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The Peters Report

Archived Backgrounder

The Peters Report

Office of the Premier

Erik Peters' mandate

On October 9, 2003, Premier-designate Dalton McGuinty asked former Ontario Provincial Auditor Erik Peters to conduct an independent review of the government's finances. Mr. Peters was asked to review and report on the province's current budgetary position as compared to the one released on March 27, 2003, and address the following matters:

  • To compare the fiscal outlook for 2003-04 presented in the March 27, 2003, budget with the current fiscal outlook as at October 24, 2003;
  • To evaluate reasons for variances between the outlook in the March 27, 2003, budget and the current one as at October 24;
  • To identify new risk factors that came to his attention during his review; and
  • To suggest improvements for fiscal accountability.

The Peters Report's findings

Mr. Peters' report confirms that the deficit for the current 2003-04 fiscal year is at least $5.6 billion. Mr. Peters also identified additional risks that could total $1 billion, and the need to reinstate a budgetary reserve and the contingency fund.

Spending higher than revenues

In March 2003, the previous government forecast a "balanced" budget for 2003-04. The current forecast of a $5.6 billion deficit for the current fiscal year, which ends March 31, 2004, largely results from:

Major revenue changes


$ Billions

Removal of unspecified asset sales


Impact of slower economic growth on tax revenue


Lower-than-budgeted income from Crown corporations


Lower CHST




Total revenue shortfall compared to March budget


Major expenditure changes


$ Billions

Removal of unspecified program review and year-end savings targets


Various in-year approvals and other expenses


Net impact of SARS ($720 million less federal offer of $250)


Drawdown of contingency fund


Total expenditure increase compared to March budget


Other changes


$ Billions

Increase in stranded debt


Elimination of budgetary reserve


Total other changes compared to March budget



Rapid growth in program spending has outpaced revenue growth in recent years. Between 2000-01 and 2003-04, tax revenue growth of $0.9 billion (1.8 per cent) has been much lower than program spending growth of $10.7 billion (21.2 per cent).

If the current spending pattern is left unchecked, the deficit would grow to $7.7 billion in 2004-05 and $8.6 billion in 2006-07.

Transparency and accountability

The Peters Report also recommends a new focus on fiscal responsibility and the need to improve the accountability and transparency of the province's budget.

"...I urge the new government to consider legislation dealing with fiscal responsibility. The objective would be to improve accountability through greater transparency in and quality of budgets and updates such as the quarterly Ontario Finances. This approach would be more effective in ensuring fiscal accountability than legislation that limits government's flexibility in responding to fiscal challenges."



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