2023 Ontario Economic Outlook and Fiscal Review: Building a Strong Ontario Together

The Honourable Peter Bethlenfalvy, Minister of Finance

Table of Contents

Minister’s Introduction and Foreword

• Introduction
• Building Ontario
  • Building the Economy for Today and Tomorrow
  • Building Highways, Transit and Infrastructure
• Working for You
  • Working for Workers
  • Keeping Costs Down
  • Better Services for You
• Building a Strong Ontario Together

Ontario’s Economic and Fiscal Outlook in Brief

• Ontario’s Economic and Fiscal Outlook in Brief
• Ontario’s Economic Outlook
  • Revisions to Outlook Since the 2023 Budget
• A Strong Foundation for the Next Generation
• Ontario’s Fiscal Plan
  • Revenue Outlook Over the Medium Term
  • Program Expense Outlook Over the Medium Term
  • Interest on Debt Outlook Over the Medium Term
  • Other Fiscal Planning Assumptions
  • Economic and Fiscal Outlook Scenarios
• Borrowing and Debt Management
• A Capital Plan for a Stronger Ontario

Chapter 1: Building a Strong Ontario Together

Section A: Building Ontario

• Introduction
• Building Ontario’s Economy for Today and Tomorrow
  • Leveraging Ontario’s Critical Minerals Advantage
  • Attracting Manufacturing, Innovation and High-Paying Jobs
  • Powering Ontario’s Growth
  • Supporting Local Ontario Businesses
• Building Highways, Transit and Infrastructure
  • Partnering to Build More Infrastructure, Faster and Smarter
  • Building Highways
  • Building Transit
  • Building Community Infrastructure and Expanding High-Speed Internet Access

Section B: Working for You

• Introduction
• Working for Workers
  • Supporting Skills Development and Training
  • Helping Workers Plan for Retirement
• Keeping Your Costs Down
  • Putting Money Back in Your Pocket
  • Building More Housing
• Better Services for You
  • Making Health Care More Connected and Convenient
  • The Right Care in the Right Place
  • Faster Access to Care
  • Hiring More Health Care Workers
  • Protecting You and Your Family

Chapter 2: Economic Performance and Outlook

• Introduction
  • Revisions to the Outlook Since the 2023 Budget
• Recent Economic Performance
  • Ontario Labour Market
  • Consumer Price Inflation
• Economic Outlook
• Global Economic Environment
• Financial Markets and Other External Factors
• Details of Ontario’s Economic Outlook
  • Employment
  • Household Consumption
  • Consumer Price Inflation
  • Housing
• Risks to the Outlook
• Economic Outlook Scenarios

Chapter 3: A Strong Foundation for the Next Generation: Ontario’s Fiscal Plan and Outlook

• Introduction
• Key Changes in 2023–24 Since the 2023 Budget
  • Revenue
  • Expense
  • Prudence in 2023–24
• Medium-Term Fiscal Plan
  • Medium-Term Revenue Outlook
  • Economic and Fiscal Outlook Scenarios
  • Medium-Term Expense Outlook
  • Prudence Built Into the Medium-Term Outlook
• Transparency and Risks
• Details of Ontario’s Finances

Chapter 4: Borrowing and Debt Management

• Introduction
• Borrowing Program
• Green Bond Program
• Cost of Debt
  • Term of Debt
• Ensuring Adequate Liquidity Levels
• Progress on the Debt Burden Reduction Strategy

Annex: Details of Tax Measures and Other Legislative Initiatives

• Overview
• Enhancing the Ontario Harmonized Sales Tax Rebate for Purpose-Built Rental Housing
• Extending the Temporary Gas Tax and Fuel Tax Cuts
• Entering into a Coordinated Vaping Product Taxation Agreement
• Enhancing the Ontario Focused Flow-Through Share Tax Credit
• Summary of Measures
• Technical Amendments
  • Other Legislative Initiatives

Consultations on Building a Strong Ontario Together

List of Tables

Ontario’s Economic and Fiscal Outlook in Brief

• Summary of Ontario’s Economic Outlook
• Changes in the Ontario Ministry of Finance Key Economic Forecast Assumptions: 2023 Budget Compared to the 2023 Ontario Economic Outlook and Fiscal Review
• Ontario’s Medium-Term Fiscal Plan — Details
• Ontario Real GDP Growth Scenarios
• Ontario Nominal GDP Growth Scenarios
• 2023–24 Borrowing Program and Medium-Term Outlook
• Infrastructure Expenditures

Chapter 1: Building a Strong Ontario Together

• Table 1.1 Recently Completed Highway Projects
• Table 1.2 2023–24 Indigenous Transportation Initiatives
• Table 1.3 School Projects Opening for the 2023–24 School Year
• Table 1.4 Continuing To Get Shovels in the Ground To Build More Schools
• Table 1.5 Supporting Communities Through Projects Under the Ontario Community Infrastructure Fund

Chapter 2: Economic Performance and Outlook

• Table 2.1 Summary of Ontario’s Economic Outlook
• Table 2.2 Changes in the Ontario Ministry of Finance Key Economic Forecast Assumptions: 2023 Budget Compared to the 2023 Ontario Economic Outlook and Fiscal Review
• Table 2.3 Private-Sector Forecasts for Ontario Real GDP Growth
• Table 2.4 Private-Sector Forecasts for Ontario Nominal GDP Growth
• Table 2.5 External Factors
• Table 2.6 Ontario’s Economic Outlook
• Table 2.7 Impact of Sustained Changes in Key External Factors on Real GDP Growth
• Table 2.8 Ontario Real GDP Growth Scenarios
• Table 2.9 Ontario Nominal GDP Growth Scenarios

Chapter 3: A Strong Foundation for the Next Generation: Ontario’s Fiscal Plan and Outlook

• Table 3.1 Fiscal Summary
• Table 3.2 2023–24 In-Year Fiscal Performance
• Table 3.3 Key Changes to 2023–24 Revenue Projections
• Table 3.4 Key Changes to 2023–24 Total Expense Projections
• Table 3.5 Summary of Medium-Term Revenue Outlook
• Table 3.6 Ontario’s Taxation Revenue Scenarios
• Table 3.7 Summary of Medium-Term Expense Outlook
• Table 3.8 Revenue
• Table 3.9 Total Expense
• Table 3.10 Infrastructure Expenditures
• Table 3.11 10-Year Review of Selected Financial and Economic Statistics

Chapter 4: Borrowing and Debt Management

• Table 4.1 2023–24 Borrowing Program and Medium-Term Outlook
• Table 4.2 Progress on Relevant Debt Sustainability Measures

Annex: Details of Tax Measures and Other Legislative Initiatives

• Table A.1 Summary of Measures

List of Charts

Ontario’s Economic and Fiscal Outlook in Brief

• Ontario Fiscal Outlook Scenarios
• Net Debt-to-GDP
• Borrowing Outlook Scenarios for Long-Term Borrowing

Chapter 1: Building a Strong Ontario Together

• Chart 1.1 Attracting More than $26 billion in Automotive, Electric Vehicle Battery Supply Chain and Clean Steel Investments to Ontario
• Chart 1.2 Record-Breaking Population Growth Continues in Ontario
• Chart 1.3 Infrastructure Banks Launched by Other Jurisdictions
• Chart 1.4 Highway 413 Project Route
• Chart 1.5 Bradford Bypass Project Route
• Chart 1.6 Highway Projects Underway in Southwestern Ontario
• Chart 1.7 Current Status of Highway 11/17 Four Lane Expansion Project — Thunder Bay to Nipigon
• Chart 1.8 Building Transit in the Greater Golden Horseshoe

Chapter 2: Economic Performance and Outlook

• Chart 2.1 Ontario Real GDP Outperforms Canada in the First Half of 2023
• Chart 2.2 Ontario Unemployment Rate Remains Low
• Chart 2.3 Ontario Consumer Price Inflation Down but Remains Elevated
• Chart 2.4 Ontario GDP Growth Projected to Normalize
• Chart 2.5 Global Real GDP Growth Projections
• Chart 2.6 World Trade Volumes Slowing
• Chart 2.7 Short-Term Interest Rate Projections Move Higher
• Chart 2.8 Ontario Real GDP and Employment Growth to Moderate
• Chart 2.9 Ontario Household Spending Growth Projected to Continue
• Chart 2.10 Inflation Projected to Ease, but Risks Remain
• Chart 2.11 Consumer Price Index Inflation Projection Revised Higher
• Chart 2.12 Recent Developments in the Ontario Housing Market
• Chart 2.13 Ontario Housing Market Expected to Rebound in 2024 and 2025
• Chart 2.14 Range of Ontario GDP Scenario Forecasts

Chapter 3: A Strong Foundation for the Next Generation: Ontario’s Fiscal Plan and Outlook

• Chart 3.1 Current Surplus/(Deficit) Outlook Compared to 2023 Budget
• Chart 3.2 Ontario Fiscal Outlook Scenarios
• Chart 3.3 Program Expense
• Chart 3.4 Composition of Revenue, 2023–24
• Chart 3.5 Composition of Total Expense, 2023–24

Chapter 4: Borrowing and Debt Management

• Chart 4.1 Borrowing Outlook Scenarios for Long-Term Borrowing
• Chart 4.2 2023–24 Borrowing
• Chart 4.3 Domestic and International Borrowing
• Chart 4.4 Green Bond Allocation by Framework Category
• Chart 4.5 Ontario’s Green Bond Issues
• Chart 4.6 Effective Interest Rate (Weighted Average) on Total Debt
• Chart 4.7 Average Annual Ontario Borrowing Rates
• Chart 4.8 Interest on Debt Expense Lower than 2023 Budget Forecast
• Chart 4.9 Weighted-Average Term of Borrowings
• Chart 4.10 Average Unrestricted Liquid Reserve Levels
• Chart 4.11 Net Debt-to-GDP
• Chart 4.12 Net Debt-to-Revenue
• Chart 4.13 Interest on Debt-to-Revenue