Managing Expenditures

Archived Backgrounder

Managing Expenditures

Ministry of Finance

The 2008 Budget forecast for Ontario economic growth in 2008 was 1.1 per cent. Due to global economic uncertainty and a significant lowering of private sector forecasts, the government is now projecting 2008 economic growth of 0.1 per cent.

As a result, Ontario's revenue growth will decline, while expenditures will increase in certain areas. Due primarily to lower revenues, the government is projecting a $500 million deficit for 2008-09.

A TRACK RECORD OF SOUND FISCAL MANAGEMENT

Since taking office, the McGuinty government has eliminated the hidden $5.5 billion deficit it inherited, produced three consecutive balanced budgets, decreased Ontario's debt-to-GDP ratio and kept the rate of growth of provincial spending below the rate of revenue growth. It has done so while making strategic investments in key public services.

The McGuinty government has demonstrated its commitment to prudent management. To manage growth in spending while improving the delivery of public services, the government achieved $806 million in savings between 2004-05 and 2007-08, exceeding the $750 million target. The government achieved these savings by streamlining purchasing processes, reducing administrative costs, reducing energy and accommodation costs, improving the use of information technology (IT) and better harmonizing and coordinating government operations.

The government continues to implement efficiencies across the broader public sector (BPS) through such initiatives as OntarioBuys, a supply-chain management program that is expected to save up to $100 million across the hospital and education sectors, which can then be reinvested into front-line services.

The government has also reduced the overall cost of government administration from 15 per cent in 2003-04 to 12 per cent in 2007-08. Ontario's spending on general government services was $124 per person in 2007-08, the second-lowest rate among all provincial governments.

FURTHER MANAGING EXPENDITURES

The new economic reality is forcing governments around the world to re-examine their expenditures.

Ontario cannot spend its way out of today's difficulties. At the same time, it cannot afford irresponsible cuts to programs and services. The McGuinty government is committed to protecting the investments it has made in key public services over the past five years, while taking a prudent and balanced approach to future growth.

In light of lower revenues for 2008-09, the government is therefore taking action to further manage spending. It is:

  • Delaying the implementation of and slowing down some new spending, while at the same time restraining internal government expenditures. Together, these restraint measures will result in $108 million in savings in the five months remaining in the 2008-09 fiscal year. These measures include:
Restraint Initiative 2008-09 Savings
Completing the hiring of 9,000 nurses over a longer period of time than anticipated in the 2008 Budget $50 million
Deferring less-urgent education capital improvement projects $25 million
Delaying the launch of the Ontario Social Venture Capital Fund $20 million
Delaying the addition of 50 Family Health Teams by one year $3 million
Internal government restraint:
  • Reducing government staff travel costs
  • Reducing print advertising for government jobs
  • Freezing the existing government real estate footprint and leasehold improvements
  • Reducing government use of management and IT consultants
  • Freezing the purchase of government vehicles for the rest of 2008-09
  • Reducing government printing, photocopying and fax costs
$10 million
Total $108 million
  • Requiring ministries to focus on the highest-priority programs during their 2009-10 planning process, while ensuring lower-priority programs are reviewed and assessed.

WORKING WITH PARTNERS IN A NEW FISCAL ENVIRONMENT

Compensation costs and wage settlements are key cost elements that can have a substantial impact on the finances of both BPS partners and the province. With major contracts covering 50 per cent of BPS unionized workers and approximately 85 per cent of Ontario Public Service employees up for negotiation in 2008-09, the government expects its bargaining agent partners to achieve affordable collective agreements in this new fiscal environment.

In 2008-09, $76.6 billion--80 per cent of total government spending--will go to transfer payment recipients. Transfer payment funding will not be increasing in fiscal 2009-10 according to what was projected in the 2008 Budget last March. The government is confident that its transfer partners will work together with it to rise to the challenge of the current fiscal situation.

A BALANCED, RESPONSIBLE APPROACH

The McGuinty government will continue to implement its agenda, in a responsible and prudent manner, given the challenging economic environment. A deficit, followed by a plan for its elimination, represents a balanced response to today's global reality. The alternative would be deep cuts to the very programs and services that are helping individuals, families and businesses weather the current storm.

he 2009 Budget will update Ontario's medium-term fiscal plan and outlook. Leading up to the Budget, the Minister of Finance will continue to consult with many individuals, organizations and associations across the province about what more the government can do during uncertain economic times to prudently manage Ontario's finances and do everything it can to protect important public services.

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