Chapter 3: Ontario’s Fiscal Plan and Outlook

Introduction

Ontario has a path to balance. The government is on track to post a surplus in 2024–25, three years earlier than forecast in the 2022 Budget. While this is a positive update, significant economic and geopolitical uncertainty persists.

For 2022–23, the government is projecting a deficit of $2.2 billion. Over the medium term, the government is projecting a deficit of $1.3 billion in 2023–24, and surpluses of $0.2 billion in 2024–25 and $4.4 billion in 2025–26. This represents significant improvement compared to the outlook presented in the 2022 Budget.

Chart 3.1: Current Deficit Outlook Compared to 2022 Budget
Accessible description of Chart 3.1

Primarily due to lower than forecast deficits and higher nominal GDP growth, the net debt-to-GDP ratio is projected to be 37.8 per cent in 2022–23, 3.6 percentage points lower than the 41.4 per cent forecast presented in the 2022 Budget. Over the medium-term outlook, Ontario’s net debt-to-GDP ratio is now forecast to be 37.8 per cent in 2023–24, 37.7 per cent in 2024–25, and declining to 36.9 per cent in 2025–26.

Table 3.1
Fiscal Summary
($ Billions)
  Actual
2021–22
Interim1
2022–23
Medium-Term
Outlook
2023–24
Medium-Term
Outlook
2024–25
Medium-Term
Outlook
2025–26
Revenue 185.1 200.4 204.4 213.0 226.0
Expense — Programs 170.4 189.1 190.6 196.4 202.5
Expense — Interest on Debt 12.6 13.4 14.1 14.4 15.1
Total Expense 183.0 202.6 204.7 210.8 217.5
Surplus/(Deficit) Before Reserve 2.1 (2.2) (0.3) 2.2 8.4
Reserve 1.0 2.0 4.0
Surplus/(Deficit) 2.1 (2.2) (1.3) 0.2 4.4
Net Debt as a Per Cent of GDP 39.8% 37.8% 37.8% 37.7% 36.9%
Net Debt as a Per Cent of Revenue 205.6% 197.5% 198.9% 197.3% 190.2%
Interest on Debt as a Per Cent of Revenue 6.8% 6.7% 6.9% 6.8% 6.7%

Table 3.1 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

Notes: Numbers may not add due to rounding. Interim and medium-term outlook primarily reflect information available as of February 23, 2023.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

Photo of a couple at home using a laptop to manage their finances.

2022–23 Interim1 Fiscal Performance

Ontario’s 2022–23 deficit is projected to be $2.2 billion — $17.7 billion lower than the outlook published in the 2022 Budget and $4.4 billion lower than the outlook published in the 2022–23 Third Quarter Finances.

The 2023 Budget is projecting revenues in 2022–23 to be $200.4 billion — $20.6 billion higher than forecast in the 2022 Budget. This increase is largely driven by higher taxation revenue as a result of higher tax assessments for 2021 and prior years, based on information received from the Canada Revenue Agency (CRA) since the release of the 2022 Budget.

Program expense is projected to be $189.1 billion — $4.0 billion higher than the 2022 Budget forecast.

Ontario is forecast to pay $13.4 billion in interest costs in 2022–23 — slightly lower than the forecast in the 2022 Budget mainly due to a lower borrowing program, despite higher interest rates. At 37.8 per cent, the net debt‐to‐GDP ratio in 2022–23 is forecast to be 3.6 percentage points lower than in the 2022 Budget, primarily as a result of lower than forecast deficits and higher nominal GDP growth.

The 2022 Budget also included a $1.0 billion reserve in 2022–23 to protect the fiscal plan against unforeseen adverse changes in Ontario’s revenue and expense forecasts. The reserve was not required at fiscal year-end and has been drawn down at interim, reducing the deficit further.

Table 3.2
2022–23 In-Year Fiscal Performance
($ Millions)
  2022 Budget Interim1
2022–23
In-Year
Change
Revenue 179,798 200,402 20,605
Expense — Programs 185,163 189,148 3,985
Expense — Interest on Debt 13,485 13,424 (61)
Total Expense 198,648 202,572 3,924
Surplus/(Deficit) Before Reserve (18,850) (2,170) 16,680
Reserve 1,000 (1,000)
Surplus/(Deficit) (19,850) (2,170) 17,680

Table 3.2 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

Notes: Numbers may not add due to rounding. Interim and medium-term outlook primarily reflect information available as of February 23, 2023.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

Interim Revenue Update

The 2022–23 total revenue outlook is $200.4 billion — $20.6 billion higher than projected in the 2022 Budget. Since the release of the 2022–23 Third Quarter Finances, total revenue has increased by $4.0 billion, due to higher projected taxation revenue, recognition of in-kind federal revenue associated with donated COVID‑19 supplies and other non-tax revenue.

Table 3.3
Summary of 2022–23 Revenue Changes Since the 2022 Budget
($ Millions)
  Interim1
2022–23
2022 Budget Total Revenue 179,798
Revenue Changes in the 2022–23 First Quarter Finances 1,204
Revenue Changes in the 2022 Ontario Economic Outlook and Fiscal Review 5,820
Revenue Changes in the 2022–23 Third Quarter Finances 9,626
Revenue Changes Since the 2022–23 Third Quarter Finances — Personal Income Tax 2,050
Revenue Changes Since the 2022–23 Third Quarter Finances — Corporations Tax 303
Revenue Changes Since the 2022–23 Third Quarter Finances — Gasoline Tax and Fuel Tax 98
Revenue Changes Since the 2022–23 Third Quarter Finances — Employer Health Tax 90
Revenue Changes Since the 2022–23 Third Quarter Finances — All Other Taxes 18
Revenue Changes Since the 2022–23 Third Quarter Finances — Total Taxation Revenue 2,560
Revenue Changes Since the 2022–23 Third Quarter Finances — Government of Canada Transfers 422
Revenue Changes Since the 2022–23 Third Quarter Finances — Other Non-Tax Revenue 973
Total Revenue Changes Since the 2022–23 Third Quarter Finances 3,955
Total Revenue Changes Since the 2022 Budget 20,605
2023 Budget Total Revenue Outlook 200,402

Table 3.3 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

Notes: Numbers may not add due to rounding. Interim and medium-term outlook primarily reflect information available as of February 23, 2023.

Source: Ontario Ministry of Finance.

The forecast for Total Taxation Revenue has increased by $2,560 million compared to the 2022–23 Third Quarter Finances. Key changes in the taxation revenue outlook include:

  • Personal Income Tax revenue increased by $2,050 million reflecting updates to capture the impact of recent stronger than expected income data as well as expectations for stronger employment and wages growth;
  • Corporations Tax revenue increased by $303 million due to stronger than expected corporate performance;
  • Gasoline Tax and Fuel Tax revenue increased by $98 million reflecting updated information from tax receipts in 2022–23;
  • Employer Health Tax revenue increased by $90 million due to expectations for stronger employment and wages growth; and
  • All Other Taxes combined increased by $18 million, mainly due to higher revenues from Tobacco Tax.

Government of Canada Transfers increased by $422 million, mainly due to the recognition of in-kind federal revenue associated with donated COVID‑19 supplies, partially offset by a reprofiling of funding under the Investing in Canada Infrastructure Program.

Other Non-Tax Revenues increased by $973 million largely due to higher third-party revenue from the Broader Public Sector and higher revenue from fees, licences and permits, royalties, and miscellaneous revenues reflecting continued recovery from the COVID‑19 pandemic.

Interim Expense Update

Since the release of the 2022 Budget, the government has made targeted investments throughout the fiscal year to continue to progress on Ontario’s Plan to Build while also investing in critical public services. The 2022–23 total expense outlook is $202.6 billion — $3.9 billion higher than the 2022 Budget.

Since the release of the 2022–23 Third Quarter Finances, the total program expense projection has increased by $0.6 billion, primarily due to additional other one-time expenses, partially offset by lower than projected ministry spending.

Table 3.4
Summary of 2022–23 Expense Changes Since the 2022 Budget
($ Millions)
  Interim1
2022–23
2022 Budget Total Expense 198,648
Total Expense Changes in the 2022–23 First Quarter Finances 105
Total Expense Changes in the 2022 Ontario Economic Outlook and Fiscal Review 15
Total Expense Changes in the 2022–23 Third Quarter Finances 3,229
Program Expense Changes Since the 2022–23 Third Quarter Finances — Base Programs2 — Health Sector (284)
Program Expense Changes Since the 2022–23 Third Quarter Finances — Base Programs3 — Education Sector4 (47)
Program Expense Changes Since the 2022–23 Third Quarter Finances — Base Programs5 — Postsecondary Education Sector (75)
Program Expense Changes Since the 2022–23 Third Quarter Finances — Base Programs6 — Children, Community and Social Services Sector (92)
Program Expense Changes Since the 2022–23 Third Quarter Finances — Base Programs7 — Justice Sector 313
Program Expense Changes Since the 2022–23 Third Quarter Finances — Base Programs8 — Other Programs (384)
Program Expense Changes Since the 2022–23 Third Quarter Finances — Total Base Programs Expense Changes Since the 2022–23 Third Quarter Finances (570)
Program Expense Changes Since the 2022–23 Third Quarter Finances — COVID‑19 Time-Limited Funding (86)
Program Expense Changes Since the 2022–23 Third Quarter Finances — Other One-Time Expenses 1,250
Total Program Expense Changes Since the 2022–23 Third Quarter Finances 594
Interest on Debt Change Since the 2022–23 Third Quarter Finances (18)
Total Expense Changes Since the 2022–23 Third Quarter Finances 576
Total Expense Changes Since the 2022 Budget 3,924
2023 Budget Total Expense Outlook 202,572

Table 3.4 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

[2], [3], [5], [6], [7], [8] For presentation purposes in the 2023 Budget, one-time COVID‑19-related spending in 2022–23 has been included within COVID‑19 Time-Limited Funding.

[4] Excludes Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.

Notes: Numbers may not add due to rounding. Interim and medium-term outlook primarily reflect information available as of February 23, 2023.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

The following program expense changes are projected since the release of the 2022–23 Third Quarter Finances:

  • Health sector expense is projected to be $284 million lower, primarily due to delays in construction projects due to current market conditions, a decrease in Canadian Medical Protective Association fees, as well as lower forecasted expenses for demand-driven Ontario Public Drug Programs.
  • Education sector expense is projected to be $47 million lower, primarily due to school boards experiencing lower than forecasted non‐government revenue and implementation timing of the Canada-wide Early Learning and Child Care Agreement, partially offset by increased school board spending, such as higher fuel costs for student transportation.
  • Postsecondary Education sector expense is projected to be $75 million lower, mainly due to lower than expected demand for student financial assistance.
  • Children, Community and Social Services sector expense is projected to be $92 million lower, primarily due to lower than expected demand for social assistance as a result of better than forecasted labour market conditions.
  • Justice sector expense is projected to be $313 million higher, primarily due to investments related to essential service delivery within courts, corrections and policing.  
  • Other Programs expense is projected to be a net $384 million lower primarily due to the following key changes:
    • $402 million in lower than forecasted spending for the Ministry of Energy, primarily due to lower costs of delivering electricity price relief programs, because of updated fuel forecasts and milder weather; and
    • $121 million decrease in the Ministry of Transportation, primarily driven by timing changes in municipal transit infrastructure projects.
  • COVID‑19 Time-Limited Funding expense is projected to be $86 million lower due to lower than required spending in various ministries.

Interest on debt expense is projected to be $18 million lower due to slightly lower borrowing costs than estimated in the 2022–23 Third Quarter Finances.

Prudence in 2022–23

The Contingency Fund is maintained to help mitigate expense risks that may adversely affect Ontario’s fiscal performance. For the remainder of 2022–23, the Contingency Fund has a current remaining balance of $1.75 billion, which is available to offset additional expenses that may materialize before the end of the fiscal year.

The 2022 Budget included a reserve of $1.0 billion in 2022–23, which was not required and has been drawn down at interim.

For the 2022–23 fiscal year, total COVID‐19 Time‐Limited Funding has decreased by $86 million since the 2022–23 Third Quarter Finances and is now projected to total $7.8 billion.

Medium-Term Fiscal Plan

The government is projecting a deficit of $1.3 billion in 2023–24, and surpluses of $0.2 billion in 2024–25 and $4.4 billion in 2025–26, a significant improvement from the 2022 Budget deficit outlook.

Medium-Term Revenue Outlook

Total revenue is projected to increase from $200.4 billion in 2022–23 to $226.0 billion in 2025–26, for an average annual growth rate of 4.1 per cent. Revenue growth reflects the Ontario Ministry of Finance’s outlook for economic growth, based on private-sector forecasts.

Table 3.5
Summary of Medium-Term Revenue Outlook
($ Billions)
  Actual
2021–22
Interim1
2022–23
Medium-Term
Outlook
2023–24
Medium-Term
Outlook
2024–25
Medium-Term
Outlook
2025–26
Revenue — Personal Income Tax 46.8 52.8 56.0 58.7 62.0
Revenue — Sales Tax 30.4 35.9 35.4 36.8 38.6
Revenue — Corporations Tax 25.2 27.9 24.7 25.9 28.2
Revenue — Ontario Health Premium 4.4 4.7 4.9 5.1 5.3
Revenue — Education Property Tax 5.7 5.8 5.7 5.7 5.8
Revenue — All Other Taxes 19.2 17.6 17.6 19.8 20.6
Total Taxation Revenue 131.7 144.7 144.2 152.1 160.4
Government of Canada 30.6 31.3 34.8 35.1 37.1
Income from Government Business Enterprises 6.4 6.5 6.3 6.7 8.5
Other Non-Tax Revenue 16.3 18.0 19.0 19.2 20.0
Total Revenue 185.1 200.4 204.4 213.0 226.0

Table 3.5 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

Note: Numbers may not add due to rounding.

Source: Ontario Ministry of Finance.

The primary driver of the forecast for Personal Income Tax (PIT) revenues is the outlook for growth in compensation of employees. Personal Income Tax revenue is projected to grow at an average annual rate of 5.5 per cent between 2022–23 and 2025–26.

The forecast for Sales Tax (ST) revenue is driven by the projection for household consumption spending. Average growth in ST revenue is 2.4 per cent between 2022–23 and 2025–26.

The forecast for Corporations Tax (CT) revenue is driven by the projection for net operating surplus of corporations. While CT revenue is projected to decline by 11.7 per cent in 2023–24 due to a slowdown in economic activity, CT revenue is projected to grow at an average annual rate of 6.8 per cent between 2023–24 and 2025–26.

The primary driver of the forecast for Ontario Health Premium revenue is the outlook for growth in compensation of employees. Ontario Health Premium revenue is projected to grow at an average annual rate of 4.4 per cent between 2022–23 and 2025–26.

Education Property Tax revenue is based primarily on the outlook for growth in the property assessment base resulting from new construction activities. Revenues are projected to remain relatively stable over the term of the outlook, with assessment growth largely offset by the impact of previously announced measures, including the reduction in Business Education Tax (BET) rates.

Revenues from All Other Taxes are projected to increase at an average annual rate of 5.5 per cent between 2022–23 and 2025–26. This includes revenues from the Employer Health Tax; Land Transfer Tax; Beer, Wine and Spirits Taxes; and volume-based taxes such as the Gasoline Tax, Fuel Tax and Tobacco Tax.

The forecast for Government of Canada transfers is largely based on existing federal–provincial funding agreements and formulas. Federal one-time transfers related to COVID‑19 amounted to $1.7 billion in 2022–23. Federal transfers are projected to increase at an average annual rate of 5.9 per cent between 2022–23 and 2025–26, which includes an estimated $4.4 billion in new federal health funding over the medium term. The new federal health funding includes a one-time additional health care payment, time-limited funding for shared priorities and an enhancement of the Canada Health Transfer, in total representing an estimated $1.8 billion in 2023–24, $1.1 billion in 2024–25 and $1.5 billion in 2025–26.

The outlook for Income from Government Business Enterprises (GBEs) is based on Ontario Ministry of Finance estimates of net income for Hydro One Ltd. (Hydro One) and projections provided by Ontario Power Generation (OPG), the Ontario Cannabis Store (OCS), the Liquor Control Board of Ontario (LCBO), and the Ontario Lottery and Gaming Corporation (OLG). Net incomes of GBEs are projected to increase at an average annual rate of 9.4 per cent from 2022–23 to 2025–26. The strong growth mainly reflects the anticipated increase in net income from OLG, OPG and Hydro One.

The forecast for Other Non-Tax Revenue is based on projections provided by government ministries and agencies. The outlook for Other Non-Tax Revenue is projected to increase at an average annual rate of 3.6 per cent from 2022–23 to 2025–26 largely due to the increase in third‐party revenues from hospitals, school boards and colleges that are recognized in Ontario’s financial statements. It also reflects new revenue streams from newly consolidated agencies and higher revenue from existing ones, reflecting continued recovery from the COVID‑19 pandemic.

Risks to the Revenue Outlook

There are a variety of risks to the economic planning assumptions underlying the revenue forecast, as outlined in Chapter 2: Economic Performance and Outlook. Table 3.6 highlights some of the key risks and sensitivities to the 2023–24 revenue forecast that could arise from unexpected changes in economic conditions. These are only estimates; actual results can vary. The risks identified are based on factors that are considered to have the most material impact on the largest revenue sources.

Table 3.6
Selected Economic and Revenue Sensitivities
Economic Factors Revenue Sources 2023–24 Sensitivities
Nominal GDP Total Taxation Revenue $1,295 million revenue change for each percentage point change in nominal GDP growth. This can vary significantly, depending on the composition and source of changes in GDP growth.
Compensation of Employees Personal Income Tax; Ontario Health Premium; and Employer Health Tax $876 million revenue change for each percentage point change in growth in compensation of employees.
Household Consumption Expenditures Sales Tax $257 million revenue change for each percentage point change in growth of household consumption expenditures.
Net Operating Surplus of Corporations Corporations Tax $236 million revenue change for each percentage point change in growth in net operating surplus of corporations.
Housing Resales and Resale Prices Land Transfer Tax $42 million revenue change for each percentage point change in growth of either housing resales or resale prices.
Ontario Population Share Canada Health Transfer $49 million revenue change for each one-tenth of a percentage point change in Ontario’s population share.
Ontario Population Share Canada Social Transfer $16 million revenue change for each one-tenth of a percentage point change in Ontario’s population share.

Table 3.6 footnotes:

Source: Ontario Ministry of Finance.

Revenue Outlook Scenarios

To illustrate the potential impacts of elevated economic uncertainty, the Ontario Ministry of Finance has developed two alternative scenarios that the economy could take over the next several years (see Chapter 2: Economic Performance and Outlook for more details). Based on the two alternative nominal GDP growth economic scenarios, two taxation revenue outlook scenarios were developed. The Faster Growth and Slower Growth scenarios each represent a potential path intended to illustrate a broader range of possible outcomes depending on the pace of economic growth, but neither should be considered as the best case or the worst case.

Table 3.7
Ontario’s Taxation Revenue Scenarios
($ Billions)
  2023–24p 2024–25p 2025–26p
Faster Growth Scenario 149.8 160.3 171.1
Planning Projection 144.2 152.1 160.4
Slower Growth Scenario 140.6 146.3 152.8

Table 3.7 footnotes:

p = Ontario Ministry of Finance Planning Projection and alternative scenarios.

Note: Numbers may not add due to rounding.

Source: Ontario Ministry of Finance.

In the Faster Growth scenario, total taxation revenue over the medium term is $10.7 billion higher in 2025–26 than the Planning Projection, while in the Slower Growth scenario, total taxation revenue is $7.6 billion lower.

Under the Faster Growth scenario, the surplus outlook would improve to $4.4 billion in 2023–24, $8.9 billion in 2024–25 and $16.0 billion in 2025–26. However, if the Slower Growth scenario materializes, the deficit outlook would deteriorate to $5.0 billion in 2023–24, $5.8 billion in 2024–25 and $3.8 billion in 2025–26.

Note that in these alternative outlook scenarios, program expenses are assumed to be unchanged compared to the medium-term expense outlook and only revenue and interest on debt are adjusted.

Chart 3.2: Ontario Medium-Term Outlook Based on Alternative Scenarios
Accessible description of Chart 3.2

Medium-Term Expense Outlook

The total expense outlook is projected to grow from $202.6 billion in 2022–23 to $217.5 billion in 2025–26.

Total program expense is projected to grow from $189.1 billion in 2022–23 to $202.5 billion in 2025–26, representing an annual average increase of 2.3 per cent. Base program expense is projected to increase by $27.4 billion over the same period, representing an annual average increase of 5.0 per cent.

Table 3.8
Summary of Medium-Term Expense Outlook
($ Billions)
  Actual
2021–22
Interim1
2022–23
Medium-Term
Outlook
2023–24
Medium-Term
Outlook
2024–25
Medium-Term
Outlook
2025–26
Base Programs2 — Health Sector 69.6 74.9 81.0 84.2 87.6
Base Programs3 — Education Sector4 28.8 32.4 34.7 36.1 37.5
Base Programs5 — Postsecondary Education Sector 10.5 11.3 12.1 12.5 12.9
Base Programs6 — Children, Community and Social Services Sector 16.8 18.4 19.4 19.8 19.9
Base Programs7 — Justice Sector 4.7 5.5 5.4 5.4 5.3
Base Programs8 — Other Programs 29.2 32.6 38.1 38.4 39.3
Total Base Programs 159.6 175.1 190.6 196.4 202.5
COVID‑19 Time-Limited Funding 10.9 7.8
Other One-Time Expenses 6.3
Total Programs 170.4 189.1 190.6 196.4 202.5
Interest on Debt 12.6 13.4 14.1 14.4 15.1
Total Expense 183.0 202.6 204.7 210.8 217.5

Table 3.8 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

[2], [3], [5], [6], [7], [8] For presentation purposes in the 2023 Budget, one-time COVID‑19-related spending in 2021–22 and 2022–23 has been included within COVID‑19 Time-Limited Funding.

[4] Excludes Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.

Note: Numbers may not add due to rounding.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

The government has made available COVID‑19 Time-Limited Funding during the pandemic, including $7.8 billion in 2022–23. This funding will no longer be reported separately, starting in
2023–24. Additionally, in 2022–23, there are other significant one-time expenses of $6.3 billion projected, including for costs associated with ongoing land and land-related claims with Indigenous communities, where Ontario is in active negotiations, or claims are accepted for negotiation or are under review1. These one-time expenses are broken out to provide greater transparency regarding their temporary nature.

In addition to these temporary initiatives, the government continues to invest in programs that serve the people of Ontario. Over the medium-term outlook, base program expense is projected to increase every year, growing at an average annual rate of 5.0 per cent from 2022–23 to 2025–26.

Chart 3.3: Program Expense Growth
Accessible description of Chart 3.3

Highlights of the changes to the program expense outlook over the medium term include the following:

  • Base Health sector expense is projected to increase from $74.9 billion in 2022–23 to $87.6 billion in 2025–26 — representing 5.4 per cent average annual growth over the period. The growth is primarily due to investments to:
    • Address the growing demands in the health sector, including funding for hospitals and cancer treatment services to respond to Ontario’s aging and growing population, and provide stability;
    • Support health human resources initiatives to optimize the existing workforce and recruit and retain health care providers;
    • Enhance emergency health services by reducing wait times;
    • Improve and reform the home and community care sector; and
    • Support mental health and addictions services through the Roadmap to Wellness: A Plan to Build Ontario’s Mental Health and Addictions System.
  • Base Education sector expense is projected to increase from $32.4 billion in 2022–23 to $37.5 billion in 2025–26 — representing 5.0 per cent average annual growth over the period. Key investments include:
    • Helping students catch up on learning through reading and math programs and modernizing the school curriculum;
    • Funding to support enrolment growth and commitments consistent with labour agreements reached; and
    • Funding to continue the implementation of the Canada‐wide Early Learning and Child Care Agreement to reduce average out‐of‐pocket child care fees and enhance access to child care.
  • Base Postsecondary Education sector expense is projected to increase from $11.3 billion in 2022–23 to $12.9 billion in 2025–26 — representing 4.5 per cent average annual growth over the period. This is mainly due to:
    • Higher college sector spending from increased on-campus activities following the easing of public health restrictions;
    • Investments of over $428 million to support Health Human Resources needs including clinical education for nursing‐related programs and expanding the number of medical school seats. The government is also providing supports through the Ontario Learn and Stay Grant; and
    • Investments in research and innovation to support productivity and economic growth, such as for the Sudbury Neutrino Observatory (SNOLAB), creating a Centre for Analytics at the Ontario Brain Institute and expanding the McMaster Nuclear Reactor.
  • Base Children, Community and Social Services sector expense is projected to increase from $18.4 billion in 2022–23 to $19.9 billion in 2025–26 — representing 2.7 per cent average annual growth over the period. This is mainly due to:
    • $1.4 billion over three years to annually adjust to inflation the core allowances for the Ontario Disability Support Program and the maximum monthly amount for the Assistance for Children with Severe Disabilities Program, starting in July 2023; and
    • $170 million over three years to support a new program for youth leaving the child welfare system aimed at improving their long-term outcomes and financial independence.
  • Base Justice sector expense is projected to decrease from $5.5 billion in 2022–23 to $5.3 billion in 2025–26. This is primarily due to obligations under the Crown Liability and Proceedings Act, 2019 in 2022–23, which are recorded annually and are not included in forecasted expenses beyond 2022–23. The government continues to make investments in the Justice sector for key initiatives such as the Guns, Gangs and Violence Reduction Strategy in order to protect public safety.
  • Base Other Programs expense is projected to increase from $32.6 billion in 2022–23 to $39.3 billion in 2025–26. Key changes include:
    • $3.5 billion over three years, beginning in 2023–24, as part of the government’s multi-year commitment to improve access to high-speed internet for every community across Ontario by the end of 2025;
    • $202 million per year starting in 2023–24 for the Homelessness Prevention Program and Indigenous Supportive Housing Program to help prevent and address homelessness;
    • $224 million in 2023–24 to support the development and expansion of brick-and-mortar training centres to train more workers for careers in the skilled trades and other in-demand jobs through the Skills Development Fund — Capital Stream;
    • $110 million over three years, beginning in 2023–24, to improve emergency readiness and enhance Ontario’s capacity to respond to emergencies; and
    • Adequate Contingency Funds to help address emerging needs and risks through the medium-term planning horizon.

The total expense outlook includes Interest on Debt expense, which is projected to increase from $13.4 billion in 2022–23 to $15.1 billion in 2025–26.

Prudence Built into the Medium-Term Outlook

In keeping with sound fiscal planning practices, Ontario’s revenue outlook is based on prudent economic planning projections, as discussed in Chapter 2: Economic Performance and Outlook. Three external economic experts reviewed the Ontario Ministry of Finance’s economic assumptions and found them to be reasonable.2

Ontario incorporates prudence in the form of a reserve to protect the fiscal outlook against unforeseen adverse changes in the province’s revenue and expense, including those resulting from changes in Ontario’s economic performance. The reserve has been set at $1.0 billion in 2023–24, $2.0 billion in 2024–25 and $4.0 billion in 2025–26. These increases reflect Ontario’s commitment to maintaining a prudent and flexible fiscal plan that can respond to elevated economic uncertainty, notably higher levels of inflation and the impact of higher interest rates on the economy.

In addition, the Contingency Fund is maintained to help mitigate expense risks that may adversely affect Ontario’s fiscal performance. The Contingency Fund in 2023–24 is set at $4.0 billion, reflecting the government’s cautious, prudent and responsible fiscal planning.

Risks to the Expense Outlook

Table 3.9 provides a summary of key expense risks and sensitivities that could result from unexpected changes in economic conditions and program demands. A change in these factors could affect total expense and the public sector, causing variances in the overall fiscal forecast. These sensitivities illustrate possible effects on the government’s key programs and can vary, depending on the nature and composition of potential risks.

Table 3.9
Selected Expense Sensitivities
Program/Sector 2023–24 Assumption 2023–24 Sensitivities
Hospital Costs (base)1 Annual growth of 4.0 per cent One per cent change in hospital costs: $238.3 million
COVID‑19 Testing Cost per additional 10,000 diagnostic tests/day (lab processing) Additional 10,000 COVID‑19 diagnostic tests: $0.52 million/day2
Ontario Health Insurance Plan (OHIP) (base) Annual growth of 5.3 per cent One per cent change in OHIP expense: $182.0 million
Home Care3 Approximately 36.8 million hours of personal support services One per cent change in hours of personal support services: approximately $17.8 million
Home Care4 Approximately 9.1 million nursing and therapy visits and 1.3 million nursing shifts One per cent change in all nursing and therapy visits: approximately $11.2 million
Elementary and Secondary Schools Approximately 2,037 million average daily pupil enrolment One per cent enrolment change: approximately $175 million
Ontario Works 235,777 average annual caseload One per cent caseload change: approximately $28 million
Ontario Disability Support Program 387,538 average annual caseload One per cent caseload change: approximately $63 million
Interest on Debt Average cost of borrowing in 2023–24 is forecast to be 4.60 per cent In the first full year, the impact of a 100 basis-point change in borrowing rates: approximately $600 million

Table 3.9 footnotes:

[1] Hospital costs are based on hospital operating transfer payments and exclude one-time funding for COVID‑19 and consolidations.

[2] Estimated cost per day is based on an average of $51.80 per test for tests conducted by the diagnostic lab network (lab processing only). Tests processed outside of the network are more expensive on a per-test basis.

[3], [4] Home Care statistics are based on a combination of 2021–22 and 2022–23 data and estimates.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

Transparency and Risks

The government continues to be transparent about the state of Ontario’s finances. This principle is reflected in the Fiscal Sustainability, Transparency and Accountability Act, 2019, which stipulates that Ontario’s fiscal policy should be clearly articulated and information about it should be readily available to the public without charge.

To ensure a reasonable and prudent economic forecast, the government’s key economic planning projections are set below the average of private-sector forecasts in each year. While the planning assumptions for economic growth are reasonable and prudent, the Ontario Ministry of Finance has also developed Faster Growth and Slower Growth scenarios to provide greater transparency around the province’s economic outlook amid heightened economic uncertainty.

As a matter of transparent fiscal management, financial pressures are monitored throughout the fiscal year by the Ontario Treasury Board Secretariat, with the goal of ensuring that robust and prudent methodologies are used to develop forecasts. Other important risk management tools include closely tracking the pace of implementation of initiatives and proactively identifying emerging program and policy risks. Comprehensive analysis of known pressures informs the fiscal planning processes, including the development of plans to mitigate and manage fiscal pressures, as well as maintaining adequate contingencies as part of the medium-term fiscal projections.

In addition to the key demand sensitivities and economic risks to the fiscal plan, there are risks stemming from the government’s contingent liabilities. Whether future events will result in actual liabilities for the province is beyond the direct control of the government. For example, losses could result from legal settlements, a call on a loan, or funding guarantees. While a Contingency Fund is included in the fiscal plan to help mitigate expense risks, until there exists certainty around the likelihood and costs of these future events, these risks are not included in the province’s fiscal plan. Provisions for losses that are likely to occur and can be reasonably estimated are expensed and reported as liabilities in Ontario’s financial statements. Any significant contingent liabilities related to the 2022–23 fiscal year will be disclosed as part of the Public Accounts of Ontario 2022–2023, to be released later this year.

New Accounting Standards

The Public Sector Accounting Board (PSAB) has issued several changes to its standards for government financial reporting, including accounting for revenue, public–private partnerships, and purchased intangibles, which will impact the Public Accounts of Ontario 2023–2024. Where reasonably determinable, the government has included the estimated impact from the PSAB standards in this Budget.

Revenue

Section PS 3400, Revenue (PS 3400) provides guidance on the accounting and reporting for common types of revenue, except for government transfers, tax revenue, externally restricted revenues, investment income and income from government business enterprises/partnerships. It identifies two types of revenue transactions: exchange and non-exchange. Revenues from exchange transactions are recognized when or as the public-sector entities satisfy their performance obligation. In contrast, revenues from non-exchange transactions are recognized when the public-sector entities have authority to claim the revenue, and a past event giving rise to the claim has occurred. Previously, revenues were recognized in the fiscal year in which the events giving rise to the revenues occurred.

The adjustment on adoption of PS 3400 will have a favourable impact on both net debt and accumulated deficit for the province. Revenue streams requiring a change in the timing of revenue recognition have currently been identified and an estimate of the adjustment as a result of the transition to PS 3400 has been determined.

Public Private Partnerships

The Public Private Partnerships standard (PS 3160) provides guidance on the accounting and reporting for the assets procured via public private partnerships (P3), as well as any associated liabilities. P3s are arrangements where a private-sector partner is used to procure and finance infrastructure assets.

Ontario has identified and developed estimates for any P3 assets and liabilities that require recognition or measurement adjustments.

Purchased Intangible Assets

Amendments to Financial Statement Concepts (Section PS 1000) and Financial Statement Presentation (Section PS 1201) and new Public Sector Guideline (PSG) 8 (Purchased Intangible Assets) require purchased intangible assets to be capitalized. Purchased intangible assets are non-financial assets lacking physical substance that are purchased through an arm’s-length exchange transaction. The new requirements are being adopted by the province of Ontario on a prospective basis, meaning only intangible assets purchased on a go-forward basis are to be capitalized and amortized.

Details of Ontario’s Finances

Table 3.10
Total Revenue
($ Millions)
  Actual
2020–21
Actual
2021–22
Interim1
2022–23
Plan
2023–24
Taxation Revenue — Personal Income Tax 40,333 46,750 52,841 55,982
Taxation Revenue — Sales Taxes 26,576 30,357 35,860 35,350
Taxation Revenue — Corporations Tax 17,775 25,227 27,928 24,668
Taxation Revenue — Education Property Tax 6,040 5,713 5,804 5,725
Taxation Revenue — Employer Health Tax 6,537 7,223 7,828 8,215
Taxation Revenue — Ontario Health Premium 4,330 4,414 4,663 4,896
Taxation Revenue — Gasoline Tax 1,898 2,202 2,030 2,222
Taxation Revenue — Land Transfer Tax 3,698 5,827 4,150 3,529
Taxation Revenue — Tobacco Tax 1,099 927 874 840
Taxation Revenue — Fuel Tax 686 771 586 635
Taxation Revenue — Beer, Wine and Spirits Taxes 624 624 626 617
Taxation Revenue — Electricity Payments in Lieu of Taxes 563 666 547 538
Taxation Revenue — Ontario Portion of the Federal Cannabis Excise Duty 106 215 253 269
Taxation Revenue — Other Taxes 619 759 665 735
Taxation Revenue — Total 110,884 131,675 144,657 144,222
Government of Canada — Canada Health Transfer 16,206 16,731 17,524 19,218
Government of Canada — Canada Social Transfer 5,815 6,003 6,178 6,384
Government of Canada — Equalization 421
Government of Canada — Infrastructure Programs 769 562 863 1,206
Government of Canada — Labour Market Programs 1,323 1,476 1,180 931
Government of Canada — Social Housing Agreement 338 305 263 218
Government of Canada — Other Federal Payments 9,014 5,091 4,728 5,996
Government of Canada — Direct Transfers to Broader Public Sector Organizations 459 439 522 470
Government of Canada — Total 33,924 30,607 31,259 34,844
Income from Government Business Enterprises — Liquor Control Board of Ontario 2,539 2,543 2,441 2,452
Income from Government Business Enterprises — Ontario Power Generation Inc./Hydro One Ltd. 2,044 2,151 1,460 1,126
Income from Government Business Enterprises — Ontario Lottery and Gaming Corporation 359 1,561 2,384 2,574
Income from Government Business Enterprises — Ontario Cannabis Store 67 186 225 194
Income from Government Business Enterprises — Total 5,009 6,441 6,510 6,345
Other Non-Tax Revenue — Fees, Donations and Other Revenues from Hospitals, School Boards and Colleges 7,790 9,688 10,385 11,104
Other Non-Tax Revenue — Vehicle and Driver Registration Fees2 1,952 33 1,208 1,131
Other Non-Tax Revenue — Miscellaneous Other Non-Tax Revenue 1,857 2,625 1,900 1,943
Other Non-Tax Revenue — Other Fees and Licences 1,017 1,174 1,403 1,518
Other Non-Tax Revenue — Sales and Rentals 680 1,046 1,630 1,847
Other Non-Tax Revenue — Reimbursements 1,277 1,233 1,039 1,048
Other Non-Tax Revenue — Royalties 359 468 364 322
Other Non-Tax Revenue — Power Supply Contract Recoveries 116 67 46 43
Other Non-Tax Revenue — Net Reduction of Power Purchase Contracts 28 5
Other Non-Tax Revenue — Other Non-Tax Revenue — Total 15,076 16,339 17,976 18,956
Total Revenue 164,893 185,062 200,402 204,367

Table 3.10 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

[2] Vehicle and Driver Registration Fees in 2021–22 reflect the elimination and rebate of eligible licence plate renewal fees paid since March 1, 2020.

Note: Numbers may not add due to rounding.

Source: Ontario Ministry of Finance.

 

Table 3.11
Total Expense1,2
($ Millions)
Ministry Expense Actual
2020–21
Actual
2021–22
Interim3
2022–23
Plan
2023–24
Agriculture, Food and Rural Affairs (Base) 288 283 312 350.3
Agriculture, Food and Rural Affairs — Demand-Driven Risk Management and Time-Limited Programs 458 358 532 472.1
Agriculture, Food and Rural Affairs — COVID‑19 Time-Limited Funding4 41 32 30
Agriculture, Food and Rural Affairs (Total) 787 674 874 822.4
Attorney General (Base) 1,523 1,622 1,869 1,919.2
Attorney General — Statutory Appropriations — Crown Liability and Proceedings Act, 2019 60 49 101
Attorney General — One-Time Accounting Adjustment for the Victim Fine Surcharges Program 196
Attorney General — COVID‑19 Time-Limited Funding5 71 145
Attorney General (Total) 1,850 1,816 1,970 1,919.2
Board of Internal Economy (Base) 248 283 305 304.8
Board of Internal Economy — Provision for the Costs of General Election 100
Board of Internal Economy — COVID‑19 Time-Limited Funding6 0 2
Board of Internal Economy (Total) 248 284 405 304.8
Children, Community and Social Services (Base) 16,994 16,777 18,380 19,360.8
Children, Community and Social Services — COVID‑19 Time-Limited Funding7 440 293 23
Children, Community and Social Services (Total) 17,433 17,071 18,403 19,360.8
Citizenship and Multiculturalism (Base) 23 33 58 64.1
Citizenship and Multiculturalism - COVID‑19 Time—Limited Funding8 3 3
Citizenship and Multiculturalism (Total) 23 36 60 64.1
Colleges and Universities (Base) 8,767 9,539 10,243 10,757.2
Colleges and Universities — Student Financial Assistance 766 954 1,091 1,357.7
Colleges and Universities — COVID‑19 Time-Limited Funding9 292 117 11
Colleges and Universities (Total) 9,826 10,610 11,345 12,114.8
Economic Development, Job Creation and Trade (Base) 162 164 165 188.9
Economic Development, Job Creation and Trade — Tax Credits for Research and Development and Regional Investment10 218 304 321 299.2
Economic Development, Job Creation and Trade — Ontario Made Manufacturing Investment Tax Credit 215.0
Economic Development, Job Creation and Trade — Time-Limited Investments 187 157 503 606.8
Economic Development, Job Creation and Trade — Bad Debt Expense 211
Economic Development, Job Creation and Trade — COVID‑19 Time-Limited Funding11 3,106 360 46
Economic Development, Job Creation and Trade (Total) 3,885 985 1,035 1,309.8
Education (Base) 28,389 28,837 32,394 34,712.1
Education — Teachers’ Pension Plan 1,607 1,610 1,662 1,711.0
Education — COVID‑19 Time-Limited Funding12 2,885 1,060 969
Education (Total) 32,881 31,507 35,025 36,423.1
Energy (Base) 229 240 254 281.8
Energy — Electricity Cost-Relief Programs 5,539 6,313 5,946 6,516.8
Energy — COVID‑19 Time-Limited Funding13 906 274
Energy (Total) 6,674 6,827 6,199 6,798.6
Environment, Conservation and Parks (Base) 632 687 725 782.6
Environment, Conservation and Parks — COVID‑19 Time-Limited Funding14 3 16 17
Environment, Conservation and Parks (Total) 635 703 742 782.6
Executive Offices (Base) 45 49 55 60.8
Executive Offices — Time-Limited Assistance 2
Executive Offices — COVID‑19 Time-Limited Funding15 6 2
Executive Offices (Total) 53 51 55 60.8
Finance (Base) 703 751 908 1,006.0
Finance — Investment Management Corporation of Ontario16 128 210 259 298.8
Finance — Ontario Municipal Partnership Fund 502 502 502 501.9
Finance — Temporary and Other Local Assistance 21 21 21 81.0
Finance — Power Supply Contract Costs 116 67 46 42.9
Finance — COVID‑19 Time-Limited Funding17 440 231
Finance (Total) 1,909 1,781 1,736 1,930.6
Francophone Affairs (Base) 5 7 7 7.7
Francophone Affairs — Time-Limited Investments 1
Francophone Affairs — COVID‑19 Time-Limited Funding18 1 2
Francophone Affairs (Total) 6 9 8 7.7
Health (Total)19 59,878 64,269 68,368 72,709.6
COVID‑19 Health Response20 5,082 6,167 4,922
Indigenous Affairs (Base) 64 85 120 133.2
Indigenous Affairs — One-Time Investments Including Settlements 149 152 5,025
Indigenous Affairs — COVID‑19 Time-Limited Funding21 42 4
Indigenous Affairs (Total) 256 241 5,145 133.2
Infrastructure (Base) 171 163 304 601.8
Infrastructure — Federal–Provincial Infrastructure Programs 161 267 365 492.2
Infrastructure — Broadband 67 75 179 783.2
Infrastructure — Waterfront Toronto Revitalization (Port Lands Flood Protection) 103 156 25
Infrastructure — Municipal Infrastructure Program Investments 197 399 396 398.4
Infrastructure — Realty 1,099 1,156 1,172 1,194.3
Infrastructure — COVID‑19 Time-Limited Funding22 9 10
Infrastructure (Total) 1,807 2,226 2,442 3,469.8
Labour, Immigration, Training and Skills Development (Base) 170 102 243 236.4
Labour, Immigration, Training and Skills Development — Training Tax Credits (Co-operative Education and Apprenticeship Training)23 98 105 68 93.5
Labour, Immigration, Training and Skills Development — Demand-Driven Employment and Training Programs 1,173 955 1,224 1,454.2
Labour, Immigration, Training and Skills Development — COVID‑19 Time-Limited Funding24 33 794 475
Labour, Immigration, Training and Skills Development (Total) 1,473 1,957 2,009 1,784.1
Long-Term Care (Total)25 4,514 5,300 6,513 8,299.7
Mines (Base) 85 135 163 172.3
Mines — One-Time Accounting Adjustment for Contaminated Sites 183 100
Mines — COVID‑19 Time-Limited Funding26 0
Mines (Total) 86 318 263 172.3
Municipal Affairs and Housing (Base) 485 486 553 767.5
Municipal Affairs and Housing — Time-Limited Investments 224 351 415 480.0
Municipal Affairs and Housing — Social Housing Agreement — Payments to Service Managers27 313 281 210 198.2
Municipal Affairs and Housing — COVID‑19 Time-Limited Funding28 2,707 330 391
Municipal Affairs and Housing (Total) 3,729 1,447 1,570 1,445.6
Natural Resources and Forestry (Base) 505 607 612 688.3
Natural Resources and Forestry — Emergency Forest Firefighting 115 237 100 135.0
Natural Resources and Forestry — One-Time Accounting Adjustment for Landfills 202
Natural Resources and Forestry — COVID‑19 Time-Limited Funding29 13 12
Natural Resources and Forestry (Total) 835 857 712 823.2
Northern Development (Base) 583 605 687 725.3
Northern Development — COVID‑19 Time-Limited Funding30 0 41
Northern Development (Total) 583 646 687 725.3
Public and Business Service Delivery (Base) 549 629 1,211 1,130.6
Public and Business Service Delivery — COVID‑19 Time-Limited Funding31 414 141 89
Public and Business Service Delivery (Total) 963 770 1,300 1,130.6
Seniors and Accessibility (Base) 55 53 63 64.9
Seniors and Accessibility — Time-Limited Investments 1
Seniors and Accessibility — Seniors Tax Credits (Home Safety and Care at Home)32 10 30 164 120.0
Seniors and Accessibility — COVID‑19 Time-Limited Funding33 151 43 15
Seniors and Accessibility (Total) 216 127 243 184.9
Solicitor General (Base) 2,807 2,981 3,529 3,431.1
Solicitor General — COVID‑19 Time-Limited Funding34 94 150 2
Solicitor General (Total) 2,901 3,131 3,531 3,431.1
Tourism, Culture and Sport (Base) 691 858 843 840.2
Tourism, Culture and Sport — Ontario Cultural Media Tax Credits 512 693 833 906.1
Tourism, Culture and Sport — Ontario Cultural Media Tax Credits — Amounts Related to Prior Years 65 84 51
Tourism, Culture and Sport — COVID‑19 Time-Limited Funding35 120 257 200
Tourism, Culture and Sport (Total) 1,388 1,893 1,927 1,746.3
Transportation (Base) 4,646 5,172 6,066 6,179.5
Transportation — Federal–Provincial Infrastructure Programs 449 231 353 729.2
Transportation — COVID‑19 Time-Limited Funding36 2,188 369 585
Transportation (Total) 7,283 5,773 7,004 6,908.7
Treasury Board Secretariat (Base) 296 315 366 497.4
Treasury Board Secretariat — Employee and Pensioner Benefits 1,485 2,633 1,286 1,260.7
Treasury Board Secretariat — One-Time Investments 1,250
Treasury Board Secretariat — Operating Contingency Fund 1,653 3,893.7
Treasury Board Secretariat — Capital Contingency Fund 97 106.3
Treasury Board Secretariat — COVID‑19 Time-Limited Funding37 3 2 1
Treasury Board Secretariat (Total) 1,784 2,950 4,654 5,758.1
Interest on Debt38 12,308 12,587 13,424 14,058.0
Total Expense 181,297 183,011 202,572 204,680.0

Table 3.11 footnotes:

[1] Numbers reflect current ministry structure.

[2] Ministry expenses have been restated for reclassification and program transfer changes. These changes are fiscally neutral. The actual results are presented on a similar basis for consistency.

[3] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

[4], [5], [6], [7], [8], [9], [11], [12], [13], [14], [15], [17], [18], [21], [22], [24], [26], [28], [29], [30], [31], [33], [34], [35], [36], [37] In the 2021 Budget, the government made available COVID‐19 Time‐Limited Funding. This funding will no longer be reported separately, starting 2023–24.

[10] Includes the estimated cost of tax credit claims for the Ontario Innovation Tax Credit, Ontario Business-Research Institute Tax Credit and the Regional Opportunities Investment Tax Credit (ROITC). Figures from 2020–21 to 2022–23 include tax credit amounts related to prior years, except for the ROITC in 2020–21. $35 million in 2022–23 was previously shown under COVID‑19 Time-Limited Funding.

[16] Based on the requirements of Public Sector Accounting Standards, the government consolidates the Investment Management Corporation of Ontario into the Ontario Ministry of Finance.

[19] Includes accounting adjustments tied primarily to grants provided for infrastructure projects and other related investments.

[20] For presentation purposes in the 2023 Budget, Time-Limited COVID‑19-related health response spending has been included separately for 2020–21 to 2022–23, instead of within the Ontario Ministry of Health and Ontario Ministry of Long-Term Care.

[23] The Co-operative Education Tax Credit remains in effect. The Apprenticeship Training Tax Credit is eliminated for eligible apprenticeship programs that commenced on or after November 15, 2017. Amounts from 2020–21 to 2022–23 include tax credit amounts related to prior years.

[25] The Ontario Ministry of Long-Term Care total includes expenses incurred by Ontario Health for funding for long-term care. These amounts will be consolidated in the total expense of the Ontario Ministry of Health, including $4.5 billion for interim 2022–23 and $5.2 billion in 2023–24.

[27] The annual decline from 2020–21 to 2023–24 is mainly due to declining federal obligations, such as maturing mortgages, under the Social Housing Agreement.

[32] $25 million of Seniors Tax Credits in 2022–23 was previously shown under COVID‑19 Time-Limited Funding.

[38] Interest on debt is net of interest capitalized during construction of tangible capital assets of $321 million in 2021–22, $479 million in 2022–23 and $573 million in 2023–24.

Note: Numbers may not add due to rounding.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

Chart 3.5: Composition of Total Revenue, 2023–24
Accessible description of Chart 3.5
Chart 3.6: Composition of Total Expense, 2023–24
Accessible description of Chart 3.6
Table 3.12
Infrastructure Expenditures
($ Millions)
Sector Total
Infrastructure Expenditures
Interim1,2
2022–23
2023–24 Plan
Investment
in Capital Assets3
2023–24 Plan
Transfers
and Other Infrastructure Expenditures4
2023–24 Plan
Total
Infrastructure Expenditures
Transportation — Transit 6,837 6,195 1,276 7,471
Transportation — Provincial Highways 2,790 3,098 95 3,193
Transportation — Other Transportation, Property and Planning 237 157 79 236
Health — Hospitals 3,186 3,348 1 3,349
Health — Other Health 406 77 504 581
Education 2,944 2,777 226 3,003
Postsecondary Education — Colleges and Other 894 614 90 705
Postsecondary Education — Universities 117 124 124
Social 342 32 337 369
Justice 516 790 11 801
Other Sectors5 2,345 1,121 2,546 3,667
Total Infrastructure Expenditures 20,615 18,210 5,289 23,499
Less: Other Partner Funding6 3,264 2,560 304 2,864
Total7 17,351 15,650 4,985 20,635

Table 3.12 footnotes:

[1] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

[2] Includes provincial investment in capital assets of $11.9 billion.

[3] Includes $573 million in interest capitalized during construction.

[4] Includes transfers to municipalities, universities and non-consolidated agencies.

[5] Includes broadband infrastructure, government administration, natural resources, and the culture and tourism industries.

[6] Other Partner Funding refers to third-party investments primarily in hospitals, colleges and schools.

[7] Includes Federal–Municipal contributions to provincial infrastructure investments.

Note: Numbers may not add due to rounding.

Source: Ontario Treasury Board Secretariat.

 

Table 3.13
10-Year Review of Selected Financial and Economic Statistics1,2
($ Millions)
  2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21 Actual
2021–22
 Interim5
2022–23
Plan
2023–24
Revenue 126,152 136,148 140,734 150,594 153,700 156,096 164,893 185,062 200,402 204,367
Expense — Programs 126,199 129,905 131,442 142,344 148,732 152,253 168,989 170,424 189,148 190,622
Expense — Interest on Debt3 11,221 11,589 11,727 11,922 12,403 12,515 12,308 12,587 13,424 14,058
Total Expense 137,420 141,494 143,169 154,266 161,135 164,768 181,297 183,011 202,572 204,680
Reserve 1,000
Surplus/(Deficit) (11,268) (5,346) (2,435) (3,672) (7,435) (8,672) (16,404) 2,051 (2,170) (1,313)
Net Debt 294,557 306,357 314,077 323,834 338,496 353,332 373,564 380,415 395,785 406,411
Accumulated Deficit 196,665 203,014 205,939 209,023 216,642 225,764 239,294 236,857  242,763 243,438
Gross Domestic Product (GDP) at Market Prices 727,042 760,435 790,749 824,979 860,104 893,224 866,981 956,707 1,046,883 1,076,440
Primary Household Income 490,423 512,570 520,486 541,501 567,484 593,065 592,460 644,263 705,280 738,162
Population (000s) — July4 13,618  13,707  13,875 14,070 14,309 14,545 14,726 14,809 15,109 15,366
Net Debt per Capita (dollars) 21,631 22,350 22,636 23,016 23,657 24,293 25,368 25,688 26,195 26,449
Household Income per Capita (dollars) 36,014 37,394 37,511 38,486 39,660 40,775 40,232 43,504 46,678 48,039
Net Debt as a Per Cent of Revenue 233.5% 225.0% 223.2% 215.0% 220.2% 226.4% 226.5% 205.6% 197.5% 198.9%
Interest on Debt as a Per Cent of Revenue 8.9% 8.5% 8.3% 7.9% 8.1% 8.0% 7.5% 6.8% 6.7% 6.9%
Net Debt as a Per Cent of GDP 40.5% 40.3% 39.7% 39.3% 39.4% 39.6% 43.1% 39.8% 37.8% 37.8%
Accumulated Deficit as a Per Cent of GDP 27.1% 26.7% 26.0% 25.3% 25.2% 25.3% 27.6% 24.8% 23.2% 22.6%

Table 3.13 footnotes:

[1] Amounts reflect a change in pension expense that was calculated based on recommendations of the Independent Financial Commission of Inquiry, as described in Note 19 to the Consolidated Financial Statements, in Public Accounts of Ontario 2017–2018. Amounts for net debt and accumulated deficit also reflect this change.

[2] Revenues and expenses have been restated to reflect the change in presentation of third-party revenue for hospitals, school boards and colleges to be reported as revenue.This restatement is fiscally neutral.

[3] Interest on debt is net of interest capitalized during construction of tangible capital assets of $321 million in 2021–22, $479 million in 2022–23 and $573 million in 2023–24.

[4] Population figures are for July 1 of the fiscal year indicated (i.e., for 2017–18, the population on July 1, 2017, is shown).

[5] Interim represents the 2023 Budget projection for the 2022–23 fiscal year.

Note: Numbers may not add due to rounding.

Sources: Statistics Canada, Ontario Treasury Board Secretariat, and Ontario Ministry of Finance.

Footnotes

[1] Potential liability for these claims is recorded if the settlement of the claim is assessed as likely and the amount of the settlement can be reasonably estimated.

[2] The three experts are from the Policy and Economic Analysis Program at the University of Toronto; Quantitative Economic Decisions, Inc.; and Stokes Economic Consulting, Inc.

Chart Descriptions

Chart 3.1: Current Fiscal Outlook Compared to 2022 Budget

The bar chart illustrates the fiscal outlook presented in the 2022 Budget compared to the current outlook in the 2023 Budget. The 2022 Budget projected deficits of $19.9 billion in 2022–23, $12.3 billion in 2023–24, $7.6 billion in 2024–25 and $5.0 billion in 2025–26. With the release of the 2023 Budget, the deficit projections have been revised to $2.2 billion in 2022–23, $1.3 billion in 2023–24, and surpluses of $0.2 billion in 2024–25 and $4.4 billion in 2025–26.

Source: Ontario Ministry of Finance.

Return to Chart 3.1

Chart 3.2: Ontario Medium-Term Outlook Based on Alternative Scenarios

The bar chart illustrates the range of Ontario fiscal outlooks based on the two alternative economic scenarios presented in Chapter 2: Economic Performance and Outlook. The 2023 Budget outlook estimates the deficit to be $1.3 billion in 2023–24, a surplus of $0.2 billion in 2024–25 and a surplus of $4.4 billion in 2025–26. Under the Faster Growth scenario, the surplus outlook is estimated to be $4.4 billion in 2023–24, $8.9 billion in 2024–25 and $16.0 billion in 2025–26. Under the Slower Growth scenario, the deficit outlook is estimated to be $5.0 billion in 2023–24, $5.8 billion in 2024–25 and $3.8 billion in 2025–26.

Source: Ontario Ministry of Finance.

Return to Chart 3.2

Chart 3.3: Program Expense Growth

The bar chart shows program expense growth from 2020–21 to 2025–26 excluding COVID‑19 Time-Limited Funding and Other One-Time Expenses. For 2020–21, base program expense, excluding COVID‑19 Time-Limited Funding and Other One-Time Expenses, is $149.9 billion, $159.6 billion in 2021–22, $175.1 billion in 2022–23, $190.6 billion in 2023–24, $196.4 billion in 2024–25 and $202.5 billion in 2025–26.

There are only three fiscal years from 2020–21 to 2022–23 where COVID‑19 Time-Limited Funding is included as part of total program expense. In 2020–21, COVID‑19 Time-Limited Funding of $19.1 billion increases total program expense to $169.0 billion. In 2021–22, COVID‑19 Time-Limited Funding of $10.9 billion increases total program expense to $170.4 billion. In 2022–23, COVID‑19 Time-Limited Funding of $7.8 billion as well as $6.3 billion for Other One-Time Expenses, increases total program expense to $189.1 billion.

Note: Numbers may not add due to rounding.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

Return to Chart 3.3

Chart 3.4: Additional Federal Health Funding to Ontario

This chart illustrates that the additional dollars Ontario is investing into health care in the 2023 Budget significantly exceed the new federal health funding. Ontario will receive a total of $4.4 billion in new federal health funding over three years: $1.8 billion in 2023–24, $1.1 billion in 2024–25 and $1.5 billion in 2025–26, while Ontario will make incremental health care investments of $15.3 billion over three years: $3.2 billion in 2023–24, $5.9 billion in 2024–25 and $6.2 billion in 2025–26.

Note: The new federal health funding includes a one-time additional health care payment, time-limited funding for shared priorities and an enhancement of the Canada Health Transfer. Funding under existing Canada–Ontario agreements is not included (i.e., 10-year agreement on shared health priorities, including Home and Community Care and Mental Health and Addictions). All federal health funding amounts are notional and estimated based on population and nominal GDP forecasts, which are subject to change.

Sources: Department of Finance Canada and Ontario Ministry of Finance.

Return to Chart 3.4

Chart 3.5: Composition of Total Revenue, 2023–24

The pie chart shows the composition of Ontario’s revenue in 2023–24, which is projected to be $204.4 billion. The largest taxation revenue source is Personal Income Tax revenue at $56.0 billion, accounting for 27.4 per cent of total revenue. This is followed by Sales Tax at $35.4 billion, or 17.3 per cent of total revenue; and Corporations Tax at $24.7 billion, or 12.1 per cent of total revenue. Other components of taxation revenue include Education Property Tax at $5.7 billion, or 2.8 per cent of total revenue; Employer Health Tax at $8.2 billion, or 4.0 per cent; Gasoline Tax and Fuel Tax at $2.9 billion, or 1.4 per cent; the Ontario Health Premium at $4.9 billion, or 2.4 per cent; and Other Taxes at $6.5 billion, or 3.2 per cent of total revenue.

Total taxation revenue accounts for $144.2 billion, or 70.6 per cent of total revenue.

The other major non-taxation sources of revenue are Federal Transfers of $34.8 billion, or 17.0 per cent of total revenue; Income from Government Business Enterprises at $6.3 billion, or 3.1 per cent of total revenue; and various Other Non-Tax Revenue at $19.0 billion, or 9.3 per cent of total revenue.

Note: Numbers may not add due to rounding.

Source: Ontario Ministry of Finance.

Return to Chart 3.5

Chart 3.6: Composition of Total Expense, 2023–24

The pie chart shows the share of Ontario’s total expense and dollar amounts by sector in 2023–24.

Total expense in 2023–24 is projected to be $204.7 billion.

The largest expense is the Health Sector at $81.0 billion, accounting for 39.6 per cent of total expense.

The remaining sectors of total expense include the Education Sector* at $34.7 billion or 17.0 per cent; the Postsecondary Education Sector at $12.1 billion or 5.9 per cent; the Children, Community and Social Services Sector at $19.4 billion or 9.5 per cent; the Justice Sector at $5.4 billion or 2.6 per cent; Other Programs at $38.1 billion or 18.6 per cent; and Interest on Debt, included as part of Total Expense, is $14.1 billion or 6.9 per cent.

* Excludes the Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.

Note: Numbers may not add due to rounding.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

Return to Chart 3.6

Updated: March 23, 2023
Published: March 23, 2023