Health and Education at Centre of Plan for New Generation of Economic Growth

Archived Release

Health and Education at Centre of Plan for New Generation of Economic Growth

Ministry of Finance

Comprehensive Four-year Plan Invests in People's Priorities, Generates Revenues, Cuts Costs QUEEN'S PARK, ON, May 18 - The McGuinty government today announced its comprehensive, four-year plan to invest in health and education, foster economic growth and balance the budget. The 2004 Budget sets out a responsible, realistic strategy to deal with Ontario's fiscal challenges, while delivering on the change Ontarians want and need, said Finance Minister Greg Sorbara. The Budget -- which, for the first time lays out a comprehensive four- year fiscal plan -- sets out a balanced mix of investment, revenue generation, cost-cutting and economic growth. "Ontarians spoke to us about the need to transform the health care system and the importance of investing in education," Sorbara said as he tabled his first Budget. "They spoke about the importance of having a comprehensive, multi-year plan that lays the foundation for economic sustainability and growth." Major initiatives announced in today's Budget include: Transforming Health Care - shorter wait times for cancer patients; nine new MRI and CT sites and 9,000 additional cataract surgeries by 2005-06; and by 2007-08, 36,000 additional cardiac services and 2,340 additional joint replacements; - 150 new Family Health Teams of doctors, nurse practitioners and other health care providers established across Ontario over the next four years to deliver around-the-clock primary care; - by 2007-08, enhancements to home care will provide an additional 95,700 Ontarians annually with care in their homes; - an additional $406 million this year for long-term care, opening 3,760 new beds and providing 2,000 more nurses and other staff; - $11.3 billion in operating support for hospitals in 2004-05; - over $600 million this year to support and reform primary care in Ontario; - community health centres to receive an additional $14 million in 2004-05 to enhance primary care delivery at 54 existing centres; - double the number of opportunities for international medical graduates; - purchasing 12,000 bed lifts for hospitals and long-term care facilities; - adding chickenpox, meningitis and pneumonia to the children's free immunization program this year, potentially saving families more than $600 per child; and - providing $273 million to public health this year to fight infectious diseases like SARS and West Nile. "Our investments in primary care will ensure care this year for up to 167,000 Ontarians who can't find a doctor," said Sorbara. Success for Students - by 2007-08, the government's investment in Ontario's schools will increase by $2.1 billion, increasing per-student funding by more than $1,100; - smaller class sizes phased in over four years, with a cap of 20 children per class for JK to Grade 3; - increasing from 50 per cent to 75 per cent the target rate for students meeting the provincial standard for reading, writing and math by 2007-08; - funding training spaces for 1,000 additional teachers in 2005-06; - training 4,000 new teacher specialists in literacy and numeracy, bringing the total to 8,000; and - more than doubling the number of schools that receive extra support from turnaround teams. "Our plan will make public education the best education. It will help our students achieve their true potential-and that is the most important thing we can do to ensure Ontario reaches its full potential," said the Minister. Sorbara also highlighted several key initiatives for municipalities, including delivering on the commitment to make two cents of the existing provincial gas tax available for public transit over three years, increasing the share of public health costs covered by the Province from 50 per cent to 75 per cent by 2007, and investing in improvements to highways, affordable housing and water quality. In addition, Sorbara announced an additional $25 million for children's mental health programs for 2004- 05, growing to $38 million in 2005-06; an additional 4,000 subsidized child care spaces as part of a child care investment of $58 million in 2004-05; for the first time in 11 years, a three per cent increase in basic needs allowance and maximum shelter allowance for recipients of social assistance under the Ontario Disability Support Program and Ontario Works; and the Ontario Property Tax Credit for Seniors will be increased by $125. The government's plan was inspired by the thousands of Ontarians who took part in the most extensive pre-budget consultations ever conducted. Sorbara said the Ontarians who participated in the consultation also stressed the importance of a gradual approach to balancing the budget, in order to preserve vital public services. "In order to stabilize our fiscal situation and invest in health care and education, we have made two important choices-to increase revenues and to balance the budget over four years," Sorbara said. "It is simply not possible to deliver a balanced budget this year without destabilizing vital public services and the economy itself." Sorbara said that the additional revenues needed to transform health care are planned to be provided through a proposed income-based Ontario Health Premium. "While we are asking the people of Ontario to pay more, we are guaranteeing that the revenues from the Ontario Health Premium would be invested exclusively in the delivery of health services over the course of our four-year plan," the Finance Minister said. "These investments would produce concrete results, including shorter wait times, more doctors and nurses, and enhanced home care and long-term care." ------------------------------------------------------------------------- Ce document est également disponible en français. You can access the 2004 Budget and all related documents at www.ontariobudget.fin.gov.on.ca or by calling 1-800-337-7222. ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 TRANSFORMING HEALTH CARE Making Services Responsive, Affordable and Sustainable Government investments in health care will reduce wait times and improve access to doctors and nurses, home care and long-term care. They will also enhance preventive health measures, expand mental health services and provide stable funding to Ontario hospitals. Shorter Wait Times Over the next four years, the government will reduce wait times for cancer, cardiac, cataract, MRI/CT and joint-replacement services. The government will: - fund an additional 9,000 cataract surgeries each year and nine new MRI/CT sites by 2005-06; - increase the number of cardiac procedures by more than 36,000 annually, provide 2,340 additional joint replacements per year, perform 425 extra organ transplants per year and expand dialysis treatments by 529,000 annually by 2007-08; and - improve wait-time information by updating the cardiac and cancer radiation registries this year and add the tracking of information on hip- and knee-joint replacements in 2005-06. Primary and Community-Based Care As a key change strategy for the health care sector, primary and community-based care will be expanded over the medium term, providing a cost-effective alternative to more expensive institutional care. The government will: - provide over $600 million in 2004-05 to support and reform primary care; - establish 150 Family Health Teams, made up of physicians, nurse practitioners and other health care providers, who will provide comprehensive, around-the-clock care to Ontarians; - provide Community Health Centres (CHCs) with an additional $14 million in 2004-05 to enhance primary care at 54 existing centers; - expand the number of CHCs over its mandate; - provide enhancements to home care, supporting an extra 95,700 Ontarians annually with care in their homes by 2007-08 and providing end-of-life care to another 6,000 clients each year; - expand community mental health services that will serve an additional 78,600 patients annually by 2007-08, including increased access to case management, crisis response and early intervention services, providing $463 million in 2004-05, growing to $583 million in 2007-08; - open 3,760 new long-term care beds in 2004-05 and improve safety and quality of care; and - provide Ontario's hospitals with $11.3 billion in operating support for 2004-05, increasing at an average annual rate of 3.4 per cent between 2003-04 interim and 2007-08. Achieving Good Health Focusing on healthy living, illness prevention and health promotion will, in the long run, be the best way to lower costs for health care. The government will: - add chickenpox, meningitis and pneumonia to the children's free immunization program in 2004-05, saving families more than $600 per child; - continue to provide all Ontarians with flu shots in workplace and community settings; - propose to ensure a smoke-free environment in workplaces and public places within three years; and - improve the public health system's capacity to better control infectious diseases by increasing the Provincial share of public health costs from 50 per cent to 75 per cent by 2007. Health Premium To reduce wait times for health care, provide more doctors and nurses and deliver results for patients, legislation will be introduced to create the Ontario Health Premium, with every cent dedicated to health, and only health. The government proposes to: - Implement an Ontario Health Premium that would be collected through the income tax system beginning July 1, 2004. The premium would be based on taxable income: 2005 and Subsequent Taxable Income 2004 Taxation Year Tax Years Up to $20,000 No premium No premium $20,000 - $36,000 $150 $300 $36,000 - $48,000 $225 $450 $48,000 - $72,000 $300 $600 $72,000 - $200,000 $375 $750 More than $200,000 $450 $900 - Every cent from this premium would be invested in health. Human Resource Development Strategy Over the next year, the Ministry of Health and Long-Term Care will work with the Ministry of Training, Colleges and Universities to implement a comprehensive health human resource development strategy, designed to increase the supply of highly trained health care professionals. The Government will: - more than double the number of training positions for international medical graduates to 200 from 90, at an additional cost of $12 million in 2004-05, growing to $25 million in 2007-08; - double the number of clinical education spaces for nurse practitioners to 150 from 75 spaces in three years, through an investment of $2 million annually starting in 2005-06; - provide $2 million, starting this year, to support experienced nurses who mentor nursing trainees completing their clinical practice training; and - purchase 12,000 bed lifts for hospitals and long-term care facilities to improve working conditions for nurses and help prevent on-the-job injuries at a cost of $60 million in 2004-05 from the Change Fund. Supporting Health Care through Technology The government is implementing eHealth initiatives to use information technology to modernize health care service delivery and help achieve health system integration. The government will: - develop a strategy to provide emergency rooms with electronic access to Ontario Drug Benefit recipients' drug history records; - set standards for information technology in the health system through the Ontario Health Informatics Standards Council; and - set up a pilot Electronic Patient Health Record system in London, which will allow two health science centres serving multiple sites to share electronic patient records, while protecting patients' privacy. De-listing Less Critical Services To improve cancer care and cardiac care, home care and long-term care, some less critical services will no longer be covered by OHIP. The following will be de-listed: - the cost of routine optometry exams, except for seniors and Ontarians under 20 years old; - chiropractic services; and - physiotherapy services, with the exception of seniors, who will continue to receive physiotherapy through home care and long-term care facilities. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 SMALLER CLASSES, STABLE FUNDING ENSURE SUCCESS FOR STUDENTS Transforming Elementary and Secondary Education to Focus on Achievement Strong public education produces the best citizens and the best workers. This Budget includes historic new investments in education over the next four years. These investments have one overriding goal -- better student achievement. By 2007-08, the government's investment in Ontario's schools will increase by $2.1 billion. Per-student funding will increase during this period by more than $1,100 to nearly $9,100, an increase of 14 per cent. Investing in Student Success Over the next four years, the government will implement a number of strategies to improve student results in reading, writing and math by age 12, by: - phasing in a cap of 20 children per class, from junior kindergarten to Grade 3; - increasing from 50 to 75 per cent the proportion of students who meet provincial standards on province-wide reading, writing and math tests; - placing a lead teacher in literacy and one for numeracy in every elementary school, doubling to 8,000 the number of specialist teachers trained in best practices; - establishing a literacy and numeracy secretariat to support teachers and focus efforts on student achievement in reading, writing and math; and - more than doubling, from 42 to 100, the number of schools that receive extra support, through "turnaround" teams of experienced teachers and administrators who will provide help to schools with consistently below-average achievement results. The Ministry of Education will work with school boards and schools to develop results targets and to monitor achievement. These performance indicators, to be developed with education partners, will be published annually. Predictable, Multi-Year Funding For the 2004-05 school year, the government will increase stabilization funding for school boards by more than $400 million. Over the next four school years, this funding will increase by more than eight per cent or $1.3 billion, including a substantial annual fund for school repairs and renovation. The Ministry of Education will announce details of this fund shortly. This substantial investment will ensure that school boards have sufficient funds to meet operating costs, maintain schools, make available more textbooks and resources, and provide a platform for improved student achievement. In addition to this stabilization funding, Investments in Student Success will increase by almost $250 million to a total of more than $450 million in 2004-05. By 2007-08, Investments in Student Success will be more than $1 billion. These funds will be earmarked to implement the cap on class size from junior kindergarten to Grade 3 and to provide additional supports to students who need help the most. Learning to 18 Strategy The Ministry of Education will work with the Ministry of Training, Colleges and Universities to develop a comprehensive "Learning to 18" strategy to increase the number of students staying in school, completing their secondary-school studies and going on to training or post-secondary education. To support the development of this strategy, the government will: - invest $3.5 million over the next four years to support pilot projects intended to bring together community resources to help at-risk youth remain in school and graduate; - promote college education among at-risk high school students by enhancing the School-College-Work Initiative by $1 million in 2004-05, annualizing to $2 million in 2005-06; and - provide $20 million in 2004-05 to acquire up-to-date equipment for secondary school students pursuing technological education. Teacher Training Smaller class sizes translate into more teachers. The government will fund training spaces for 1,000 additional new teachers in 2005-06. This investment will ensure the Province has enough teachers to implement its reforms. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 NEW DEAL FOR MUNICIPALITIES SUPPORTS SAFE AND VITAL COMMUNITIES Government to Create New Infrastructure Financing Authority Building stronger communities is dependent on addressing infrastructure, transit, safety and the special needs of Ontario's northern and agricultural communities. The government is undertaking a wide range of investments and initiatives to support Ontario's municipalities and work in partnership on shared challenges. They include: - delivering on the commitment to make two cents of the existing provincial gas tax available to municipalities for public transit over three years, beginning in October 2004; - increasing the share of public health costs covered by the Province from 50 per cent to 75 per cent by 2007; and - building on these initiatives through dialogue with municipalities and the Minister of Municipal Affairs and Housing, John Gerretsen, taking into account their various needs and capacities. Ontarians want a higher quality of life in our cities, towns and rural communities. We are giving communities the tools and flexibility they need to grow strong, be safe and remain livable. Strengthening Infrastructure The government plans to renew and build critical infrastructure to strengthen our communities. In 2004-05, the government will invest $3.3 billion in Ontario's infrastructure (gross basis). The government will: - introduce legislation that would affirm the creation of the Ontario Strategic Infrastructure Financing Authority (OSIFA) to provide efficient and affordable financing for public infrastructure priorities, funded by the sale of Infrastructure Renewal Bonds; - release the first-ever Growth Management Plan for the Golden Horseshoe to maximize the benefits of growth and minimize its costs; - commit $505 million in 2004-05 for municipal and local infrastructure investments; - develop a 10-year strategic infrastructure investment plan that will set out investment priorities for all sectors and describe how these investments will be funded; and - invest $97 million in the justice sector in 2004-05 to complete current court and correctional projects, including initiatives to address court backlogs and undertake various repair and rehabilitation projects. Increasing Public Transit, Improving Roads and Bridges More public transit will mean less gridlock, keep people and business moving, and improve quality of life. To support public transit, the government will: - introduce proposed legislation to create a new Greater Toronto Transportation Authority (GTTA), to co-ordinate transportation investment and planning in the Greater Toronto Area (GTA). The GTTA would have a mandate to reduce gridlock and ensure the free movement of goods and people across the GTA by creating an integrated transportation system for the region; - invest $992 million in highway rehabilitation and expansion through the Ministry of Transportation and the Ministry of Northern Development and Mines in 2004-05; and - provide $448 million in transit to expand GO Transit services; develop the new Bus Rapid Transit system in the GTA; undertake technical studies and environmental assessments for the Ottawa O- Train and Waterloo Region's Light Rail Transit; begin York Region's Quick Start program; and renew municipal transit fleets across the province. In addition, Provincial support for the TTC will include funding to undertake an environmental assessment for the possible future expansion of the Spadina subway to York University. Northern Ontario Northern Ontario comprises 90 per cent of the province's land mass and has extraordinary potential for economic growth. To support northern growth, the government will: - invest a total of $285 million in 2004-05, improving the northern transportation system, including highway expansion and rehabilitation projects and other transportation investments. Key projects include expanding portions of Highways 11 and 69, and transforming the Ontario Northland Transportation Commission (ONTC); - dedicate $135 million to investments in community infrastructure initiatives through the Northern Ontario Heritage Fund; - provide $107 million for expansion projects to create new spaces at Ontario's universities and community colleges, including a new Northern Ontario Medical School; - consult with northern communities to determine the best way to implement improvements to the Provincial Land Tax (PLT); - enact a Northern Prosperity Plan, to help northern communities attract and retain investment and jobs; - introduce legislation to establish a Northern Ontario Grow Bonds program that would foster small and medium-sized business development; - dedicate $10 million to a new initiative entitled the Government of Ontario (GO) North Investor Program. This initiative will build on the Grow Bonds program by attracting anchor investments to northern towns and cities; and - maintain tax support for northern resource companies by proposing not to parallel federal changes to the resource allowance. Instead, Ontario would maintain the resource allowance and the non- deductibility of Crown royalties and mining taxes retroactive to the commencement of the federal change. Rural/Agricultural Ontario To support rural and agricultural areas of Ontario, the government: - will partner with the federal government to fund municipal infrastructure through the five-year, $900 million Canada-Ontario Municipal Rural Infrastructure Fund (COMRIF). Priority will be given to helping small towns and rural communities improve water quality, upgrade sewage treatment and waste management, fix local roads and repair bridges. The federal and Ontario governments are working closely with the Association of Municipalities of Ontario to implement a program that meets local needs; - has implemented an exemption from the Land Transfer Tax for farms that transfer ownership between members of the same family, removing an obstacle to passing on the farming tradition from generation to generation; - will introduce legislation to simplify the process for farmers to obtain retail sales tax exemptions on farm-related supplies and equipment; - will consult with rural residents and stakeholders across the province to better understand the unique priorities of rural communities and the changes that are needed to improve their economic prosperity, environmental well-being and quality of life; and - will allocate $20 million over the next two years to help farmers pay the costs associated with becoming compliant with the Nutrient Management Act. Environment As part of its commitment to clean, safe, livable communities, the government is making major investments in the environment through the 2004 Budget. These include: - investing over $400 million to support source-to-tap drinking water initiatives, which includes over $250 million in capital funding. A significant portion of this funding will be used to help municipalities bring their water treatment up to the world-class standards set out in the Province's Safe Drinking Water Act; - moving forward with proclamation of the outstanding legislative provisions to help municipalities provide financial support for the remediation of brownfield sites. The Province will partner with municipalities in a program of matching property tax relief to ensure that these sites are returned to their economic and environmental potential; and - working with municipalities and other stakeholders to move forward on the commitment to divert 60 per cent of waste from landfills. To complement this initiative, the government is also appointing an expert panel to advise on ways to improve the Environmental Assessment process. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 PROVIDING ASSISTANCE TO THOSE WHO NEED IT Effective, Co-ordinated Supports to Children, Families and Vulnerable People Assisting Ontario's Most Vulnerable People Over and over again during the course of pre-Budget consultations, Ontarians voiced their belief that government has a responsibility to provide help to those who need it most. Whatever challenges the Province faces, the challenges faced by the most vulnerable must not be forgotten. Revitalized social programs that support strong communities are a priority for the government. The 2004 Budget is responding to the concerns of Ontarians with a number of measures that would increase funding to social assistance recipients and the social services sector, including the Ministries of Children and Youth Services and Community and Social Services. Funding for the sector would increase by over $1 billion by 2007-08 compared to the 2003-04 level. Enhancing Income Support Programs The 2004 Budget is proposing long-overdue increases to income support programs, the first such increases in 11 years. The basic needs and maximum shelter allowances under the Ontario Disability Support Program and Ontario Works will increase by three per cent. There will also be an increase in the maximum benefit provided to families caring for children with severe disabilities. In total, the proposed measures will provide recipients of social assistance with an additional $106 million in benefits annually. Municipalities will not be required to share the cost of these increases until 2005. To further assist low-income parents, the Budget proposes that social assistance benefits not be reduced this fiscal year to take into account the July 1, 2004 increase to the federal National Child Benefit Supplement. In 2004-05, this will mean an extra $7 million in the hands of parents who need it most. Transforming Children's Services The 2004 Budget reflects the government's desire to transform and improve children's and youth services in Ontario to ensure that all children and youth have the best opportunities to succeed and realize their full potential. - As part of the Federal-Provincial Framework on Early Learning and Child Care, funding will be provided to stabilize the existing regulated child care system and provide child care spaces for pre- school-aged children. In the first year, this will result in an additional 4,000 subsidized day-care spaces. The total of this investment for 2004-05 is $58 million, growing to $137 million in 2007-08. - To help vulnerable children and youth, the Budget would invest $25 million in 2004-05 in children's community mental health programs, growing to $38 million by 2005-06. This would revitalize and expand children's mental health programs and allow them to treat an additional 7,000 children per year. - The government would provide a three per cent increase in funding in 2004-05 to agencies that have not received a funding increase in several years, including agencies that provide prevention and early intervention services for children and families at risk. - The government would provide a $24 million capital investment over the next four years for Children's Treatment Centres (CTCs) across the province. CTCs help parents obtain and co-ordinate a range of services for their children with disabilities. Improving Access to Housing As part of its commitment to strong communities, the government is working to ensure that Ontarians have easier access to affordable, quality housing. As a result, the Province is committed to working with the federal government and municipalities to increase the number of affordable housing units in Ontario, with a particular focus on appropriate housing for persons suffering from mental illness, victims of domestic violence and the working poor. In addition, the 2004 Budget proposes to provide additional capital funding of $8 million in 2004-05 for the expansion of women's shelters, and $28 million over the next three years to create new housing spaces for people with developmental disabilities. As well, homelessness prevention programs would be streamlined and enhanced by $2 million annually. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 IMPROVING SENIORS' QUALITY OF LIFE Budget Helps Ensure that Seniors Can Live Their Lives with Dignity Ontario is home to about 1.5 million seniors, which is close to 13 per cent of Ontario's population. By 2028, the number of senior citizens in Ontario is expected to double. The government is committed to ensuring that Ontario seniors live safely, with dignity, and as independently as possible, with the supports they need. Enriching the Ontario Property Tax Credit The Ontario Property Tax Credit for seniors was established in 1992 to target assistance to seniors with modest incomes who own or rent their homes, and has not been increased since its creation. In the 2004 Budget, the government proposes to enhance the program for the first time to ensure that it better reflects the circumstances facing seniors in Ontario today. Effective for the 2004 and subsequent taxation years, the underlying "basic" property tax credit amount would be increased by $125. In addition, to ensure that all seniors currently receiving the maximum basic property tax credit amount would benefit from this proposed enrichment, the maximum benefit available for the property and sales tax credits for seniors would be increased from $1,000 to $1,125. This enhancement would deliver an estimated $85 million in property tax support to about 685,000 senior families, including approximately 33,000 senior families who do not currently benefit from the credit. Enhancing Funding for Long-Term Care Facilities The 2004 Budget provides an additional $406 million investment in long- term care facilities in 2004-05, which will fund the opening of 3,760 new beds and will improve the safety and quality of care provided to residents. This additional funding will bring total spending on long-term care facilities in 2004-05 to $2.5 billion. The Budget also proposes to increase the quality of life for residents of long-term care facilities through a three per cent increase in the comfort allowance for low-income residents of such facilities who do not receive social assistance. The comfort allowance is a residual amount of income that low-income residents are allowed to keep after contributing toward the cost of their care, and is usually used to buy personal items, such as clothes and toiletries. To ensure the safety of residents, the government is increasing inspection of long-term care facilities and providing residents and their families with a toll-free phone service to access information or file complaints. Increasing Affordable Housing Options for Seniors Seniors have made a significant contribution to building Ontario. The government is recognizing this contribution through a commitment to improve their quality of life. As part of this commitment, seniors whose primary residence was acquired through a life lease in a development owned by a non- profit organization or registered charity are exempt from paying land transfer tax. This measure will save the average senior in a life lease arrangement approximately $1,500 in land transfer tax. Life leases are important as an alternative form of seniors housing. These unique developments allow seniors to continue to live independently in an environment that is designed with their particular needs in mind. In a life lease, seniors receive the exclusive right to occupy a residential unit for life in return for an upfront payment and monthly maintenance fees. Life lease projects are usually sponsored by religious or charitable groups and provide seniors with a sense of community. There are approximately 70 life lease projects, in various stages from planning to completion, in Ontario. The measure has been made retroactive to July 19, 1989, to ensure that all seniors living in eligible life lease units qualify for the exemption. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 HIGH-QUALITY, AFFORDABLE POST-SECONDARY EDUCATION AND TRAINING Investments in Colleges, Universities and Workplace Training to Drive Economic Growth Since the fall of 2003, the government has taken a number of steps to strengthen the postsecondary education and training sectors. After a decade in which tuition rose by 137 per cent, the government announced a two-year freeze on tuition fees -- plus additional funding for colleges and universities to cover the freeze. Highlights of the 2004 Budget Ontario's post-secondary education institutions and apprenticeship and training system play a unique, critical role in driving the province's economic growth. To support these sectors, the government will increase the operating budget of the Ministry of Training, Colleges and Universities by $260 million to $4.2 billion in 2004-05. The ministry's funding will increase by $470 million, or 12 per cent, by 2007-08, compared to 2003-04. Post-secondary Education Former Ontario premier Bob Rae will conduct a comprehensive review designed to transform the post-secondary education system and recommend ways to make it high-quality, accountable and affordable, giving Ontarians the opportunity to achieve their full potential regardless of income. In the interim, the government will enhance accessibility and affordability by: - compensating post-secondary institutions to make up revenue shortfalls from both years of the tuition-fee freeze; - improving access to student loans for more than 50,000 students through eligibility reforms that improve the harmonization of the Ontario and Canada student assistance plans - and a $20.9 million enhancement to the program; and - providing $25 million in 2004-05 (from the Change Fund) in one-time funding to stabilize colleges, particularly smaller rural and northern colleges, and $20 million to update technology and equipment in colleges. Capital funding will increase in 2004-05 to ensure there is additional physical capacity to accommodate increased enrolment. The government is investing $180 million, including $90 million this year, as part of a three-year commitment to create more than 21,000 new spaces at four colleges and nine universities. The government will also enhance accountability in the sector by implementing the first annual accountability and funding agreements with post-secondary institutions beginning in 2005-06. These agreements will include multi-year funding and enrolment targets and will link funding to government objectives. Skills and Training The government will transform the training and apprenticeship system by creating a One-Stop Training and Employment system to increase responsiveness to employers and better serve apprentices, immigrants, unemployed individuals and youth in transition from school to work. The government will achieve these objectives by: - proposing a new, 25 per cent refundable Apprenticeship Training Tax Credit on salaries and wages, with an increase to 30 per cent in the rate for businesses with payrolls up to $400,000, which would encourage employers to hire apprentices in designated industrial, construction, motive power trades and certain service trades. - increasing the number of new entrants into apprenticeship programs by 7,000 to reach 26,000 annually by 2007-08; - providing new academic upgrading and training options each year for 6,000 young people who have dropped out of high school with increased funding through the Ministry of Training, Colleges and Universities of $2 million in 2004-05, growing to $15 million in 2007-08; - providing 1,500 annual scholarships of $1,000 each for students who leave high school but return to complete their high school credentials and enter apprenticeships. The government will invest $3 million in this initiative in 2004-05, growing to $4.5 million annually by 2005-06. This initiative also includes a $2,000 signing bonus for employers to encourage them to hire and train these apprentices; and - removing cultural and bureaucratic barriers faced by skilled internationally trained workers by investing $12.5 million annually by 2005-06 to work with professional regulatory bodies to increase access; expand training and employment services to help with the transition to Ontario's workforce; and improve information on employment opportunities and requirements for individuals considering immigration to Ontario. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 BUDGET INSPIRES A NEW GENERATION OF ECONOMIC GROWTH Building a Strong and Prosperous Economy Will Benefit All Ontarians The government is committed to strengthening economic growth so that the people of Ontario can enjoy an unsurpassed quality of life. The 2004 Budget proposes a number of important measures that would lay the groundwork for renewed growth of the Ontario economy, including attracting investment; assisting business to grow and prosper; encouraging research commercialization and innovation; and supporting the development of domestic industries. The government is determined to make Ontario the North American leader in economic growth and innovation, and regain its status as one of the most prosperous jurisdictions in the world. Eliminating the Capital Tax Corporations carrying on business in Ontario are subject to capital tax. Generally, the capital tax base comprises the corporation's liabilities and its shareholders' equity. Capital tax is payable whether or not a business is profitable. In the global marketplace, Ontario's capital tax is widely recognized as a barrier to attracting the investment that Ontario needs to build an innovative economy of high-wage and high-skill jobs. The 2004 Budget proposes to implement a prudent plan to gradually eliminate the capital tax by 2012. Starting January 1, 2005, the current $5 million deduction from taxable paid-up capital would be increased by $2.5 million each year until the deduction reaches $15 million on January 1, 2008. By that time, in addition to small businesses that do not pay capital tax, more than 13,000 medium-sized corporations would no longer pay capital tax. Starting January 1, 2009, capital tax rates would be reduced each year until the capital tax is fully eliminated on January 1, 2012. Enhancing Capital Cost Allowance In order to help Ontario businesses put the right tools in place to build an innovative economy of high-wage and high-skill workers, this Budget proposes to enhance the capital cost allowance (CCA) for newly acquired computer and data network infrastructure equipment. Ontario proposes to increase the CCA rate from 30 to 45 per cent for computer equipment and from 20 to 30 per cent for data network infrastructure equipment acquired after March 22, 2004. This would parallel the CCA changes announced in the 2004 federal budget and would benefit Ontario businesses by allowing faster writeoffs on vital computer and data network infrastructure equipment. Supporting Small Business The small business sector makes a big contribution to job creation and economic growth in Ontario. Small businesses are the heart and soul of many local economies across the province. That is why the government is holding the line on the small business Corporate Income Tax rate and maintaining the $400,000 exemption for Employer Health Tax. In addition, the 2004 Budget proposes several innovative measures to provide small businesses with the support they require to grow and prosper, including: - moving forward with a commitment to establish a Northern Ontario Grow Bonds program that would foster small and medium-sized business development; - initiating a one-stop Web Business Portal that would simplify registration and change-of-business information for small businesses; - converting the Red Tape Commission into a small business agency; and - creating a Small Business Tax Administration Advisory Committee. Enhancing the Film and Television Tax Credit Ontario's domestic film and television industry contributes significantly to Ontario, both economically and culturally. The Ontario Film and Television Tax Credit (OFTTC) supports this important sector by providing Ontario-based, Canadian-controlled production companies with a 20 per cent refundable tax credit on Ontario labour expenditures incurred in making film and television productions. To further encourage production activity in Ontario, the 2004 Budget proposes a number of enhancements to the OFTTC: - effective for productions commencing principal photography after March 27, 2003, qualifying labour expenditures would not be reduced by equity investments from Canadian government film agencies; - amendments to the OFTTC would parallel the following enhancements to the federal Canadian Film or Video Production Tax Credit announced in November 2003: - extending the commencement time for a production to allow qualifying labour expenditures to be incurred as early as two years before principal photography begins; and - allowing a person, other than the production company, to hold an interest in a film or television production, unless the production or one of the investors is associated with a tax shelter. Improving Ontario's Capacity to Commercialize Research and Innovate Investments in innovation will set the stage for a new generation of economic growth in Ontario. Without access to private capital, however, commercializing discoveries from Ontario's universities, colleges and hospitals is difficult. The 2004 Budget includes initiatives to fund costs associated with bringing scientific discoveries from publicly funded research institutions to market by: - providing $27 million through the Ontario Research Commercialization Program to help universities, colleges and hospitals identify discoveries with commercial potential; and - providing up to $36 million through the Ontario Commercialization Investment Funds program to help these institutions establish pools of seed capital to commercialize promising technology. Establishing Strategic Infrastructure Priorities The government is developing a 10-year strategic infrastructure plan that will establish investment priorities for the 21st century. To support that plan, the government is creating the Ontario Strategic Infrastructure Financing Authority to provide affordable financing to meet critical municipal, health, education and housing priorities. Supporting Ontario's Tourism Industry Ontario's important tourism sector was hit hard by the SARS outbreak in 2003, and recovery is continuing. In support of the hotel industry's initiative in funding tourism marketing and assisting in the industry's recovery, it is proposed that the destination marketing fee be exempt from Retail Sales Tax (RST) for a one-year period. This temporary exemption from the five per cent RST accommodations tax on this fee would be effective for destination marketing fees billed after May 18, 2004 and before May 19, 2005. Assisting Ontario's Wine and Microbrewery Sectors To assist the domestic wine and microbrewery sectors in their development, the Province would commit marketing support of $2 million annually for a five-year term to the Ontario Wine Strategy and $1 million annually for a five-year term to the Ontario Small Brewers' Association Strategy. This funding will be available commencing January 1, 2005. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 THE PLAN TO BALANCE THE BUDGET A Responsible Four-year Plan to Eliminate the Deficit by 2007-08 To preserve Ontario's economic health, to protect services people value, and to put Ontario on a path to fiscal sustainability and accountability, the government is committing to a medium-term plan to balance the budget. As a result, the government is setting out a comprehensive four-year fiscal plan to gradually reduce the deficit and eliminate it by 2007-08. The plan includes steadily declining deficit targets: ------------------------------------------------------------------------- Multi-Year Balanced Budget Plan ($ Billions) Outlook Interim Plan ----------------------------- 2003-04 2004-05 2005-06 2006-07 2007-08 Revenue* 68.3 78.4 79.9 82.5 86.0 Expense Programs 62.5 66.7 67.2 68.9 70.6 Capital 2.2 2.6 2.5 2.5 2.5 Interest on Debt 9.8 10.3 10.8 11.1 11.5 ------------------------------------------------- Total Expense 74.5 79.6 80.5 82.5 84.5 Reserve - 1.0 1.5 1.5 1.5 ------------------------------------------------- Surplus/(Deficit) (6.2) (2.2) (2.1) (1.5) 0.0 ------------------------------------------------------------------------- * Includes one-time revenue gain of $3.9 billion related to the elimination of the liability for non-utility generator power purchase agreements in 2004-05. Numbers may not add due to rounding. ------------------------------------------------------------------------- Medium-term fiscal targets between 2004-05 and 2007-08 will be achieved by holding average annual program spending growth (1.9 per cent) below the average annual growth in tax revenues (5.6 per cent). Over the medium term, total expense will rise moderately by $4.9 billion, from $79.6 billion in 2004-05 to $84.5 billion in 2007-08. In 2004-05, the deficit target of $2.2 billion includes a one-time revenue gain of $3.9 billion related to the elimination of the liability for power purchase agreements with non-utility generators, if the proposed new electricity market structure is approved by the legislature and implemented. A Balanced Approach to Eliminating the Structural Deficit The 2003 Economic Outlook and Fiscal Review released in December 2003 showed that the deficit identified by former Provincial Auditor Erik Peters was not a one-year anomaly in an otherwise healthy fiscal situation. It is a structural deficit caused by several years of much faster growth in program spending than in government tax revenues. The fiscal path followed by the previous government was not sustainable. Between 2000-01 and 2003-04, Provincial program spending increased by 22 per cent, far exceeding tax revenues, which declined by 0.6 per cent during the same period. This imbalance between Provincial spending and revenue created a fiscal situation that was not sustainable in the long run and resulted in a structural or permanent deficit, unless further action was taken. The four-year plan is based on prudent assumptions that are achievable. The Ontario Government is predicting that the provincial economy will grow by 2.3 per cent in 2004, and an average 3.3 per cent annually from 2005 to 2007. The private-sector consensus forecast is calling for a faster rate of growth and predicting that by 2005, Ontario will have one of the strongest economies in the advanced industrialized world. Reserves of $1.5 billion for 2005-06 and beyond have been included in the medium-term fiscal outlook to protect against unexpected changes in the economic and fiscal outlook to better reflect the inherent risks and uncertain nature of medium-term fiscal projections. The accumulated deficit as a percent of GDP is projected to decrease steadily from 25.3 per cent in 2003-04 to 21.9 per cent in 2007-08. ------------------------------------------------------------------------- 2004 Ontario Budget The Plan For Change Backgrounder ------------------------------------------------------------------------- May 18, 2004 A MORE TRANSPARENT AND ACCOUNTABLE BUDGET Ensuring Fiscal Sustainability The government is proposing a Fiscal Transparency and Accountability Act (FTAA) to replace the current flawed Balanced Budget Act. If approved by the legislature, the proposed FTAA would have three main elements: - It would provide a responsible and flexible framework for the conduct of fiscal policy; - It would lay out clear and comprehensive transparency requirements for the Budget and related publications, consistent with international best practices; and - If a report is not released as required by the legislation, the Minister of Finance would table a statement of non-disclosure in the legislature and encourage debate. The proposed FTAA would require the Ministry of Finance to prepare a Pre-Election Report. This report would be reviewed by the Provincial Auditor and released well before elections to ensure governments do not mislead the public on the state of the Province's finances. Key principles and objectives include maintaining a prudent debt-to-GDP ratio and planning for an annual balanced budget. The proposed FTAA would specify the timing and content of several key reports to establish a coherent ongoing cycle for reporting. For example, FTAA would require that the Budget be tabled in the legislature. Budgeting for Results Around the world, governments are moving towards developing and reporting on the results of public-sector activity. This is motivated by the need to know what value is gained for any money spent, rather than simply knowing how much is spent. A new made-in-Ontario approach -- Budgeting for Results -- is being developed to address these issues and make government more accountable in three key ways: - it will clearly set priorities and measurable outcome-based results; - it will integrate those results into a planning and budgeting process that looks at all government spending, not just new or different spending; and - it will consistently monitor and regularly report on progress. Reporting on Results Later this year, the Premier will release the government's first report on results. It will show progress in developing measures for the results, targets for the measures and plans for how they will be achieved. This will be an important milestone in the development of a more transparent approach to government reporting. This report will be released annually. To ensure a link between the Premier's report and financial reporting, the proposed FTAA would require the government to integrate information on results into the Budget and the Mid-Year Economic Outlook and Fiscal Review. ------------------------------------------------------------------------- Ce document est également disponible en français. You can access the 2004 Budget and all related documents at www.ontariobudget.fin.gov.on.ca or by calling 1-800-337-7222. ------------------------------------------------------------------------- Contact Info For further information: Diane Flanagan, Minister's Office, (416) 212-0634; Boni Fox Gray, Communications & Corporate Affairs Branch, (416) 212-2155 HELP | CONTACT US | PRIVACY | IMPORTANT NOTICES © Queen's Printer for Ontario, 2008-2009 — Last Modified: February 15, 2009 For further information: Diane Flanagan, Minister's Office, (416) 212-0634; Boni Fox Gray, Communications & Corporate Affairs Branch, (416) 212-2155