Strong Action for Ontario
A Plan to Balance the Budget, Create Jobs, Protect Education and Health Care
The 2012 Ontario Budget includes a deficit elimination plan that reduces program spending growth and contains costs by $17.7 billion over the next three years, while increasing revenues by $4.4 billion without raising taxes.
This is serious action for a serious time and puts Ontario on track to eliminate the deficit by 2017-18.
More than 50 cents of every dollar spent by the Ontario government pays for the compensation of teachers, doctors and others in the broader public sector. Given the serious fiscal challenge the Province is facing, compensation costs must be managed if the government is to meet its fiscal targets and protect the gains made over the past eight years in education and health care.
The collective bargaining process will be respected. Where agreements cannot be negotiated that are consistent with the plan to balance the budget and protect priority services, the government is prepared to propose the necessary administrative and legislative measures.
The government intends to introduce a number of measures to make public sector pensions more affordable for taxpayers and sustainable for pension plan members, following consultations with affected stakeholders. For example, in cases where pensions are in a deficit, many public sector workers would be asked to reduce future benefits before seeking additional pension contributions from employers or the government. Current retirees would not be affected.
The 2012 Budget proposes strong action to balance the budget by 2017-18, including:
- Implementing savings of $4.9 billion over three years
- Freezing the general Corporate Income Tax rate and Business Education Tax rate reductions until the budget is balanced
- Capping the Ontario Clean Energy Benefit at 3,000 kWh per month
- Changing the Ontario Drug Benefit program so that about five per cent of seniors -- those with the highest incomes -- pay a larger share of their prescription drug costs
- Ensuring Ontario user fees recover more of the cost of providing programs and services
- Extending the pay freeze for MPPs for another two years -- for a total of five years
- Extending the pay freeze for executives at hospitals, universities, colleges, school boards and agencies for another two years.
The deficit for 2011-12 is projected to be $15.3 billion -- $1 billion lower than forecast a year ago and an improvement of over 38 per cent from the 2009-10 deficit forecast in the fall of 2009. Without the measures announced in the 2012 Budget, Ontario's deficit would approach $25 billion in 2014-15. Instead, it is projected to be $10.7 billion that fiscal year.
The government will continue to focus on its priorities to further strengthen the economy and spur job creation.
Jobs and Prosperity
To help build a strong and diversified Ontario that enables business to invest in innovation, improve productivity and become more globally competitive, the government will:
- Consolidate many business support programs into a Jobs and Prosperity Fund that will focus on productivity growth and job creation, while generating overall savings of $250 million in 2014-15
- Establish a multi-stakeholder Jobs and Prosperity Council to advise the government on a plan to boost Ontario's productivity, and lead a research agenda on Ontario's productivity and innovation
- Diversify Ontario's exports to emerging economies by streamlining and coordinating the trade promotion activities of relevant ministries.
Knowledge and Skills
The government will continue to build on its plan to have the world's best-educated workforce to ensure future prosperity in the knowledge-based economy by:
- Fully implementing full-day kindergarten by September 2014
- Keeping a cap on class sizes in the early grades
- Remaining committed to the 30% Off Ontario Tuition grant for eligible full-time undergraduate university and college students
- Further integrating training programs across government to make them more responsive to today's job market.
Transforming Health Care
The government will build on Ontario's Action Plan for Health Care to create a sustainable and high-quality health care system by:
- Transforming health care to reduce the rate of growth of spending to an average of 2.1 per cent annually over the next three years
- Enhancing community-based care to treat patients in alternative settings such as non-profit clinics and at home instead of in hospitals, where appropriate
- Moving to patient-centred funding models to improve the value and quality of care.
- As a result of measures proposed in the 2012 Budget, Ontario's accumulated deficit would be $22.1 billion lower in 2014-15 than if no action was taken.
- For every dollar in new revenues outlined in the 2012 Budget, there are four dollars of savings and cost-containment measures.
- Measures to reduce program spending by a cumulative $17.7 billion over the next three years, compared to what it would have otherwise been, include:
- $4.9 billion in planned savings from removing overlap and duplication, implementing more efficient delivery models and focusing on core business
- $6 billion in government actions to restrain compensation for school boards, payments to physicians and public servants
- $6.8 billion to contain costs across the broader public sector.
- Ontario's economy is projected to grow at 1.7 per cent in 2012, 2.2 per cent in 2013 and 2.4 per cent in 2014.
- In 2011, more than 121,000 jobs were created in Ontario — with full-time employment increasing by 123,400.
- The cost of servicing Ontario's debt is approximately $10 billion, the third-largest annual expense behind health care and education. To put this in perspective, Ontario spends more on interest each year than on colleges and universities.
- For every one per cent increase in interest rates, the cost to service the debt increases by $467 million in the first year of the increase. If no action is taken to balance the budget, Ontario would pay almost as much to service the debt in 2017-18 as it spends on education today.
- In February 2012, the Conference Board of Canada suggested that if no action was taken to control growth in spending, Ontario's deficit could be $16 billion by 2017-18. Using similar assumptions, the Commission on the Reform of Ontario's Public Services estimated that the deficit could be as high as $30 billion.
- In 2011-12, Ontario's per capita program spending is projected to be $8,560. This is the lowest among the provinces and 11 per cent below the average spent across the other nine provincial governments.
- Ontario delivers government services with the lowest per-capita number of provincial public servants.
- Read the 2012 Ontario Budget.
- Learn more about expense management measures being taken by Ontario.
- Read background information on the 2012 Ontario Budget:
- Read highlights of the 2012 Ontario Budget.
- Budget 2012 - Electronic Press Kit (photos)
“We are making the right choices to ensure that Ontario families are receiving the best possible services and the best value for tax dollars. All of us have a role to play in balancing the budget.”
“Building a stronger Ontario requires strong action. We will make the right choices to protect the vital gains we have made together. When we make these choices, we will choose protecting education and health care — every single time.”