2018 Ontario Budget
A Plan for Care and Opportunity

The Honourable Charles Sousa, Minister of Finance

Table of Contents

Foreword

Chapter I: A Plan for Care

• Introduction
• Better Health Care for Everyone in Ontario
  • Increasing Funding for Hospitals
  • Young People in Ontario Benefiting from OHIP+
  • Expanding OHIP+ for All Seniors
  • Reducing Prescription Drug and Dental Costs
  • Improving Access to Team-Based Interprofessional Health Care
  • Rowan’s Law: Taking Action on Concussion Prevention and Awareness
• Expanding Access to Mental Health and Addictions Services
  • Increasing Access to Publicly Funded Psychotherapy
  • Expanding Services for Children in their Communities
  • Increasing Access to Mental Health Services for Students
  • Ontario’s Strategy to Combat the Opioid Crisis
  • Expanding Supportive Housing for Mental Health
  • Supporting Priority Populations
  • Increasing Caregiver and Family Supports
• Making Child Care More Accessible and Affordable
  • Free Child Care for Preschool-Aged Children across Ontario
  • Increasing Access to Affordable Child Care
  • Investing in Child Care Infrastructure
  • Providing More Before- and After-School Care Programs
  • Supporting Child Care and Early Years Professionals
• Better Care for Seniors
  • Supporting Seniors in Living Independently
  • Expanding and Improving Home and Community Care for Clients and Caregivers
  • Reducing the Wait Time for Long-Term Care
  • Fairness for All Seniors, Regardless of their Needs
• Removing Barriers and Providing Better Care
  • Investing in Developmental Services
  • Improving Autism Services
  • Improving Support in School for Children with Special Needs
  • Building a Barrier-Free Ontario
• Strengthening Income Security
  • Implementing Income Security Reform
  • Evaluating a Basic Income
  • Improving Food Security
• Investing in Affordable Housing
• Improving the Justice System
  • Continued Transformation of the Criminal Justice System
  • Community Justice Centres
  • Ending Gender-Based Violence

Chapter II: Growing the Economy and Creating Good Jobs

• Introduction
• Introducing a Good Jobs and Growth Plan
  • Building Ontario’s Talent Advantage
• Making Postsecondary Education More Affordable
  • Providing Transparent, Timely and Targeted Financial Assistance to Students
  • Saving Students Money through Open Textbooks
  • Recognizing Indigenous Institutes
• Investing in Postsecondary Education Infrastructure
  • Enhancing the Commitment to Modernize Postsecondary Institutions
• Giving Students a Strong Foundation
  • Preparing for Success in High School
  • Refreshing Curriculum and Assessment to Support Student Achievement
  • Enhancing Education in Career/Life Planning
  • Growing the Specialist High Skills Major Program
  • Enhancing Access and Engagement through Digital Learning
  • Focusing on Well-Being, Equity and New Approaches to Learning
  • Investing in Schools
• Welcoming Immigrants and Attracting International Talent
  • Welcoming Immigrants through the Ontario Immigrant Nominee Program
  • Helping Ontario’s Vulnerable Newcomers Settle and Succeed
• Improving Business Competitiveness
  • Attracting and Retaining Major Investments in Ontario
  • Supporting Innovation, Startups and Scale-Ups
  • Supporting Regional Economic Development
  • Reducing Ontario’s Electricity Costs for Businesses
  • Reducing Red Tape
  • Supporting a Competitive Tax Environment
  • Continuing to Support Small Business
  • Reviewing Government Supports for Beverage Alcohol
• Accelerating and Diversifying Trade in Ontario
  • Standing Up for Ontario’s Business and Workers
  • Promoting Trade and Economic Opportunities with International Partners
• Championing Women’s Economic Empowerment
  • Closing the Gender Wage Gap
  • Increasing the Number of Women on Boards
• Fostering Fair Workplaces
  • Fairness for Workers
• Strengthening and Modernizing Retirement Security
  • Enhancing the Canada Pension Plan
  • Ontario Pension Funding Reforms
  • Protecting Ontario’s Pension Plan Members
  • Laying the Groundwork for Further Reform
  • Broader Public Sector Pension Reform
  • Workplace Safety and Insurance Board (WSIB) Pension Plan
• Delivering Electricity Rate Relief through Ontario’s Fair Hydro Plan
  • Additional Relief for Families through Ontario’s Fair Hydro Plan
• Investing in Ontario’s Low-Carbon Economy
  • Linking to Create the Second Largest Carbon Market in the World
  • Looking Ahead
• Protecting the Environment for Ontario Families
  • Investing in the Great Lakes
  • Sarnia Health Study
  • Protecting Ontario’s Biodiversity
• Building Tomorrow’s Infrastructure Today
  • Trillium Trust
  • Investing in Transit and Transportation Infrastructure
  • Improving Mobility and Connectivity across the Province
  • Green Transportation Infrastructure
  • Other Investments in Transportation Infrastructure
  • Moving Forward on Transportation Plans
  • Supporting Community Benefits
  • Investing in Digital Infrastructure
  • Investing in Cybersecurity
  • Culture and Recreation Infrastructure
• Investing in Ontario’s Communities
  • A Strong Franco-Ontarian Community Means a Strong Ontario
  • Community Hubs
  • A Better Way Forward: Ontario’s Commitment to Fight Systemic Racism
  • Supporting Ontario’s Public Libraries
  • Social Impact Bond Pilot for At-Risk Individuals
• Implementing the Fair Housing Plan
  • Measures in the Fair Housing Plan to Improve Fairness for Renters
• Protecting Consumers and Investors
  • Increasing Rights and Protections when Accessing Credit Reports
  • Championing Financial Empowerment
  • Modernizing the Regulation of Insurance
  • Creating the Financial Services Regulatory Authority of Ontario
  • Establishing the Cooperative Capital Markets Regulatory System
  • Making Auto Insurance More Affordable
  • Regulating Financial Planners
  • Strengthening Protection for Investors in Syndicated Mortgages
  • Modernizing the Legislative Framework for Co-Operative Corporations
  • Updating Capital Markets Law
• Investments in Innovation and Transformative Technologies
  • Bolstering Artificial Intelligence
  • A Made-in-Ontario Data Strategy
  • Competitiveness in FinTech
  • Access to Capital
  • Supporting Regenerative Medicine
  • Supporting Ontario Research
  • Strengthening Intellectual Property in Ontario

Chapter III: Ontario’s Economic and Fiscal Strength

Section A: Economic and Fiscal Overview

• Introduction
• Ontario’s Balanced Budget
• Ontario’s Economic Performance
• Medium-Term Fiscal Plan
• A Responsible Fiscal Recovery Plan
• Making Government Services Work Better for Ontarians
  • Ensuring Responsible Management of Spending
  • Using Innovative Approaches to Modernize Public Services
  • Enhancing Government Efforts to Transform Programs
• Government Transparency and Financial Management
  • Government Transparency
  • Financial Management

Section B: Economic Outlook

• Economic Outlook
• Ontario’s Recent Economic Performance
  • Ontario Creating High-Quality Jobs
• Global Economic Environment
• Outlook for Continued Economic Growth
• Risks to Ontario’s Economic Outlook
• Ontario Economic Outlook Details
• Private-Sector Forecasts
• Comparison to the 2017 Budget

Section C: Fiscal Plan

• Ontario’s Fiscal Plan
• 2017–18 Interim Fiscal Performance
  • In-Year Revenue Performance
  • In-Year Expense Performance
• Medium-Term Fiscal Plan
  • Medium-Term Revenue Outlook
  • Medium-Term Expense Outlook
  • Fiscal Prudence
  • Key Changes since the 2017 Budget
• Details of Ontario’s Finances

Section D: Borrowing and Debt Management

• Introduction
• Long-Term Public Borrowing
• Ensuring Preferred Market Access
• Leading Canadian Dollar Green Bond Market
• Extending Term of Borrowing
• Interest on Debt Savings and Affordability
• Ensuring Adequate Liquidity Levels
• Reducing Net Debt-to-GDP
• Total Debt Composition
• Cost of Debt
• Limiting Risk Exposure
• Using Derivatives to Mitigate Risks
• Reducing Ontario’s Electricity Sector Stranded Debt
• Consolidated Financial Tables

Chapter IV: Fairness and Opportunity through Partnerships

Section A: Working with Indigenous Partners

• Introduction
• Working in Partnership to Support Indigenous Children and Youth
  • Indigenous Youth and Community Wellness Secretariat: Delivering Community- and Youth-Driven Solutions
  • Improving Access to Culturally Relevant Child Care
• Enhancing Indigenous Health Care
• Urban Indigenous Action Plan
• Providing Additional Assistance to Individuals and First Nations Impacted by Mercury Contamination
  • Remediation of Mercury Contamination
  • Indexing Mercury Disability Payments
• Partnering with Indigenous Communities on Infrastructure
  • Indigenous Supportive Housing Program
  • Connecting Northern Remote Communities to the Transmission Grid
• Partnering with Indigenous Communities to Invest in Economic Development
• Settling Indigenous Land Claims
• Revenue-Sharing Agreements with First Nation Communities
  • Natural Resource Revenue Sharing
  • Community-Based Regulation of Tobacco and Revenue Sharing
• Modernizing the Ontario Gas Card Program

Section B: Working with Federal, Provincial, Territorial and Municipal Partners

• Federal–Provincial Collaboration
  • Ontario: A Forward-Looking Leader and Collaborative Partner
  • Strengthening Health Care
  • Forming a National Pharmacare Plan
  • Implementing Legalization of Cannabis
  • Investing in Infrastructure
  • Clean Water and Wastewater Fund
  • Providing Access to Affordable Housing
  • Improving Labour Market Transfers
  • Enhancing the Working Income Tax Benefit
  • Tackling Climate Change
• Working in Partnership with Municipalities

Chapter V: Taxation

Section A: Tax Measures

• Introduction
• Improving Fairness and Transparency of Ontario’s Personal Income Tax
  • Proposed PIT Changes
• Improving Economic Competitiveness
  • The Ontario Research and Development Tax Credit
  • The Ontario Innovation Tax Credit
  • The Commercialization of Intellectual Property
• Targeting the Employer Health Tax Exemption to Small Employers
• Paralleling Federal Measures
  • Income Sprinkling
  • The Small Business Limit
  • Closing Tax Loopholes
• Measures Related to Cannabis
  • Ontario Portion of the Federal Excise Duty
  • First Nations HST Point-of-Sale Rebate
• Easing Land Transfer Tax Reporting Requirements for Certain Dispositions
• Other Measures
  • Ontario Interactive Digital Media Tax Credit
• Summary of Measures

Section B: Property Tax

• Modernizing Railway Right-of-Way Property Taxation
• Non-Profit Child Care Services in Schools
• Assisting Toronto in Supporting Cultural Spaces
• Victoria University
• Airports
• Creating Consistency in Business Vacancy Rebate and Reduction Programs
• Ongoing Integrity of Education Property Tax Revenue
• Supporting Fair and Accurate Property Assessments

Section C: Revenue Integrity

• Combatting the Underground Economy
  • Addressing Electronic Sales Suppression
  • Addressing Unregulated Tobacco
• Supporting Smoke-Free Ontario
  • Increasing Tobacco Taxes

Section D: Amendments

• Technical Amendments
• Other Legislative Initiatives

List of Tables

Chapter I: A Plan for Care

• Table 1.1 Major Hospital Projects
• Table 1.2 New Long-Term Care Beds

Chapter II: Growing the Economy and Creating Good Jobs

• Table 2.1 Recent Strategic Investments through the Jobs and Prosperity Fund
• Table 2.2 Recent Regional Development Investments
• Table 2.3 Carbon Pricing Scenarios — Impacts by 2020
• Table 2.4 Examples of Greater Toronto and Hamilton Area (GTHA) Rapid Transit Projects
• Table 2.5 Examples of Highway Projects Planned and Underway

Chapter III: Ontario’s Economic and Fiscal Strength

• Table 3.1 Ontario’s Fiscal Recovery Plan
• Table 3.2 Ontario Economic Outlook
• Table 3.3 Outlook for External Factors
• Table 3.4 Impacts of Sustained Changes in Key External Factors on Ontario’s Real GDP Growth
• Table 3.5 The Ontario Economy, 2016–21
• Table 3.6 Private-Sector Forecasts for Ontario Real GDP Growth
• Table 3.7 Changes in Ministry of Finance Key Economic Forecast Assumptions: 2017 Budget Compared with 2018 Budget
• Table 3.8 Ontario’s Medium-Term Fiscal Plan
• Table 3.9 2017–18 In-Year Fiscal Performance
• Table 3.10 Summary of Revenue Changes since the 2017 Budget
• Table 3.11 Summary of Expense Changes since the 2017 Budget
• Table 3.12 Summary of Medium-Term Revenue Outlook
• Table 3.13 Personal Income Tax Revenue Outlook
• Table 3.14 Sales Tax Revenue Outlook
• Table 3.15 Corporations Tax Revenue Outlook
• Table 3.16 Selected Economic and Revenue Risks and Sensitivities
• Table 3.17 Summary of Medium-Term Expense Outlook
• Table 3.18 Selected Expense Sensitivities
• Table 3.19 Average Annual Negotiated Wage Increase in Ontario
• Table 3.20 Change in Medium-Term Fiscal Plan since the 2017 Budget
• Table 3.21 Summary of Medium-Term Revenue Changes since the 2017 Budget
• Table 3.22 Summary of Medium-Term Cannabis-Related Revenue
• Table 3.23 Summary of Investments
• Table 3.24 Revenue
• Table 3.25 Total Expense
• Table 3.26 2018–19 Infrastructure Expenditures
• Table 3.27 Ten-Year Review of Selected Financial and Economic Statistics
• Table 3.28 Summary of Borrowing Program and Medium-Term Outlook
• Table 3.29 Consolidated Derivative Portfolio Notional Value
• Table 3.30 Net Debt and Accumulated Deficit
• Table 3.31 Medium-Term Outlook: Net Debt and Accumulated Deficit

Chapter V: Taxation

• Table 5.1 Current and Proposed 2018 Ontario PIT Rates and Brackets
• Table 5.2 Example Showing Impact of Proposed Changes, 2018
• Table 5.3 Tax Relief from the Basic Personal Amount, 2018
• Table 5.4 Tax Relief from a $2,000 Charitable Donation, 2018
• Table 5.5 Tax Measures
• Table 5.6 Proposed Measures to Modernize Railway Right-of-Way Taxation

List of Charts

Chapter I: A Plan for Care

• Chart 1.1 Caring for the People of Ontario
• Chart 1.2 Examples of Hospital Construction and Renewals in 2018–19
• Chart 1.3 Reducing Costs with Full-Day Kindergarten
• Chart 1.4 Community Justice Centres
• Chart 1.5 It’s Never Okay

Chapter II: Growing the Economy and Creating Good Jobs

• Chart 2.1 The Good Jobs and Growth Plan
• Chart 2.2 Impact of OSAP Transformation on Access for Underrepresented Groups, 2016–17 to 2017–18
• Chart 2.3 Examples of School Projects Recently Approved
• Chart 2.4 Bridge Training Projects: Changing the System
• Chart 2.5 A Renewed Jobs and Prosperity Fund
• Chart 2.6 Reducing Electricity Costs for Businesses
• Chart 2.7 Select Recent Premier International Trade Missions
• Chart 2.8 Residential Electricity Bills — Selected Jurisdictions in Canada and the United States
• Chart 2.9 Planned Use of Carbon Allowance Proceeds
• Chart 2.10 Significant Infrastructure Investments
• Chart 2.11 Ontario’s FinTech Competitiveness

Chapter III: Ontario’s Economic and Fiscal Strength

• Chart 3.1 Ontario’s Balanced Budget
• Chart 3.2 Ratio of Program Expense to GDP, 2007–08 to 2017–18
• Chart 3.3 Comparison of Program Spending Per Capita across Provinces, 2017–18
• Chart 3.4 Slower Ontario Real GDP Growth Expected due to Global Factors
• Chart 3.5 Ontario’s Fiscal Recovery Plan
• Chart 3.6 Ontario’s Economic Growth has Outpaced G7
• Chart 3.7 Quality Job Gains and Unemployment Rate Decline
• Chart 3.8 Ontario Economic Growth Expected to Shift
• Chart 3.9 Over One Million Jobs Created By 2021
• Chart 3.10 The Evolution of the Greater Toronto Area (GTA) Resale Market
• Chart 3.11 Composition of Revenue, 2018–19
• Chart 3.12 Composition of Total Expense, 2018–19
• Chart 3.13 A Further Breakdown of Sector Expenses
• Chart 3.14 Further Breakdown of 2017–18 Interim Expense Outlook
• Chart 3.15 Composition of Borrowing, 2017–18
• Chart 3.16 Canadian Dollar and Foreign Currency Borrowing
• Chart 3.17 Ontario’s Green Bond Issues
• Chart 3.18 Weighted-Average Term of Borrowing in Years
• Chart 3.19 Interest on Debt: Budget Forecast versus Actual
• Chart 3.20 Interest on Debt-to-Revenue Ratio
• Chart 3.21 Average Unrestricted Liquid Reserve Levels
• Chart 3.22 Net Debt-to-GDP and Accumulated Deficit-to-GDP
• Chart 3.23 Total Debt Composition as of March 31, 2018
• Chart 3.24 Effective Interest Rate (Weighted Average) on Total Debt
• Chart 3.25 Net Interest Rate Resetting and Foreign Exchange Exposure

Chapter IV: Fairness and Opportunity through Partnerships

• Chart 4.1 Diverging Fiscal Sustainability between the Federal Government and Subnational Governments
• Chart 4.2 Net Contribution to the Equalization Program, 2018–19