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- Balancing the Budget in a Responsible Manner
- Tackling the Debt Burden
- New Legislation to Strengthen Fiscal Accountability and Reporting
- Debt Burden Reduction Strategy
- A Plan to Improve Outcomes and Manage Government Spending Responsibly
- Driving Public Sector Leadership Performance
- Progress on the Line-by-Line Review
- A Balanced, Sustainable and Reasonable Approach to Managing Compensation
- Additional Review and Accountability of Government Spending
- Calling for a Review of Federal Transfers
Restoring trust, transparency and accountability is foundational to this government’s plans to build a fiscally sustainable government and protect critical public services.
The government inherited a challenging fiscal situation from the previous government. For most of the past 15 years, unsustainable levels of spending have resulted in structural deficits and an unprecedented increase in public debt.
In the 2018 Ontario Economic Outlook and Fiscal Review (2018 Fall Economic Statement), the government presented a new approach to public finances which serves three important objectives: restore fiscal balance, reduce the debt burden and strengthen accountability and transparency. The government is committed to working towards these objectives and restoring fiscal sustainability to the Province’s finances.
The government is delivering on its commitment to rebuild confidence in Ontario’s finances by putting Ontario on a path to balancing the budget in a responsible and pragmatic manner. The 2019 Ontario Budget presents a plan to return to balance by 2023–24, as well as a plan to tackle the debt burden inherited from the previous government through a debt burden reduction strategy. Restoring balance and reducing the debt burden will improve Ontario’s fiscal health and help ensure Ontario’s hospitals, schools and other key public services have the sustainable funding they need for generations to come.
An important component of the government’s commitment to restoring trust, transparency and accountability is modernizing the rules that govern fiscal planning by introducing the Fiscal Sustainability, Transparency and Accountability Act, 2019 (FSTAA). The proposed FSTAA puts sustainability at the centre of Ontario’s fiscal planning; it enhances transparency and public reporting; and includes provisions that bolster oversight and true compliance and enforcement measures for elected officials who fail to live up to the transparency people rightly expect.
The government is committed to the ongoing review and scrutiny of all programs and services to ensure public spending is delivering value for the people of Ontario. Based on the recommendations in EY Canada’s line-by-line review, the government engaged in a multi-year planning process which has found efficiencies that are projected to generate savings and cost avoidance of about eight cents for every dollar spent, on average, over the path to balance while protecting what matters most and ensuring that there are no front-line staff impacts.
By generating these savings and ensuring value for money, the government is able to provide a projected $26 billion in much-needed relief to Ontario individuals, families and businesses over six years while eliminating the deficit inherited from the previous government.
To improve accountability and transparency, the government took action by launching an Audit and Accountability Committee to ensure value for every taxpayer dollar spent, and is acting on each of the recommendations of the Independent Financial Commission of Inquiry.
The government is also standing up for Ontario taxpayers and advancing their priorities with the federal government.
With the 2019 Budget, Ontario’s Government for the People is taking decisive action to restore the public’s confidence in Ontario’s finances and outline its vision for the province going forward.
Balancing the Budget in a Responsible Manner
The government is fulfilling its promise to balance the budget in a reasonable and responsible timeframe. The plan to balance is supported by long-term decisions that reinvent the way the government delivers programs and services, and focuses resources on people’s priorities.
Balancing the budget is not an end in itself; instead, it is both a fiscal and moral imperative that is in the public interest.
Of the current net debt, $183 billion has been accumulated since the beginning of 2008–09, which has affected the Province’s ability to balance the books. Every dollar that goes to servicing the debt is a dollar that could go to hiring another nurse, fixing another school or providing additional relief to lower- and middle-income families. In addition, a balanced budget will improve business confidence in Ontario as a destination for investment, which will create jobs and further economic growth. Balancing the budget will not only reduce the Province’s vulnerability to economic shocks, such as downturns in the economy due to external factors, but it will also reduce the accumulation of debt because the government will no longer need to borrow to pay for its ongoing operating costs.
Tackling the Debt Burden
When debt is used to make long-term investments, such as taking out a mortgage to purchase a home, it can have a beneficial long-term impact. However, when debt is used to finance month-to-month expenses, it has a corrosive impact on overall financial health. Just as families cannot live indefinitely off a credit card, governments cannot live indefinitely off new debt. Unfortunately, previous governments chose to ignore these economic realities for too long. When debt spirals out of control, interest charges risk becoming unsustainable, the government’s ability to respond to economic downturns becomes more limited, Ontario’s credit rating is affected and future generations are put at risk. These are the problems that Ontario risks if action is not taken now.
Ontario’s Government for the People will not sit idly by and let past problems fester. It is taking responsibility for fixing previous financial mismanagement and is moving forward with a plan to tackle the debt burden.
The Debt Burden in Numbers
Over the last decade alone, Ontario’s net debt has more than doubled — growing from $160 billion heading into the last major recession to more than one-third of a trillion dollars. With net debt projected to be $343 billion in 2018–19, Ontario continues to have the highest subnational debt of any jurisdiction in the world.
Taking Action to Restore Ontario’s Advantage
From a net debt-to-GDP perspective, Ontario does not fare well when compared to other jurisdictions. Ontario’s net debt-to-GDP ratio was 29.3 per cent in 2000–01, well below that of Quebec, which stood at 38.3 per cent. While both Ontario and Quebec were hit hard by the last major recession and increased debt to accommodate stimulus spending, Quebec outlined a plan to return to fiscal health that it is delivering on, while the previous Ontario government continued with unsustainable levels of spending and relied on non-recurring revenues to make progress. The end result is that Ontario’s and Quebec’s net debt-to-GDP ratios have converged, with Quebec’s projected to have fallen below Ontario’s in 2018–19. This makes it clear how important it is to have a reasonable and responsible plan to balance the budget that is supported by smart long-term decisions.
The Province’s net debt per capita has increased from $13,163 per person, or $52,652 per family of four at the beginning of the 2008–09 global economic downturn, to a projected $23,979 per person, or $95,916 per family of four in 2018–19. Compared with the other provinces, Ontario had the second highest net debt per capita in Canada, after only Newfoundland and Labrador.
How Public Debt Impacts the Everyday Lives of Families
Just as people pay interest on their credit card debt and mortgages, the government pays interest on the public debt. The government is forecast to spend $13.3 billion on interest to service its debt in 2019–20. This is the Province’s fourth largest line item after health care, education and social services – it is larger than the annual budget of most Provincial ministries, including what the Province spends on colleges, universities and student aid combined. Furthermore, interest to service the debt in 2019–20 is more than the projected deficit of $10.3 billion. This means that were it not for interest on debt costs, the Province’s budget would be balanced. In fact, almost nine cents of every dollar the Province brings in goes towards interest costs. This is spending that cannot be used to give money back to people or to invest in priorities that people value, such as health care and education.
High interest payments also make Ontario vulnerable to economic shocks, and a rising debt burden has the potential to hamper investments in the province as well as economic growth. Indeed, Ontario’s net debt position has factored into the six times that the Province has been downgraded by credit rating agencies over the past 10 years.
A Moral, Fiscal and Economic Imperative to Take Action
The government has a moral, fiscal and economic imperative to address the pressing debt situation and restore accountability and trust in Ontario’s finances.
With these actions, the government commits to lowering Ontario’s net debt to less than the 40.8 per cent of GDP that it inherited from the previous government by the 2022–23 fiscal year. This will help ensure that future generations are not left to deal with the burden of past financial mismanagement.
New Legislation to Strengthen Fiscal Accountability and Reporting
A key part of restoring the public’s confidence in Ontario’s finances is ensuring that there is a robust legislative framework in place to guide the Province’s fiscal and budgetary planning and reporting, to put the public first and hold the government accountable.
To that end, and in response to the recommendation of the Independent Financial Commission of Inquiry (Commission), the government undertook a review of the Fiscal Transparency and Accountability Act, 2004 (FTAA) to improve the law’s effectiveness in guiding the government’s fiscal planning and reporting.
“To be effective, fiscal rules should have three main properties – simplicity, flexibility, and enforceability. These three properties are very difficult to achieve simultaneously and past reforms have struggled to find the right balance.”
International Monetary Fund, 20181
The government has completed its review of the FTAA. To restore accountability, transparency and trust in Ontario’s finances, the government is proposing to replace the Act with a new, modernized legislative framework that would be called the Fiscal Sustainability, Transparency and Accountability Act, 2019 (FSTAA). This represents the first comprehensive change to Ontario’s fiscal planning legislation in 15 years. The proposed FSTAA would feature critical improvements that would help restore sustainability and trust in the Province’s finances.
Putting Sustainability at the Centre of Ontario’s Fiscal Policy
“Current fiscal policy in Ontario is not sustainable over the long term.”
Parliamentary Budget Officer’s
Fiscal Sustainability Report, 20172
When the Fiscal Transparency and Accountability Act was first introduced in 2004, Ontario’s net debt stood at $143 billion, and the net debt-to-GDP ratio was 26.8 per cent. Unfortunately, in the years that followed the introduction of the Act, the previous government chose to repeatedly deviate from the Act’s principles governing fiscal policy, which ultimately led to 10 straight years of deficits and more than a doubling of the Province’s net debt. The result of this approach is apparent in the findings of the Independent Financial Commission of Inquiry (Commission), which found that the Province’s net debt-to-GDP had grown to 40.8 per cent3. The government has an obligation to address the Province’s debt burden for future generations and for the long-term health of Ontario’s finances. Two key elements of the proposed Act are focused on enhancing fiscal sustainability and reducing the debt burden and would require the government to:
- Develop a debt burden reduction strategy, including a requirement for the Minister of Finance to set out in the annual Budget the government’s net debt-to-GDP objectives and plans for reducing the debt burden, in addition to a report on progress in each subsequent Budget. Ontario’s first ever debt burden reduction strategy can be found later in this section; and
- Apply a sustainability lens when developing Ontario’s fiscal policy by considering the fiscal position of the Province, including the debt burden, over the long term.
Enhancing Transparency and Public Reporting
The proposed Act represents a commitment from the government to be open and transparent about the state of Ontario’s finances. Under the previous government, all four of the Province’s long-term reports were released past the legislative deadline and eight of the last 14 Third Quarter Finances were either not released by the deadline or not released at all. As recommended by the Commission, the government must place transparency for the taxpayer as the top priority in the preparation of financial reports.
To provide more certainty to the public and stakeholders around the timing of release of key financial reports, the proposed FSTAA would require the government to:
- Release a budget by March 31 — prior to the start of a new fiscal year, except for years in which a general election takes place to allow a new government additional time to develop its first multi-year fiscal plan.
FSTAA would also enhance the content requirements of financial reports to increase transparency, by requiring the government to:
- Provide a rationale for running deficits in the introductory section of the budget document. The previous government ran deficits for 10 straight years, yet rarely articulated a rationale to the public for doing so; and
- Report on its plan to balance the budget in greater detail by including estimates of the major components of revenue and expense and their underlying forecasts and assumptions, and publishing the projected net debt-to-GDP ratio for the period of the plan.
See the Ontario’s Economic and Fiscal Outlook in Brief — Plan to Balance the Budget: Ontario’s Recovery Plan section of this document for additional reporting under Ontario’s proposed new enhanced guidelines.
Strengthening Accountability through Compliance
Strengthening accountability through the proposed Act is a step towards restoring public trust in Ontario’s finances, and will show the people of Ontario that the government will be held to account by:
- Introducing a Premier and Minister’s Accountability Guarantee to demonstrate the commitment to accountability, transparency and trust by imposing monetary penalties on the Premier and the Minister of Finance for any missed reporting deadlines; and
- Requiring the Auditor General of Ontario to annually review the Minister’s compliance with the proposed Act.
Strengthening Legislation, Eliminating Loopholes and Ensuring Compliance with the Law
Key features of the proposed Fiscal Sustainability, Transparency and Accountability Act, 2019 (FSTAA) would strengthen government requirements related to debt management, and accountability and compliance.
As part of the proposed package of legislative reforms, the government is also proposing to eliminate a long-standing loophole of the previous government by repealing the Investing in Ontario Act, 2008. In the 2007–08 fiscal year, this Act allowed the government to spend better-than-planned fiscal results after the year had ended, instead of requiring the surplus to go towards reducing the debt. By repealing this Act, the government would be ensuring that any surplus would go towards debt reduction. The government is demonstrating respect for tax dollars and building on its commitment to restore trust and accountability in the Province’s finances.
Actively Pursuing a Debt Reduction Approach to Public Finance
To ensure real progress is made in addressing the debt burden, the government is committed to actively pursuing a debt burden reduction approach to public finance — effectively making the reduction of the Province’s debt burden a key consideration in all government decisions.
The government must play an important role in making Ontario an attractive destination for investment through balancing the budget and restoring fiscal sustainability to the province. Balancing the budget and a disciplined approach to expenditures is an important signal to people that the province is well managed and a good place to do business. It will also signal to the world that Ontario is serious about ensuring its economy is not overloaded with debt, but instead that it is efficient and able to effectively meet the needs of businesses and the people of Ontario.
Ontario conducts its borrowing program responsibly, respecting the people and businesses of the province by constantly implementing efficiencies in how it borrows money to reduce the interest on debt. To protect the Province from an increase in interest rates, the government has extended the term of its debt to lower the amount that must be refinanced every year. This strategy is similar to a homeowner extending the term of their mortgage to protect themselves against rising mortgage rates.
Enhancing Public Reporting on Debt Sustainability and Affordability
Under the proposed FSTAA, the government would be required to report annually on progress made with respect to the goals and plans set out in its debt burden reduction strategy, including the projected net debt-to-GDP ratio. The requirement for enhanced annual reporting would ensure that the government updates the people of Ontario on the progress made. Annual reporting also responds to the Auditor General of Ontario’s recommendation that the government not only have a plan for debt burden reduction, but also provide regular public updates.
The government is also committed to transparency with respect to improvements to the fiscal outlook generated by these actions. This includes updating the people of Ontario on the amount of every dollar the government receives that goes towards interest on the Province’s debt load. See Chapter 4: Borrowing and Debt Management for more details, including the projected interest on debt-to-revenue ratio.
Debt Burden Reduction Strategy
The government’s debt burden reduction strategy sets out clear actions for managing debt. These actions will allow the government to continue to invest in priorities that people value, such as health care and education. The debt burden reduction strategy delivers on the commitment made in the 2018 Ontario Economic Outlook and Fiscal Review and follows up on the recommendations of the Commission. The government will update progress on the debt burden reduction strategy in all budgets going forward.
2019 Ontario Budget Summary of Progress on Implementation and Supporting Actions
The government is projecting a deficit of $11.7 billion in 2018–19, a $3.3 billion improvement from the Commission’s deficit forecast of $15.0 billion. Over the medium term, the government is projecting steadily declining deficits until balance is achieved by 2023–24 — a reasonable and responsible timeline. This fiscal recovery plan supports reducing the debt burden, bringing the Province’s finances in line with a more sustainable path forward.
The government has also conducted a review of its capital investments to prioritize projects that have a real impact on people’s daily lives. This review has resulted in a more sustainable level of planned infrastructure expenditures. Having a more responsible capital plan than the previous government had will lower the Province’s projected borrowing requirements by $10 billion over the next five years, thereby reducing projected net debt by that amount and interest costs by a cumulative $0.3 billion.
The balanced budget plan is supported by the government’s comprehensive multi-year planning exercise, which is delivering ongoing efficiencies beyond the 2018–19 fiscal year. In fact, the government’s efforts to date are projected to deliver an average of about eight per cent in savings and cost avoidance each year over the path to balance until 2023–24, or about eight cents for every dollar spent.
As recommended by the Commission, the 2018 Ontario Economic Outlook and Fiscal Review included a $1.0 billion reserve to protect the fiscal outlook against unforeseen adverse changes in the Province’s revenue and expense forecasts in 2018–19. The reserve was not used by year-end. In line with actions set out to reduce the debt burden, the reserve has been drawn down, thereby reducing debt that the government would otherwise have incurred.
In addition, the government is committed to applying any remaining contingency funds in 2018–19 to lower the deficit.
To protect the Province from an increase in interest rates, the government has extended the term of its debt to lower the amount that must be refinanced every year. In 2018–19 alone, Ontario issued $9.6 billion in debt with maturities of 30 years or longer. This provides certainty with respect to interest payments over the longer term, so the government can focus on prioritizing available resources to protect what matters most to people.
Addressing the Debt Problem
The government recognizes that Ontario’s debt situation is at risk of becoming unsustainable. In spite of the Province’s responsible approach to how its borrowing program is conducted, rising interest costs, currently forecast at $13.3 billion in 2019–20, risk crowding out investments in the vital public programs that the people of Ontario rely on. This could impact the government’s ability to respond to future economic shocks.
Addressing the debt problem is imperative for providing the necessary fiscal flexibility to support ongoing economic growth in the province and to enable the government to protect vital services for future generations. It would also free up resources to allow the government to respond appropriately to a future recession.
That is why the government is taking action to reduce the debt burden and restore the fiscal health of the Province within a reasonable and practical timeframe. The government’s debt burden reduction strategy is underpinned by a clear objective: reduce the net debt by 2022–23 to less than the inherited 40.8 per cent of GDP by implementing meaningful actions that will generate results.
Balancing the budget and managing the Province’s debt burden are not ends in and of themselves. They are the only way to ensuring Ontario’s hospitals, schools and other key public services have the sustainable funding they need for generations to come.
A Plan to Improve Outcomes and Manage Government Spending Responsibly
All successful businesses engage in strategic planning to map their goals, objectives and future course. The government of Ontario should be no different. This is why the government took immediate steps to control spending and focus on fiscal discipline. Outside experts were also engaged to conduct a review of government spending and help lay a strong foundation for a comprehensive multi-year planning process. These actions are leading to efficiencies and better expenditure management while helping to ensure improved services and outcomes for the people of Ontario. Efforts to date are projected to generate savings and cost avoidance of about eight cents for every dollar spent, on average, over the path to balance while prioritizing what matters most and ensuring no front-line staff impacts. Realizing the full benefits of this plan will require a sustained effort with a continued focus on financial management throughout the next five years.
Immediate Spending Controls
The government has demonstrated its commitment to controlling unnecessary expenses and ensuring value for every dollar spent. As identified in the 2018 Ontario Economic Outlook and Fiscal Review, and as part of its recent release of the 2018–19 Third Quarter Finances, the government identified savings through a number of immediate actions, including:
- A hiring freeze, with the exception of essential front‐line services;
- A freeze on discretionary spending;
- A cancellation of all subscription‐based services; and
- A restriction on travel, meals and hospitality spending.
Building on these actions, the government is also putting any unused reserve and contingency funds at year-end towards reducing the Province’s net debt position.
Driving Public Sector Leadership Performance
The people of Ontario rely on the services that public sector organizations provide. At the same time, the Province must bring sustainability to its finances and ensure value for money.
In summer 2018, the government committed to reviewing public sector leadership compensation and to developing a new approach — one that recognizes leaders who deliver better outcomes for the people of Ontario while providing the best value for taxpayer dollars.
The review determined that existing practices in the public sector allowed for automatic adjustments to executive compensation regardless of the results achieved. This system does nothing to reward excellence or improve public services.
The government is now moving forward with an approach that ends automatic pay increases for public sector leaders. Under the new framework, pay-for-performance may only be provided to those leaders who achieve the bold outcomes the Province needs. Compensation adjustments would be controlled, and only executives who deliver on priority-driven outcomes would be eligible.
To move ahead with this approach, the government is proposing amendments to the Broader Public Sector Executive Compensation Act, 2014, and is consulting with employers to set sector-specific priorities that all leaders must work towards.
These requirements will drive a culture of excellence over entitlement. This means that the cost of any compensation increases would be more than offset by the transformational objectives that leaders deliver. The taxpayers of Ontario expect nothing less.
Progress on the Line-by-Line Review
To better prepare for future planning, in July 2018 the government issued an open request for bids for outside experts to conduct a review of government spending over the past 15 years. EY Canada was selected to complete the review. The review compared Ontario’s expenditures and rate of spending growth with that of other provinces and identified opportunities to modernize programs and services.
EY Canada reviewed over half a million lines of financial data and found the previous government had allowed for significant and unsustainable expenditure growth. Had expenditures grown at the same rate as population growth, the previous government would have spent $331 billion less over 15 years, and the current government would not be faced with such a challenging fiscal situation.
Despite the challenges uncovered by the line-by-line review, there are opportunities to make positive changes that will return the Province’s finances to a fiscally sustainable position while protecting the core services of the government. EY Canada’s report4 identified four key recommendations to help drive efficiencies, find cost savings and enable the transformation of public services to make them more convenient:
- Modernizing services through better use of digital and shared-service models;
- Finding more cost‐efficient ways of administering government;
- Ensuring government funding is directed to those that require it the most; and
- Maximizing the value of government assets and putting taxpayer investment to its most productive use.
Ontario’s Government for the People has acted on the line-by-line review in the following areas for cross-sector reforms that will bring additional efficiencies to government operations supported by internal and external experts.
Building on the findings of the line-by-line review and the innovative ideas identified in the Planning for Prosperity survey and the Big Bold Ideas Challenge, the government embarked on a comprehensive multi-year planning process. This process was guided by the vision of putting the people of Ontario at the centre of everything the government does. The government’s fiscal plan prioritizes:
- Achieving fiscal sustainability;
- Growing the economy;
- Being open for business, open for jobs; and
- Protecting what matters most.
One of the government’s key goals was for all ministries to develop concrete plans to ensure that government programs are modernized, duplication is eliminated, and valuable programs and services are sustainable and delivering outcomes.
The multi-year planning process has resulted in:
- The development of long-term plans to make government more efficient and effective to ensure government spending is sustainable and delivers the best value;
- Finding administrative savings throughout ministries without impacting front-line services. To this end, all ministries were required to show administrative savings of at least four per cent;
- An evidence-based approach to government decision-making informed by data;
- Breaking down silos and ensuring that government is thinking about the people of Ontario, where they live, who they receive public services from and what their unique circumstances may be;
- A focus on accountability and measuring success, with the ultimate objective of monitoring results and delivering meaningful improvements to the public services Ontario families and businesses rely on; and
- Modernizing services and reducing red tape to provide greater convenience for individuals, families and businesses.
The line-by-line review and multi-year planning process identified opportunities for efficiencies that will curb government spending and improve services for the people of Ontario. In fact, the government’s efforts to date are projected to deliver an average of about eight per cent in savings and cost avoidance each year over the path to balance until 2023–24, or about eight cents for every dollar spent.
Ongoing Program Reviews
Moving forward, the government will establish a dedicated program review process that will undertake program evaluations on a permanent and ongoing basis to ensure government services are meeting people’s needs and to identify ways to modernize programs and save money. The findings will highlight opportunities for improvement and considerations for program reform in future years. The ongoing process will be supported by a more robust financial management system.
Implementing Enterprise Risk Management
Building on the EY Canada line-by-line review’s call for a sustained commitment to evidence-based decision-making, including consideration of business risks, the government is implementing enterprise risk management across ministries and Provincial agencies. This includes ensuring risk management capacity in support of how the Province designs, funds, manages and delivers services to the people of Ontario.
Ensuring Agencies are Relevant, Efficient and Effective
The winding down of the GreenON and the Self-Directed Personal Support Services Ontario agencies were early signs of the government’s commitment to restoring accountability and trust as they relate to the Provincial agency sector. Further to this commitment, the government announced in the 2018 Ontario Economic Outlook and Fiscal Review that the Province is taking steps to ensure all Provincial agencies are relevant, efficient and effective, and that they provide value for money to taxpayers.
In November, the Agency Review Task Force (task force), comprised of five government Members of Provincial Parliament, commenced its comprehensive review of all Provincial agencies to support the government’s commitment to restoring accountability and trust. To date, the task force has reviewed over 60 agencies — almost one-third of more than 190 Provincial agencies.
With the support of ministries, the task force is recommending opportunities in the agency sector that would:
- Enable immediate efficiencies;
- Ensure agencies remain transparent and sustainable over the long term;
- Ensure agencies use taxpayer dollars appropriately and effectively;
- Align agencies with current government priorities; and
- Ensure agencies have appropriate oversight structures in place.
The work of the task force aligns with the broader efforts of the government to improve the way in which agencies deliver on government priorities and transform the way services are delivered, such as the review of the Workplace Safety and Insurance Board (WSIB), expanding the mandate of Infrastructure Ontario to support business development and improving the governance of the Ontario Energy Board.
The task force is also focused on transformational opportunities for Provincial agencies and other selected entities that could lead to dissolutions or mergers to achieve cost savings and service delivery efficiencies.
To date, the task force has recommended the dissolution of 10 Provincial agencies, as they have become unnecessary, or because there are more cost-effective ways of achieving their goals:
- Building Code Conservation Advisory Council: The ministry could seek expert advice on conservation matters of the Building Code from working groups rather than through a Provincial agency.
- Criminal Injuries Compensation Board: Reforming victim compensation services by replacing the adjudicative model with an administrative model to ensure victims receive financial assistance faster and more efficiently with less administrative burden. Starting in 2021–22, the government is reinvesting over $6 million annually in victim services.
- Curriculum Council: The ministry will obtain specific curriculum advice from stakeholder/expert working groups, rather than this agency.
- Forensic Advisory Committee: In place of the committee, the ministry would use a working group to engage sector experts as needed. The ministry has identified technical experts and partners for such a working group.
- Livestock Medicines Advisory Committee: The mandate of the agency is no longer relevant due to changes in federal legislation. Direct consultations would allow for greater flexibility when expert advice is needed.
- Local Planning Appeal Support Centre: This agency was established in 2017 without sufficient funding. Individuals and community groups will continue to be able to obtain advice, information and services elsewhere.
- Ontario Honours Advisory Council: Selecting individuals to fulfill this function can be more efficiently achieved outside the agencies’ appointments process. The ministry will continue to use individuals with the expertise to evaluate honours recipients with the greatest merit.
- Ontario Investment and Trade Advisory Council: The agency has not been active since 2010 and does not receive any funding. The agency has no budget and no employees. The ministry can consult with external experts as required.
- Ontario Immigrant Investor Corporation: The federal government announced the termination of its Immigrant Investor Program in 2014. Ontario no longer accepts allocations related to the program. The agency is legally bound to be operational until the last repayment in 2022–23 of immigrant investor monies allocated to Ontario, after which the agency is proposed to be dissolved.
- Ontario Mortgage and Housing Corporation: The activities and obligations of this agency will be taken on as a ministry function.
Eliminating these 10 agencies, as well as GreenON and the Self-Directed Personal Support Services Ontario, is expected to generate savings of over $125 million over five years, as well as achieve administrative efficiencies by reducing the number of agency appointees needed.
The task force will continue its review of all Provincial agencies. The outcome of the reviews will allow the government to take action, including potential dissolutions, mergers and other improvements, to ensure that agencies are relevant, efficient and effective. Together, these reviews will improve the way in which agencies deliver on government priorities and transform the way services are delivered.
Banning Government Agencies from Buying Tickets to Political Speeches
The government is making changes that will prohibit ministries and Provincial agencies from using public funds to attend or to sponsor events at which a politician is scheduled to speak. This is part of the government’s coordinated approach to managing expenses and ensuring public money is directed to provide better quality services for the people of Ontario. To learn about what politicians are communicating, Provincial agencies can request copies of speeches.
The amendments proposed to the Financial Administration Act would prevent ministries, agencies and hydro entities from purchasing tickets or sponsoring any event where the keynote speaker is a party leader, minister, senator or anyone else holding federal, provincial or municipal office across Canada.
For example, under the proposed amendment, Provincial agencies such as Metrolinx would be prohibited from purchasing tickets to a minister’s luncheon speech at the Economic Club of Canada. Similarly, the prohibition would also apply to government corporations such as the Ontario Power Generation to prevent them from paying to attend events where a politician is a keynote speaker.
A Balanced, Sustainable and Reasonable Approach to Managing Compensation
The previous government’s poor fiscal management has put the Province’s finances into an untenable position. To restore sustainability, the government and its service delivery partners must collectively exercise prudent fiscal stewardship. Leading by example, the government has already reduced the size of the Ontario Public Service by 3.5 per cent through voluntary attrition alone.
As the government pursues efficiencies that deliver relief to families, it will do so in a way that preserves front-line services and puts people at the centre of every decision. The government’s plan ensures that front-line services and the workers that deliver them are protected.
This spring, the government will consult with Ontario public sector employers and bargaining agents on how compensation costs can be managed in a way that results in wage settlements that are modest, reasonable and sustainable. Feedback received through these discussions will directly inform any next steps taken to manage growth in compensation costs.
These consultations will build on the government’s recent action to strengthen its oversight of Provincial agency collective bargaining, as announced in the 2018 Economic Outlook and Fiscal Review, as well as efforts to better enable service transformation through proposed amendments to the Public Sector Labour Relations Transition Act, 1997. Moving forward, the government will continue to explore opportunities to expand collective bargaining oversight to key areas of the provincial public sector. This will help ensure that every taxpayer dollar is invested wisely.
Additional Review and Accountability of Government Spending
Providing a New Level of Accountability
Last December, the government announced the launch of the Audit and Accountability Committee. This new sub-committee of the Treasury Board/Management Board of Cabinet was created to ensure resources are used to support strong fiscal management and accountability throughout government by driving special audits through the Province’s ministries, agencies and transfer-payment partners.
The Audit and Accountability Committee will also reinforce the valued work of the Auditor General of Ontario. A key mandate of the committee will be to monitor progress and ensure the timely implementation of audit recommendations resulting from the Auditor General’s reports.
The Audit and Accountability Committee is the only one of its kind in Canada and will provide a new level of accountability to help ensure that the people of Ontario are receiving value for money and that key government programs are protected for future generations.
Implementing the Recommendations of the Independent Financial Commission of Inquiry
The government is acting on each of the recommendations of the Independent Financial Commission of Inquiry (Commission) to restore accountability and trust in Ontario’s public finances.
In July 2018, the government established the Commission with a mandate to look at the Province’s past accounting practices and to provide a baseline for the Province’s fiscal outlook.
The Commission delivered its report to the government on August 30, 2018, and it was made public on September 21, 2018. The government has accepted the Commission’s recommendations and is moving forward to support their implementations.
|1. Establish transparency for the taxpayer and general public as the top priority in preparing the Budget, Public Accounts and other financial reports. Ensure that accounting practices of the government are in accordance with the letter and spirit of Canadian Public Sector Accounting Standards.||Implemented|
|2. Take an active role in the standards-setting process led by the Public Sector Accounting Board (PSAB) to identify and address accounting matters of particular importance to the Province.||Implemented|
|3. Restore a constructive, professional relationship between the government and the Auditor General in a manner that respects the Auditor General’s legislated independence.||Implemented|
|4. Require that the Auditor General is given advance notification and is asked for comment when a ministry or an agency consolidated in the financial statements of the Province proposes to engage a private-sector firm to provide accounting advice. In addition, require that the Province approve, after consultation with the Auditor General, the retention of the same private-sector firm for both accounting advice and auditing services.||Implemented|
|5. Engage the Auditor General in an effort to reach agreement on the accounting treatment of any net pension assets of the Ontario Teachers’ Pension Plan and Ontario Public Service Employees’ Union Pension Plan.||In Progress|
|6. Adopt the Auditor General’s proposed accounting treatment for any net pension assets of the Ontario Teachers’ Pension Plan and Ontario Public Service Employees’ Union Pension Plan on a provisional basis, until an agreement is reached between the government and the Auditor General. For the Public Accounts of Ontario 2017–2018, this would include restatement of the prior year’s figures for comparative purposes.||Implemented|
|7.Review the methodology for establishing fair market values for plan assets and the management assumptions used to determine long-term liabilities for the Ontario Teachers’ Pension Plan and Ontario Public Service Employees’ Union Pension Plan. Begin this work following the release of the Public Accounts of Ontario 2017–2018, and establish periodic reviews in the future.||In Progress|
|8. Adopt the Auditor General’s proposed accounting treatment for global adjustment refinancing, which is a major component of the Fair Hydro Plan.||Implemented|
|9. Revise the budget plan for 2018–19 to reflect the Commission’s proposed accounting adjustments, adjust revenue and expense projections based on the latest available information, and restore the reserve to at least the historical level of $1 billion.||Implemented|
|10. Establish a fiscal plan that includes near- and medium-term deficit targets and clearly describes how the government will achieve and report on these targets.||Implemented|
|11. Undertake a review of the Fiscal Transparency and Accountability Act, 2004 to improve its effectiveness in guiding government fiscal planning and reporting.||Implemented|
|12. Conduct analysis to determine and set an appropriate target and timeline to reduce the Province’s ratio of net debt-to-GDP.||Implemented|
|13. Set a long-term goal of restoring the Province’s AAA credit rating.||In Progress|
|14. Expand Ontario’s Long-Term Report on the Economy, published two years into each mandate, to include additional analysis on fiscal sustainability, and set out the fiscal implications of current trends and future risks.||In Progress|
Table 1.1 Footnotes:
Source: “Report of the Independent Financial Commission of Inquiry,” (2018).
The Commission’s advice, in addition to the results of EY Canada’s line-by-line review of government spending, informed the 2018 Ontario Economic Outlook and Fiscal Review and the development of the 2019 Ontario Budget.
Restoring Financial Transparency
Last fall, the Legislative Assembly passed a motion to appoint a Select Committee on Financial Transparency (Select Committee) to consider and report to the House on the Independent Financial Commission of Inquiry’s report. In addition, the Select Committee was given a mandate to investigate and report on the accounting practices, decision making and policy objectives of the previous government.
As part of its investigation into questionable accounting practices, the Select Committee received testimony from the former Premier and Minister of Energy. In addition, the committee heard from senior officials from the Ontario Public Service, the Independent Electricity System Operator, Ontario Power Generation, the Commissioners of the Independent Financial Commission of Inquiry, the Financial Accountability Office and the Auditor General of Ontario. The Select Committee tabled its final report in the Legislature on March 26, 2019.
Calling for a Review of Federal Transfers
The government is doing its part to ensure that the Province is on a sustainable fiscal track, and it is critical that the federal government do its part, too. The federal–provincial transfer system is key to ensuring the long-term fiscal sustainability of all the provinces and territories. This is why it is crucial that all Canadians have a federal government that supports the needs of their regions, without getting in the way and adding costs.
Currently, the system is not working. The federal government is propping up an overly complicated, broken system of transfers. Ontario continues to experience a sizeable imbalance between what its families, businesses and individuals contribute to the federation and what the people of Ontario receive in transfers and federal spending. The most recent data shows that the people of Ontario send $12.9 billion more in tax dollars to Ottawa than the province receives. Ontario’s Government for the People calls on the federal government to fix this imbalance and support the people of Ontario by providing fair and adequate support for the services families rely on, such as helping to pay for increasing health and social program costs.
Third-party experts, such as the federal Parliamentary Budget Officer (PBO), have consistently found that the federal government has achieved fiscal sustainability over the long term, in large part, by restricting the growth of major transfers. This has meant significant fiscal challenges for the territories and provinces, including Ontario. At the same time, EY Canada’s line-by-line review of the Province’s spending found that federal transfers are inadequate to meet the growing costs of delivering quality services to the people of Ontario. In a recent report, the PBO demonstrated that federal health transfers are declining significantly over time as a share of provincial spending.
While the federal government has announced a number of new funding programs in recent years, they are weighed down by conditions and restrictions. The federal government should be supporting the provinces and territories to meet their mounting cost pressures and address the priorities of their citizens, but it continues to add red tape, administrative restrictions and cost burdens.
All Canadians deserve a federal transfer system that supports the priorities and fiscal sustainability of the provincial and territorial governments, not one that gets in the way.
A simple and effective transfer system, based on clear and consistent principles, should be:
- Fair: Federal programs must treat Ontario families fairly; transfers should have clear goals that Canadians can understand and trust.
- Adequate: Transfer programs must reflect the pressures that the people of Ontario are facing today and will be facing in the future; the federal government must do its share to help the people of Ontario.
- Flexible: Transfers must not restrict the Province’s ability to respond to the needs of Ontario families, nor add more red tape and costs for Ontario.
It is critical that the federal government treat Ontario’s businesses, individuals and families fairly and support them through adequate transfer agreements, not more red tape and administrative burdens. The Province will continue to press the federal government for a review of its broken system of transfers to ensure that it is living up to these principles and meeting the needs of the people of Ontario.
Chart 1.1: Ontario’s Path to Balance the Budget
This bar chart shows Ontario’s interim projections for 2018–19, the medium-term outlook from 2019–20 to 2021–22 and the recovery plan from 2022–23 to 2023–24, with a surplus projected for 2023–24. Each year, the government is projecting the following fiscal targets:
Note: Includes reserve to protect against unforeseen adverse changes in the Province’s revenue and expense. The reserve is set at $1 billion in each year from 2019-20 to 2021-22, $1.3 billion in 2022-23, and $1.6 billion in 2023-24.
Source: Ontario Ministry of Finance.
Chart 1.2: Net Debt Growth
Ontario’s net debt was $38 billion in 1990–91 and grew to $160 billion by 2008–09. It has since more than doubled over the last 10 years and is over one-third of a trillion dollars in 2018–19 at $343 billion.
Source: Ontario Financing Authority.
Chart 1.3: Ontario and Quebec Net Debt-to-GDP
Ontario’s and Quebec’s net debt-to-GDP ratios in 2000–01 were 29.3 per cent and 38.3 per cent respectively. [In 2018–19, these converged; at 40.7 per cent by 2019–20, Ontario’s net debt-to-GDP ratio will surpass that of Quebec’s at 38.6 per cent.]
|Year||Ontario’s net debt-to-GDP||Quebec’s net debt-to-GDP|
Notes: Net debt has been restated to include broader public-sector net debt, starting in 2005–06. Net debt has been restated from 2001–02 onward for the adjustments resulting from the revised accounting treatment of jointly sponsored pension plans.
Sources: Quebec Budgets and Quebec Public Accounts; Statistics Canada (October and November 2018) and the Conference Board of Canada (February 2019) and Ontario Ministry of Finance.
Chart 1.4: Net Debt Per Capita
Ontario’s net debt per capita in 2018–19 was $23,979.
|Year||Net debt per capita|
Note: Net debt has been restated to include broader public-sector net debt, starting in 2005–06. Net debt has been restated from 2001–02 onward for the adjustments resulting from the revised accounting treatment of jointly sponsored pension plans.
Sources: Statistics Canada and Ontario Ministry of Finance.
Chart 1.5: Actions to Reduce the Debt Burden
The government will take action to reduce the debt burden. These actions will strengthen legislation, eliminate loopholes, and ensure compliance with the law. This includes new legislation that would require a debt burden reduction strategy, including net debt-to-GDP objectives, reporting annually on progress and repealing the Investing in Ontario Act, 2008. In addition, the government will actively pursue a debt burden reduction approach to public finance by focusing on making efficient programs that provide value for money; reviewing and auditing existing programs to find inefficiencies, making Ontario Open for Business; pursuing borrowing in a cost-effective manner; and establishing a policy to ensure that reserve and unused contingency funds are put towards reducing net debt at year-end. The government will also enhance reporting on debt sustainability and affordability through reporting details on the debt burden reduction objectives and actions in the annual budget and reporting on other debt affordability and sustainability metrics, such as interest on debt as a share of revenue.
Chart 1.6: Strengthening Fiscal Accountability and Reporting
The graphic displays the three central tenets of responsible fiscal management used to modernize the government’s fiscal legislative framework to restore the public’s trust in Ontario’s finances.
These tenets are:
- Sustainability - Putting Sustainability at the Centre of Ontario’s Fiscal Policy
- Transparency - Enhancing Transparency and Public Reporting
- Accountability - Strengthening Accountability and Compliance
Chart 1.7: Progress on the Line-by-Line Review
Transfer Payment Consolidation
- The government is consolidating transfer payments in multiple sectors, including health care, social services and education, to reduce administrative costs, increase value for money, enhance the client experience and improve outcomes. By modernizing transfer payments, the government will allow service delivery partners to devote more resources to front-line services, rather than to back-office administration.
- The government is centralizing procurement across the Ontario Public Service and the broader public sector. By creating a more streamlined and collaborative procurement system for goods and services, the government is projecting savings of $1 billion annually. The new system will make it easier for companies of all sizes to do business with the province and harness innovation to address the needs of the people of Ontario.
Capital Asset Management
- The government is conducting a review to explore options and possible implementation strategies for reducing duplication and ensuring best practices in the management of capital assets. This work is expected to drive improved management and planning, enterprise decision‑making and transparency regarding capital investments.
- See Chapter 1, Section B: Putting People First for more details.
- A digital-first approach is being applied across government to make it easier for the people of Ontario to access programs and services, reduce government silos, and lower internal administrative burdens and costs.
- See Chapter 1, Section B: Putting People First for more details.
- The government is reviewing business supports programs to identify opportunities for better value for money. The aim is to ensure these programs are coordinated and integrated across government, and that they can demonstrate benefits for the people and businesses of Ontario.
-  Luc Eyraud, Xavier Debrun, Andrew Hodge, Victor Duarte Lledo and Catherine A Pattillo, “Second-Generation Fiscal Rules: Balancing Simplicity, Flexibility, and Enforceability” (2018) https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2018/04/12/Second-Generation-Fiscal-Rules-Balancing-Simplicity-Flexibility-and-Enforceability-45131
-  Canada, Office of the Parliamentary Budget Officer, “Fiscal Sustainability Report,” (2017). The PBO’s “Fiscal Sustainability Report,” (2018) maintained the previous report’s finding that Ontario’s current fiscal policy was not sustainable over the long term.
-  To ensure consistency and comparability of numbers between the current outlook, the Commission’s baseline forecast and prior year results, the Commission’s Net Debt as a Per Cent of GDP estimate was revised from 40.5 per cent to 40.8 per cent in the 2018 Ontario Economic Outlook and Fiscal Review.
-  EY Canada, “Managing Transformation — A Modernization Action Plan for Ontario,” (2018), https://www.ontario.ca/page/planning-prosperity-putting-people-centre-service-delivery