Mid-Year Update of Financial Results and Economic Performance for 2009-10
Like most jurisdictions around the world, Ontario continues to face significant economic challenges. Just as other governments have had to update their forecasts, Ontario is currently projecting deficits of $24.7 billion in 2009-10, $21.1 billion in 2010-11 and $19.4 billion in 2011-12. These projections reflect a reduction in anticipated revenues due to lower 2008-09 results and a weaker economy in 2009.
The decision to run a deficit demonstrates the government's commitment to helping Ontario families during these difficult times by maintaining key public services while also positioning the province to be competitive in the global market.
Total revenue in 2009-10 is projected to be $90.2 billion, a decrease of $5.8 billion or 6 per cent from the 2009 Budget forecast, reflecting the impact of the global recession on Ontario.
Total expense in 2009-10 is estimated to be $113.7 billion,
4.4 per cent higher than the 2009 Budget forecast. Ongoing government measures to maintain services and lessen the effect of the economic crisis have increased spending on vital programs within the Ministry of Health and Long-Term Care, the Ministry of Community and Social Services and the Ministry of Training, Colleges and Universities. Higher expenses have also been driven by time-limited support to the automotive sector, additional spending for social assistance and the province's response to the H1N1 flu virus.
|2009–10 In-Year Fiscal Performance |
|Interest on Debt||9,301||9,406||105|
SUMMARY OF ECONOMIC PERFORMANCE
Ontario's real gross domestic product (GDP) fell by 1 per cent in the second quarter of 2009, following sharper declines in the previous two quarters. This decline reflects the lingering effects of the global recession on Ontario, including a drop in corporate profits of 49.7 per cent, lower business investment, rising unemployment and lower incomes.
Manufacturing, which accounts for a large part of Ontario's economy, was particularly affected by the recession, especially in the auto sector. Declining U.S. demand caused Ontario auto manufacturing sales to fall by 37 per cent over the first eight months of 2009, compared to the same period in 2008. Ontario automotive employment fell by 25.5 per cent over the first nine months in 2009, compared to the same period in 2008.
Key economic indicators continue to reflect the effects of the global economic recession:
- Household wealth and consumer confidence are still below pre-recession levels, while retail sales remain 5.1 per cent lower
- Manufacturing sales are down 19 per cent compared to last year
- International exports are down over 28 per cent and wholesale trade has fallen 6.7 per cent
- Sales of existing homes are down by 1.4 per cent so far this year compared to the same period a year ago
- Employment is lower by 205,200 jobs since the peak in September 2008.
Recent economic data provide early signs that the economy is beginning to stabilize. However, the pace of growth is expected to be gradual. Gross domestic product is not expected to return to its pre-recession level until the second quarter of 2011, and employment is not projected to return until late 2011.
Based on the most up-to-date information, Ontario's economy is now expected to grow by a modest 2 per cent in 2010, then by 3 per cent in 2011 and 3.3 per cent in 2012.
ONTARIO'S EXPENDITURE MANAGEMENT PLAN
The government has already taken numerous steps to ensure Ontarians receive value for money spent and it is committed to implementing an enhanced expenditure-management process to look at ways of improving further the delivery of key services for Ontarians in the future.
The Ontario Treasury Board will conduct a rigorous strategic spending review, focused on ensuring the continued relevance and effectiveness of government programs and services and the way they are funded. The Board will be charged with providing a plan in the 2010 Budget to return the province to a sustainable and firmer fiscal footing, while protecting key services.
The government will work with its broader public-sector partners and will also review all agencies, boards and commissions to ensure that their programs meet the priorities of Ontarians and yield measurable results effectively and efficiently.