofOntariosgoodsexportstotheUnitedStates declinedfrom91.5percentin2003to78.4percentin2013,whiletheshareof OntariosgoodsexportstotheEuropeanUnionincreasedfrom3.8percentin 2003to9.5percentin2013.TheshareofOntariosgoodsexportstotherestof theworldincreasedto12.1percentin2013from4.7percentin2003. ReturntoChart2.20 Chart 2.21: Private-Sector Outlook for Growth Weaker in 2014 but Stronger in 2015 to 2017 ThebarchartshowstheaverageprivatesectorprojectionforOntariosrealGDP growthatthetimeofthe2013Budgetand2014Budget. TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2013was 1.6percentinthe2013Budgetand1.3percentcurrently. TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2014was 2.4percentinthe2013Budgetand2.2percentcurrently. TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2015and 2016was2.5percentinthe2013Budgetand2.6percentcurrently. TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2017was 2.3percentinthe2013Budgetand2.7percentcurrently. ReturntoChart2.21 383
2014OntarioBudget Chart 2.22: Government of Canada Transfers Changes since the 2013 Budget Thischartshowsthethreebroadfactorsaccountingforthedeclineinthe mediumtermoutlookofGovernmentofCanadaTransferssincethe2013Budget. DownwardrevisionsbyStatisticsCanadatohistoricalpopulationestimates loweredOntariosprojectedentitlementsundereachoftheCanadaHealth Transfer,CanadaSocialTransferandEqualizationprograms. TheclosureofHydroQuebecsGentilly2nuclearpowerplanttemporarilylowers Quebecsfiscalcapacity,asmeasuredundertheEqualizationprogram,whichin turnlowersOntariosEqualizationentitlementoverathreeyearperiod. OtherChangesincludeupdatedfiscalcapacityandeconomicdata,particularly for201213,whichincreasedOntariosrelativefiscalcapacitycomparedto the2013Budgetprojection,therebyloweringOntariosEqualization entitlementoutlook. ReturntoChart2.22 Chart 2.23: Medium-Term Revenue Outlook Has Declined since the 2010 Budget ThischartshowsthedeclineinthemediumtermoutlookforOntarioGovernment revenuessincethe2010Budgetprojection. Sincethe2010Budget,themediumtermoutlookforrevenueshasdeclined, reflectinginpartslowereconomicgrowthinachallengingglobalenvironment. Beforetheimpactofnewrevenuemeasures,therevenueoutlookinthe 2014Budgetis$2.9billionbelowthe2010Budgetprojectionin201314and$8.8 billionbelowby201617. ReturntoChart2.23
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ChartDescriptions Chart 2.24: Ontarios Record Against Deficit Targets ThischartshowsOntariosactualdeficitsversusdeficittargetsfrom200910 through201314. Inthe2009OntarioEconomicOutlookandFiscalReview,Ontarioprojecteda $24.7billiondeficitfor200910.Theactualresultfor200910wasadeficitof $19.3billion.The2010Budgetprojecteddeficitsof$19.7billionfor201011, $17.3billionfor201112,$15.9billionfor201213and$13.3billionfor201314. Theactualresultfor201011wasadeficitof$14.0billion.Theactualresultfor 201112wasadeficitof$13.0billion.Theactualresultfor201213wasadeficit of$9.2billion.Theinterimprojectionfor201314isadeficitof$11.3billion. ReturntoChart2.24 Chart 2.25: Ontarios Plan to Eliminate the Deficit ThischartshowsOntarios2014BudgetPlantoeliminatethedeficit,including aprojecteddeclineinOntariosdeficitsfrom201415through201718.Forthe mediumtermandextendedoutlook,thecurrentfiscalprojectionsareadeficit of$12.5billionfor201415,adeficitof$8.9billionfor201516,adeficitof $5.3billionfor201617andareturntobalancefor201718. Thegovernmentsdeficittargetsincludeareserveof$1.0billionin201415, and$1.2billionineachof201516,201617and201718.Thechartalsoshows thatforthemediumtermandextendedoutlook,thecurrentfiscalprojections beforethereserveareadeficitof$11.5billionfor201415,adeficitof$7.7billion for201516,adeficitof$4.1billionfor201617andasurplusof$1.2billionin 201718. ReturntoChart2.25
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2014OntarioBudget Chart 2.26: Composition of Revenue, 201415 Thischartshowstheshareoftotalrevenuein201415anddollaramountsby majorrevenuecategory.ThelargestrevenuesourceisPersonalIncomeTax revenueat$29.2billion,accountingfor24.5percentoftotalrevenue.Thisis followedbySalesTaxat$21.9billion,or18.5percentoftotalrevenue,and CorporationsTaxat$10.3billion,or8.6percentoftotalrevenue.Totaltax revenueaccountsfor$83.4billion,or70.1percentoftotalrevenue.Theother majornontaxationsourcesofrevenueareFederalTransfersof$21.9billion, or18.4percentoftotalrevenue.IncomefromGovernmentBusinessEnterprises at$5.0billionor4.2percentoftotalrevenueandvariousOtherNonTax Revenuesat$8.6billionor7.2percentoftotalrevenue. ReturntoChart2.26 Chart 2.27: Composition of Total Expense, 201415 Thischartshowstheshareoftotalexpensein201415anddollaramounts bysector. ThelargestexpenseistheHealthSectorat$50.1billion,accountingfor 38.4percentoftotalexpense. TheremainingsectorsoftotalexpenseincludetheEducationSectorat $24.8billionor19.1percent;thePostsecondaryandTrainingSectorat$7.8billion or6.0percent;theChildrensandSocialServicesSectorat$15.0billionor 11.5percent;theJusticeSectorat$4.3billionor3.3percent;andOther Programsat$17.4billionor13.3percent.InterestonDebt,includedaspartof TotalExpense,is$11.0billionor8.4percent. NotethattheEducationSectorexcludesTeachersPensionPlan.Teachers PensionPlanexpenseisincludedinOtherPrograms. ReturntoChart2.27
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ChartDescriptions Chart 2.28: Composition of Program Expense, 201415 Thischartshowstheshareofprogramexpensein201415anddollaramounts bysector.Programexpenseequalstotalexpenseminusinterestondebtexpense. ThelargestexpenseistheHealthSectorat$50.1billion,accountingfor 41.9percentoftotalprogramexpense. TheremainingsectorsofprogramexpenseincludetheEducationSectorat $24.8billionor20.8percent;thePostsecondaryandTrainingSectorat$7.8billion or6.6percent;theChildrensandSocialServicesSectorat$15.0billionor 12.6percent;theJusticeSectorat$4.3billionor3.6percent;andOther Programsat$17.4billionor14.5percent. NotethattheEducationSectorexcludesTeachersPensionPlan. TeachersPensionPlanexpenseisincludedinOtherPrograms. ReturntoChart2.28 Chart 3.1: Total Transfer Protection Payments from 201011 to 201314 ThischartshowstheamountofTotalTransferProtectionPaymentspaidto provincesfrom201011to201314.Duringthistime,Quebecreceived $731million,followedbyManitobawith$660millionandNovaScotiawith $421million.TheseprovincesarefollowedbyNewBrunswick,Newfoundland andLabrador,SaskatchewanandPrinceEdwardIsland.However,thefederal governmentdecidedtoendthepracticeoftransferprotectionpaymentsin 201415,whenOntariowouldhavequalifiedforapaymentof$641million. ReturntoChart3.1
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2014OntarioBudget Chart 3.2: Reducing Federal Health Transfers Downloads Fiscal Burden to Provinces and Territories Thischartshowsthat,basedontheratioofnetdebttoGDP,thefinancialposition ofthefederalgovernmentisprojectedtoimproveovertime,whereasthe financialpositionsofprovincial,localandAboriginalgovernmentsareprojectedto deteriorateoverthesameperiod.From1991to2014,thefederalgovernmentis expectedtohaveanetdebttoGDPratiohigherthanprovinces.Thisrelationship isprojectedtoreverse,startingin2015,andwidenovertime.From2015to2087, thedifferencebetweennetdebttoGDPratiosbetweenthefederalandprovincial governmentsincreases,reflectingaprogressivelystrongerfiscalpositionforthe federalgovernmentandadeterioratingfiscalpositionforprovincesand territories. ReturntoChart3.2 Chart 3.3: Ontarios Net Contribution to the Federation in 200910 Thischartshowsthatin200910,Ontarianscontributed$97.3billiontothe federalgovernmentwhilereceiving$86.2billioninfederaltransfersandservices. ThegapbetweenOntarioscontributiontothefederalgovernmentandbenefit fromfederaltransfersandservicesis$11billionor1.9percentofGDP. ReturntoChart3.3 Chart 3.4: Net Contribution to Equalization, 201415 Thischartshowsthatin201415,Ontarioisthelargestnetcontributortothe Equalizationprogram.OntarioisfollowedbyAlberta,BritishColumbia, Saskatchewan,andNewfoundlandandLabrador.Allotherprovincesreceivemore inEqualizationpaymentsthantheirtaxpayerscontributethroughfederaltaxes. ReturntoChart3.4 Chart 3.5: Public Infrastructure Investment Per Capita (201415 to 202324) Thisbarchartillustratespercapitainvestmentinpublicinfrastructurebyorderof governmentoverthenextdecade.Thefederalinvestmentisroughly$2,000per capitaover10years.Bycomparison,Ontarioplanstoinvest$10,000percapita overthesameperiod. ReturntoChart3.5
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Ontario:$1B FederalGovernment:$1B ThePotentialResults Withinthefirst10yearsofitsdevelopment,theRingofFirewillproduce considerablebenefits: $9.4B $6.2B 5,500 $2B InGDPgeneratedinOntario ForOntariosMiningindustry JobssustainedannuallyinOntario Inadditionalrevenuesdividedamongfederal,provincialand municipalgovernments
2014OntarioBudget Chart 4.1: Retirement Income Targets and Potential Gaps ThisbarchartshowshowtheCPPandOAScontributetoretirementincomefor individualswithpreretirementearningsof$45,000,$70,000and$90,000.The chartshowsthateachindividualfacesapotentialgapinachievinga70percent incomereplacementtargetduetothelimitedbenefitsprovidedbythese programs.Anindividualwithannualpreretirementincomeof$45,000would needanadditional$14,109annuallyoverandabovebenefitsprovidedbytheCPP andOAStomeeta70percentincomereplacementtargetof$31,500.An individualwithpreretirementincomeof$70,000wouldneedanadditional $29,829tomeetanincomereplacementtargetof$49,000.Anindividualwithpre retirementincomeof$90,000wouldrequireanadditional$43,829tomeetan incomereplacementtargetof$63,000. Allamountsarebeforetaxandexpressedin2014dollars.Preretirementearnings areconstantovera40yearcareer,takingintoaccountannualincreasesinthe averagewage.Individualsareassumedtoretireatage65. ReturntoChart4.1 Chart 4.2: Impact of Management Fees on Retirement Savings Thislinegraphshowshowmanagementfeesaffectretirementsavingsovertime forthecaseofanindividualmakingannualcontributionsof$6,000toanRRSP. Thegraphshowsthevalueofasavingsportfoliounderthreescenarios:a 2.4percentmanagementfee,aonepercentmanagementfee,andnofees. Givena2.4percentmanagementfee,thevalueofthosesavingsaftera40year periodwouldbe$434,872.Withalowonepercentfee,thevalueofthosesame savingswouldbe$605,689after40years.Underanofeescenario,thevalueof thosesamesavingsoverthesameperiodwouldbe$784,630.Thegraphshows thatcomparedtothepotentialsavingsportfoliovalueintheabsenceoffees, managementfeesof2.4percentcouldreducethepotentialportfoliovalueby morethan44percent. ReturntoChart4.2
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ChartDescriptions Chart 4.3: Life Expectancy at Age 65 by Sex in Ontario Thislinegraphshowsthatlifeexpectancyatage65hasincreasedsteadilysince thelate1970s.In1979,Ontariomalescouldexpecttoliveanother14years, comparedtoanother19yearsforfemales.By2011,theseexpectationshad increasedto19yearsformalesand22yearsforfemales.Thegraphsprojections showthatthistrendwillcontinue.By2035,lifeexpectancyatage65isprojected tobe23yearsformalesand25yearsforfemales. ReturntoChart4.3 Chart 4.4: Illustrations of Maximum Annual Benefit ThischartillustratestheproposedannualORPPretirementbenefitlevel,the benefitleveloftheproposedORPPwhencombinedwithCPPbenefitsandthe annualCPPandproposedORPPcontributionsforthreedifferentindividuals Barbara,BonnieandBernicewhohavedifferentsteadycareerearnings. Barbaraspreretirementearningsare$45,000annually.Barbaraandher employertogetherwouldcontribute$1,575annuallytotheORPPand$4,110 annuallytotheCPPoverherworkingcareer.Inretirement,Barbarawouldreceive anORPPbenefitof$6,410annuallyforlife.CombinedwithherCPPbenefits,she wouldreceiveabout$17,090annuallyforlife,replacingabout40percentofher preretirementincome. Bonniespreretirementearningsare$70,000annually.Bonnieandheremployer togetherwouldcontribute$2,525annuallytotheORPPand$4,850annuallyto theCPPoverherworkingcareer.Inretirement,BonniewouldreceiveanORPP benefitof$9,970annuallyforlife.CombinedwithherCPPbenefits,shewould receiveabout$22,430annuallyforlife,replacingabout34percentofherpre retirementincome. Bernicespreretirementearningsare$90,000annually.Berniceandheremployer togetherwouldcontribute$3,285annuallytotheORPPand$4,850annuallyto theCPPoverherworkingcareer.Inretirement,BernicewouldreceiveanORPP benefitof$12,815annuallyforlife.CombinedwithherCPPbenefits,shewould receiveabout$25,275annuallyforlife,replacingabout30percentofherpre retirementincome.
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2014OntarioBudget Allamountsarebeforetaxandexpressedin2014dollars.Preretirementearnings areconstantovera40yearcareer,takingintoaccountannualincreasesinthe averagewage.IndividualsareassumedtohavecontributedtotheCPPandORPP throughouttheircareerandtoretireatage65. ReturntoChart4.4 Table 5.1: Ontario Personal Income Tax: Taxable Income Thresholds and Rates Thechartontheleftdisplaysthecurrentstatutorytaxratesof5.05percentfor thetaxableincomesbelow$40,120,9.15percentontaxableincomebetween $40,120and$80,242,11.16percentontaxableincomesbetween$80,242and $514,090,and13.16percentontaxableincomesabove$514,090. Thechartontherightdisplaysthemeasuresthatthegovernmentproposesto implementfor2014andbeyond.Thelowerpartofthechartshowsthatthere wouldbenochangetostatutorytaxratesontaxableincomesof$150,000and below.Aboveisaboxthatshowstheproposedstatutorytaxrateof12.16per centthatwouldapplyontaxableincomesbetween$150,000and$220,000. Ontheverytopofthechart,anotherboxshowsthatthecurrenttoptaxrateof 13.16percentwouldapplytotaxableincomesabove$220,000. Notationstothefarrightofthechartindicatethattheproposedchangeswould affectthetoptwopercentoftaxfilers,andthat98percentoftaxfilerswould notbeaffected. ReturntoTable5.1 Chart 5.1: Ontario Business R&D Spending Below the U.S. BusinessR&DasapercentageofGDPinOntariohascontinuouslylaggedbehind theU.S.Between2001and2011,OntariosbusinessR&DasapercentageofGDP declinedfrom1.7percentto1.2percent,whiletheU.S.remainedat1.9percent. ReturntoChart5.1 Chart 6.1: Weighted-Average Term of Borrowing in Years AsatMarch31,2014,theweightedaveragetermofborrowingswas13.6years. TheaveragetermtomaturityofnewlongtermProvincialborrowinghasbeen extendedsignificantlyfrom8.6yearsin200809. ReturntoChart6.1 392
ChartDescriptions Chart 6.2: 201314 Borrowing TheProvinces201314borrowingprogramtotalled$36.0billion,andconsisted of$25.5billionofsyndicatedbonds,$2.3billionofdomesticfloatingratenotes, $0.02billiondomesticmediumtermnotes,$0.4billionofOntarioSavingsBonds, a$1.1billiondomesticbondauction,and$6.6billionofU.S.dollarglobalbonds. ReturntoChart6.2 Chart 6.3: Domestic and International Borrowing TheProvinces201314borrowingprogramtotalled$36.0billion.$29.4billion,or 82percent,wasborrowedinthedomesticmarketand$6.6billion,or18percent, wasborrowedintheinternationalmarket. ReturntoChart6.3 Chart 6.4: Average Unrestricted Liquid Reserve Levels AsatMarch31,2014,theaverageunrestrictedliquidreservewas$24.9billion. Theaverageunrestrictedliquidreservelevelhasbeensteadilyincreasingfrom $8.3billionin200809. ReturntoChart6.4 Chart 6.5: Residual Stranded Debt since April 1, 1999 AsatMarch31,2013,asdeterminedbytheMinisterofFinance,theresidual strandeddebtwas$3.9billion,adecreaseofabout$0.6billioncomparedto residualstrandeddebtof$4.5billionasatMarch31,2012,andadecreaseofan estimated$8billionfromtheestimatedpeakof$11.9billionasatMarch31,2004. ReturntoChart6.5 Chart 6.6: Net Debt-to-GDP NetdebttoGDPratioisprojectedtobe38.9percentasatMarch31,2014. ThenetdebttoGDPisprojectedtopeakat40.8percentin201516. ReturntoChart6.6
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2014OntarioBudget Chart 6.7: Accumulated Deficit-to-GDP TheaccumulateddeficittoGDPratioisprojectedtobe25.6percentasat March31,2014.TheaccumulateddeficittoGDPisprojectedtopeakat 26.5percentin201415and201516. ReturntoChart6.7 Chart 6.8: Effective Interest Rate (Weighted Average) on Total Debt AsatMarch31,2014,theinterimeffectiveinterestrate(calculatedasaweighted average)is3.9percentontheProvincestotaldebt.Thiscompareswith4.1per centin201213and4.4percentin201112.Theeffectiveinterestratehasbeen steadilydecreasingfrom10.9percentin199091. ReturntoChart6.8 Chart 6.9: Total Debt Composition AsatMarch31,2014,theProvincestotaldebtwas$295.8billion,andconsistedof $198.9billionofdomesticbonds,$12.9billionofnonpublicdebt,$21.2billionof treasurybillsandU.S.commercialpaper,and$62.8billionofinternationalbonds. ReturntoChart6.9 Chart 6.10: Net Interest Rate Resetting Exposure TheProvincesinterimnetinterestrateresettingexposure,calculatedasa percentageofthedebtissuedforProvincialpurposeswas11.0percentonMarch 31,2014.Thiscomparesto8.9percentasatMarch31,2013,and8.3percentas atMarch31,2012.Theinterestrateexposurelimitissetat35percent. ReturntoChart6.10 Chart 6.11: Foreign Exchange Exposure TheProvincesinterimforeignexchangeexposure,calculatedasapercentageof thedebtissuedforProvincialpurposes,was0.4percentasatMarch31,2014. Thiscomparesto0.8percentasatMarch31,2013,and1.0percentasat March31,2012.Theforeignexchangeexposurelimitissetat5percent. ReturntoChart6.11
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