Ontario Economic Outlook and Fiscal Review

The Honourable C h a r l e s S o u s a
Minister of Finance
B AC KG ROU N D PA P ERS
ONTARIO ECONOMIC OUTLOOK

and
FISCAL REVIEW
2014
The Honourable C h a r l e s S o u s a
Minister of Finance
B AC KG ROU N D PA P ERS
ONTARIO ECONOMIC OUTLOOK

and
FISCAL REVIEW
2014
For general inquiries regarding the 2014 Ontario Economic Outlook and Fiscal Review,
Background 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.fin.gov.on.ca
Queens Printer for Ontario, 2014

ISSN 1483-5967 (Print)
ISSN 1496-2829 (PDF/HTML)
Ce document est disponible en franais sous le titre :
Perspectives conomiques et revue financire de lOntario de 2014,
Documents dinformation
Contents
Contents
Foreword
Introduction .......................................................................................... xiii
Economic Outlook Improving ................................................................... xiii
Meeting Fiscal Targets ............................................................................ xiv
A Balanced Path to a Balanced Budget ....................................................... xv
Pursuing Program Review, Renewal and Transformation .............................. xvi
Managing Compensation Costs ................................................................ xvii
Ensuring Everyone Pays their Fair Share of Taxes ...................................... xvii
Unlocking the Value of Provincial Assets ................................................... xviii
Our Plan for Building Ontario Up............................................................... xix
Investing in Peoples Talents and Skills .................................................. xix
Building Modern Infrastructure and Transportation.................................... xx
A Dynamic and Supportive Business Environment .................................... xxi
Building a Secure Retirement ............................................................... xxii
A Strong Ontario within a Strong Canada ................................................. xxiii
A Fair Society ....................................................................................... xxiii
Conclusion ...........................................................................................xxiv
Chapter I: Building Opportunity, Securing Our Future

Section A: Making Every Dollar Count
A Balanced Path to a Balanced Budget ........................................................ 3
Ontarios Plan to Eliminate the Deficit ...................................................... 4
Progress on Actions to Eliminate the Deficit ................................................. 7
Pursuing Program Review, Renewal and Transformation ............................. 7
Managing Compensation Costs ................................................................ 9
Ensuring Everyone Pays their Fair Share of Taxes ..................................... 11
Unlocking the Value of Provincial Assets .................................................. 15
iii
2014OntarioEconomicOutlookandFiscalReview
Section B: Investing in Peoples Talents and Skills
Ontarios Skilled Workforce Is a Key Competitive Advantage..........................21
Building on Previous Achievements ............................................................22
Investing in Early Career Experience ..........................................................22
Ontarios Specialist High Skills Majors Program .........................................23
Experience Ontario ...............................................................................23
Advancing Postsecondary Education ...........................................................23
Supporting Partnerships, Creating Jobs ......................................................25
Ontario Youth Jobs Strategy ..................................................................25
Improving Skills Training ..........................................................................27
Ontarios Integrated Employment and Training System ..............................27
CanadaOntario Job Grant.....................................................................28
Promoting the Skilled Trades ....................................................................29
Section C: Building Modern Infrastructure and Transportation Networks

Continuing to Move Ontario Forward ..........................................................32
Dedicated Funding for Priority Projects in the GTHA ..................................32
Dedicated Funding for Priority Projects Outside the GTHA...........................33
Improving Public Transit ..........................................................................34
Investing in Provincial Highways................................................................36
Building Better Places to Learn ..................................................................37
Increasing Access to Postsecondary Institutions...........................................37
Investing in Modern Health Infrastructure ...................................................38
Innovative Approaches to Infrastructure Investment ....................................38
Section D: Creating a Supportive and Dynamic Business Climate

Maintaining a Competitive Tax Environment ................................................42
Building Strategic Partnerships ..................................................................44
Reducing Regulation for Business ..............................................................47
Growing Small Businesses in Ontario .........................................................47
Helping Businesses Manage Electricity Costs ...............................................48
Modernizing and Strengthening Financial Services........................................49
Strengthening Ontarios Financial Services Sector .....................................50
Modernizing Ontarios Financial Services Sector ........................................51
iv
Contents
Going Global .......................................................................................... 53
Growing Ontario Exports ....................................................................... 53
Strengthening Partnerships with Provinces and Territories ......................... 54
Attracting Foreign Direct Investment ...................................................... 55
Supporting a Vibrant Tourism and Culture Sector ..................................... 55
Section E: Strengthening Retirement Security

A Leader in Retirement Income Security ..................................................... 57
Introduction ........................................................................................ 57
The Ontario Retirement Pension Plan ...................................................... 57
Pooled Registered Pension Plans ............................................................ 60
Target Benefit Pension Plans.................................................................. 60
Ongoing Retirement Income Security Reforms ............................................ 61
A Strong Pension Regulator ................................................................... 61
Pension Reforms Underway ................................................................... 62
Sustainable and Cost-Effective Public-Sector Defined Benefit Plans ................. 64
Pooled Asset Management ..................................................................... 64
Framework for Conversion to Jointly Sponsored Pension Plans .................... 64
Section F: A Fair Society

Building Opportunity for All Ontarians ........................................................ 65
Moving Forward on the Poverty Reduction Strategy ...................................... 65
Breaking the Cycle of Poverty for Children and Youth ................................ 66
Moving towards Greater Employment and Income Security ........................ 67
Investing in Affordable Housing and Ending Chronic Homelessness .............. 68
Using Evidence to Develop Policy and Measure Success ............................. 69
Supporting Ontarians with Developmental Disabilities................................... 69
Increased Legal Aid Eligibility.................................................................... 70
Protecting Ontario Consumers................................................................... 71
Taking Steps to Keep Auto Insurance Affordable ....................................... 71
Transparency and Accountability ............................................................ 72
Electricity Rate Mitigation for Low-Income Ontarians .................................... 73
Chapter II: Economic Outlook

Overview ...............................................................................................77
Economic Expansion Continues .................................................................79
Ontarios Economy Continues to Create Jobs ...............................................80
Global Economic Developments and Outlook ...............................................82
U.S. Economy ......................................................................................83
Oil Prices ............................................................................................85
Financial Markets .................................................................................86
Canadian Dollar ...................................................................................88
Outlook for Ontario Economic Growth.........................................................91
Details of the Ontario Economic Outlook .....................................................99
Private-Sector Forecasts ..................................................................... 100
Change in the Economic Outlook .......................................................... 101
Comparison to the 2014 Budget ........................................................... 102
Chapter III: Fiscal Outlook

Section A: Overview ............................................................................. 105
Section B: 201415 Fiscal Performance
201415 Revenue Changes since the 2014 Budget .................................... 108
Details of 201415 In-Year Revenue Changes ........................................ 109
201415 Expense Changes since the 2014 Budget ..................................... 110
Details of 201415 In-Year Expense Changes ......................................... 110
Section C: Medium-Term Fiscal Outlook

Ontarios Recovery Plan ......................................................................... 113
Medium-Term Revenue Outlook .............................................................. 114
Medium-Term Revenue Outlook Has Declined since the 2010 Budget ......... 116
Medium-Term Expense Outlook ............................................................... 117
Fiscal Prudence ..................................................................................... 117
Section D: Details of Ontarios Finances

Fiscal Tables and Charts ......................................................................... 119
vi
Contents
Chapter IV: National Leadership Strong Ontario,

Strong Canada
Overview: Time for FederalProvincial Partnership ..................................... 131
Need for Responsible Federal Actions ....................................................... 132
Addressing Fiscal Imbalance in the Federation........................................ 132
Modernizing the Fiscal Arrangements .................................................... 134
Investing to Improve the Lives of Ontarians .............................................. 137
Infrastructure Investment ................................................................... 137
Ring of Fire ....................................................................................... 138
Support for the Automotive Sector ....................................................... 138
Support for Labour Market Development ............................................... 139
Attracting Skilled Immigrants .............................................................. 140
Partnership on Poverty Reduction ......................................................... 140
Ensuring Old Age Security ................................................................... 141
Ensuring Everyone Pays their Fair Share of Taxes ................................... 142
Chapter V: A Fair and Efficient Tax System

Income Tax Changes for People .............................................................. 145
Personal Income Tax Rates ................................................................. 145
Dividend Tax Credits .......................................................................... 145
Tax Changes for Business ...................................................................... 146
Review of the Ontario Interactive Digital Media Tax Credit ....................... 146
Tax on Aviation Fuel Relief for Vulnerable Communities ....................... 147
Registration Requirements for Certain Road-Building Machines ................. 147
Small Business Deduction ................................................................... 148
Other Measures .................................................................................... 148
Enhanced Administration of the Estate Administration Tax ....................... 148
Tax Credit for Farmers Who Donate to Community Food Programs ............ 148
Provincial Land Tax ............................................................................ 148
Power Dam Special Payment ............................................................... 149
Implementation of the Special Purpose Business Property Assessment
Review Recommendations ................................................................... 149
vii
Chapter VI: Borrowing and Debt Management

Long-Term Public Borrowing and Green Bonds ........................................... 153
Debt and Net Debt-to-GDP ..................................................................... 157
Residual Stranded Debt Update ............................................................... 158
Total Debt Composition .......................................................................... 160
Cost of Debt ......................................................................................... 161
Risk Exposure ....................................................................................... 162
Chapter VII: Pre-Budget Consultations

How to Participate in the 2015 Pre-Budget Consultations ............................ 165
Online Submissions ........................................................................... 165
Written Submissions ........................................................................... 166
viii
Contents
Tables
Chapter II:
Economic Outlook
Table 2.1
Ontario Economic Outlook.......................................... 77
Table 2.2
Outlook for External Factors ....................................... 89
Table 2.3
Impacts of Sustained Changes in Key External Factors

on Ontarios Real GDP Growth .................................... 90
Table 2.4
The Ontario Economy, 2012 to 2017 ........................... 99
Table 2.5
Private-Sector Forecasts for Ontario Real

GDP Growth .......................................................... 100
Table 2.6
Changes in Ministry of Finance Key Economic Forecast

Assumptions: 2014 Budget Compared to 2014 Fall
Economic Statement ............................................... 102
Chapter III:
Fiscal Outlook
Table 3.1
201415 In-Year Fiscal Performance ......................... 108
Table 3.2
Summary of Revenue Changes

since the 2014 Budget ............................................ 109
Table 3.3
Summary of Expense Changes

since the 2014 Budget ............................................ 110
Table 3.4
Ontarios Recovery Plan ........................................... 113
Table 3.5
Summary of Medium-Term Revenue Outlook .............. 115
Table 3.6
Ontarios Recovery Plan ........................................... 119
Table 3.7
Revenue ............................................................... 120
Table 3.8
Total Expense ........................................................ 121
Table 3.9
Details of Other Expense ......................................... 122
Table 3.10
201415 Infrastructure Expenditures ........................ 123
Table 3.11
Ten-Year Review of Selected Financial and

Economic Statistics ................................................. 124
ix
Chapter VI:
Borrowing and Debt Management
Table 6.1
201415 Borrowing Plan .......................................... 155
Table 6.2
Medium-Term Borrowing Outlook .............................. 156
Contents
Charts
Chapter I:
Building Opportunity, Securing Our Future
Chart 1.1
Ontarios Plan to Eliminate the Deficit ........................... 4
Chart 1.2
Ontarios Record against Deficit Targets ........................ 5
Chart 1.3
Ontarios Internationally Competitive CIT Rate .............. 42
Chapter II:
Economic Outlook
Chart 2.1
Ontarios Economic Expansion .................................... 79
Chart 2.2
Employment Gains Concentrated in Full-Time,

Private-Sector, Above-Average Wage Jobs ................... 80
Chart 2.3
Ontario Job Recovery Ahead of U.S.

and OECD Average ................................................... 81
Chart 2.4
Global Economic Growth to Improve............................ 83
Chart 2.5
Strengthening U.S. Recovery ..................................... 84
Chart 2.6
Oil Prices to Remain High .......................................... 85
Chart 2.7
Interest Rates to Rise Gradually ................................. 87
Chart 2.8
Canadian Dollar to Remain Below Parity ....................... 88
Chart 2.9
Ontarios Growth Outlook Led by Exports

and Investment ........................................................ 91
Chart 2.10
Employment Expected to Rise

over the Medium Term .............................................. 92
Chart 2.11
Housing in Ontario to Remain Affordable ...................... 94
Chart 2.12
Although Elevated, Canadian Household Debt

Remains Affordable ................................................... 95
Chart 2.13
Ontario Business Machinery and Equipment

Investment Expected to Rise in Line with Profits ........... 96
Chart 2.14
Exports Expected to Increase ..................................... 98
Chart 2.15
Private-Sector Outlook for Growth Down Slightly......... 101
xi
Chapter III:
Fiscal Outlook
Chart 3.1
Medium-Term Revenue Outlook Has Declined

since the 2010 Budget ............................................. 116
Chart 3.2
Composition of Revenue, 201415 ............................ 126
Chart 3.3
Composition of Total Expense, 201415 ..................... 127
Chart 3.4
Composition of Program Expense, 201415 ................ 128
Chapter IV:
National Leadership Strong Ontario,

Strong Canada
Chart 4.1
Fiscal Disparity in the Federation Projected Budget

Balances across Orders of Government ...................... 132
Chart 4.2
Ontarios Net Contribution to the Federation

in 200910 ............................................................ 134
Chart 4.3
Net Contribution to Equalization (201415) ................ 135
Chart 4.4
Declining Federal Housing Investment in Ontario ......... 141
Chapter VI:
Borrowing and Debt Management
Chart 6.1
201415 Borrowing ................................................ 154
Chart 6.2
Net Debt-to-GDP .................................................... 157
Chart 6.3
Residual Stranded Debt since April 1, 1999 ................ 158
Chart 6.4
Total Debt Composition as at September 30, 2014 ...... 160
Chart 6.5
Effective Interest Rate (Weighted Average)

on Total Debt ......................................................... 161
Chart 6.6
Net Interest Rate Resetting and

Foreign Exchange Exposure...................................... 162
xii
Foreword
Foreword
Introduction
ThepurposeofthisOntarioEconomicOutlookandFiscalReviewistoupdatethe
peopleofOntarioontheprogresstheirgovernmenthasmadeontheirbehalf
sincethepassageofthe2014Budget.Normallythisisintendedtobeamidyear
assessment,comingaboutsixmonthsafterthebudget.Butwithintervening
events,mostnotablythespringelection,ourbudgetonlypassedonJuly24,
lessthanfourmonthsago.
Withastrongandclearmandatefromthepeopleandspurredonbyasenseof
urgencycreatedbythecompressedtimeframe,thegovernmenthassincebeen
movingaheadwithspeed,determinationanddiligence.
Ourpurposeisclear:tocreateopportunityandsecurityforpeople,andtobuild
Ontarioup,whileeliminatingthedeficitinaresponsibleandbalancedway.
Ourcommitmenttobalancingthebudgetby201718willensurethat,overthe
longterm,wecanprovidetheprogramsandservicesthatOntariansexpect
andrelyon.
Economic Outlook Improving

Theglobaleconomicenvironmentremainschallengingandcontributedto
relativelyweakgrowthforOntariothrough2013.However,therearepositive
signsthatOntarioseconomicexpansionisgainingmomentumthisyear,
supportedbyaresurgentU.S.economy.Majoreconomicindicators,includingreal
grossdomesticproduct(GDP),exportsandhouseholdconsumption,haveposted
solidgainssincethebeginningof2014.Ontariosunemploymentratehasdeclined
to6.5percentinOctober,downfrom7.5percentatthebeginningoftheyear
andthelowestrateofunemploymentsince2008.
xiii
Meeting Fiscal Targets

TheOntariogovernmentisworkingtomeetitsfiscaltargets,despitethe
challengesoftherelativelymodestpaceofeconomicgrowth.Lowereconomic
growthmeanslessthanexpectedrevenue.
TheProvincestotalrevenueprojectionfor201415of$118.4billionis
$509millionlowerthanthe2014Budgetforecast.Thislargelyreflectsweak2013
economicgrowthandlowerthanexpectedtaxrevenuesin201314thatcarry
forwardoverthemediumterm.
Yetthegovernmenthasoverachievedonitsfiscaltargetsinspiteofadeclinein
therevenueoutlooksincethe2010Budgetandiscontinuingtomoveforward
towardsbalance.Thisishappeningthankstosoundmanagementof
governmentexpenses.
From201011throughto201314,growthinprogramspendingwasheldtoan
averageof1.2percentperyear.Thisgrowthrateresultedfromdisciplinedaction
tofindefficienciesinthedeliveryofpublicserviceswhilestillmakingcritical
investmentsintheprogramsandservicesthatpeopledependon,suchashealth
careandeducation.
Asaresultofresponsiblemanagement,programspendingwas16.6percent
ofOntariosGDPin201314.Incontrast,programspendingwas17.9percentof
OntariosGDPin200910.From201314throughtobalancein201718,program
spendingisprojectedtogrowatanaverageannualrateof0.8percent.
Thegovernmentsupportedtheeconomyduringtherecessionandisnow
takingaresponsibleandbalancedapproachtoeliminatingthedeficit.
Indeed,Ontarioconsistentlyhasthelowestpercapitaprogramspending
amongallCanadianprovinces.
xiv
Foreword
A Balanced Path to a Balanced Budget

Thefoundationofastrongeconomyisabalancedbudget.Thegovernmentis
committedtoachievingabalancedbudgetby201718.Balancingthebudgetisa
signofprudentmanagementthatisconsistentwiththisgovernmentscorevalues.
Simplyput,wewanttomakesurethateverydollarcounts.Goodmanagement
ofthegovernmentsfinancesallowsustoenacttheprogressiveagendaforaction
thatOntarianshavegivenusastrongmandatetoimplement.
Balancingthebudgetby201718isachallenge,butwearemeetingthat
challengebytakingadeliberateandthoughtfulapproachtothetoughchoices
weface.
Thekeyelementsofourplantoachieveabalancedbudgetare:
Pursuingprogramreview,renewalandtransformation;
Managingcompensationcosts;
Ensuringeveryonepaystheirfairshareoftaxes;and
Unlockingthevalueofprovincialassets.
Throughtheseactions,thegovernmentismakingsurethateachandeverydollar
goesfurthertoachievevaluefortaxpayershardearnedmoney.However,should
economicconditionspersistthatresultintheProvincesrevenueoutlookfalling
furtherbelowthe2014Budgetprojection,thegovernmentwillconsiderother
tools,asnecessary,tobalancethebudgetby201718.Thiswouldbedonewhile
continuingtomakecriticalinvestmentsintheprogramsandservicesthatpeople
dependon,suchashealthcareandeducation.
xv
Pursuing Program Review, Renewal and

Transformation
Thegovernmentiscommittedtotransformingandmodernizingpublicservices
byfindingnewandsmarterwaystodeliverthebestvalueforeverydollarspent.
TheHonourableDebMatthews,PresidentoftheTreasuryBoard,isleading
acarefulreviewofeverygovernmentprogram.Governmentprogramswill
bereviewedthroughfourlensesforrelevance,effectiveness,efficiency
andsustainability.
Afocusonevidenceandmeasurableresultsisacriticalelementofthereview.
Theobjectiveistoensurethatsustainedfundinggoestoinitiativesthatwork.
Opportunitieswillbeidentifiedtotransformandmodernizepublicservicessothat
everydollargoesfurthertoachievevaluefortaxpayershardearnedmoney.
Inadditiontobetteroutcomes,thegovernmentiscommittedtomeetingits
annualprogramreviewsavingstargetof$250millionfor201415and
$500millionforeachofthenexttwoyears,asannouncedinthe2014Budget.
xvi
Foreword
Managing Compensation Costs

Thegovernmentiscontinuingtotakeactiontocontrolcompensationcosts.
ThegovernmentintroducedBill8,thePublicSectorandMPPAccountabilityand
TransparencyAct,2014,which,ifpassed,wouldauthorizeittodirectlycontrol
compensationofseniorexecutivesinthebroaderpublicsector.Thelegislation
wouldauthorizethegovernmenttoobtainallcompensationrelatedinformation
andsetcompensationframeworksincludinghardcaps.
InAugust,thegovernmentreachedafouryearcollectiveagreementwiththe
AssociationofManagement,AdministrativeandProfessionalCrownEmployees
ofOntario(AMAPCEO).Theagreementincludesawagefreezeinthefirsttwo
yearsanda1.4percentwageincreaseineachofthethirdandfourthyears.
Theagreementisconsistentwiththefiscalplanoutlinedinthe2014Budget,
whichincludesnonewfundingforcompensationincreases.Thecostofwage
increasesin2016and2017isbeingoffsetoverthefouryeartermthrough
changestobenefitsandentitlements,makingitanetzeroagreement.Thisnew
agreementfollowsatwoyeardealthatincludednowageincreasesineither
2012or2013totallingfourconsecutiveyearswithoutanincrease.
Ensuring Everyone Pays their Fair Share of Taxes

Overthepastseveralyears,ourgovernmenthascutmanytaxesforbusiness
toencouragebusinessgrowthandinvestment.Asaresult,Ontariohasalower
combinedfederalprovincialgeneralcorporateincometaxratethanthe
combinedfederalstatetaxrateinanyoftheU.S.states.
Aneffectivetaxadministrationsystemalsorequiresbusinessestopaytheirfair
shareoftaxes.Whenbusinessesdonotpaytheirfairshare,provincialrevenues
arecompromised.ThishasadirectimpactontheprogramsandservicesOntarians
expectandrelyon.Further,whenbusinessesdonotpaytheirfairshareoftaxes,
theydisadvantageotherbusinessesthatdofollowtherules.Often,businesses
thatdonotpaytaxesalsoignoretherulesthatprotectemployeesandensure
thatproductsandservicesarereliableandsafe.Thisactivityfostersan
undergroundeconomy.
xvii
Thegovernmentistakingactionagainsttheundergroundeconomyby:
Launchingpilotinitiativestobettercoordinateandstrengthencompliance
activitiesinhighrisksectors;
Expandingtaxverificationforprocurementsinthebroaderpublicsector,
Crowncorporations,andfinancialassistanceprovidedtobusinesses;and
Examiningadditionalmeasuresthatwouldenablebetterinformation
sharingacrossgovernmentministries,agenciesandjurisdictions.
Inaddition,wearetakingfurthermeasurestoaddressthesupplyof
contrabandtobacco.
Unlocking the Value of Provincial Assets

Unlockingthevalueofprovincialassetsisawaytohelpoureconomygrow
whilecreatingjobsandsustaininggovernmentservices.Itisalsoawayto
createnewrevenuethatcanbeputtowardsimprovingpublicinfrastructure,
includingtransit.
Maintainingprovincialownershipofmanyoftheseassetsremainsapriorityto
deliverkeyservicestothepublic,whileholdingontootherassets,suchasthe
LiquorControlBoardofOntario(LCBO)headofficelands,maynolongerserve
apublicpolicypurpose.
ThePremiersAdvisoryCouncilonGovernmentAssetshasbeenaskedtofind
waystoincreaseefficienciesandunlockthefullvalueofHydroOneInc.,Ontario
PowerGenerationandtheLCBO,includingotheraspectsofOntariosbeverage
alcoholretailsystem.
TheCouncilsfindingsincludeopportunitiestoprovideconsumerswithimproved
access,enhancedcustomerserviceattheLCBO,aswellasnegotiatingwith
supplierstoachievehigherreturnsforOntarians.TheCouncilsaysHydroOne
shouldretainitscoretransmissionbusiness.Also,thefragmentedsystemofabout
70localelectricitydistributorsshouldbeencouragedtoconsolidateandbringin
privatecapitaltoimprovetheefficiencyoftheelectricitydistributionsector.
xviii
Foreword
ThegovernmentissupportiveoftheCouncilsinitialfindingsandhastaskeditto
buildonitsworkbyenteringintoasecondphase.Inthisnextphase,theCouncil
willbroadenitscommitmenttoacollaborativeandtransparentprocessand
deepentherelationshipsithasestablishedwithallparties,bringingtheCouncil
closertoitsgoalofreachingagreementswiththeappropriateparties.
TheCouncilsfinalrecommendationswillhelpinformthe2015Budget.
Our Plan for Building Ontario Up

Thegovernmentsagendaforprogressiveactionissupportedbyourplan:
Investinginpeoplestalentsandskills;
Buildingmoderninfrastructureandtransportationnetworks;
Creatingadynamicandsupportiveenvironmentthatallowsbusiness
tothrive;and
Ensuringastrongretirementincomesystemsoeveryonecanafford
toretire.
Theevidenceshowsthatourplanisworking.Ontariosunemploymentratehas
declinedfromarecessionaryhighof9.4percentinJune2009to6.5percentin
October2014.SincetherecessionarylowinJune2009,Ontariohasadded551,300
jobs,erasingthe265,800joblossduringtherecession.Themajorityofthejobs
addedarefulltimeandintheprivatesector.Employmentisnow4.3percentor
285,500abovetheprerecessionpeak.
Investing in Peoples Talents and Skills

WhileOntarioseconomycontinuestocreatejobs,moreremainstobedone.
WewilltakestepstoensurethatOntarians,particularlyyoungOntarians,havethe
skillsandtrainingtheyneedforhighpaying,rewardingjobs.
Tothatend,thegovernmentislaunchingnewinitiativesandenhancing
establishedprogramssothathighschoolstudentsreachtheirfullpotential.
Forexample,in2015,thegovernmentwilllaunchExperienceOntario,which
willallowallhighschoolgraduatestogainvaluableworkexperiencebeforethey
choosetheircareerpath.
xix
Ouractionscontinuebeyondhighschool.TheProvincecontinuestostrengthen
postsecondaryeducationthroughinitiativessuchasonlinelearningtoolsthatgive
studentstheflexibilitytocontrolhow,whenandwheretheylearn.
Thegovernmentalsolauncheda$295millionOntarioYouthJobsStrategyin
September2013.Akeyelementofthatstrategy,theOntarioYouthEmployment
Fund,hasalreadyhelpedmorethan23,000youngpeoplegainworkexperience
andfindjobs.
Ontariosskilledtradesarefundamentaltoensuringcontinuedeconomicgrowth
acrosstheprovince.Wearecontinuingtostrengthentheskillstrainingsystemand
haveappointedareviewerfortheCollegeofTrades.
Building Modern Infrastructure and Transportation

TheProvincesplanfortheeconomyisfoundedonworldclassinfrastructurethat
willenhancethequalityoflifeforOntarians,supporteconomicgrowth,increase
productivityandmeetfuturedemographicneeds.
Ontarioisplanningtoinvestmorethan$130billioninpublicinfrastructureover
thenext10years,including$12.8billionin201415.
InJuly,weintroducedlegislationthat,ifpassed,wouldrequirecurrentandfuture
governmentstoregularlypreparelongterminfrastructureplansandfurther
improvethewaytheProvinceprioritizesinfrastructureneeds.
Inthe2014Budget,thegovernmentprovideddetailsoftheMovingOntario
Forwardplantomakenearly$29billionindedicatedfundingavailableoverthe
next10yearsforpublictransit,highwaysandotherpriorityinfrastructureprojects
acrosstheprovince.MovingOntarioForwardisinvesting$15billionintransit
projectsintheGreaterTorontoandHamiltonAreaandnearly$14billionincritical
infrastructureprojectselsewhereinOntarioinafair,accountableand
transparentmanner.
Itisanambitiousplanthatlooksbeyondthefouryearelectioncyclethatcan
causegovernmentvisiontobeshortsighted.Thisgovernmentistakingalongterm
view.Byinvestingininfrastructuretoday,wearehelpingcreatejobsandgrowour
economysowecanmeettheinfrastructureneedsoftomorrow.
xx
Foreword
A Dynamic and Supportive Business Environment

Keyinitiativesunderourplaninclude:
Maintainingacompetitivetaxenvironmentthatencouragesbusinessto
investandgrow;
Buildingstrategicpartnershipswithbusiness,includinginvestments
throughthe$2.5billionJobsandProsperityFund;
Reducingregulationforbusiness;
GrowingsmallbusinessesinOntario;
Helpingbusinessmanageelectricitycosts;
Modernizingfinancialservices;and
MovingforwardwiththegovernmentsGoingGlobalTradeStrategy,
toencourageOntariobusinesstoexpandtheirexportsinternationally.
Throughtheseinitiatives,theProvincewillencourageproductivityenhancing
investmentsbybusiness,improveOntarioscapitalmarkets,andsupportgrowth
inkeysectors,suchasadvancedmanufacturing.
Thegovernmentisfosteringeconomicgrowthinallpartsoftheprovince.Wehave
createdregionaleconomicdevelopmentfundslikeREDtheRuralEconomic
DevelopmentProgram.Recently,REDprovidedsupporttotheHensallDistrict
Cooperative,whichprocessesandmarketshighvaluefieldcropsforover
2,000farmers.Thissupportcreatedandmaintained14localjobsandleveraged
$4.3millioninprivateinvestment.
PremierKathleenWynnerecentlyledatrademissiontoChinathatattracted
almost$1billioninnewinvestmentsbyChinesecompanies,whichwillcreate
morethan1,800jobsacrossOntario.
ThegovernmentisalsomodernizingandstrengtheningOntariosfinancial
servicessector.Weareworkingwithotherjurisdictions,domesticandglobal,
onnewinitiativessuchasatradinghubintheChinesecurrencyinCanada,
collaboratingwiththeChinese,federalandBritishColumbiagovernments.
xxi
Weareworking,incollaborationwithotherprovincesandterritoriesandthefederal
government,toestablishaCooperativeCapitalMarketsRegulatorySystemtohelp
makesecuritiesmarketssafer.WearereviewingthemandatesoftheFinancial
ServicesCommissionofOntarioandtheDepositInsuranceCorporationofOntario
toensuretherecontinuestobestrongoversightinthissector.
Wehavealreadybegunareviewofthelegislativeframeworkforcreditunionsand
caissespopulairesledbyLauraAlbanese,MPP,ParliamentaryAssistantto
theMinisterofFinance.
Thegovernmentisalsoundertakingareviewoftheregulationoffinancial
planning.Anexpertcommitteewillbeappointedtolookatmoretailored
regulationoffinancialadvisersandfinancialplanners.
Ontariostourismandcultureindustriesnotonlycreatejobsandeconomic
growth,theyenhanceOntariansqualityoflife.Akeyupcomingeventinthe
tourismandculturesectoristhecommemorationofthe400thanniversaryofthe
FrancophonepresenceinOntario,scheduledtotakeplacefromJunetoOctober
2015.OnSeptember25,2014,thegovernmentannouncedfundingof$5.9million
forawiderangeofcommemorativeeventsfortheanniversary.Specifictourism,
cultural,educationalandlegacyprojectswillbeannouncedinthecomingweeks
andmonths.
Building a Secure Retirement

TheProvinceiscommittedtoastrongandsecureretirementincomesystem
tohelpensurethatOntariansarebetterabletoenjoytheirretirementyears.
Asaresult,the2014Budgetannouncedthegovernmentsnewmandatory
provincialpensionplantheOntarioRetirementPensionPlan(ORPP).
ThegovernmentintendstoimplementtheORPPin2017,coincidingwith
expectedreductionsinEmploymentInsurancepremiums.
TheORPPisanintegralpartofthegovernmentsplantoinvestinpeopleandhelp
workingOntariansbuildamoresecureretirementfuture.TheORPPisbeing
designedtotargetthosemostatriskofundersaving,particularlymiddleincome
earnerswithoutworkplacepensioncoverage,andwillneedtoeffectivelybalance
retirementincomesecuritywithimpactonbusiness.
TheHonourableMitzieHunter,AssociateMinisterofFinanceresponsible
fortheORPP,hasbegunworktowardsthepensionplanslaunchin2017.
xxii
Foreword
A Strong Ontario within a Strong Canada

Whentheglobaleconomicrecessionstruckin2009,thefederalandOntario
governmentsworkedinconcerttoeasetheworsteffectsofthedownturn.
Collaborationisstillneededtosecurelongtermproductivityandprosperity
andbuildastrongOntariowithinastrongCanada.
Ontarioistakingimportantstepstodeliveronitsplanandbuildastrongand
sustainablefiscalfoundation.Itiscriticalthatthefederalgovernmentavoid
furtherunilateralactionsthatwouldnegativelyimpactthepeopleofOntario,
andavoidactionsthatputtheProvincesfiscalplanatrisk.Thefederal
governmentneedstotreatOntariofairly,andsupporteconomicgrowthin
theprovince.
Asthefederalgovernmentisexpectedtobeinapositiontorealizesignificant
andgrowingsurplusesbeginningin201516,itwillhaveanopportunitytoinvest
inpartnershipswiththeOntariogovernmentinawaythatwillsupportjob
creationandeconomicgrowth.
Ontariocallsonthefederalgovernmenttoreformthetransferpaymentsystem
totreatOntariansfairly.Inaddition,giventhefundamentalroleinfrastructure
playsinCanadaseconomicgrowth,theProvinceiscallingonthefederal
governmenttomatchOntariosinvestmentsintheRingofFireregion,and
significantlyincreaseitsinvestmentsinpublicinfrastructure.
A Fair Society
ThegovernmentisdeterminedtobuildafairerandhealthierOntario.Tothatend,
ithaslaunchedareinvigoratedPovertyReductionStrategythataimstoend
chronichomelessness,aswellassupportandencouragepeopletofind
meaningfulemploymentatafairwage.Allowingpeopletorealizetheirfull
potentialreducespovertyandmakesgoodeconomicsense.
Thegovernmentistakingactiontohelplowwageworkerswhostruggletomake
endsmeet,includingbyraisingtheminimumwageto$11perhour,thehighest
ofanyprovince.
xxiii
ManyOntariansneedtoownanddriveacartoandfromwork.Thatiswhy
governmentreformsareaimedatfightinginsurancefraudandabuseinorderto
makeautoinsurancemoreaffordableforOntarians.
AsaresultofthegovernmentsAutoInsuranceCostandRateReductionStrategy,
ratesdeclinedbymorethansixpercentonaveragefromAugust2013to
August2014.
Conclusion
Lookingforwardfromnowuntilournextbudgetin2015,thisgovernment
willcontinuetopursueitsmandateforaction.
Wewillcontinuetoinvestinpeoplesskillsandtalents,buildmodern
infrastructureandtransportationnetworks,createasupportiveanddynamic
businessclimate,andstrengthenretirementincomesecurityforallOntarians.
Thesegovernmentprioritiesandourdeterminedeffortstomakeeverydollar
countwillhelpsupporteliminatingthedeficitby201718.
Wewillcontinuetocreateopportunityandsecurityforpeople,tobuild
Ontarioup,whileatthesametimeeliminatingthedeficitinaresponsible
andbalancedway.
xxiv
Chapter
Building Opportunity,
Securing Our Future
ChapterI:BuildingOpportunity,SecuringOurFuture
Section A: MakingEveryDollarCount
A Balanced Path to a Balanced Budget
Thegovernmentiscommittedtobalancingthebudgetby201718,andwilldo
soinawaythatisbothfiscallyresponsibleandfair.
TheProvincewillcontinuetoinvestinpeoplesskillsandtalents;
buildmoderninfrastructureandtransportationnetworks;createasupportive
anddynamicbusinessclimate;andstrengthenretirementincomesecurity
forallOntarians.Thiswillhelpgrowtheeconomy,protectrevenueandcreate
jobs.Thegovernmentwillalsocontinuetoresponsiblymanagespending.
From201314throughtobalancein201718,programspendingisprojected
togrowatanaverageannualrateof0.8percent.
Together,thesegovernmentprioritiesandactionstomakeeverydollarcount
willhelpsupporteliminatingthedeficitandimprovetheProvincesfiscal
sustainability.
Althoughtheglobaleconomicenvironmentremainschallenging,therearesigns
thatOntarioseconomicexpansionisgainingmomentumin2014,followingweak
growthin2013.However,shouldeconomicconditionspersistthatresultinthe
Provincesrevenueoutlookfallingfurtherbelowthe2014Budgetprojection,
thegovernmentwillconsiderothertools,asnecessary,tobalancethebudget
by201718.Thiswouldbedonewhilecontinuingtomakecriticalinvestmentsin
theprogramsandservicesthatpeopledependon,suchashealthandeducation.
Ontarios Plan to Eliminate the Deficit
CHART 1.1
Fiscal Balance
($ Billions)
201415
201516
201617
201718
5.0
0.0
0.0
(5.3)
(5.0)
(8.9)
(10.0)
(12.5)
(15.0)
(20.0)
(25.0)
Source: Ontario Ministry of Finance.
Ontarios Plan to Eliminate the Deficit

Ontariosplantoeliminatethedeficitbuildsonitspastsuccess.Forfiveyears
inarow,thegovernmenthasbeatenthedeficittargetsitestablishedafter
the200809globalrecession.OntarioisoneoftheonlygovernmentsinCanada
tohaveachievedthislevelofsuccess.Bybeatingitsfiscaltargets,theProvinces
accumulateddeficitis$25billionlowerthanitotherwisewouldhavebeen.
Ontarios Record against Deficit Targets
CHART 1.2
Fiscal Balance
Actual
($ Billions)
200910
201011
201112
201213
201314
5.0
0.0
(5.0)
(9.2)
(10.0)
(14.0)
(13.3)
(15.0)
(20.0)
(25.0)
(19.3)
(10.5)
(13.0)
(17.3)
(15.9)
(19.7)
(24.7)
Fiscal Forecast
Performance
Notes: Forecast for 201011 to 201314 is based on the 2010 Budget. Projection for 200910 is from the 2009 Ontario
Economic Outlook and Fiscal Review.
TheProvincehasoverachievedonitsfiscaltargetsinspiteofadeclinein
therevenueoutlooksincethe2010Budget.Thisoverachievementreflects
governmentactionstomanagegrowthinprogramspending.Infact,Ontario
consistentlyhasthelowestpercapitaprogramspendingamongall
Canadianprovinces.
Ontariohasbeenabletoachievethisrecordagainstitsdeficittargetsdespitea
verticalfiscalimbalancebetweenprovincesandthefederalgovernment.Boththe
federalParliamentaryBudgetOfficerandtheConferenceBoardofCanadaconfirm
thatwhilethefederalgovernmentisexpectedtobeinapositiontorealize
significantandgrowingsurplusesinthefuture,theprovincesandterritoriesasa
wholewillfaceincreasingchallengestoachievefiscalbalancewhileproviding
essentialprogramsandservicestoCanadians.Notwithstandingrecentunilateral
federalactionsthathavenegativelyimpactedOntarians,Ontarioistaking
importantstepsforwardtodeliveronitsplanandbuildastrongandsustainable
fiscalfoundation.
Between201011and201314,growthinOntariosprogramspendingwasheld
toanaverageof1.2percentperyear.Responsiblymanagingspendingresulted
inprogramspendingbeing16.6percentofgrossdomesticproduct(GDP)in
201314,lowerthanthe17.9percentreachedin200910.Thishasbeenthe
resultofdisciplinedactiontofindefficienciesinthedeliveryofpublicservices
whilestillmakingcriticalinvestmentsintheprogramsandservicesthatpeople
dependon,suchashealthandeducation.Infact,projectedprogramexpense
in201415isessentiallyunchangedfromthe2014Budget.
Balancingthebudgetby201718requiresathoughtfulapproachtomaking
toughchoices.Stepstowardsdeliveringonthegovernmentsplantobalance
arecentredon:
ProgramReview,RenewalandTransformation;
Managingcompensationcosts;
Ensuringeveryonepaystheirfairshareoftaxes;and
Unlockingthevalueofprovincialassets.
Progress on Actions to Eliminate the Deficit

Pursuing Program Review, Renewal and Transformation
AchievingbudgetbalanceandimprovingoutcomesforOntarianswillrequire
changesinhowgovernmentworks.OneofthewaystheProvinceisbringing
aboutchangeisthroughProgramReview,RenewalandTransformation
afundamentallynewapproachtomultiyearplanningandbudgeting.
TheProgramReview,RenewalandTransformationplanningprocessisdesigned
aroundkeyprinciples,includinglookingathoweverydollaracrossgovernment
isspent;usingevidencetoinformbetterchoicesandimproveoutcomes;
workingacrossgovernmenttobestdeliverservicesaroundtheclient;andtaking
amultiyearapproachtoidentifyingprogramtransformationopportunitiesand
achievingsavings.
Therewillbeacarefulreviewofeverygovernmentprogramthroughfourlenses:
Therelevanceoftheprograminrealizinggovernmentpriorities;
Theprogramseffectivenessinachievingdesiredoutcomes;
Theefficiencyinconvertingresourcesintoresults;and
Thesustainabilityoftheprogramoverthelongterm.
ProgramReview,RenewalandTransformationopportunitieswillbeidentified
toimproveservicesandoutcomesbasedonmeasurableresults,toensurethat
sustainedfundinggoestoinitiativesthatwork.Atthesametime,thegovernment
willalsohavetomaketoughchoicesaboutservicesthatarenotperforming,
donotlinktogovernmentpriorities,ornolongerserveaclearpublicinterest.
InadditiontoimprovingoutcomesforOntarians,thegovernmentwillmeet
itsannualprogramreviewsavingstargetof$250millionfor201415and
$500millionforeachofthenexttwoyears,asannouncedinthe2014Budget.
ThePresidentoftheTreasuryBoardhasconvenedaProgramReview,Renewal
andTransformationSubCommitteeofTreasuryBoardtoensureallofthe
governmentisworkingtogethertowardsthesameobjective.
AgroupofexpertswillbebroughttogethertoprovideadvicetothePresidentof
theTreasuryBoardasthegovernmentmovesforwardwiththeProgramReview,
RenewalandTransformationprocess.Thegroupwillbecomposedofexperts
fromgovernment,business,thebroaderpublicsectorandothersectorswith
experienceinleadingorganizationchangeinitiatives.ThePresidentofthe
TreasuryBoardwillalsoprovideanopportunityforOntariogovernmentstaff
andthepublictosharetheirtransformationandsavingsideas.
ProgramReview,RenewalandTransformationwillbuildonactionsalready
underwaytotransformandmodernizegovernmentprogramsandservices,
suchas:
ActingontherecommendationsoftheCommissionontheReformof
OntariosPublicServices;
ImplementingtheActionPlanforHealthCare;and
Providingtargetedelectricityratemitigation.
Acting on the Recommendations of the Commission on the Reform of

Ontarios Public Services
ThegovernmentiscontinuingtomoveaheadwiththeCommissions
recommendationsover80percentarebeingactedon.Inaddition,
theProvincehasbeenabletoholdannualaveragegrowthinprogramspendingto
1.2percentoverthepastthreefiscalyearsmuchlowerthanthe3.5percent
growththattheCommissionprojectedwouldoccurifthegovernmenttookno
action,andinlinewiththerecommendedgrowthrateofaroundonepercent.
AspartofProgramReview,RenewalandTransformation,thegovernment
willcontinuetolookattheCommissionsrecommendationsthatpresent
opportunitiesforserviceimprovementandsavings,andwillreportback
onprogress.
Implementing the Action Plan for Health Care

SinceannouncingtheActionPlanforHealthCarein2012,thegovernmenthas
madefundamentalimprovementstothedeliveryofhealthcareserviceswhile
managingdowntherateofgrowthinhealthspendingfromanaverageannual
rateofaboutsixpercentsince200304.ImplementingtheActionPlans
transformationalinitiativeshelpedslowtherateofgrowthinhealthcarespending
toabout2.5percentonaverageoverthelasttwoyears.Throughtargeted
investmentsandfurtherimplementationoftheActionPlan,thegovernmentis
improvingaccesstohighqualitycareandcreatingamoresustainablehealth
caresystem.
Providing Targeted Electricity Rate Mitigation

TheOntarioCleanEnergyBenefit(OCEB)willendonDecember31,2015.Tohelp
lowincomeOntarianswithelectricitycosts,theMinisterofEnergyhasasked
theOntarioEnergyBoardtodevelopoptionsforanOntarioElectricitySupport
Program(OESP),whichwillstartonJanuary1,2016.EndingtheOCEBwillsavethe
governmentapproximately$1billionannuallycomparedtothecurrentlevelof
spendingontheprogram.Thegovernmentisalsomovingforwardwithremoving
theDebtRetirementCharge(DRC)costfromresidentialuserselectricitybillsafter
December31,2015,savingatypicalresidentialratepayerabout$70peryear.
Aswell,thegovernmentisexpandingtheIndustrialConservationInitiativeand
introducedanewstreamoftheIndustrialElectricityIncentiveprogramtohelp
largebusinesseswiththeirelectricitycosts.
Managing Compensation Costs

Thegovernmentistakingaconsistent,fairandprinciplebasedapproachto
managecompensationcostsintheOntarioPublicService(OPS)andacrossthe
broaderpublicsector,whileensuringthatservicelevelsmeetpublicneeds.
The2013Budgetstatedthatallpublicsectorpartnerswillneedtocontinueto
worktogethertoeffectivelymanagecompensationcostswithinOntariosexisting
fiscalframework,whichincludesnofundingforincrementalcompensation
increasesfornewcollectiveagreements.
The2014Budgetconfirmedthatanymodestwageincreasesthatarenegotiated
mustbeabsorbedbyemployerswithinavailablefundingandwithinOntarios
existingfiscalplanthroughefficiencyandproductivitygainsorothertradeoffs
sothatservicelevelscontinuetomeetpublicneeds.
Overhalfofthegovernmentsprogramspendingisonsalariesandbenefits.
Broaderpublicsectorpartnersneedtocometogethertomanagecompensation
costsandcontrolspendingwhileprotectingpublicservicesthatOntariansrelyon
andworkingtowardsbalancingOntariosbudget.
Labour Agreements in the Ontario Public Service

AcollectiveagreementwasreachedwiththeAssociationofManagement,
AdministrativeandProfessionalCrownEmployeesofOntario(AMAPCEO),
whichwasratifiedbybothpartiesonAugust28,2014.
TheAMAPCEOagreementincludesawagefreezeinthefirsttwoyearsanda
1.4percentwageincreaseineachofthethirdandfourthyears.Thisnew
agreementfollowsatwoyeardealthatincludednowageincreasesineither
2012or2013totallingfourconsecutiveyearswithoutanincrease.
Theagreementisconsistentwiththefiscalplanoutlinedbythegovernment,
whichincludesnonewfundingforcompensationincreases.Thecostofwage
increasesin2016and2017isbeingoffsetoverthefouryeartermthrough
changestobenefitsandentitlements,makingitanetzeroagreement.Oneof
thesechangesistheeliminationofexitpay,whichwillreducefuturecostsand
savetaxpayersapproximately$55millionthisyear.
Thegovernmentrespectsthecollectivebargainingprocessandvaluesthework
ofOntarioPublicServiceemployees.Thegovernmentlooksforwardtocontinuing
toworkwithitsbargainingagentpartnerstoreachagreementsthatarefairand
equitabletoemployeesandtothepeopleofOntariointhecurrentfiscaland
economicclimate.
Changes to Benefit Entitlements

Aspartofthe201314expenditurereview,thegovernmentintroducedchanges
tobringpostretirementbenefitentitlementsinthepublicserviceinlinewith
practicesintheprivatesectorandotherjurisdictions,whichwillsavethe
governmentover$1.4billionby201718.
10
Reforming Executive Compensation in the Broader Public Sector

Thegovernmentiscontinuingtotakeactiontocontrolexecutivecompensation
costsinthebroaderpublicsectorandbuildingontheworkthathasalreadybeen
donetomanageexecutivecompensation.
In2014,OntariointroducedBill8,thePublicSectorandMPPAccountabilityand
TransparencyAct,2014,whichincludedtheBroaderPublicSectorExecutive
CompensationAct,2014,asSchedule1.
Ifpassed,thelegislationwouldallowthegovernmenttotakeaprinciplebased,
longtermapproachtoreformexecutivecompensation.Itwouldapplyto
designatedexecutivesathospitals,communitycareaccesscorporations,school
boards,colleges,universities,andthehydroentities.
Theproposedlegislationwouldauthorizethegovernmenttoissueadirectiveto
collectcompensationinformationsuchassalariesandsalaryranges,payatrisk,
andbenefits.Itwouldalsoauthorizetheimplementationofcompensation
frameworksthatcouldsetlimitsonallelementsofcompensationincluding
hardcaps.
Thelegislationwouldpermittheauditofrelevantrecordsatadesignated
employer,andcouldrequiretheemployertorepayanyamountpaidtoa
designatedexecutiveinexcessoftheapplicablecompensationframework.
Further,onOctober29,2014,thePresidentoftheTreasuryBoardannounced
thatthegovernmentplanstobringforwardamendmentstotheproposed
legislationthatwouldfurtherenhancethegovernmentsauthorityover
executivecompensationbyextendingittoanadditional64broader
publicsectororganizations.

Ontariohascreatedacompetitiveandfairtaxsystemthatsupportsthefundingof
criticalpublicservicesforOntarians.Whensomebusinessesdonotpaytheirfair
shareoftaxes,itcompromisestheviabilityoflegitimatebusinessesandputsthem
atacompetitivedisadvantage.Businessesthatdonotpaytheirfairshareoftaxes
oftenignoreotherrules,suchasprotectingemployeesandensuringthatproducts
andservicesarereliableandsafe.ThatiswhyitisimportantforOntariotoensure
alevelplayingfieldforbusinessesandrequirealltaxpayerstoplaybytherules.
11
Thegovernmenthastakenconcretestepstoaddressthosesituationswherea
deliberateeffortismadetoavoidorevadepayingafairshareoftaxes.Basedon
recommendationsfromtheCommissionontheReformofOntariosPublic
Services,in201314Ontarioseffortstoenhancetheintegrityofthetaxsystem
generatedover$380millioninadditionalrevenue.Recentexamplesinclude:
Enhancedcomplianceactivities(e.g.,auditing)toaddresstheunderground
economyandcorporatetaxavoidanceinOntariothroughamultiyear
agreementwiththeCanadaRevenueAgency.Overthefouryear
agreement,approximately$700millioninadditionaltaxrevenueis
expectedtobegenerated.
LaunchingaTenderContractTaxComplianceinitiativetoensurebusinesses
engagedinprocurementactivitywiththegovernmentofOntario
demonstratetheyhavecompliedwiththeirtaxobligationsbeforebeing
awardedgovernmentcontracts.
EnhancingenforcementmeasuresundertheTobaccoTaxAct,including
increasedfinesandimpoundingvehiclesforthosewhobreakthelaw.
Buildingonthisprogress,Ontarioiscommittedtomovingforwardwithnew
measurestoensureaneffectivetaxadministrationsystemthataddressesthe
undergroundeconomy,corporatetaxavoidanceandcontrabandtobacco.
Underground Economy
Inataxcontext,theundergroundeconomyisthedeliberateunderreporting
ornotreportingofincometoavoidpayingtaxesrequiredbylaw.Itisanissue
forgovernmentsaroundtheworld,andOntarioisnoexception.Itresultsin
significantlossofrevenuestogovernmentandcompromisestheviabilityof
legitimatebusinessesbycreatinganunlevelplayingfield.
Ontarioiscommittedtoaddressingthischallengeandisproceedingwitha
numberofconcretemeasures,including:
12
Launchingpilotinitiativestobettercoordinateandstrengthencompliance
activitiesinhighrisksectors.Thefocuswillbeonstrengtheningconsumer
protection,enhancingworkersafetyandcurtailingtaxloss.
BuildingonitsTenderContractTaxComplianceinitiativelaunchedin
February2014,thegovernmentwilldevelopaplantoexpandtax
verificationtofinancialassistanceprovidedbygovernment,and
procurementsinthebroaderpublicsectorandCrowncorporations.
Examiningnewmethodsofinformationsharingacrossgovernment
ministries,agenciesandjurisdictionstostrengthenitsabilitytodetect
andmitigatetheundergroundeconomy.
TheParliamentaryAssistanttotheMinisterofFinance,LauraAlbanese,
willmonitorandreportonthegovernmentsprogressontheseinitiatives.
Ontarioalsoneedsastrongfederalpartnerincombatingpervasiveand
technologicallysophisticatedtaxevasion.Thegovernmenthasrequestedfor
severalyearsthatthefederalgovernmentreleaseanationalstrategyandaction
plantoaddresstheundergroundeconomy.Aclearnationalstrategyandaction
planareimperativetoensuringthateffectivecomplianceeffortsareeffectively
coordinatedwithprovinces.
Corporate Tax Avoidance

Ontario,inconjunctionwiththeGovernmentofCanada,hastakensubstantive
actiontobetteraddresscorporatetaxavoidance.
Mostrecently,theTaxationAct,2007,wasamendedtoenhanceoversightof
aggressivetaxavoidancetransactions.Theresultingnewdisclosurerulesare
similartothoseputinplacebythefederalgovernmentandQuebec,andposition
Ontariotomoreeffectivelyaddressegregioustaxpractices.
Ontarioiscommittedtoadoptingbestpracticestoensurecompaniespaytheirfair
shareoftaxanddonotemployelaboratetaxplanningschemesthatundermine
theintentoftheProvincestaxlaws.Accordingly,thegovernmentismonitoring
theOrganisationforEconomicCooperationandDevelopments(OECD)project
onbaseerosionandprofitshifting.
Ontariowillcontinuetoworkwiththefederalgovernmenttoidentifyandadopt
newmeasurestocurtailaggressivecorporatetaxavoidance.
13
Contraband Tobacco
ThelowpriceofcontrabandtobaccounderminestheintegrityoftheTobaccoTax
ActandtheSmokeFreeOntarioStrategy.Thegovernmentiscommittedto
addressingthischallengeandwillproceedwithseveralimportantinitiativesto
doso.
Itintendstoestablishoversightofrawleaftobaccointheprovinceeffective
January1,2015.Tothatend,adraftregulationwaspostedonOntariosregulatory
registryfromSeptember2,2014,toOctober31,2014,tosolicitfeedbackand
suggestions.Thisfeedbackwillbetakenintoaccountasthegovernmentfinalizes
theregulation.
Thiscriticalinitiativewillhelptoeffectivelyimpedetheflowofrawleaftobacco
tocontrabandtobaccoproductmanufacturersandaddresssomeoftheconcerns
raisedbylawenforcementagencies.
First Nation Partnership

Ontario respects the ceremonial value and economic development importance of
tobacco to First Nation communities. The government recognizes this as it works to
build a strong, sustainable partnership with First Nation communities.
In this regard, two pilot projects with the Chippewas of the Thames First Nation
and the Mohawk Council of Akwesasne continue to advance, with the goal of
reaching agreements on community-based tobacco regulation on-reserve and
revenue-sharing.
Ontario will also launch a formal review of the First Nation Cigarette Allocation
System in early 2015. As part of this review, the government will appoint a facilitator
who will work with First Nation communities and other stakeholders across the
province, such as industry and public health experts. It will listen to stakeholder
perspectives, identify issues with the current system, and make recommendations
for improving and modernizing the allocation system.
14
Unlocking the Value of Provincial Assets

Thegovernmentiscontinuingtopursueopportunitiestounlockeconomicvalue
fromitsassets,includingsharesinGeneralMotors;anextensiverealestate
portfoliothatincludestheLiquorControlBoardofOntario(LCBO)headoffice
lands,OntarioPowerGenerations(OPG)headofficebuildingandSeatonand
Lakeviewlands;andassetsunderreviewbythePremiersAdvisoryCouncilon
GovernmentAssetsLCBO,OPGandHydroOne.
Netrevenuegainsfromsalesofqualifyingassetswillhelpbuildanewgeneration
ofpublicinfrastructuretoimprovetheProvinceslongtermcompetitivenessand
thewellbeingofallOntarians.
Premiers Advisory Council on Government Assets

InApril2014,thegovernmentappointedthePremiersAdvisoryCouncilon
GovernmentAssetstoprovidebalancedandtransparentrecommendationsas
ittakesactiontomaximizethevalueofkeyprovincialassets;generateabetter
return;andinvestinthenewtransitandtransportationinfrastructuretohelp
expandtheeconomy,boostproductivity,improvecompetitivenessandcreate
jobsforOntarians.
We asked the council to find ways to improve customer service, increase efficiencies
and unlock the full value of Hydro One, Ontario Power Generation (OPG) and the
Liquor Control Board of Ontario (LCBO), which includes other aspects of Ontario's
alcohol retail landscape. These assets are important to the people of Ontario. They
help fund core services such as health care and education, and must continue to do
so for decades to come.
Premier Kathleen Wynne, October 17, 2014.
TheCouncilsworkhasbeenguidedbythreekeyprinciples:
Thepublicinterestremainsparamountandprotected;
DecisionsalignwithmaximizingvaluetoOntarians;and
Thedecisionprocessremainstransparent,professionaland
independentlyvalidated.
15
InanOctober17thspeech,theCouncilsChair,EdClark,laidouttheCouncils
initialfindingsonwaystomaximizethevalueoftheseGovernmentBusiness
Enterprises(GBEs)totheProvince.TheCouncilprovideditsinitialreportearlier
inNovember.TheCouncilagreedwiththegovernmentsoverallstrategyto
considerdivestingnoncoreassetsifitwasinthepublicinteresttodoso.
Reducingownershipwouldprovidethegovernmentwithfundstofurtherinvest
ininfrastructurethatcoulddeliverhighsocietalandeconomicreturnstothe
provincewithoutaddingtoOntariosoveralldebtorincreasingthedeficit.
WithrespecttoOPG,HydroOneandtheLCBO,theCouncilwasoftheviewthat
thegovernmentshouldretainownershipofthesecorestrategicGBEs.Atthesame
time,theCouncilfoundthatthesecompaniescouldsignificantlyimprovetheir
performanceandthattheProvincecoulddiluteitsinterestinsomenoncore
assetswheregovernmentownershipisnotcritical.Doingsowouldbringgreater
returnstoOntariansandensurethelongtermsustainabilityoftheassets,
allowingOntariotogrowfaster,createjobsandincreaseproductivity.
BeverageAlcohol:TheCouncilexaminedthethreequasimonopoliesthat
dominateOntariosliquordistributionsystem:theLCBO,theprivatelyowned
BeerStoreandoffsiteWineryRetailStores.
ItfoundtheLCBOdoesnotsufficientlyuseitsbuyingpowertolowercosts
andrecommendedgraduallyintroducinganewpricingstrategytoachieve
highernegotiatedmarginsthatbenefitOntariansthroughhigherdividends
totheProvince.TheCouncilalsorecommendedthattheLCBOenhancethe
customerexperiencethroughafocusonnewstoreformatsandcreatingan
onlinemarketplacetomakeabroaderselectionofproductsavailableto
retailconsumers.
TheCouncilfoundthatOntariansandbrewersbenefitfromtheBeerStores
lowcostquasimonopolybutthatOntariansdeserveafairshareoftheprofits
generatedbythebeerproducers.Italsorecommendedthatchangesbemade
toprovidegreatertransparencyandtoensurethatallproducers,includingcraft
breweries,betreatedequitablyattheBeerStore.Inaddition,theCouncilwas
oftheviewthatthesaleof12packsofbeershouldbeextendedtoLCBOstores.
16
TheoffsiteWineryRetailStoresareasmallerquasimonopolyownedby
sixproducers,andthestoresaregrandfatheredunderinternationaltrade
agreements.TheCouncilproposedengagingtheownerstoachieveafairertax
systemsothat,again,Ontariansgetafairshareoftheprofitsrealizedfromthis
quasimonopolyaswellasfindingwaystoallowdomesticproducerstohave
outlets,oraccesstonewprivateoutletsconsistentwithinternational
tradeagreements.
OPG:OntarioPowerGenerationhastwodistinctbusinesses:acomplexnuclear
businessandamorestablehydro/thermalbusiness.TheCouncilrecommended
thatOPGfocusonensuringthattheDarlingtonnuclearrefurbishmentproject
bedeliveredsafely,onbudgetandonschedule.TheCouncilfoundthatOPG
shouldconsider,infuture,creatinganinternalstructureasiftheyweretwo
separateentitiesfocusedonverydifferentbusinessesonenuclear,theother,
nonnuclear.TheCouncilalsosuggestedthatthegovernmentconsider
strengtheningprojectmanagementexperienceonOPGsboardtohelpsupport
theDarlingtonrefurbishment.
HydroOne:HydroOnestransmissionanddistributionservicesareimportantto
theprovinceselectricitysystem.TheCouncilfoundthatHydroOneshouldpursue
operationalefficienciesandretainthetransmissionbusinessasacoreasset,but
separatetheelectricitydistributionbusinesscurrentlyintegratedinHydroOne
Networks.TheCouncilalsorecommendedbringinginprivatesectorcapitalto
facilitateconsolidationoflocaldistributioncompaniesandhavetheProvince
diluteitsinterestinthedistributionbusinessinHydroOneNetworksandHydro
OneBrampton.
The Province should take action now to act as a catalyst and achieve savings over
the longer-term. Two entities that are key to unlocking this jam are Hydro One
Brampton and the distribution business in Hydro One Networks. We would
propose using them both to spur industry consolidation. Not force consolidation.
Consolidation will facilitate efficiencies, reducing costs which will reduce electricity
rates from what they would have been. It will also improve adaptability of the
system and create companies which can grow and create jobs.
Ed Clark, October 17, 2014.
17
TheCouncilsinitialfindingsalsoindicateareasforimprovementinrelationto
totalcompensationpracticesattheseGBEs.Sustainablearrangementsareinthe
bestinterestofall,asindicatedbytheCouncil.TheCouncilhasstateditbelieves
thatitisveryimportanttohavetherightprocess,totalkthroughandunderstand
possiblesolutions.
ThegovernmentagreeswiththeCouncilsinitialfindings,andisaskingthe
Counciltomovetothesecondphaseofitsreview,duringwhichitwillbroaden
itscommitmenttoacollaborativeandtransparentprocessanddeepenthe
relationshipsithasestablishedwithallparties.ThiswillbringtheCouncilcloser
toitsgoalofreachingagreementwiththeappropriateparties.
TheMinistryofFinanceandtheLCBOwillworkwiththeCounciltodevelop
asystemofnegotiatedmarkupsthatwouldreplacetheLCBOscurrentfixed
markupstructureandwouldobtainfurthervaluefromitssuppliersonbehalfof
Ontarians.Thesepartieswillalsoworktodevelopadditionalstoreformatsthat
deliveranenhancedcustomerexperience.
TheCouncilwillrepresenttheinterestsoftheCrownindiscussionswiththe
BeerStoreanditsownerbrewerstodeterminehowadditionalvaluemightbe
obtainedonbehalfofOntarianswhileprotectingtheconsumerinterest.
TheCouncilwillalsoexplorehowadditionalgrowthandretailopportunities
forcraftbrewerscouldbecreated.
Similarly,theCouncilwillrepresenttheinterestsoftheCrownindiscussionswith
thewineindustryandownersofoffsiteWineryRetailStorestodeterminehow
additionalvaluemightbeobtainedfromthestoresonbehalfofOntariansand
howadditionalgrowthaswellasretailopportunitiesforothersmallwineries
couldbecreated.
TheCouncilwillbeguidedinitsworkbyadvicefromgovernmentandother
externalexperts.Inparticular,theCouncilwillseektoensurethesocial
responsibilitymandatethataccompaniesthesaleofbeveragealcoholisupheld.
Aswell,theCouncilwillworkwiththeMinistryofFinanceandtheMinistryof
EconomicDevelopment,EmploymentandInfrastructuretoensurethatall
recommendationsrespectOntariosobligationsandrequirementsundervarious
tradeagreementsandtradelaws.
18
Inthissecondphase,theCouncilwillbeworkingondevelopingan
implementationplanforHydroOnesdistributionbusinesses,whichalsoincludes
HydroOneBrampton.
TheCouncilwillalsolookatoptionssuchas:
Consideringsales,mergersoramalgamationsthatallowtheProvinceto
diluteorreduceitsinterestinHydroOneBramptonandthedistribution
businesscurrentlyinHydroOneNetworks;
Bringinginprivatecapitaltohelpspurconsolidationtobuildeconomies
ofscale;and
Facilitatingefficiencieswithlocaldistributioncompaniesthatbenefit
ratepayerswhilealsoallowingtheProvincetoextractfinancialvalue
fromitsassets.
Withrespecttoseparatingthecoretransmissionbusinessfromthedistribution
segmentcurrentlycontainedinHydroOneNetworks,animplementationplan
wouldincludeaddressingthepotentialtransitionimplicationsandcostsof
separatingthedistributionandtransmissionbusinesses,withthegoalof
extractingfinancialvalueofHydroOnesdistributionassetsandmaintaining
thevalueofHydroOnestransmissionassetstotheProvince.
TheCouncilwillalsoworkinaconstructivemannerwithitspartnersacrossthese
threeGBEstoensurethatagreementsandemploymenttermsaresustainable,
fairtoallpartiesandincorporatetherecommendationsprovidedin
previousreports.
TheCouncilwillworkwiththeMinistriesofFinanceandEnergyaswellasother
affectedministriestokeepthegovernmentapprisedofitsprogress.Itsactivities
andrecommendationswillinformtheProvinces2015Budgetprocess.
Optimizing the Value of the Provinces Real Estate Portfolio

ThegovernmenthasnowmovedforwardwiththeprocesstoselltheLCBOshead
officelandsbyreleasingaRequestforProposals(RFP)onSeptember4,2014,
andexpectsthetransactiontoclosein2015.ThissalewillensurethatOntarians
getgreatervalueoutofthispublicasset.
19
Thegovernmentisalsoperformingduediligenceandexploringopportunitiesfor
movingforwardwiththesaleoftheOPGheadoffice.Otherrealestateassets
continuetoberevitalized,includingtheformerLakeviewgeneratingstation
propertyinsoutheasternMississaugaandtheSeatonLandsinPickering.
NetrevenuegainsfromthedivestitureofqualifyingassetswillallowtheProvince
tofundtheTrilliumTrusttoinvestininfrastructure,includingroads,bridgesand
transit.Thesewouldhelpexpandtheeconomy,improvecompetitivenessand
productivity,andcreatejobsforOntarians.
20
Section B: InvestinginPeoplesTalents
andSkills
Ontarios Skilled Workforce Is a Key Competitive
Advantage
OneofOntariosgreateststrengthsisitspeoplestalentsandskills.Byinvesting
inthemtoday,theProvincecontinuestoenhanceitsabilitytomeetthedemands
oftheevolvingeconomyandnurtureitshighlyskilledandadaptiveworkforce.
Investinginskillswillhelpfosteradynamiceconomy,stimulateinnovationand
increaseprosperityforallOntarians.
TheProvinceisfocusingonitsgreatestassetbystrengtheningitsworldclass
educationsystemthroughAchievingExcellence,anewvisionthatwilltakepublic
educationinOntariotothenextlevel.Thegovernmentisalsopartneringwith
stakeholderstocreateinnovativeprogramsthatsupportOntariosfamiliesand
youth;buildingonitssolidemploymentandskillstrainingnetworktomaximize
labourmarketparticipation;andinvestingintheretentionandrecruitmentof
skilledprofessionalswhoprovidecareforsomeofsocietysmostvulnerable.
SomeofOntariosrecentinitiativeshaveincluded:
Completingtherolloutoffulldaykindergartenandinvestinginchildcare
modernizationsothateverychildhasthebeststartinlife;
Providingthe30%OffOntarioTuitiongrant,whichhelpedover
230,000studentsstartcollegeoruniversitylastyear;
ExtendingtheOntarioYouthJobsStrategy,givingmoreyoungpeoplethe
chancetogainafootholdinthejobmarket.Thisstrategyisontrackto
create30,000jobopportunities,includingmorethan23,000placements
todateundertheYouthEmploymentFund;
SigningStrategicMandateAgreementswithall45publiclyassisted
universitiesandcolleges,whichwillhelpguidefuturegrowthby
encouragingmorefocusonuniquestrengths,whileavoidingorlimiting
expansioninacademicareaswhereprogramsalreadyexisttomeet
demand;and
21
Investing$150millionoverthreeyearsintechnologyandlearningtools
suchasdigitaltablets,softwareandprofessionaldevelopmentforteachers
tofurtheradvanceOntarioshighperformingeducationsystem.
Building on Previous Achievements

The2014testscoresfromtheEducationQualityandAccountabilityOffice(EQAO)
provideevidencethatOntariostudentscontinuemakingprogress.Onaverage,
72percentofallGrade3and6studentsaremeetingorexceedingprovincial
literacyandnumeracystandards anincreaseofonepercentagepoint
comparedto201213levelsand18percentagepointscomparedto200203.
Thegovernmentiscontinuingtostrengthenstudentsmathskillsby:
Investing$4milliontosupportworkshopsforteachersandprincipalsas
wellasAdditionalQualificationcoursestoprovidenewlearningsupports
inmathematicsforeducators;
SupportingHomeworkHelp,alive,interactiveonlinemathresource,
whichprovidesfree,realtimemathtutoringtostudentsinGrades7to10
inallEnglishlanguageschoolboards;
InFrenchlanguageschoolboardsacrosstheprovince,providing,through
SOSDEVOIRS,oneononestudentsupportandinteractiveonlineresources
inmathaswellasinavarietyofothersubjects;and
Awardingmorethan2,200ParentsReachingOut(PRO)Grantsduringthe
201415schoolyeartohelpschoolcouncilsidentifylocalbarrierstoparent
engagementandfindsolutionstogetmoreparentsinvolvedintheir
childrenseducationathomeandschool,particularlyinmath.
Investing in Early Career Experience

Thegovernmentishelpinghighschoolstudentsreachtheirfullpotentialby
makingiteasierforthemtofindtheircareerpassionanddeveloptheskillsthey
needforjobsinthe21stcentury.Comparedtoadecadeago,75percentofhigh
schoolstudentsarenowgraduatinginfouryears,upfrom56percent,and
83percentofstudentsnowgraduateinfiveyears,anincreaseof15percentage
points.Investinginthesegraduatesearlycareerexperiencehelpsthemachieve
excellence,akeygoalofOntariosrenewedvisionforeducation.
22
Ontarios Specialist High Skills Majors Program

TheProvinceisenhancingitsSpecialistHighSkillsMajorsprogramtohelpmore
highschoolstudentsfindtheircareerpassionandobtaintheskillsandknowledge
theyneedfortheglobaleconomy.Thisinnovativeprogramallowsstudentsto
chooseaspecificsector,suchashealthcareoraerospace,anddevelopessential
knowledgeandskillstobetterpreparethemforlifeafterhighschool.Asof
thefallof2014,morethan44,000studentswillbeenrolledin1,685programs,
anincreaseof2,000studentsand125programscomparedtothe201314
schoolyear.
Experience Ontario
Throughpartnershipswithcommunitiesandprivatesectorbusinesses,
thegovernmentwillalsobelaunchingExperienceOntario,aninemonthpaid
communityworkandserviceprogramthatallowshighschoolgraduatesto
gainvaluableworkexperiencebeforetheyenrolinpostsecondaryeducationor
choosetheircareerpath.In2015,thefirstrolloutofExperienceOntariowilloffer
studentsnewopportunitiesforexperientiallearning.LedbytheMinistryof
Training,CollegesandUniversities,itwillalsosupportparticipantswithbetter
andmoreaccessibleinformationoncareeroptionsandtrainingpathwaysasthey
goontoapprenticeship,paidemploymentorpostsecondaryeducation.
Advancing Postsecondary Education

Ontariohasincreasedfundingtopostsecondaryeducationby83percentover
thepast10yearsandhasmadepostsecondaryeducationmoreaccessibleby
providingmorethan$1billioningrantsandloanstostudents,includingthe
30%OffOntarioTuitiongrant.TheseinvestmentshavehelpedOntariomaintaina
highershareofadults(aged2564)withcompletedpostsecondaryeducationthan
anycountryintheOrganisationforEconomicCooperationandDevelopment
(OECD).In2013,66percentofadultshadapostsecondarycredential,upfrom
56percentin2002,positioningOntariotomeetorexceeditstargetofa
70percentattainmentrateby2020.
23
ToincreasethevalueOntariansreceivefromthesignificantinvestmentthey
makeincollegesanduniversities,thegovernmentwillworkwithpostsecondary
educationpartnerstofindwaystomoremeaningfullylinkpublicfundsto
specificoutcomes.
Key Postsecondary Education Achievements

Compared to 200203, there are over 170,000 more full-time students eligible for
funding at Ontario colleges and universities, an increase of 43 per cent.
Sixty-six per cent of adults (aged 2564) had a postsecondary credential in 2013,
up from 56 per cent in 2002 and a higher share than in any country in the OECD.
In 201314, over 230,000 undergraduate students received the 30% Off Ontario
Tuition grant, with most students who receive it paying less in net tuition than
a decade ago.
TheProvincecontinuestostrengthenOntariospostsecondaryeducation
throughanumberofinitiativesthatwillhelptransformthepostsecondarysystem.
Mostrecently,thegovernmentandall45universitiesandcollegessignedStrategic
MandateAgreementsthatwillhelptheseinstitutionsbuildontheirunique
strengths,avoidunnecessaryduplicationandguidefuturegrowth.
InJanuary2014,thegovernmentalsocommitted$42millionoverthreeyearsto
establishOntarioOnline,aCentreofExcellenceforonlinelearningthatwillgive
studentsaccesstoflexiblecoursesandgreatercontroloverhow,whenandwhere
theylearn.Thisinnovativeinitiativewillofferhighqualityonlinecoursesthatare
recognizedforcreditacrossmanyofOntarioscollegesanduniversities.Todate,
over100onlinecourseshavebeendeveloped,withmoretofollowinthecoming
year.Thenextstepistolaunchawebportalthatcreatesonewindowaccessto
onlineuniversityandcollegecoursesacrosstheprovince,withcourseofferings
startinginthefallof2015.
24
Supporting Partnerships, Creating Jobs

Thegovernmentiscommittedtoworkingwithitscommunitypartnersand
privatesectorbusinessestocreatenewopportunitiesforOntariosyouth.
TheProvinceisalsopartneringwithcollegesanduniversitiestocreateinnovative
programsthatwouldhelpstudentsfindjobsandyoungentrepreneursgain
businessskills,mentorshipopportunitiesandworkexperiencetostartand
growabusiness.
Ontario Youth Jobs Strategy

Ontariohasmadesignificantprogressontheimplementationofthe$295million
OntarioYouthJobsStrategyannouncedinthe2013Budget.
Akeyelementofthestrategy,theOntarioYouthEmploymentFund,hasalready
helpedmorethan23,000youngpeoplegainworkexperienceandfindjobssince
itslaunchinSeptember2013.TogetherwiththeYouthEntrepreneurshipFund,
YouthInnovationFundandYouthSkillsConnectionsFund,thestrategyison
tracktocreate30,000mentorshipandjobopportunitiesfortodaysyouth.
25
On-Campus Entrepreneurship Activities and Campus-Linked

Accelerators
AspartoftheOntarioYouthJobsStrategy,thegovernmentispartneringwith
collegesanduniversitiestofosterstudententrepreneurshipandhelpyoung
peopledeveloptheskillstheyneedtolaunchrewardingcareers.TheProvince
isproviding$5millionovertwoyearstotheOnCampusEntrepreneurship
Activities(OCEA)programand$20millionovertwoyearstotheCampusLinked
Accelerators(CLA)programtohelpstudentsdevelopentrepreneurialskillsand
transferacademicexpertiseandknowledgetothemarketplace.Today,almost
allpostsecondaryinstitutionsacrossOntariohaveoncampusentrepreneurship
programs.TheseplatformshelpconnectOntariosyoungentrepreneurswith
thetools,experienceandbusinesssupportstheyneedtodevelopskillsand
taketheirbusinessideastothenextlevel.
Examples of On-Campus Entrepreneurship Activities (OCEA)

and Campus-Linked Accelerators (CLA) at work:
The University of Toronto is establishing a central Office of Entrepreneurship to
strengthen on-campus entrepreneurship activities and further build ties with the
regional innovation ecosystem. It plans to expand its entrepreneurship programs
to accommodate increased demand for on-campus accelerators.
The University of Windsors EPICentre will support job creation and economic
development opportunities by encouraging on-campus entrepreneurship and
innovation, with strong ties to entrepreneurial mentors.
Seneca College is launching the Health Entrepreneurship and Lifestyle Innovation
Xchange (HELIX). A youth entrepreneurship initiative, HELIX is an opportunity
for students and community youth to develop entrepreneurial skills.
Conestoga Colleges Entrepreneurship@Conestoga helps students explore
entrepreneurship as a career option and develop their entrepreneurial skills.
The Advanced Manufacturing Technology (AMT) Catalyst will support
entrepreneurs in advanced manufacturing and related trades.
26
Magnet
TheProvinceishelpinguniversityandcollegestudentsfindgoodjobsbyinvesting
almost$1.2milliontoexpandMagnet,aninnovativecareernetworkingplatform
thathelpsmatchemployerswithqualifiedstudentsandgraduates.
ThegovernmenthasalreadyhelpedexpandMagnetto18collegesand
universitiesacrosstheprovince.
FoundedinpartnershipwithRyersonUniversitysDigitalMediaZoneandthe
OntarioChamberofCommerce,thisleadingedgetechnologyfillsaneedby
helpingpeoplefindwork,gatheringlabourmarketinformation,andlinking
opportunitiesforsmallandmediumsizedbusinesses.Todate,morethan
25,000jobseekershavecreatedprofilesthroughMagnet,generatingover
40,000invitationsforjobseekersandemployerstoconnect.
Improving Skills Training

Ontarios Integrated Employment and Training System
Ontarioinvestsover$1billionannuallyinemployment,trainingandlabourmarket
programsandservicesthroughEmploymentOntario,whichservesmorethanone
millionOntarians.
TomakeiteasierforOntarianstoaccesstheseservices,theProvinceiscontinuing
tomoveforwardwithgovernmentwidemodernizationandintegrationof
employmentandtrainingprogramswithEmploymentOntario.Thiswillbetter
supportOntariosmostvulnerable,includingthosereceivingsocialassistance,
peoplewithdisabilities,longtermunemployedindividuals,Aboriginalpeoples,
newCanadiansandatriskyouth.
Toensuresuccess,theProvincewillimprovethecoordinationandintegrationof
itsemploymentandtrainingsystemby:
DevelopingacomprehensiveLabourMarketInformationStrategyto
improveaccesstohighqualitylabourmarketinformation.Thiswill
makeiteasierforjobseekers,studentsandtheirfamiliestomake
informeddecisionsabouttheireducation,trainingandcareers;
27
PilotingLocalEmploymentPlanningCouncils,thenextgenerationoflocal
boards,topromoteplacebasedapproachestosupporttheworkforceand
generateandanalyzelocallabourmarketinformation.Thesecouncilswill
connectemployers,differentlevelsofgovernment,serviceproviders,
trainersandotherlocalpartners;
Launchingemployerdrivenskillstrainingpilotprogramsandtesting
differentwaysofpartneringwithemployerstoaddressgapsin
skillstraining;
Puttinginplaceacommonassessmentframeworktomakesureindividuals
insearchoftrainingoremploymentgetthesupportstheyneedtoaccess
therightservices;and
EstablishinganewOntarioCentreforWorkforceInnovationthatwilldrive
innovationandevidencebasedservicedeliveryacrosstheprovince.
CanadaOntario Job Grant

InMarch2014,theProvincesignedtheCanadaOntarioJobFundAgreement
(COJFA)withthefederalgovernment.Thisagreementprovidesakeysourceof
fundingforinitiativesliketheCanadaOntarioJobGranttoencouragemore
employerstotrainemployees.AsofSeptember26,2014,theProvincebegan
acceptingemployerapplicationsfortheCanadaOntarioJobGrant,whichwill
helpmeettheneedsofbusinessesofallsizes,industriesandregions.
Thisprogramprovidesupto$15,000perpersonfortrainingcosts,suchastuition
andtrainingmaterials,includingupto$10,000ingovernmentcontributions.
Althoughthenewagreementisagoodsteptowardssupportingthosewhoare
attachedtotheworkforce,thereisacriticalneedforfundingtosupportskills
developmentforthemostvulnerable.Thefederalgovernmenthasnotcomefar
enoughtoaddressthiscriticalneed.Anyfundinggappotentiallycreatespressures
andcoulddirectfundingawayfromsupportforvulnerableworkersinOntario.
28
CanadaOntario Job Grant-Funded Skills Training Pilots

As part of the CanadaOntario Job Grant program, the Province introduced two new
employer-driven skills training pilots. These pilots will test different ways of working
with employers to provide short-term, flexible training. They include the:
Customized Training pilot, which will provide support for firm-specific training
solutions; and
UpSkill pilot, which will support essential and technical skills training tailored to
specific sectors and targeted for potentially vulnerable workers in low- and
medium-skilled occupations.
Promoting the Skilled Trades

Ontarioswellqualifiedskilledtradesarefundamentaltoensuringcontinued
growthinkeysectors.ThatiswhytheProvincecreatedtheOntarioCollegeof
Trades,whichprotectsthepublicbyregulatingandpromotingtheskilledtrades.
TosupportthesuccessoftheCollege,OntarioappointedformerSecretaryof
CabinetandHeadoftheOntarioPublicService,TonyDean,toreviewkeyareasof
OntariosskilledtradessystemthatfallwithinthemandateoftheOntarioCollege
ofTrades.
Mr.Deanwillreviewissuesrelatedtothescopesofpracticeortypeofwork
performedinatradeaswellasthetradeclassificationreviewprocess,which
determineswhethercertificationtopractiseatradeshouldbecompulsoryor
voluntary.ThetradeclassificationreviewprocesswillbepausedduringMr.Dean's
work.TheCollegewillcontinuetofulfilitsmandatewhilethisworkisunderway.
Mr.DeanwillconsultwithstakeholdersandreceivesupportfromtheMinistryof
Training,CollegesandUniversitiesandtheCollegeofTrades,butwillfunction
independentlyofboth.TheappointmentbeganinOctober2014andwillcontinue
foronecalendaryear.Mr.DeanwillthendeliverhisreporttotheCollegeof
Tradesandtheministry.TheCollegewillhavetheopportunitytoreviewhis
findingsandimplementkeyrecommendations.
29
30
Section C: BuildingModernInfrastructure
andTransportationNetworks
TheProvincesplanfortheeconomyisfoundedonworldclassinfrastructurethat
willenhancethequalityoflifeforOntarians,supporteconomicgrowth,increase
productivityandmeetfuturedemographicneeds.
Ontarioisplanningtoinvestmorethan$130billioninpublicinfrastructureover
thenext10years,including$12.8billionin201415.Theseinvestmentswillfocus
ontransportation,healthcareandeducation,andareexpectedtosupportover
110,000jobsonaverageeachyear.
Thiscommitmentbuildsonnearly$100billionininfrastructureinvestmentsby
theProvincesince2003,whichhavehelpedmakeOntariosafer,morecompetitive
andmoreproductive.
The Case for Investing in Public Infrastructure Is Strong

Experts agree that to remain economically strong and competitive, governments
must invest in maintaining, renewing and developing infrastructure. Experts also
agree that public infrastructure provides a good return on investment. For example:
The International Monetary Funds (IMF) October 2014 World Economic Outlook
report shows that productive and efficient infrastructure investment can provide
a much-needed boost to productivity and output.1
In June 2014, former Bank of Canada governor David Dodge stated that with low
interest rates, now is the right time for governments and the private sector to
invest in infrastructure.2
An April 2013 report by the Conference Board of Canada found that each dollar
invested in public infrastructure in Ontario raises gross domestic product by
$1.14 in the near term.3
1
International Monetary Fund, World Economic Outlook: Legacies, Clouds, Uncertainties,

(October 2014).
David Dodge, Richard Dion and John Weekes, Bennett Jones Spring 2014 Economic Outlook,
(June 2014).
Pedro Antunes and Jacqueline Palladini, The Economic Impact of Ontarios Infrastructure
Investment Program, Conference Board of Canada, (April 2013).
31
Ontarioremainscommittedtolongterminfrastructureplanningtomake
investmentsthatbenefitOntariansandtheeconomy.Thatiswhy,onJuly7,2014,
theProvinceintroducedBill6,theproposedInfrastructureforJobsandProsperity
Act,2014.Theproposedlegislationwouldrequirecurrentandfuturegovernments
toregularlypreparelongterminfrastructureplansandfurtherimprovetheway
theProvinceprioritizesinfrastructureneeds.
Continuing to Move Ontario Forward

Inthe2014Budget,theProvinceprovideddetailsoftheMovingOntarioForward
plantomakenearly$29billionindedicatedfundingavailableoverthenext
10yearsforpublictransit,highwaysandotherpriorityinfrastructureprojects
acrosstheprovince.ThisispartofOntariosplantoinvestover$130billionin
infrastructureoverthenext10years.
MovingOntarioForwardwillinvest$15billionintransitprojectsintheGreater
TorontoandHamiltonArea(GTHA)andnearly$14billionincriticalinfrastructure
projectselsewhereinOntarioinafair,accountableandtransparentmanner.
Dedicated Funding for Priority Projects in the GTHA

ThededicatedfundingfortheGTHAwillbeinvestedinpublictransitpriorities
thataddresscongestionandimprovemobilitythroughouttheregion.
AkeypriorityfortheProvinceistransformingtheGOTransitnetworktoa
RegionalExpressRail(RER)service.RegionalExpressRailwillgiveresidents
significantnewtravelchoicesalongtheGOcorridors,includingelectrifiedservice
runningatupto15minutefrequencies.TheMinistryofTransportationand
Metrolinxareworkingcloselytogethertodevelopandimplementaplanto
realizetheRERvisionoverthenext10years.
InadditiontoRER,dedicatedfundingwillbeusedtobuildpriorityrapidtransit
projectsconnectingtoGOTransitandothertransitsystemsacrosstheGTHA.
TheseprojectswilllargelybedrawnfromtheNextWaveofprojectsinTheBig
Move,MetrolinxsRegionalTransportationPlan.
TheProvinceisworkingwithMetrolinxtoundertakerigorousbusinesscase
analysistoinformhowbesttoprioritizetheseprojectsintheGTHA.Thiswill
ensurethatdecisionsarebasedonthebestevidenceavailable.
32
Dedicated Funding for Priority Projects Outside the GTHA

OutsidetheGTHA,thededicatedfundingwillbeusedtosupportpriority
infrastructureprojects.TheProvincewillworkwithOntarioregionsand
communitiestoidentifyprojectsthatenhanceeconomicgrowthandaddress
criticalinfrastructureneedsthroughanevidencebasedprocess.
Modernizing Infrastructure in Communities across Ontario

As a key early step in implementing Moving Ontario Forward, the Province
announced its continuing support for strong communities with the launch of the
new permanent Ontario Community Infrastructure Fund on August 18, 2014.
The fund will provide $100 million per year for investments in roads, bridges
and other critical infrastructure projects in small, rural and northern communities.
This includes $50 million per year in application-based funding and another
$50 million per year in stable, predictable formula-based funding.
The funds design was informed by consultations with more than 500 municipal
delegates in the summer of 2013.
The Province also launched an intake process to identify priority infrastructure
projects for the federal governments Small Communities Fund. Through this fund,
Ontario and the federal government will each provide $272 million to support
community projects in municipalities with populations of less than 100,000.
The Small Communities Fund is part of the federal governments 10-year New
Building Canada Fund.
Funding decisions are expected to be made early in 2015.
OtherpriorityprojectsoutsidetheGTHAcouldincludelocalandregionaltransit;
roads,bridgesandothercriticalinfrastructure;fundingforbusandrail
infrastructuredeliveredbytheOntarioNorthlandTransportationCommission;
strategichighwayimprovements;infrastructuredevelopmentintheRingofFire;
andotherprojectstobeidentifiedthroughtheBuildingCanadaPlannegotiations
withthefederalgovernment.
33
The Ring of Fire

The Provinces Ring of Fire area, located about 540 kilometres northeast of
Thunder Bay, is rich with chromite, nickel, gold and other deposits. This region has
the potential to create business and growth opportunities for mining and supporting
industries in northern Ontario.
Ontario is playing a leadership role in the development of the Ring of Fire,
committing up to $1 billion for strategic transportation infrastructure development
in the region.
Inaddition,giventhefundamentalroleinfrastructureplaysinCanadaseconomic
growth,theProvinceiscallingonthefederalgovernmenttomatchOntarios
investmentsintheRingofFireregion,andsignificantlyincreaseitsinvestments
inpublicinfrastructure.
SeeChapterIV:NationalLeadership:StrongOntario,StrongCanadafor
moredetails.
Improving Public Transit

TheMovingOntarioForwardinitiativebuildsonthesignificantinvestmentsthat
theProvinceisalreadymakinginpublictransittosupporteconomicgrowthand
improvethequalityoflifeforpeopleacrosstheprovince.
Ontariansarealreadybeginningtoseetheresultsofthesesignificantinvestments.
Forexample:
34
GOTransitnowhas250,000boardings197,000onthetrainsystemand
53,000onthebussystemonatypicalweekday,andrecentlyaddedthe
500thbustoitsfleet.
ConstructionhasbegunontheWaterlooRapidTransitproject.
This36kilometrecorridorwilllinkKitchener,WaterlooandCambridge,
andconnectcommuterstoGOTrainservicebetweentheRegionof
WaterlooandtheGreaterTorontoArea(GTA).
NewaccessibleTorontoTransitCommission(TTC)streetcarsarerolling
intoserviceinToronto.By2019,over200newstreetcarswillbebrought
intoreplacetheTTCscurrentfleet,makingthemthefirstnewgeneration
ofstreetcarsinTorontoin30years.PRESTOfarecardreaderswillalsobe
installedonthenewstreetcarsstartingthisfall,withPRESTOoperating
onallstreetcarlinesoncethenewfleetisinfullservice.Thiswillallow
commuterstotravelseamlesslyandmoreconvenientlyontheTTCand
acrosstheGTHA.
TheTTCopenedasecondsubwayplatformatUnionStationinAugust,
helpingtoreduceovercrowdingandimprovepassengercirculation.
Inaddition,progresscontinuesonthefirstwaveofprojectsinMetrolinxs
RegionalTransportationPlan,theBigMove.Recentexamplesinclude
thefollowing:
InMarkham,anewsegmentofbusrapidtransit(rapidway)openedin
August,extendingVivarapidtransitservicealongHighway7fromHighway
404toSouthTownCentreBoulevard.Withtheopeningofthissegment,
approximately18percentofthevivaNextbusrapidtransitprojectis
inservice.
ThefirstUnionPearsonExpresstrainshavearrivedinTorontoandare
undergoingtestingandcommissioning.TheUnionPearsonExpressremains
ontracktobeginserviceinthespringof2015,intimetoserveasacritical
transportationlinkforthePan/ParapanAmericanGames.
ConstructionofthetunnelsfortheEglintonCrosstownLightRailTransit
(LRT)continuestoprogress.AsofOctober30,2014,tunnellingofabout
3.4kilometreswascompleted.
Expanding GO Transit
Ontario recently took a key step towards doubling train service between Kitchener
and Toronto in 2016 by finalizing the purchase of a 53-kilometre rail corridor
between Kitchener and Georgetown. Increasing Metrolinxs ownership along the
Kitchener rail corridor will allow GO Transit to improve service, control operations
and make infrastructure upgrades needed to support service expansion.
35
Investing in Provincial Highways

Investmentsintheprovincialhighwaynetworksupportthemovementofgoodsto
marketandcommutersbetweentheirhomesandworkplaces.Ontarioisinvesting
$2.5billioninprovincialhighwayandbridgeprojectsthisyear.
Examplesofhighwayexpansionprojectsinclude:
36
Openinga13kilometreextensiononHighway404fromGreenLaneto
RavenshoeRoadthatwillmakeitfastertotravelintoandoutoftheGTA
andtakeupto22,000vehiclesadayofflocalroads;
ContinuingtofourlanekeyhighwaycorridorsinnorthernOntario,
includingwideningHighway69betweenParrySoundandSudbury,
andHighway11/17betweenThunderBayandNipigon.Anewfourlane
stretchofHighway11/17betweenHighway527andMcKenzieRoadwas
openedtotrafficthisfall;
Wideninga12kilometrestretchofHighway410fromsouthofHighway
401toQueenStreetinBrampton,whichincludesbuildingahighoccupancy
vehicle(HOV)laneineachdirection.Thecontracthasbeenawardedand
constructionistargetedforcompletionbythefallof2018;
WideningandimprovingtheHighway417corridorthroughOttawa,
includingopeningtheHuntClubRoadextensionandnewinterchange
atHighway417inthesummerof2014;and
WideningHighway7/8fromFischerHallmanRoadtoCourtlandAvenue
inKitchener,scheduledtobecompletedin2016.Workcompletedtodate
includestherehabilitationandwideningofoverandunderpassesand
theinstallationofnoisebarrierwalls.
Building Better Places to Learn

AsofSeptember2014,fulldaykindergartenwasavailabletoallfourandfive
yearoldsinOntario.Since2010,thegovernmenthasprovided$1.5billionin
capitalfundingtosupporttherolloutoffulldaykindergartenacrosstheprovince.
Thisfundingsupportedthecreationofcloseto3,500newkindergarten
classrooms,throughadditionsandmajorretrofits.
Thegovernmentplanstoprovidefundingofmorethan$11billionoverthe
next10yearsforelementaryandsecondaryeducationinfrastructureto
continuebuildingbetterplacestolearnandsupportconsolidationsofschools.
Capitalinvestmentswillhelpbuildnewschoolstoaddressgrowthpressuresin
areassuchasMilton,Brampton,BarrhavenandAncaster.Theseinfrastructure
investmentswillalignwithdemographictrendsandhelpmeettheneedsof
changingcommunities.
Increasing Access to Postsecondary Institutions

Ontariowillcontinuetoexpanditspostsecondaryeducationinfrastructurein
areaswherestudentdemandisstrongandwheretherearegapsinaccess.
TheProvincereleaseditsMajorCapacityExpansionPolicyFrameworkin
December2013toguidethedevelopmentofneworexpandedcampusesin
underservedareas.InMarch2014,theProvinceissuedacallforproposalsto
universitiesandcollegesfocusedonfuturelargescaleexpansionofpostsecondary
educationcapacityinOntario.
ProposalswillbeevaluatedthroughtheMajorCapacityExpansionPolicy
Framework,whichhighlightstheneedtoensurethatdecisionsreflectprovincial
priorities,futuredemandneedsandregionalcapacitygaps.
37
Investing in Modern Health Infrastructure

BuildingasustainablepublichealthcaresystemsupportsOntariosActionPlan
forHealthCarebyensuringthatpatientsgettherightcare,attherighttime,
intherightplace.
Overthenext10years,Ontarioplanstoinvestover$11.4billioninhospitalcapital
grantstoprovideadequateinfrastructurecapacityinthehealthcaresector.
AcrossOntario,morethan40majorhospitalprojectsareunderconstructionor
invariousstagesofplanning,includingtherecentlyannouncedplanstomove
forwardwithanewhospitalinMarkdaleandtheexpansionandredevelopment
ofCambridgeMemorialHospital.
TheProvincewillalsoprovideanadditional$300millionoverthenext10years
tohelpshiftcarefromhospitaltocommunitysettings.Thisincludesdoublingits
annualinvestmentoverthenextthreeyearsforCommunityHealthCentres,
AboriginalHealthAccessCentres,andcommunitybasedmentalhealthand
addictionsagencies.
Innovative Approaches to Infrastructure Investment

OntarioisoneoftheleadingjurisdictionsforAlternativeFinancingand
Procurement(AFP)projects.InfrastructureOntario(IO)anditsprivatesector
partnersconsistentlydelivervaluablepublicinfrastructureassetsontimeand
onbudget.
TheOntariogovernment,throughIO,isdeliveringover80projectsvaluedat
about$35billionincapitalconstructioncostsusingtheAFPmodel.Theseinclude
completedprojectsandprojectsunderconstruction,withover$3billionin
estimatedvalueformoneysavings.Arecentreviewof37projectsthathave
reachedsubstantialcompletionfoundthat36werecompletedonorbelow
budgetand27werecompletedon,aheadof,orwithinonemonthofschedule.
InfrastructureOntarioiscommittedtoapplyinglessonslearned,developingbest
practices,andbeingopenandtransparentbyprovidinginformationonlineand
consultingwithpartners.
38
AspartofitsSpring2014MarketUpdate,IOidentifiedaseriesofupcoming
projects,estimatedprojectsizesandprocurementtimelinestoallowfirmsto
betterorganizetheirresources.ExamplesofAFPprojectscurrentlyin
procurementorunderwayinclude:
TheSenecaCollegeKingCampusexpansionproject,whichinvolvesthe
designandconstructionofnewacademicandotherfacilitiesthatwillallow
Senecatoincreasetherangeofprogramsofferedandprovidespaceforan
additional1,450students;and
McMasterChildrensHealthCentre,whichinvolvestheconstructionofa
newchildrenstreatmentcentrethatwillconsolidateanumberofservices
underoneroofandimproveaccessforchildrenandfamilies.
In201314,sevenAFPprojectsreachedsubstantialcompletion,including:
WaypointCentreforMentalHealthCare,astateoftheartmentalhealth
carefacilityinPenetanguishenethatwillofferalarger,moremodernspace
fortreatmentandcareofpeoplewithmentalhealthdisorderswhohave
beeninvolvedwiththecriminaljusticesystem;and
ElginCountyCourthouse,whichbringstogetherexistingcourtfacilities
withinonelocationinSt.Thomas,improvingjusticeservicesforlocal
residents.
TheProvinceisalsoenhancingtheAFPmodeltohelpimprovethedeliveryoflarge
andcomplexprojects,particularlyintegratedtransitsystemswithsignificantrisk
andscope.TheseenhancementsarestartingwiththeEglintonCrosstown,
Metrolinxslargesttransitproject,nowunderprocurement.
Theseenhancementswillenablecompaniesofvarioussizestocompeteand
participatewhilemaintainingthecommitmenttoontimeandonbudgetdelivery.
Inaddition,bidderswillincorporatecommunitybenefitssuchasjobandsupplier
fairsintotheirbids.Theprocurementwillalsoincludeapilotinitiativetoincrease
theparticipationofregisteredapprentices.
39
40
Section D: CreatingaSupportiveand
DynamicBusinessClimate
Ontarioprovidesasupportiveenvironmentforbusinessdevelopmentandgrowth.
TheProvincesinvestmentsinskillsandinfrastructurehavemadeOntarioan
attractiveplacetostartandgrowabusiness.OverallbusinesscostsinOntario
areverycompetitivewithinCanadaandinternationally.
Inthe2014Budget,thegovernmentcommittedtocreatingasupportiveand
dynamicbusinessclimate.Keyinitiativesundertheplaninclude:
Investinginpeoplestalentsandskills.SeeChapterI,SectionB:Investingin
PeoplesTalentsandSkillsformoredetails;
Buildingmoderninfrastructureandtransportationnetworks.SeeChapterI,
SectionC:BuildingModernInfrastructureandTransportationNetworksfor
moredetails;
Maintainingacompetitivetaxenvironmentthatencouragesbusinesses
toinvestandgrow;
Buildingstrategicpartnershipswithbusinesses,includinginvestments
throughthe10year,$2.5billionJobsandProsperityFund;
Reducingregulationforbusinesses;
GrowingsmallbusinessesinOntario;
Helpingbusinessesmanageelectricitycosts;
Modernizingfinancialservices;and
MovingforwardwiththegovernmentsGoingGlobalTradeStrategy,
toencourageOntariobusinessestoexpandtheirexportsinternationally.
Throughtheseinitiatives,thegovernmentwillsupportgrowthacrossallregions
oftheprovince,encourageproductivityenhancinginvestmentsbybusiness,and
improveOntarioscapitalmarkets.
KPMGs 2014 Competitive Alternatives report ranks Torontos overall business costs
as second lowest among 34 large cities in Canada and the United States, and fifth
lowest among 48 large cities in North America, Europe, Australia and Japan.
41
Maintaining a Competitive Tax Environment

Ontariohassignificantlyimproveditstaxcompetitiveness,makingtheprovince
amoreattractivelocationforbusinessinvestment.
OntariosgeneralCorporateIncomeTax(CIT)ratehasbeenreducedfrom
14percentto11.5percent,resultinginacombinedfederalOntariogeneralCIT
rateof26.5percent.Thiscombinedrateislowerthanthecombinedfederalstate
CITrateinanyoftheU.S.statesandlowerthantheaverageCITrateofG8and
G20membercountries.
CHART 1.3
Ontarios Internationally Competitive CIT Rate
Per Cent
45
40
35
30
26.5
27.7
Ontario
G20
Average
39.2
38.9
39.6
U.S.
Average
Michigan
New York
29.9
25
20
15
10
5
0
G8
Average
Notes: Ontario rate is the combined federalprovincial general CIT rate. Average rates are legislated corporate tax rates in 2014
based on information available as of October 23, 2014, and, where applicable, exclude Canada. U.S. rates reflect the deductibility
of state CIT for federal tax purposes.
Sources: KPMG International, OECD and Ontario Ministry of Finance.
ThereductioninOntariosgeneralCITrate,togetherwithothertaxchanges,has
cutOntariosmarginaleffectivetaxrateonnewbusinessinvestmentinhalfsince
2009.ThisencouragesproductivityenhancinginvestmentsthatenableOntario
businessestoimprovetheircompetitivenessandcreatemorewellpayingjobs.
42
Measures Taken to Maintain a Competitive Tax System

Introducing several tax reforms that deliver over $9 billion annually in tax cuts
to businesses:
The Harmonized Sales Tax (HST), a more modern value-added tax,
removes $4.7 billion a year in embedded sales taxes paid by businesses
when fully implemented;
Cutting Corporate Income Tax (CIT) rates for businesses provides $2.3 billion
of tax relief per year; and
Eliminating Capital Tax, which corporations pay whether or not they had a
profit, provides $2.1 billion of tax relief per year.
Implementing significant cuts to high Business Education Tax rates has resulted
in savings of over $200 million per year for Ontario businesses.
Providing a benefit of $265 million over three years by paralleling the 2013 federal
budget measure to extend the 50 per cent accelerated depreciation rate for
manufacturing and processing machinery and equipment to December 31, 2015.
Reducing business compliance costs by more than $635 million per year from the
HST and streamlined CIT administration.
43
Building Strategic Partnerships

Privatesectorinvestmentisacatalystforeconomicprosperitythroughenhanced
productivity,strengthenedinnovation,increasedexports,andbetterjob
opportunities.Thegovernmentseconomicplansetsthestageformorebusiness
investmentandlongtermeconomicgrowththroughstrategicpartnerships
betweengovernmentandbusiness.Thesepartnershipscantakemanydifferent
forms,includinggrants,loans,equityinvestmentsandfosteringindustryacademic
collaboration.
Company
Description
Honda Canada (2014)
An investment of $857.4 million to support production at the companys

manufacturing facilities in Alliston.
OpenText (2014)
An investment of up to $2 billion to expand operations across Ontario,

including new jobs in research and development. OpenText is Canadas
largest software company, specializing in enterprise information
management software.
Cisco (2013)
An investment of up to $4 billion that will establish Ontario as one of the

companys research and development hubs. This project will support the
development of technology used in mobile computing and video technology.
BasedonanongoingreviewofOntariosbusinesssupportprograms,theProvince
isadoptingamorerigorousapproachtoevaluatingpotentialstrategicpartnership
opportunitieswithbusiness.Aspartofthisnewapproach,strategicpartnerships
willhaveanaddedfocusonincreasingbusinessinvestment,particularlyin
productivityenhancingactivitiessuchasresearchanddevelopment(R&D)and
exports.Partnershipsinstrategicsectorssuchasadvancedmanufacturingfoster
enhancedbusinessinvestmentandlongtermeconomicgrowthintheprovince.
Astrategicpartnershipinvestmentshouldalsoalignwiththegoalsofaclusteror
sectorplantoincreasegrowthandcompetitiveness.Ifpassed,theBetterBusiness
ClimateAct,2014,wouldenabletheMinisterofEconomicDevelopment,
EmploymentandInfrastructuretoprepareplansforthedevelopmentofeconomic
clusters,whichwouldhelptoinformstrategicpartnerships.
44
Inthe2014Budget,thegovernmentannounceda10year,$2.5billionJobs
andProsperityFund.TheFundisfocusingonsupportingstrategicprivatesector
investmentsininnovation,productivityandexportopportunities.Allbusiness
projectssupportedbytheJobsandProsperityFundwillundergoarigorous
assessmenttoensuresubstantialeconomicbenefits,costeffectivenessfor
government,andareturnoninvestmentforOntarians.
Acrosstheprovince,communitieshaveuniquestrengthsuponwhichbusinesses
frommanydifferentindustriesrely.Together,theselocaleconomiesarethe
foundationofaresilientOntarioeconomy.Forthisreason,thegovernmentis
partneringwithcommunitiesacrosstheprovincetoimproveeconomicoutcomes,
throughprogramssuchastheRuralEconomicDevelopmentProgram,
SouthwesternOntarioDevelopmentFund,EasternOntarioDevelopmentFund
andNorthernOntarioHeritageFundCorporation.
Supporting Jobs and Economic Development in Communities

across Ontario
The governments priority is to create jobs, growth and opportunity in every part of
Ontario. Each region of the province has unique advantages to specific industries and
economic activities that form a strong base to build resilient local economies.
Examples include:
GlobalMed. Inc., located in Quinte West, makes plastic tubing used in medical
applications. The company received $470,000 from the Eastern Ontario
Development Fund to invest in new technology that will increase production and
expand the range of products. The project will leverage $4.7 million in private
investment, and is targeted to create 10 new jobs while retaining 180 positions.
CapsCanada, located in Windsor, received $1.5 million from the Southwestern
Ontario Development Fund. The funding is for renovations to its Tecumseh facility
to meet increasing global demand from health nutrition and pharmaceutical
industries. The project will create 34 new jobs and retain 63 existing jobs.
Morin Industrial Coatings Ltd. is receiving $1 million from the Northern Ontario
Heritage Fund Corporation to expand its corrosion control business in Lively,
creating eight new jobs. The project will leverage $1.5 million in private
investment.
The Rural Economic Development Program provided support to the Hensall District
Co-operative (HDC), which processes and markets high-value field crops for over
2,000 Ontario farmers. The project is focusing on export growth and will create six
jobs and retain eight. It will also leverage $4.3 million in private investment.
45
OnOctober7,2014,thegovernmentlaunchedthenewthreeyear,$25million
AboriginalEconomicDevelopmentFund(AEDF),whichispartoftheJobsand
ProsperityFund.TheAEDFwillpartnerwithFirstNation,MtisandInuit
communitiestogrowlocalbusinessesandcreatejobs.ItwillhelpAboriginal
communitiesdeveloplongtermstrategiestodiversifytheirlocaleconomies,
improveaccesstofinancing,andfacilitatecollaborationamongcommunities
forregionalemploymentandskillstrainingprojects.
Ontarioisalsocommitting$40millionannually,undertheJobsandProsperity
Fund,tohelptheagrifoodandagriproductsprocessingindustrycreatejobs
andattractnewinvestment.ThePremierhaschallengedthebroaderagrifood
industrytodoubleitsannualgrowthrateandcreate120,000newjobsby2020.
Otherstrategicpartnershipsincludeinitiativestoimproveaccesstocapitalfor
business.InJanuary2014,inpartnershipwiththefederalgovernmentandprivate
sectorpartners,OntariolaunchedtheNorthleafVentureCatalystFund(NVCF).
Sinceitslaunch,theFundhasgrowntomorethan$233million,targetingafinal
closeof$300million.Todate,theFundhasmadeeightinvestmentsincompanies
andotherventurecapitalfunds.
In April 2014, the Northleaf Venture Catalyst Fund contributed to a $46 million
investment in Toronto-based Wattpad, a social writing and networking company
with more than 35 million users.
ThesuccessofNVCFbuildsonotherprovincialprograms,suchastheInvestment
AcceleratorFund(IAF),whichprovidesfinancingatthecriticalearlystagesof
afirmslife.InOctober2014,fiveIAFportfoliocompaniesraisedmorethan
$50millioninfinancingalone,primarilyfromprivatesectorinvestors.
Bysupportingdynamicentrepreneurialfirms,thegovernmentishelpingtolay
thefoundationforfutureeconomicgrowth.
TheProvinceisalsoexploringwaystopartnerwiththeprivatesectortoleverage
publicinvestmentsinhealthresearchthatwillcontributetoimprovedhealth
outcomesandeconomicactivity.TheOntarioHealthInnovationCouncilwas
establishedinNovember2013,andiscurrentlydevelopingrecommendations
foritsfinalreportonacceleratingtheadoptionofnewhealthtechnologies
andinnovations.
46
Reducing Regulation for Business

Ontarioisworkingtocreatearegulatorybusinessenvironmentthatwillhelp
businesstogrow.ThroughtheOpenforBusinessrenewalinitiative,theBetter
BusinessClimateAct,2014,ifpassed,wouldensurethatregulatoryburdensare
beingfurtherreducedandsmarterregulatorypracticesarebeingadopted.
Doingsowouldhelpbusinesssavemillionsofhoursintimeand$100millionin
costsby201617.
Everyyear,thegovernmentwillreportontheeffortsofministriestofurther
reducetheregulatoryburdenonbusinessbyatleastoneinitiativeperministry.
Thegovernmentiscommittedtoreducingtheregulatoryburdenwhileprotecting
thepublicinterest,includinghealth,safetyandtheenvironment.
Growing Small Businesses in Ontario

Smallandmediumsizedenterprisesaretheleadingsourceofbusiness
entrepreneurshipandaccountformorethan60percentofprivatesector
employment.Inadynamiceconomy,successfulsmallandmediumsized
businesseswillgrowandprosperastheyinnovateandexpandintoglobalmarkets.
Tofosterahealthyandgrowingsmallandmediumsizedbusinesssector,the
Ontariogovernmentistakingaction,suchas:
EmployerHealthTaxExemptionsupportingsmallemployersbyraising
theexemptionfrom$400,000to$450,000ofannualOntariopayroll;
FivePointSmallBusinessEnergySavingsPlanensuringsmallbusinesses
havethetoolstheyneedtounderstandtheirbill,conserveenergy,manage
costsandsavemoney;and
VentureCapitalcreatinganewventurecapitalfundincollaborationwith
thefederalgovernmentandprivatesectorpartnersthatwillhelp
innovativestartupsandotheremergingcompaniesgetthefinancingthey
needtobuildcompetitivebusinessesandcreatetomorrowsjobs.
47
Helping Businesses Manage Electricity Costs

SuccessfulmanagementofelectricitycostscanbekeyingrowingOntario
businesses.OntarioismovingforwardwithanewstreamoftheIndustrial
ElectricityIncentive(IEI)programandisexpandingeligibilityfortheIndustrial
ConservationInitiative(ICI).
Industrialcompaniescouldbeeligibleforasignificantreductionin
electricityratesforincrementalconsumptionthroughtheIEIprogramif
theystartorexpandoperations.Contractsunderthenewstreamare
availableforalongerterm,withanenddateofuptoDecember31,2024.
TheICIisbeingexpandedbyloweringthethresholdforqualifyingindustrial
sectorsfromfivemegawatts(MW)tothreeMW,withneweligible
participantswhooptintobeginreceivingbillingundertheICIstarting
July1,2015.ExistingparticipantsinICIsave,onaverage,anestimated
10to20percentontheirelectricitybill.TheICIencourageselectricity
conservationduringpeakhours,savingmoneyfortheentire
electricitysystem.
Inaddition,theProvinceextendedtheNorthernIndustrialElectricityRate(NIER)
Programwith$360millionoverthreeyears(201314to201516)toprovidea
rebateoftwocentsperkilowatthourtoqualifyinglargenorthernindustrials.
The initial streams of the Industrial Electricity Incentive Program resulted in seven
projects, including Pembroke MDF (estimated 140 new jobs), ASW Steel (estimated
45 new jobs), Atlantic Packaging Products (estimated 80 new jobs), and Resolute
Forest Products (estimated 78 new jobs).
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 the changes to the Industrial Conservation Initiative,
assuming the company reduces its electricity consumption by 15 per cent during
times of highest system demand.
48
Modernizing and Strengthening Financial Services

Awellregulatedfinancialservicessectorsupportsadynamicbusinessclimate
whileprotectingindividualinvestors.AspartofitsplanforOntarioseconomy,
thegovernmentismovingforwardtostrengthenitsfinancialservicessectorby:
PlayingaleadroleintheestablishmentofaCooperativeCapitalMarkets
RegulatorySystem;and
SupportingeffortstosecurethedesignationofaCanadianrenminbi
tradinghub.
Aswell,theProvinceiscommittedtoreviewingthe:
MandatesoftheFinancialServicesCommissionofOntarioandthe
DepositInsuranceCorporationofOntariokeyfinancialservices
regulatoryagencies;
Legislativeframeworkforcreditunionsandcaissespopulaires;and
Policyalternativesformoretailoredregulationoffinancialplanning.
ThefinancialservicessectorremainsanengineofgrowthforOntario
theeconomyssecondlargestmajorsectoraftermanufacturingbasedonoutput.
In2014todate,ithascontinuedtocreatejobsataratetwiceasfastastheoverall
Ontarioeconomy.Thefinancialsectoralsoenableseconomicgrowthintherestof
theeconomybysupportingancillaryjobsinbusinessservicesandotherindustries,
aswellassavings,accesstocapitalforsmallbusinessesandconsumers,
andinvestment.
TorontoisthefinancialcapitalofCanadaandaglobalfinancialcentrehometo
manyleadingbanks,securitiesdealers,insurersandpensionfunds.Torontoisalso
thesecondlargestfinancialsectoremployerinNorthAmerica,afterNewYork.
Asaglobalfinancialcentre,TorontorankshighlyasnumbersixonTheBanker
magazinerankingafterLondon,NewYork,Singapore,HongKongandDubai.
AccordingtotheConferenceBoardofCanada,43percentofCanadasfinancial
servicesheadquartersemployeesarebasedinToronto,triplethenearest
competitor,Montreal,at12.4percent.
49
Strengthening Ontarios Financial Services Sector

Establishing a Cooperative Capital Markets Regulatory System
Ontariocontinuestoworkalongsideitsprovincialandfederalpartnerstoachieve
aCooperativeCapitalMarketsRegulatorySystem(CCMR)framework.
TheCCMR,onceimplemented,wouldmakesecuritiesmarketsinCanadasafer,
moreefficient,andmorecompetitive.ItwouldofferrealbenefitstoCanadiansby
increasingbusinessesabilitytoraisecapital,allowinghouseholdstosaveand
investwithconfidence,andhelpingcreatejobsandeconomicgrowth.
AstrongcooperativesecuritiesregulatoryframeworkwouldenhanceCanadas
reputationandcompetitivenessinglobalcapitalmarkets.
InSeptember2014,theOntario,BritishColumbia,Saskatchewan,NewBrunswick,
andfederalgovernmentsannouncedaMemorandumofAgreementtojointly
establishtheCCMRandpublishedforcommentconsultationdraftsofthe
provincialcapitalmarketslegislationandcomplementaryfederallegislationthat
thenewcommonregulatorwouldadminister.Momentumcontinuestobuildfor
theCCMRinitiative,withPrinceEdwardIslandagreeingtoparticipateon
September30,2014.
Ontarioisworkingactivelywithallotherparticipatinggovernmentstoachievethe
keymilestonesforthisinitiativeandtoencourageotherprovincesandterritories
toparticipateinandbenefitfromtheCCMR.
Renminbi Trading Hub

Ontariosupportstheagreementrecentlyreachedbetweenthefederal
governmentandBankofCanadawiththegovernmentandcentralbankofChina,
relatingtothedesignationofarenminbi(RMB)tradinghubinCanada.TheRMB
istheofficialcurrencyofthePeoplesRepublicofChina.
50
ACanadianRMBtradinghub,onceimplemented,wouldfacilitateincreased
investmentandtradebyallowingtheCanadianfinancialsectortoquicklyand
efficientlyclearandsettletransactionsinCanada.Itwouldalsostrengthen
CanadasbroadereconomicrelationshipwithChinaanditscompetitiveposition
inglobalfinancialmarketsbyallowingbusinessestoraisefundsinRMBandthe
financialservicessectortoofferRMBproductstocustomers.Canadianimporters
andexportersthattradeinRMBwillalsobenefitfromreducedadministrative
requirementsinChina.
EstablishingNorthAmericasfirstRMBtradinghubwillraiseCanadasstatureasa
globalfinancialcentreandfacilitateincreasedtradeandinvestmentwithChina,
thusbenefitingtheentireCanadianeconomy.
Modernizing Ontarios Financial Services Sector

Reviewing the Mandates of Key Financial Services Regulators
The2014Budgetnotedthatmandatereviewsofallgovernmentagencieswill
beundertakenbeginningthisyear.TheFinancialServicesCommissionofOntario
(FSCO)andtheDepositInsuranceCorporationofOntario(DICO)playcriticalroles
intheregulationoffinancialservices.TheFSCOisalsoresponsibleforthe
regulationofpensionsinOntario.
Thegovernmentisundertakingreviewsofbothagenciesmandatestofurther
modernizeregulationoffinancialservicesandadvanceongoingworkon
pensionreform.
Thegovernmentisalsocommittedtoreducingriskintheagenciessectorthrough
strongagencyoversight.Thegovernmentispreparedtopursueearlylegislative
changestoimproveaccountabilityandmodernizeagencygovernance.
Reviewing Ontarios Legislative Framework for Credit Unions and

Caisses Populaires
CreditunionsandcaissespopulairesplayanimportantroleinOntarioseconomy.
Theypromoteacompetitivefinancialservicesmarketplaceandsomecommunities
relyontheirlocalcreditunionsandcaissespopulairesastheirsolefinancial
servicesprovider.Almost1.6millionOntarians,morethan10percentofOntarios
population,aremembersofacreditunionorcaissepopulaire.Thesectorholds
morethan$40billioninassets,employsover6,000peopleand,asoftheendof
2013,hadprovidedloansofmorethan$33billiontoindividualsandbusinesses.
51
ToensurethatOntarioscreditunionlegislationremainscurrentandinline
withbestpractices,inthefallof2014,theMinisterofFinanceappointedhis
ParliamentaryAssistant,MPPLauraAlbanese,toleadareviewoftheCredit
UnionsandCaissesPopulairesAct,1994.AnExpertAdvisorwillbeassisting
Ms.Albaneseinherreview.Aspartofthereview,Ms.Albaneseiscurrently
holdingpublicconsultationsacrosstheprovince.Herfinalreportwilltakethese
publicviewsintoconsideration.Itwillcontainrecommendationstothe
governmentonproposedchangestotheexistingframeworktopromote
competition,protectconsumersandtheirdeposits,andhelpcreditunions
continuetomeettheirmembersneeds.Ms.Albanesesfinalreportwillbe
releasedinthefallof2015.
Reviewing Regulation of Financial Planning

Individualsareincreasinglyresponsiblefortheirownincomesecurityandrequire
soundandprofessionalfinancialadviceandplanningservices.Tohelpconsumers
makeinformedchoicesandinvestments,thegovernmentismovingforwardwith
theappointmentofanexpertcommitteetothoroughlyconsidermoretailored
regulationoffinancialadvisers,includingfinancialplanners.
Overthecomingmonths,thecommittee,composedofindependentmembers,
willdevelopamandateinconsultationwithkeystakeholders.Themandatewill
includeananalysisofrelevantissuessurroundingtheprofession,suchasthe
sufficiencyofregulatoryframeworks;proficiencyandeducationrequirements;
theuseofmultipletitles;consumeraccesstoinformationandcomplaint
registration;andpotentialconflictsofinterest.Uponacomprehensiveanalysis
ofrelevantissues,thecommitteewillprovidekeyrecommendationsandsubmit
theirfinalreporttotheMinisterofFinanceforreviewbyearly2016.
52
Going Global
Growing Ontario Exports
OntariosGoingGlobalTradeStrategywillhelpgrowexportsofOntarioshigh
qualitygoodsandservicesastheglobaleconomyexpands.Continuingtoincrease
provincialexportsisanimportantsourceofgrossdomesticproduct(GDP)andjob
growth.Emergingmarketeconomieswillsignificantlyincreasetheirshareofthe
globaleconomyoverthenextfivetotenyears.Chinasshareofglobaloutputis
expectedtoalmostdoubleto27percentby2035.Developedeconomiessuchas
theUnitedStatesandEuropewillcontinuetoincreasetheirdemandforhigh
valueaddedproducts,includingOntariosresources,hightechnologyexports,
andprofessionalandtechnicalservices.
AsuccessfultrademissiontoChinawasconcludedthisfall.ItincludedthePremier
ofOntario,thePremiersofQuebecandPrinceEdwardIsland,and60Ontario
businessesandorganizations.ThetrademissionhelpedshowcaseOntarios
expertise,particularlyincleantechandscienceandtechnology,whileincreasing
theprovincesinternationalprofile.ThePremierstrademissiontoChinahas
alreadyattractednearly$1billiontoOntarioinnewdeals,creatingmore
than1,800newjobs.Thegovernmentsigned26agreementsduringthis
weeklongmission.
Huawei Technologies Co. Ltd. announced a major expansion to its Ontario

operations, valued at $210 million, that will create 325 jobs, including approximately
250 positions for engineers and researchers and at least 75 new marketing, sales
and support positions.
Yiwu North America Corporation announced a $100 million investment to
establish a new trading centre in Whitchurch-Stouffville. The first phase of the
project is expected to create 800 jobs.
ThegovernmentcontinuestoexpandthereachofOntariosexports,building
onastrengtheningU.S.economy,anddiversifyingexportstowardsfastgrowing
marketsabroad.Itisalsohelpingcompaniesofallsizes,includingsmalland
mediumsizedenterprises(SMEs),increasetheirsuccessinexportingtoglobal
marketsandcreatingjobs.
53
Ontarioispartneringwiththefederalgovernmenton:
TherecentlynegotiatedComprehensiveEconomicandTradeAgreement
(CETA)withtheEuropeanUnion,alargeandwealthymarketofover
500millionpeoplethatholdsouttremendousexportandinvestment
opportunitiesforOntariofirms,includingSMEs;and
Negotiatingcomprehensivetradeagreementswithmanyofitsothermajor
tradingpartners,includingcountriesthatarepartoftheTransPacific
Partnershipdiscussions.Ontariowillcontinuetosupporttrade
agreementsthatbenefititseconomywhilesupportingstrategicsectors.
Ontarioisintheprocessofexpandingitsinternationalrepresentationtoinclude
SouthKorea,ChongqinginChina,andIsrael.ThisaddstotheexistingInternational
MarketingCentresinNewYork,SanFrancisco,MexicoCity,SoPaulo,London,
Paris,Munich,Beijing,Shanghai,TokyoandNewDelhi(includingasatelliteoffice
inMumbai).
ThegovernmentcontinuestoconnectInfrastructureOntariowithOntarios
internationaltradeofficestocreateexportopportunitiesforOntariofirmsthat
haveparticipatedinAlternativeFinancingandProcurement(AFP)projects.
InfrastructureOntarioisshowcasingthemadeinOntarioAFPmodelthrough
itsinvolvementwiththeNationalGovernorsAssociationintheUnitedStates.
Inaddition,over40internationaldelegationshavevisitedInfrastructureOntario
tobetterunderstandthemadeinOntarioAFPmodel.
Strengthening Partnerships with Provinces and Territories

WhileOntarioisexpandingitsglobalreach,itisalsoworkingtostrengthen
economictieswiththerestofCanada.Thefreeflowofpeople,goods,services
andinvestmentswithinCanadahelpstheOntarioeconomybuildonitsstrengths.
OntariostronglysupportsamoreefficientandeffectiveCanadianeconomicunion.
AttheCounciloftheFederationmeetinginAugust2014,Premiersagreedto
undertakeacomprehensiverenewalofthenationalAgreementonInternalTrade
(AIT),whichincludedaligningitwithmoderninternationaltradeagreements.
54
OntariohasbeenworkingtostrengthenitsrelationshipwithQuebecinorderto
reinforcethiskeyregionalpartnership.Bothprovincesareworkingtoincrease
trade,expandaccesstopublicprocurementandexploretheviabilityofexpanded
electricitytrade.Aspartofthisinitiative,thePremiershaveagreedtopursuejoint
meetingsoftheirCabinets,thefirstofwhichwilloccuronNovember21,2014,
inToronto.
Attracting Foreign Direct Investment

Foreigndirectinvestment(FDI)contributestoOntarioseconomybyimproving
productivityandcompetitiveness,introducingnewtechnologiesandcreatingnew
highpayingjobsforOntarians.TheOntariogovernmenthasplayedanimportant
roleinattractingFDIbycontributingtoapositivebusinessinvestmentclimateand
leveragingmajorcapitalspendingprojectsbyleadingglobalcompanies.
OntarioremainstheleadingdestinationinNorthAmericaforFDI.
fDiIntelligence,amajorsourceofresearchandanalysisonFDItrends
globally,publishedinitsreportonglobalFDItrendsin2013thatOntariois
thenumberonedestinationinNorthAmericaforglobalFDI,basedon
capitalspendingprojects.
OntariorankedsecondinNorthAmericainthesoftwareandinformation
technologysector,thirdinautosandfourthinfinancialservices.
TheprovincecontinuestopunchaboveitsweightinFDIinthesemajor
sectors,whilerankingonlyfifthinNorthAmericainoveralleconomicsize.
Supporting a Vibrant Tourism and Culture Sector

Ontariostourismandcultureindustriesnotonlycreatejobsandeconomic
growth,theyalsoenhanceOntariansqualityoflife.Akeyupcomingeventin
thetourismandculturesectoristhecommemorationofthe400thanniversary
oftheFrancophonepresenceinOntario,scheduledtotakeplacefromJuneto
October2015.
OnSeptember25,2014,thegovernmentannouncedfundingof$5.9million
forawiderangeofcommemorativeeventsfortheanniversary.Specifictourism,
cultural,educationalandlegacyprojectswillbeannouncedinthecomingweeks
andmonths.TheProvincewillbesupportingprojectsthataregearedtowards
jobcreation,attractingvisitors,andcelebratingthecontributionsof
FrancoOntarianstothesocial,culturalandeconomicdevelopmentofOntario.
55
56
Section E: StrengtheningRetirement
Security
A Leader in Retirement Income Security
Introduction
Thegovernmentiscommittedtoastrongandsecureretirementincomesystem
tohelpensurethatOntariansarebetterabletoenjoytheirretirementyears.
Severalstudieshaveshownthat,unlessactionistaken,asignificantportion
oftodaysworkerswillfaceadeclineintheirlivingstandardinretirement.1
Thesestudiesalsoindicatethatthisproblemwilllikelyworsenovertime.
AsnotedinOntarios2014Budget,thegovernmentrecognizesthatincreasing
retirementsavingsintheprovinceisacomplexchallengethatrequiresamulti
facetedapproachandclosecollaborationwithallparties,includingindividuals,
employers,labour,thefinancialservicesindustry,andallordersofgovernment.
ThatiswhyOntarioiscontinuingwithitsthreeprongedstrategy,firstoutlined
inthe2013OntarioEconomicOutlookandFiscalReview,tostrengthenand
modernizetheretirementincomesystem.Thismultifacetedstrategywill
strengthentheretirementincomesecurityofallOntarians,including:
Thosewithoutworkplacepensionplans;
Thosewithselfdirectedretirementsavings;and
Thosewithdefinedbenefitplans.
The Ontario Retirement Pension Plan

CanadaspubliclyadministeredCanadaPensionPlan(CPP)isfundamentaltothe
retirementincomesecurityofallCanadians,butitsbenefitsaretoolowtomeet
theneedsofmanyworkers.
RecentstudiesthathaveexaminedtheadequacyofretirementsavingsinCanadainclude:
KeithHorner,RetirementSavingbyCanadianHouseholds,(2009);KevinD.Moore,William
RobsonandAlexandreLaurin,C.D.HoweInstitute,CanadasLoomingRetirement
Challenge,(2010);MichaelC.Wolfson,ProjectingtheAdequacyofCanadiansRetirement
Incomes,(2011);McKinsey&Company,AreCanadiansReadyforRetirement?(2012);
andCIBC,CanadiansRetirementFuture:MindtheGap,(2013).
57
Ontariohaslongplayedaleadershiproleinretirementincomesecurityandhas
beenadvocatingforanenhancementtotheCPPsince2010.
In2013,thefederalgovernmentunilaterallyshutdowndiscussiononoptionsfor
anenhancementtotheCPP,againsttheconsensusofprovincesandterritories
tocontinueworkingonthisissue.
OntariospreferredsolutionremainsanenhancementtotheCPP;however,
thecostofinactionissimplytoohigh.Asaresult,thegovernmentintendsto
introduceanewmandatoryprovincialpensionplantheOntarioRetirement
PensionPlan(ORPP)thatwillofferasecurebenefitforlife.Theimplementation
oftheORPPisintendedtocoincidewiththeexpectedreductionsinEmployment
Insurancepremiumsin2017.TheORPPwillbedesignedtofacilitatethepossibility
ofitsintegrationwiththeCPP,intheeventthatanagreementisreachedona
CPPenhancement.
TheORPPisanintegralpartofthegovernmentsplantoinvestinpeople,
andtohelpworkingfamiliesbuildamoresecureretirementfuture.
AprovincialpensionplanofthisscalewouldbethefirstofitskindinCanada.
Onceintroduced,theORPPwouldbeasignificantstepinaddressingthe
retirementundersavingchallenge,particularlyformiddleincomeearners
withoutworkplacepensioncoverage.
Asoutlinedinthe2014Budget,theORPPwouldhavethefollowingfeatures:
Design
ReplicatemanyoftheCPPsdesignfeaturesinordertobuildonthe
successoftheCPP.
Benefits
58
Provideapredictablestreamofretirementincomeforlifebypooling
longevityandinvestmentrisk,andindexingbenefitstoinflation.
Aimtoprovideareplacementrateof15percentofanindividuals
earnings,uptoamaximumannualearningsthreshold.TheORPPbenefits
wouldbeearnedascontributionsaremadetoensurethatthesystem
isfair,andyoungergenerationsarenotburdenedwithadditionalcosts.
Contributions
TheORPPwouldrequireequalcontributionssharedbetweenemployers
andemployees,notexceeding1.9percenteach(3.8percentcombined)
onearningsuptoamaximumearningsthresholdof$90,000(in2014
dollars).Thisthresholdwouldincreaseeveryyear,consistentwith
increasestotheCPPmaximumearningsthreshold.
Earningsbelowalowearningsthresholdwouldbeexemptfrom
contributions.ThegovernmentwillconsultonwhethertheORPPs
lowearningsthresholdwillmirrortheCPPsthresholdof$3,500.
Participation
TheORPPwouldbemandatoryforallemployeesworkinginOntario
whodonotcurrentlybenefitfromacomparableworkplacepensionplan.
Employeesparticipatinginacomparableworkplacepensionplan
andselfemployedindividualswouldnotparticipateintheORPP.
Thegovernmentwillconsultonwhatconstitutesacomparableworkplace
pensionplanandhowtobestassistselfemployedindividualsinachieving
asecureretirementfuture.
Administration
TheORPPwouldbepubliclyadministeredatarmslengthfrom
governmentwithastronggovernancemodelandberesponsible
formanagingtheplansinvestments.
RecognizingthatretirementincomesecurityiscriticallyimportanttoOntario
familiesandforthefutureprosperityoftheprovince,thegovernmentis
committedtoimplementingtheORPPasapriorityin2017.Enrolmentof
employersandemployeeswouldoccurinstages,beginningwiththelargest
employers,andcontributionrateswouldbephasedinovertwoyears.
InJune,PremierKathleenWynneappointedanewAssociateMinisterofFinance
responsiblefortheORPP.TheAssociateMinisterofFinance,theHonourable
MitzieHunter,hasbeguntoengageavarietyofstakeholdersmeetingwith
businesses,labour,organizations,associations,aswellasindividuals,familiesand
communitiesacrosstheprovincetoensurethattheORPPproperlybalances
retirementincomesecuritywiththeimpactonbusiness,andmeetstheneedsof
a21stcenturyworkforce.
59
ThegovernmentwillalsobesupportedbyMichaelNobregainhisroleasthe
ImplementationLead,providingguidanceandsupporttotheMinisterofFinance,
theAssociateMinisterofFinanceandMinistryofficialsontheimplementationof
theORPP.Inparticular,thisrolewillinvolveprovidingadviceonthecreationof
thearmslengthadministrativeentityandthedevelopmentoftheadministrative
andoperationalcapacitynecessarytoensureasmoothtransitionto2017and
managetheORPPonalongtermbasis.
TheProvincewillcontinuetoworkwiththeTechnicalAdvisoryGroupon
RetirementSecurity,relyingonarangeofpensionexpertiseandperspectives
asitdevelopstheORPP.
Thegovernmentintendstointroducelegislationshortlytobegintheprocessof
fulfillingitscommitmenttointroducetheORPPandwillformallyconsultonkey
plandesignissuesinearly2015.Feedbackfromthegovernmentsconsultations
willinformtheORPPsdesignandstructure.
Pooled Registered Pension Plans

Voluntarysavingstools,suchasregisteredretirementsavingsplans(RRSPs)and
pooledregisteredpensionplans(PRPPs),willcontinuetoplayanimportantrole
inOntariosretirementincomesecuritysystem.Pooledregisteredpensionplans
willofferemployeesandtheselfemployedavoluntary,lowcost,taxassisted
optiontoincreaseretirementsavings.
Afterasuccessfulconsultationprocessinearly2014,the2014Budgetcommitted
tointroducingalegislativeframeworkforPRPPsthatisbroadlyconsistentwiththe
modelintroducedbythefederalgovernmentandadoptedbyvariousprovinces.
Thegovernmentintendstointroducethislegislationshortly.
Target Benefit Pension Plans

Ontariosthreeprongedstrategytoenhanceretirementincomesecurityincludes
pensionreformstoallowformoreflexiblemodelssuchastargetbenefitpension
plans.Theseplansofferemployersaninnovativenewoptionbycombining
featuresofdefinedbenefitpensionplansanddefinedcontributionpensionplans.
Targetbenefitpensionplanstargetaspecificpension,fundedbyfixed
contributions.Unlikedefinedbenefitpensions,targetbenefitpensionsmaybe
reducedtoaddressfundingshortfalls.
60
Asoutlinedinthe2014Budget,thegovernmentwillbeconsultingonaregulatory
frameworkfortargetbenefitpensionplansinOntario.Initialconsultations,
includingthereleaseofaconsultationpaper,willfocusonaframeworkfortarget
benefitmultiemployerpensionplans.
Ongoing Retirement Income Security Reforms

A Strong Pension Regulator
Akeyfactorinensuringretirementincomesecurityiseffectiveandresponsive
pensionregulationandoversight.Theregulator,theFinancialServicesCommission
ofOntario(FSCO)anditsSuperintendent,musthavesufficientlyeffectivepowers
toensurecompliancewithpensionminimumstandardslegislation.
InresponsetotheReportoftheExpertCommissiononPensions,in2010
thegovernmentmadeanumberofamendmentstothePensionBenefitsAct,
whichhaveyettobeproclaimed,toexpandtheSuperintendentspowers.
Thegovernmentintendstomoveforwardwiththenecessaryregulationsto
proclaimtheseamendments.
To bring compliance as near to 100% as can be achieved, the regulator ought to

have a number of strategies at its disposal. Disseminating information, dispelling
misunderstandings, resolving ambiguities, developing open and cooperative
relationships, providing positive incentives for willing compliance and forgiveness
for innocent and minor transgressions are and should be part of any regulators
repertoire. Nonetheless, significant and intentional violations will occur and must be
dealt with.
Report of the Expert Commission on Pensions, A Fine Balance: Safe Pensions, Affordable Plans,
Fair Rules, (2008), 139.
61
Pension Reforms Underway

ThegovernmentcontinuestostrengthenandmodernizeOntariosretirement
incomesystemthroughthedevelopmentofregulationstoimplementthe
amendmentstothePensionBenefitsActintroducedin2010.
InNovember2014,thegovernmentpassedaregulationtoextendtheexemption
thatcertainpensionplanshavefromthesolvencyconcernstest.Thistest
determineswhendefinedbenefitpensionplansmustfileannualvaluation
reportswiththepensionregulator.Theexemptionhasnowbeenextendedfrom
December31,2014,toDecember31,2017,toallowenoughtimetoconsulton
anappropriatetestforthosepensionplansthatareexemptfromsolvency
fundingrequirements.
Inaddition,earlierthisfallregulatoryproposalsonthefollowingissueswere
postedforpublicconsultation:
Informationstatementsforretiredandformerpensionplanmembers;
Disclosureofenvironmental,socialandgovernancefactorsinpension
investmentdecisions;and
ThetransferofpensionbenefitsfromOntarioregisteredpensionplans
toplansinotherjurisdictions.
Afterincorporatingfeedback,regulationswillbeconsideredforapprovallater
thisyear.
Thegovernmentcontinuestoworkonotherareasofreform,including:
62
Updatingfilingrequirementstoreflectchangestoaccountingstandards:
Afterinitialconsultations,thegovernmentremainscommittedto
implementingthenecessaryregulatoryreformsonceithashadan
opportunitytoincorporatestakeholderfeedback.
Paymentofvariablebenefitsdirectlyfromdefinedcontributionplans:
InitialconsultationsinAprilhighlightedareaswherelegislative
amendmentswouldberequiredtopromoteconsistencybetweenthe
treatmentofvariablebenefitsandthecurrentframeworkforLifeIncome
Funds(LIFs).Thegovernmenthasconsideredstakeholderresponsestothe
consultationandisproceedingwiththenecessaryamendmentstothe
PensionBenefitsAct.Theamendmentswillsupportgreaterflexibility,
sothatretiredmembersreceivingvariablebenefitswouldhavemore
portabilityandwithdrawaloptionsindealingwiththeirretirementfunds.
Oncetheseamendmentshavebeenpassed,thegovernmentwillmove
forwardwithregulationstoimplementitscommitmenttopermitdirect
paymentsfromdefinedcontributionpensionplans.
Exemptionfromthe30percentruleforpensioninvestmentsinOntario
infrastructure:Asannouncedinthe2013OntarioEconomicOutlook
andFiscalReview,thegovernmentiscommittedtoremovingobstacles
toinvestmentsinOntarioinfrastructurebyOntariospensionplans.
The30percentrulelimitstheabilityofpensionplanstotakelargevoting
interestsinacorporation,potentiallyrestrictingpensioninvestmentsin
infrastructureprojects.Withtheremovalofthisrestriction,pensionplans
mayrepresentasignificantnewsourceofcapitaltosupporteconomic
growthandjobcreationinOntario.Adescriptionofproposedregulatory
amendmentsprovidingforanexemptionfromthe30percentrulefor
pensioninvestmentsinOntarioinfrastructurewaspostedforconsultation
earlierthisfall.Thegovernmentwillconsiderstakeholderresponsesasit
developsregulationstoimplementtheproposedexemption.
63
Sustainable and Cost-Effective Public-Sector

Defined Benefit Plans
Pooled Asset Management
The2014Budgetannouncedthatthegovernmentwillbemovingforwardwith
aframeworktoenablethepoolingofpensionplanassetsinthebroaderpublic
sectoraswellasendowmentandotherfundsofpublicentities.Largerpoolsof
capitalenableaccesstoabroaderrangeofinvestments,whichiskeytoimproving
riskadjustedreturns.
Thegovernmentisworkingcloselywithkeystakeholderstodevelop
theframeworkforthepooledassetmanagemententity.TheWorkplaceSafety
andInsuranceBoardandOntarioPensionBoardhaveexpressedtheirinterest
inbeinginvolvedasinitialparticipantsintheentity.
Framework for Conversion to Jointly Sponsored

Pension Plans
Thegovernmentwillfacilitateconversionsormergersofemployersponsored,
singleemployerpensionplans(SEPPs)intoneworexistingjointlysponsored
pensionplans(JSPPs).OnJuly24,Bill14,theBuildingOpportunityandSecuring
OurFutureAct(BudgetMeasures),2014,receivedRoyalAssent.Thislegislation
makeschangestothePensionBenefitsActthat,onceproclaimed,willprovide
authorityforregulationstofacilitatethesetransactions.
Workiswellunderwaytodevelopthenecessaryregulationsrequiredforthe
legislativeprovisionstobeproclaimed.Issuestobeaddressedinregulations
includethelevelofconsentrequiredforactivemembersandretirees,aswellas
thedegreeofprotectionthatemployersmustprovideiftheSEPPconvertsto,
ormergeswith,aJSPP.Thegovernmenthasassignedahighprioritytothe
developmentoftheseregulationsandintendstopostregulatoryproposalsonthe
RegulatoryRegistryinthecomingmonths.Commentsreceivedwillbeconsidered
inthedevelopmentoftheregulations,whichareanticipatedtotakeeffecton
July1,2015.
64
Section F: AFairSociety
Building Opportunity for All Ontarians
TheProvincesfutureprosperitydependsoneveryOntarianbeingableto
participateinitseconomy.
Ontariohasareputationforpromotinggreaterfairnessbyinvestinginpeople;
ensuringequalaccesstokeypublicservicessuchashealthcareandeducation;
andsupportingtheneedsoflowincomefamiliesandthemostvulnerable.
Byprovidingenhancedprotection,securityandequalopportunityforOntarians,
thegovernmentprovidesindividualswithagreatersenseofdignityand
independence.
TheProvincespathtoabalancedbudgetwillhelpensurethatservicesand
supportsforthemostvulnerableareprotectedandsustainableoverthelong
term.Theseservicesandsupportsplayacriticalroleinensuringthatevery
Ontarianhastheopportunitytoparticipateinemploymentandcontributeto
theprosperityoftheirprovince.
Moving Forward on the Poverty Reduction Strategy

InSeptember,thegovernmentreleasedarenewedPovertyReductionStrategy
RealizingOurPotentialtoexpanditseffortstoreachmorevulnerablepeople.
Asustained,flexibleandresultsdrivenapproachtopovertyreductionisneeded
tocontinuebuildingopportunitiesforallOntarians.
OntariosrenewedPovertyReductionStrategyfocusesonfourobjectives:
Breakingthecycleofpovertyforchildrenandyouth;
Movingtowardsgreateremploymentandincomesecurity;
Investinginaffordablehousingandendingchronichomelessness;and
Usingevidencetodeveloppolicyandmeasuresuccess.
AspartoftherenewedPovertyReductionStrategy,thegovernmentis
recommittingtoitstargettoreducechildpovertyby25percent,andhasset
anewgoaltoendchronichomelessness.
65
Breaking the Cycle of Poverty for Children and Youth

From2008to2011,themostrecentyearsforwhichdataareavailable,the
Strategyhashelpedlift47,000childrenoutofpoverty.Thechildrenspovertyrate
hasfallenfrom15.2percentin2008to13.6percentin2011.Withouttheefforts
oftheStrategy,thechildpovertyratewouldhavebeen15.9percentin2011.
Thisprogressinreducingpovertyisallthemoreimportantbecauseithappened
duringaglobaleconomicrecessionandensuingslowrecovery.
TheOntarioChildBenefit(OCB)hasmadeadirectandlastingimpactbyhelping
liftchildrenoutofpoverty.
InJuly,themaximumannualbenefitincreasedby$100to$1,310perchild,
enhancingtheincomesofoverhalfamillionfamilies.
BeginninginJuly2015,theOCBsmaximumbenefit,andtheincome
thresholdatwhichtheOCBstartstobereduced,willbeindexedtoannual
increasesintheOntarioConsumerPriceIndex,safeguardingthe
purchasingpoweroftheOCBfromerosionduetoinflation.
ThegovernmentwillbuildonthefirstPovertyReductionStrategybyexpanding
accesstohealthbenefitsforchildreninlowincomefamilies,includingprescription
drugs,assistivedevices,visioncareandmentalhealthservices.Thesebenefitswill
helpensurethatnoparenthastochoosebetweenworkandsocialassistanceto
improvehealthoutcomesfortheirchildorchildren.
ThegovernmentwillalsoexpandOntariosStudentNutritionProgramsothat
childrenandyouthinmorelowincomeneighbourhoodsandonFirstNation
reserveshaveaccesstonutritiousbreakfasts,snacksandlunches.Duringthe
201213schoolyear,theprogramservednearly700,000schoolagedchildrenand
youth;theexpansionofthisprogramwillserveanestimated56,000morechildren
andyouthinhigherneedscommunities.Aninitialinvestmentof$32millionover
thenextthreeyearswillestablish340newbreakfastprogramsinelementaryand
secondaryschoolsandenhancesomeexistingstudentnutritionprograms.
66
Moving towards Greater Employment and Income Security

Whilegovernmentsupportsplayaroleinreducingpoverty,employmentremains
keytofurthergains.
Asof2011,inhouseholdswherenooneisemployed,thepovertyrateis
60percent.Withonefulltimeworker,workingallyear,thepovertyratedrops
toabout10percent.Withtwoormorefulltimeworkers,workingallyear,
thepovertyratefallstoaboutonepercent.
TherenewedPovertyReductionStrategyaimstosupportandencourage
peopletofindmeaningfulemploymentatafairwage,andcontinuestofocuson
providingopportunitiesforyouthandvulnerablepopulationssothattheydevelop
theskillsandexperienceneededtoenterthelabourmarket.
Tohelplowwageworkerswhostruggletomakeendsmeet,thegovernment
hasraisedtheminimumwageto$11perhour,thehighestamongtheprovinces.
Thegovernmenthasalsopassedlegislationtoindextheminimumwagetothe
ConsumerPriceIndexsoitkeepspacewiththecostofliving.
TheOntarioYouthApprenticeshipProgramgivesyouththeskills,training
andexperiencethatenablethemtograduatewithahighschooldiplomaand
partialcompletionofaqualificationinatrade.In201314,21,603studentsin
Grades11and12wereparticipatingintheprogram.
Aswell,Ontarioisimprovingonemploymentandtrainingservicestobetter
assistthemostvulnerable,includingthosereceivingsocialassistance,
personswithdisabilities,thelongtermunemployed,Aboriginalpeoples,
newcomersandatriskyouth.
Becauseoftheimportanceofemploymenttopovertyreduction,thegovernment
willmonitorandreportonthreenewindicators:
Youthnotinemployment,educationortraining;
Adultsinlongtermunemployment;and
Avulnerablepersonspovertyrate.
67
Investing in Affordable Housing and Ending

Chronic Homelessness
Thegovernmentscommitmentonendinghomelessnesswillrequireamulti
facetedapproachthatincludesinvestingineffectiveprogramsandservicestoday
anddevelopingstrategiestohelpendchronichomelessnessoverthelongterm.
TheProvincesapproachincludesaparticularfocusonaffordablehousingand
homelessnessprevention.
OntariosLongTermAffordableHousingStrategycontinuestobethebasisfor
amoreefficientandeffectivelocalapproachtoinvestmentdecisionmakingin
affordablehousingandsupports.AspartoftheStrategy,thegovernmentis
ensuringthatvulnerableOntariansremainappropriatelyhousedbyinvestingin
homelessnessprevention,expandingaccesstosupportivehousing,andinvesting
inmoreaffordablehousing.
ThegovernmentisupdatingitsLongTermAffordableHousingStrategyby
201516sothathousingandhomelessnessrelatedpoliciesandprogramsare
relevanttocurrentrealitiesandreflectnewresearchandabestpractice
approachtopovertyreduction.
OneexampleofthisapproachistheCommunityHomelessnessPrevention
Initiative(CHPI).Establishedin2013,CHPIallowslocalgovernmentstouseflexible
fundingapproaches,tailoredtocommunityneeds,todevelopprogramsand
supportsforthosewhoarehomelessoratriskofbecominghomeless.Anincrease
of$42millionforCHPIwasannouncedinthe2014Budget,bringingtotal
investmentinthisprogramto$294millionannually.Thiswasrolledoutin
October2014.Thisinvestmentwillfurtherimproveaccesstoadequate,suitable
andaffordablehousingforthoseinneed.
Atthesametime,inAugust2014,thegovernmentsignedarenewedInvestment
inAffordableHousingcostmatchingagreementwiththefederalgovernment.
Thisagreementisexpectedtoprovideatotalofmorethan$801millioninnew
fundingforaffordablehousingacrossOntariooverthenextfiveyearsandprovide
flexibilitytolocalgovernmentstomeetlocalneedsandpriorities,suchasthe
creationandrepairofaffordablehousing,downpaymentassistancefor
homeownershipandrentalassistancetohouseholdsinneed.Theprogramalso
providesdedicatedfundingassistancetailoredtotheneedsoftheoffreserve
AboriginalcommunityaswellasremoteareasinnorthernOntario.
68
Using Evidence to Develop Policy and Measure Success

ThegovernmentsrenewedPovertyReductionStrategyhighlightstheimportance
ofmeasuringtheimpactofprogramsonpeopleslivesandusingevidenceto
developprogramsandservices.Toensurethebestallocationofgovernment
resources,investmentsinpovertyreductionprogramsandinterventionsshouldbe
basedonevidence,lessonslearnedandbestpractices.
Povertyisacomplexissue,andestablishingtherightmeasurestoassessprograms
requirescarefulplanning.Thegovernmentwillworkwithitspartnersamong
communityorganizations,serviceprovidersandacademiatodevelopapproaches
thatarecomprehensiveandresultsfocused.
Asinitialsteps,thegovernmentwillundertakeinitiativestoenhanceitsability
tocollectanduseevidence.
Inthe2014Budget,thegovernmentannouncedthatitwouldbeinvesting
morethan$50millionoverfiveyearstocreateanewLocalPoverty
ReductionFund.Thisfundwillsupport,amongotherthings,the
developmentofstrategiesforcollectingevidencetoidentifypoverty
reductioninitiativesthatwork.
Thegovernmentwillalsobeseekingexpertadvice,includingfromthose
withlivedexperienceofhomelessness,tohelpdefinetheproblem,
understandhowtomeasureit,andsetatargetrelatedtoending
chronichomelessness.
Supporting Ontarians with Developmental

Disabilities
Inthe2014Budget,thegovernmentcommittedtoinvestinganadditional
$810millionoverthreeyearstoimprovesupportsforadultswithdevelopmental
disabilitiesandtheirfamiliestohelptheseadultsliveasindependentlyas
possibleandfullyintegrateintosociety.
69
AsofOctober2014,thegovernmenthasmadeprogressimplementingthese
initiatives,including:
Expandingdirectfundingtomorethan6,000childrenandtheirfamilies
throughtheSpecialServicesatHomeprogramandnearly1,900adults
throughthePassportprogram;
Expandingresidentialsupportsto350additionaladults,including
vulnerableyoungadultswhoaretransitioningfromchildrensservices;
CreatingaDevelopmentalServicesEmploymentandModernizationFund
tomodernizeservicedeliveryandincreaseemploymentopportunitiesfor
peoplewithdevelopmentaldisabilities;and
FormingaHousingTaskForce,consistingofkeystakeholdersinthe
developmentalservicesandhousingsectors,torecommendinnovative
housingsolutionsforadultswithdevelopmentaldisabilities.
Increased Legal Aid Eligibility

AllOntarians,regardlessofincomelevelorability,shouldhaveaccesstoan
effectiveandfairjusticesystem.Ontarioiscommittedtoensuringlowincome
familiesandvulnerablegroupshaveaccesstothelegalsupportstheyneed.
Thegovernmentiscommittedtoexpandingaccesstolegalaidbyraisingthe
incomeeligibilitythresholdtoqualifyforlegalaidassistance.Theincome
eligibilitythresholdhasnotincreasedsincethe1990s.Asaresult,moreandmore
lowincomeOntarianshavebeenunabletoaffordlegalrepresentationinthe
courtsystem.
AsannouncedonOctober30,2014,thegovernmentismovingforwardwithaplan
that,whenfullyphasedin,willallowoveronemillionmorepeopletoqualifyfor
legalaidservices.Byincreasingtheeligibilitythreshold,morethandoublethe
numberoflowincomeindividualswillhaveaccesstolegalaidservices.
Thisinitiativewouldresultinapproximately75,000additionalcertificates
whichallowlowincomeOntarianstoberepresentedbyalawyertobeissued
byLegalAidOntarioeachyear.
The2014Budgetincludedaninitialinvestmentof$95.7milliontoincrease
theincomeeligibilitythresholdbysixpercentineachofthefirstthreeyears
oftheplan.ThefirstincreasetookplaceonNovember1,2014.
70
Protecting Ontario Consumers

ThegovernmentsroleinbuildingopportunitiesforallOntariansincludes
takingmeasuresthatprotectconsumersandtheirhardearnedmoney.
ProtectingconsumersstrengthensOntarioseconomybyhelpingthemkeep
theirdailyexpensesaffordable.
Taking Steps to Keep Auto Insurance Affordable

Governmentreformsaimedatfightingfraudandabusearemakingautoinsurance
moreaffordableforOntarians.AsaresultofthegovernmentsAutoInsurance
CostandRateReductionStrategy,ratesdeclinedbymorethansixpercenton
averagefromAugust2013toAugust2014.
Todate,thegovernmenthastakenactiontoaddressoverhalfofthe
recommendationsmadebytheAutoInsuranceAntiFraudTaskForce,including
keyproposalstoenhancetheFinancialServicesCommissionofOntarios(FSCO)
investigationandenforcementauthorityandmakeiteasierforindividualsto
reportsuspectedautoinsurancefraud.Licensingofhealthserviceprovidersinthe
autoinsurancesystem,akeyTaskForceproposal,willbecomefullyeffectiveon
December1,2014.
ThegovernmentisalsocommittedtoestablishingaSeriousFraudUnit,whose
initialmandatewouldincludeaddressingautoinsurancefraud.Establishingsucha
dedicatedinvestigationandprosecutionunitwouldbeconsistentwiththeTask
Forcesconclusionthatcasesofsuspectedautoinsurancefraudshouldbe
vigorouslypursuedandprosecutedwhereevidencewarrants.
Bill15,theFightingFraudandReducingAutomobileInsuranceRatesAct,2014,
continuesthegovernmentseffortstoprotectconsumersandcombatfraud
aspartoftheAutoInsuranceCostandRateReductionStrategy.Ifpassed,
Bill15would:
TransformOntariosautoinsurancedisputeresolutionsystemtohelp
injureddriverssettledisputedclaimsfaster;
Regulatethetowingandvehiclestorageindustriesthroughmeasuresthat
tacklequestionablepractices;and
71
Givethegovernmentauthoritytochangethecurrent60dayperiodthata
vehiclecanbestoredafteranaccident,accruingcharges,withoutnoticeto
theowner.
Ratesaredirectlylinkedtoclaimscosts,andfurtheractiontoreducecostsand
uncertaintyintheautoinsurancesystemisneededtoachievethegovernments
15percentaverageratereductiontarget.Thegovernmentwillcontinuetoreview
additionalpossiblereforms,butitisalsoimportantfortheinsuranceindustryto
helpkeepautoinsuranceaffordable.Insurancecompanieshavearesponsibilityto
manageclaimsfairlywhileoperatingefficientlyandinvestinginnewprocesses
andtools,suchasdataanalyticstechnology,tohelpcrackdownonfraud
andabuse.
Transparency and Accountability

Inthe2013Budget,thegovernmentcommittedtocreatingannualindependent
expertreviewsoftheimpactofautoinsurancereformstodate.Inlate2013,the
Provinceretainedanindependentthirdpartytodeliverthesereviewsintheform
ofannualAutomobileInsuranceTransparencyandAccountabilityExpertReports.
Inadditiontotheseannualreports,anInterimReportwasrequestedandreleased
inApril2014.InNovember2014,thefirstannualreportwasdeliveredtothe
MinisterofFinance.
The2014AnnualReportconfirmedthattheSeptember2010autoinsurance
reformsreducedclaimscosts,stabilizedpremiumsandpreventedfurtherrate
increases.Thereportalsonotedthatwhilethegovernmentscurrentstrategyhas
resultedinanaverageratereductionofoversixpercentsinceAugust2013,there
arestillothersourcesofconsiderableuncertaintythatarepreventingratesfrom
beingreducedfurther.Additionalactionswillberequiredtoreachtheaverage
ratereductiontarget.
The2014AnnualReportalsoincludedspecificrecommendationstargetedat
reducingcosts,aswellasmoregeneralrecommendationsaimedatimproving
theautoinsurancesystemasawhole.Theseincludeimprovingconsumer
representation;andenhancingsharingandmonitoringofinformation,suchas
insurerclaimspractices,theimpactoflegalcosts,andothermeasurestoimprove
transparency.Therecommendationsandobservationsinthereportclearly
demonstratethatallstakeholdershavearoleincreatingamoresustainable,
affordableandfairsystem.
72
Electricity Rate Mitigation for Low-Income

Ontarians
ThegovernmentrecognizesthatOntarioslowincomehouseholdstypicallyspend
aproportionatelyhigherpercentageofdisposableincomeonelectricitycompared
tohighearninghouseholds.
TheMinisterofEnergyhasaskedtheOntarioEnergyBoardtodevelopoptions
andprovideareportbyDecember1,2014,onasustainable,longtermelectricity
supportprogram,theOntarioElectricitySupportProgram(OESP),specifically
designedforlowincomeOntarians,tobeinplacebyJanuary1,2016.
TheOESPwouldreplacetheOntarioCleanEnergyBenefit(OCEB)onceitends
December31,2015.
ThegovernmentisalsomovingforwardwithremovingtheDebtRetirement
Charge(DRC)costfromresidentialuserselectricitybillsafterDecember31,2015.
Thiswillsaveatypicalresidentialratepayerabout$70peryear.Implementation
detailswillbesetoutinadraftregulation,expectedinearly2015.
73
74
Chapter
II
Economic Outlook
ChapterII:EconomicOutlook
Overview
TheoutlookforOntarioseconomyhasevolvedlargelyasexpectedatthetimeof
the2014Budget.Growthisshiftingawayfromarelianceonhousinginvestment
andconsumerspendingtowardsexportsandproductivityenhancingbusiness
investment.Thistransitionisexpectedtogainmomentumasanimprovingglobal
economysupportsstronger,morebalancedgrowth.
AspartofdevelopingOntariosfiscalplan,theMinistryofFinanceisforecasting
realgrossdomesticproduct(GDP)growthof1.9percentin2014and2.4percent
annuallyoverthe2015to2017period.ThiscomparestoaprojectionforrealGDP
growthinthe2014Budgetof2.1percentin2014,2.5percentinboth2015and
2016,and2.6percentin2017.
TABLE2.1
OntarioEconomicOutlook
(PerCent)
2011
2012
2013
2014p
2015p
2016p
2017p
Real GDP Growth
2.6
1.7
1.3
1.9
2.4
2.4
2.4
Nominal GDP Growth
4.6
3.2
2.4
3.5
4.4
4.4
4.4
Employment Growth
1.8
0.8
1.4
0.8
1.3
1.4
1.5
CPI Inflation
3.1
1.4
1.0
2.1
2.0
2.0
2.0
p = Ontario Ministry of Finance planning projection.

Sources: Statistics Canada and Ontario Ministry of Finance.
AresurgenceoftheU.S.economywillsupportOntarioeconomicgrowththrough
strongerdemandforOntarioexports.However,globalriskstotheeconomic
projectionremainelevated.Inparticular,manyeurozonecountriescontinue
tostrugglewithongoingstructuralchangeandcompetitivenesschallenges.
Globalinterestrates,currenciesandcommoditypricesmaycontinueto
experienceincreasedvolatility,contributingtobusinessuncertainty,asevolving
monetarypoliciesandrisingglobaltensionsbuffetfinancialmarkets.
77
WithinOntario,elevatedlevelsofhouseholddebtandthehousingmarketremain
keyrisksfortheeconomy.However,Ontarioseconomyhasshownsignsof
strongermomentum.Majorindicators,includingrealGDP,exportsandhousehold
consumption,havepostedsolidgainssincethebeginningof2014.Aswell,
Ontariosunemploymentratehasdeclinedto6.5percentinOctober,downfrom
7.5percentinJanuary2014andthelowestrateofunemploymentsince2008.
TherecentdeclineintheCanadiandollarandoilpriceswillimproveOntarios
competitivepositionandcouldresultinevenstrongergrowthfortheprovince.
78
Economic Expansion Continues

Ontarioexperiencedarelativelyweakpaceofeconomicgrowthin2013.RealGDP
in2013rosebyjust1.3percent,wellbelowOntariospotential,andtheweakest
paceofgrowthsincetheglobalrecession.Sloweconomicgrowthin2013reflected
lowerresidentialconstruction,weakerbusinessinvestmentandslowergrowthin
exports.However,recentindicatorsareprovidingsolidevidencethatOntarios
economicexpansiongainedmomentumin2014andiswellpositionedfor
continuedgrowthovertheforecastperiod.
Economicgrowthrebounded0.9percentinthesecondquarterof2014after
anunusuallyharshwinterslowedthepaceofeconomicactivityinthefirst
quarter.Includingthesecondquarter2014rebound,OntariorealGDPisnow
11.3percentaboveitsrecessionarylow.Ontariospostrecessionexpansionhas
beensupportedbystronggainsinhouseholdspending,investmentandexports.
CHART 2.1
Ontarios Economic Expansion
Per Cent Change from Recessionary Low (2009Q2)

32.0
28.8
28.0
26.0
24.0
19.4
20.0
16.0
12.0
8.0
11.3
11.6
11.1
5.6
4.0
0.0
*Government includes current spending and capital investment.

**Business investment includes non-residential structures, machinery and equipment, and intellectual property products.
TheOntarioeconomyisgainingstrengthasrisingexportsandmanufacturing
outputbenefitfromsolidU.S.growthandalowerCanadiandollar.
79
Theviewamongprivatesectoreconomists,supportedbyrecenteconomicdata,
suggestsOntarioseconomyiswellpositionedforcontinuedgrowthoverthe
remainderof2014andthroughouttheforecastperiod.
Ontarios Economy Continues to Create Jobs

Employmenthasreboundedstronglyfromtherecessionarylow.SinceJune2009,
Ontariohasgainedoverhalfamillionnetnewjobs,mostlyinfulltimepositions
andintheprivatesector.Inaddition,themajorityoftheincreasehasbeenin
industriespayingaboveaveragewages,includingprofessional,scientificand
technicalservicesandconstruction.AsofOctober2014,Ontariohad285,500
morejobsthanattheprerecessionpeakinSeptember2008.Ontarios
unemploymentratehasalsodeclinedfromarecessionaryhighof9.4percent
inJune2009to6.5percentinOctober2014.
Employment Gains Concentrated in Full-Time,

Private-Sector, Above-Average Wage Jobs
CHART 2.2
Employment Gains since June 2009

(Thousands)
600
500
551
513
393
400
384
300
168
200
100
103
38
55
Notes: Above-average wage industries are defined as those with earnings above the average hourly earnings of all industries.
Figures may not sum to total due to rounding.
80
ThepaceofjobcreationinOntariosincetheendoftherecessionhasbeen
strongerthaninmostdevelopedeconomies,includingtheUnitedStatesandthe
averageformembercountriesintheOrganisationforEconomicCooperationand
Development(OECD).
Ontario Job Recovery Ahead of U.S. and

OECD Average
CHART 2.3
Employment
(Per Cent Change from Peak)
4
Ontario
OECD
U.S.
0
(2)
(4)
(6)
(8)
2008
2009
2010
2011
2012
2013
2014
Note: Based on quarterly data. Pre-recession peak was 2008Q3 for Ontario, 2008Q2 for the OECD average and 2008Q1 for the U.S.
Sources: Statistics Canada, U.S. Bureau of Labor Statistics and OECD.
81
Global Economic Developments and Outlook

Theglobaleconomycontinuestoexpandatamoderatebutunevenpace.
GlobalrealGDPgrowthisexpectedtoremainunchangedat3.3percentthisyear.
IntheUnitedStates,strongergrowthinrecentquartershasbeendrivenby
householdspendingandbusinessinvestment.InJapan,economicactivityis
expectedtoimprovemodestlyinthesecondhalfof2014,followingacontraction
inthesecondquarter.Chinaseconomyhasbeentransitioningawayfrom
investmentleddevelopmenttowardsmorebalancedbutsustainablegrowth.
Intheeurozone,economicgrowthremainsuneven,withseveralcountries
strugglingwithprolongeddownturns.Inflationhasremainedpersistentlylow,
promptingtheEuropeanCentralBank(ECB)toembarkonaquantitativeeasing
programaimedatliftingeconomicgrowth.
Globalgrowthisprojectedtoimprovein2015,ledbystrongereconomicactivity
intheUnitedStates.EconomicgrowthinChinaisexpectedtostabilizeatamore
moderatepace,inpartduetocontinuedsupportfromgovernmenttargeted
stimulusmeasures.Intheeurozone,growthisexpectedtograduallyimproveas
thelowereuroandmorestimulativemonetarypolicysupportamodestrecovery.
However,manyEuropeancountriesstillfaceanumberofsignificantstructural
andfiscalchallengesthatcouldposearisktotheexpectedimprovementin
globalgrowth.
82
Global Economic Growth to Improve
CHART 2.4
Real GDP Growth
(Per Cent Change)
Global Economy
8.0
Emerging and
Developing Economies
Advanced Economies
7.0
6.2
6.0
5.0
4.0
5.1
4.1
3.4
3.3
3.3
3.8
3.0
2.0
1.7
1.0
1.2
1.4
1.8
4.7
4.4
5.0
2.3
0.0
p = International Monetary Fund projection.

Source: International Monetary Fund (October 2014).
U.S. Economy
TheU.S.economyhasreboundedstronglyin2014,followingalargelyweather
inducedcontractioninthefirstquarteroftheyear.Underlyingmomentum
appearstobebroadening,withseveralkeysectorsoftheeconomyimproving.
Employmentgains,averagingabout230,000jobspermonthsofarthisyear,
havesupportedstrongerhouseholdconsumption.Motorvehiclesaleshave
beenverystrongthisyearandthehousingmarketcontinuestoimprove.
Longterminterestratesremainhistoricallylowassloweconomicgrowthandlow
inflationgloballyhaveoffsettheendoftheFederalReservesquantitativeeasing
program.TheU.S.dollarhasappreciatedagainstmostmajorcurrenciesthisyear,
largelyareflectionoftherelativestrengthoftheU.S.economy.
83
Steadyemploymentgainsandhigherhousingandequitypriceshavehelped
repairconsumerbalancesheetsintheUnitedStates.Householdnetworth
hasmorethanrecoveredfromtheimpactoftherecession,helpingtosupport
consumerspendingandresidentialinvestment.Meanwhile,improvedfinancial
conditionsandsolidbusinessconfidenceareexpectedtosupportgrowthin
businessinvestment.
CHART 2.5
Strengthening U.S. Recovery
Real GDP Growth

(Per Cent Change)
4.0
3.1
3.0
2.5
2.0
2.3
2.2
2.2
2012
2013
2014p
2.9
2.8
2016p
2017p
1.6
1.0
0.0
2010
2011
2015p
p = projection.
Sources: U.S. Bureau of Economic Analysis and Blue Chip Economic Indicators (October 2014).
Accordingtotheconsensusforecast,1U.S.realGDPgrowthisprojectedto
strengthenfrom2.2percentthisyearto3.1percentin2015.TheU.S.labour
marketisexpectedtocontinueimprovingsteadily,withtheunemploymentrate
decliningfrom6.2percentin2014to5.3percentby2017.
BlueChipEconomicIndicators(October2014).
84
Oil Prices
ThepriceofWestTexasIntermediate(WTI)crudeoilaveraged$98USperbarrel
in2013.GeopoliticalconflictsinUkraineandtheMiddleEastmovedtheWTIprice
to$107USbymidJune2014.Sincethen,thepriceofWTIhasdeclinedsharplyto
below$80US,areflectionofrisingsupplyandsofterglobaldemand.
Downwardpressureoncrudeoilpricescouldintensifyifsupplygrowth,especially
intheUnitedStates,remainsstrong.Sofarin2014,U.S.oilproductionhassurged
toitshighestlevelsince1986andisexpectedtoincreasefurtherin2015.
However,ongoinggeopoliticaltensionsandhighrecoverycostswillprovidesome
supportforprices.Loweroilprices,ifsustained,willprovideaboosttoOntarios
economicoutlook.
Oil Prices to Remain High
CHART 2.6
West Texas Intermediate (WTI) Crude Oil

($ US Per Barrel)
Forecast
Range
120
100
80
60
40
20
0
2000
2002
2004
2006
2008
2010
2012
2014p
2016p

Sources: U.S. Energy Information Administration, Ontario Ministry of Finance Survey of Forecasters (October 2014) and
Ontario Ministry of Finance.
85
Financial Markets
IntheUnitedStates,theFederalReservebeganreducingitspurchasesof
U.S.treasurybondsandmortgagebackedsecuritiesinJanuaryofthisyear
andendedthesepurchasesinOctober.Withtheendofitsquantitativeeasing
program,mostmarketparticipantsexpecttheU.S.FederalReservetobegin
increasingitspolicyinterestratebymid2015.
TheBankofCanadacontinuestomaintainitspolicyinterestrateatthehistorically
lowlevelof1.0percent,unchangedsinceSeptember2010.Althoughinflationin
CanadaisclosetotheBankstwopercenttargetandGDPgrowthwasstrongin
thesecondquarter,significantdownsiderisksforCanadasinflationandgrowth
outlookremain.InterestrateincreasesinCanada,asintheUnitedStates,are
expectedtobegradual.TheyieldonthreemonthCanadiantreasurybillsis
expectedtoaverage1.2percentin2015,upfromanexpected0.9percentin
2014.Yieldsareforecasttoreach3.0percentin2017.
DespitethewithdrawaloftheexceptionalmonetarystimulusintheUnitedStates,
longtermgovernmentyieldshavetrendedlowerthisyear,reflectinglowinflation
inadvancedeconomiesandongoingglobaleconomicconcerns.Manymarket
observersbelievethatinterestratesinadvancedeconomiesmayremainlower
foralongerperiod,andcouldremainlowerthanhasbeenthecasehistorically.
Theyieldon10yearGovernmentofCanadabondsisexpectedtorisegradually
fromanaverageof2.2percentin2014to2.9percentin2015andto4.2percent
by2017.
86
CHART 2.7
Interest Rates to Rise Gradually
Per Cent
14
12
10-year Government of Canada Bond

3-month Government of Canada Treasury Bill
10
8
6
4
2
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014p 2016p
Sources: Bank of Canada and Ontario Ministry of Finance.
87
Canadian Dollar
TheCanadiandollarhastradedataround90centsUSformuchof2014andis
expectedtoaverageabout91centsUSfortheyearasawhole,downfrom
97centsUSin2013andparityin2012.Recently,thedollarhasbeenimpactedby
therelativestrengthoftheU.S.economyandthestanceofmonetarypolicy.Asa
resultoftherecentstrongU.S.economicperformanceandreductionsinmonetary
stimulus,theU.S.dollarhasappreciatedagainstmanycurrenciesincludingthe
Canadiandollar.Inaddition,slowglobalgrowthhasloweredcommodityprices,
furtherweakeningtheCanadiandollar.ThelowerdollarshouldhelpOntario
businessescompetegloballyandencourageexportgrowth.
TherearedivergentviewsonthedirectionoftheCanadiandollar.Privatesector
forecastersexpectthedollartoaveragecloseto89centsUSin2015,with
forecastsrangingfrom86centsUSto92centsUSfortheyear.Thedollaris
forecasttorisemodestlyin2016and2017,averaging92centsUSin2017.
CHART 2.8
Canadian Dollar to Remain Below Parity
Cents US
110
Forecast
Range
100
90
80
70
60
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014p 2016p
Sources: Bank of Canada, Ontario Ministry of Finance Survey of Forecasters (October 2014) and Ontario Ministry of Finance.
88
Forecastsforkeyexternalfactorsaresummarizedinthetablebelow.
TheseareusedasthebasisfortheMinistryofFinancesforecastforOntarios
economicgrowth.
TABLE2.2
OutlookforExternalFactors
2011
2012
2013
2014p
2015p
2016p
2017p
World Real GDP Growth

(Per Cent)
4.1
3.4
3.3
3.3
3.8
4.0
4.1
U.S. Real GDP Growth

(Per Cent)
1.6
2.3
2.2
2.2
3.1
2.9
2.7
West Texas Intermediate

Crude Oil ($US/bbl.)
95
94
98
98
93
95
98
101.1
100.1
97.1
90.8
89.5
91.0
92.0
0.9
0.9
1.0
0.9
1.2
2.0
3.0
2.8
1.9
2.3
2.2
2.9
3.5
4.2
Canadian Dollar (Cents US)

Three-Month Treasury Bill
(Per Cent)
Rate1
10-Year Government Bond

(Per Cent)
Rate1
p = Ontario Ministry of Finance planning projection based on external sources.

1 Government of Canada interest rates.
Sources: IMF World Economic Outlook (October 2014), U.S. Bureau of Economic Analysis, Blue Chip Economic Indicators
(October 2014), U.S. Energy Information Administration, Bank of Canada, Ontario Ministry of Finance Survey of Forecasts
(October 2014) and Ontario Ministry of Finance.
89
Table2.3providescurrentestimatesoftheimpactofsustainedchangesinkey
externalfactorsonthegrowthofOntariosrealGDP,assumingotherexternal
factorsremainunchanged.Therelativelywiderangefortheimpactsreflects
uncertaintyregardinghowtheeconomywouldbeexpectedtorespondtothese
changesinexternalconditions.
TABLE2.3
ImpactsofSustainedChangesinKeyExternalFactors
onOntariosRealGDPGrowth
(PercentagePointChange)
First Year
Second Year
Canadian Dollar Depreciates by

Five Cents US
+0.1 to +0.8
+0.2 to +0.9
Crude Oil Prices Decrease by

$10 US per Barrel
+0.1 to +0.3
+0.1 to +0.3
U.S. Real GDP Growth Increases by

One Percentage Point
+0.3 to +0.7
+0.4 to +0.8
Canadian Interest Rates Increase by

One Percentage Point
0.1 to 0.5
0.2 to 0.6
90
Outlook for Ontario Economic Growth

TheMinistryofFinanceisforecastingcontinuedgrowthinOntarioseconomy,
withrealGDPprojectedtoriseby1.9percentin2014and2.4percentannually
in2015,2016and2017.ThiscomparestoaforecastforrealGDPgrowthatthe
timeofthe2014Budgetof2.1percentin2014,2.5percentinboth2015and
2016,and2.6percentin2017.
Gainsinexportsandbusinessinvestmentwillleadeconomicgrowthover
theforecastperiod.Householdspendingwillalsorisemoderately,inlinewith
gainsinhouseholdincome.
CHART 2.9
Ontarios Growth Outlook Led by Exports and Investment
Real Growth, Average Annual Per Cent Change

6
200007
5
4
3
201417p
4.7
3.6
3.4
2.7
3.7
3.5
3.2
2.9
2.3
2.7
2.4
1.8
1.2
1
0
(0.3)
(1)
GDP
Household Government* Residential

Business
Spending
Investment Investment**
Exports
Imports
p = Ministry of Finance planning projections.

*Government includes current spending and capital investment.
**Business investment includes non-residential structures, machinery and equipment, and intellectual property products.
91
Ontarioemploymentisexpectedtogrowby57,000jobsin2014.Employment
growthisprojectedtopickupin2015alongsideimprovingoutputgrowthand
businessconfidence.Employmentisforecasttoriseby90,000jobsor1.3percent
in2015andthenincreasebyanaverageof103,000jobsor1.4percentperyear
over2016and2017.Ontariosunemploymentrateisexpectedtoaverage
7.3percentin2014andfallsteadilytoanaverageannualrateof6.3percent
in2017.
Employment Expected to Rise over the

Medium Term
CHART 2.10
Employment
(Millions)
7.4
7.2
7.2
7.1
7.0
6.8
6.6
6.7
6.8
6.9
6.9
7.0
6.6
6.5
6.4
6.2
6.0
2009
2010
2011
2012
2013
2014p
2015p
2016p
2017p

Householddisposableincomeisprojectedtogrowby3.6percentin2014,
upfrom2.7percentin2013,andthenincreasebyanaverageof4.8percent
annuallyoverthe2015to2017period.
92
Followingtwoyearsofincreasesbelow2.0percent,theOntarioConsumerPrice
Index(CPI)isexpectedtoincreaseby2.1percentin2014.Sharpincreasesin
worldfoodandenergypricesatthebeginningoftheyear,areflectionofharsh
winterweatherandgeopoliticaltensions,contributedtohigherinflationin2014.
ThelowerCanadiandollaralsocontributedtohigherconsumerpricesby
increasingthepriceofimportedgoods.Consumerpricesareexpectedtoincrease
byanaverageof2.0percenteachyearoverthe2015to2017period.
Housingstartsareexpectedtototal58,000unitsin2014,downslightlyfrom
61,100unitsin2013.Existinghomesalesareexpectedtoincreasemodestlyin
2014,followinga0.5percentincreasein2013.DemandfornewhomesinOntario
willcontinuetobesustainedbygrowthinthepopulation.Housingstartsare
expectedtoaverage65,300unitsperyearbetween2015and2017,largelyinline
withunderlyingdemographicrequirements.
93
TheaverageOntarioresalehomepriceisexpectedtoincreasebynearly
4.0percentin2014.Goingforward,amorebalancedhousingmarketisexpected
tocontributetostableaveragehomeprices.Althoughinterestratesarepredicted
torisegraduallyoverthemediumterm,mortgagecarryingcostsareexpectedto
remainaffordable.
CHART 2.11
Housing in Ontario to Remain Affordable
Mortgage Carrying Cost as a Share of Disposable Income per Household

(Per Cent)
45
40
35
30
25
20
15

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.
94
Canadashouseholddebttoincomeratiowas163.6percentinthesecond
quarterof2014.Althoughthedebttoincomeratiochangedlittleoverthe
pastfivequarters,thelevelofhouseholddebtinCanadaremainselevated.
Debtservicecostsasapercentofhouseholddisposableincome,ameasureof
theaffordabilityofinterestpayments,declinedfromahighof9.2percentinthe
fourthquarterof2007to7.0percentinthesecondquarterof2014,itslowest
levelonrecordandareflectionoflowinterestrates.
Although Elevated, Canadian Household Debt

Remains Affordable
CHART 2.12
Household Debt as a Per Cent

of Household Disposable
Income
Debt Service Cost as a Per Cent

of Household Disposable
Income
170
9.5
9.0
150
Household Debt
8.5
8.0
130
7.5
110
Debt Service Cost
7.0
6.5
90
2000Q1
6.0
2002Q1
2004Q1
2006Q1
2008Q1
2010Q1
2012Q1
2014Q1
Source: Statistics Canada.
95
BusinessinvestmentisexpectedtobeoneofthedriversofOntarioeconomic
growthovertheforecastperiod.Afterunderperformingoverthepasttwoyears,
privatesectorinvestmentsinmachineryandequipmentareexpectedtoincrease
inthenearterm,supportedbyrisingcorporateprofitsandimprovingdemand
conditions.TheBankofCanadaBusinessOutlookSurvey,publishedinOctober
2014,supportsthisoutlookforrisingbusinessinvestmentoverthenext
12months.
Thenetoperatingsurplusofcorporationsincreased4.4percentinthefirsthalf
of2014comparedtothesameperiodayearearlierandisprojectedtogrowbyan
averageof5.2percentannuallyoverthenextthreeyears.AsashareofOntario
GDP,thenetoperatingsurplusofcorporationsincreasedto11.5percentinthe
secondquarterof2014,itshighestreadinginsevenquarters.
Ontario Business Machinery and Equipment

Investment Expected to Rise in Line with Profits
CHART 2.13
Investments in Machinery and Equipment

($ Billions, 2007)
Net Operating Surplus

($ Billions)
30
120
110
100
90
25
80
70
Investments in Machinery and
Equipment
60
20
50
2009
2010
2011
2012
2013
2014p
2015p
2016p
2017p

96
ThecompositionanddestinationofOntariosexportshaveevolvedanddiversified
overthelastdecade.TheshareofOntariosexportsdestinedfortheUnitedStates
hasdeclinedfrom91.5percentin2003to78.5percentin2013.Overthesame
period,theshareofOntariosexportstotheEuropeanUnionandothercountries
hasmorethandoubled.
TheshiftinOntariostradehasincludedstronggainsinexportstotherestof
Canadaandinexportsofhighvalueaddedservices.From2003to2013,Ontarios
totalexportstootherprovincesincreasedby37percent.Overthesameperiod,
exportsofservicesincreasedbyabout58percent,whileexportsofgoods
declined1.7percent.
AlthoughmarketsforOntarioexportshavebecomemorediversifiedinrecent
years,theUnitedStatesremainsbyfarOntarioslargesttradingpartner.
SolidgrowthintheUnitedStateswillsupportstrongdemandforOntarioexports.
U.S.motorvehiclesalesareexpectedtorise5.8percentin2014and2.4percent
in2015.OtherkeysectorsoftheU.S.economythatareimportantforOntario
exports,includingresidentialconstructionandindustrialproduction,arealso
projectedtoincreasestronglyoverthenextfewyears.
Overall,Ontariostotalexportsinrealtermsareprojectedtoincreaseby
3.6percentin2014andbyanaverageof3.7percentbetween2015and2017.
97
Exports Expected to Increase
CHART 2.14
($ Billions, 2007)
400
381
369
356
350
341
339
323
317
329
313
299
300
274
250
2007
2008
2009
2010
2011
2012
2013
2014p 2015p 2016p 2017p

98
Details of the Ontario Economic Outlook

ThefollowingtableprovidesdetailsoftheMinistryofFinanceseconomicoutlook
for2014to2017.
TABLE2.4
TheOntarioEconomy,2012to2017
(PerCentChange)
Actual
Projection
2012
2013
2014
2015
2016
2017
Household Consumption
1.7
1.5
1.3
2.1
1.9
2.0
2.4
2.2
2.4
2.6
2.4
2.7
Residential Construction
4.7
(2.3)
0.0
1.1
1.6
2.0
Non-residential Construction
7.8
(5.2)
(1.5)
4.8
3.0
3.4
Real Gross Domestic Product
(2.8)
(8.2)
2.0
6.1
5.3
5.1
Exports
Machinery and Equipment
3.3
1.8
3.6
4.4
3.5
3.2
Imports
1.8
0.1
2.5
3.3
2.5
2.6
3.2
2.4
3.5
4.4
4.4
4.4
Nominal Gross Domestic Product

Other Economic Indicators
Retail Sales
1.6
2.3
4.2
4.1
4.3
4.4
Housing Starts (000s)
76.7
61.1
57.9
60.0
67.0
69.0
Home Resales
(1.9)
0.5
1.0
(0.5)
0.5
2.1
Primary Household Income
3.6
2.9
3.7
4.4
4.7
4.6
Compensation of Employees
3.5
2.8
3.4
4.6
4.6
4.6
(0.6)
0.0
4.7
5.2
5.7
4.8
Consumer Price Index
Net Operating Surplus Corporations
1.4
1.0
2.1
2.0
2.0
2.0
Employment
0.8
1.4
0.8
1.3
1.4
1.5
Job Creation (000s)
52
96
57
90
98
107
Unemployment Rate (Per Cent)
7.8
7.5
7.3
7.1
6.6
6.3
U.S. Real Gross Domestic Product
2.3
2.2
2.2
3.1
2.9
2.7
WTI Crude Oil ($ US per Barrel)
94
98
98
93
95
98
100.1
97.1
90.8
89.5
91.0
92.0
3-month Treasury Bill Rate1
0.9
1.0
0.9
1.2
2.0
3.0
1.9
2.3
2.2
2.9
3.5
4.2
Key External Variables
10-year Government Bond

1
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 (October 2014), U.S. Energy Information
Administration and Ontario Ministry of Finance.
99
Private-Sector Forecasts
TheMinistryofFinanceconsultswithprivatesectoreconomistsandtrackstheir
forecaststoinformthegovernmentsplanningassumptions.Additionally,inthe
processofpreparingthe2014OntarioEconomicOutlookandFiscalReview,
theMinisterofFinancemetwithprivatesectoreconomiststodiscusstheirviews
ontheeconomy.Allprivatesectoreconomistsareprojectingcontinuedgrowth
forOntarioovertheforecasthorizon.Onaverage,privatesectoreconomistsare
projectinggrowthof2.0percentin2014and2.5percentannuallyin2015,2016
and2017.Forprudentfiscalplanning,theMinistryofFinancesrealGDPgrowth
projectionsareslightlybelowtheaverageprivatesectorforecast.
TABLE2.5
PrivateSectorForecastsforOntarioRealGDPGrowth
(PerCent)
2014
2015
2016
2017
BMO Capital Markets (October)
2.0
2.4
Central 1 Credit Union (September)
1.7
2.2
2.5
3.3
Centre for Spatial Economics (July)
2.0
2.5
2.5
2.4
CIBC World Markets (September)
2.3
2.8
2.4
Conference Board of Canada (July)
1.5
2.5
2.1
2.2
Desjardins Group (October/June)
2.0
2.4
2.5
2.1
IHS Global Insight (July)
2.0
2.4
2.7
2.4
Laurentian Bank Securities (August)
1.9
2.1
National Bank (September)
2.1
2.4
RBC Financial Group (September)
2.1
2.8
Scotiabank Group (October)
2.0
2.5
2.3
TD Bank Financial Group (October)
2.2
2.7
2.3
University of Toronto (October)
2.0
2.8
2.9
2.8
Private-Sector Survey Average
2.0
2.5
2.5
2.5
Ontarios Planning Assumption
1.9
2.4
2.4
2.4
Sources: Ontario Ministry of Finance Survey of Forecasts (October 2014) and Ontario Ministry of Finance.
100
Change in the Economic Outlook

ThecurrentprivatesectoraverageoutlookforOntariorealGDPgrowth
is2.0percentin2014,downfromthe2.2percentprojectedatthetimeofthe
2014Budget.Thesofteroutlookreflectsweakgrowthinthefirstquarterofthe
yeardueinlargeparttoharshwinterweather.Forecastsfor2015through2017
havealsobeenreviseddownslightlycomparedtoforecastsatthetimeofthe
2014Budget.
Private-Sector Outlook for Growth Down Slightly
CHART 2.15
Projections for Ontario Real GDP Growth

(Per Cent)
3.5
2014 Budget
3.0
2.5
2.0
2.6
2.2
2.5
Current
2.6
2.5
2.7
2.5
2.0
1.5
1.0
0.5
0.0
2014p
2015p
2016p
2017p
p = private-sector survey average projection.

Source: Ontario Ministry of Finance Survey of Forecasts (April and October 2014).
101
Comparison to the 2014 Budget

Comparedtothe2014Budget,keyforecastchangesinclude:
lowerrealGDPgrowthin2014,2015and2016;
strongerCPIinflationin2014and2015;and
sloweremploymentgrowthin2014,2015and2016.
TABLE2.6
ChangesinMinistryofFinanceKeyEconomicForecast
Assumptions:
2014BudgetComparedto2014FallEconomicStatement(FES)
(PerCentChange)
2014p
2015p
2016p
2014
Budget
2014
FES
2014
Budget
2014
FES
2014
Budget
2014
FES
Real Gross Domestic Product

Nominal Gross Domestic Product
2.1
3.5
1.9
3.5
2.5
4.4
2.4
4.4
2.5
4.4
2.4
4.4
Retail Sales
4.1
4.2
4.0
4.1
4.4
4.3
Housing Starts (000s)
58.0
57.9
60.0
60.0
67.0
67.0
3.3
3.7
4.4
4.4
4.7
4.7
Compensation of Employees
3.5
3.4
4.6
4.6
4.6
4.6

Corporations
4.4
4.7
4.2
5.2
5.0
5.7
Employment
1.1
0.8
1.5
1.3
1.6
1.4
Job Creation (000s)
73
57
107
90
110
98
Consumer Price Index
1.5
2.1
1.9
2.0
2.0
2.0
2.7
2.2
3.0
3.1
2.9
2.9
Key External Variables

U.S. Real Gross Domestic Product
WTI Crude Oil ($ US per Barrel)
97
98
96
93
96
95
90.0
90.8
91.0
89.5
92.0
91.0
3-month Treasury Bill Rate1

(Per Cent)
1.0
0.9
1.3
1.2
2.4
2.0
10-year Government Bond Rate1

(Per Cent)
2.8
2.2
3.5
2.9
3.9
3.5

1 Government of Canada interest rates.
Sources: Blue Chip Economic Indicators (March, April and October 2014) and Ontario Ministry of Finance.
102
Chapter
Fiscal Outlook
III
ChapterIII:FiscalOutlook
Section A: Overview
Thegovernmentiscommittedtobalancingthebudgetby201718inafairand
responsibleway.Thisapproachwillhelpprotectthecriticalpublicservicesthat
supportthewellbeingofOntarians,whileimprovingthefiscalsustainabilityof
theprovince.
Forfiveyearsinarow,thegovernmenthasbeatenthedeficittargetsit
establishedafterthe200809globalrecession.InSeptember,thePublicAccounts
ofOntario20132014reportedthatthedeficitfor201314was$10.5billion,
animprovementof$1.3billioncomparedwiththeprojectioninthe2013Budget.
Althoughtheglobaleconomicenvironmentremainschallenging,therearesigns
thatOntarioseconomicexpansionisgainingmomentumin2014,followingweak
growthin2013.
Eventhoughthecurrentrevenueoutlookislowerthanprojectedinthe
2014Budget,thegovernmentiscommittedtoeliminatingthedeficitby201718.
Thegovernmentprojectsdeficitsof$12.5billionin201415,$8.9billionin
201516and$5.3billionin201617,withareturntobalancein201718,
consistentwiththeplanoutlinedinthe2014Budget.
Interestondebtexpenseiscurrentlyforecasttobebelowthe2014Budget
estimate,whichishelpingtomitigatethedeclineintherevenueoutlook.
Projectedprogramexpenseisessentiallyunchangedfromthe2014Budget,
reflectingthegovernmentsongoingcommitmenttomanagespendingand
ensureeverydollarcounts.
105
Thegovernmentiscommittedtoputtingtheprovinceanditspeopleinaposition
tosucceedbyhelpingtospurgrowthandcreatenewjobs.Ithasalsotaken
importantstepstowardsdeliveringonactionstoeliminatethedeficitthatwere
outlinedinthe2014Budget.Together,thesegovernmentprioritiesandprogress
onactionstoeliminatethedeficitwillhelptheProvinceachievethefiscaltargets
itsetoutinthe2014Budget.
ShouldeconomicconditionspersistthatresultintheProvincesrevenueoutlook
fallingfurtherbelowthe2014Budgetprojection,thegovernmentwillconsider
othertools,asnecessary,tobalancethebudgetby201718.Thiswouldbedone
whilecontinuingtomakecriticalinvestmentsintheprogramsandservicesthat
peopledependon,suchashealthandeducation.
106
Section B: 201415FiscalPerformance
Thedeficitfor201415iscurrentlyprojectedtobe$12.5billion,unchangedfrom
the2014Budgetforecast.
TheProvincestotalrevenueprojectionfor201415of$118,362millionis
$509millionlowerthanthe2014Budgetforecast,largelyreflectingalowerthan
projectedleveloftaxrevenuein201314thatcarriesforwardoverthemedium
term,aswellasaonetimedeclineinCorporationsTaxrevenuerelatedto
assessmentsforprioryears.
The201415totalexpenseoutlookis$208millionlowerthantheprojectionin
the2014Budget.Thisisduetolowerthanforecastinterestondebtexpense,
resultingprimarilyfromlowerthanforecastinterestratesandaonetimegain
fromthesaleofassetbackedcommercialpaperthatwaswrittendowninprior
fiscalyears.Projectedprogramexpenseisessentiallyunchangedfromthe
2014Budget,reflectingthegovernmentscommitmenttomanagespending
andensureeverydollarcounts.
The2014Budgetincludeda$1billionreservein201415toprotectagainst
adversechangesintheProvincesrevenueandexpense.Consistentwiththis,
thereserveisbeingreducedby$300milliontomitigatetheremainingimpact
ofthedeclineintherevenueoutlook.Thismaintainsareserveof$700million
in201415.
107
TABLE3.1
201415InYearFiscalPerformance
($Millions)
Budget Plan
Current Outlook
In-Year Change
118,871
118,362
(509)
119,366
119,374
11,010
10,794
(216)
130,376
130,168
(208)
1,000
700
(300)
(12,505)
(12,507)
(1)
Revenue
Expense
Programs
Interest on Debt
Total Expense
Reserve
Surplus/(Deficit)
Note: Numbers may not add due to rounding.
201415 Revenue Changes since the 2014 Budget

The201415revenueprojectionof$118,362millionis$509millionbelowthe
2014Budgetoutlook,largelyreflectingalowerleveloftaxrevenuein201314
aswellasaonetimedeclineinCorporationsTaxrevenuerelatedtoassessments
forprioryears.Theimpactofthelower201314taxrevenuebaseextendsover
themediumterm.TheoutlookforIncomefromGovernmentBusinessEnterprises
andforOtherNonTaxRevenueisunchangedfromthe2014Budgetoutlook.
108
TABLE3.2
SummaryofRevenueChangessincethe2014Budget
($Millions)
201415
Taxation
Corporations Tax
(398)
Personal Income Tax
(87)
Sales Tax
(51)
Ontario Health Premium
20
Total Taxation
(517)
Government of Canada
Total Revenue Changes since the 2014 Budget
8
(509)
Details of 201415 In-Year Revenue Changes

Keychangestorevenueprojectionssincethe2014Budgetincludethefollowing:
CorporationsTaxrevenueisdown$398million,mostlybecausetax
assessmentsfor2012andearlieryearsarelowerthanestimatedatthetime
ofthe2014Budget.Theseprioryearvarianceshaveaonetimeimpact.
PersonalIncomeTaxrevenueisdown$87million,duetolower2013tax
revenueof$227millionbasedontaxreturnsprocessedsincethe
2014Budget,partiallyoffsetbyaonetimeprioryearadjustmentof
$140million.
SalesTaxrevenueis$51millionlower,mostlyduetoalowerestimateof
OntariosHarmonizedSalesTax(HST)entitlementfor2014,providedbythe
federalgovernmentinJune2014.
OntarioHealthPremiumrevenueisprojectedtobeup$20million,asa
resultofaonetimeprioryearadjustmentof$28million,partiallyoffset
bylowertaxrevenueof$8millionbasedontaxreturnsprocessedsincethe
2014Budget.
GovernmentofCanadatransfersare$8.3millionhigher,duetothe
extensionoftheTargetedInitiativeforOlderWorkersprogram,with
acorrespondingincreaseinexpense.
109
201415 Expense Changes since the 2014 Budget

The201415totalexpenseoutlook,at$130,168million,is$208millionlowerthan
theprojectioninthe2014Budget.
TABLE3.3
SummaryofExpenseChangessincethe2014Budget
($Millions)
201415
Program Expense Changes
Emergency Forest Firefighting
15.0
Targeted Initiative for Older Workers
8.3
Funding to Support Ebola Containment
3.0
400th Anniversary of the Francophone Presence in Ontario
1.1
Other Program Expense
(1.1)
Contingency Fund
(18.0)
Total Program Expense Changes
8.3
Interest on Debt
(215.9)
Total Expense Changes since the 2014 Budget
(207.6)
Details of 201415 In-Year Expense Changes

Keychangestoexpenseprojectionssincethe2014Budgetwithoffsetsfromthe
ContingencyFundsinclude:
Anincreaseof$15.0milliontosupportemergencyforestfirefighting
activitiesuntiltheendofthe2014fireseason.
Anincreaseof$3.0milliontohelpfrontlineresponderscontaintheEbola
outbreakinWestAfrica.
Otherkeychangestoexpenseprojectionssincethe2014Budgetinclude:
110
Anincreaseof$1.1milliontosupportculturalcelebrationsmarkingthe
400thanniversaryoftheFrancophonepresenceinOntario,offsetbya
transferfromtheMinistryofFinance.
Anincreaseof$8.3millionfortheTargetedInitiativeforOlderWorkers
program,offsetbyfederalfundingtoextendtheprogram
Interestondebtexpenseis$215.9millionlowerthanforecastinthe
2014Budget.Thisreductionisprimarilytheresultoflowerthanforecast
interestratesandaonetimegainfromthesaleofassetbackedcommercial
paperthatwaswrittendowninpriorfiscalyears.
111
112
Section C: MediumTermFiscalOutlook
Ontarios Recovery Plan
Thegovernmentprojectsdeficitsof$12.5billionin201415,$8.9billion
in201516and$5.3billionin201617,unchangedfromtheforecastoutlined
inthe2014Budget.
Themediumtermrevenueoutlookhasdeclinedsincethe2014Budget,
reflectingalowerforecastfortaxationrevenue.
Totalexpenseisnowprojectedtobelowerthanforecastatthetimeofthe
2014Budget,asaresultoflowerprojectedinterestondebtexpense.
A$1.2billionannualreserveismaintainedineachof201516,201617and
201718toprotectthefiscaloutlookagainstadversechangesintheProvinces
revenueandexpense.
Eveninthefaceofadeclineintherevenueoutlook,thegovernmentiscommitted
tobalancingthebudgetby201718,andwilldosoinawaythatisbothfiscally
responsibleandfair.
TABLE3.4
OntariosRecoveryPlan
($Billions)
Current
Outlook
Revenue
Extended
Outlook
Medium-Term Outlook
201415
201516
201617
201718
118.4
124.2
129.0
134.5
119.4
120.1
120.2
119.4
Expense
Programs
Interest on Debt
Total Expense
Reserve
Surplus/(Deficit)
10.8
11.8
12.9
13.9
130.2
131.9
133.2
133.3
0.7
1.2
1.2
1.2
(12.5)
(8.9)
(5.3)
113
TheProvincewillcontinuetoinvestinpeoplesskillsandtalents;buildmodern
infrastructureandtransportationnetworks;createasupportiveanddynamic
businessclimate;andstrengthenretirementincomesecurityforallOntarians.
Thiswillhelpgrowtheeconomy,protectrevenueandcreatejobs.Inaddition,
theprogramexpenseoutlookoverthemediumtermisessentiallyunchanged
fromthe2014Budget.
Together,thesegovernmentprioritiesandactionstomakeeverydollarcount
willhelpsupporteliminatingthedeficitandimprovethefiscalsustainabilityof
theprovince.
Medium-Term Revenue Outlook

Themediumtermrevenueoutlookreflectscurrentrevenueinformationand
projectionsfortheOntarioeconomyasoutlinedinChapterII:EconomicOutlook,
aswellastheestimatedimpactofgovernmentpolicymeasures.Revenueis
projectedtogrowatanannualaveragerateof4.4percentfrom201415to
201617.
Keyinformationstilltobereceived,overtheremainderofthefiscalyear,
couldhaveasignificantimpactonthemediumtermoutlook.Thisincludes:
Finalresultsfrom2013corporateandpersonalincometaxreturn
processing;
EntitlementestimatesfortheHarmonizedSalesTax(HST),whichwillbe
providedbythefederalgovernmentinDecember2014;
OngoingmonthlyreceiptsforothertaxationrevenuesuchasLandTransfer
TaxandEmployerHealthTax;and
Ontarios201516Equalizationentitlement,whichthefederalgovernment
willprovideinDecember2014.
114
TABLE3.5
SummaryofMediumTermRevenueOutlook
($Billions)
Projected Outlook
Revenue
201415
201516
201617
2014 Budget
118.9
124.5
129.4
2014 Ontario Economic Outlook and Fiscal Review
118.4
124.2
129.0
(0.5)
(0.3)
(0.3)
Change since the 2014 Budget

ThechangeinthemediumtermrevenueoutlookreflectslowerTaxationRevenue
thanprojectedinthe2014Budget.Thedeclineintaxationrevenueislargelydue
totheimpactofalowerlevelofrevenuein201314,reflectingweaker2013
resultsfromprocessingtaxreturnsduring2014.Theimpactofthelower201314
revenuecarriesforwardoverthemediumterm.AdownwardrevisiontoOntarios
estimated2014HSTentitlement,providedbythefederalgovernment,also
contributestotheloweroverallrevenueoutlook.
TheforecastforGovernmentofCanadatransfersisunchangedfromthe2014
Budgetoutlook,exceptforan$8.3millionfederalfundingincreasein201415for
theTargetedInitiativeforOlderWorkersprogram(seeSectionBofthischapter).
Overalltransfersareprojectedtogrowatanaverageannualrateof4.7percent
overthemediumterm.Theincreaseovertheforecastperiodlargelyreflects
projectedincreasesinthemajorGovernmentofCanadatransfers.
TheoutlookforIncomefromGovernmentBusinessEnterprisesisunchanged
fromthe2014Budgetoutlook.Overallrevenuefromgovernmententerprisesis
projectedtoincreaseatanannualaveragerateof4.3percentovertheoutlook.
TheforecastforOtherNonTaxRevenueisunchangedfromthe2014Budget
outlookandisbasedoninformationprovidedbygovernmentministriesand
provincialagencies.OtherNonTaxRevenueisprojectedtodecreasebyan
averageannualrateof4.2percent,largelyreflectinglower,fiscallyneutral
powersupplycontractrecoveries,theremovaloftheDebtRetirementCharge
costfromresidentialuserselectricitybills,andlowermiscellaneousrevenue.
115
Medium-Term Revenue Outlook Has Declined since the

2010 Budget
CHART 3.1
Medium-Term Revenue Outlook Has Declined since

the 2010 Budget
($ Billions)
140
135
130
2010 Budget Revenue Outlook
125
120
115
2014 Ontario Economic Outlook and Fiscal Review
110
(not including 2014 Budget measures)
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.
Sincethe2010Budget,themediumtermoutlookforrevenuehasdeclined,
reflecting,inpart,slowereconomicgrowthinachallengingglobalenvironment.
Beforetheimpactof2014Budgetmeasures,therevenueoutlookinthe
2014OntarioEconomicOutlookandFiscalReviewis$7.8billionbelowthe
2010Budgetprojectionin201415and$9.1billionbelowby201617.
116
Medium-Term Expense Outlook

Totalexpenseisprojectedtogrowto$133.2billionby201617belowthe
forecastincludedinthe2014Budgetduetolowerinterestondebtexpense.
Ontariosmediumtermforecastforinterestondebtexpenseiscurrentlyforecast
tobebelowthe2014Budgetestimate,primarilyasaresultoflowerthanforecast
interestrates.Thesesavingsmitigatetheimpactofthedeclineinthemedium
termoutlookforrevenue.
Theprogramexpenseoutlookoverthemediumtermisessentiallyunchanged
fromthe2014Budget.
Thegovernmentiscommittedtotransformingandmodernizingpublicservices
toimproveoutcomesforOntariansandmeettheProvincesfiscalcommitments.
ThroughProgramReview,RenewalandTransformation,afundamentallynew
approachtomultiyearplanningandbudgeting,programswillbereviewed
throughthelensesofrelevance,effectiveness,efficiencyandsustainability.
Programrenewalandtransformationopportunitieswillbeidentifiedtoimprove
servicesandoutcomesbasedonmeasurableresults,toensurethatsustained
fundinggoestoinitiativesthatwork.
Fiscal Prudence
AsrequiredbytheFiscalTransparencyandAccountabilityAct,2004,Ontarios
fiscalplanincorporatesprudenceintheformofareservetoprotectthefiscal
outlookagainstadversechangesintheProvincesrevenueandexpense.
Consistentwithitspurpose,thereserveisbeingreducedby$0.3billionin
201415,to$0.7billion,tohelpmitigatetheimpactofthedeclineinOntarios
revenueoutlook.Thegovernmentismaintainingthe$1.2billionreservethat
wassetoutinthe2014Budgetineachof201516,201617and201718.
Thefiscalplanalsoincludescontingencyfunds(bothoperatingandcapital)tohelp
mitigateexpenserisksparticularlyincaseswherehealthandsafetymaybe
compromisedorservicestothemostvulnerablearejeopardizedthatmay
otherwisenegativelyimpactOntariosfiscalperformance.
117
118
Section D: DetailsofOntariosFinances
Fiscal Tables and Charts
ThissectionprovidesinformationontheProvinceshistoricalfinancial
performance,keyfiscalindicators,anddetailsofOntariosfiscalplanandoutlook.
TABLE3.6
OntariosRecoveryPlan
($Billions)
Current
Outlook
201415
201516
201617
201718
118.4
124.2
129.0
134.5
119.4
120.1
120.2
119.4
10.8
11.8
12.9
13.9
130.2
131.9
133.2
133.3
0.7
1.2
1.2
1.2
Surplus/(Deficit)
(12.5)
(8.9)
(5.3)
Net Debt
287.3
303.3
315.2
322.5
Accumulated Deficit
189.1
198.0
203.3
203.3
Revenue
Medium-Term Outlook
Extended
Outlook
Expense
Programs
Interest on Debt
Total Expense
Reserve
119
TABLE3.7
Revenue
($Millions)
Taxation Revenue
Personal Income Tax
Sales Tax1
Corporations Tax
Education Property Tax2
Employer Health Tax
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
Current
Outlook
201415
201112
201213
Actual
201314
24,548
20,159
9,944
5,765
5,092
2,916
2,380
1,432
1,150
710
561
367
574
75,598
25,574
20,957
12,093
5,511
5,137
3,067
2,390
1,484
1,142
710
560
324
469
79,418
26,929
20,481
11,423
5,457
5,283
3,128
2,363
1,614
1,110
718
557
543
360
79,966
29,085
21,886
9,856
5,661
5,551
3,341
2,395
1,604
1,300
734
572
329
536
82,848
10,705
4,469
2,200
362
904
489
97
2,079
21,305
11,315
4,591
3,261
116
897
483
97
901
21,661
11,940
4,689
3,169
123
909
474
96
877
22,277
12,350
4,841
1,988
296
910
458
1,047
21,890
1,882
1,659
872
4,413
1,816
1,721
932
4,469
2,009
1,723
1,605
5,337
2,053
1,779
1,194
5,026
831
1,075
952
1,372
1,193
776
317
200
1,741
8,457
109,773
932
1,125
939
1,323
1,188
760
263
226
1,065
7,821
113,369
962
1,248
954
1,296
1,160
759
243
242
1,467
8,331
115,911
996
1,442
940
959
2,058
795
217
274
917
8,598
118,362
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 Relatively high Miscellaneous Other Non-Tax revenue in 201112 reflects one-time revenues from Chryslers repayment
of an Ontario loan and higher-than-usual recoveries of prior-year-expenditures. In 201314, it includes the gain on the
sale of the Provinces shares of General Motors Company.
1
120
TABLE3.8
TotalExpense
($Millions)
Ministry Expense
Aboriginal Affairs1
Agriculture and Food / Rural Affairs1
Attorney General
Board of Internal Economy
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 of
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 Debt2
Other Expense1
Program Review Savings Target
Year-End Savings3
Total Expense
201112
201213
Actual
201314
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
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
23,644
312
480
30
889
5
785
48,909
152
303
840
720
719
1,337
7,581
2,823
10,572
6,012
126,364
67
1,038
1,705
271
3,855
130
9,347
2,170
19
973
65
1,016
1,683
197
3,912
130
9,720
2,280
20
963
63
864
1,813
199
3,997
120
10,001
2,346
24
822
Current
Outlook
201415
24,839.9
332.8
490.2
35.8
1,014.3
5.2
1,028.8
50,054.8
279.6
311.2
879.6
713.2
754.3
1,235.7
7,847.1
3,024.9
10,794.1
6,085.2
(250.0)
(1,100.0)
130,168.4
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
Details on other ministry expense can be found in Table 3.9, Details of Other Expense.
Interest on debt is net of interest capitalized during construction of tangible capital assets of $234 million in 201112,
$232 million in 201213, $134 million in 201314 and $336 million in 201415.
3 As in past years, the Year-End Savings provision reflects anticipated underspending that has historically arisen at yearend due to factors such as program efficiencies, and changes in project startups and implementation plans.
Notes: Numbers may not add due to rounding.
The impact of recently announced ministry restructuring will be reflected in future updates.
1
2
121
TABLE3.9
DetailsofOtherExpense
($Millions)
Ministry Expense
Aboriginal Affairs
One-Time Investments 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
Natural Resources
Emergency Forest Firefighting
Tourism, Culture and Sport
Time-Limited Investments Sport Program
One-Time Investments
Time-Limited Investments to Support 2015 Pan/
Parapan American Games
Training, Colleges and Universities
Total Other Expense
Current
Outlook
201415
201112
201213
Actual
201314
28
12
247
19
132
17
47.1
6.5
44.9
50
50.0
523
895
(1,296)
873
507.0
1,033
994
1,006
1,100.0
78
1,440
598
1,375
592
1,323
569
1,296
541.5
397.0
959.1
80.0
1,300
1,519
1,265
1,170.0
241.7
100.0
59
158
155
155.2
42
208
209
180
92
85.1
37
3
59
358
332
600.1
133
7,054
4,863
6,012
6,085.2
Numbers reflect Public Sector Accounting Board pension expense. Ontarios matching contributions to the plan grow
from $1,344 million in 201112 to $1,532 million in 201415.
Notes: Numbers may not add due to rounding.
The impact of recently announced ministry restructuring will be reflected in future updates.
122
TABLE3.10 201415InfrastructureExpenditures
($Millions)
201415 Current Outlook
Total
Infrastructure
Expenditures
201314
Actual
Investment
in Capital
Assets1
Transfers
and Other
Infrastructure
Expenditures2
Total
Infrastructure
Expenditures
Transit
2,489
2,630
519
3,150
Provincial Highways
1,792
2,472
2,472
580
750
95
845
2,903
3,341
287
3,629
Sector
Transportation
Other
Transportation3
Health
Hospitals
Other Health
317
206
203
409
1,735
1,724
58
1,781
Colleges
353
368
368
Universities
155
168
168
Water/Environment
134
57
96
153
Municipal and Local Infrastructure
673
643
651
Justice
302
129
125
254
Other
353
481
132
613
Education
Postsecondary
Subtotal
11,786
12,167
2,326
14,493
Less: Other Partner Funding4
1,827
1,666
1,666
Total Excluding Partner Funding
9,960
10,500
2,326
12,826
319
284
262
546
9,641
10,216
2,064
12,280
Less: Other Capital

Total Provincial
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 $7.9 billion for 201314.
1
123
TABLE3.11 TenYearReviewofSelectedFinancialand
EconomicStatistics1
($Millions)
Revenue
200506
200607
200708
90,738
97,120
104,115
81,421
86,020
94,601
9,019
8,831
8,914
90,440
94,851
103,515
298
2,269
600
298
2,269
600
Expense
Programs
Interest on
Debt3
Total Expense
Surplus/(Deficit) Before Reserve
Reserve
Surplus/(Deficit)
Net
Debt4
152,702
153,742
156,616
Accumulated Deficit
109,155
106,776
105,617
Gross Domestic Product (GDP) at Market Prices
552,769
574,292
597,803
363,479
382,688
401,978
Population July (000s)
12,528
12,662
12,764
Net Debt per Capita (dollars)
12,189
12,142
12,270
Household Income per Capita (dollars)
29,013
30,224
31,493
9.9
9.1
8.6
Interest on Debt as a per cent of Revenue

Net Debt as a per cent of GDP
27.6
26.8
26.2
Accumulated Deficit as a per cent of GDP
19.7
18.6
17.7
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, $134 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.
1
124
Current
Outlook
201415
200809
2009102
201011
201112
201213
Actual
201314
97,532
96,313
107,175
109,773
113,369
115,911
118,362
95,375
106,856
111,706
112,660
112,248
115,792
119,374
8,566
8,719
9,480
10,082
10,341
10,572
10,794
103,941
115,575
121,186
122,742
122,589
126,364
130,168
(6,409)
(19,262)
(14,011)
(12,969)
(9,220)
(10,453)
(11,807)
700
(6,409)
(19,262)
(14,011)
(12,969)
(9,220)
(10,453)
(12,507)
169,585
193,589
214,511
235,582
252,088
267,190
287,288
113,238
130,957
144,573
158,410
167,132
176,634
189,141
604,282
595,433
629,500
658,635
679,616
695,705
720,055
413,032
413,152
425,140
444,343
460,133
473,702
491,229
12,883
12,998
13,135
13,264
13,410
13,551
13,679
13,164
14,894
16,331
17,762
18,798
19,717
21,003
32,061
31,787
32,367
33,501
34,312
34,957
35,912
8.8
9.1
8.8
9.2
9.1
9.1
9.1
28.1
32.5
34.1
35.8
37.1
38.4
39.9
18.7
22.0
23.0
24.1
24.6
25.4
26.3
125
Composition of Revenue, 201415
CHART 3.2
Other Non-Tax Revenue

7.3% $8.6B

2.8% $3.3B
Income from Government

Business Enterprises
4.2% $5.0B
Gasoline and Fuel Taxes

2.6% $3.1B
Other Taxes
3.7% $4.3B
Federal
Transfers
18.5% $21.9B
Employer Health Tax

4.7% $5.6B
Corporations Tax
8.3% $9.9B
Education Property Tax

4.8% $5.7B
Personal
Income Tax
24.6% $29.1B
Sales Tax
18.5% $21.9B
126
Composition of Total Expense, 201415
CHART 3.3
Postsecondary and
Training Sector
6.0% $7.8B
Childrens and Social

Services Sector
Justice Sector
11.5% $15.0B
3.3% $4.3B
Other Programs
13.3% $17.4B
Education Sector1
19.1% $24.8B
Interest on Debt
8.3% $10.8B
Health Sector
38.5% $50.1B
1 Excludes
Teachers Pension Plan. Teachers Pension Plan expense is included in Other Programs.
127
CHART 3.4
Composition of Program Expense,1 201415

Postsecondary and
Training Sector
6.6% $7.8B
Childrens and Social

Services Sector
12.6% $15.0B
Justice Sector
3.6% $4.3B
Education Sector2
20.8% $24.8B
Other Programs
14.5% $17.4B
Health Sector
41.9% $50.1B
Program expense equals total expense minus interest on debt expense.

Excludes Teachers Pension Plan. Teachers Pension Plan expense is included in Other Programs.
1
2
128
Chapter
IV
National Leadership:
Strong Ontario,
Strong Canada
ChapterIV:NationalLeadershipStrongOntario,StrongCanada
Overview: Time for FederalProvincial Partnership

OntarioandtheGovernmentofCanadahavealonghistoryofcreating
constructiveandforwardlookingpartnerships.Fromactingtogethertosupport
theautosectortomodernizingthesalestaxsystemwiththeHarmonizedSales
Tax(HST)andmorerecently,workingtoestablishaCooperativeCapital
MarketsRegulatortogetherwithotherprovincesbothgovernments
understandthatcollaborationcanyieldsignificantbenefitsforOntariansand
allCanadians.
Ontariorepresentsnearly40percentoftheCanadianeconomy,andisaleaderin
manyvitalsectors,frommanufacturingtominingtofinancialservices.Continued
collaborationamongallordersofgovernmentisrequiredtosecurelongterm
productivityandprosperityandbuildastrongOntariowithinastrongCanada.
Ontarioisdoingitspart.TheProvinceisfosteringahealthyeconomybyinvesting
inpeoplesskillsandtalents;buildingmoderninfrastructureandtransportation
networks;creatingasupportiveanddynamicbusinessclimate;andstrengthening
retirementincomesecurityforOntarians.Atthesametime,theProvinceis
committedtobalancingthebudgetby201718inawaythatisbothfiscally
responsibleandfair.SeeChapterI,SectionA:MakingEveryDollarCount.
WhileOntarioisdeliveringonitsplantobalance,itiscriticalthatthefederal
governmentavoidunilateralactionsthathurtOntariansandputtheProvinces
fiscalplanatrisk.Ontario,likeotherprovincesinthefederation,hasresponsibility
forkeypublicservicessuchashealthcareandeducationwhilethefederal
governmentcollectsmostofthetaxrevenue.Thissituation,calledthevertical
fiscalimbalance,leavesOntariosfiscalsustainabilityandthatofother
provincesvulnerabletounilateralfederalactions.
Asthefederalgovernmentisexpectedtobeinapositiontorealizesignificant
andgrowingsurplusesbeginningin201516,itwillhavetheopportunitytoinvest
inpartnershipswiththeProvinceonissuesthatwillsupportjobcreationand
economicgrowthtoimprovethelivesofOntarians.Ontariocallsonthefederal
governmenttojoinwiththeprovincestobuildupthenationaleconomytogether.
131
Need for Responsible Federal Actions

Addressing Fiscal Imbalance in the Federation
ArecentreportbytheConferenceBoardofCanada1concludesthatthefederal
governmentcanrealizesignificantandgrowingsurplusesinthefuture,while
provincesandterritoriesasawholewillfaceincreasingchallengestoachieve
fiscalbalanceatthesametimeasprovidingessentialprogramsandservices
toCanadians.
Fiscal Disparity in the Federation
CHART 4.1
Projected Budget Balances across Orders of Government
Budget Balance
(Per Cent of GDP)
6.0
Federal Government
4.2
Provinces and Territories
4.0
2.0
0.0
(2.0)
(4.0)
(6.0)
(8.0)
200405
(6.6)
200910
201415
201920
202425
202930
203435
Source: Conference Board of Canada, A Difficult Road Ahead: Canadas Economic and Fiscal Prospects, 2014.
ThefederalParliamentaryBudgetOfficer(PBO)recentlyconfirmedthisconclusion
inits2014FiscalSustainabilityReport.Thisreportdemonstratesthatthefederal
governmenthassubstantialroomtoinvestinprogramsoverthelongtermand
stillremainfiscallysustainable,whileotherordersofgovernmentwillcollectively
facelongertermfiscalchallenges.
ConferenceBoardofCanada,ADifficultRoadAhead:CanadasEconomicandFiscal
Prospects,2014.
132
Evenwiththisverticalfiscalimbalance,thePBOreportshowsthatprovincesand
territoriesaredoingtheirpartandreducingthefiscalgapbymanaginggrowthin
programspending,inparticularbycontrollinghealthcarecostsinthefaceof
growingdemographicandotherpressures.Infact,Ontariohastakenactionto
managegrowthinprogramspending,holdingaverageannualgrowthto
1.2percentbetween201011and201314.Thisactionhascontributedto
Ontariooverachievingonitsfiscaltargetsforfiveyearsinarow.
Meanwhile,theunilateralfederaldecisiontolimitincreasesfortheCanadaHealth
Transfertotherateofnominaleconomicgrowthstartingin201718willremove
$21billioninfundingfromCanadianshealthcareand$8billionfromhealth
careinOntarioby202324.
By indexing federal funding for health care at the rate of growth of GDP, the federal
government has mostly insulated itself from the fiscal impact of an ageing
population. But provincial governments, with direct constitutional responsibility for
the delivery of health care, are unable to do so.
Parliamentary Budget Officer, Fiscal Sustainability Report 2014.
UnilateralactionsbythefederalgovernmentputOntariosfiscalplanand
publicservicesatrisk,particularlygiventheverticalfiscalimbalancewithinthe
federation.Thefederalgovernmentmustavoiddecisionsthatnegativelyimpact
OntariansandOntarioseconomicgrowthprospects.
133
Modernizing the Fiscal Arrangements

Currentfederalprovincialfiscalarrangementscontinuetoworkagainst,notfor,
thepeopleofOntario.OntariansaresignificantcontributorstotheCanadian
economy,butasdiscussedinthe2014OntarioBudget,theshortfallbetween
whatthepeopleofOntariopayinfederaltaxesversuswhattheyreceivein
federaltransfersandserviceswasroughly$11billionin200910.Thisrepresents
$850perOntarianor$3,400forafamilyoffour.
CHART 4.2
Ontarios Net Contribution to the Federation in 200910
($ Billions)
100
THE GAP
98
96
97.3
94
$11 BILLION or
1.9 per cent of GDP
92
90
88
86
86.2
84
82
80
Federal Revenue
Collected from Ontarians
Federal Spending in Ontario
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.
Source: Ontario Ministry of Finance calculations based on data from the Mowat Centre.
134
Equalizationisafederalprogramthatprovidesfundingintendedtosupport
reasonablycomparableprovincialservicesacrossthecountry.Eventhis
fundamentalfederalprogramworksagainstOntario.Ofthoseprovincesthat
receiveEqualizationpayments,Ontarioistheonlyonethatisanetcontributor
totheprogram.In201415,Ontarianswillcontributeapproximately$6.5billion
totheEqualizationprogramwhileOntariowillonlyreceiveapproximately
$2.0billioninreturnrepresentinganetcontributionof$4.5billion
thehighestofallprovinces.
CHART 4.3
Net Contribution to Equalization (201415)
($ Billions)
6.0
4.5
4.0
2.7
2.0
2.1
0.5
0.0
0.3
(0.3)
(1.2)
(2.0)
(1.3)
(1.4)
(4.0)
(6.0)
(5.9)
(8.0)
ON
AB
BC
SK
NL
PE
NS
MB
NB
QC
AsthecurrentfiscalarrangementsputOntarioatadisadvantage,thereisa
needforalongertermfocusoncreatingafairandtransparentsystemsupported
byacollaborativefederalprovincialprocess.Thiswillrequireaprincipled
approachtomajortransfers.Specifically,thefederalgovernmentmustavoid
theunilateralimpositionofarbitrarycapsandconstraintsonmajortransfers.
135
Forexample,whenOntariofirstreceivedEqualizationin200910,thefederal
governmentunilaterallytiedtheoverallsizeoftheprogramtothegrowthrateof
nationalnominalgrossdomesticproduct(GDP).Equalizationhasbeenaformula
drivenprogramthataimstoaddressdisparitiesbetweenprovincesabilitytopay
forpublicservices.However,theGDPconstraintmeansthatEqualizationfunding
canonlygrowatasetrate,regardlessofthescaleofthedisparitiesbetween
theprovinces.
Between200910and201415,thecumulativeimpactoftheGDPconstraint
onOntariosEqualizationpaymentsisapproximately$6.7billion.In201415
alone,theGDPconstraintreducedOntariospaymentbynearly$670million
overthreetimesmorethanin201314.
Themajorfocusofthefiscalarrangementshastraditionallybeenonsupporting
thehighqualitysocialservicesdeliveredbyprovincesthatCanadiansacrossthe
nationrelyon.Whilethereiscontinuedneedforthissupport,thefederal
governmentshouldmodernizethefiscalarrangementstosupporteconomic
developmentacrossthecountryaswell.
Ratherthanlimitingtransfersthroughunilateraldecisions,nowisthetimefor
thefederalgovernmenttopartnerwithprovincesandfocusonareasthatwill
buildthefoundationforjobcreationandeconomicgrowth.Ontariocallsonthe
federalgovernmenttopartnerwiththeprovincestobuildupthenational
economytogether.
136
Investing to Improve the Lives of Ontarians

TheProvincehasincreasedinvestmenttosupporteconomicgrowth,creategood,
wellpayingjobs,andimprovethelivesofOntarians.Thefederalgovernmentis
laggingbehind.
Ontariocallsonthefederalgovernmenttoactnow,partnerwiththeProvince
andcommittoinvestmentsthatwillmakeadifferenceinthelivesofOntarians.
Infrastructure Investment
HighqualitypublicinfrastructurewillhelpOntariansspendlesstimeintraffic
andmoretimeathomewiththeirfamilies.Itwillalsogettheeconomymoving
byimprovingaccesstoimportantmarketsandallowinggoodstomovemore
efficiently,andbuildstrongcommunitiesbysupportingcriticalservices.
SeeChapterI,SectionC:BuildingModernInfrastructureandTransportation
Networksformoredetails.
Overthepastyear,PremierKathleenWynnehasshownnationalleadershipby
leadingaworkinggroupofministersfromallprovincesandterritoriesexamining
thecriticalroleinfrastructureplaysintheeconomy.InAugust2014,thePremier
hostedasummitonthefutureofinfrastructureinCanadacalledBuildingCanada
Up,workingwithpartnersfromgovernmentandtheprivateandnonprofit
sectorstodemonstratethebenefitsofpublicinfrastructuretotheeconomy.
Ontariocontinuestoleadonthisissuelocallyaswell.TheProvinceis
investingmorethan$130billioninpublicinfrastructureoverthenext10years.
Thisincludesmakingnearly$29billionindedicatedfundingavailableforpublic
transit,highwaysandotherpriorityareassuchasthegovernmentscommitment
ofupto$1billiontowardsinfrastructuredevelopmentintheRingofFire.
TheProvinceinveststhreetimesasmuchasthefederalgovernmentinpublic
infrastructureinOntario.Despitethisimbalance,thefederalgovernmentreceives
roughlyequalrevenuefromtheeconomicactivityenabledbymodern
infrastructure.Inafairpartnership,thesharesofcostsandbenefitsshould
bealigned.
137
Higherlevelsofinvestmentsbythefederalgovernmentwouldgenerate
considerableeconomicbenefits,aswellasrevenuetobothordersofgovernment.
Ontarioisdoingitspartbyinvestingmorethan$130billionininfrastructureover
10years.Inaddition,giventhefundamentalroleinfrastructureplaysinCanada's
economicgrowth,theProvinceiscallingonthefederalgovernmenttomatch
OntariosinvestmentsintheRingofFireregionandsignificantlyincreaseits
investmentsinpublicinfrastructure.
Ring of Fire
TheprovincesRingofFirearea,locatedabout540kilometresnortheastof
ThunderBay,holdssignificantdepositsofmineralsandhasthepotentialto
drivethecreationofgood,highpayingjobsinnorthernOntario.TheRingofFire
includesthelargestdepositofchromiteeverdiscoveredinNorthAmerica,as
wellasnickelandotherminerals.Chromiteisakeyingredientofstainlesssteel.
OntarioisCanadasleadingjurisdictionfortheexplorationandproductionof
mineralsandamajorplayeraroundtheworld.TheRingofFirehasthepotential
tohaveapositiveeconomicimpactnotonlyonnorthernOntario,butalsoon
Canadaasawhole.
OntarioisplayingaleadershiproleinthedevelopmentoftheRingofFire.
TheProvincehascommittedupto$1billiontodevelopstrategictransportation
infrastructure.Ontarioiscallingonthefederalgovernmenttobeanequalpartner
andmatchtheProvincesinvestmentstobuildtheinfrastructurerequiredforthis
importantprojectinthenorththatwillcreatejobs,provideopportunitiesforFirst
Nationcommunities,andboostthenortherneconomy.Astrongandclearfederal
commitmenttomatchprovincialfundingwouldhelpboostinvestorconfidence
andacceleratedevelopmentintheRingofFire.
Support for the Automotive Sector

OntarioandCanadahavesuccessfullyworkedtogethertomakestrategic
investmentsintheprovincesautosector,resultingineconomicgrowthand
jobsforthousandsofCanadians.Ontariosautomotivesectorhasshown
tremendousresilience,withproduction,shipmentsandexportsontherebound.
Asopportunitiesariseinthefuture,Ontariowilllooktocollaboratewiththe
federalgovernmenttobuildonthissuccessandstrengthenthisvitalpartof
Canadaseconomy.
138
Support for Labour Market Development

TheProvincecontinuestoinvestintheskillsandtalentsofOntarianstohelp
themcompetegloballyandtomeetthedemandsofarapidlyevolvingeconomy.
ThenewCanadaOntarioJobFundAgreementisagoodstepforwardin
supportingskillsandtrainingprogramming,butthefederalgovernmenthasnot
comefarenoughtoaddressthecriticalneedforfunding.Ontarioremains
concernedthatthisgapinfundingwillcreatepressuresandpotentiallydirect
fundingawayfromexistingsuccessfulskillsandtrainingprogramsforthemost
vulnerableunemployedworkers.
Alongsideadequateandreliablefunding,goodlabourmarketinformationiscritical
tohelpingOntariansfindhighquality,wellpayingjobs.Greatercoordination
betweenthefederalgovernmentandtheprovincesandterritoriesisneeded
toensurethatareliableanduptodatelabourmarketsystemisavailable.
Byworkingtogether,thecollectionanduseoflabourmarketinformation
willallowtheProvincetoallocatefundingmosteffectivelyandimprove
decisionmakingforyouth,families,employersandthebroaderpublicsector.
LabourMarketDevelopmentAgreements(LMDAs)supportprovenandeffective
trainingprogramsthathelpCanadiansfindwork,asevidencedinongoingfederal
andprovincialterritorialevaluations.Thefederalgovernmenthasindicatedthat
itwantstorenegotiatetheLMDAs;however,ithasnotprovidedanyevidence
tosupporttheneedtodoso.AnyfuturedecisionsaroundLMDAsmustcontinue
tobecollaborativeandevidencebased.
139
Attracting Skilled Immigrants

Immigrationplaysasignificantroleinsupportingeconomicgrowthandis
centraltobringingmuchneededskillstoOntarioslabourforce.Itisexpected
thatimmigrationwillaccountforalloftheincreaseinOntariosworkingage
populationoverthenext25years,meaningthatimmigrantswillbeoneofthe
mainsourcesoffuturelabourforcegrowthintheprovince.However,recent
federalchangestoimmigrationpolicyhaveresultedinfewerskilledimmigrants
comingtoOntario.
Inthefallof2012,OntariointroduceditsfirstImmigrationStrategytocontinue
attractingthebestandbrightesttotheprovince.Ontariowillreintroducethe
OntarioImmigrationAct,2014,whichifpassed,wouldstrengthentheintegrity
andeffectivenessoftheProvincialNomineeProgram.Itwouldalsoposition
Ontarioasafullpartnerinimmigrationwiththefederalgovernment.
OntariosProvincialNomineeProgramplaysavitalroleinsupportingemployersin
theireffortstoattractandretaintheskilledworkerstheyneedtobecompetitive
intodaysknowledgebasedeconomy.In2014,OntariosProvincialNominee
targetwasincreasedto2,500.Althoughprogresshasbeenmade,itremains
wellbelowthe5,000requestedbytheProvince.TheProvinceurgesthefederal
governmenttosupportastrongandresilientworkforceinOntarioandincrease
theProvincialNomineetarget.
Partnership on Poverty Reduction

OntariosPovertyReductionStrategyarticulatesacomprehensiveapproachto
tacklingpoverty,buttheProvinceneedsthefederalgovernmenttobeapartner
inthisplan.
Thefederalgovernmentisurgedtocomebacktothetableasalongtermhousing
fundingpartnerintheareaofsocialhousing.Federalfundingforexistingsocial
housingunitsinOntariowilldeclinefromalmosthalfabilliondollarsannually
tozeroby2033,jeopardizingthemaintenanceofexistingfacilitiesandputting
morefamiliesatriskofhomelessness.
140
CHART 4.4
($ Millions)
1,000
900
Declining Federal Housing Investment in Ontario
Other Time-Limited Housing Programs (e.g., Investment in Affordable Housing)

Homelessness Partnering Strategy
Social Housing Funding
800
700
600
500
400
300
200
100
0
Sources: FederalOntario Funding Agreements and Federal Public Accounts.
Ontarioalsoencouragesthefederalgovernmenttomakeenhancementstothe
WorkingIncomeTaxBenefit(WITB).IncreasestotheWITBwouldsupportthe
incomesoflowwageworkersandmakeiteasierforfamiliestoparticipatein
employmentandremaininthelabourmarket.
Ensuring Old Age Security

Inits2012budget,thefederalgovernmentannouncedchangestotheOldAge
Security(OAS)benefit,GuaranteedIncomeSupplement(GIS)andAllowances
(ALW).Overthe2023to2029period,thefederalgovernmentplanstoincrease
theminimumagesofeligibilityforOASandGISfrom65to67andforALWfrom
60to62.Thosechangeswillhaveawiderangeofnegativeimpactsonseniorsin
Ontario,particularlyvulnerableseniorswithlowincomes.
AstheProvincewillcovertheincreasedcostsassociatedwiththegreaterdemand
forsocialservicesresultingfromthesechanges,Ontariocallsonthefederal
governmenttofulfilitspromisetofullycompensateprovinces.
141

Aspartofitscommitmenttohavingafairandefficienttaxadministration
system,Ontariocontinuestoworkwiththefederalgovernmenttoensure
everyonepaystheirfairshareoftaxes.
Asithasdoneforanumberofyears,Ontarioisagaincallingonthefederal
governmenttoreleaseitsproposednationalstrategytoaddresstheunderground
economy.Anationalstrategywouldserveasafoundationforsustainedactionand
enableamorecoordinatedapproachwiththeProvincetoaddressbehavioursthat
Ontariansbelieveareunfair,unsafeandunacceptable.
TheProvincewillalsocontinuetoreviewitstaxcollectionarrangementswiththe
federalgovernmentonaregularbasistoensurethatqualityservicesareprovided
toOntariansandthatoptimalrevenuesarerealizedthroughtaxadministration
andcomplianceactivities.
142
Chapter
A Fair and Efficient

Tax System
ChapterV:AFairandEfficientTaxSystem
Income Tax Changes for People

Personal Income Tax Rates
The2014OntarioBudgetannouncedPersonalIncomeTaxchanges,beginningin
2014.Thetaxableincomethresholdforthe13.16percenttaxratewaslowered
from$514,090to$220,000,andanewtaxrateof12.16percentwasintroduced
ontaxableincomebetween$150,000and$220,000.AmendmentstotheTaxation
Act,2007,receivedRoyalAssentonJuly24,2014.Employersandpension
administratorsbeganadjustingwithholdingsinSeptember2014toincorporate
thenewrateandincomethresholds.
Dividend Tax Credits

TheProvinceannouncedmeasuresinthe2013OntarioEconomicOutlookand
FiscalReviewtochangethecalculationoftheOntariosurtaxwithrespectto
dividendtaxcredits,andtosetthedividendtaxcreditratesfornoneligible
dividendsandeligibledividendsat4.5percentand10percent,respectively,
beginningin2014.LegislativeamendmentsreceivedRoyalAssentonJuly24,
2014.ThesechangesensurethatOntariosdividendtaxcreditshavethesame
valueforalltaxpayers,regardlessoftheirincomes.
145
Tax Changes for Business

Review of the Ontario Interactive Digital Media Tax Credit
Theinteractivedigitalmediaindustryplaysanimportantroleinbuildingahighly
skilledworkforceandinnovativebusinessclimateinOntario.Inrecentyears,asa
resultofrapidgrowthintheinteractivedigitalmediasector,taxsupportforthe
sectorthroughtheOntarioInteractiveDigitalMediaTaxCredit(OIDMTC)has
grownatanunsustainablerate.In200304,theOIDMTCprovidedover$1million
insupport,whilein201415claimsareestimatedtobeover$61million,which
representsaverageannualgrowthof42percent.
Asinteractivedigitalmediaproductsbecomeincreasinglymainstream,
thebroadeligibilityoftheOIDMTClimitstheabilityofthecredittotarget
innovativeproducts.
Tobettermeettheneedsofthisgrowingandevolvingindustry,theProvincewill
reviewthescopeandparametersofthiscredit.
Gamingindustryproductsrepresentonetypeofactivitythiscreditisintendedto
support.OntariosgamingindustryisanimportantpartofOntariosinteractive
digitalmediasector,contributing$134millioninannualgrossexpendituresand
employingover1,850Ontarians.1
Ontarios Gaming Industry A Success Story

Ontario is one of the leading centres of independent gaming in the world.
The success of a home-grown company, Capybara Games, highlights the level of
innovation and excellence in Ontarios independent gaming sector. The companys
mega-hit game, Superbrothers: Sword and Sworcery EP, has sold over 1.5 million
copies, picked up critical awards and accolades, was featured on the Time.com Top
10 of Everything list for 2011 and was one of only five landmark video games
selected by Apple to celebrate five years of their App Store. The company continues
to grow, branching out to new mobile platforms and new console games. This growth
creates new demand for highly skilled creative and technical talent and results in
direct economic benefits for Ontario.
EntertainmentSoftwareAssociationofCanada,CanadasVideoGameIndustryin2013,
p.28.
146
ThegovernmentiscontinuingtoreviewallofOntariosbusinesstaxcreditsto
ensurethattheyareeffective,efficientandachievingclearoutcomes.
Tax on Aviation Fuel Relief for Vulnerable Communities

The2014OntarioBudgetannouncedanincreaseinthetaxrateonaviationfuel
byonecentperlitreeachyearforfouryears,beginningin2014.Therevenue
generatedbythischangeissupportingpublictransit,transportationinfrastructure
andotherpriorityprojectsacrosstheprovince.
TheBudgetalsoannouncedthatthegovernmentwouldproviderelieftovulnerable
communities,especiallythoseinremoteandnorthernareas.TheMinistryof
TransportationisworkingwiththeMinistryofFinancetodevelopaprogram.
Specificdetailswillbeprovidedatalaterdate.
Registration Requirements for Certain Road-Building

Machines
The2014OntarioBudgetannouncedthattheProvincewillproposeamendments
totheHighwayTrafficActtomodernize,by2016,thetreatmentofunregistered
roadbuildingmachinesthatusepublicroadsandhighways.Thesevehiclesare
currentlyexemptfromOntariofueltaxandmanyofthesafetyrequirementstied
tovehiclelicensing.
TheMinistryofTransportationisworkingwiththeMinistryofFinancetoreview
theregistrationandlicensingrequirementsofthesevehicles.Inadditionto
expectedbenefitswithrespecttoroadsafety,the2014OntarioBudgetestimated
thatthenewregistrationrequirementsforcertainroadbuildingmachineswould
resultinanannualincreaseinfueltaxrevenueofupto$25millionbeginningin
201617.Therevenuegeneratedbythischangewouldsupportpublictransit,
transportationinfrastructureandotherpriorityareasacrosstheprovince.
147
Small Business Deduction

EffectiveMay1,2014,thesmallbusinessdeduction(SBD)wasphasedoutfor
Canadiancontrolledprivatecorporations(CCPCs)operatinginOntariowithover
$10millionintaxablecapitalemployedinCanada,andeliminatedforCCPCswith
taxablecapitalover$15million.Ontarioisnowinlinewitheveryotherprovince,
andthefederalgovernment,toensurethatonlysmallCCPCsqualifyfortheSBD.
Therevenuegeneratedbythischangeissupportingpublictransit,transportation
infrastructureandotherpriorityprojectsacrosstheprovince.
Other Measures
Enhanced Administration of the Estate Administration Tax
In2011,thegovernmentamendedtheEstateAdministrationTaxAct,1998,to
enhancecompliancebyintegratingtheadministrationofthetaxwiththeaudit
andverificationfunctionsattheMinistryofFinance.Toensuretheeffectiveness
ofthisnewadministration,everyonewhoappliesforacertificateofappointment
ofestatetrusteeafterDecember31,2014,willberequired,nomorethan30days
afterthecertificateisissued,tosubmitanestateinformationreturntothe
MinistryofFinance.Completedreturnswillhavetocontainaninventoryofestate
assets.TheMinistryofFinancewillmakereturnforms,andanaccompanying
guide,availablebeforeJanuary1,2015.
Tax Credit for Farmers Who Donate to Community

Food Programs
Thefinalregulationtocompletetheimplementationofthecommunityfood
programdonationtaxcreditforfarmersbecameeffectiveonSeptember29,2014.
Thecreditwillencouragefarmerstodonateagriculturalproductstocommunity
foodorganizations,includingfoodbanks.Thiswillhelpincreasetheavailabilityof
freshagriculturalproductsforindividualswhorelyontheseorganizationstoget
thefoodtheyneed.
Provincial Land Tax

ThegovernmentismovingaheadwithitscommitmenttoreviewtheProvincial
LandTax(PLT),thepropertytaxappliedintheunincorporatedareasofnorthern
Ontariothatareoutsidemunicipalboundaries.
148
Tosupportthereview,theMinistryofFinanceheld21consultationsessions
acrossnorthernOntariowithrepresentativesoflocalboardsfromunincorporated
areas.APLTworkinggroupofnorthernmunicipalrepresentativeshasalsobeen
establishedtoprovideinput.Consultationswithnorthernstakeholderswill
continue,andtheirconcernswillbeaddressedinafairandbalancedway.
Thegovernmentiscommittedtobringingforwardproposalsthatcanbe
implementedbeginningin2015,basedontheresultsofthereview.Theintentof
theproposalswillbetoincreasefairnessamongnorthernpropertytaxpayersand
ensurethatanychangesareintroducedinamanageableway.
Power Dam Special Payment

The2014OntarioBudgetannouncedaplantophasedownthemunicipalPower
DamSpecialPaymentProgramto$14.3millionby2017,ensuringthatmorethan
75percentofthecurrentfundinglevelismaintained.
TheProvincecommittedtoworkwithmunicipalitiestoexplorewaysto
implementthephasedown,beginningin2015,inamannerthatisfairand
manageable.Tosupporttheseconsultations,aworkinggrouphasbeenformed
witharepresentativegroupofmunicipalities.Theseconsultationswillalsoexplore
theoptionofreintroducingpropertytaxationforpowerdams.
Evaluatingthepropertytaxoptionrequirescarefulconsiderationandcomplex
analysis.Thisworkisalreadyunderway,alongwithplanstoconsultwith
municipalitiesandelectricitysectorrepresentatives.
TheProvincerecognizesthatitmaynotbepossibletocompletethepropertytax
aspectofthisprojectinadvanceofthe2015municipalbudgetyear.Therefore,
theplannedreductiontothePowerDamSpecialPaymentProgramfor2015will
bedeferredwhilethisworkisunderway.
Implementation of the Special Purpose Business Property

Assessment Review Recommendations
TheProvinceisimplementingimprovementstoOntariospropertyassessment
systemrecommendedinthereportontheSpecialPurposeBusinessProperty
AssessmentReview(SPBPAR)intimeforthe2016provincewidereassessmentin
consultationwithtaxpayers,municipalitiesandprofessionalorganizations.
149
AkeySPBPARrecommendationistheimplementationofadvancedisclosure,
whichwillenablebusinesstaxpayersandimpactedmunicipalitiestocontributeto
theassessmentprocessinadvanceofrollreturn.TheMunicipalProperty
AssessmentCorporationwillintroducetheadvancedisclosureprocessforspecial
purposebusinesspropertiesbeginningin2015andhasalreadyinitiated
discussionsontheunderlyingassessmentmethodologies.
Workisalsounderwayacrosstheassessmentsystemonenhancementsrelatedto
accountability,dataintegrityandassessmentappeals,andontheimplementation
ofpropertyspecificassessmentrecommendationsintheSPBPARreport.
150
Chapter
VI
Borrowing and
Debt Management
ChapterVI:BorrowingandDebtManagement
Long-Term Public Borrowing and Green Bonds

Theforecastlongtermpublicborrowingrequirementfor201415remainsat
$35.0billion,asforecastinthe2014Budget.Todatein201415,$24.7billion,
or71percent,ofthisyearslongtermpublicborrowingrequirementhasbeen
completed.ThisfigureincludesOntarioSavingsBondsalesof$553millionand
a$500millionGreenBondissue.
Theweightedaveragetermtomaturityoflongtermprovincialdebtissuedso
farin201415is13.4years,comparedto13.6yearsfor201314and12.4years
for201213.Thetermofdebtmaybeextendedorshorteneddependingon
thefuturedirectionofinterestratesandthetermpreferenceofinvestors.
Inthe2013OntarioEconomicOutlookandFiscalReview,theMinisterofFinance
announcedthatOntariointendedtobethefirstprovinceinCanadatoissue
GreenBonds.
OnOctober2,2014,OntariosuccessfullylaunchedaGreenBondprogram,
withaninauguralglobalCanadiandollarbondof$500million.Therewasstrong
demandforOntariosfirstGreenBondissue,withordersapproaching$2.4billion.
GreeninvestorsinCanadaaswellasintheUnitedStates,EuropeandAsia
participatedinthedeal,bringingnewinternationalbuyerstotheCanadian
dollarmarket.
AsthefirstCanadianprovincetoissueGreenBonds,Ontarioisleadingtheway
toestablishanddevelopaCanadiandollarGreenBondmarketwithinvestor
participationfromaroundtheworld.
GreenBondswillbeanimportanttooltohelpOntariofinancetransitandother
environmentallyfriendlyprojectsacrosstheprovince.TheEglintonCrosstown
LightRailTransit(LRT)wasselectedasthefirstgreenprojecttobefundedthrough
OntariosinauguralGreenBondissue.
153
CHART 6.1
$24.7 Billion Issued
201415 Borrowing
Domestic Floating
Rate Notes
$1.9B
7.8%
Ontario Savings
Bonds
$0.6B
2.2%
U.S. Dollar Global

Bonds
$3.6B
14.4%
European
Medium-Term Note
$2.6B
10.6%
Syndicated Bonds
$15.3B
61.8%
Australian Kangaroo
Bonds
$0.3B
1.2%
Green Bond Issue
$0.5B
2.0%

Source: Ontario Financing Authority.
Ontariohasissued$18.3billioninlongtermdebt,or74percentoftotal
borrowingcompletedthisfiscalyear,inCanadiandollars.TheProvinceexpectsto
endtheyearwithatleast70percentofitsborrowinginCanadiandollars,asset
outinthe2014Budget.Canadiandollarborrowinghasbeencompletedthrough:
syndicatedissues;
floatingratenotes;
OntarioSavingsBonds;and
aGreenBondissue.
About$6.5billion,or26percent,ofborrowinghasbeencompletedinforeign
currencies.TheU.S.dollarmarkethasremainedanimportantsourceoffunding
forOntariothisyear,with$3.3billionissuedinU.S.dollars.Theremainingforeign
currencyborrowingwascompletedineurosandAustraliandollars.Thisisthefirst
timetheProvincehasissuedinthesemarketssince2010and2011,respectively.
154
TABLE6.1
201415BorrowingPlan
($Billions)
Deficit/(Surplus)
Budget
Plan
Current
Outlook
In-Year
Change
12.5
12.5
0.0
Investment in Capital Assets
10.2
10.2
Non-Cash Adjustments
(4.5)
(4.2)
0.3
Loans to Infrastructure Ontario
1.8
1.8
Other Net Loans/Investments
(0.5)
(0.4)
0.0
Debt Maturities
21.7
21.7
0.0
0.3
0.2
(0.1)
41.5
41.8
0.3
Debt Redemptions
Total Funding Requirement
Canada Pension Plan Borrowing
Decrease/(Increase) in Short-Term Borrowing
(2.4)
(2.4)
Increase/(Decrease) in Cash and Cash Equivalents
(1.4)
(1.7)
(0.3)
Preborrowing
(2.6)
(2.6)
Total Long-Term Public Borrowing Requirement
35.0
35.0
(0.0)
Longtermpublicborrowingin201415willremainat$35.0billionasforecastin
the2014Budget.
Theinterestondebt(IOD)expensefor201415isforecastat$10,794million,
$216millionlowerthanforecastinthe2014Budget,primarilyasaresultoflower
thanforecastinterestratesandaonetimegainfromthesaleofassetbacked
commercialpaper(ABCP)thatwaswrittendowninpriorfiscalyears.
Thecreditratingsofdebtissuedinthecapitalmarketsaffectthecostof
borrowing.Thegovernmentwillcontinuetomanageprogramspendinggrowth
responsiblytosupportthereductioninOntariosnetdebttoGDPratiotothe
prerecessionlevelof27percent.ThiswillhelpkeepIODatamanageablelevel
andprotectfuturegenerationsfromrisinginterestcosts,whichcouldotherwise
crowdoutspendingongovernmentpriorities.
155
TABLE6.2
MediumTermBorrowingOutlook
($Billions)
Deficit/(Surplus)
201415
201516
201617
12.5
8.9
5.3
Investment in Capital Assets
10.2
10.3
10.2
Non-Cash Adjustments
(4.2)
(4.9)
(5.1)
Loans to Infrastructure Ontario
1.8
1.4
0.8
Other Net Loans/Investments
(0.4)
1.1
0.2
Debt Maturities
21.7
20.5
21.2
0.2
0.2
0.2
41.8
37.5
32.8
Debt Redemptions
Total Funding Requirement
Canada Pension Plan Borrowing
(0.0)
(0.1)
Decrease/(Increase) in Short-Term Borrowing
(2.4)
Increase/(Decrease) in Cash and Cash Equivalents
(1.7)
Preborrowing
(2.6)
Total Long-Term Public Borrowing
35.0
37.4
32.7
Thetotallongtermpublicborrowingrequirementoverthe201417periodhas
beenreducedby$0.3billioncomparedtothe2014Budget.
156
Debt and Net Debt-to-GDP

Totaldebt,whichrepresentsallborrowingwithoutoffsettingfinancialassets,
isprojectedtobe$310.5billionasatMarch31,2015,comparedto$295.8billion
asatMarch31,2014.
Ontariosnetdebtisthedifferencebetweentotalliabilitiesandtotalfinancial
assets.Itisprojectedtobe$287.3billionasatMarch31,2015,$2.0billionlower
thanforecastinthe2014Budget.Netdebtwas$267.2billionasat
March31,2014.Accumulateddeficitisprojectedtobe$189.1billionasat
March31,2015,comparedto$189.8billionforecastinthe2014Budget.
Theprojecteddifferenceof$98.1billionbetweennetdebtandaccumulated
deficitisduetonetinvestmentsincapitalassets.
TheProvincesnetdebttoGDPratioisexpectedtopeakin201516at
40.4percent,comparedtotheforecastpeakof40.8percentinthe2014Budget,
40.4percentinthe2013Budgetand41.3percentinthe2012Budget.
Net Debt-to-GDP
CHART 6.2
Per Cent
45
40
35
30
26.9
25
20
15
32.3
31.5 30.7
30.4
29.6
29.5
28.5
28.4
32.5
34.1
35.8
37.1
38.4
39.9 40.4 40.2 39.4
28.1
27.1 27.5 26.6 27.6 26.8 26.2
21.2
17.2
13.4
10
5
0
Note: Net Debt has been restated to include Broader Public Sector Net Debt, starting in 200506.
157
Residual Stranded Debt Update

The2014annualfinancialstatementsoftheOntarioElectricityFinancial
Corporation(OEFC)showedrevenueoverexpenseof$1.5billion,reducing
theOEFCsunfundedliability(orstrandeddebtoftheelectricitysector)
from$11.3billionasatMarch31,2013,to$9.8billionasatMarch31,2014.
InaccordancewithOntarioRegulation89/12,theMinisterofFinancehas
determinedtheresidualstrandeddebttobe$2.6billionasatMarch31,2014.
Thisisadecreaseof$1.3billioncomparedtoresidualstrandeddebtof$3.9billion
asatMarch31,2013,andadecreaseof$9.3billionfromanestimatedpeakof
residualstrandeddebtof$11.9billionasatMarch31,2004.
Residual Stranded Debt since April 1, 1999
CHART 6.3
($ Billions)
Initial Stranded Debt
25
OEFC Unfunded Liability*
Residual Stranded Debt
20
15
10
11.9
9.9
7.8
5.9
6.3
7.7
7.5
8.5
7.6
6.7
5.6
5.4
5.8
4.5
3.9
2.6
* 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 Financial Statements from 2000 to 2014. 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, 2014, as determined by the Minister of Finance in accordance with a regulation made under
the Electricity Act, 1998.
TheresidualstrandeddebtdeterminationasatMarch31,2014,isbasedona
strandeddebtamountof$9.8billion,reducedbytheestimatedpresentvalueof
futurededicatedrevenuestoOEFCof$7.2billion.Thisresultsinthecalculated
$2.6billionofresidualstrandeddebtasatMarch31,2014.
158
TheAuditorGeneralauditsOEFCsannualfinancialstatementsandhasprovided
anunqualifiedopinioneveryyearsincetheinitial19992000financialstatements.
AsconfirmedintheAuditorGenerals2011AnnualReport,theDebtRetirement
Charge(DRC)isusedexclusivelybyOEFCtomeetitsmandate,asprovidedfor
undertheElectricityAct,1998,whichincludesservicingandretiringitsdebtand
otherliabilities.
TheAuditorGenerals2012and2013AnnualReportsalsonotedthattheAuditor
waspleasedtoseeanincreasedleveloftransparencywithrespecttopublic
reportingontheresidualstrandeddebt.
TheElectricityAct,1998,allowsfortheDRCtobepaiduntiltheresidual
strandeddebtisretired.Thegovernmentismovingforwardwithremovingthe
DRCcostfromresidentialuserselectricitybillsafterDecember31,2015,once
theOntarioCleanEnergyBenefitends.Thiswillsaveatypicalresidentialratepayer
about$70peryear.TheDRCistoremainonallotherelectricityusersbillsuntil
theresidualstrandeddebtisretireditisestimatedthiswilloccurbytheend
of2018,consistentwiththeestimateinthe2014Budget.
Theestimatedtimingforresidualstrandeddebtretirementissubjectto
uncertaintyinforecastingfutureOEFCresultsanddedicatedrevenuestoOEFC,
whichdependonthefinancialperformanceofOntarioPowerGeneration,
HydroOneandmunicipalelectricityutilities,aswellasotherfactorssuchas
interestratesandelectricityconsumption.
159
Total Debt Composition

Totaldebtiscomposedofbondsissuedinthepubliccapitalmarkets,
nonpublicdebt,treasurybillsandU.S.commercialpaper.
Publicdebt,asatSeptember30,2014,totalled$291.9billion,primarilyconsisting
ofbondsissuedinthedomesticandinternationalpublicmarketsin10currencies.
Ontarioalsohas$12.5billionoutstandinginnonpublicdebtissuedinCanadian
dollars.NonpublicdebtconsistsofdebtinstrumentsissuedmainlytotheCanada
PensionPlanInvestmentBoard.Thisdebtisnotmarketableandcannotbetraded.
Canadiandollarissuanceaccountsfor77percentofOntariostotaldebt
composition.Whileforeigncurrencyissuanceaccountsfor23percent,foreign
exchangeexposurewasonly0.3percentasatSeptember30,2014.
CHART 6.4
Total Debt Composition as at September 30, 2014
$304.4 Billion Outstanding

Domestic Bonds
Syndicated bonds
Medium-term notes
Floating rate notes
Ontario Savings Bonds
Bond auctions
Real return bonds
Non-Public Debt
$12.5B
4%
Domestic Bonds
$206.3B
68%
Treasury Bills
$12.9B
4%
International
Bonds
$64.0B
21%
U.S. Commercial
Paper
$8.7B
3%
International Bonds
Canadian dollars
U.S. dollars
Euros
Japanese yen
New Zealand dollars
Norwegian kroner
Swiss francs
Australian dollars
South African rand
Hong Kong dollars

160
Cost of Debt
Theeffectiveinterestrate(onaweightedaveragebasis)ontotaldebt
was3.9percentasatSeptember30,2014,unchangedfromMarch31,2014.
Effective Interest Rate (Weighted Average)

on Total Debt
CHART 6.5
Per Cent
12
10
8
6
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 3.9
2
0
*As at September 30, 2014.

Sources: Ontario Public Accounts (19912014) and Ontario Financing Authority.
161
Risk Exposure
TheProvincelimitsitselftoamaximumnetinterestrateresettingexposure
of35percentofdebtissuedforProvincialpurposesandamaximumforeign
exchangeexposureoffivepercentofdebtissuedforProvincialpurposes.
AsatSeptember30,2014,thenetinterestrateresettingexposurewas
11.8percentandforeignexchangeexposurewas0.3percent.
Net Interest Rate Resetting and Foreign Exchange Exposure
CHART 6.6
(As a Percentage of Debt Issued for Provincial Purposes)
Net Interest Rate

Resetting Exposure
Foreign Exchange
Exposure
(Per Cent)
(Per Cent)
35
Net Interest Rate Resetting
Foreign Exchange Exposure
30
Exposure (Limit Set at 35 Per Cent)

(Limit Set at 5 Per Cent)
25
3
20
15
11.4
10
8.3
1.0
8.3
1.0
5
0
8.9
0.8
0.4
0.1
March 31, 2010
March 31, 2011
March 31, 2012
11.8
11.0
March 31, 2013
0.3
March 31, 2014 September 30, 2014
Note: Excludes OEFC debt.

162
Chapter
Pre-Budget
Consultations
VII
ChapterVII:PreBudgetConsultations
How to Participate in the 2015 Pre-Budget

Consultations
Lastyear,thegovernmenthaditsmostsuccessfulconsultationstodate,reaching
over300,000Ontarians.
Thisyear,onceagaintheMinisterofFinancewillbehostingprebudget
consultationswithindividualsandorganizationsaspartoftheOntario
governmentsongoingdialoguewiththecitizensofOntario.
Throughtheuseofmoderntechnology,includingvirtualtownhalls,theMinister
ofFinancewillcontinuetoreachabroaderaudienceincommunitiesthroughout
theprovince.
Ontarianscansubmittheirideasonline,orsendaletterorsubmission.
Inparticular,theMinisterofFinancewantstohearOntariansviewsregarding
whatmorethegovernmentcandotocreatejobsandgrowtheeconomy,
whileeliminatingthedeficit.
Belowisinformationonhowyoucanshareyourviewsandideasfortheupcoming
2015Budget.
Online Submissions
Individualscanalsosubmitideasforthe2015Budgetbycompletingaformon
theMinistryofFinancewebsiteatwww.fin.gov.on.ca.ClickonthePreBudget
ConsultationsitemintheOntariosFiscalCyclemenu.
165
Written Submissions
Individualsandorganizationscanmail,emailorfaxsubmissionsdirectlytothe
MinisterofFinance.
Mailing Address
TheHonourableCharlesSousa
MinisterofFinance
c/oBudgetSecretariat
FrostBuildingNorth,3rdFloor
95GrosvenorStreet
Toronto,ONM7A1Z1
Email Address
submissions@ontario.ca
Fax
4163250969
166
ChartDescriptions
Chart Descriptions
Chart 1.1: Ontarios Plan to Eliminate the Deficit Remains on Track
ThischartshowsOntariosplantoeliminatethedeficit,includingaprojected
declineinOntariosdeficitsfrom201415through201718.Thecurrentfiscal
projectionsareadeficitof$12.5billionfor201415,adeficitof$8.9billionfor
201516,adeficitof$5.3billionfor201617andareturntobalancefor201718.
ReturntoChart1.1
Chart 1.2: Ontarios Record against Deficit Targets
ThischartshowsOntariosactualdeficitsversusdeficittargetsfrom200910
through201314.
Inthe2009OntarioEconomicOutlookandFiscalReview,Ontarioprojecteda
$24.7billiondeficitfor200910.Theactualresultfor200910wasadeficitof
$19.3billion.The2010Budgetprojecteddeficitsof$19.7billionfor201011,
$17.3billionfor201112,$15.9billionfor201213and$13.3billionfor201314.
Theactualdeficitsoverthesameperiodare$14.0billionfor201011,
$13.0billionfor201112,$9.2billionfor201213and$10.5billionfor201314.
ReturntoChart1.2
Chart 1.3: An Internationally Competitive CIT Rate
Thisbarchartshowsthatin2014Ontarioscombinedfederalprovincialgeneral
CITrateislowerthantheaverageCITrateofG20andG8membercountries,
27.7and29.9percentrespectively,andwellbelowtheaveragefederalstate
CITrateintheUnitedStates(39.2percent),Michigan(38.9percent)and
NewYork(39.6percent).
ReturntoChart1.3
Chart 2.1: Ontarios Economic Expansion
BarchartshowsthepercentchangeofOntariosrealGDPalongwiththepercent
changeofthemajorcategoriesofspendingthatoccurredfromtherecessionary
lowinthesecondquarterof2009tothelatestquarter,thesecondquarterof
2014.Sincetherecessionarylowinthesecondquarterof2009,realGDPhas
increased11.3percent;householdspendinghasincreased11.1percent;
governmentspending,whichincludesbothinvestmentandcurrentspending,
hasincreased5.6percent;residentialinvestmenthasincreased19.4percent;
businessinvestment,whichincludesnonresidentialinvestment,machinery
andequipmentinvestmentandintellectualpropertyproducts,hasincreased
11.6percent;exportshaveincreased26.0percent;andimportshaveincreased
28.8percent.
ReturntoChart2.1
Chart 2.2: Employment Gains Concentrated in Full-Time, Private-Sector,
Above-Average Wage Jobs
BarchartshowsOntarioemploymentgainssinceJune2009.Totalemployment
increasedby551,000sinceJune2009.Fulltimeemploymentincreasedby
513,000,whileparttimeemploymentincreasedby38,000.Privatesector
employmentincreasedby393,000,whilepublicsectoremploymentincreasedby
103,000andselfemploymentroseby55,000.Employmentinaboveaverage
wageindustriesincreasedby384,000,whileemploymentinbelowaverage
industriesincreasedby168,000.
ReturntoChart2.2
Chart 2.3: Ontario Job Recovery Ahead of U.S. and OECD Average
Linechartcomparesthepercentagechangeinemploymentrelativetoits
prerecessionpeakinOntario,theaverageforthemembercountriesofthe
OrganisationforEconomicCooperationandDevelopment(OECD)andthe
UnitedStatesbetweenthefirstquarterof2008andthethirdquarterof2014.
Asofthethirdquarterof2014,employmentinOntariohasrecoveredtowell
aboveitsprerecessionpeakwhiletheUnitedStatesisjustslightlyaboveits
prerecessionpeak.Asofthesecondquarterof2014,theOECDrecoveryfalls
betweenOntarioandtheUnitedStates.
ReturntoChart2.3
2
ChartDescriptions
Chart 2.4: Global Economic Growth to Improve
BarchartshowsrealGDPgrowthfortheglobaleconomy,advancedeconomies
andemerginganddevelopingeconomiesfrom2011to2015.
RealGDPgrowthfortheglobaleconomywas4.1percentin2011,3.4percent
in2012and3.3percentin2013.AccordingtotheInternationalMonetaryFund
(IMF),growthisprojectedtobe3.3percentin2014and3.8percentin2015.
RealGDPgrowthforadvancedeconomieswas1.7percentin2011,1.2percent
in2012and1.4percentin2013.AccordingtotheIMF,growthisprojectedtobe
1.8percentin2014and2.3percentin2015.
RealGDPgrowthforemerginganddevelopingeconomieswas6.2percent
in2011,5.1percentin2012and4.7percentin2013.AccordingtotheIMF,
growthisprojectedtobe4.4percentin2014and5.0percentin2015.
ReturntoChart2.4
Chart 2.5: Strengthening U.S. Recovery
BarchartshowsU.S.realGDPgrowthfrom2010to2017.U.S.realGDPincreased
2.5percentin2010andgrewby1.6percentin2011,2.3percentin2012and
2.2percentin2013.AccordingtoBlueChipEconomicIndicators,U.S.realGDP
isprojectedtogrowby2.2percentin2014,3.1percentin2015,2.9percent
in2016and2.8percentin2017.
ReturntoChart2.5
Chart 2.6: Oil Prices to Remain High
LinechartshowsthepriceofWestTexasIntermediate(WTI)crudeoilfrom2000
to2017.ThepriceofWTIcrudeoilrosefrom$30USperbarrelin2000to$98US
perbarrelin2013.Oilpricesareexpectedtoaverage$98USperbarrelin2014.
TheOntarioMinistryofFinanceprojectsoilpriceswillfallto$93USperbarrel
in2015andthenincreaseto$95USperbarrelin2016andto$98USperbarrel
in2017.
ReturntoChart2.6
Chart 2.7: Interest Rates to Rise Gradually
Linechartshowingthe10yearGovernmentofCanadabondyieldandthethree
monthGovernmentofCanadaTreasurybillratefrom1990to2017.The10year
GovernmentofCanadabondyieldhasdeclinedfromover10percentin1990toa
lowof1.9percentin2012.Itisexpectedtorisegraduallyfrom2.2percentin
2014to4.2percentin2017.ThethreemonthTreasurybillratehasdeclinedfrom
closeto13percentin1990to0.9percentin2012.Itisprojectedtorisegradually
from0.9percentin2014to3.0percentin2017.
ReturntoChart2.7
Chart 2.8: Canadian Dollar to Remain Below Parity
LinechartshowingtheCanadianexchangeratefrom1990to2017andthelow
andhighprivatesectorprojectionsfor2014to2017.TheCanadiandollarfellfrom
87centsUSin1991toalowof64centsUSin2002.Ittrendedupoverthe2003to
2012periodandwasatparitytotheUSdollarin2012.TheMinistryofFinance
projectstheCanadiandollarwillfallto89.5centsUSin2015andthenincreaseto
92centsUSin2017.Privatesectorprojectionsrangefromahighof98centsUS
toalowof89centsUSin2017.
ReturntoChart2.8
ChartDescriptions
Chart 2.9: Ontarios Growth Outlook Led by Exports and Investment
BarchartshowstheaverageannualrealGDPgrowthoftheOntarioeconomy
alongwiththeaverageannualgrowthofthemajorcategoriesofspendingover
the2000to2007periodandforecastsoverthe2014to2017period.Ontarios
annualrealGDPgrowthaveraged2.7percentforthe2000to2007periodandis
projectedtoaverage2.3percentforthe2014to2017period.Household
spendinggrowthaveraged3.4percentforthe2000to2007periodandis
projectedtoaverage2.4percentforthe2014to2017period.Government
spendinggrowth,whichincludesbothinvestmentandcurrentspending,averaged
3.6percentforthe2000to2007periodandisprojectedtoaverage0.3percent
forthe2014to2017period.Residentialinvestmentgrowthaveraged4.7percent
forthe2000to2007periodandisprojectedtoaverage1.2percentforthe2014
to2017period.Businessinvestmentgrowth,whichincludesnonresidential
investment,machineryandequipmentinvestmentandintellectualproperty
products,averaged2.9percentforthe2000to2007periodandisprojectedto
average3.5percentforthe2014to2017period.Exportgrowthaveraged
1.8percentforthe2000to2007periodandisprojectedtoaverage3.7percent
forthe2014to2017period.Importgrowthaveraged3.2percentforthe2000to
2007periodandisprojectedtoaverage2.7percentforthe2014to2017period.
ReturntoChart2.9
Chart 2.10: Employment Expected to Rise Over the Medium Term
BarchartshowstheannuallevelofOntarioemploymentfrom2009to2017.
Ontarioemploymentrosefrom6.5millionin2009to6.9millionin2013.
TheOntarioMinistryofFinanceprojectsemploymentwillincreasesteadilyto
7.2millionin2017.
ReturntoChart2.10
Chart 2.11: Housing in Ontario to Remain Affordable
Linechartshowsthemortgagecarryingcostasashareofdisposableincome
perhouseholdinOntariofrom1981to2017.Thelineincreasedtoahighofalmost
37percentin1990andthendeclinedtoalowof20percentin1998.Ithassince
trendedhigher,surpassing26percentin2013.TheOntarioMinistryofFinance
projectsthesharetoremaincloseto27percentoverthe2014to2017period.
ReturntoChart2.11
Chart 2.12: Although Elevated, Canadian Household Debt Remains
Affordable
Linechartfromthefirstquarterof2000tothesecondquarterof2014shows
Canadianhouseholddebtasapercentageofhouseholddisposableincomeand
Canadiandebtservicecostsasapercentofhouseholddisposableincome.The
lineforhouseholddebtasapercentofhouseholddisposableincomeincreased
steadilyfrom108.1percentinthefirstquarterof2000toapeakof164.1percent
inthethirdquarterof2013.Ithassinceedgeddownto163.6percentinthe
secondquarterof2014,butremainsatahistoricallyelevatedlevel.Thelinefor
debtservicecostsasapercentofhouseholddisposableincomewasinthehigh
eightpercentrangeoverthe2000tomid2001period,easingtothemidsevento
loweightpercentrangeoverthe200206period.Theratiobegantorise
subsequently,hittingapeakof9.2percentinfourthquarterof2007.Fromthis
peakitdeclinedsteadily,fallingto7.0percentinthesecondquarterof2014,its
lowestlevelonrecord.
ReturntoChart2.12
Chart 2.13: Ontario Business Machinery and Equipment Investment
Expected to Rise in Line with Profits
Twolinechartsshowbusinessmachineryandequipment(M&E)investment
(inreal2007dollars)andnetoperatingsurplus(innominaldollars)from2009
to2017.Investmentsinmachineryandequipmentincreasedfrom$21.8billionin
2009to$24.4billionin2011anddeclinedbackto$21.8billionin2013.The
OntarioMinistryofFinanceprojectsM&Einvestmentstoincreaseto$26.1billion
by2017.
Netoperatingsurplusofcorporationsincreasedfrom$58.4billionin2009to
$84.3billionin2011andwaslittlechangedsincethen,stayingat$83.8billionin
2012and2013.TheOntarioMinistryofFinanceprojectsnetoperatingsurplus
ofcorporationstoincreaseto$102.2billionby2017.
ReturntoChart2.13
ChartDescriptions
Chart 2.14: Exports Expected to Increase
ThebarchartshowstheannuallevelofOntarioexportsin2007dollarsfrom
2007to2017.Exportsfellfrom$339billionin2007toalowof$274billionin
2009.Exportssteadilyincreasedto$329billionin2013.TheOntarioMinistry
ofFinanceprojectsexportswillincreaseto$381billionby2017.
ReturntoChart2.14
Chart 2.15: Private-Sector Outlook for Growth Down Slightly
ThebarchartshowstheaverageprivatesectorprojectionforOntariosrealGDP
growthatthetimeofthe2014Budgetand2014OntarioEconomicOutlookand
FiscalReview(thecurrentview).
TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2014was
2.2percentinthe2014Budgetandis2.0percentcurrently.
TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2015and
2016was2.6percentinthe2014Budgetandis2.5percentcurrently.
TheaverageprivatesectorforecastforOntariorealGDPgrowthfor2017was
2.7percentinthe2014Budgetandis2.5percentcurrently.
ReturntoChart2.15
Chart 3.1: Medium Term Revenue Outlook Has Declined since the
2010 Budget
Thischartisalinegraphcomparingthemediumtermrevenueoutlooksfromthe
2010Budgetandthe2014OntarioEconomicOutlookandFiscalReview.Fora
moremeaningfulcomparison,thelatterexcludestheimpactof2014Budget
revenueinitiatives.
Thelineshowsthattherevenueoutlookhasdeclinedsignificantlysincethe2010
Budget.Beforetheimpactof2014Budgetmeasures,therevenueoutlookinthe
2014OntarioEconomicOutlookandFiscalReviewis$7.8billionbelowthe2010
Budgetprojectionin201415and$9.1billionbelowby201617.
ReturntoChart3.1
Chart 3.2: Composition of Total Revenue, 201415
Thischartshowstheshareoftotalrevenueoutlookin201415anddollar
amountsbymajorrevenuecategory.
ThelargesttaxationrevenuesourceisPersonalIncomeTaxrevenueat$29.1
billion,accountingfor24.6percentoftotalrevenue.ThisisfollowedbySalesTax
at$21.9billion,or18.5percentoftotalrevenue,andCorporationsTaxat
$9.9billion,or8.3percentoftotalrevenue.Totaltaxrevenueaccountsfor
$82.8billion,or70.0percentoftotalrevenue.Theothermajornontaxation
sourcesofrevenueareFederalTransfersof$21.9billion,or18.5percentoftotal
revenue,IncomefromGovernmentBusinessEnterprisesat$5.0billionor
4.2percentoftotalrevenue,andvariousOtherNonTaxRevenuesat$8.6billion
or7.3percentoftotalrevenue.
ReturntoChart3.2
Chart 3.3: Composition of Total Expense, 201415
Thischartshowstheshareoftotalexpenseoutlookin201415anddollar
amountsbysector.
ThelargestexpenseistheHealthSectorat$50.1billion,accountingfor
38.5percentoftotalexpense.Theremainingsectorsoftotalexpenseincludethe
EducationSectorat$24.8billionor19.1percent;thePostsecondaryandTraining
Sectorat$7.8billionor6.0percent;theChildrensandSocialServicesSectorat
$15.0billionor11.5percent;theJusticeSectorat$4.3billionor3.3percent;and
OtherProgramsat$17.4billionor13.3percent.InterestonDebt,includedaspart
ofTotalExpense,is$10.8billionor8.3percent.
NotethattheEducationSectorexcludestheTeachersPensionPlan.Teachers
PensionPlanexpenseisincludedinOtherPrograms.
ReturntoChart3.3
ChartDescriptions
Chart 3.4: Composition of Program Expense, 201415
Thischartshowstheshareofprogramexpenseoutlooksin201415anddollar
amountsbysector.Programexpenseequalstotalexpenseminusinterestondebt
expense.
ThelargestexpenseistheHealthSectorat$50.1billion,accountingfor
41.9percentoftotalprogramexpense.Theremainingsectorsofprogram
expenseincludetheEducationSectorat$24.8billionor20.8percent;the
PostsecondaryandTrainingSectorat$7.8billionor6.6percent;theChildrens
andSocialServicesSectorat$15.0billionor12.6percent;theJusticeSectorat
$4.3billionor3.6percent;andOtherProgramsat$17.4billionor14.5percent.
NotethattheEducationSectorexcludesTeachersPensionPlan.Teachers
PensionPlanexpenseisincludedinOtherPrograms.
ReturntoChart3.4
Chart 4.1: Fiscal Disparity in the Federation: Projected Budget Balances
across Orders of Government
AsapercentageofGDP,theConferenceBoardofCanadaprojectsthatthefederal
governmentwillbeabletoachievegrowingsurplusesoverthelongterm,reaching
4.2percentby203435.Atthesametime,provincesandterritoriesasawhole
willhaveagrowingdeficitinthelongterm,fallingtonegative6.6percentofGDP
by203435.
ReturntoChart4.1
Chart 4.2: Ontarios Net Contribution to the Federation in 200910
In200910(thelatestyearinwhichcomparabledataareavailable),thefederal
governmentwillcollect$97.3billionfrombusinessesandindividualsinOntario.
Inthesameyear,thefederalgovernmentwillspendonly$86.2billioninOntario
intheformofdirectprogramspendingandtransferstogovernmentand
individuals.Thisleavesan$11billiongap,representing1.9percentofGDP,
whichisOntariosnetcontributiontothefederation.
ReturntoChart4.2
Chart 4.3: Net Contribution to Equalization (201415)
Thischartshowsthatin201415,Ontarioisthelargestnetcontributortothe
Equalizationprogram.OntarioisfollowedbyAlberta,BritishColumbia,
Saskatchewan,andNewfoundlandandLabrador.Allotherprovincesreceivemore
inEqualizationpaymentsthantheirtaxpayerscontributethroughfederaltaxes.
ReturntoChart4.3
Chart 4.4: Declining Federal Investment in Housing in Ontario
FederalfundingforexistingsocialandaffordablehousingunitsinOntario,
throughsocialhousingfunding,thehomelessnesspartneringstrategy,and
othertimelimitedhousingprogramswilldeclinefromalmosthalfabilliondollars
annuallytozerodollarsby2033.
ReturntoChart4.4
Chart 6.1: 201415 Borrowing
Todate,theProvinces201415borrowingprogramtotalled$24.7billion,and
consistedof$15.3billionofdomesticsyndicatedbonds,$1.9billionofdomestic
floatingratenotes,$0.6billionofOntarioSavingsBonds,$3.6billionofU.S.dollar
globalbonds,$2.6billionofaEuropeanmediumtermnote,$0.3billionof
AustralianKangarooBondsanda$0.5billionGreenBondissue.
ReturntoChart6.1
Chart 6.2: Net Debt-to-GDP
NetdebttoGDPratioisprojectedtobe39.9percentfor201415.Thenet
debttoGDPisprojectedtopeakat40.4percentin201516.
ReturntoChart6.2
10
ChartDescriptions
Chart 6.3: Residual Stranded Debt since April 1, 1999
AsatMarch31,2014,asdeterminedbytheMinisterofFinance,theresidual
strandeddebtwas$2.6billion,adecreaseof$1.3billioncomparedtoresidual
strandeddebtof$3.9billionasatMarch31,2013.Thisisalsoatotalestimated
decreaseof$9.3billionfromanestimatedpeakofresidualstrandeddebtof
$11.9billionasatMarch31,2004.
ReturntoChart6.3
Chart 6.4: Total Debt Composition as at September 30, 2014
AsatSeptember30,2014,theProvincestotaldebtwas$304.4billion,and
consistedof$206.3billionofdomesticbonds,$12.5billionofnonpublicdebt,
$12.9billionoftreasurybills,$8.7billionofU.S.commercialpaper,and
$64.0billionofinternationalbonds.
ReturntoChart6.4
Chart 6.5: Effective Interest Rate (Weighted Average) on Total Debt
Theeffectiveinterestrate(calculatedasaweightedaverage)ontotaldebt
was3.9percentasatSeptember30,2014.Thiscompareswith3.9percent
in201314and4.1percentin201213.Theeffectiveinterestratehasbeen
steadilydecreasingfrom10.9percentin199091.
ReturntoChart6.5
Chart 6.6: Net Interest Rate Resetting & Foreign Exchange Exposure
(As a Percentage of Debt Issued for Provincial Purposes)
TheProvincesnetinterestrateexposure,calculatedasapercentageofthe
debtissuedforProvincialpurposes,was11.8percentonSeptember30,2014.
Thiscomparesto11.0percentasatMarch31,2014,and8.9percentasat
March31,2013.Theinterestrateexposurelimitissetat35percentand
excludesOEFCdebt.TheProvincesforeignexchangeexposure,calculated
asapercentageofthedebtissuedforProvincialpurposes,was0.3percent
asatSeptember30,2014.Thiscomparesto0.4percentasatMarch31,2014,
and0.8percentasatMarch31,2013.Theforeignexchangeexposurelimit
issetat5percentandalsoexcludesOEFCdebt.
ReturntoChart6.6
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The Honourable C h a r l e s S o u s a

ONTARIO ECONOMIC OUTLOOK

ONTARIO ECONOMIC OUTLOOK

Queens Printer for Ontario, 2014

Chapter I: Building Opportunity, Securing Our Future

Section C: Building Modern Infrastructure and Transportation Networks

Section D: Creating a Supportive and Dynamic Business Climate

Section E: Strengthening Retirement Security

Section F: A Fair Society

Chapter II: Economic Outlook

Chapter III: Fiscal Outlook

Section C: Medium-Term Fiscal Outlook

Section D: Details of Ontarios Finances

Chapter IV: National Leadership Strong Ontario,

Chapter V: A Fair and Efficient Tax System

Chapter VI: Borrowing and Debt Management

Chapter VII: Pre-Budget Consultations

Ontario Economic Outlook.......................................... 77

Outlook for External Factors ....................................... 89

Impacts of Sustained Changes in Key External Factors

The Ontario Economy, 2012 to 2017 ........................... 99

Private-Sector Forecasts for Ontario Real

Changes in Ministry of Finance Key Economic Forecast

201415 In-Year Fiscal Performance ......................... 108

Summary of Revenue Changes

Summary of Expense Changes

Ontarios Recovery Plan ........................................... 113

Summary of Medium-Term Revenue Outlook .............. 115

Ontarios Recovery Plan ........................................... 119

Revenue ............................................................... 120

Total Expense ........................................................ 121

Details of Other Expense ......................................... 122

201415 Infrastructure Expenditures ........................ 123

Ten-Year Review of Selected Financial and

Borrowing and Debt Management

201415 Borrowing Plan .......................................... 155

Medium-Term Borrowing Outlook .............................. 156

Building Opportunity, Securing Our Future

Ontarios Plan to Eliminate the Deficit ........................... 4

Ontarios Record against Deficit Targets ........................ 5

Ontarios Internationally Competitive CIT Rate .............. 42

Ontarios Economic Expansion .................................... 79

Employment Gains Concentrated in Full-Time,

Ontario Job Recovery Ahead of U.S.

Global Economic Growth to Improve............................ 83

Strengthening U.S. Recovery ..................................... 84

Oil Prices to Remain High .......................................... 85

Interest Rates to Rise Gradually ................................. 87

Canadian Dollar to Remain Below Parity ....................... 88

Ontarios Growth Outlook Led by Exports

Employment Expected to Rise

Housing in Ontario to Remain Affordable ...................... 94

Although Elevated, Canadian Household Debt

Ontario Business Machinery and Equipment

Exports Expected to Increase ..................................... 98

Private-Sector Outlook for Growth Down Slightly......... 101

Medium-Term Revenue Outlook Has Declined

Composition of Revenue, 201415 ............................ 126

Composition of Total Expense, 201415 ..................... 127

Composition of Program Expense, 201415 ................ 128

National Leadership Strong Ontario,

Fiscal Disparity in the Federation Projected Budget

Ontarios Net Contribution to the Federation

Net Contribution to Equalization (201415) ................ 135