FORM 18-K/A
For Foreign Governments and Political Subdivisions Thereof
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 8 TO
ANNUAL REPORT
of
PROVINCE OF ONTARIO
(Canada)
(Name of Registrant)
Date of end of last fiscal year: March 31, 2005
SECURITIES REGISTERED*
(As of the close of the fiscal year)
Title of Issue Amounts as to which Names of exchanges
registration is effective on which registered
N/A N/A N/A
Name and address of persons authorized to receive notices and
communications from the Securities and Exchange Commission:
Jennifer MacIntyre
Counsellor
Canadian Embassy
501 Pennsylvania Avenue N.W.
Washington, D.C. 20001
Copies to:
Christopher J. Cummings
Shearman & Sterling LLP
Commerce Court West, 199 Bay Street
Suite 4405, P.O. Box 247
Toronto, Ontario, Canada M5L IE8
* The Registrant is filing this annual report on a voluntary basis.
PROVINCE OF ONTARIO
The undersigned registrant hereby amends its Annual Report on Form 18-K for
the fiscal year ended March 31, 2005 (the "Annual Report") as follows:
The following additional exhibit is added to the Annual Report:
Exhibit (l) 2006 Ontario Economic Outlook and Fiscal Review
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this amendment to the annual report to be signed on
its behalf by the undersigned, thereunto duly authorized, at Toronto, Ontario.
PROVINCE OF ONTARIO
(Name of registrant)
October 26, 2006 By: /s/ Irene Stich
------------------------------
Name: Irene Stich
Title: Director, Capital Markets Operations
Capital Markets Division
Ontario Financing Authority
Exhibit Index
Exhibit (l): 2006 Ontario Economic Outlook and Fiscal Review
EXHIBIT (l)
2006 Ontario Economic Outlook and Fiscal Review
Background Papers
[THE ONTARIO COAT OF ARMS]
General inquiries regarding the 2006 Ontario Economic Outlook and Fiscal Review,
Background Papers should be directed to:
Ministry of Finance
95 Grosvenor Street, Queen's Park
Frost Building North, 3rd Floor
Toronto, Ontario M7A 1Z1
or call:
Ministry of Finance Information Centre
Toll-free English & French inquiries: 1-800-337-7222
Teletypewriter (TTY): 1-800-263-7776
For electronic copies of this document, visit our website at
www.fin.gov.on.ca
Printed copies are available from:
Publications Ontario
880 Bay Street
Toronto, Ontario M7A 1N8
Telephone: (416) 326-5300
Toll-free: 1-800-668-9938
TTY Toll-free: 1-800-268-7095
Website: www.publications.gov.on.ca
©Queen's Printer for Ontario, 2006
ISSN 1483-5967 (Print)
ISSN 1496-2829 (PDF/HTML)
Ce document est disponible en francais sous le titre :
Perspectives economiques et revue financiere de l'Ontario de 2006, Documents d'information
==========================================================================================================
TABLE OF CONTENTS
ANNEX I
ONTARIO'S ECONOMIC AND REVENUE OUTLOOK
SECTION I: STRENGTHENING ONTARIO'S ECONOMIC ADVANTAGE
Ontario's Economic Plan - Building Prosperity
Investing in Jobs and Economic Growth
SECTION II: ONTARIO'S ECONOMIC OUTLOOK
Changes in the Global Economic Environment
Changes in the Economic Outlook for 2006
Oil and Gas Prices
U.S. Economy
The Canada-U.S. Exchange Rate
Exports and Imports
Interest Rates and Inflation
Job Growth
Household Spending
Investment to Lead Growth
Economic Outlook Comparison with G7 Countries
Details of the Ontario Economic Outlook
SECTION III: ONTARIO REVENUE OUTLOOK
2006-07 Revenue Outlook
Medium-term Revenue Changes Since Budget
Medium-term Revenue Outlook
SECTION IV: POTENTIAL RISKS TO PROVINCIAL REVENUES
ANNEX II
ONTARIO'S MEDIUM-TERM FISCAL PLAN AND OUTLOOK
INTRODUCTION
SECTION I: ONTARIO'S MEDIUM-TERM FISCAL PLAN AND OUTLOOK
Key Elements of Ontario's Medium-term Fiscal Plan
Medium-term Fiscal Outlook
Medium-term Revenue Outlook
Medium-term Expense Outlook
Fiscal Prudence
Maintaining a Prudent Debt-to-GDP Ratio
Key Changes Since the 2006 Ontario Budget
Modernizing Government Update
SECTION II: 2006-07 SECOND-QUARTER FISCAL UPDATE
2006-07 Fiscal Summary
2006-07 Expense Outlook
ANNEX III
FAIRNESS FOR ALL CANADIANS
Introduction
Ontarians Do Not Receive Fair Treatment
Canada-Ontario Agreement
Federal Trusts
Fairness for All Canadians
ANNEX IV
CORPORATE TAX HARMONIZATION
CREATING A MORE COMPETITIVE TAX CLIMATE FOR BUSINESS
Corporate Tax Harmonization
Capital Tax Base Harmonization
Benefits to Provinces
ANNEX V
TRANSPARENCY IN TAXATION
TRANSPARENCY IN TAXATION
Structure of the Report
Scope
Method
PERSONAL INCOME TAX
PERSONAL INCOME TAX - DESCRIPTION OF TAX PROVISIONS
Ontario Non-refundable Tax Credits
Other Ontario Tax Credits
Exemptions, Deductions and Deferrals Shared with the Federal Government
CORPORATE TAX
CORPORATE TAX - DESCRIPTION OF TAX PROVISIONS
Corporate Income Tax
SALES AND COMMODITY TAX
SALES AND COMMODITY TAX - DESCRIPTION OF TAX PROVISIONS
Retail Sales Tax
EDUCATION PROPERTY TAX
EMPLOYER HEALTH TAX
ESTATE ADMINISTRATION TAX
GROSS REVENUE CHARGE
ANNEX VI
BORROWING AND DEBT MANAGEMENT
LONG-TERM PUBLIC BORROWING
DEBT
Total Debt Composition
Debt Management
Debt Maturities
Cost of Debt
Net Debt-to-GDP
GLOSSARY OF FINANCIAL TERMS USED IN ANNEX VI
ANNEX VII
DETAILS OF ONTARIO'S FINANCES
SECTION I: POTENTIAL EXPENSE RISKS, COST DRIVERS AND CONTINGENT LIABILITIES
Expense Risks and Sensitivities
Compensation Costs
Contingent Liabilities
SECTION II: FISCAL TABLES AND GRAPHS
ANNEX VIII
ECONOMIC DATA TABLES
ONTARIO ECONOMY
Ontario, Gross Domestic Product, 1992-2005
Ontario, Growth in Gross Domestic Product, 1992-2005
Ontario, Selected Economic Indicators, 1992-2005
Ontario, Selected Economic Indicators, Annual Change, 1992-2005
Ontario, Real Gross Domestic Product by Industry at Basic Prices, 2002-2005
Ontario, Growth in Real Gross Domestic Product by Industry at Basic Prices, 2002-2005
Ontario, Real Gross Domestic Product at Basic Prices in Selected Manufacturing Industries, 2002-2005
Ontario, Growth in Real Gross Domestic Product at Basic Prices in Selected Manufacturing Industries, 2002-2005
Ontario, Housing Market Indicators, 2002-2005
Selected Financial Indicators, 1992-2005
G7 COMPARISON
Ontario and the G7, Real Gross Domestic Product Growth, 1992-2005
Ontario and the G7, Employment Growth, 1992-2005
Ontario and the G7, Unemployment Rates, 1992-2005
Ontario and the G7, CPI Inflation Rates, 1992-2005
G7, Exchange Rates, 1992-2005
ONTARIO, INTERNATIONAL MERCHANDISE TRADE
Ontario, International Merchandise Exports by Major Commodity, 2005
Ontario, International Merchandise Imports by Major Commodity, 2005
Ontario, International Merchandise Trade by Major Region, 2005
CANADA, INTERNATIONAL MERCHANDISE TRADE
Canada, International Merchandise Trade by Major Region, 2005
DEMOGRAPHIC CHARACTERISTICS
Ontario, Selected Demographic Characteristics, 1986-2006
Ontario, Components of Population Growth, 1996-97 to 2005-06
ONTARIO LABOUR MARKETS
Ontario, Labour Force, 1992-2005
Ontario, Employment, 1992-2005
Ontario, Unemployment, 1992-2005
Ontario, Employment Insurance (EI) and Social Assistance, 1992-2005
Ontario, Labour Compensation, 1992-2005
Ontario, Employment by Occupation, 1994-2005
Ontario, Distribution of Employment by Occupation, 1994-2005
Ontario, Employment by Industry, 1996-2005
Ontario, Growth in Employment by Industry, 1996-2005
Ontario, Employment Level by Economic Regions, 1995-2005
Ontario, Employment Level by Industry for Economic Regions, 2005
Ontario Economic Regions
ANNEX IX
HOW TO PARTICIPATE IN THE 2007 PRE-BUDGET CONSULTATIONS
HOW TO PARTICIPATE IN THE 2007 PRE-BUDGET CONSULTATIONS
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FORWARD
When the McGuinty government came to office in 2003, it inherited a $5.5 billion
fiscal deficit, as well as significant deficits in health care, education and
infrastructure.
Over the past three years, through its prudent and disciplined fiscal approach,
the government has made progress in restoring Ontario's financial health, while
making historic, long-term investments in health, education, infrastructure and
a strong economy.
Ontario's economy is fundamentally strong and has shown great resilience in the
face of adverse external economic forces that have been building in recent
years. Consumer spending and business investment have experienced solid growth
in the first half of 2006, and the unemployment rate has fallen to an average of
6.4 per cent -- the lowest in five years. Since October 2003, Ontario has
created 254,100 net new jobs.
However, Ontario's economy continues to be affected by external risks and
pressures, notably high oil prices, a strong Canadian dollar and a weakening of
the U.S. economy. These factors have caused Ontario's economy to grow more
slowly than projected in the March 2006 Budget.
The government's fiscal prudence and investments to strengthen the economy since
2003 have prepared the province to weather this period of slower, short-term
economic growth. Over the medium term, Ontario's growth is expected to
strengthen significantly.
While Ontario's economic fundamentals remain strong, the government recognizes
the need to introduce measures to boost jobs and growth in the short term.
Building on current investments, the government is therefore committing
additional resources to training and job services, infrastructure spending, and
measures to promote interprovincial trade and Ontario tourism.
Slower economic growth has also had an impact on Ontario's fiscal outlook. While
the 2006-07 deficit target remains unchanged from the $1.9 billion deficit
projection outlined in the First Quarter Ontario Finances (a deficit of $0.9
billion if the reserve is not required), the medium-term fiscal outlook is now
projecting deficits of $2.2 billion in 2007-08 (a deficit of $0.7 billion if the
reserve is not required) and $1.0 billion in 2008-09 (a surplus of $0.5 billion
if the reserve is not required).
The government remains committed to eliminating the deficit. It will therefore
continue to be prudent and disciplined in its approach to managing the
Province's finances, a key part of which includes keeping program spending under
control.
Fair and equitable funding arrangements with the federal government are also
critical to Ontario's ability to strengthen its economic advantage through
investments in health, postsecondary education, infrastructure and training. At
present, Ontarians receive less federal support in these areas than Canadians in
other provinces and territories. The Ontario Government will therefore continue
to press the federal government to honour the funding commitments it has already
made and to take additional measures to treat Ontarians fairly.
Ontario's economic foundation remains strong. The government's prudent and
disciplined approach, in addition to ongoing strategic investments in a
well-educated and highly skilled population, a high-quality health care system,
reliable, modern infrastructure and key economic sectors, will continue to
strengthen the economy and ensure that the province is well positioned to manage
both the challenges and opportunities ahead.
==========================================================================================================
ANNEX I
ONTARIO'S ECONOMIC AND REVENUE OUTLOOK
===============================================================================================================================
SECTION I: STRENGTHENING ONTARIO'S ECONOMIC ADVANTAGE
Ontario's economy is fundamentally strong and has been resilient in the face of adverse external economic forces.
In the first half of 2006, economic growth was supported by domestic demand, with consumer spending and business
investment growing solidly. Ontario has created 254,100 net new jobs since October 2003, and the unemployment
rate has fallen to an average of 6.4 per cent so far this year-- the lowest in five years.
However, record-high oil prices, the stronger Canadian dollar and a weaker outlook for economic growth in the
United States-- Ontario's largest trading partner-- have led to slower projected economic growth than anticipated
in the March 2006 Budget. Still, growth is expected to strengthen over the medium term and private-sector
forecasters expect Ontario to grow faster than most G7 economies over the 2006 to 2009 period.
Over the past three years, the government has managed the Province's finances prudently, while making key
investments in health care, education and infrastructure. This economic strategy has prepared the Province well
to weather this temporary period of slower economic growth.
ONTARIO'S ECONOMIC PLAN-- BUILDING PROSPERITY
Today's increased globalization means that Ontario faces a more challenging and competitive environment than ever
before. Ontario's future prosperity depends largely on its ability to continue to adapt, innovate and strengthen
its competitive advantage.
Ontario's strength is due, in large part, to the diversity of its economy and of its people. The government's
economic plan is to strengthen the province's economic advantage and build opportunity through investments in
infrastructure, electricity, education, research and innovation, and key economic sectors, while maintaining a
competitive tax and business environment.
Sound fiscal management is a vital part of the government's plan for sustainable prosperity. A strong fiscal
position increases private-sector confidence, which in turn stimulates private-sector investment in Ontario,
leading to stronger economic growth.
The government's economic plan focuses on several important components:
o renewing Ontario's infrastructure
o investing in reliable electricity supply
o supporting research and innovation
o building a highly educated and skilled workforce
o ensuring a competitive economic environment
o strengthening key sectors and regions.
RENEWING ONTARIO'S INFRASTRUCTURE
A crucial component of Ontario's economic plan is renewing the province's infrastructure. The 2005 Budget
announced that, over the following five years, the government and its partners will invest more than $30 billion
in public infrastructure under the ReNew Ontario plan. As well, in the 2006 Budget, the government announced Move
Ontario, an additional $1.2 billion one-time investment in public transit, municipal roads and bridges.
The government's infrastructure projects, particularly in transit, health and education, will improve the
productivity and long-term growth prospects of Ontario's economy, and during the construction period they will
support close to half a million jobs over the next several years.
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Infrastructure Investment for Economic Prosperity
Public infrastructure is vital to Ontario job creation and economic prosperity, quality of life and delivery of public
services. The government is investing to renew and expand Ontario's infrastructure to provide a solid foundation for growth
with:
o a five-year ReNew Ontario plan to invest more than $30 billion in infrastructure
o a $1.2 billion investment in transportation infrastructure, including $838 million in new funding for public transit
in the Greater Toronto Area (GTA) and $400 million in new funding for Ontario's roads and bridges in municipalities
primarily outside the GTA, with special emphasis on rural and northern communities
o more than 100 major hospital improvement and modernization projects across Ontario; 36 long-term care (LTC)
expansion and redevelopment projects completed; and, as announced in June 2006, more than
$1 billion in additional support for hospital construction
o more than 3,000 urgent education repair and construction projects; creating 14,000 new graduate school spaces across
the province by 2009-10; and increasing first-year enrolment at Ontario medical schools by 23 per cent by opening
new campuses and creating new spaces
o a new five-year, $3.4 billion Southern Ontario Highways Program to support key transportation and trade corridors in
southern Ontario, adding 130 kilometres of highway and 64 bridges, and repairing 1,600 kilometres of highway and 200
bridges
o a $1.8 billion Northern Ontario Highways Strategy, expanding the northern highway system by more than
60 kilometres and over 50 bridges, and repairing 2,000 kilometres of highway and 200 bridges over
five years
o more than $1.6 billion of provincial gas tax revenues in municipal transit systems by 2010 to strengthen public
transit and increase ridership in Ontario
o up to $900 million, together with the federal government and municipal partners, through the Canada-Ontario
Municipal Rural Infrastructure Fund (COMRIF) to upgrade critical local infrastructure such as roads and bridges and
water and wastewater systems
o the federal government and other partners, more than $800 million for Canada-U.S. border infrastructure improvements
in Windsor, Niagara, Sarnia and Sault Ste. Marie to enhance the flow of trade with Ontario's largest trading partner
o fast-tracking of a number of infrastructure projects, generating immediate economic activity and boosting
job creation.
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RELIABLE ELECTRICITY SUPPLY AND PRICE STABILITY
Reliable electricity supply and price stability, which keep Ontario's economy competitive and benefit all
consumers, are central to the government's plan. The government has taken action to establish a 20-year plan for
sustainable, reliable clean energy in the future.
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Investing in Ontario's Electricity Infrastructure and Improving Price Stability
Investments in Ontario's electricity infrastructure are essential to supporting and enhancing Ontario's economic
competitiveness and promoting a more prosperous Ontario. Predictable and stable pricing benefits all consumers.
o Since October 2003, more than 3,000 megawatts of power have come online-- enough power for about 1.8 million homes.
o About 8,500 megawatts of electricity supply projects are underway for new and refurbished generation, and
conservation and demand management, adding enough power for about 3.7 million homes over the next five years.
o About $11 billion in investments are being made in the projects for new and refurbished generation.
At the peak of construction activity, over 5,000 workers will be directly employed at these projects, plus many
thousands more working in factories to supply new materials and equipment to them.
o The government has a target to double by 2025 the province's renewable energy sources, including wind, solar and
water, to 15,700 megawatts, making Ontario a leader in clean energy.
o The government has initiated up to $2 billion of spending on conservation programs over the next several years. To
promote conservation, the government is also moving forward on the installation of 800,000 smart meters in Ontario
homes and businesses by 2007, and all homes and businesses by 2010.
o To promote reliable delivery of electricity, Hydro One is planning to invest $755 million in 2006, and more than
$1.2 billion in each of 2007 and 2008, to sustain, expand and reinforce its transmission and distribution systems.
o The government is also promoting consolidation efficiencies in the electricity distribution sector through a
two-year exemption from the electricity transfer tax for sales of electricity assets between publicly owned
utilities, as announced on October 17, 2006. Previous transfer tax exemptions have led to efficiency savings of 10
to 30 per cent in operations, maintenance and administration costs.
o Effective April 1, 2005, the government set an average price of 4.5 cents per kilowatt hour ((cent)/kWh) on the output of
Ontario Power Generation's (OPG) regulated assets, which produce about 40 per cent of Ontario's electricity
generation.
o The government extended and adjusted the transitional revenue limit on most of the output from the rest of OPG's
assets:
4.6(cent)/kWh from May 1, 2006 to April 30, 2007
4.7(cent)/kWh from May 1, 2007 to April 30, 2008
4.8(cent)/kWh from May 1, 2008 to April 30, 2009.
o The government has also established a regulated price plan (RPP) for residential and small business consumers, with
prices set periodically by the Ontario Energy Board (OEB). On October 11, 2006, the OEB announced that RPP prices
would be reduced by 0.3(cent)/kWh, effective November 1, 2006.
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RESEARCH AND INNOVATION
Ontario's highly skilled and diverse workforce, competitive taxes, research and development incentives, and
excellent infrastructure all contribute to the province's positive environment for innovation. In fact, half of
Canada's industrial research and development is carried out in this province.
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Investing in Research and Innovation
Together with researchers, universities and entrepreneurs, the government is expanding research, commercialization and
outreach programs. The government's $1.7 billion investment over the five years to 2009-10 includes:
o $550 million for the Ontario Research Fund to support research excellence and infrastructure
o $160 million for the Ideas to Market Strategy to move discoveries rapidly from lab to marketplace
o $286 million for the Ontario Cancer Research Network and Ontario Institute for Cancer Research
o $100 million for the Perimeter Institute for Theoretical Physics and Institute for Quantum Computing in Waterloo to
help position Ontario for the next revolution in high-speed computing
o $42 million for new awards to recognize and support the achievements of Ontario's researchers and innovators
o $26 million for the development and expansion of commercialization centres in Hamilton and Toronto
o nearly $4 million for youth science and technology outreach.
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A HIGHLY EDUCATED AND SKILLED WORKFORCE
One of Ontario's most important competitive advantages is its highly skilled and well-educated workforce. The
Province is investing in the skills and knowledge of its people through Reaching Higher, its historic $6.2
billion investment in postsecondary education, which will provide higher quality and more accountability and
opportunity, including initiatives for those now underrepresented in higher education. As well, the creation of a
$2.1 billion Jobs and Skills Renewal Strategy supports thousands of new apprenticeships and programs to fully
utilize the skills of Ontarians. The Province continues to call on the federal government to honour the Labour
Market Partnership Agreement, which funds a portion of this strategy.
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Investing in People
A key driver of a strong economy and job opportunity is a well-educated and highly skilled workforce.
The Ontario Government has invested to strengthen the competitive advantage found in its people by:
Creating prosperity through postsecondary education:
o increasing full-time enrolment by 86,000 students
o doubling student assistance to make education affordable, benefiting 145,000 students this year
o limiting student debt to $7,000 per completed year of study; bringing back upfront grants; and limiting average
tuition increases
o committing $55 million by 2009-10 to create more opportunities for Aboriginal peoples, persons with disabilities,
francophones and students first in their families to pursue higher education
o increasing operating funding by 35 per cent by 2009-10 to hire new faculty, improve student services and enhance
libraries, laboratories and equipment.
Modernizing the training and employment system:
o $1.2 billion in new funding annually by 2009-10 provided through three labour market and immigration agreements with
the federal government
o building on these new resources, a $2.1 billion Jobs and Skills Renewal Strategy to help students pursue skilled
trades, create training incentives for employers and help workers upgrade their skills
o over $100 million annually for apprenticeship; on track to meet the annual goal of 26,000 new registered apprentices
by 2007-08
o an Apprenticeship Training Tax Credit (ATTC) to encourage businesses to create apprenticeship opportunities
o $15 million by 2007-08 to expand Academic Upgrading for early school leavers
o $52 million this year to help 56,000 young people get summer jobs
o up to $45 million in a Youth Challenge Fund and a $28 million Youth Opportunities Strategy to help at-risk youth
succeed
o providing new funding for services and programs to help job-threatened or laid-off workers find new jobs.
Creating better opportunity for new Canadians:
o introduced on June 8, 2006, Bill 124, the Fair Access to Regulated Professions Act, to ensure internationally
trained individuals are given fair and transparent access to Ontario's regulated professions
o over $130 million in 2006-07 to help newcomers settle, improve their language skills and
find employment
o $34 million for 60 bridge-training programs, helping more than 6,000 newcomers
o positions for internationally trained medical graduates doubled to 200.
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A COMPETITIVE ECONOMIC ENVIRONMENT
Ontario's economic plan focuses on ensuring taxes are competitive. Strong capital investment by the business
sector is a major source of long-term productivity growth, which leads to higher living standards.
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Creating a More Competitive Tax Climate for Business
The government has announced several measures to further support job creation and enhance Ontario's competitiveness
including:
o A five per cent capital tax rate cut beginning in 2007 and a legislated plan to eliminate Ontario capital tax
entirely by 2012.
o A proposed enhanced dividend tax credit that would provide $40 million this year and up to
$120 million on full implementation to encourage investment in Ontario corporations and to provide better
integration of the corporate and personal income tax systems.
o A single corporate tax administration that would allow businesses to spend less time on paperwork, and more time
creating jobs and fostering a strong, prosperous economy. The benefits, when fully implemented, will include:
up to $100 million annually in compliance cost savings from one tax form, one tax administration and one set of tax
rules
a $90 million annual income tax cut for Ontario businesses, due to corporate income tax harmonization, that will
primarily benefit the manufacturing, wholesale and retail trade,
and film production sectors
continued Ontario support for research and development (R&D) and innovation with a
4.5 per cent non-refundable tax credit to replace the current R&D tax deduction
continued Ontario income tax support for the mining sector.
(See Annex IV, Corporate Tax Harmonization, for details.)
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As part of its plan, Ontario is modernizing its business and financial regulation to maintain an attractive
business climate, stay ahead of global markets and build on Ontario's economic advantage. A competitive
regulatory framework protects consumers and investors and is also key to a positive business climate and a
growing economy.
Providing excellent, publicly funded health care is another important part of Ontario's economic advantage
because it lowers costs to business and supports the productivity of Ontario's workforce.
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Modern Business and Financial Services Regulation
To help support a growth-oriented business environment, the Ontario Government:
o is working with its partners to offer a wide range of government information relevant to business through
ServiceOntario. It has made it easier to access important information, government forms and services, including
searching, registering and changing information. There are also links to industry-specific information and other
support services for Ontario businesses.
o is modernizing its corporate and commercial law framework to help businesses compete in the global economy.
o is updating Ontario's laws on the transfer of securities that are held in electronic form. The Canadian Capital
Markets Association reports that the benefit of improved trade processing, which it estimated at $140 million per
year across Canada, could be at risk without these changes.
o is streamlining securities regulation by working to expand harmonized approaches across jurisdictions and is
engaging other jurisdictions to move to a common securities regulator.
o is protecting investors through civil liability for secondary-market disclosure, more robust corporate and
investment fund governance and enhanced financial reporting.
o is proposing amendments to the Credit Union and Caisses Populaires Act, 1994, and has introduced a bill to replace
the Mortgage Brokers Act.
o has introduced legislation to allow Ontario's farm mutual insurance companies, and other provincially incorporated
insurers, to operate under investment and corporate governance rules similar to those at the federal level.
o is harmonizing the Province's air emissions reporting standards with federal regulations to save time and money for
businesses.
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KEY SECTORS AND REGIONS
The Ontario economy is continually adapting to both transitory and longer-lasting changes in the external
environment. In addition, various industries and regions face unique issues.
Ontario's regions can achieve the best possible outcomes and the highest standard of living by being adaptable
and by building on the strength of Ontario's highly educated and skilled workforce. Government, working with
industry and community groups, can help ensure that the best possible long-term outcomes are achieved.
STRONG, SUSTAINABLE COMMUNITIES
A strong economy and strong communities reinforce each other in generating wealth and opportunities. Together,
they are key to a sustainable and responsive economy that is innovative and competitive and supports a high
quality of life.
The government has demonstrated its commitment to building strong, sustainable communities through such
initiatives as the Places to Grow Act, the Green Belt Plan and Planning Act reform. These advances in planning
complement substantial investments in infrastructure and Ontario's ongoing efforts to enhance effective
partnerships with other levels of government.
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Building Effective Partnerships
Municipal Act, 2001 Reform
o Introducing amendments to the Municipal Act, 2001, that, if passed, will strike a balance of appropriate powers and
accountability for all municipalities, while recognizing their unique needs.
Stronger City of Toronto for a Stronger Ontario Act
o Realizing a new vision for Toronto-- an economically strong, socially and culturally vibrant, and environmentally
sustainable city-- through the Stronger City of Toronto for a Stronger Ontario Act. The government is the first to
recognize Toronto in legislation as a responsible, accountable government with broad permissive powers.
Provincial-Municipal Fiscal and Service-Delivery Review
o Embarking with the municipal sector on a review of the provincial-municipal relationship.
The review will be broad in scope, and include funding, service delivery and service governance.
Its aim is to develop long-term, sustainable options for both levels of government.
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AGRICULTURE AND RURAL ONTARIO
Ontario has the largest agriculture sector of any province, with sales of $8.2 billion in 2005. The government
recognizes that Ontario farmers face challenges from a variety of external factors-- low international commodity
prices, the stronger Canada-U.S. exchange rate and changing consumer preferences. The Province is working to
maintain a strong, sustainable farm sector and to promote innovation for success in the future. Ontario provides
significant support to the province's farmers through a number of important measures.
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Building Opportunity for Farmers and Rural Ontarians
On September 19, 2006, the Premier announced $185 million for farmers and rural Ontario:
o $110 million directly to farmers for transitional funding while moving to a better method of valuing inventory under
the Canadian Agricultural Income Stabilization (CAIS) program and to continue the Self-Directed Risk Management
program
o $75 million for investments in rural infrastructure and economic development.
Other important Ontario initiatives to support farmers include:
o the new Premier's Award for Agri-Food Innovation Excellence-- a range of awards will be given, with the Premier's
Award and the Minister's Award to be presented at the Premier's 2007 Agri-Food Summit
o $25 million in 2005-06 for the University of Guelph's animal health laboratory, $10 million in 2005-06 for an
Ontario livestock and poultry traceability system, and $1 million in 2005-06 for advanced research into hardier
grape varietals
o $265 million in 2005 from the retail sales tax exemption for farm products and goods used in agriculture
o $300 million in 2006 from the farm property class tax-rate reduction
o over $800 million from 2003-04 to 2005-06 for farm income stabilization and support
o over $40 million in tax relief from the fuel tax exemption for coloured fuel used in farm equipment
o making an initial $7 million available immediately to help farmers and small rural businesses take early action to
protect drinking water.
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NORTHERN ONTARIO
The coming years hold unique opportunities and challenges for the economy of northern Ontario. The government is
working with the people of this region to prepare for these challenges and build a prosperous future. It is also
supporting industries, such as mining and forest products, investing in critical infrastructure and fostering the
growth of new companies.
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Supporting New Opportunities and New Ideas in Northern Ontario
The government is investing in emerging sectors and infrastructure projects in transportation, health care and education by:
o establishing a Bio-Energy Research Centre in Atikokan
o investing $1.8 billion over five years under the Northern Ontario Highway Strategy and $56 million in immediate
investments in roads and bridges under Move Ontario
o opening a new Northern Ontario School of Medicine in 2005, with campuses in Thunder Bay and Sudbury.
The government is implementing the Northern Prosperity Plan through:
o the Go North Investor Program to help raise the international profile of northern Ontario and its communities as a
competitive investment location
o a $60 million annual contribution to the Northern Ontario Heritage Fund Corporation (NOHFC) whose refocused mandate
promotes private-sector job creation, while continuing to invest in public infrastructure projects that support
economic development. Young northerners are taking advantage of NOHFC programs for internships, co-op placements and
support for entrepreneurs
o four Northern Development Councils to engage northerners on issues of importance to them.
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Forest Products Sector Investments
Since June 2005, Ontario has announced $900 million in assistance available over five years for the forest sector to
encourage greater efficiency, higher-value production and reduced delivered wood costs:
o $350 million over five years in loan guarantees to stimulate new investments in value-added manufacturing, energy
conservation and energy co-generation
o $150 million over three years in Forest Sector Prosperity Fund grants to leverage new capital investments-- support
was recently announced for investments in forest product facilities in the communities of Earlton, Sault Ste. Marie
and Thunder Bay
o $75 million annually for the construction and maintenance costs of primary and secondary forest access roads
o $70 million in a one-time stumpage fee refund for 2005-06
o $10 million annually by 2007-08 to enhance the Forest Resource Inventory
o $3 million annually for three years to reduce timber fees for poplar veneer and white birch
o $1 million annually starting in 2006-07 for an Ontario Wood Promotion program to enhance value-added manufacturing.
The government has so far received 35 applications for funding from the prosperity fund and loan guarantee program that, if
approved, would result in more than $1.2 billion in new investment in Ontario's forest products sector.
The recent agreement to streamline administration of Ontario's corporate tax system will also foster a stronger forestry
sector through reduced compliance costs and continued support of R&D and innovation.
- -------------------------------------------------------------------------------------------------------------------------------
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Strong Growth Continues in Ontario's Mining Sector
Ontario has a well-established and dynamic mining industry that is recognized throughout the world. Supported by high
commodities prices, the industry's mineral production value exceeded $7 billion in 2005. The mining sector employed over
23,000 people in Ontario in 2005.
Ontario's mining sector continues to prosper and attract foreign investment. For example,
De Beers Canada has started construction towards opening Ontario's first diamond mine close to Attawapiskat in 2008.
Through new initiatives like Ontario's Mineral Development Strategy, the Ontario Government is working with the mining
sector, stakeholders and Aboriginal partners on a strategy to promote long-term sustainability and enhance the mineral
sector's global competitiveness. The strength of Ontario's mining sector has helped the Toronto Stock Exchange (TSX) grow
into a world leader in mining finance.
In the 2006 Budget, the government announced $10 million to support the launch of the new Centre for Excellence in Mining
Innovation at Sudbury's Laurentian University, and the 2005 Budget announced
$15 million for geological mapping in the Far North.
Tax support for the mining sector will continue under the recent agreement to streamline administration of Ontario's
corporate tax system, which will also foster a stronger mining sector by reducing compliance costs.
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TOURISM
Ontario's tourism industry employed more than 257,000 people in September 2006, accounting for four per cent of
Ontario's total employment. In 2005, the tourism industry contributed $11 billion (or 2.5 per cent) to Ontario's
GDP. From 1995 to 2005, tourism employment grew by 24 per cent in Ontario, compared with 23 per cent in the rest
of Canada and 16 per cent in the United States.
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Support to the Tourism Industry
In the 2005 Budget, the government announced $5 million in marketing efforts to promote Ontario's cultural facilities. In the
2006 Budget, the Province announced a number of new initiatives to benefit the tourism industry:
o $49 million to support capital construction projects for Ontario's major cultural agencies and attractions: the
Royal Ontario Museum, Art Gallery of Ontario, Canadian Opera Company, National Ballet School, Royal Conservatory of
Music and Gardiner Museum of Ceramic Art
o $10 million to the Ontario Heritage Trust
o $1 million for the development and production of plans for the 2007 Toronto International Arts Festival.
The completion of Toronto's cultural renaissance by 2008 will also boost tourism in Ontario.
The government will introduce a new campaign to encourage Ontarians to travel and vacation in Ontario, boosting economic
activity and tourism-related jobs.
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MANUFACTURING
A number of policies and investments aim to strengthen Ontario's manufacturing capacity and enhance opportunities
for other sectors in an evolving economy. They help Ontario's diversified economy meet the challenges and
opportunities that arise in world markets.
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Investing to Attract High-value Jobs
Ontario's future prosperity is closely linked to the growth of high-value jobs in all sectors of its economy.
To attract these jobs to the province, the government:
o introduced the $500 million Advanced Manufacturing Investment Strategy to encourage companies to invest in
leading-edge technologies and processes.
Maintaining Ontario's Position as North America's Auto Leader
Ontario's strategic investments, including the $500 million Ontario Automotive Investment Strategy, have attracted about $7
billion in investments supporting highly skilled, high-paying jobs:
o General Motors: Oshawa, St. Catharines, Ingersoll-- $2.5 billion
o Linamar: Guelph-- $1.1 billion
o Toyota: Woodstock-- $1.1 billion (first Ontario greenfield auto plant in almost 20 years)
o Ford: Oakville-- $1 billion
o DaimlerChrysler: Windsor, Brampton-- $768 million
o Navistar: Chatham, Windsor--$270 million
o Honda: Alliston-- $154 million
o Nemak: Windsor-- $100 million
o Valiant: Windsor-- $93 million.
The auto sector continues to evolve and restructure. Ontario's positive investment climate is helping attract automakers to
produce new models such as the redesigned Camaro in Oshawa.
Key Tax Measures That Benefit Ontario's Manufacturing Sector
o a corporate income tax (CIT) rate that is two percentage points below the general CIT rate
o a five per cent rate cut in Ontario's capital tax beginning in 2007 and a legislated plan to eliminate the capital
tax entirely by 2012
o doubling of the non-capital loss carry-forward period from 10 to 20 years
o a proposed enhanced dividend tax credit to encourage Ontarians to invest in Canadian corporations, including
manufacturers
o a 25 to 30 per cent refundable tax credit for businesses hiring apprentices in industrial, construction, motive
power and certain service trades
o corporate tax incentives for research and development
o a retail sales tax (RST) exemption for production machinery and equipment
o an RST exemption for reinforced concrete used to make production machinery and equipment
o an RST exemption for materials incorporated into goods for sale
o an Employer Health Tax (EHT) exemption for small businesses, including manufacturers.
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INVESTING IN JOBS AND ECONOMIC GROWTH
Over the past three years, the government has managed the Province's finances prudently, while making key
investments in health care, education and infrastructure. This economic strategy has laid the foundations for
long-term competitiveness.
Building on this strategy, and to assist the workers and communities most affected by slower growth in the
economy, the government is allocating a portion of the proceeds of the Teranet initial public offering (IPO) to
promote additional job creation while strengthening the social and economic foundations for long-term prosperity.
- -------------------------------------------------------------------------------------------------------------------------------
A Strategy to Further Boost Jobs and Economic Renewal
The government will boost jobs and economic growth through a renewed focus on four key areas:
Focused Training and Job Services
The government will provide new funding for services and programs to help job-threatened and laid-off workers find new jobs,
including:
o sending special teams into communities where plants have closed to help develop re-employment action plans for
affected workers
o customized training, skills upgrading, job placement and job relocation services
o workplace literacy programs to help workers learn new processes and technologies
o helping laid-off apprentices find new placements and accelerating their in-school learning.
Fast-Tracking Infrastructure Projects
The government will fast-track a number of infrastructure projects, generating immediate economic activity and boosting job
creation.
Encouraging Ontario Tourism
The government will introduce a new campaign to encourage Ontarians to travel and vacation in Ontario, boosting economic
activity and tourism-related jobs.
Strengthening Interprovincial Trade
The government will strengthen interprovincial trade links to match industrial needs in Alberta with the industrial capacity
in Ontario and will explore the merits of joining the Alberta-British Columbia trade agreement.
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===========================================================================================================================
SECTION II: ONTARIO'S ECONOMIC OUTLOOK
This section addresses Ontario's economic outlook for 2006 to 2009.(1) The economic forecast underlying the
fiscal plan is prudent, taking into account external developments and continuing risks. The Ministry of Finance
is projecting real gross domestic product (GDP) growth of 1.6 per cent for 2006, 2.0 per cent in 2007, 3.0 per
cent in 2008 and 3.1 per cent in 2009. These projections are below the average private-sector forecast in every
year. The economic outlook supports the forecast for taxation revenue growth in 2006-07 and the following two
years outlined later in this Annex.
Over the medium term, Ontario's economic growth could be better than current private-sector forecasters
anticipate. The factors that will help bring about stronger growth are taking shape. Recently, energy prices have
fallen faster than had been expected, boosting consumer and business confidence. If prices continue to decline,
this will increase discretionary consumer spending while lowering business costs. Interest rates are low by
historical standards and central banks, including the Bank of Canada and U.S. Federal Reserve, could cut interest
rates to stimulate growth. The Canadian dollar has weakened recently and could fall below current projections,
improving Ontario's competitive position and providing much-needed relief to Ontario's export-oriented
manufacturing sector.
ONTARIO ECONOMIC OUTLOOK
(PER CENT)
2004 2005 2006p 2007p 2008p 2009p
------------- ------------ ------------- ------------ ------------- ------------
Real GDP Growth 3.1 2.8 1.6 2.0 3.0 3.1
Nominal GDP Growth 5.2 4.1 3.0 3.7 4.7 4.8
Unemployment Rate 6.8 6.6 6.3 6.3 6.2 6.1
CPI Inflation 1.9 2.2 1.9 1.6 1.8 1.8
p = projection.
Sources: Statistics Canada and Ontario Ministry of Finance.
In order to establish its fiscal plans, the government consults with private-sector forecasters in developing its
economic projections. As part of the Fiscal Transparency and Accountability Act 2004, the Minister of Finance has
established the Ontario Economic Forecast Council to provide advice on economic projections and assumptions. The
council members are Peter Dungan from the University of Toronto, Ernie Stokes from the Centre for Spatial
Economics, and Glen Hodgson of the Conference Board of Canada.
At the time of the 2006 Ontario Budget, private-sector forecasters were, on average, calling for real GDP growth
of 2.6 per cent in both 2006 and 2007, 3.1 per cent in 2008 and 3.4 per cent in 2009. Since that time,
projections have been revised down, largely reflecting the negative impact of higher oil prices, the stronger
Canadian dollar and weaker U.S. growth projections. Currently, the average private-sector forecast for Ontario is
1.7 per cent in 2006, 2.1 per cent in
2007, 3.1 per cent in 2008 and 3.2 per cent in 2009.
- ------------------------------------------------------------------------------------------------------------------------------
PRIVATE-SECTOR FORECASTS FOR ONTARIO REAL GDP GROWTH
(PER CENT)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------ --------------- ---------------- ---------------- ---------------
2006 2007 2008 2009
--------------- ---------------- ---------------- ---------------
Conference Board of Canada (October) 1.6 2.4 3.3 3.3
Global Insight (October) 2.0 2.3 2.6 3.0
Centre for Spatial Economics (June) 2.7 2.2 2.8 3.1
University of Toronto (October) 1.0 1.7 3.0 3.4
BMO Financial Group (October) 1.8 2.3 - -
RBC Financial Group (October) 1.5 2.0 - -
Scotiabank Group (October) 1.9 2.0 - -
TD Bank Financial Group (September) 1.8 2.0 3.6 -
BMO Capital Markets (October) 1.4 2.0 - -
CIBC World Markets (October) 1.4 1.8 - -
- ------------------------------------------------------------ --------------- ---------------- ---------------- ---------------
Private-Sector Survey Average 1.7 2.1 3.1 3.2
Ontario's Planning Assumption 1.6 2.0 3.0 3.1
- ------------------------------------------------------------ --------------- ---------------- ---------------- ---------------
Sources: Ontario Ministry of Finance and Ontario Ministry of Finance Survey of Forecasts (October 2006).
- ------------------------------------------------------------------------------------------------------------------------------
CHANGES IN THE GLOBAL ECONOMIC ENVIRONMENT
Ontario continues to face challenges due to external forces that have affected its growth outlook since the 2006
Ontario Budget in March. Oil prices are higher than expected. The Canadian dollar surged to a 28-year high of
over 91 cents US in May 2006, and forecasters have increased medium-term projections for its value. As well, the
U.S. economic growth outlook has weakened.
One of the biggest changes in the assumptions underlying the economic forecast is the outlook for oil prices.
After the 2006 Ontario Budget, oil prices continued to rise, setting a new record for four consecutive months
from April to July. Since then, prices have fallen to around $60 US a barrel. Oil price forecasts are, on
average, about $10 US per barrel higher than they were at the time of the 2006 Ontario Budget. Higher oil prices
reduce the amount of money available for households to spend on other goods and services and increase costs for
businesses.
Private-sector forecasts for the Canadian dollar are, on average, over two cents higher than projected at the
time of the March Budget. The high value of the Canadian dollar, as well as increased competition from emerging
industrialized economies (such as India and China), are leading to restructuring in Ontario's export-oriented
manufacturing sector. While some plants have eliminated jobs or shut down, others have become more innovative,
investing in new technologies and increasing equipment investment. In many cases, this has led to higher
productivity-- securing existing jobs and creating new ones.
While U.S. economic growth is expected to slow from 3.4 per cent in 2006 to 2.6 per cent in 2007, the Blue Chip
Economic Indicators survey projects it will rebound to 3.1 per cent in both 2008 and 2009. Much of the weakness
in U.S. growth is due to the slowdown in the U.S. housing market.
Although there is a wide range of views regarding the future direction of monetary policy, forecasters are, on
average, calling for interest rates to remain near current levels through 2007 and to edge higher in 2008.
The following table highlights the changes since the Budget in the average private-sector forecast of the key
external factors that affect Ontario's economic growth.
KEY EXTERNAL FACTORS AFFECTING ONTARIO'S ECONOMY
AVERAGE PRIVATE-SECTOR FORECAST
2006 2007 2008 2009
------------------------- -------------------------- ------------------------- ----------------
2006 2006 2006 2006 2006 2006 2006
Budget Fall Update Budget Fall Update Budget Fall Update Fall Update
---------- -------------- ---------- --------------- ---------- -------------- ----------------
Canadian Dollar (Cents US) 86.6 88.5 86.9 88.8 85.9 89.1 88.5
Crude Oil 60.5 67.2 56.6 64.3 49.9 63.0 59.4
($ US per Barrel)
U.S. Real GDP Growth (Per 3.4 3.4 3.0 2.6 3.1 3.1 3.1
Cent)
Three-month Treasury Bill 3.9 4.0 4.1 4.0 4.3 4.2 4.4
Rate (Per Cent)
10-year Government Bond Rate 4.3 4.3 4.6 4.2 5.2 4.8 5.1
(Per Cent)
Sources: Blue Chip Economic Indicators (October 2006) and Ontario Ministry of Finance Survey of Forecasts (October 2006).
The next table shows the typical range for the first- and second-year impact of these external factors on Ontario
real GDP growth. These estimates are based on historical relationships and illustrate the upper and lower limits
for the average response. They show the implications of changes in key assumptions in isolation from changes to
other external factors. The combination of other circumstances can also have a substantial bearing on the actual
outcome. The range of possible impacts reflects a variety of factors. For example:
o A percentage point decrease in U.S. real growth would reduce Ontario real GDP growth by 0.3 to 0.7 percentage
points in the first year. In this case, the range in part reflects the fact that the impact on Ontario
growth depends on the composition of U.S. growth.
o A five-cent rise in the Canadian dollar would reduce Ontario real growth by 0.2 to 0.9 percentage points in the
first year. This range reflects a number of uncertainties, such as to what extent firms pass lower import
costs through to domestic prices for goods and services in Canada.
o A sustained $10 US per barrel increase in the price of world crude oil would lower U.S. growth and trim Ontario's
real growth by 0.3 to 0.7 percentage points in the first year. The range is due in part to uncertainty
regarding the degree to which higher energy costs affect consumer and business expectations and behaviour.
This impact assumes a matching rise in the price of natural gas-- a substitute energy source.
o A one percentage point rise in nominal interest rates would reduce Ontario real GDP growth by 0.1 to 0.5
percentage points in the first year. Real growth would be reduced further in the second year, owing to the
time it takes for monetary policy changes to affect spending. Higher interest rates discourage
interest-sensitive spending, such as housing and durable-goods purchases. The range reflects, in part, the
extent to which higher interest income would offset the negative impact.
IMPACTS OF CHANGES IN KEY ASSUMPTIONS ON ONTARIO REAL GDP GROWTH(1)
(PERCENTAGE POINT CHANGE)
First Year Second Year
-------------------------- ----------------------
Canadian Dollar Appreciates by Five Cents US (0.2) to (0.9) (0.7) to (1.4)
World Crude Oil Prices Increase by $10 US per Barrel (0.3) to (0.7) (0.1) to (0.5)
U.S. Real GDP Growth Decreases by One Percentage Point (0.3) to (0.7) (0.4) to (0.8)
Canadian Interest Rates Increase by One Percentage Point (0.1) to (0.5) (0.2) to (0.6)
(1) Impacts based on changes being sustained.
Parentheses denote declines.
Source: Ontario Ministry of Finance.
CHANGES IN THE ECONOMIC OUTLOOK FOR 2006
The Ministry of Finance has revised its real GDP growth assumption for 2006 to 1.6 per cent, down from 2.3 per
cent in the 2006 Ontario Budget and below the current private-sector average.
The domestic side of the economy has performed well, leading to stronger-than-expected job creation. Despite
softer real GDP growth, Ontario employment in 2006 is now expected to grow by 1.4 per cent-- above the Budget
projection of 1.3 per cent.
The outlook for retail sales continues to be buoyant. Housing activity has been stronger than expected, with
housing starts projected to reach 75,000 units this year, up from the Budget projection of 73,500. Business
investment in machinery and equipment is projected to be stronger than expected at the time of the Budget, but
non-residential construction investment spending is projected to be somewhat slower.
Exports have been softer than expected while imports have risen faster. The outlook for corporate profits has
declined significantly since the Budget, reflecting ongoing high oil prices, a higher Canadian dollar and
softening U.S. demand.
The next table shows changes in key forecast components compared with the 2006 Ontario Budget projection.
THE ONTARIO ECONOMY IN 2006
(PER CENT CHANGE)
2006 2006
Budget Fall Update
------------------- ------------------
Real Gross Domestic Product 2.3 1.6
Personal consumption 2.8 3.1
Residential construction (2.1) (1.2)
Non-residential construction 5.9 4.5
Machinery and equipment 7.9 8.7
Exports 2.5 (0.5)
Imports 3.4 3.5
Nominal Gross Domestic Product 4.5 3.0
Other Economic Indicators
Retail sales 4.2 4.2
Housing starts (000s) 73.5 75.0
Personal income 4.7 4.6
Wages and salaries(1) 4.7 4.3
Corporate profits 3.8 (1.0)
Consumer Price Index 2.1 1.9
Labour Market
Employment 1.3 1.4
Job creation (000s) 85 92
Unemployment rate (per cent) 6.3 6.3
(1) Includes supplementary labour income.
Source: Ontario Ministry of Finance.
The short-term economic outlook is strongly influenced by external factors, such as oil prices, U.S. economic
growth, the Canadian dollar and interest rates. The next section discusses the outlook for the external factors
in more detail and the forecast for Ontario's exports. This is followed by a discussion of the outlook for jobs,
household spending and investment.
OIL AND GAS PRICES
[Line graph showing the increase in crude oil prices between 1999 and 2006]
Crude oil prices have more than tripled since early 2002, averaging about $68 US per barrel so far in 2006, and
are on pace to break last year's record of $56.50 US per barrel. The main factors affecting energy markets in
recent years-- strong global demand, heightened geopolitical risks, supply concerns and slow growth in oil
production and refinery capacity-- continue to play a major role in 2006.
After surging to a record high of more than $78 US per barrel in mid-July 2006, oil prices have now dropped to
around $60 US per barrel, reflecting a decline in speculative pressures. For one thing, the 2006 Atlantic
hurricane season has been less severe than expected, limiting storm damage to the Gulf Coast oil-producing
region. In addition, U.S. crude inventories were well supplied at the end of the summer's busy driving season.
Natural gas prices plunged 25 per cent in September to average $5.20 US per million British Thermal Units (MMBtu)
-- the lowest monthly average in two years. They have averaged about $6.90 US per MMBtu so far in 2006, down from
a record annual average of $9.00 US per MMBtu in 2005, but significantly higher than in 2002, when prices
averaged $3.40 US per MMBtu. Mild weather last winter left natural gas inventories at high levels at the start of
the summer. The less severe 2006 Atlantic hurricane season and slowing U.S. economy, coupled with robust natural
gas inventories, were the key factors that pulled prices down recently. Barring any extreme weather or major
geopolitical event, forecasters generally expect natural gas prices will average about $8.25 US per MMBtu each
year over the forecast horizon.
The cooling U.S. economy, which accounts for about one-quarter of global crude oil demand, could lead to softer
global demand growth. However, strong growth in China, which has constituted 40 per cent of the increase in world
oil demand over the past four years, will limit the slowdown in demand growth. The U.S. Energy Department
estimates world oil demand will increase by 1.5 million barrels a day-- or 1.8 per cent-- in 2007, with over half
the demand growth to come from the United States and China. U.S. oil demand is forecast to rise by 350,000
barrels a day-- or 1.7 per cent-- and Chinese consumption is projected to increase by 500,000 barrels a day-- or
6.8 per cent-- in 2007.
[Bar chart showing crude oil prices from 2002 and forecasting through to 2009]
Forecasters predict that crude oil markets will remain tight over the next few years and are calling for prices
to average $67.20 US per barrel in 2006 and $64.30 US per barrel in 2007. Oil price volatility will likely
persist, reflecting limited expected increases to surplus capacity in 2007, coupled with concerns about the
market's ability to respond to a major supply disruption. Projections for oil prices range from $57.80 US per
barrel to $71.80 US per barrel in 2007. Oil producers are pouring significant amounts into the exploration and
development of both conventional and non-conventional sources of oil. As new capacity comes online over the
medium term, the fundamentals will be in place to support a drop in crude oil prices.
Higher oil and gas prices have a negative impact on the provincial economy and government revenues. Because the
Ontario economy imports virtually all of its oil, it is vulnerable to sustained elevated oil prices. Higher oil
and gas prices increase household expenses, reducing discretionary spending on other goods and services. For many
businesses, higher gasoline and oil prices increase operating costs, reducing profits and their ability to fund
new investments.
For planning purposes, the Ministry of Finance forecasts oil prices to average $67.50 US per barrel in 2006,
$65.00 US per barrel in 2007, $64.00 US per barrel in 2008 and $60.00 US per barrel in 2009.
U.S. ECONOMY
[Bar chart showing real GDP growth for the United States covering 2003 and forecasting through to 2009]
The U.S. economy is expected to grow by 3.4 per cent in 2006. The pace of activity has slowed from 5.6 per cent
at an annual rate in the first quarter to 2.6 per cent in the second quarter. Economists expect growth to
moderate in the second half of this year and into 2007. The Blue Chip Economic Indicators survey calls for real
GDP growth to slow to 2.6 per cent in 2007 and then rebound to 3.1 per cent in both 2008 and 2009.
After increasing interest rates by 4.25 percentage points since June 2004, it appears the U.S. Federal Reserve
may have ended its tightening cycle. Private-sector forecasters, on average, predict the Federal Reserve will
remain on hold for the rest of the year and will cut rates by 0.50 percentage points next year as inflation eases
and growth remains moderate.
While most forecasters expect the U.S. economy to keep growing, there are significant risks to the outlook.
Higher mortgage rates and lower housing affordability have caused residential construction to decline and home
prices to soften. That reduces funds available through mortgage equity withdrawal to support consumer spending.
The negative impact of the housing slowdown is likely to be cushioned by solid growth in labour income and lower
projected gasoline prices and interest rates, which will support healthy consumer spending. In addition, profit
margins remain high and business investment remains robust. Nonetheless, slower growth in the U.S. economy--
Ontario's largest export market-- will have an impact on Ontario's economic growth.
[Bar chart outlining the current account deficits and surpluses for 2006 and 2007 for the United States,
the Euro Zone, Japan, Canada, China and newly industrialized Asian countries.]
There is also concern that record current account deficits and a high budget deficit could expose the U.S.
economy to a potential cutback in foreign capital inflows. The U.S. federal budget deficit is projected to
improve to $260 billion US in the 2006 fiscal year, or 2.0 per cent of GDP, compared with $318 billion US, or 2.6
per cent of GDP, in 2005. However, the U.S. current account deficit has continued to deteriorate, equivalent to
6.6 per cent of GDP in the second quarter, up from 6.4 per cent of GDP in 2005. At the same time, current account
surpluses in China and newly industrialized Asian countries have remained large. With active currency management
in Asia, global savings have risen, holding global interest rates down and making it easier for U.S. consumers to
borrow.
Private-sector forecasters expect the U.S. current account deficit to show little improvement in 2007. The longer
global imbalances last, the more vulnerable the United States may be to a sharper correction, affecting the value
of the U.S. dollar. A steep decline in the U.S. dollar would likely result in considerably higher interest rates,
which would be required to compensate foreign investors for the increased risk of holding U.S.-denominated debt.
These factors would contribute to further weakening in consumer and business demand. If that were to happen,
Ontario's exports would be hit by both a weak U.S. dollar and declining U.S. demand.
THE CANADA-U.S. EXCHANGE RATE
[Line graph tracking the Canadian dollar against the US dollar from 1991 and forcasting through to 2009.]
The Canadian dollar has appreciated dramatically against the U.S. currency over the past four years. On a
trade-weighted basis, the Canadian dollar has appreciated more than any other major currency since the beginning
of 2002, reflecting high commodity prices and solid economic growth in Canada.
The unprecedented rise of the dollar, along with growing competition from low-cost producers in newly
industrializing countries, has created challenges for Ontario exporters. U.S. travel to Ontario has also been
adversely affected by the strength of the dollar and other factors.
Despite the high value of the Canadian dollar, Ontario industry remains competitive in the global marketplace.
The higher dollar lowers the cost of imported machinery and equipment-- about 60 per cent of the Province's
machinery and equipment is imported. This makes it easier for Ontario manufacturers to shift to producing
higher-value products. The appreciation of the Canadian dollar has also benefited Ontario consumers by lowering
prices of imported goods and helping to offset some of the impact of higher oil prices.
Forecasters predict an easing in oil and other commodity prices. This should limit further appreciation of the
Canadian dollar, removing some of the competitive pressures on the Ontario economy. The private sector expects
the Canadian dollar to average 88.5 cents US in 2006, 88.8 cents US in 2007, 89.1 cents US in 2008 and 88.5 cents
US in 2009.
For planning purposes, it is assumed the Canadian dollar will average 88.5 cents US in 2006 and 89.0 cents US in
2007 through 2009.
THE CANADIAN DOLLAR OUTLOOK
(CENTS US)
2006p 2007p 2008p 2009p
----------------- ------------------ ------------------ -----------------
Private-sector Average 88.5 88.8 89.1 88.5
High 88.9 94.0 90.9 91.0
Low 88.0 82.6 86.9 85.6
Ministry of Finance 88.5 89.0 89.0 89.0
p = projection.
Sources: Ontario Ministry of Finance and Ontario Ministry of Finance Survey of Forecasts (October 2006).
EXPORTS AND IMPORTS
[Bar chart contrasting imports and exports for Ontario real international and
interprovincial trade from 2001 and forecasting through to 2009.]
Ontario's exports are expected to decline modestly in 2006. The Province's real net trade surplus narrowed to
$25.1 billion in the second quarter of 2006. This is due to a higher dollar, weaker demand in the United States
and restructuring in the auto industry. The trend is expected to continue in 2007, with exports projected to
increase by only 0.2 per cent. Ontario's exports are projected to rebound in 2008 and 2009, as U.S. growth picks
up momentum and new auto product lines come on-stream.
The auto sector accounted for 44 per cent of Ontario's merchandise exports in 2005, with 98 per cent of these
exports destined for the United States. Ontario continues to be the largest motor-vehicle assembler in North
America, surpassing Michigan in each of the past two years. With U.S. auto sales expected to decline to
16.6 million in 2006 from last year's pace of 16.9 million, Ontario exporters are experiencing a decline in
demand for auto parts and assembled vehicles. Private-sector forecasters predict U.S. auto sales will ease
further to 16.4 million in 2007. In the medium term, Ontario auto exports will benefit from new production lines,
including a Toyota plant in Woodstock scheduled to begin production in 2008 and the introduction of the newly
designed Camaro in Oshawa in 2009.
Industrial goods and materials exports (such as iron, steel, other metals, rubber and plastic), which account for
19.2 per cent of Ontario's exports, comprise one of the strongest-growing export categories, up 6.4 per cent on a
year-to-date basis. Declining commodity prices would likely restrain the value of exports over the forecast
period.
[Bar chart showing Ontario's top six merchandise export partners by
their share of Ontario's exports between 1995 and 2005.]
Machinery and equipment, which make up 20.5 per cent of the province's exports, are up 2.9 per cent so far this
year. These exports are expected to continue strengthening, due to strong global demand. For example, real
business investment in machinery and equipment in the United States is projected to increase by 7.3 per cent in
2006 and by an average of 6.4 per cent in 2007 to 2009.
The United States is Ontario's largest trading partner, accounting for almost 90 per cent of Ontario's
international merchandise exports. Over the past three years, Ontario's nominal merchandise exports to the United
States have fallen by five per cent. So far this year, Ontario's exports to the United States are down a further
2.1 per cent.
Exports to countries other than the United States, however, have increased by 64 per cent over the past three
years. Increasing diversification means Ontario's exporters can benefit from strong global growth. The European
Union (EU) is Ontario's second-largest trading partner, accounting for almost five per cent of Ontario's
international exports. Exports to the EU rose 67 per cent over the past three years and are up a further 24 per
cent so far this year. Ontario exports to Mexico have risen 43 per cent over the past three years and are up over
52 per cent so far this year. China accounts for about one per cent of Ontario's international exports, but
Ontario exports to China have risen 57 per cent over the past three years. Exports to India have more than
doubled over the past three years, but India accounts for just 0.1 per cent of total international exports.
[Pie chart showing the shares held by various provinces of Ontario's interprovincial exports in 2002]
[Bar chart showing Ontario's top six merchandise import partners by their share of Ontario's imports between 1995 and 2005.]
Exports of goods and services to Canada's other provinces and territories are also important to Ontario. Exports
to the rest of Canada totalled $100.3 billion in 2005, while Ontario's international exports totalled $232.7
billion. Between 2002 and 2005, exports to other provinces grew over 12 per cent-- while international exports
were down 0.5 per cent. The trend of interprovincial exports outpacing international exports is continuing.
Exports to other provinces are up 1.3 per cent so far this year, well ahead of growth in international exports,
which are up only 0.5 per cent. Continuing strength in
Western Canada should provide a lift to Ontario exports over the forecast horizon.
Ontario's imports continue to grow at a rapid pace, as a result of solid growth in domestic demand and a strong
dollar. While the vast majority of Ontario's imports come from the United States, other regions are becoming more
prominent. Imports from China have risen by almost 90 per cent over the last three years and are up over 17 per
cent so far this year. Imports from the EU are up
6.4 per cent.
INTEREST RATES AND INFLATION
[Bar chart showing the 10 year Government of Canada Bond rate from 1990 and forecasting through to 2009.]
Since May 2006, the Bank of Canada has left its benchmark rate unchanged at 4.25 per cent, after increasing
interest rates 2.25 percentage points since September 2004. Inflationary pressures appear to be regional, centred
in Alberta's labour and housing markets. Forecasters generally believe that the Bank of Canada will leave rates
unchanged for the remainder of 2006 as they view the risks to the Canadian economy as being balanced.
Private-sector economists expect Canadian three-month treasury bill rates to average 4.0 per cent in both 2006
and 2007, 4.2 per cent in 2008 and 4.4 per cent in 2009. Ten-year Government of Canada bond yields are forecast
to average 4.3 per cent in 2006, 4.2 per cent in 2007, 4.8 per cent in 2008 and 5.1 per cent in 2009.
The U.S. Federal Reserve Board has held its target for the federal funds rate steady at 5.25 per cent since June
2006, after 17 consecutive one-quarter percentage point increases since June 2004. Forecasters expect that the
Federal Reserve, like the Bank of Canada, will remain on hold through the end of 2006.
Oil price movements over the past several years have been a key force affecting inflation. Ontario's CPI
inflation rate was 0.2 per cent in September, down from a peak of 3.3 per cent in September 2005, when gasoline
prices averaged $1.11 per litre. Plus, the one percentage point cut in the federal goods and services tax (GST)
in July 2006 further reduced the CPI inflation rate by an estimated 0.6 per cent. Ontario's CPI inflation rate is
expected to average 1.9 per cent in 2006.
The rising Canadian dollar has helped to offset some of the impact of higher energy prices on Ontario CPI
inflation. Looking forward, analysts generally expect the exchange rate will remain around 89 cents US, removing
the impact on inflation of a steadily rising dollar.
Overall, inflationary pressures are well contained over the forecast horizon. Ontario's CPI inflation rate is
expected to fall to 1.6 per cent in 2007, reflecting lower energy prices, the impact of the 1.0 percentage point
GST reduction and a gradual slowing in home-replacement costs. Once the impact of the GST cut no longer affects
year-to-year price changes and energy prices stabilize, CPI inflation is projected to rise to an average of 1.8
per cent in both 2008 and 2009. This forecast excludes the impact of the federal government's proposed additional
one percentage point reduction in the GST.
CANADIAN INTEREST RATE AND INFLATION OUTLOOK
(ANNUAL PER CENT)
2005 2006p 2007p 2008p 2009p
------------- -------------- -------------- ------------- --------------
Three-month Treasury Bill Rate 2.7 4.0 4.2 4.5 4.6
10-year Government Bond Rate 4.1 4.3 4.4 4.9 5.2
Ontario CPI Inflation Rate 2.2 1.9 1.6 1.8 1.8
p = projection.
Sources: Bank of Canada, Statistics Canada and Ontario Ministry of Finance.
- -------------------------------------------------------------------------------------------------------------------------------
Supporting Ontario's Small Business Sector
Small businesses are an important part of the Ontario economy. Businesses with fewer than 50 employees account for 39 per
cent of employment in the province.
The government is committed to encouraging growth in the small business sector. Tax measures to help small business include:
o the small business deduction, which reduces Ontario's general corporate income tax rate for small
Canadian-controlled private corporations, providing an estimated benefit of about $900 million annually
o an exemption from Ontario's capital tax for small businesses, credit unions, caisses populaires, family farm
corporations and family fishing corporations that saves them over $300 million annually
o the Employer Health Tax exemption, which will provide small private-sector employers with a benefit of approximately
$590 million for the 2006 tax year
o a 10 per cent refundable tax credit for small corporations performing research and development (R&D) in Ontario
o enhanced refundable tax credit rates for small business for hiring apprentices or co-op students.
Ontario and the federal government have signed an agreement that would transfer administration of Ontario's corporate income
tax and capital tax to the Canada Revenue Agency, starting with taxation years ending after December 31, 2008. A single
corporate tax administration, one tax return and one common set of administrative rules would cut the paper burden and other
tax compliance costs faced by small business (see Annex IV, Corporate Tax Harmonization).
Ontario is working with the small business sector to simplify Ontario tax administration. It is also working with the Small
Business Agency of Ontario to help small businesses grow and succeed, and reducing paper burden to save owners and
entrepreneurs time and money.
As well, the Province has an array of apprenticeship and skills training programs to address potential skills shortages, and
is taking further measures to expand Ontario's skilled labour supply. The new Ministry of Small Business and
Entrepreneurship, created in May 2006, will help to promote the success of small businesses in Ontario.
- -------------------------------------------------------------------------------------------------------------------------------
JOB GROWTH
The Ontario economy has created 103,600 net jobs so far in 2006, bringing the total net new positions added since
October 2003 to 254,100. Full-time employment accounted for all of the job gains this year, with full-time
positions replacing part-time ones. Most of these new jobs were in the service sector, which is gaining a greater
share of Ontario's economy-- a trend paralleled in most industrialized countries. Domestic-oriented sectors of
the economy have been thriving. The largest job gains so far this year have come from finance, insurance and real
estate (25,200); education (25,100); information, culture and recreation (23,800); business, building and other
support services (16,800); professional, scientific and technical services (16,800); wholesale and retail trade
(13,800); and construction (13,600).
[Bar chart showing Ontario's unemployment rate from 2004 and forecasting through to 2009.]
Record-high oil prices and the high Canadian dollar, along with competition from low-cost global producers, have
exerted increased pressure on the goods-producing industries, particularly the export-oriented manufacturing
sector. Yet, while economic conditions have adversely affected many manufacturers, the sector is investing for
future success. Ontario has supported numerous new
developments with funding from its Advanced Manufacturing Investment Strategy and Ontario Automotive Investment
Strategy. In the last six months, there have been encouraging signs for this sector, as companies assisted by
these two programs, including Linamar, General Motors, Diamond Aircraft Industries, Messier-Dowty Inc. and
Procter and Gamble Inc., have created or secured thousands of manufacturing positions.
For 2006 as a whole, employment is expected to grow by 1.4 per cent and the unemployment rate is projected to
fall from 6.6 per cent in 2005 to 6.3 per cent-- the lowest annual rate since 2001. Looking ahead to 2007,
employment is forecast to continue growing at a healthy rate of 1.2 per cent or 76,000 jobs. As the economy
gathers momentum in 2008 and 2009, employment growth is expected to accelerate to 1.6 per cent per year. Strong
job gains should lower Ontario's unemployment rate to 6.1 per cent in 2009.
HOUSEHOLD SPENDING
[Bar chart showing Ontario's real consumer spending and real after-tax income from 2001 and forecasting through to 2009.]
Healthy employment and wage gains in Ontario are contributing to strong growth in personal income, with an
expected rise of 4.6 per cent in 2006. Personal disposable income is forecast to increase by 4.7 per cent, partly
reflecting energy rebates for low-income households and federal tax cuts. As previously announced, the Government
of Ontario will provide $100 million in assistance to low-income Ontarians this fall-- up to $120 per family-- to
help them with higher electricity costs over the past year. Personal income is projected to grow by 4.1 per cent
in 2007 and by an average of 4.9 per cent per year in 2008 and 2009. The growth forecast in employment, wages and
incomes supports the outlook for increasing Personal Income Tax and Employer Health Tax revenues.
Not surprisingly, these strong income gains are leading to robust consumer spending. Real consumer spending is
expected to grow by 3.1 per cent in 2006, following a 3.5 per cent gain in 2005. Consumer spending is projected
to increase by an average of 3.0 per cent over the 2007 to 2009 period, in line with growth in personal
disposable income. Purchases of durables are expected to slow, reflecting the softening housing market and
reduced auto sales, while spending on services is expected to strengthen. The growth in consumer spending can be
expected to boost Retail Sales Tax revenues over the forecast period.
[Line graph showing Canadian household debt interest costs
as a percentage of personal disposable income from 1980 through to 2006.]
The ratio of Canadian household debt costs to personal disposable income was 7.6 per cent in the second quarter
of 2006, down from a recent high of 8.3 per cent in the third quarter of 2000.
Over the first seven months of 2006, Ontario's retail sales rose by 4.3 per cent over the same period last year.
Home and hardware centres and home-furnishing retailers saw strong growth, supported by a healthy housing market
as home purchases translated into renovation, landscaping and decoration activity. However, new car sales, the
biggest-ticket item, are down 2.2 per cent compared with the same period last year, when substantial discounts
were offered on vehicles. As new car dealers are the largest retailer category, accounting for about 20 per cent
of sales in Ontario, the weakness in sales limited overall retail sales growth. In contrast, sales at gas
stations continued to account for a larger share of retail sales as gas prices averaged 7.6 per cent higher so
far this year. Excluding sales at gas stations, Ontario retail sales are up 2.9 per cent over the first seven
months of the year, compared with an increase of 3.7 per cent in 2005.
[Line graph showing the affordability of Ontario housing
from 1985 and forecasting through to 2009.]
After years of robust activity, helped by low mortgage rates, the housing market is moderating. However, it is
stronger than expected. The sales-to-new-listings ratio dropped from the recent high of 73.9 in the first quarter
of 2002 to 55.9 in the second quarter of 2006. The larger supply of existing homes should translate into slower
house-price appreciation in the near future.
Home resales in the province declined 0.2 per cent in 2005 and are expected to dip by 2.0 per cent this year and
a further 4.4 per cent in 2007. Although mortgage rates have edged up slightly over the past year, mortgage
payments as a share of after-tax income continue to be low by historical standards as income growth remains
solid. Softer demand has contributed to more moderate house price gains. The average resale price of a house in
Ontario rose 6.8 per cent in the first half of 2006, compared with an average increase of 7.7 per cent in the
past two years.
In the medium term, moderate house price increases and rising incomes, along with relatively steady mortgage
rates, will keep housing affordable.
Ontario's new housing market remains resilient. Housing starts for 2006 are projected to reach 75,000 units, down
from 78,800 in 2005, with starts of single housing units falling more than
multiples-- townhomes, apartment buildings and condominiums.
The number of housing starts is expected to decline to 70,000 units in 2007 and then improve to 71,000 units in
2008 and 72,000 units in 2009.
INVESTMENT TO LEAD GROWTH
[Line graph demonstration that the Canadian ratio of debt-to-equity
shows up in strong balance sheets for business over the period of 1988 through to 2006.]
[Bar chart showing the percentage change in real business investment
for both the commercial and industrial construction sector and
the machinery and equipment investment sector from 2002 and forecasting through to 2009.]
[Line graph contrasting Ontario's profits and investments in the machinery and
equipment investment sectors from 1981 through 2005.]
The outlook for 2006 investment remains positive. The Canadian debt-to-equity ratio has continued to decline in
the last couple of years. Although Ontario corporate profits as a share of GDP have declined to around
11 per cent, they remain well above the historical average.
Healthy balance sheets and low interest rates are a positive for investment.
While the high dollar and high energy prices are likely to dampen corporate profits in 2006, the exchange rate
makes it considerably cheaper to import new machinery and equipment. The value of Ontario imports of machinery
and equipment is up 1.9 per cent so far this year while prices are down 5.4 per cent.
According to Statistics Canada's Private and Public Investment Intentions Survey, growth in machinery and
equipment investment is expected to be buoyant, led by finance, insurance and real estate (9.8 per cent or $11.7
billion); information and culture (9.0 per cent or $3.3 billion); utilities (68.6 per cent or $2.5 billion);
construction (11.2 per cent or $2.0 billion); and wholesale trade (11.2 per cent or $1.7 billion). Investment in
machinery and equipment is an important source of productivity growth, as it often embodies technological
advances. While investment spending in current dollars has not grown as fast as profits, this represents a
substantial increase in real terms, as the cost of purchasing machinery and equipment has fallen. In 2005, real
machinery and equipment investment grew at an 11.0 per cent rate-- its fastest pace since the technology boom in
the late 1990s. Real investment in machinery and equipment is projected to rise by 8.7 per cent in 2006 and by an
average of 5.8 per cent from 2007 through 2009.
Commercial and industrial construction has strengthened in 2006. Outlays are projected to advance 4.5 per cent in
2006 and an average of 3.8 per cent annually over the 2007 to 2009 period. According to the Private and Public
Investment Intentions Survey, the biggest increase in outlays in 2006 will come from utilities (up 47.7 per cent
or $3.6 billion); finance, insurance and real estate (up 7.2 per cent or $2.2 billion); transportation and
warehousing (up 56.9 per cent or $1.8 billion); and retail trade (up 25.7 per cent or $1.6 billion).
- -------------------------------------------------------------------------------------------------------------------------------
Promoting Investment in the Entertainment and Creative Cluster
In 2005, the entertainment and creative cluster contributed nearly $9.9 billion to Ontario's economy
(2.2 per cent of GDP) and employed approximately 185,000 people, accounting for 42 per cent of Canada's total workforce in
this cluster.
The government is moving forward in implementing a number of initiatives announced in the 2006 Budget to support the
entertainment and creative cluster in Ontario. It has:
o approved the extension of the Ontario Production Services Tax Credit until March 31, 2007
o proposed the enhancement of the Ontario Interactive Digital Media Tax Credit
o provided $49 million to support Ontario's major cultural agencies and attractions: the Royal Ontario Museum, Art
Gallery of Ontario, Canadian Opera Company, National Ballet School, Royal Conservatory of Music and Gardiner Museum
of Ceramic Art
o provided $10 million to the Ontario Heritage Trust
o launched the Entertainment and Creative Cluster Partnerships Fund in September 2006
o provided $1 million in support for the 2007 Toronto International Arts Festival.
- -------------------------------------------------------------------------------------------------------------------------------
ECONOMIC OUTLOOK COMPARISON WITH G7 COUNTRIES
[Bar chart showing Ontario's performance in real GDP growth
against that of the G7 countries for 2006 through 2009.]
Ontario is expected to remain among the fastest-growing industrial jurisdictions over the medium term despite the
challenges facing it. Private-sector forecasters project that over the 2006 to 2009 period, real GDP growth in
Ontario will average 2.5 per cent a year-- ahead of all G7 countries, except Canada as a whole and the United
States.
Government policy plays a vital role in helping to maintain and enhance Ontario's competitive advantages and in
attracting high-value jobs to ensure the economy can weather the challenges it faces. Investments in
infrastructure, education and skills training, and partnerships to promote business investment and innovation,
support the fundamental strengths of the province and underpin near-term economic activity. All of these factors
will foster economic growth in a highly competitive global market.
ONTARIO AND G7 ECONOMIC OUTLOOK, 2006 TO 2009
REAL GDP GROWTH (PER CENT)
2006 2007 2008 2009
--------------------- --------------------- --------------------- ---------------------
Ontario 1.7 2.1 3.1 3.2
Canada 2.8 2.6 2.9 3.0
United States 3.4 2.6 3.1 3.2
France 2.3 2.0 2.0 2.1
Germany 2.2 1.2 1.7 1.6
Italy 1.6 1.2 1.4 1.5
United Kingdom 2.6 2.4 2.3 2.2
Japan 2.8 2.2 2.0 1.6
Sources: Consensus Forecasts (October 2006) and Ontario Ministry of Finance Survey of Forecasts
(October 2006).
DETAILS OF THE ONTARIO ECONOMIC OUTLOOK
This table shows the key details of the updated economic outlook for the 2006 to 2009 period.
- -------------------------------------------------------------------------------------------------------------------------------
THE ONTARIO ECONOMY, 2004 TO 2009
(PER CENT CHANGE)
- -------------------------------------------------------------------------------------------------------------------------------
Actual Projected
2004 2005 2006 2007 2008 2009
----------- ----------- ------------ ----------- ----------- -----------
----------- ----------- ------------ ----------- ----------- -----------
Real Gross Domestic Product 3.1 2.8 1.6 2.0 3.0 3.1
Personal consumption 3.1 3.5 3.1 2.6 2.9 3.4
Residential construction 3.5 0.8 (1.2) (2.8) 2.0 3.0
Non-residential construction (1.0) (1.1) 4.5 3.6 4.1 3.8
Machinery and equipment 8.9 11.0 8.7 5.8 5.6 6.0
Exports 5.8 2.7 (0.5) 0.2 3.3 2.9
Imports 7.2 4.7 3.5 1.1 3.5 3.4
Nominal Gross Domestic Product 5.2 4.1 3.0 3.7 4.7 4.8
Other Economic Indicators
Retail sales 3.2 4.7 4.2 3.8 4.7 4.6
Housing starts (000s) 85.1 78.8 75.0 70.0 71.0 72.0
Personal income 4.5 4.7 4.6 4.1 4.7 5.0
Wages and salaries(1) 4.7 5.0 4.3 4.1 4.8 5.1
Corporate profits 13.7 (0.4) (1.0) 3.0 6.0 5.4
Consumer Price Index 1.9 2.2 1.9 1.6 1.8 1.8
Labour Market
Employment 1.7 1.3 1.4 1.2 1.6 1.6
Job creation (000s) 103 81 92 76 103 108
Unemployment rate (per cent) 6.8 6.6 6.3 6.3 6.2 6.1
- ------------------------------------------------------ ----------- ----------- ------------ ----------- ----------- -----------
- -------------------------------------------------------------------------------------------------------------------------------
(1) Includes supplementary labour income.
Sources: Statistics Canada, Canada Mortgage and Housing Corporation and Ontario Ministry of Finance.
- -------------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
SECTION III: ONTARIO REVENUE OUTLOOK
The revenue forecast reflects developments to date and the current economic outlook, but there are risks to the
forecast that the Province will continue to monitor over the coming months. Recent signs of weakness in corporate
profits give rise to concerns for historically volatile Corporations Tax revenues. Uncertainty remains regarding
the 2005 Canada-Ontario Agreement, posing a challenge to developing the revenue outlook and fiscal plan. Ontario
does not accept the federal position that the unanticipated measures announced by the federal government in its
2006 budget count towards the Agreement. Issues surrounding federal transfers are discussed in greater detail in
Annex III, Fairness for All Canadians.
Since the 2006 Ontario Budget, the economic growth outlook for 2006 to 2008 has softened, reflecting higher oil
prices, a stronger Canadian dollar and a slower growth outlook for the U.S. economy. The negative revenue impact
in 2006-07 of slower economic growth is offset by proceeds from the Teranet Income Fund initial public offering
(IPO) and higher revenues related to processing of prior years' tax returns. The revenue increase related to
prior years is largely one-time in nature, with only a portion of the increase carrying forward over the medium
term. Also contributing to higher 2006-07 revenues is Ontario's share of Government of Canada transfers to all
provinces and territories under the federal trusts announced in the 2006 federal budget.
Over the medium term, slower projected economic growth results in a lower forecast for taxation revenues. Partly
offsetting the revenue impact of less robust economic growth are higher revenues related to processing of prior
years' tax returns and Government of Canada transfers under the federal trusts.
The 2006 Ontario Budget included $2.2 billion of funding from the 2005 Canada-Ontario Agreement in its
medium-term fiscal plan. The Agreement, although historic and a significant victory for the people of Ontario,
represented just a first step towards addressing Ontario's fairness issues. Regrettably, it has not yet been
honoured by the new federal government. The federal government made an unequivocal commitment to honour the
Agreement, recognizing that it was in the interests of all Ontarians and all Canadians to invest in a fair way in
Ontario's prosperity. Issues surrounding federal transfers are discussed in greater detail in Annex III, Fairness
for All Canadians.
2006-07 REVENUE OUTLOOK
Total revenue in 2006-07 is currently projected to be $87,044 million, an increase of $1,314 million from the
2006 Budget Plan.
SUMMARY OF 2006-07 IN-YEAR REVENUE CHANGES SINCE BUDGET
($ MILLIONS)
Taxation Revenue
Personal Income Tax 650
Corporations Tax (260)
Tobacco Tax (80)
Employer Health Tax (15)
Ontario Health Premium (10)
---------------
285
Government of Canada
Trusts Announced in 2006 Federal Budget 456
---------------
456
Other Non-tax Revenue
Teranet IPO 573
---------------
573
Total Revenue Changes 1,314
The Personal Income Tax revenue outlook for 2006-07 has increased by a net amount of $650 million. Processing of
personal income tax returns during 2006 has resulted in higher revenues largely related to prior years. This
results in a substantial increase in revenues in
2006-07 as higher prior-year tax revenues than included in past Public Accounts must be reflected in the current
year. Only a portion of this increase carries forward over the medium term. The 2006-07 increase is partially
offset by the impact of slower projected wages and salaries growth in 2006. The 2006-07 Personal Income Tax
revenue forecast also reflects an estimated $30 million revenue decrease due to tax changes since the 2006
Ontario Budget.
o In August 2006, the Province announced that it would create a new, enhanced dividend tax credit to encourage more
investment by Ontarians in Canadian corporations, and to improve the integration of the corporate and
personal income tax systems.
o Ontario will also parallel proposed federal tax changes that would provide benefits to Ontarians, including a
full exemption for postsecondary student scholarship income, a tax deduction for tradespersons, and the
elimination of capital gains on certain charitable donations.
The Corporations Tax revenue outlook for 2006-07 has decreased by $260 million from the Budget forecast. This is
$510 million lower than the First Quarter Ontario Finances' projection of a $250 million increase in Corporations
Tax revenues in 2006-07. This reflects slower projected growth in pre-tax corporate profits in 2006 and
higher-than-expected refunds in respect of 2005 corporate tax return filing.
Tobacco Tax revenue in 2006-07 is forecast to decrease by $80 million from the 2006 Ontario Budget forecast based
on lower-than-projected revenue receipts during the first half of the fiscal year.
Revenues from the Employer Health Tax and Ontario Health Premium are forecast to decrease by $15 million and $10
million respectively as a result of projected softening of economic growth in 2006.
The forecast for Government of Canada transfers has increased by $456 million, representing Ontario's share of
Government of Canada transfers to all provinces and territories under the federal trusts announced in the 2006
federal budget and confirmed by the recently released federal financial results for 2005-06.
The First Quarter Ontario Finances noted that the Sales and Rentals revenue forecast increased by $570 million,
reflecting the expected gross amount of the Province's share of proceeds related to the Teranet Income Fund IPO
announced on June 16, 2006. An additional $3 million was subsequently realized upon the sale of income fund units
by the Province's designees. The update on proceeds from the Teranet IPO is discussed in greater detail in Annex
II, Ontario's Medium-term Fiscal Plan and Outlook.
MEDIUM-TERM REVENUE CHANGES SINCE BUDGET
SUMMARY OF MEDIUM-TERM REVENUE CHANGES SINCE BUDGET
($ BILLIONS)
Outlook
----------------------------------------------------------------
2006-07 2007-08 2008-09
--------------------- -------------------- ---------------------
Key Revenue Changes Since 2006 Budget
Slower Economic Growth (0.5) (0.8) (1.0)
Teranet IPO 0.6 - -
Prior Years' Tax Return Processing 0.9 0.3 0.3
Trusts Announced in 2006 Federal Budget 0.5 0.5 0.2
Other (0.1) (0.2) (0.3)
Total Revenue Changes 1.3 (0.3) (0.8)
Note: Numbers may not add due to rounding.
Source: Ontario Ministry of Finance
Since the 2006 Ontario Budget, the economic growth outlook for 2006 to 2008 has softened, reflecting higher oil
prices, a stronger Canadian dollar and a slower growth outlook for the U.S. economy. The negative revenue impact
of slower economic growth is offset in 2006-07 by proceeds from the Teranet Income Fund IPO and higher revenues
related to processing of prior years' tax returns. The revenue increase related to prior years is largely
one-time in nature, with only a portion of the increase carrying forward over the medium term. Also contributing
to higher revenues is Ontario's share of Government of Canada transfers to all provinces and territories under
the trusts announced in the 2006 federal budget.
The Taxation Revenue forecast reflects an estimated $60 million revenue decrease by
2008-09, due to personal income tax changes, including a proposed enhanced dividend tax credit, paralleling
proposed federal tax changes and improvements to Ontario Property and Sales Tax Credits. Also reflected in the
forecast are projected lower Tobacco Tax revenues and the anticipated impact of the federal-provincial agreement
to streamline the administration of Ontario's corporate tax system, which reduces Corporations Tax revenues by
$35 million in 2008-09. The latter issue is discussed in detail in Annex IV, Corporate Tax Harmonization.
MEDIUM-TERM REVENUE OUTLOOK
MEDIUM-TERM REVENUE OUTLOOK
($ BILLIONS)
Revenue 2006-07 2007-08 2008-09
--------------------- -------------------- ---------------------
Taxation Revenue 61.6 63.5 66.1
Government of Canada 14.0 15.4 15.5
Income from Government Enterprises 3.9 4.1 4.3
Other Non-tax Revenue 7.5 7.0 7.3
Total Revenue 87.0 90.0 93.2
Note: Numbers may not add due to rounding.
Total revenue in 2008-09 is projected to be $93.2 billion, an increase of $6.2 billion over the level forecast
for 2006-07. This represents an average annual growth rate of 3.5 per cent between 2006-07 and 2008-09.
Taxation revenue is forecast to increase by $4.6 billion between 2006-07 and 2008-09, with annual growth
averaging 3.6 per cent. This is consistent with nominal GDP annual growth averaging 4.2 per cent from 2006 to
2008.
Federal payments to Ontario are forecast to increase by $1.4 billion between 2006-07 and
2008-09, with annual growth averaging 5.0 per cent. The forecast is based on current federal-provincial
agreements, funding commitments, and formulas for major health and social transfers. The forecast includes $2.2
billion over three years in Canada-Ontario Agreement transfers and $1.1 billion over three years, representing
Ontario's share of Government of Canada trusts.
Income from Government Enterprises is forecast to increase by $0.4 billion over the medium term.
Other Non-Tax revenue is forecast to decrease by $0.3 billion between 2006-07 and 2008-09. The decrease is due to
the $0.6 billion one-time Sales and Rentals revenues in 2006-07 from the Teranet IPO. Adjusting for this, Other
Non-Tax revenue increases by $0.3 billion between
2006-07 and 2008-09, representing an average annual growth rate of 2.2 per cent.
===========================================================================================================================
SECTION IV: POTENTIAL RISKS TO PROVINCIAL REVENUES
A growing economy with rising incomes, corporate profits and consumer spending generates higher revenues to pay
for public services. Taxation revenues make up the largest category of Provincial revenue. Of the $87.0 billion
in total revenues forecast for 2006-07, $61.6 billion, or about 71 per cent, is expected to come from taxation
revenues. Three revenue sources within this category-- Personal Income Tax, Retail Sales Tax and Corporations
Tax-- account for about 55 per cent of total revenues. Inherent in any multi-year forecast is uncertainty about
the future, making cautious and prudent planning a critical element of managing public finances.
This section highlights some of the key sensitivities and risks to the fiscal plan that could follow from
unexpected changes in economic conditions. It should be cautioned that these estimates, while useful, are only
guidelines and can vary depending on the composition and interaction of the potential risks.
- --------------------------------------------------------------------------------------------------------------------------------
SELECTED ECONOMIC AND REVENUE RISKS AND SENSITIVITIES
- --------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ ----------------------------------------- -------------------------------------------
Item/Key Components 2006-07 Assumption 2006-07 Sensitivities
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------ ----------------------------------------- -------------------------------------------
TOTAL REVENUES
o Real GDP 1.6 per cent growth in 2006 $645 million revenue change for each
o GDP Deflator 1.4 per cent increase in 2006 percentage point change in real GDP
growth. Can vary significantly depending
on composition and source of changes in
GDP growth.
o Canadian Interest Rates 4.0 per cent three-month treasury bill Between $65 million and
rate in 2006 $325 million revenue change in the
opposite direction for each percentage
point change in interest rates.
o U.S. Real GDP 3.4 per cent growth in 2006 Between $195 million and
$475 million revenue change for each
percentage point change in U.S. real GDP
growth.
o Canadian Dollar Exchange Rate 88.5 cents US in 2006 Between $25 million and
$115 million revenue change in the
opposite direction for each one cent
change in the Canadian dollar exchange
rate.
TOTAL TAXATION REVENUES
o Revenue Base(1) 3.3 per cent growth in 2006-07 $590 million revenue change for each
o Nominal GDP 3.0 per cent growth in 2006 percentage point change in nominal GDP
growth. Can vary significantly depending
on composition and source of changes in
GDP growth.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------------------ -------------------------------------------
PERSONAL INCOME TAX REVENUES
o Revenue Base 5.8 per cent growth in 2006-07
Key Economic Assumptions
o Wages and Salaries 4.3 per cent growth in 2006 $240 million revenue change for each
percentage point change in wages and
salaries growth.
o Employment 1.4 per cent growth in 2006
o Unincorporated Business Income 3.3 per cent growth in 2006
Key Revenue Assumptions
o Net Capital Gains Income 18 per cent decrease in 2006 $4 million revenue change for each
percentage point change in net capital
gains income growth.
o RRSP Deductions 6.0 per cent growth in 2006 $15 million revenue change in the
opposite direction for each percentage
point change in RRSP deductions growth.
o 2005 Tax-Year Assessments(2) $20.4 billion $204 million revenue change for each
percentage point change in 2005 Personal
Income Tax assessments.(4)
o 2004 Tax-Year and Prior Year $1.3 billion $13 million revenue change for each
Assessments(2) percentage point change in 2004 and Prior
Year Personal Income Tax assessments.(4)
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------ ----------------------------------------- -------------------------------------------
RETAIL SALES TAX REVENUE
o Revenue Base 4.0 per cent growth in 2006-07
Includes:
o Taxable Household Spending 3.3 per cent growth in 2006-07
o Other Taxable Spending 4.8 per cent growth in 2006-07
Key Economic Assumptions
o Retail Sales 4.2 per cent growth in 2006
o Nominal Consumption 4.3 per cent growth in 2006 $90 million revenue change for each
Expenditure percentage point change in nominal
consumption expenditure growth.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------------------ -------------------------------------------
CORPORATIONS TAX REVENUES
o Revenue Base 0.3 per cent decline in 2006-07
o Corporate Profits 1.0 per cent decline in 2006 $65 million revenue change for each
percentage point change in pre-tax
corporate profit growth.
o 2005-06 Tax $1.3 billion payable in 2006-07 $13 million revenue change in the
Assessment Refunds(3) opposite direction for each percentage
point change in
2005-06 refunds.(4)
o 2005-06 Tax Payments Upon Filing $0.8 billion receivable in 2006-07 $8 million revenue change for each
percentage point change in
2005-06 payments upon filing or
assessment payments.(4)
o 2005-06 Tax Assessment Payments $0.8 billion receivable in 2006-07 $8 million revenue change for each
percentage point change in
2005-06 assessment payments.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------------------ -------------------------------------------
EMPLOYER HEALTH TAX REVENUES
o Revenue Base 4.1 per cent growth in 2006-07
o Wages and Salaries 4.3 per cent growth in 2006 $35 million revenue change for each
percentage point change in wages and
salaries growth.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------------------ -------------------------------------------
Ontario Health Premium Revenues
o Revenue Base 4.7 per cent growth in 2006-07
o Personal Income 4.6 per cent growth in 2006 $25 million revenue change for each
percentage point change in personal
income growth.
o 2005 Tax Year Assessments $2.3 billion $23 million revenue change for each
percentage point change in Ontario Health
Premium Assessments.
GASOLINE TAX REVENUES
o Revenue Base 0.4 per cent growth in 2006-07
o Gasoline Pump Prices 95.0 cents per litre in 2006 $2 million revenue change in the opposite
direction for each cent
per litre change in gasoline pump prices.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------ ----------------------------------------- -------------------------------------------
FUEL TAX REVENUES
o Revenue Base 1.8 per cent growth in 2006-07
o Real GDP 1.6 per cent growth in 2006 $13 million revenue change for each
percentage point change in real GDP
growth.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------------------------------------------------ -------------------------------------------
LAND TRANSFER TAX REVENUES
o Revenue Base 3.0 per cent decline in 2006-07
o Housing Resales 2.0 per cent decrease in 2006 $10 million revenue change for each
percentage point change in both the
number and prices of housing resales.
o Resale Prices 5.9 per cent growth in 2006
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- ------------------------------------------ ----------------------------------------- -------------------------------------------
HEALTH AND SOCIAL TRANSFERS
o Canada-wide Revenue Base $28.6 billion in 2006-07
o Ontario Revenue Share 37.7 per cent in 2006-07
o Ontario Population Share 38.9 per cent in 2006-07 $44 million revenue change for each tenth
of a percentage point change in
population share.
o Ontario Basic Federal PIT Share 43.9 per cent in 2006-07 $6 million revenue change in the opposite
direction for each tenth of a percentage
point change in Basic Federal Personal
Income Tax base share.
- ------------------------------------------ ----------------------------------------- -------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
(1) Revenue base is revenue excluding the impact of measures, adjustments for
past Public Accounts estimate variances and other one-time factors.
(2) Ontario 2005 Personal Income Tax (PIT) is a forecast estimate because 2005
tax returns are currently being assessed by the Canada Revenue Agency.
(3) Corporations Tax refunds arising during 2005-06 are still an estimate
because tax returns for corporate fiscal years ending in Ontario's 2005-06
fiscal year are still being assessed by the Tax Revenue Division of the
Ontario Ministry of Finance.
(4) Now that 2005-06 Public Accounts of Ontario have been finalized, any change
in 2005 PIT assessments or 2005-06 Corporations Tax revenues will have a
dual effect on 2006-07 revenues through: a) a change in the revenue base
upon which this year's growth is applied, and b) a revenue adjustment
applied against the current year in respect of any variance from the
estimate included in the 2005-06 Public Accounts.
- --------------------------------------------------------------------------------------------------------------------------------
(1) This document is based on information available as of October 20, 2006.
==========================================================================================================
ANNEX II
ONTARIO'S MEDIUM-TERM FISCAL PLAN AND OUTLOOK
===========================================================================================================================
INTRODUCTION
In 2003-04, Ontario's deficit was $5.5 billion. In addition to the fiscal deficit, the province had significant
deficits in health care, education and infrastructure. Through a prudent and disciplined fiscal approach, the
government has made progress on restoring Ontario's financial health, while making historic, long-term
investments in health, education, infrastructure and a strong economy.
The 2006 Budget outlined a medium-term fiscal plan that would return the Province to a sustainable fiscal balance
by 2008-09. However, record-high oil prices, the strong Canadian dollar and a weaker outlook for growth in the
United States-- Ontario's largest trading partner-- have led to slower projected economic growth than anticipated
in the 2006 Budget. As a result, while the 2006-07 deficit outlook of $1.9 billion remains on track, the
medium-term fiscal outlook includes deficits of $2.2 billion in 2007-08 and $1.0 billion in 2008-09-- reflecting
the impact of more moderate economic growth on Ontario's revenue outlook. The Province will post a $0.5 billion
surplus if the reserve is not required in 2008-09.
The government remains committed to eliminating the deficit. It will therefore continue to be prudent and
disciplined in its approach to managing the Province's finances, including keeping program spending growth under
control. This approach, in addition to ongoing strategic investments in health care, education, infrastructure
and key economic sectors, will continue to strengthen the economy and ensure that the province is well positioned
to manage both the challenges and opportunities ahead.
This Annex provides an overview of the following:
o Section I: Ontario's Medium-term Fiscal Plan and Outlook
o Section II: 2006-07 Second-quarter Fiscal Update
Additional information can be found in Annex VII, Details of Ontario's Finances.
===========================================================================================================================
SECTION I: ONTARIO'S MEDIUM-TERM FISCAL PLAN AND OUTLOOK
The inherited deficit in 2003-04 of $5.5 billion was the result of a prolonged period when annual growth in
Provincial spending exceeded annual growth in Provincial revenue. By introducing a responsible and disciplined
approach to fiscal planning, the government has made progress towards restoring the financial health of the
Province by exceeding its planned deficit targets in each fiscal year since 2003-04. In 2004-05, the deficit was
reduced to $1.6 billion, and the Consolidated Financial Statements for 2005-06 indicated that the Province's
fiscal performance, projected to be a $1.4 billion deficit at the time of the 2006 Budget, had improved to a
modest surplus of $0.3 billion.
[Line graph showing the fiscal balance between surplus and deficit for
Ontario's medium term fiscal plan and forecasting through to 2008-2009.]
Higher revenues, combined with lower interest on debt expenses, have given the government the flexibility to
invest further in key priority areas and still improve upon the 2006 Budget deficit projection of $2.4 billion
for 2006-07. In fact, the Province has already reported an improvement of $0.4 billion in the deficit outlook for
2006-07 from the 2006 Budget forecast.
While the 2006-07 deficit target remains unchanged from the $1.9 billion deficit projection outlined in the First
Quarter Ontario Finances, or $0.9 billion if the reserve is not required, the medium-term economic growth outlook
has softened, reflecting record-high oil prices, a stronger Canadian dollar and a slower projected growth outlook
for the U.S. economy. The medium-term fiscal outlook, which includes reserves of $1.5 billion in 2007-08 and
2008-09, is now projected to be a deficit of $2.2 billion in 2007-08 and $1.0 billion in 2008-09, reflecting the
impact of the slower economic growth on Provincial revenue. This represents a change of $0.7 billion in 2007-08
and $1.0 billion in 2008-09 from the fiscal targets presented in the 2006 Budget. The Province will post a
deficit of $0.7 billion if the reserve is not required in 2007-08 and a $0.5 billion surplus if the reserve is
not required in 2008-09. The government is committed to eliminating the fiscal and structural deficits through
prudent fiscal management, including keeping expense growth under control.
KEY ELEMENTS OF ONTARIO'S MEDIUM-TERM FISCAL PLAN
The key elements of the government's medium-term fiscal plan, which will ensure an ongoing commitment to a
disciplined and prudent approach to fiscal planning, include:
o promoting a strong economy by investing in Ontario's infrastructure, health care, education, and postsecondary
education and training
o making disciplined decisions that hold the annual rate of growth in total spending to 2.7 per cent on average
over the medium term-- significantly less than the 3.5 per cent average annual rate of growth in total
revenue
o working constructively with the federal government towards a set of principled and sustainable federal-provincial
fiscal arrangements
o responsibly maintaining a cautious and prudent fiscal planning process, including an annual reserve
o forming the Ontario Economic Forecasting Council, which will meet with the Minister of Finance to discuss
macroeconomic projections
o identifying $750 million in program review savings by 2007-08.
MEDIUM-TERM FISCAL OUTLOOK
While the 2006-07 fiscal outlook is unchanged from the $1.9 billion deficit forecast in the First Quarter Ontario
Finances, the medium-term fiscal outlook now projects a deficit of $2.2 billion in 2007-08 and $1.0 billion in
2008-09, including the reserve. This represents a change of $0.7 billion in 2007-08 and $1.0 billion in 2008-09
from the fiscal targets presented in the 2006 Budget. The Province will post a deficit of $0.7 billion if the
reserve is not required in
2007-08 and a $0.5 billion surplus if the reserve is not required in 2008-09.
As per the Fiscal Transparency and Accountability Act, 2004, the following table provides details of projected
revenue and expense from 2006-07 through to the 2008-09 fiscal year. Further details are included in Annex VII,
Details of Ontario's Finances.
- -------------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM FISCAL PLAN AND OUTLOOK
($ BILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
Actual Outlook(1)
--------------- ---------------- ---------------
2005-06 2006-07 2007-08 2008-09
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Revenue
Taxation Revenue 59.9 61.6 63.5 66.1
Government of Canada 13.3 14.0 15.4 15.5
Income from Government Enterprises 4.3 3.9 4.1 4.3
Other Non-Tax Revenue 6.7 7.5 7.0 7.3
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Total Revenue 84.2 87.0 90.0 93.2
Expense
Programs
Health Sector 32.8 35.5 37.5 38.9
Education Sector(2) 11.6 12.1 12.6 12.7
Postsecondary Education and Training Sector 4.7 5.2 5.9 6.0
Children's and Social Services Sector 10.1 10.3 10.5 10.6
Justice Sector 3.1 3.2 3.2 3.2
Other Programs 12.6 12.4 11.6 11.6
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Total Programs 74.9 78.8 81.2 83.1
Interest on Debt 9.0 9.2 9.5 9.6
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Total Expense 83.9 88.0 90.8 92.7
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
Surplus/(Deficit) Before Reserve 0.3 (0.9) (0.7) 0.5
Reserve - 1.0 1.5 1.5
- ------------------------------------------------------------- ---------------- --------------- ---------------- ---------------
- ------------------------------------------------------------- ---------------- --------------- ---------------- ---------------
Surplus/(Deficit) 0.3 (1.9) (2.2) (1.0)
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
(2) Education sector includes Teachers' Pension Plan (TPP). Excluding TPP, total education sector expense is $11.3
billion in 2005-06, and projected at $11.7 billion in 2006-07, $12.1 billion in 2007-08 and $12.4 billion in 2008-09.
Note: Numbers may not add due to rounding.
- -------------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM REVENUE OUTLOOK
The revenue forecast reflects developments to date and the current economic outlook, but there are risks to the
forecast that the Province will continue to monitor over the coming months. Recent signs of weakness in corporate
profits give rise to concerns for historically volatile Corporations Tax revenues. Uncertainty remains regarding
the 2005 Canada-Ontario Agreement, posing a challenge to developing the revenue outlook and fiscal plan. Ontario
does not accept the federal position that the unanticipated measures announced by the federal government in its
2006 budget count towards the Agreement. Issues surrounding federal transfers are discussed in greater detail in
Annex III, Fairness for All Canadians.
Total revenue in 2008-09 is projected to be $93.2 billion, an increase of $6.2 billion over the level forecast
for 2006-07. This represents an average annual growth rate of 3.5 per cent between
2006-07 and 2008-09.
Taxation revenue is forecast to increase by $4.6 billion between 2006-07 and 2008-09, with annual growth
averaging 3.6 per cent. This is consistent with nominal GDP annual growth averaging 4.2 per cent from 2006 to
2008.
Federal payments to Ontario are forecast to increase by $1.4 billion between 2006-07 and
2008-09, with annual growth averaging 5.0 per cent. The forecast is based on current federal-provincial
agreements, funding commitments, and formulas for major health and social transfers. The forecast includes $2.2
billion over three years in Canada-Ontario Agreement transfers and $1.1 billion over three years, representing
Ontario's share of Government of Canada trusts.
Income from Government Enterprises is forecast to increase by $0.4 billion over the medium term.
Other Non-Tax revenue is forecast to decrease by $0.3 billion between 2006-07 and 2008-09. The decrease is due to
the $0.6 billion one-time Sales and Rentals revenues in 2006-07 from the Teranet IPO. Adjusting for this, Other
Non-Tax revenue increases by $0.3 billion between
2006-07 and 2008-09, representing an average annual growth rate of 2.2 per cent.
MEDIUM-TERM EXPENSE OUTLOOK
Over the medium term, total expense will rise from $88.0 billion in 2006-07 to $92.7 billion in 2008-09-- an
increase of $4.7 billion. To put the Province's finances on track towards a sustainable fiscal balance, annual
average growth in spending over the medium term will be held to less than the annual average rate of growth in
revenue. Annual growth in total expense is expected to average 2.7 per cent over this period, which is less than
the 3.5 per cent average annual growth in revenue forecast over the medium term.
DETAILS OF EXPENSE OUTLOOK
o Total health sector spending, including the impact of consolidating the Province's 156 hospitals (including four
specialty psychiatric hospitals), will grow by $2.7 billion to $35.5 billion in 2006-07. Between 2005-06
and 2008-09, total health spending will increase by $6.1 billion.
o Total education sector spending, including the impact of consolidating the Province's 103 school boards and
authorities, will grow by $0.5 billion to $12.1 billion in 2006-07, increasing to $12.7 billion by
2008-09. Excluding Teachers' Pension Plan expense, education sector spending will grow by $0.4 billion to
$11.7 billion in 2006-07, increasing to $12.4 billion by 2008-09.
o Total postsecondary education and training sector spending, including the impact of consolidating the Province's
24 colleges of applied arts and technology, will grow by $0.5 billion to $5.2 billion in 2006-07,
increasing to $6.0 billion by 2008-09.
o Children's and Social Services sector funding to support vulnerable adults, families and at-risk youth will grow
by an additional $0.3 billion in 2006-07 to $10.3 billion, rising to $10.6 billion by 2008-09.
o Justice sector spending will grow by $0.1 billion to $3.2 billion in 2006-07 and remain at that level throughout
the medium term.
o Other Programs spending will total $12.4 billion in 2006-07, but will decrease to $11.6 billion in 2007-08 and
2008-09, mainly reflecting one-time investments in 2006-07 such as those related to the Teranet IPO
proceeds, the Ontario Home Electricity Relief program, and additional forest fire fighting costs.
o Interest on debt expense is forecast to grow by $0.4 billion between 2006-07 and 2008-09, reflecting the
government's deficit targets and interest rates that are forecast to increase from historically low
levels. In 2006-07, interest on debt costs will amount to about 11 per cent of total Provincial revenue
and will fall to about 10 per cent in 2008-09. This represents an improvement over 2003-04, when interest
on debt expense represented 14 per cent of total Provincial revenue.
FISCAL PRUDENCE
The government is applying a disciplined approach to balancing strategic investments in key priority areas with a
plan to achieve a sustainable fiscal balance. The government's medium-term fiscal plan also includes prudence in
recognition of the risks that could materialize as a result of changes in the economic and fiscal outlook.
Fiscal prudence is particularly important in the current context, where the economic outlook has softened due to
record-high oil prices, a strong Canadian dollar and a slower projected growth outlook for the U.S. economy. The
government's medium-term fiscal plan continues to include reserves of $1.0 billion in 2006-07 and $1.5 billion in
2007-08 and 2008-09 to protect the fiscal plan against the impact of external adverse developments. The 2007-08
and 2008-09 reserves are $0.5 billion higher than the $1.0 billion reserve in 2006-07 to better reflect the risks
and uncertain nature of medium-term fiscal projections.
Consistent with the principles of increased fiscal transparency and accountability, the government provides
quarterly fiscal and economic updates using the best available information.
MAINTAINING A PRUDENT DEBT-TO-GDP RATIO
[Line graph showing the projected debt-to-GDP ratio for Ontario
from 2003-2004 and forecasting through to 2008-2009.]
The government's medium-term fiscal plan includes a commitment to maintain a prudent level of Provincial debt
relative to the size of Ontario's economy as measured by nominal GDP. Ongoing debt accumulation can significantly
limit the extent to which vital public services can be funded, as increasing debt charges crowd out funds
available for spending on government priorities. Responsible fiscal management, therefore, needs to be long term
to ensure that future generations are not burdened with an unsustainable debt load.
As per the Fiscal Transparency and Accountability Act, 2004, Provincial debt is defined as accumulated deficit,
which is the sum of all past Provincial surpluses and deficits.
Consistent with the medium-term fiscal outlook provided in this update, the Province's debt-to-GDP ratio is
projected to decline from 25.2 per cent in 2003-04 to 20.0 per cent in
2006-07 and 19.0 per cent by 2008-09.
KEY CHANGES SINCE THE 2006 ONTARIO BUDGET
The government's medium-term fiscal outlook has been updated to reflect revenue and expense changes since the
Budget, including updates to the Province's interest on debt forecast. Further details are included in Annex I,
Ontario's Economic and Revenue Outlook, and Annex VII, Details of Ontario's Finances.
In 2005-06, the Province recorded a modest surplus of $298 million, which is an improvement from the interim
deficit projection of $1.4 billion reported in the 2006 Budget. This modest surplus, confirmed by the Auditor
General in the 2005-06 Consolidated Financial Statements, can be primarily attributed to higher-than-expected tax
revenues and lower-than-expected net expenses of hospitals, colleges and school boards. Higher revenues in
2006-07, combined with lower interest on debt expense, have given the government the flexibility to invest
further in key priority areas and still improve upon the 2006 Budget deficit projection of $2.4 billion for
2006-07. However, the deficit is now projected to be $2.2 billion in 2007-08 and $1.0 billion in 2008-09,
including the reserve, reflecting the medium-term impact of slower economic growth on Provincial revenues. The
Province will post a $0.5 billion surplus if the reserve is not required in 2008-09.
The following table provides an overview of the key changes to the medium-term revenue and expense outlooks and
the reserve since the release of the 2006 Budget. Additional details on key changes to the 2006-07 fiscal outlook
since the 2006 Budget are provided in Section II of this Annex.
- -------------------------------------------------------------------------------------------------------------------------------
IMPACT OF KEY CHANGES TO THE MEDIUM-TERM DEFICIT TARGETS
($ BILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
Outlook
-------------- ---------------- ----------------
2006-07 2007-08 2008-09
-------------- ---------------- ----------------
-------------- ---------------- ----------------
Surplus/(Deficit) as per 2006 Budget (2.4) (1.5) 0.0
-------------- ---------------- ----------------
-------------- ---------------- ----------------
Total Revenue Changes Since 2006 Budget 1.3 (0.3) (0.8)
Key Expense Changes Since 2006 Budget:
Additional Funding to Reduce Health Wait Times 0.1 0.2 0.2
Investment of Teranet IPO Proceeds into Priorities (see Section II) 0.5 - -
Spending Related to Federal Trusts 0.5 0.5 0.2
Other Expense (Net), Including Interest on Debt Savings (0.2) (0.2) (0.1)
-------------- ---------------- ----------------
-------------- ---------------- ----------------
Total Expense Changes Since 2006 Budget 0.9 0.5 0.3
-------------- ---------------- ----------------
-------------- ---------------- ----------------
Total Changes Since 2006 Budget 0.4 (0.7) (1.0)
-------------- ---------------- ----------------
-------------- ---------------- ----------------
Surplus/(Deficit) (1.9) (2.2) (1.0)
Reserve 1.0 1.5 1.5
- ------------------------------------------------------------------------------ -------------- ---------------- ----------------
- ------------------------------------------------------------------------------ -------------- ---------------- ----------------
Surplus/(Deficit) Before Reserve (0.9) (0.7) 0.5
- -------------------------------------------------------------------------------------------------------------------------------
Note: Numbers may not add due to rounding.
- -------------------------------------------------------------------------------------------------------------------------------
DETAILS OF KEY REVENUE CHANGES
Since the 2006 Ontario Budget, the economic growth outlook for 2006 to 2008 has softened, reflecting higher oil
prices, a stronger Canadian dollar and a slower growth outlook for the U.S. economy. The negative revenue impact
of slower economic growth is offset in 2006-07 by proceeds from the Teranet Income Fund IPO and higher revenues
related to processing of prior years' tax returns. The revenue increase related to prior years is largely
one-time in nature, with only a portion of the increase carrying forward over the medium term. Also contributing
to higher revenues is Ontario's share of Government of Canada transfers to all provinces and territories under
the trusts announced in the 2006 federal budget.
All other medium-term revenue changes lower the revenue outlook over the medium term. The medium-term revenue
outlook changes are discussed in greater detail in Annex I, Ontario's Economic and Revenue Outlook.
UPDATE ON THE PROCEEDS FROM THE INITIAL PUBLIC OFFERING (IPO) OF TERANET
The First Quarter Ontario Finances reported that an estimated $570 million was expected from the Teranet IPO
proceeds, of which $54 million was devoted to service improvements and system enhancements of Teranet.
The amount included $410 million in cash received from the IPO on June 16, 2006. The $160 million cash component
of the transaction received by the Province in a deferred payment was dependent upon the market price of the
income fund units at the time the Province's designees sold their income fund units and paid the Province the
deferred payment. In September, the Province's designees sold their income fund units and paid the Province
$163 million, resulting in an additional $3 million in revenue.
The proceeds from the Teranet IPO have been added to the Ministry of Finance Operating Contingency Fund and the
government will continue to determine priority areas in which to invest the proceeds. Details on priority areas
where the government is proposing to invest the Teranet IPO proceeds can be found in Section II of this Annex.
DETAILS OF KEY EXPENSE CHANGES
Major changes to the medium-term expense outlook since the 2006 Budget include:
o increases in total health sector expense by $0.1 billion in 2006-07, $0.2 billion in 2007-08 and $0.2
billion onwards, to reflect enhancements to the government's Wait Times Strategy
o an amount of $0.5 billion allocated to the Contingency Fund until priority projects to be funded by the proceeds
from the Teranet Income Fund IPO in 2006-07 are determined; details on key investments to date can be
found in Section II of this Annex
o spending related to the Government of Canada transfers under the federal trusts, which amount to $0.5 billion in
2006-07 and 2007-08, and $0.2 billion in 2008-09, pending satisfactory resolution of issues related to the
Canada-Ontario Agreement
o a net decrease in other expenses by $0.2 billion in 2006-07 and 2007-08, and $0.1 billion in 2008-09, mainly due
to the impact of lower interest on debt costs arising from continued cost-effective debt management and
lower interest rates than were forecast at the time of the 2006 Budget.
MODERNIZING GOVERNMENT UPDATE
The government's modernization plan contains three objectives:
o program review-- achieving savings of $750 million by 2007-08 from more cost-effective programs
o efficient government-- delivering higher-quality services in an efficient and effective manner
o controlling long-term costs-- improving health care, education and other key services in a way that is
affordable and fiscally sustainable.
ACHIEVEMENT OF SAVINGS
Since taking office, the government has undertaken a comprehensive review to ensure that key programs and
services are being delivered in the most cost-effective way possible and to secure their long-term viability. A
critical component of the fiscal plan has been the program review target of $750 million to be achieved by
2007-08.
As indicated in the 2006 Budget, $407 million in savings had been found-- $350 million in direct program savings
and a further $57 million through more efficient management of the Province's revenues. To keep pace with the
rising expectations of citizens for high-quality, cost-effective public services, the government is modernizing
and improving programs and services both internally and externally. Examples include:
o decreased procurement costs resulting from a more streamlined purchasing process, vendor rebates and 33
new vendors of record
o savings generated by changes in the application of information technology services and products, including
the consolidation of key infrastructure services across the Ontario Public Service (e.g.,
service/datacentre consolidation and common computer applications and services)
o more effective management of government revenues through improved collection of the government's accounts
receivable
o reduced ministry accommodation costs and more energy-efficient government
buildings-- Ontario is leading by example in reducing energy consumption
o improved and more cost-effective service delivery to both citizens and business customers through the
implementation of ServiceOntario.
Since the 2005 Budget, ministries across the government have reviewed their baseline expenditures for
efficiencies to ensure all expenditures are aligned with the government's priorities. As a result of the review,
combined with the work underway to modernize government, the remaining $343 million of the $750 million program
review target has been realized and exceeded. All government ministries have realized sufficient savings from
program review to absorb almost $400 million in salary and wage and other inflationary pressures. Total savings
from modernization equal $806 million annually.
The 2006 Budget confirmed that the government has continued to move forward on the modernization initiatives. For
example, the new Securities Transfer Act, coming into force January 2007, creates the first fully harmonized
provincial commercial law in Canada. The modernization of Ontario's commercial law framework will help businesses
compete in the global economy and facilitate economic growth.
The continued work to modernize government and review all expenditures demonstrates Ontario's commitment to
achieving efficiency, effectiveness and economy throughout government.
In November 2005, the first money-back service guarantee was implemented for the Online Birth Certificate
Service. As of September 2006, of the 250,189 eligible applications received, 80 refunds have been issued to
applicants who did not receive their birth certificate within 15 business days.
Building on the success of the Online Birth Certificate service guarantee, an Online Marriage and Death
Certificates Application money-back guarantee will be launched in January 2007, enabling customers quick and
convenient access to these vital documents.
The government is also working with broader public-sector (BPS) partners to manage the rate of growth in
spending, while improving their respective service levels. OntarioBuys, a Ministry of Finance program, is
working with BPS partners to improve their supply chain functions. For instance, an e-supply chain project
involving 46 hospital facilities across the province is already yielding significant annual savings available for
front-line services. The BPS is demonstrating keen interest in this program and new projects are being
initiated. Existing OntarioBuys projects in the health and education sectors, once implemented, will yield
demonstrable savings and improve service quality.
The program review savings target was $750 million and has been exceeded. The following table presents total
achieved program review savings.
- -------------------------------------------------------------------------------------------------------------- ----------------
TOTAL PROGRAM REVIEW SAVINGS 2007-08
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------- ----------------
- -------------------------------------------------------------------------------------------------------------- ----------------
Previously Reported Savings ($407 Million)
Supply Chain and Transactional Services 200
Information and Information Technology 100
Accommodation Savings Review 50
Revenue Savings 57
----------------
----------------
Subtotal 407
Remaining Savings/Efficiencies ($399 Million)
Salary and Wage Pressures Absorbed 366
Ministry Efficiencies - Absorbing Inflationary Costs 18
Central Agency Review/Integration 15
----------------
----------------
Subtotal 399
- -------------------------------------------------------------------------------------------------------------- ----------------
- -------------------------------------------------------------------------------------------------------------- ----------------
Total 806
- -------------------------------------------------------------------------------------------------------------- ----------------
===========================================================================================================================
SECTION II: 2006-07 SECOND-QUARTER FISCAL UPDATE
2006-07 FISCAL SUMMARY
The 2006 Budget Plan projected a deficit of $2,350 million for 2006-07. As at September 30, 2006, a deficit of
$1,949 million is projected for 2006-07, an in-year improvement of $401 million from the deficit projected in the
2006 Budget. Additional information can be found in Annex VII, Details of Ontario's Finances.
- -------------------------------------------------------------------------------------------------------------------------------
2006-07 FISCAL OUTLOOK-- IN-YEAR CHANGE
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
Budget Plan Outlook(1) 2006-07 In-Year Change
2006-07
----------------------------------------------------------
----------------------------------------------------------
Revenue 85,730 87,044 1,314
Expense
Programs 77,651 78,789 1,138
Interest on Debt 9,429 9,204 (225)
----------------------------------------------------------
----------------------------------------------------------
Total Expense 87,080 87,993 913
----------------------------------------------------------
----------------------------------------------------------
Surplus/(Deficit) Before Reserve (1,350) (949) 401
Reserve 1,000 1,000 -
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Surplus/(Deficit) (2,350) (1,949) 401
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
- -------------------------------------------------------------------------------------------------------------------------------
Total revenue in 2006-07 is currently projected to be $87,044 million, an increase of $1,314 million from the
2006 Budget Plan. In-year revenue changes are discussed in greater detail in Annex I, Ontario's Economic and
Revenue Outlook.
Total expense is projected to increase to $87,993 million, up a net $913 million from the 2006 Budget Plan and up
$494 million from the outlook presented in the First Quarter Ontario Finances. This is mainly due to an in-year
increase in the Operating Contingency Fund of $456 million related to the federal trusts and the $519 million in
proceeds from the Teranet IPO, offset by interest on debt savings of $225 million.
The reserve, included to protect the fiscal plan against unexpected and adverse changes in the economic and
fiscal outlook, is unchanged at $1.0 billion. Any portion of the reserve not required at year-end will be used to
reduce the deficit.
The 2006-07 fiscal outlook continues to include funding from the 2005 Canada-Ontario Agreement. Issues
surrounding federal transfers are discussed in greater detail in Annex III, Fairness for All Canadians.
2006-07 EXPENSE OUTLOOK
- -------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF IN-YEAR EXPENSE CHANGES SINCE BUDGET
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
In-Year Change
---------------
---------------
Expense Changes This Quarter:(1)
Ministry of Finance-- Increase to Operating Contingency Fund for the federal trusts 456
Ministry of Natural Resources-- Additional forest fire fighting costs 124
Ministry of Health and Long-Term Care(2)-- Wait Times Strategy 109
Ministry of Community and Social Services-- Ontario Disability Support Program 25
Ministry of Children and Youth Services-- Youth Challenge Fund 15
Ministry of Education-- TVOntario Strategic Plan implementation 8
Ministry of Public Infrastructure Renewal-- Caledonia-- Purchase of Douglas Creek Estates 6
Ministry of Finance-- Increase to Operating Contingency Fund for additional proceeds from the Teranet IPO 3
Interest on Debt-- Savings (74)
---------------
---------------
Sub-Total 672
Proposed Investments Related to Teranet IPO Proceeds
Ministry of Transportation-- Toronto Transit Vehicle Assistance 150
Ministry of Agriculture, Food and Rural Affairs-- Assistance to Farmers 101
Ministry of Agriculture, Food and Rural Affairs-- Rural Infrastructure 70
Ministry of Agriculture, Food and Rural Affairs-- Rural Development 5
-------------
-------------
Total Proposed Investments Related to Teranet IPO Proceeds 326
---------------
---------------
Total Expense Changes, Including Investments Related to Teranet IPO Proceeds 998
Ministry of Finance-- Operating Contingency Fund offsets (498)
Ministry of Public Infrastructure Renewal-- Capital Contingency Fund offsets (6)
---------------
---------------
Net Expense Changes This Quarter 494
Net Expense Changes Reported in First Quarter Ontario Finances 419
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Expense Changes Since Budget 913
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
(2) Includes amounts allocated to hospitals' net expense for Wait Times Strategy.
- -------------------------------------------------------------------------------------------------------------------------------
The following is a detailed explanation of the in-year changes this quarter.
o The Province proposes that the Operating Contingency Fund under the Ministry of Finance be increased by $456
million in 2006-07 to reflect spending related to the federal trusts, pending satisfactory resolution of
issues related to the Canada-Ontario Agreement.
o An in-year increase of $124 million in the Ministry of Natural Resources for additional personnel and equipment
resources is required to support forest fire fighting, due to the above-average number of fires this
season, fully offset from the Operating Contingency Fund.
o Health sector expense increased by $109 million, reflecting enhancements to the government's Wait Times Strategy,
including about $50 million for 127,200 additional key procedures (hip and knee replacements, cataract
surgeries, MRI exams and CT scans) and about $59 million to improve supporting programs and services.
o An increase of $25 million in the Ministry of Community and Social Services is a result of the elimination of the
four-month limit on retroactive payments for the Ontario Disability Support Program, fully offset from the
Operating Contingency Fund.
o An increase of $15 million in the Ministry of Children and Youth Services is supporting the Youth Challenge Fund
to provide prevention and early intervention initiatives for youth at risk, fully offset from the
Operating Contingency Fund.
o An in-year increase of $8 million in the Ministry of Education is supporting the modernization of TVOntario
through its conversion to digital broadcasting, fully offset from the Operating Contingency Fund.
o The Ministry of Public Infrastructure Renewal has paid $22 million to acquire the Douglas Creek Estate
Lands. The net impact on the ministry's allocation is an increase of $6 million, fully offset from the
Capital Contingency Fund. As part of its broader response and strategy to provide support and assistance
to individuals and businesses of Caledonia, the government has provided $25 million this fiscal year, of
which $2 million was reported in the First Quarter Ontario Finances for business assistance.
o An increase of $3 million in the Ministry of Finance Operating Contingency Fund resulting from the additional
revenue from the Teranet IPO when the Province's designees sold their income fund units and paid the
Province.
o Savings of $74 million in Interest on Debt costs for 2006-07 are mainly due to cost-effective debt management and
lower-than-forecast long-term interest rates.
The following provides details of the government's investments to date related to the Teranet IPO proceeds in
the Operating Contingency Fund.
o A $150 million increase in the Ministry of Transportation is for the contribution to the City of Toronto to help
fund the replacement and refurbishment of Toronto Transit Commission (TTC) vehicles, fully offset from the
Teranet IPO proceeds in the Operating Contingency Fund. This contribution recognizes the unique funding
requirements of the TTC-- Canada's largest municipal transit agency.
o There is an increase in the Ministry of Agriculture, Food and Rural Affairs of $96 million in assistance to
farmers to match the federal Canadian Agricultural Income Stabilization Inventory Transition Initiative,
and $5 million to support horticulture producers through the Self-Directed Risk Management Program, fully
offset from the Teranet IPO proceeds in the Operating Contingency Fund.
o An investment of $70 million in the Ministry of Agriculture, Food and Rural Affairs is for rural communities to
support projects such as water and wastewater infrastructure, and roads and bridges, fully offset from the
Teranet IPO proceeds in the Operating Contingency Fund.
o An increase of $5 million in the Ministry of Agriculture, Food and Rural Affairs is assisting rural communities
with economic development projects, fully offset from the Teranet IPO proceeds in the Operating
Contingency Fund.
==========================================================================================================
ANNEX III
FAIRNESS FOR ALL CANADIANS
===============================================================================================================================
INTRODUCTION
For over 15 years, successive Ontario governments have urged the federal government to address the systemic
unfairness towards the people of Ontario in federal programs and transfers. In 2004, the McGuinty government
documented the inequities in greater detail than ever before and its call for fairness received support from
business, community, sectoral and municipal leaders from all regions of Ontario.
The Government of Ontario and the people of this province believe that equitable treatment is a fundamental
principle that must serve as the underpinning of our fiscal arrangements. Outside of the country's formal
Equalization program, federal transfers and programs of general application should treat all Canadians equally.
Federal cash transfers to provinces and territories that support these programs should be allocated on an equal
per-capita basis.
This unfairness represents a real drain on the Ontario economy and a significant barrier to progress for the
people of this province. With fair support from the federal government, Ontario could do even more to strengthen
the economy and improve vital public services like health care and education.
More and more, studies are supporting what Ontario has been saying: that outside of the Equalization program
itself, all Canadians deserve the same level of support from their national government for their public services.
Even the federal government's own study, the O'Brien Report, agrees that backdoor equalization with respect to
health and social transfers needs to be addressed. All Canadians are equal, and the federal government should
invest fairly in the future prosperity of all Canadians and all regions.
ONTARIANS DO NOT RECEIVE FAIR TREATMENT
The Ontario Government recognizes the importance of modern and efficient infrastructure to support economic
growth. That's why the 2006 Ontario Budget included a $1.2 billion investment in the Province's public transit
systems, municipal roads and bridges. This investment includes $670 million through the Move Ontario Trust to
enable the extension of the Toronto subway to Vaughan, and $167 million to enable expansion of public transit in
Mississauga, Brampton and York Region. The initiative builds on the provision of two cents per litre of gas tax
revenues to municipalities in support of public transit, and the government's ReNew Ontario plan to invest more
than $30 billion over five years in health care, education, water and wastewater, justice, transportation and
transit infrastructure.
[Bar chart showing the differences in per capita funding between Ontario and the rest of Canada over various programs
such as health, infrastructure, training, education and employment insurance.]
The federal government is a necessary partner in the Toronto-York subway extension, the North America Gateway and
other projects of national strategic significance, and must distribute infrastructure funding fairly over the
long term. Under the terms of the existing infrastructure programs, on a per-capita basis, Ontario has only
received 80 per cent of the funding made available to the rest of Canada over the terms of those agreements. Over
the life of the existing federal infrastructure programs, this shortfall will add up to $1.2 billion.
At the same time, the federal government must address the inequities in how it distributes the Canada Health
Transfer (CHT), which supports Ontario's hospitals and health care providers, and the Canada Social Transfer
(CST), which supports colleges, universities and social programs. Federal support for health care in Ontario is
only 92 per cent of the average support given to Equalization-receiving provinces.(1) This means Ontario will
receive $53 less per person-- an annual shortfall totalling $677 million. Federal transfers to support Ontario's
postsecondary education sector and social programs are only 88 per cent of the average support given to
Equalization-receiving provinces. This means Ontario will receive $33 less per person-- an annual shortfall
totalling $415 million.
Federal funding for labour market training in Ontario is also distributed inequitably. Federal support for
training and employment services per unemployed person in Ontario is only 63 per cent of the average funding per
unemployed person provided to Canadians in other provinces. Ontarians would benefit by $314 million annually if
they received the same funding for training as other Canadians.
Ontarians also receive less federal Employment Insurance (EI) regular benefits per unemployed person than
unemployed persons elsewhere in Canada. EI regular benefits for unemployed Ontarians are only 58 per cent of the
average for unemployed persons in the rest of Canada. Ontarians would benefit by $1.6 billion annually if they
received the same level of EI benefits as other Canadians.
CANADA-ONTARIO AGREEMENT
In 2005, the Canadian and Ontario governments entered into a historic agreement that finally addressed some of
Ontario's concerns about fairness. Progress was made in a number of areas, including funding to support Ontario
workers and immigrants at levels comparable to that of other provinces.
The Canada-Ontario Agreement, although historic and a significant victory for the people of Ontario, represented
just a first step towards addressing Ontario's fairness issues. Regrettably, it has not yet been honoured by the
new federal government.
The new federal government made an unequivocal commitment to honour that Agreement, recognizing that it was in
the interests of all Ontarians and all Canadians to invest in a fair way in Ontario's prosperity.
Letter from Stephen Harper to Dalton McGuinty, January 18, 2006
- -----------------------------------------------------------------------------------------------------------------------------
Dear Premier McGuinty,
It was a pleasure to speak with you earlier this week.
When we met in my office in May 2005, no agreement had been finalized between yourself and the Prime Minister. We
did reach an understanding that I would be amenable to supporting a fiscal imbalance agreement reached between
Ontario and Canada.*
Our platform released last week does not provide for the last two years of this agreement as that would put us
beyond the term of the current Ontario government. However, given your strong commitment to the terms of the
current agreement, I have no difficulty in accommodating your request.* This means we will be fully funding this
agreement* through the 2009-10 and 2010-11 fiscal years, a commitment which is clearly within the fiscal
flexibility of our plans.*
I have attached the spreadsheet which sets out the details of the funding of that agreement in order to avoid any
confusion.
Sincerely,
Hon. Stephen Harper, P.C., M.P.
* Emphasis added.
- ------------------------------------------------------------------------------------------------------------------------------
PRIME MINISTER HARPER'S COMMITMENT TO THE CANADA-ONTARIO AGREEMENT
($ MILLIONS)
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Total
Higher Education 400 - 350 400 400 400 1,950
Housing and Infrastructure 150 150 100 100 100 - 600
Cities 149 149 - - - - 298
Labour Market
Development and
Immigration 80 300 400 560 634 634 2,608
Climate Change - 40 140 158 200 - 538
Corporate Tax Collection
and Meat Inspection 10 80 350 250 100 100 890
Total 789 719 1,340 1,468 1,434 1,134 6,884
- ------------------------------------------------------------------------------------------------------------------------------
Based on the specific, firm, written commitment to the Canada-Ontario Agreement, set out in the Honourable
Stephen Harper's letter to Premier Dalton McGuinty on January 18, 2006, Ontario built these revenues and
corresponding expenditures into its March 2006 Budget medium-term fiscal plan.
- -------------------------------------------------------------------------------------------------------------------------------
REVENUE FROM 2005 CANADA-ONTARIO AGREEMENT INCLUDED IN
ONTARIO'S MEDIUM-TERM FISCAL PLAN
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
2006-07 2007-08 2008-09 Three-Year
Total
---------------- ---------------- ----------------- ----------------
Immigration(1) 2 2 2 6
Labour Market Partnership 93 108 155 356
Corporate Tax Collection - 250 150 400
Higher Education - 350 400 750
Housing 150 - - 150
Infrastructure - 100 100 200
Climate Change 40 140 158 338
---------------- ---------------- ----------------- ----------------
---------------- ---------------- ----------------- ----------------
Total Included in Fiscal Plan 285 950 965 2,200
- -------------------------------------------------------------------------------------------------------------------------------
(1) Annual funding to support the development of an immigration portal. Under the Canada-Ontario Agreement, $320 million
annually by 2009-10 in newcomer services will be delivered to Ontarians by the federal government.
- -------------------------------------------------------------------------------------------------------------------------------
Uncertainty remains regarding the Agreement resulting from the unanticipated announcement in the 2006 federal
budget of the intention to include several trusts, certain tax measures and "further amounts allocated" as
counting towards the Agreement.
Furthermore, the federal government made unexpected changes to the form and timing of revenues to flow to Ontario
through the Agreement. Finally, Ontario awaits the balance of the funds committed under the Agreement, including
outstanding 2005-06 amounts and the long-term funding that was promised in the Honourable Stephen Harper's
January 18, 2006 letter.
FEDERAL TRUSTS
The May 2006 federal budget announced the federal government's intention to create several trusts worth
$3.3 billion for the benefit of all provinces and territories. These trusts provide support to provinces and
territories for postsecondary education, public transit and housing.
Ontario will receive $390 million over two years from the Postsecondary Education Infrastructure Trust; $352
million over three years from the Public Transit Capital Trust; $312 million over three years from the Affordable
Housing Trust; and $80 million over three years from the Off-Reserve Aboriginal Housing Trust.
The Province is including $1,134 million of revenue from these trusts in its medium-term fiscal outlook. The
Province proposes that the Operating Contingency Fund under the Ministry of Finance be increased by $1,134
million over three years to reflect supplemental spending related to these trusts, pending satisfactory
resolution of issues related to the Canada-Ontario Agreement.
Ontario does not accept the position that the unanticipated measures announced by the federal government in its
2006 Budget count towards the Canada-Ontario Agreement. No other province has been called upon to use these
trusts to offset pre-existing federal commitments, deals or obligations.
If the federal government maintains that the trusts apply against the Canada-Ontario Agreement revenues already
built into the Province's fiscal plan, which also already have expenditures aligned against them, then there is
no supplemental funding available to spend in those areas beyond what was already included in Ontario's March
2006 Budget.
To maintain otherwise would be to claim that funds provided once are to be spent twice.
FAIRNESS FOR ALL CANADIANS
Ontario is calling on the federal government to honour its commitment to the government and to the people of
Ontario. This means moving forward to ensure that Canadians living in Ontario are treated fairly by their
national government in the areas of health and social transfers, infrastructure funding, support for workers--
and all federal programs designed to help Canadians across the country.
Ontario and the federal government must work together in a forward-looking manner to address the future
prosperity of the Province and Canada.
The Government of Ontario welcomes Ottawa's acknowledgment and attention to the fiscal imbalance and Ontario's
equitable treatment concerns. In the longer term, we need a fundamental re-examination of our fiscal
architecture. The Government of Ontario has put forward a number of suggestions for such a review.
Ultimately, the Government of Ontario's position can be summarized, simply, as Fairness for All Canadians. We
expect the federal government to make meaningful, concrete steps towards achieving fairness immediately.
(1) CHT and CST figures are for the 2006-07 fiscal year and the "rest of Canada" refers to Equalization-receiving
provinces; figures for infrastructure refer to funding over the terms of existing federal infrastructure programs;
figures for training are for 2004 and refer to per unemployed person, and "rest of Canada" refers to other provinces
only, not territories; EI regular benefits figures are for 2005 and refer to per unemployed person, and "rest of
Canada" refers to other provinces only, not territories.
(2) All provinces except Ontario and Alberta receive Equalization. Saskatchewan receives more CHT and CST cash per
capita than the other seven Equalization-receiving provinces.
==========================================================================================================
ANNEX IV
CORPORATE TAX HARMONIZATION - CREATING A MORE COMPETITIVE TAX CLIMATE FOR BUSINESS
===========================================================================================================================
CREATING A MORE COMPETITIVE TAX CLIMATE FOR BUSINESS
Strengthening Ontario's competitiveness requires creating a climate for investment growth while ensuring that the
government has the resources it needs to make strategic investments in the people and economy of the province.
A competitive tax system is essential to attract business investment and foster economic growth in a highly
competitive global economy. Ontario already has a competitive corporate tax system. Ontario's combined
federal-provincial statutory corporate income tax rate for manufacturing is below the average for the United
States. It is also below the combined rate in each of the Great Lakes states against which Ontario competes most
directly.
To further enhance Ontario's investment climate, the Ontario capital tax is being phased out. The capital tax,
which taxes business investment rather than profits, is widely recognized as a barrier to investment. As a key
element of the government's strategy to promote new investment, economic growth and job creation, a plan to
eliminate Ontario's capital tax by 2012 was legislated. The 2006 Ontario Budget built on that plan by
accelerating the capital tax rate cut. Starting on January 1, 2007, every corporation still paying capital tax
will have its rate cut by five per cent.
The following table sets out the legislated capital tax elimination plan:
- -----------------------------------------------------------------------------------------------------------------------------
ONTARIO'S CAPITAL TAX ELIMINATION PLAN(1)
- -----------------------------------------------------------------------------------------------------------------------------
Deduction($M) Rates(%)
- ------------------------ -------------- -------------------------------------------------------------------------------------
Regular Financial Institutions
Corporations
- ------------------------ -------------- ------------------ --------------------- --------------------------------------------
1st $400 M of Taxable Capital Above $400 M
Taxable Capital
- ------------------------ -------------- ------------------ --------------------- --------------------------------------------
Non-Deposit Taking Deposit Taking
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2004 5 0.3 0.6 0.72 0.9
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2005 7.5 0.3 0.6 0.72 0.9
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2006 10 0.3 0.6 0.72 0.9
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2007 12.5 0.285 0.57 0.684 0.855
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2008 15 0.285 0.57 0.684 0.855
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2009 15 0.225 0.45 0.54 0.675
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2010 15 0.15 0.3 0.36 0.45
- ------------------------ -------------- ------------------ --------------------- ---------------------- ---------------------
Jan. 1, 2011 15 0.075 0.15 0.18 0.225
- ------------------------ ----------------------------------------------------------------------------------------------------
Jan. 1, 2012 Eliminated
- -----------------------------------------------------------------------------------------------------------------------------
(1) Shading denotes the five per cent capital tax rate cut announced in the
2006 Ontario Budget and enacted on May 18, 2006.
- -----------------------------------------------------------------------------------------------------------------------------
Ontario's tax system also provides a variety of corporate income tax incentives and rate reductions to encourage
economic growth and job creation. These include(1):
o $380 million in annual support for research and development through Ontario-only tax deductions and tax credits
o $900 million annually to provide a reduced tax rate for small businesses
o $255 million annually to provide a reduced tax rate on income from manufacturing and processing, mining, logging,
farming and fishing
o $150 million annually in tax credits to support the entertainment and creative industries.
To further support job creation and Ontario's competitiveness, the government has introduced or enhanced a number
of income tax credits:
o The Apprenticeship Training Tax Credit was implemented to encourage the hiring and training of apprentices.
o Tax credits for film and television production, computer animation, sound recording, book publishing and
interactive digital media have been enhanced.
o A new, enhanced dividend tax credit is proposed, starting in 2006, that would encourage greater investment in
Ontario corporations and better integrate the corporate and personal income tax systems. Ontario taxpayers
would pay less tax on their dividends from large Canadian companies, which would, in turn, create a more
competitive business and investment climate. This would provide a benefit to investors of $40 million in
2006-07, rising to $120 million when fully implemented in 2010-11.
While a competitive tax system is an important element in enhancing Ontario's attractiveness as a place to
invest, other factors also play a key role in business location decisions. For example, publicly funded health
care is a major competitive advantage for the province. Ontario has numerous other competitive strengths,
including a well-trained labour force, proximity to markets and a high quality of life. The Ontario Government
continues to make key investments in infrastructure, health, education and innovation to help strengthen
Ontario's business environment.
A 2006 study by KPMG found that the overall cost of doing business in Ontario (including taxes paid by
businesses) is below that of most major cities in the United States and other industrialized countries. In fact,
among the 24 large cities in the G7 featured in that study, Toronto had the third-lowest cost of doing business.
CORPORATE TAX HARMONIZATION(2)
The government is taking additional action to further reduce the cost of doing business in Ontario. The
Canada-Ontario Agreement of May 2005 committed both governments to work towards concluding an agreement on a
single corporate tax administration.
On October 6, 2006, Ontario entered into a Memorandum of Agreement (MOA) with the federal government to
streamline the administration of Ontario's corporate tax system. As a result, Ontario businesses will spend less
time on paperwork, and more time creating jobs and fostering a strong, prosperous economy.
When fully implemented, Ontario corporations will save $90 million annually in Ontario corporate income tax from
a harmonized corporate income tax base and up to an additional $100 million annually in compliance costs from one
tax form, one tax administration and one set of tax rules.
SINGLE TAX ADMINISTRATION
The MOA on a single corporate tax administration represents a major step in the government's goals of providing
greater efficiency in service delivery and creating a stronger, more productive and competitive economy.
Effective for taxation years ending after December 31, 2008, Ontario corporations will begin filing a single
combined federal and Ontario corporate tax return with the Canada Revenue Agency (CRA). Businesses will begin
remitting Ontario tax instalment payments to the CRA as early as February 2008.
The CRA will collect and administer Ontario's corporate income tax, capital tax, corporate minimum tax and the
special additional tax on life insurers. The CRA administration of these taxes will include assessments,
collections, audits and appeals.
In addition, the MOA allows for the delivery of early compliance gains to business, including more coordinated
audits and other administrative efficiencies, prior to the single administration in 2009.
CORPORATE INCOME TAX BASE HARMONIZATION
As part of the single tax administration, Ontario will enter into a corporate income tax collection agreement
with the federal government that is substantially similar to agreements currently in place with all other
provinces, except Quebec and Alberta. Ontario already has a tax collection agreement with the federal government
for its personal income tax.
The Ontario corporate income tax collection agreement, like those of other provinces, will require Ontario to
fully harmonize with the federal definition of corporate taxable income. As a result, any Ontario differences
from the federal definition of taxable income will expire for taxation years ending after 2008.
To improve Ontario's competitiveness and enhance the benefits of tax base harmonization, most Ontario-only
measures that currently apply in calculating Ontario taxable income will not be replaced. Eliminating these
differences from the federal tax base will provide business with an Ontario corporate income tax cut of $90
million a year.
The most significant measure that Ontario will not be replacing is the income tax provision that requires an
Ontario-based corporation to add back into income a portion of certain management fees, rents, royalties and
other similar payments made to certain non-residents. This add-back provision generally has the effect of
imposing a five per cent tax on these payments. Eliminating the add-back will provide an estimated $70 million
annual tax reduction that will primarily benefit the manufacturing, wholesale and retail trade, and film
production sectors, and help foster a more innovative and competitive economy.
The remaining $20 million net annual cut in Ontario corporate income tax will arise from eliminating other
Ontario tax measures in order to harmonize with the federal definition of taxable income.
SUPPORT FOR RESEARCH AND DEVELOPMENT
Ontario currently provides $380 million annually in corporate income tax incentives to support research and
development (R&D). One of these incentives is a deduction for the portion of the federal investment tax credit
that relates to Ontario scientific research and experimental development (SR&ED). This deduction has the effect
of enhancing the value of the federal SR&ED investment tax credit for Ontario corporations. However, as an
Ontario-only deduction, it does not conform to the requirements of a harmonized tax base.
Given the importance of R&D to a vibrant, innovative and competitive economy, Ontario will replace this deduction
with a new 4.5 per cent non-refundable tax credit on SR&ED expenses incurred in Ontario that qualify for the
federal investment tax credit. A phased-in three-year carry-back and a 20-year carry-forward will be provided for
unused credits. The tax credit will take effect for taxation years ending after 2008.
The tax credit rate has been set to maintain the same revenue cost to Ontario as the R&D deduction. Ontario's R&D
deduction will provide an estimated $200 million of tax support in 2006. By converting the R&D deduction to a tax
credit, this tax support would now become taxable for both federal and Ontario tax purposes. While the tax credit
rate has been designed to be revenue-neutral to Ontario, the federal government would receive an annual revenue
windfall of about $40 million (based on the current $200 million estimate) from the taxation of the credit.
SUPPORT FOR ONTARIO'S MINING SECTOR
To support jobs and investment in the mining sector, the 2004 Ontario Budget announced that Ontario would not
parallel federal legislation to replace the resource allowance with a typically less generous deduction for
mining taxes and Crown royalties.
For taxation years ending after 2008, Ontario will be required to follow the federal deduction for mining taxes
and royalties. However, to maintain the effect of Ontario's existing resource allowance, a tax credit/debit
mechanism, with an indefinite carry-forward for unused credits, will be introduced.
Maintaining the effect of the existing resource allowance will continue to provide an annual benefit of about $40
million, net of the deduction for mining taxes paid, to the mining sector in Ontario's northern communities.
TRANSITIONAL RULES FOR INCOME TAX BASE HARMONIZATION
The requirement to parallel the federal definition of taxable income means that federal "pools" for items such as
unclaimed depreciation and losses will apply for Ontario purposes starting with taxation years ending after 2008.
Ontario generally parallels federal income tax base changes in order to reduce compliance costs to business. As a
result, many corporations do not have significant differences in their tax pools for Ontario and federal
purposes. In some cases, however, differences may arise where corporations have deducted different amounts from
their tax pools for Ontario and federal purposes.
In the absence of transitional rules, the use of federal tax pools could cause Ontario corporate income tax to be
either overstated or understated.
To ensure a smooth transition to the federal tax base, Ontario will introduce a mechanism that is designed to
eliminate, over five years, the amounts by which Ontario corporate income tax is overstated or understated.
Ontario will be consulting with the business community on the details of the transitional rules.
CAPITAL TAX BASE HARMONIZATION
Until Ontario's capital tax is eliminated, harmonizing with the federal corporate income tax base will require
changes to the calculation of Ontario capital tax. Currently, corporations that are not financial institutions
calculate their Ontario taxable capital by restating the balance sheet into Ontario corporate income tax values.
Since corporations will no longer be calculating Ontario corporate income tax values after 2008 as a result of
income tax base harmonization, Ontario will need to move to a new method of calculating taxable capital.
To further enhance business compliance savings and administrative efficiencies for the Ontario and federal
governments, Ontario's capital tax base for non-financial institutions will be harmonized with the federal Large
Corporations Tax (Part I.3 of the Income Tax Act (Canada)). Ontario's legislated capital tax elimination schedule
will continue to apply. In the case of corporations with permanent establishments in Ontario and elsewhere,
the capital tax liability will also continue to be reduced to reflect the percentage of income allocated outside
Ontario.
Since Ontario's capital tax for financial institutions is already largely harmonized with the federal capital
tax, no policy changes are required with respect to the Ontario capital tax for financial institutions, except
that it will be administered by the CRA for taxation years ending after 2008.
BENEFITS TO PROVINCES
The MOA contains a number of provisions that will benefit Ontario and other provinces that participate in a
corporate income tax collection agreement. These include:
o a federal-provincial review to ensure the provinces are not disadvantaged by the current timing of federal tax
payments
o $25 million in annual federal funding for a national initiative to be led by the CRA, comprising enhanced audits
of interprovincial income allocation and targeting of interprovincial tax avoidance
o a federal-provincial study on the feasibility of developing a program that would allow corporate income tax
refunds to be applied against other provincial and federal tax debts
o an improved management and accountability framework with the CRA.
Provinces will also benefit under their personal income tax collection agreements. For example, the federal
government has agreed to waive the charges to the provinces for costs incurred by the CRA to develop the
provincial tax-on-income system for personal income tax. This represents a $22 million saving to Ontario.
(1) Annex V, Transparency in Taxation, provides a detailed listing of tax measures provided by Ontario.
(2) Federal administration of Ontario corporate taxes and consequential tax proposals will require legislative
amendments that must be approved by the legislature.
==========================================================================================================
ANNEX V
TRANSPARENCY IN TAXATION
===========================================================================================================================
TRANSPARENCY IN TAXATION
The enactment of the Fiscal Transparency and Accountability Act, 2004, represents a major commitment of the
Ontario Government to be more open and accountable. Under Section 6 of the Act, the Minister of Finance is
required to release a mid-year review of the fiscal plan on or before November 15 of each year, which must
include information about the estimated cost of expenditures made through the tax system.
Tax expenditure reporting is an important element of improved fiscal transparency and accountability. This report
is the second annual compilation of the estimated cost of Ontario tax provisions.
STRUCTURE OF THE REPORT
This report provides estimates of revenue forgone in 2006 with respect to provisions in the following taxes:
o Personal Income Tax
o Corporate Tax
o Sales and Commodity Tax
o Education Property Tax
o Employer Health Tax
o Estate Administration Tax
o Gross Revenue Charge
Descriptions of each tax provision were provided in the government's first Transparency in Taxation report,
presented in Annex III of the 2005 Ontario Economic Outlook and Fiscal Review, Background Papers. Please refer to
the 2005 report for the descriptions.
Electronic copies of the 2005 Ontario Economic Outlook and Fiscal Review, Background Papers are available via the
Internet at: www.fin.gov.on.ca/english/economy/ecoutlook/statement05/05fs-paperce.pdf
or printed copies are available from:
Publications Ontario
880 Bay Street, Toronto, Ontario M7A 1N8
Telephone: (416) 326-5300
Toll-free: 1-800-668-9938
TTY Toll-free: 1-800-268-7095
Website: www.publications.gov.on.ca
This report includes descriptions only for tax provisions that are new or have been modified since 2005. The
descriptions are intended to provide a basic understanding of the provisions and do not replace the relevant
legislation or regulations.
SCOPE
Given the absence of a universally accepted definition of a "tax expenditure," this report continues the broad
approach adopted in last year's report of listing estimates of forgone revenue that could potentially be included
under a broad-based tax system.
Personal and corporate income tax expenditures identified in this report include tax expenditures shared with the
federal government and Ontario-only tax expenditures.
Under a tax collection agreement between Ontario and Canada, the federal government determines the personal
income tax base. Ontario has limited policy control over the individual components of taxable income and the
associated tax expenditures related to the federally defined tax base.
Ontario currently collects and administers its own corporate income tax. However, on October 6, 2006, Ontario
entered into a Memorandum of Agreement with the federal government under which the federal government would
collect and administer Ontario's corporate income tax and capital tax, effective for taxation years ending after
2008. (See Annex IV, Corporate Tax Harmonization, for additional details.)
METHOD
The estimates in this report were developed using the latest available taxation or economic data, forecast to the
2006 calendar year. The data used to estimate the values of the tax provisions come from a variety of sources.
Revisions to the underlying data, as well as improvements to the estimation method, may result in changes to the
estimated value of a provision in future publications. As well, some tax provision estimates are particularly
sensitive to economic conditions or other variables and those values could fluctuate significantly from year to
year.
It is important to note that the estimates in this report are not intended to represent the potential revenue
gain for the Province if the tax provisions were not in place. Each estimate has been determined separately and
in isolation of other factors, such as the economic impact of any change, behavioural responses, the interaction
among various tax provisions, or any modifications in policy that might reasonably accompany the change. As a
result, the estimates cannot be added together to determine the total cost of a particular group of tax
expenditures.
Tax expenditure estimates of less than $1 million are denoted by the letter "s" (small). This report also
includes tax provisions for which relevant data from the tax system are not currently available to the Ministry
of Finance. Although estimates may not be available, these items are listed to ensure greater accountability and
transparency.
Future annual reports will continue to refine Ontario's tax expenditure estimates.
===========================================================================================================================
PERSONAL INCOME TAX
Table 1 provides estimates of tax provisions relating to the Ontario Personal Income Tax system. Business
provisions listed here are for unincorporated businesses.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 1: PERSONAL INCOME TAX(1)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------- ----------------------
Tax Provisions 2006 Estimates(2)
($ Millions)
- --------------------------------------------------------------------------------------------------------- ----------------------
Ontario Non-refundable Tax Credits
Adoption Expense Credit(3) 1
Age Credit 230
Amounts Transferred from Spouse 40
Basic Personal Credit 4,105
Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) Contributions Credit 520
Caregiver Credit 15
Charitable Donations Credit 520
Disability Credit 80
Eligible Dependant Credit 90
Employment Insurance (EI) Premiums Credit 195
Infirm Dependant Credit 1
Medical Expense Credit 105
Ontario Overseas Employment Tax Credit 5
Pension Income Credit 90
Spouse or Common-law Partner Credit 215
Student Loan Interest Credit 10
Tuition Fee and Education Credits 310
Ontario Tax Reduction (OTR)
OTR-- Basic Reduction 165
OTR-- Reduction for Dependent Children Under 19 195
OTR-- Reduction for Disabled or Infirm Dependants 8
OTR-- Total 305
Other Ontario Tax Credits(4)
Ontario Focused Flow-through Share Tax Credit 2
Ontario Political Contribution Tax Credit 5
Ontario Property and Sales Tax Credits (OPSTC)
OPSTC-- Non-seniors 460
OPSTC-- Seniors(5) 505
OPSTC-- Total(5) 965
Ontario Labour Sponsored Investment Fund and Employee Ownership Tax Credits
Employee Ownership (EO) Tax Credit s
Labour Sponsored Investment Fund (LSIF) Tax Credit 20
Research-oriented Investment Fund (ROIF) Tax Credit 1
Exemptions, Deductions and Deferrals Shared with the Federal Government
Business
Items for Which an Estimate is not Available
Assistance for Artists and Deduction for Canadian Art Purchased by
Unincorporated Businesses
Assistance for Prospectors and Grubstakers
Deduction of Accelerated Capital Cost Allowance
Deferral Through Use of Billed-basis Accounting by Professionals
Employment
Deduction for Clergy Residence 15
Deduction of Home Relocation Loans s
Deduction of Other Employment Expenses 260
Deduction of Union and Professional Dues 130
Employee Stock Options 150
Moving Expense Deduction 15
Northern Residents' Deductions 1
Items for Which an Estimate is not Available
Deductions for Tradespersons' and Apprentice Vehicle Mechanics' Tools
Deductions for Artists and Musicians
Deduction for Military and Police Deployed to High-risk International Missions
Deduction for Tuition Assistance for Adult Basic Education
Deferral of Salary Through Leave of Absence/Sabbatical Plans
Employee Benefit Plans
Non-taxation of Allowances to Public Officials
Non-taxation of Business-paid Health and Dental Benefits
Non-taxation of Certain Non-monetary Employment Benefits
Special Tax Computations for Certain Retroactive Lump-sum Payments
Farming and Fishing
Items for Which an Estimate is not Available
Cash-basis and Flexibility in Inventory Accounting
Deduction of Farm Losses for Part-time Farmers
Deferral of Income for Farmers
Net Income Stabilization Account for Farmers
Investment
$500,000 Lifetime Capital Gains Exemption for Farming or Fishing Property and Small Business Shares 140
Deduction of Allowable Business Investment Losses 10
Deduction of Carrying Charges Incurred to Earn Income 250
Deduction of Resource-related Expenditures 70
Partial Inclusion of Capital Gains 525
Items for Which an Estimate is not Available
Capital Gains Exemptions-- $1,000 on Personal-use Property and $200 on
Foreign Exchange Transactions
Deduction of Limited Partnership Losses
Deferral of Capital Gains Through Five-year Reserve
Deferral of Capital Gains Through Rollovers
Deferral of Capital Gains Through 10-year Reserve for Farming or Fishing
Property and Small Business Shares
Deferral of Capital Gains Through Transfers to a Spouse or Spousal Trust
Non-taxation of Capital Gains on Principal Residences
Reduced Inclusion Rate for Capital Gains Arising from Certain Donations
Taxation of Capital Gains Upon Realization
Non-taxable Income
Guaranteed Income Supplement and Allowance Benefits 20
Social Assistance Benefits 20
Workers' Compensation Benefits 155
Items for Which an Estimate is not Available
Certain Government Pensions and Allowances
Damages With Respect to Personal Injury or Death
Death Benefits of Up to $10,000
Employer-paid CPP/QPP Contributions and EI Premiums
Gifts and Bequests
Income of Indians on Reserves
Income from the Office of the Governor General and Allowances for Diplomats and
Other Government Employees Posted Abroad
Investment Income on Life Insurance Policies
Lottery and Gambling Winnings
Strike Pay
Special Circumstances
Child Care Expense Deduction 150
Treatment of Alimony, Maintenance and Child Support Payments 50
Items for Which an Estimate is not Available
Deduction Related to Vows of Perpetual Poverty
Disability Supports Deduction
Exemption of Scholarship, Fellowship and Bursary Income
Tax-free Amount for Emergency Service Volunteers
Tax-deferred Savings
Registered Pension Plans (RPP)-- Deduction for Contributions 565
Registered Retirement Savings Plans (RRSP)-- Deduction for Contributions 1,875
Items for Which an Estimate is not Available
Deferred Profit-sharing Plans
Registered Education Savings Plans (RESP)
RPP and RRSP-- Non-taxation of Investment Income
- --------------------------------------------------------------------------------------------------------- ----------------------
(1) Estimates do not include the impact of revenue forgone from personal income
tax provisions for trusts, which are taxed as individuals under the Income
Tax Act.
(2) Estimates are based on 2003 tax-filer data forecast to represent the 2006
taxation year, unless otherwise noted. Tax-filer data include only those
returns assessed within one year of the taxation year.
(3) Estimate is based on federal estimates.
(4) Estimates are based on tax-sharing statements (TSS) unless otherwise noted.
(5) Estimate is based on TSS and the enrichment of the income threshold for
senior couples to $23,090 proposed in the 2006 Ontario Budget.
===========================================================================================================================
PERSONAL INCOME TAX-- DESCRIPTION OF TAX PROVISIONS
The following Personal Income Tax provisions have changed since 2005.
ONTARIO NON-REFUNDABLE TAX CREDITS
The non-refundable tax credits listed in the following table are based on amounts that are adjusted for inflation
each year. A brief description of these tax provisions is available in the 2005 Ontario Economic Outlook and
Fiscal Review, Background Papers.
- -------------------------------------------------------------------------------------------------------------------------------
AMOUNTS ON WHICH INDEXED NON-REFUNDABLE TAX CREDITS ARE BASED
- -------------------------------------------------------------------------------------------------------------------------------
Base Amount
-------------------------------
Non-refundable Tax Credits 2005 ($) 2006 ($)
Adoption Expense Credit, maximum claim 10,000 10,220
Age Credit, maximum claim 4,002 4,090
Reduced by 15 per cent of individual's net income in excess of 29,793 30,448
Basic Personal Credit 8,196 8,377
Caregiver Credit, maximum claim 3,863 3,948
Reduced by dependant's net income in excess of 13,218 13,509
Disability Credit 6,622 6,768
Eligible Dependant Credit, maximum claim 6,960 7,113
Reduced by dependant's net income in excess of 696 711
Dependant's net income less than 7,656 7,824
Infirm Dependant Credit, maximum claim 3,863 3,948
Reduced by dependant's net income in excess of 5,492 5,613
Medical Expense Credit
Qualifying medical expenses in excess of the lesser of three per cent of net income and 1,856 1,896
Qualifying medical expenses of other dependant, maximum claim
10,000 10,220
Pension Income Credit, maximum claim 1,133 1,158
Spouse or Common-law Partner Credit, maximum claim 6,960 7,113
Not exceeding spouse's or common-law partner's net income deducted from 7,656 7,824
Tuition Fee and Education Credits
Education Credit, full time (per month) 441 451
Education Credit, part time (per month) 132 135
Maximum transfer 5,667 5,792
- ----------------------------------------------------------------------------------------------- ---------------- --------------
OTHER ONTARIO TAX CREDITS
Ontario Property and Sales Tax Credits (OPSTC)--The Property Tax Credit is the lesser of occupancy cost and a
basic property tax credit amount plus 10 per cent of occupancy cost. Occupancy cost is property tax or
20 per cent of rent paid on an individual's or couple's principal residence plus $25 if residing in a
college residence. The basic property tax credit amount is $250 for non-senior individuals or couples and
$625 for senior individuals or couples. The Sales Tax Credit is $100 for an individual plus $100 for a
spouse or common-law partner and $50 for each dependent child aged 18 or under. The credits for non-seniors
are jointly reduced by two per cent of family net income in excess of $4,000; the credits for seniors are
jointly reduced by four per cent of family net income in excess of $22,250, which the 2006 Ontario Budget
proposes to increase for senior couples. The maximum OPSTC are $1,000 for non-seniors and $1,125 for
seniors. The estimate includes the proposed increase to the income threshold for senior couples, which is
expected to be $23,090 for 2006.
EXEMPTIONS, DEDUCTIONS AND DEFERRALS SHARED WITH THE FEDERAL GOVERNMENT
EMPLOYMENT
Item for Which an Estimate is not Available
Deductions for Tradespersons' and Apprentice Vehicle Mechanics' Tools--Tradespersons and registered apprentice
vehicle mechanics may deduct from their employment income as a tradesperson or apprentice mechanic an
amount of up to $500 for the cost of their tools in excess of a specified amount. The deduction for
tradespersons' tools parallels the 2006 federal budget initiative.
INVESTMENT
$500,000 Lifetime Capital Gains Exemption for Farming or Fishing Property and Small Business Shares-- A $500,000
lifetime capital gains exemption is available for gains from the disposition of qualified farming or
fishing property and small business shares. The inclusion of fishing property parallels the 2006 federal
budget initiative.
Items for Which an Estimate is not Available
Deferral of Capital Gains Through Rollovers-- Individuals (other than trusts) are permitted a rollover of capital
gains on eligible small business investments. To the extent that the proceeds are reinvested in one or more
eligible small business corporations, the liability for personal income tax on the gain is deferred until
the replacement property is sold. In addition, capital gains on intergenerational transfers of farming or
fishing property are deferred in certain circumstances until the property is disposed of outside the
immediate family. The inclusion of fishing property parallels the 2006 federal budget initiative.
Deferral of Capital Gains Through 10-year Reserve for Farming or Fishing Property and Small Business Shares-- If
proceeds from the sale of small business shares or from the sale of farming or fishing property to a child,
grandchild or great-grandchild are not all receivable in the year of sale, realization of a portion of the
capital gain may be deferred until the year in which the proceeds become receivable. However, a minimum of
10 per cent of the gain must be brought into income each year, creating a maximum
10-year reserve period. For most other assets, the maximum reserve period is five years. The inclusion of
fishing property in the 10-year reserve provision parallels the 2006 federal budget initiative.
Reduced Inclusion Rate for Capital Gains Arising from Certain Donations-- Effective May 2, 2006, capital gains
arising from gifts of publicly listed securities and ecologically sensitive land to public charities are
exempt from tax. Previously, capital gains on such donations were subject to one-half the normal 50 per
cent inclusion rate for capital gains. In addition, capital gains on certain objects certified as being of
cultural importance to Canada are exempt from tax if donated to a designated museum or art gallery.
SPECIAL CIRCUMSTANCES
Item for Which an Estimate is not Available
Exemption of Scholarship, Fellowship and Bursary Income-- For students eligible for the education credit,
scholarship, fellowship and bursary income is exempt from tax, starting in 2006. Previously, the first
$3,000 of this income was exempt.
===========================================================================================================================
CORPORATE TAX
The estimated values of tax provisions in the Ontario Corporate Income Tax, Capital Tax and Mining Tax systems
are presented in Table 2.
- -------------------------------------------------------------------------------------------------------------------------------------
TABLE 2: CORPORATE TAX
- -------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------- ----------------------
Tax Provisions 2006 Estimates(1)
($ Millions)
- -------------------------------------------------------------------------------------------------------------- ----------------------
Corporate Income Tax
Ontario Refundable Tax Credits
Apprenticeship Training Tax Credit(2,)(3) 95
Co-operative Education Tax Credit(2)(3) 5
Ontario Book Publishing Tax Credit(4) 2
Ontario Business Research Institute Tax Credit 4
Ontario Computer Animation and Special Effects Tax Credit(4) 7
Ontario Film and Television Tax Credit(4) 95
Ontario Innovation Tax Credit 180
Ontario Interactive Digital Media Tax Credit(4) 8
Ontario Production Services Tax Credit(4) 40
Ontario Sound Recording Tax Credit(4) 1
Ontario Deductions and Exemptions
Additional Deduction for Credit Unions 4
Assets Used to Generate Clean Energy s
Manufacturing and Processing (M&P) and Resource Sector Credit 255
Non-taxation of the Federal Investment Tax Credit(5) 200
Ontario Current Cost Adjustment 5
Ontario Depletion Allowance s
Ontario New Technology Tax Incentive s
Ontario Political Contributions 1
Ontario Resource Allowance(6) 80
Small Business Deduction(7) 900
Exemptions, Deductions and Deferrals Shared with the Federal Government
Allowable Business Investment Losses(8),(9) 5
Deductibility of Charitable Donations(8) 110
Deductibility of Gifts to the Crown(8) s
Deductibility of Gifts of Cultural Property and Ecologically Sensitive Land(8) s
Deferral of Income for Farmers(8) s
Holdback on Progress Payments to Contractors(8) 20
Non-taxation of Non-profit Organizations(8) 100
Partial Inclusion of Capital Gains(8) 940
Items for Which an Estimate is not Available
Accelerated Write-off of Capital Assets and Resource-related Expenditures
Cash-basis Accounting and Flexibility in Inventory Accounting
Deductibility of Countervailing and Anti-dumping Duties
Deferral Through Capital Gains Rollovers
Deferral Through Use of Billed-basis Accounting by Professionals
Expensing of Advertising Costs
Non-taxation of Provincial, Municipal and Federal Crown Corporations
Non-taxation of Registered Charities
Reduced Inclusion Rate for Capital Gains Arising from Certain Donations
Tax Exemption on Income of Foreign Affiliates of Canadian Corporations
Taxation of Capital Gains upon Realization
Capital Tax(10)
Capital Tax Deduction 300
Deferred Mining Exploration and Development Expenses 6
Deferred Ontario New Technology Tax Incentive and Scientific Research and Experimental Development Costs s
Exemption for Assets Used to Generate Clean Energy s
Exemption for Family Farm Corporations, Family Fishing Corporations, Credit Unions and Other Specified Entities s
Small Business Investment Tax Credit for Financial Institutions 10
Items for Which an Estimate is not Available
Renounced Mining Expenses
Mining Tax(11)
Mining Tax Exemption 8
Mining Tax Holiday for Mines (other than remote mines) s
Mining Tax Holiday for New Remote Mines s
Mining Tax Rate for Remote Mines s
Processing Allowance 50
Items for Which an Estimate is not Available
Fast Writeoff of Exploration Costs
- -------------------------------------------------------------------------------------------------------------------------------------
(1) Estimates are forecast to the 2006 calendar year based on preliminary 2004
Ontario tax administration data, unless otherwise noted. Estimates do not
include the revenue impact of corporate income tax expenditures provided to
mutual fund corporations.
(2) Estimates include the impact of both the corporate and personal income tax
provisions.
(3) The Apprenticeship Training Tax Credit was announced in the 2004 Ontario
Budget. The estimated 2006-07 impact as provided in the Budget was $95
million. Some of the apprenticeship programs previously included under the
Co-operative Education Tax Credit (CETC) were transferred to the new
credit. The estimate for the CETC was produced at the time of the 2004
Ontario Budget.
(4) The estimates include the impact of the enhancements outlined in the 2005
Ontario Budget and/or the 2006 Ontario Budget.
(5) Relating to qualifying Ontario Research and Development expenses.
(6) The resource allowance applies to the mining and oil and gas sectors. The
estimate is not net of mining taxes and Crown royalties paid.
(7) Includes the impact of the Ontario surtax on Canadian-controlled private
corporations.
(8) Estimates based on assessed 2004 federal tax administration data, allocated
to Ontario and forecast to 2006.
(9) Estimate could overstate true value as it does not reflect the future
reduction in tax revenues that would occur if those losses were instead
deducted from future capital gains.
(10) Ontario has legislated a plan to eliminate the capital tax by 2012. The
capital tax elimination plan is outlined in Annex IV, Corporate Tax
Harmonization.
(11) Estimates are forecast to the 2006 calendar year based on preliminary 2004
Ontario mining tax administration data.
===========================================================================================================================
CORPORATE TAX-- DESCRIPTION OF TAX PROVISIONS
The following Corporate Income Tax provisions have changed since 2005.
CORPORATE INCOME TAX
ONTARIO REFUNDABLE TAX CREDITS
Ontario Interactive Digital Media Tax Credit-- A 20 per cent refundable tax credit for the creation, marketing
and distribution of original interactive digital media products by corporations with annual gross revenues
of up to $20 million and total assets of up to $10 million. The 2006 Ontario Budget proposed to expand the
tax credit rate from 20 per cent to 30 per cent for corporations qualifying under the existing provisions
and to extend eligibility for a 20 per cent tax credit to corporations that exceed the current size test
and to corporations performing fee-for-service work in Ontario.
Ontario Production Services Tax Credit-- An 18 per cent refundable tax credit for foreign-based and non-certified
domestic film and television production activity in Ontario. The 18 per cent rate has been extended from
March 31, 2006 to March 31, 2007.
EXEMPTIONS, DEDUCTIONS AND DEFERRALS SHARED WITH THE FEDERAL GOVERNMENT
Items for Which an Estimate is not Available
Reduced Inclusion Rate for Capital Gains Arising from Certain Donations-- Effective May 2, 2006, capital gains
arising from gifts of publicly listed securities and ecologically sensitive land to public charities are
exempt from tax. Previously, capital gains on such donations were subject to one-half the normal 50 per
cent inclusion rate for capital gains. In addition, capital gains on certain objects certified as being of
cultural importance to Canada are exempt from tax if donated to a designated museum or art gallery.
===========================================================================================================================
SALES AND COMMODITY TAX
The estimated values of tax provisions relating to sales and commodity taxes, including the Fuel Tax, Gasoline
Tax, Land Transfer Tax, Retail Sales Tax and Tobacco Tax, are presented in Table 3.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 3: SALES AND COMMODITY TAX
- --------------------------------------------------------------------------------------------------------------------------------
Tax Provisions 2006 Estimates(1)
($ Millions)
Fuel Tax
Exemptions/Reduced Rates
Exemption for Biodiesel(2) s
Exemption for Coloured Fuel(3) 420
Reduced Rate for Railway Diesel(4) 32
Refunds
Auxiliary Power Take-off Equipment(5) 6
Gasoline Tax
Exemptions/Reduced Rates
Exemption for Ethanol, Methanol and Natural Gas(6) 55
Reduced Rate for Aviation Aircraft(7) 265
Reduced Rate for Propane(7) 10
Refunds
Auxiliary Power Take-off Equipment(5) s
Aviation Fuel(5) s
Tax-exempt Use in Unlicensed Equipment(5) 7
Land Transfer Tax
Exemptions
Life Leases(8) 1
Deferrals and Exemptions for Corporate Reorganizations(5) 29
Items for Which an Estimate is not Available
Hospital Restructuring
Oil/Pipeline Easements and Mineral Lands
Other Transfers and Dispositions
Refunds
Refund for First-time Home Buyers(5) 33
Retail Sales Tax
Exemptions
25(cent)Coin Pay Phone Calls(8) 7
Agricultural Goods 250
Audio Books Purchased by Persons Who Are Legally Blind(8) 4
Automobile Insurance Premiums(9)(1)(0) 800
Basic Groceries(1)(0) 1,600
Books, Newspapers and Magazines Sold by Subscription 375
Children's Car Seats and Booster Seats(1)(0) 4
Children's Clothing 130
Commercial Aircraft, Vessels Greater than 1,400 Cubic Metres and Commercial Vessels Less than 1,400 80
Cubic Metres
Custom Software(1)(1) 75
Donations to Schools, Colleges and Universities(8) 6
Educational CD-ROMs and DVDs(8) 3
Energy 4,190
Feminine Hygiene Products(1)(0) 19
Footwear Sold for $30 or Less 30
Goods Purchased for Use by Fishers and Fur-trappers s
Individual Life and Health Insurance Premiums(1)(2) 435
Mobile Homes s
Municipal Fire-fighting Equipment s
Prepared Foods Sold for $4 or Less(1)(0) 230
Prescription Drugs and Medical Supplies 830
Production Machinery and Equipment 560
Religious Equipment 10
Repairs and Replacements Performed Under Warranty(9) 140
Seedlings s
Services 9,640
Toll-free Telephone Services(8) 46
Transient Accommodation(1)(3) 85
University Research Equipment 5
Items for Which an Estimate is not Available
Admissions
Municipal, Hospital Restructuring
Museums and Art Galleries
Used Adult Clothing or Footwear Sold for $50 or Less by Religious, Charitable and
Benevolent Organizations
Credits/Rebates
Rebate for Alternative Fuel Vehicles(5) 4
RST Rebate for Building Materials for Religious, Charitable and Benevolent Organizations(5) 22
Tax Credit for Fuel Conservation(1)(4) 5
Temporary Exemption for Destination Marketing Fees(1)(0) 2
Temporary Rebate for Building Materials Incorporated into Electricity Generating, Qualifying Nuclear and s
Deep Lake-water Cooling Facilities(5)
Temporary Rebate for Solar Energy, Wind Energy, Micro Hydro-electric and Geothermal Energy Systems(5) s
Vendor Compensation(1)(5) 105
Tobacco Tax
Compensation for Tax Collectors(1)(6) s
- ---------------------------------------------------------------------------------------------------------- ---------------------
(1) Estimates are forecast to the 2006 calendar year based on preliminary 2002
provincial Input-Output tables from Statistics Canada, unless otherwise
noted.
(2) Based on estimated amount of biodiesel sold in Ontario.
(3) Based on returns filed by registered dyers.
(4) Forgone revenue estimated as difference from the regular fuel tax rate.
(5) Based on refunds filed or rebates/deferrals claimed.
(6) Based on estimated ethanol volumes produced in and imported to Ontario.
(7) Forgone revenue estimated as difference from the regular gasoline tax rate.
(8) Based on the Ontario Budget estimate, when the measure was proposed,
projected to 2006.
(9) Estimates assume items would be taxed at eight per cent general RST rate.
(10) Figure derived from estimated consumer spending.
(11) Based on Statistics Canada Computer Software and Related Services Industry
Revenue Profile.
(12) Based on insurance premiums data provided by the Canadian Life and Health
Insurance Association Inc.
(13) The RST rate on accommodations is five per cent. Forgone revenue estimated
as difference from the regular RST rate of eight per cent.
(14) Based on new passenger vehicle sales.
(15) Based on returns filed by RST vendors.
(16) Based on returns filed by tobacco tax collectors.
===========================================================================================================================
SALES AND COMMODITY TAX-- DESCRIPTION OF TAX PROVISIONS
The following Sales and Commodity Tax provisions have changed since 2005.
RETAIL SALES TAX
CREDITS/REBATES
Rebate for Alternative Fuel Vehicles-- The RST paid on vehicles powered by alternative fuels is refunded, to a
maximum of $750 for propane vehicles and $1,000 for vehicles powered by any other alternative fuel. Certain
hybrid electric vehicles are also eligible for a rebate. The 2006 Ontario Budget doubled the maximum RST
rebate for qualifying hybrid electric vehicles from $1,000 to $2,000.
Temporary Exemption for Destination Marketing Fees-- There is an RST exemption for destination marketing fees
charged on transient accommodation on or after May 19, 2004 and on or before June 30, 2006. The 2006
Ontario Budget extended the exemption to include destination marketing fees billed on or before June 30,
2007.
===========================================================================================================================
EDUCATION PROPERTY TAX
Table 4 provides estimates of tax provisions relating to the Education Property Tax system.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 4: EDUCATION PROPERTY TAX(1)
- -------------------------------------------------------------------------------------------------------------------------------
Tax Provisions 2006 Estimates(2)
($ Millions)
Brownfields Financial Tax Incentive Program(3) s
Charity Rebate 7
Conservation Land Property Tax Exemption Program 2
Eligible Convention Centres Exemption s
Farm Property Class Tax Rate Reduction 65
Farmlands Awaiting Development Sub-class Tax Rate Reduction s
Heritage Property Tax Rebate s
Live Performance Theatres Exemption and Professional Sports Facility Tax Rate Reduction(4) 2
Managed Forest Tax Incentive Program 2
Seniors and Persons with Disabilities Property Tax Relief(5) s
Tax Exemptions Under Private Statutes 6
Vacant Commercial and Industrial Unit Rebate 30
Vacant Land and Excess Land Sub-class Tax Rate Reduction 50
Items for Which an Estimate is not Available
Other Tax Exemptions Under Public Statutes
Discretionary exemptions granted by municipalities to special purpose
properties (e.g., legions, navy leagues, public-private capital facilities)
Mandatory exemptions granted to special purpose/institutional properties
(e.g., places of worship, cemeteries, Boy Scouts Association of Canada and
Canadian Girl Guides Association, charitable institutions including
Canadian Red Cross, St. John Ambulance and charitable, non-profit
philanthropic corporations organized for the relief of the poor)
Relief from Property Taxes That are Unduly Burdensome for Residential, Farm
or Managed Forest Properties
- -------------------------------------------------------------------------------------------------------------------------------
(1) Expenditures related to provincial land taxes or payments made in lieu of
taxes have not been included.
(2) Estimates based on 2006 education tax rates, 2006 Assessment Roll, 2004
Municipal Financial Information Returns and municipal tax policies.
(3) Effective October 1, 2004, municipalities may pass bylaws cancelling
municipal property taxes on eligible brownfields properties. The Province
may match the municipal reduction with an education property tax reduction.
(4) In 2006, improved information allowed a much more precise estimate of the
exemptions given to live performance theatres.
(5) Estimate does not include expenditures due to the exemption from taxation
on 10 per cent of the assessment of improvements to accommodate seniors and
persons with disabilities in newly built homes or the expenditure on such
improvements in existing homes.
===========================================================================================================================
EMPLOYER HEALTH TAX
Table 5 provides an estimate of the tax exemption under the Employer Health Tax system.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 5: EMPLOYER HEALTH TAX (EHT)
- -------------------------------------------------------------------------------------------------------------------------------
Tax Provision 2006 Estimate
($ Millions)
$400,000 Exemption for Private-sector Employers(1) 760
- -------------------------------------------------------------------------------------------------------------------------------
(1) Estimate is based on new methodology and 2004 remuneration data forecast to represent the 2006 taxation year.
- -------------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
ESTATE ADMINISTRATION TAX
Table 6 provides an estimate of the 2006 exemption under the Estate Administration Tax system.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 6: ESTATE ADMINISTRATION TAX
- -------------------------------------------------------------------------------------------------------------------------------
Tax Provision 2006 Estimate
($ Millions)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Exemption Where the Value of the Estate Does Not Exceed $1,000 s
- -------------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
GROSS REVENUE CHARGE
Table 7 provides an estimate of the tax provision under the Gross Revenue Charge.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 7: GROSS REVENUE CHARGE (GRC)(1)
- -------------------------------------------------------------------------------------------------------------------------------
Tax Provision 2006 Estimate(2)
($ Millions)
Gross Revenue Charge 10-year Holiday s
- -------------------------------------------------------------------------------------------------------------------------------
(1) Expenditure does not include the provincial water rental portion of the GRC.
(2) 2006 estimate based on 2004 GRC returns.
- -------------------------------------------------------------------------------------------------------------------------------
==========================================================================================================
ANNEX VI
BORROWING AND DEBT MANAGEMENT
===========================================================================================================================
LONG-TERM PUBLIC BORROWING
The total long-term public borrowing requirement for the Province and the Ontario Electricity Financial
Corporation (OEFC) in 2006-07 is projected at $20.4 billion, down $0.4 billion from the $20.8 billion estimated
in the 2006 Budget Plan, and down $0.1 billion from the estimate published in the First Quarter Ontario Finances.
[Pie chart showing the sources of long term public borrowing]
As at September 30, 2006, the Province had raised approximately $10.5 billion or 51 per cent of the long-term
public borrowing requirement. Since the end of the quarter, the Province has raised an additional $1.7 billion,
for a total of $12.2 billion as at October 16, 2006, leaving $8.2 billion of borrowing to be completed.
Of the $12.2 billion, approximately $9.3 billion or 76 per cent has been issued in the domestic market through a
number of instruments. These included:
o Syndicated issues
o Ontario Savings Bonds
o Medium-Term Notes
o Bond auctions.
The Province also issued debt successfully in the international capital markets, including:
o two US$1 billion Global bond issues
o Euro Medium-Term Notes (EMTNs) in U.S. dollars and South African rand.
The Canadian domestic market will continue to be the main funding source in 2006-07. However, the Province will
maintain a flexible approach to borrowing, monitoring both domestic and international capital markets for
diversified borrowing opportunities that minimize debt servicing costs. Should cost-effective opportunities
continue to be available, approximately 25 per cent of the long-term borrowing program will be raised from
international markets.
- -------------------------------------------------------------------------------------------------------------------------------
2006-07 BORROWING PROGRAM: PROVINCE AND OEFC
($ BILLIONS)
- -------------------------------------------------------------------------- ----------------- ------------------ ----------------
Budget Plan Current Outlook In-Year
Change
----------------- ------------------ ----------------
----------------- ------------------ ----------------
Deficit/(Surplus) 2.4 1.9 (0.4)
Adjustments for:
Non-Cash Items Included in Deficit 1.1 0.4 (0.6)
Amortization of Major Tangible Capital Assets (2.2) (2.3) (0.1)
Investment in Capital Assets 2.5 2.6 -
Debt Maturities 15.1 14.9 (0.2)
Debt Redemptions 0.7 0.9 0.2
Canada Pension Plan Borrowing (0.4) (0.3) 0.1
Increase/(Decrease) in Cash and Cash Equivalents - - -
Decrease/(Increase) in Short-Term Borrowing 1.4 1.3 -
Other Uses/(Sources) of Cash 0.2 0.9 0.6
- -------------------------------------------------------------------------- ----------------- ------------------ ----------------
Total Long-Term Public Borrowing Requirement 20.8 20.4 (0.4)
- -------------------------------------------------------------------------- ----------------- ------------------ ----------------
Note: Numbers may not add due to rounding.
- --------------------------------------------------------------------------------------------------------------------------------
The change in the total long-term public borrowing requirement for 2006-07 is primarily due to a $0.4 billion
decline in the deficit from the 2006 Budget plan. The $0.6 billion decline in non-cash items included in the
deficit reflects the net cash impact of the $1.1 billion cash transfer from the federal trusts. This decline in
non-cash items is offset by the $0.6 billion increase in other uses of cash, resulting from new loans to school
boards under the Good Places to Learn initiative.
- ------------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM BORROWING OUTLOOK: PROVINCE AND OEFC
($ BILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------
2006-07 2007-08 2008-09
-------------- --------------- --------------
Deficit/(Surplus) 1.9 2.2 1.0
Adjustments for:
Non-Cash Items Included in Deficit 0.4 1.8 1.5
Amortization of Major Tangible Capital Assets (2.3) (2.4) (2.6)
Investment in Capital Assets 2.6 2.7 2.7
Debt Maturities:
Currently Outstanding 14.9 13.8 20.2
Incremental Impact of Future Refinancing - 1.0 -
Debt Redemptions 0.9 0.7 0.7
Canada Pension Plan Borrowing (0.3) (0.4) (0.6)
Increase/(Decrease) in Cash and Cash Equivalents - 0.2 0.6
Decrease/(Increase) in Short-Term Borrowing 1.3 0.3 -
Other Uses/(Sources) of Cash 0.9 0.6 0.8
- -------------------------------------------------------------------------------- -------------- --------------- --------------
Total Long-Term Public Borrowing Requirement 20.4 20.5 24.4
- -------------------------------------------------------------------------------- -------------- --------------- --------------
Note: Numbers may not add due to rounding.
- ------------------------------------------------------------------------------------------------------------------------------
Refinancing maturing debt remains a primary component of the medium-term borrowing outlook. Total long-term
public borrowing is forecast to increase by $0.7 billion in 2007-08, and $1.0 billion in 2008-09 from the
forecast at the time of the 2006 Budget to reflect the revised deficit projections in those years.
===========================================================================================================================
DEBT
[Bar chart showing both net debt and total debt from 1990-1991 through to 2006-2007]
The Province's total debt as at September 30, 2006 was $156.1 billion. Total debt, which represents all borrowing
by the Province without including offsetting financial assets, is projected to be $158.1 billion as at March 31,
2007, compared to $154.9 billion as at March 31, 2006. Total debt is forecast to increase by more than the
projected deficit because of an increase in the Province's net investment in capital assets. This investment
represents capital assets acquired by the Province (including land, buildings, highways and bridges) net of
corresponding amortization expense.
Ontario's net debt-- the difference between the Province's total liabilities and total financial assets-- is
projected to be $145.3 billion as at March 31, 2007, compared to $141.9 billion as at March 31, 2006. As with
total debt, net debt is forecast to increase by more than the projected deficit primarily because of the increase
in the Province's net investment in capital assets.
TOTAL DEBT COMPOSITION
[Pie chart showing the composition of Ontario's debt issued outside of Canada.]
Total debt of $156.1 billion as at September 30, 2006 consists of bonds and debentures issued in both the short-
and long-term public capital markets and non-public debt held by certain federal and provincial public-sector
pension plans and government agencies.
Public debt totals $132.7 billion, primarily consisting of bonds issued in the domestic and international
long-term public markets in 10 currencies. Ontario also had $23.4 billion outstanding in non-public debt issued
in Canadian dollars. Non-public debt consists of non-marketable debt instruments issued to public-sector pension
funds, including the Canada Pension Plan (CPP), mainly in the 1980s.
DEBT MANAGEMENT
The Province mitigates the financial risks associated with its capital market activities by adhering to prudent
risk management policies and exposure limits.
The Province limits itself to a maximum interest rate reset exposure of 25 per cent of debt issued for Provincial
purposes and a maximum foreign exchange exposure of five per cent of debt issued for Provincial purposes.
The Province's interest rate reset and foreign exchange exposures have remained well below policy limits during
the first half of 2006-07.
[Bar chart showing the interest rate exposure at March 31 for the years 2003 through 2006 and at September 30, 2006.]
[Bar chart showing the foreign rate exposure at March 31 for the years 2003 through 2006 and at September 30, 2006.]
[Bar chart showing debt maturities forecasting from 2007 to 2044.]
DEBT MATURITIES
The most significant component of the borrowing program is the refinancing of debt maturities. The Ontario
Financing Authority (OFA), on behalf of the Province, will continue to aim for a balanced maturity profile and
take advantage of opportunities to schedule maturities into years that currently have lower levels of maturing
debt.
COST OF DEBT
[Line graph showing the effective interest rate on the total debt,
the public debt and the non-public debt from 1990-1991 through to 2006-2007]
The effective interest rate (on a weighted-average basis) on total debt of $156.1 billion as at September 30,
2006 was 6.08 per cent, compared to 6.14 per cent as at March 31, 2006. As at March 31, 1991, the effective
interest rate on total debt was 10.92 per cent.
The effective interest rate on public debt was 5.51 per cent as at September 30, 2006, a decrease from 5.52 per
cent as at March 31, 2006. The effective interest rate on non-public debt was 9.35 per cent as at September 30,
2006, a decrease from 9.49 per cent as at March 31, 2006.
NET DEBT-TO-GDP
[Graph showing the net debt-to-GDP ration from 1997-1998
and forecasting through to 2008-2009.]
Net debt-to-GDP peaked at 32.9 per cent in 1999-2000, the year the Province first consolidated the unfunded
liability (or "stranded debt") of OEFC, which manages the debt and certain other liabilities of the former
Ontario Hydro. Since then, Ontario's net debt-to-GDP ratio has trended downward, declining to 26.4 per cent in
2005-06. The current outlook projects a ratio of 26.2 per cent in 2006-07, 25.9 per cent in 2007-08 and 25.2 per
cent in 2008-09.
===========================================================================================================================
GLOSSARY OF FINANCIAL TERMS USED IN ANNEX VI
Amortization of Major Tangible Capital Assets: the portion of the cost of major tangible capital assets owned by
the Province allocated to annual expense, the portion of the cost of tangible capital assets of fully
consolidated government organizations allocated to annual expense, and the Province's portion of the cost
of major tangible capital assets of hospitals, school boards and colleges allocated to annual expense.
Canada Pension Plan Borrowing: the Province has the option of borrowing from the Canada Pension Plan as a source
of long-term borrowing.
Debt Maturities: total forecasted amount of debt that will be due for repayment in the fiscal year.
Debt Redemptions: total forecasted amount of Ontario Savings Bonds expected to be presented for redemption prior
to maturity.
Domestic Bonds: debt securities issued in the domestic market, settling through the domestic clearing system.
Euro Medium-Term Notes (EMTNs): debt issued outside the United States and Canada and structured to meet
individual investor requirements.
Global Bonds: debt securities issued simultaneously in the international and domestic markets, settling through
various worldwide clearing systems. These can be issued in a variety of currencies, including Canadian and
U.S. dollars.
Increase/(Decrease) in Cash and Cash Equivalents: the change in cash and other short-term liquid instruments.
Investment in Capital Assets: the cost of acquiring major tangible capital assets owned by the Province during
the year, including land, buildings, highways and bridges; the cost of tangible capital assets acquired by
fully consolidated government organizations, including land, buildings and equipment; and the Province's
portion of the cost of tangible capital assets acquired by hospitals and colleges during the year,
including land, buildings and equipment.
Medium-Term Notes (MTNs): debt instruments offered under a program and structured to meet specific investor
needs.
Net Debt: the difference between the Province's total liabilities and total financial assets. The annual change
in net debt is equal to the surplus/deficit of the Province plus the change in tangible capital assets and
the change in net assets of hospitals, school boards and colleges.
Non-Cash Items Included in Deficit: adjustments to the deficit (reported on an accrual basis) to determine cash
flows to be used in operating activities. Non-cash adjustments include revenues that are earned but not
received and/or expenses that were recognized but not paid during the fiscal year.
Syndicated Issues: debt securities that are underwritten by a group of investment dealers.
Total Debt: the Province's total borrowings outstanding without taking into consideration any of the Province's
assets.
Treasury Bills: short-term debt instruments issued by governments on a discount basis, usually for durations of
91 days, 182 days or 52 weeks.
Weighted-Average Interest Rate: takes into account the proportion of debt at each level of interest rate in the
debt portfolio.
==========================================================================================================
ANNEX VII
DETAILS OF ONTARIO'S FINANCES
===========================================================================================================================
SECTION I: POTENTIAL EXPENSE RISKS, COST DRIVERS AND CONTINGENT LIABILITIES
EXPENSE RISKS AND SENSITIVITIES
Containing the rate of growth in the Province's medium-term expense plan is a key element of Ontario's fiscal
plan. However, a number of expense risks and cost drivers could affect the Province's fiscal performance over the
medium term.
A key cost driver within Ontario's expense outlook is the demand for programs and services that arises from
changes in the economic outlook or other utilization pressures. These pressures are especially evident in the
health and social services sectors.
Under the enhanced reporting introduced in the 2006 Budget, the net expenses of the Province's hospitals, school
boards and colleges are included with the Province's total expense. Therefore any variance on these consolidated
expenses will impact the Province's bottom line.
The following sensitivities are based on averages for program areas and could change, depending on the nature and
composition of the potential risk.
Key sensitivities and risks to the Province's revenue outlook that could follow from unexpected changes in
economic conditions are described in Annex I, Ontario's Economic and Revenue Outlook.
- -------------------------------------------------------------------------------------------------------------------------------
SELECTED EXPENSE RISKS AND SENSITIVITIES
- -------------------------------------------------------------------------------------------------------------------------------
Program/Sector 2006-07 Assumption 2006-07 Sensitivities
- -------------------------------------------------------------------------------------------------------------------------------
Health Sector Annual growth of 8.2 per cent. One per cent change in health spending:
$355 million.
Hospitals Annual growth of 11.1 per cent. One per cent change in hospital net expense:
$165 million.
Drug Utilization Annual growth of 10 per cent. One per cent change in utilization of all drug
programs: $35 million (seniors and social
assistance recipients).
Long-Term Care Homes 75,500 long-term care home beds. Annual average Provincial operating cost per bed,
after resident co-payment revenue, in a long-term
care home is $38,000. One per cent change in
number of beds: $28 million.
Home Care Over 17 million hours of homemaking and One per cent change in hours of homemaking and
support services; support services: $4 million.
Nine million nursing and health One per cent change in nursing and professional
professional visits. visits: $6 million.
- -------------------------------------------------------------------------------------------------------------------------------
Elementary and Secondary Almost two million average daily pupil One per cent enrolment change: $160 million in
Schools enrolment. school boards' net expense.
University Students 327,000 full-time undergraduate and One per cent enrolment change: $26 million.
graduate students.
Ontario Works(1) 199,000 average annual caseload. One per cent caseload change: $17 million.
Ontario Disability Support 212,000 average annual caseload. One per cent caseload change: $24 million.
Program(1)
College Students 151,000 full-time students. One per cent enrolment change: $7 million in
colleges' net expense.
Interest on Debt Average cost of borrowing is forecast to The impact of a 100 basis-point change in
be approximately 5.1 per cent. borrowing rates is forecast to be approximately
$250 million.
Correctional System Three million adult inmate days per year. Average cost $160 per inmate per day. One per
cent change in inmate days: $5 million.
(1) Based on 2005-06.
- -------------------------------------------------------------------------------------------------------------------------------
COMPENSATION COSTS
Compensation costs and wage settlements are key cost drivers and have a substantial impact on the finances of
both the broader public-sector partners and the Province.
- -------------------------------------------------------------------------------------------------------------------------------
Program/Sector Cost of 1% Size of Sector
Salary Increase
- -------------------------------------------------------------------------------------------------------------------------------
OHIP Payments to Physicians(1) $76 million Just over 22,000 physicians in Ontario including
approximately 10,900 family doctors and 11,335
specialists.
Hospital Nurses2 $44 million Over 53,000 full-time equivalent (FTE) nurses in
hospitals.
Elementary and $140 million Over 195,000 staff including teachers, principals,
Secondary School Staff(3) administrators, and support and maintenance staff.
College Staff(2) $12 million Almost 35,000 staff including faculty, administrators,
and support and maintenance staff.
Ontario Public Service(4) $52 million Over 64,000 public servants.
- -------------------------------------------------------------------------------------------------------------------------------
(1) Based on 2006-07 outlook.
(2) Based on 2005-06 actuals.
(3) One per cent increase in salary benchmarks in Grants for Student Needs based on 2006-07 school year.
(4) Based on 2005-06, reflects total compensation costs.
- -------------------------------------------------------------------------------------------------------------------------------
CONTINGENT LIABILITIES
In addition to the key demand sensitivities and economic risks to the fiscal plan, there are additional risks
stemming from the government's contingent liabilities. Whether these contingencies will result in actual
liabilities for the Province is beyond the direct control of the government. Losses could result from legal
settlements, defaults on projects, and loan and funding guarantees. Provisions for losses that are likely to
occur and can be reasonably estimated are expensed and reported as liabilities in the Province's financial
statements. Significant contingent liabilities are described as follows.
ONTARIO NUCLEAR FUNDS AGREEMENT
The Province has certain responsibilities with respect to nuclear used fuel waste management and nuclear station
decommissioning. The Province, Ontario Power Generation Inc. (OPG), a wholly owned subsidiary, and certain
subsidiaries of OPG are parties to the Ontario Nuclear Funds Agreement (ONFA), to establish, fund and manage
segregated funds to ensure sufficient funds are available to pay the costs of nuclear station decommissioning and
nuclear used fuel waste management. Under ONFA, the Province is liable to make payments should the cost estimate
for nuclear used fuel waste management rise above specified thresholds for a fixed volume of used fuel. As well,
under ONFA, the Province guarantees a return of 3.25 per cent over the Ontario consumer price index for the
nuclear used fuel waste management fund. Ontario has also provided a direct Provincial guarantee to the Canadian
Nuclear Safety Commission on behalf of OPG for up to $1.5 billion, which relates to the portion of the
decommissioning and waste management obligations not funded by the segregated funds.
OBLIGATIONS GUARANTEED BY THE PROVINCE
Ontario provides guarantees on loans on behalf of various parties. The authorized limit for loans guaranteed by
the Province as at March 31, 2006, was $3.8 billion. The outstanding loans guaranteed and other contingencies
amounted to $3.3 billion at March 31, 2006. A provision of $504 million based on an estimate of the likely loss
arising from guarantees under the Student Support Programs has been reflected in the 2005-06 Consolidated
Financial Statements of the Province.
SOCIAL HOUSING-- LOAN INSURANCE AGREEMENTS
The Province is liable to indemnify and reimburse the Canada Mortgage and Housing Corporation for any net costs,
including any environmental liabilities incurred as a result of project defaults, for all non-profit housing
projects in the Provincial portfolio. At March 31, 2006, there were $8.6 billion of mortgage loans outstanding.
CLAIMS AGAINST THE CROWN
There are claims outstanding against the Crown arising from legal action, either in progress or threatened, in
respect of aboriginal land claims, breach of contract, damages to persons and property, and like items. At March
31, 2006, there were 94 claims outstanding against the Crown that were for amounts over $50 million.
CANADIAN BLOOD SERVICES
The provincial and territorial governments of Canada have entered into a Canadian Blood Services Excess Insurance
Captive Support Agreement (the "Captive Support Agreement") with Canadian Blood Services (CBS) and Canadian Blood
Services Captive Insurance Company Limited (CBSI), a wholly owned subsidiary of CBS established under the laws of
British Columbia. Under the Captive Support Agreement, each government indemnifies CBSI for its pro rata share of
any payments that CBSI becomes obliged to make under a comprehensive blood risks insurance policy it provides to
CBS. The policy has an overall limit of $750 million, which may cover settlements, judgments and defence costs.
The policy is in excess of, and secondary to, a $250 million comprehensive insurance policy underwritten by CBS
Insurance Company Limited, a subsidiary of CBS domiciled in Bermuda. Given current populations, Ontario's maximum
potential liability under the Captive Support Agreement is approximately $376 million. The Province is not aware
of any proceedings that could lead to a claim against it under the Captive Support Agreement.
===========================================================================================================================
SECTION II: FISCAL TABLES AND GRAPHS
The following pages provide details on Ontario's finances - both historical and projections over the medium term.
Key tables consist of:
o Medium-term Fiscal Plan and Outlook (2005-06 to 2008-09)
o 2006-07 Fiscal Outlook-- In-year Change
o Details of Provincial Revenue (2002-03 to 2006-07)
o Details of Provincial Total Expense, by Ministry (2002-03 to 2006-07)
o Details of Infrastructure Expenditures (2005-06 to 2006-07)
o Ten-Year Review of Selected Financial and Economic Statistics (1997-98 to 2006-07).
Key graphs consist of:
o Composition of Revenue (2006-07)
o Composition of Total Expense (2006-07)
o Composition of Program Expense (2006-07).
MEDIUM-TERM FISCAL PLAN AND OUTLOOK TABLE 1
- -------------------------------------------------------------------------------------------------------------------------------
($ BILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
Actual(1) Outlook(2)
---------------------------------------------
2005-06 2006-07 2007-08 2008-09
------------------------------------------------------------
------------------------------------------------------------
Revenue 84.2 87.0 90.0 93.2
Expense
Programs 74.9 78.8 81.2 83.1
Interest on Debt 9.0 9.2 9.5 9.6
------------------------------------------------------------
------------------------------------------------------------
Total Expense 83.9 88.0 90.8 92.7
------------------------------------------------------------
------------------------------------------------------------
Surplus/(Deficit) Before Reserve 0.3 (0.9) (0.7) 0.5
Reserve - 1.0 1.5 1.5
------------------------------------------------------------
------------------------------------------------------------
Surplus/(Deficit) 0.3 (1.9) (2.2) (1.0)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Investment in Capital Assets 2.0 2.6 2.7 2.7
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Net Debt(3) 141.9 145.3 149.1 151.5
Accumulated Deficit(3) 109.2 111.1 113.3 114.4
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Gross Domestic Product (GDP) at Market Prices 538.4 554.5 574.8 601.6
Net Debt as a per cent of GDP 26.4 26.2 25.9 25.2
Accumulated Deficit as a per cent of GDP 20.3 20.0 19.7 19.0
- -------------------------------------------------------------------------------------------------------------------------------
(1) Starting in 2005-06, the Province's financial reporting was expanded to
include hospitals, school boards and colleges using one-line consolidation.
(2) Second-quarter fiscal forecast as at September 30, 2006.
(3) Net Debt is calculated as the difference between liabilities and financial
assets. The annual change in Net Debt is equal to the Surplus/Deficit of
the Province plus the change in tangible capital assets and the change in
net assets of hospitals, school boards and colleges. Accumulated Deficit is
calculated as the difference between liabilities and total assets including
tangible capital assets and net assets of hospitals, school boards and
colleges. The annual change in the Accumulated Deficit is equal to the
Surplus/Deficit.
Note: Numbers may not add due to rounding.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
2006-07 FISCAL OUTLOOK-- IN-YEAR CHANGE TABLE 2
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
Budget Plan Outlook(1) 2006-07 In-Year Change
2006-07
----------------------------------------------------------
Revenue 85,730 87,044 1,314
Expense
Programs 77,651 78,789 1,138
Interest on Debt 9,429 9,204 (225)
----------------------------------------------------------
Total Expense 87,080 87,993 913
----------------------------------------------------------
Surplus/(Deficit) Before Reserve (1,350) (949) 401
Reserve 1,000 1,000 -
- -------------------------------------------------------------------------------------------------------------------------------
Surplus/(Deficit) (2,350) (1,949) 401
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
- -------------------------------------------------------------------------------------------------------------------------------
REVENUE TABLE 3
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
2002-03 2003-04 2004-05 Actual Outlook(1)
2005-06 2006-07
----------------------------------------------------------------
Taxation Revenue
Personal Income Tax 18,195 18,301 19,320 21,041 22,321
Retail Sales Tax 14,183 14,258 14,855 15,554 16,165
Corporations Tax 7,459 6,658 9,883 9,984 9,585
Employer Health Tax 3,589 3,753 3,886 4,197 4,299
Ontario Health Premium - - 1,737 2,350 2,541
Gasoline Tax 2,306 2,264 2,277 2,281 2,303
Fuel Tax 682 681 727 729 742
Tobacco Tax 1,183 1,350 1,453 1,379 1,405
Land Transfer Tax 814 909 1,043 1,159 1,125
Electricity Payments-In-Lieu of Taxes 711 627 511 951 790
Other Taxes 429 347 283 292 283
----------------------------------------------------------------
49,551 49,148 55,975 59,917 61,559
- -------------------------------------------------------------------------------------------------------------------------------
Government of Canada
Canada Health and Social Transfer (CHST) 7,346 7,345 - - -
Canada Health Transfer (CHT) - - 5,640 7,148 7,619
Canada Social Transfer (CST)(2) - - 2,912 3,324 3,420
CHST Supplements 191 577 775 584 -
Social Housing 525 528 522 520 530
Infrastructure Programs 97 150 209 285 359
Wait Times Reduction Fund - - 242 243 467
Medical Equipment Funds - 192 387 194 -
Other Government of Canada 735 1,101 1,195 953 1,643
----------------------------------------------------------------
8,894 9,893 11,882 13,251 14,038
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment in Government Business Enterprises
Ontario Lottery and Gaming Corporation 2,288 2,106 1,992 2,027 1,743
Liquor Control Board of Ontario 939 1,045 1,147 1,197 1,254
Ontario Power Generation Inc. and Hydro One Inc. 717 (17) 444 1,107 919
Other Government Enterprises (2) (64) (5) (23) 4
----------------------------------------------------------------
3,942 3,070 3,578 4,308 3,920
- -------------------------------------------------------------------------------------------------------------------------------
Other Non-Tax Revenue
Reimbursements 1,111 1,206 1,241 1,295 1,358
Electricity Debt Retirement Charge 889 1,000 997 1,021 1,027
Vehicle and Driver Registration Fees 982 985 976 763 1,021
Power Sales 635 510 610 779 988
Other Fees and Licences 606 594 506 550 556
Liquor Licence Revenue 530 488 489 516 453
Net Reduction of Power Purchase Contract Liability 161 104 236 396 412
Sales and Rentals 560 532 352 465 969
Royalties 304 248 278 191 243
Miscellaneous Other Non-Tax Revenue 726 622 721 773 500
----------------------------------------------------------------
6,504 6,289 6,406 6,749 7,527
- -------------------------------------------------------------------------------------------------------------------------------
Total Revenue 68,891 68,400 77,841 84,225 87,044
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
(2) Includes 2005 federal budget additional Early Learning and Child Care revenues of $272 million in 2005-06 and $254
million in 2006-07.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE TABLE 4
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
Ministry 2002-03 2003-04 2004-05Actual 2005-06 Outlook(1)
2006-07
- -------------------------------------------------------------------------------------------------------------------------------
Agriculture, Food and Rural Affairs 666 843 799 865 880
One-Time and Extraordinary Assistance 18 64 601 282 192
Attorney General 1,103 1,231 1,209 1,291 1,301
Board of Internal Economy 146 196 145 150 169
Children and Youth Services 2,457 2,660 2,851 3,330 3,279
Citizenship and Immigration 55 55 64 93 91
Community and Social Services 5,844 5,990 6,379 6,737 7,070
Community Safety and Correctional Services 1,713 1,704 1,749 1,767 1,887
Culture 373 327 344 475 366
Democratic Renewal Secretariat - - 2 2 10
Economic Development and Trade 104 89 84 202 353
Education 345 352 368 418 446
School Boards(2) 8,739 9,400 10,251 10,886 11,219
Teachers' Pension Plan (TPP) 238 235 240 295 408
Energy 190 169 194 207 242
Environment 250 265 307 275 302
Executive Offices 20 24 19 19 19
Finance 1,082 1,229 1,067 1,034 1,167
Interest on Debt 9,694 9,604 9,368 9,019 9,204
Community Reinvestment Fund/Ontario Municipal 622 651 626 714 731
Partnership Fund
Community Reinvestment Fund One-Time Transition Funding - 233 - -
-
Electricity Consumer Price Protection Fund 665 253 - - -
Power Purchases 786 797 840 803 988
Contingency Fund - - - - 1,292
Government Services 331 467 898 562 811
Pensions and Other Employee Future Benefits 102 309 458 729 594
Health and Long-Term Care(3) 14,758 16,232 17,572 17,722 18,687
Hospitals(2,3) 11,241 12,830 13,759 14,816 16,463
Health Promotion 175 204 241 296 363
Intergovernmental Affairs 9 6 13 10 9
Labour 123 117 129 141 150
Municipal Affairs and Housing 656 635 772 928 693
Natural Resources 526 627 563 632 806
Northern Development and Mines 302 189 320 337 347
Office of Francophone Affairs 3 3 3 4 4
Public Infrastructure Renewal(4) 93 (35) 41 107 120
Contingency Fund - - - - 169
Research and Innovation 158 194 263 370 345
Secretariat for Aboriginal Affairs 18 15 21 50 21
Tourism 155 212 167 210 161
Training, Colleges and Universities 2,473 2,834 3,316 3,529 3,876
Colleges(2) 987 1,090 1,289 1,185 1,359
Transportation 1,554 1,816 1,831 2,203 2,093
Move Ontario - - - 1,232 6
Year-End Savings - - - - (700)
- -------------------------------------------------------------------------------------------------------------------------------
Total Expense 68,774 73,883 79,396 83,927 87,993
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
(2) Starting in 2005-06, the Province's financial reporting was expanded to
include hospitals, school boards and colleges using one-line consolidation.
Prior to 2005-06, historical figures reflect grants to these entities for
comparison purposes.
(3) The 2003-04 expenses for Health and Long-Term Care and Hospitals include
$824 million of SARS-related and major one-time health costs. The 2006-07
figures reflect a change in the presentation of expense in the Health
Sector to be consistent with the 2005-06 Public Accounts. This change in
presentation does not affect total expense.
(4) Credit amounts relate to consolidation adjustments between the Ontario
Realty Corporation and ministries to reflect net spending for the year.
Note: Expense amounts for 2002-03 to 2004-05 have been restated to reflect
ministry restructuring that occurred during fiscal 2005-06. This
restatement has no impact on total expense or the surplus/deficit.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
2006-07 INFRASTRUCTURE EXPENDITURES TABLE 5
($ MILLIONS)
- --------------------------------------------- ----------------------- ---------------------------------------------------------
Total Infrastructure 2006-07 Outlook(1)
Expenditures 2005-06
Actual
----------------------- ---------------------------------------------------------
Investment in Transfers Total
and Other
Expenditures in Infrastructure
Capital Assets Infrastructure(2) Expenditures
----------------------- ----------------- -------------------- ------------------
Transportation
Transit 1,541 546 547 1,093
Highways 1,237 1,295 116 1,411
Other Transportation 494 2 60 62
Health
Hospitals 296 305 - 305
Other Health 166 32 172 204
Education
School Boards 949 - 1,110 1,110
Colleges 44 13 - 13
Universities 88 - 27 27
Water/Environment 342 10 226 236
Municipal and Local Infrastructure(3) 455 2 451 453
Justice 84 64 53 117
Other 468 290 232 522
- --------------------------------------------- ----------------------- ----------------- -------------------- ------------------
Total(4) 6,164 2,559 2,994 5,553
- -------------------------------------------------------------------------------------------------------------------------------
(1) Second-quarter fiscal forecast as at September 30, 2006.
(2) Mainly consists of transfers for capital purposes to municipalities and
universities, expenditures for servicing capital-related debt of schools,
and expenditures for the repair and rehabilitation of schools. These
expenditures are included in the Province's Total Expenses in Table 4.
(3) Municipal and local water and wastewater infrastructure investments are
included in the Water/Environment sector.
(4) Total expenditures include $36 million in flow-throughs in Investment in
Capital Assets (for provincial highways) and $208 million in flow-throughs
in Transfers and Other Expenditures in Infrastructure ($31 million in
Transportation, $26 million in Water/Environment, $150 million in Municipal
and Local Infrastructure, and $1 million in Other Infrastructure).
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TEN-YEAR REVIEW OF SELECTED FINANCIAL AND ECONOMIC STATISTICS
($ MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
1997-98 1998-99 1999-00
-----------------------------------------------------
Financial Transactions
Revenue 52,782 56,050 65,042
Expense
Programs(3) 48,019 49,036 53,347
Interest on Debt 8,729 9,016 11,027
-----------------------------------------------------
Total Expense(3) 56,748 58,052 64,374
-----------------------------------------------------
Surplus/(Deficit) Before Reserve (3,966) (2,002) 668
Reserve - - -
-----------------------------------------------------
Surplus/(Deficit) (3,966) (2,002) 668
- -------------------------------------------------------------------------------------------------------------------------------
Net Debt(4) 112,735 114,737 134,398
Accumulated Deficit(4) 112,735 114,737 134,398
- -------------------------------------------------------------------------------------------------------------------------------
Gross Domestic Product (GDP) at Market Prices 359,353 377,897 409,020
Personal Income 289,537 304,652 321,702
- -------------------------------------------------------------------------------------------------------------------------------
Population-- July (000s) 11,228 11,367 11,506
Net Debt per Capita (dollars) 10,041 10,094 11,681
Personal Income per Capita (dollars) 25,787 26,801 27,959
- -------------------------------------------------------------------------------------------------------------------------------
Total Expense as a per cent of GDP 15.8 15.4 15.7
Interest on Debt as a per cent of Revenue 16.5 16.1 17.0
Net Debt as a per cent of GDP 31.4 30.4 32.9
Accumulated Deficit as a per cent of GDP 31.4 30.4 32.9
- -------------------------------------------------------------------------------------------------------------------------------
(1) Starting in 2005-06, the Province's financial reporting was expanded to
include hospitals, school boards and colleges using one-line consolidation.
Total expense prior to 2005-06 has not been restated to reflect expanded
reporting.
(2) Second-quarter fiscal forecast as at September 30, 2006.
(3) Starting in 2002-03, major tangible capital assets owned by Provincial
ministries (land, buildings and transportation infrastructure) are
accounted for on a full accrual accounting basis. Other tangible capital
assets owned by Provincial ministries will continue to be accounted for as
expense in the year of acquisition or construction. All capital assets
owned by consolidated organizations are accounted for on a full accrual
basis.
(4) Net Debt is calculated as the difference between liabilities and financial
assets. The annual change in Net Debt is equal to the Surplus/Deficit of
the Province plus the change in tangible capital assets and the change in
net assets of hospitals, school boards and colleges. Accumulated Deficit is
calculated as the difference between liabilities and total assets including
tangible capital assets and net assets of hospitals, school boards and
colleges. The annual change in the Accumulated Deficit is equal to the
Surplus/Deficit. For fiscal 2005-06, the change in the Accumulated Deficit
includes the opening combined net assets of hospitals, school boards and
colleges that were recognized upon consolidation of these broader public
sector entities.
Sources: Ontario Ministry of Finance and Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 6
- -------------------------------------------------------------------------------------------------------------------------------
Actual(1) Outlook(2)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
- -------------------------------------------------------------------------------------------------------------------------------
66,294 66,534 68,891 68,400 77,841 84,225 87,044
53,519 55,822 59,080 64,279 70,028 74,908 78,789
10,873 10,337 9,694 9,604 9,368 9,019 9,204
- -------------------------------------------------------------------------------------------------------------------------------
64,392 66,159 68,774 73,883 79,396 83,927 87,993
- -------------------------------------------------------------------------------------------------------------------------------
1,902 375 117 (5,483) (1,555) 298 (949)
- - - - - - 1,000
- -------------------------------------------------------------------------------------------------------------------------------
1,902 375 117 (5,483) (1,555) 298 (1,949)
- -------------------------------------------------------------------------------------------------------------------------------
132,496 132,121 132,647 138,557 140,921 141,928 145,345
132,496 132,121 118,705 124,188 125,743 109,155 111,104
- -------------------------------------------------------------------------------------------------------------------------------
440,759 453,701 477,528 491,859 517,306 538,386 554,529
347,653 361,187 370,418 383,197 400,287 419,230 438,685
- -------------------------------------------------------------------------------------------------------------------------------
11,685 11,898 12,102 12,260 12,407 12,541 12,696
11,339 11,104 10,961 11,302 11,358 11,317 11,448
29,752 30,357 30,608 31,256 32,263 33,429 34,553
- -------------------------------------------------------------------------------------------------------------------------------
14.6 14.6 14.4 15.0 15.3 15.6 15.9
16.4 15.5 14.1 14.0 12.0 10.7 10.6
30.1 29.1 27.8 28.2 27.2 26.4 26.2
30.1 29.1 24.9 25.2 24.3 20.3 20.0
- -------------------------------------------------------------------------------------------------------------------------------
[Pie chart showing the composition of revenue for 2006-2007 with personal income tax the highest at 26%.]
[Pie chart showing the composition of total expense for 2006-2007 with the health sector the highest at 40%.]
[Pie chart showing the composition of program expense for 2006-2007 with the health sector the highest at 45%.]
==========================================================================================================
ANNEX VIII
ECONOMIC DATA TABLES
===========================================================================================================================
ANNEX VIII
ECONOMIC DATA TABLES
ONTARIO ECONOMY TABLE NUMBER
Ontario, Gross Domestic Product, 1992-2005.............................................................. 1
Ontario, Growth in Gross Domestic Product, 1992-2005.................................................... 2
Ontario, Selected Economic Indicators, 1992-2005........................................................ 3
Ontario, Selected Economic Indicators, Annual Change, 1992-2005......................................... 4
Ontario, Real Gross Domestic Product by Industry at Basic Prices, 2002-2005............................. 5
Ontario, Growth in Real Gross Domestic Product by Industry at
Basic Prices, 2002-2005................................................................................. 6
Ontario, Real Gross Domestic Product at Basic Prices in Selected
Manufacturing Industries, 2002-2005..................................................................... 7
Ontario, Growth in Real Gross Domestic Product at Basic Prices
in Selected Manufacturing Industries, 2002-2005......................................................... 8
Ontario, Housing Market Indicators, 2002-2005............................................................9
Selected Financial Indicators, 1992-2005................................................................10
G7 COMPARISON
Ontario and the G7, Real Gross Domestic Product Growth, 1992-2005.......................................11
Ontario and the G7, Employment Growth, 1992-2005........................................................12
Ontario and the G7, Unemployment Rates, 1992-2005 ......................................................13
Ontario and the G7, CPI Inflation Rates, 1992-2005......................................................14
G7, Exchange Rates, 1992-2005...........................................................................15
ONTARIO, INTERNATIONAL MERCHANDISE TRADE
Ontario, International Merchandise Exports by Major Commodity, 2005.....................................16
Ontario, International Merchandise Imports by Major Commodity, 2005.....................................17
Ontario, International Merchandise Trade by Major Region, 2005..........................................18
CANADA, INTERNATIONAL MERCHANDISE TRADE
Canada, International Merchandise Trade by Major Region, 2005...........................................19
===========================================================================================================================
ECONOMIC DATA TABLES (CONT'D)
DEMOGRAPHIC CHARACTERISTICS TABLE NUMBER
Ontario, Selected Demographic Characteristics, 1986-2006................................................20
Ontario, Components of Population Growth, 1996-97 to 2005-06............................................21
ONTARIO LABOUR MARKETS
Ontario, Labour Force, 1992-2005 .......................................................................22
Ontario, Employment, 1992-2005 .........................................................................23
Ontario, Unemployment, 1992-2005........................................................................24
Ontario, Employment Insurance (EI) and Social Assistance, 1992-2005.....................................25
Ontario, Labour Compensation, 1992-2005.................................................................26
Ontario, Employment by Occupation, 1994-2005............................................................27
Ontario, Distribution of Employment by Occupation, 1994-2005............................................28
Ontario, Employment by Industry, 1996-2005..............................................................29
Ontario, Growth in Employment by Industry, 1996-2005....................................................30
Ontario, Employment Level by Economic Regions, 1995-2005................................................31
Ontario, Employment Level by Industry for Economic Regions, 2005........................................32
Ontario Economic Regions................................................................................33
(Note: Data in the tables may not add to totals due to rounding.)
TABLE 1: ONTARIO, GROSS DOMESTIC PRODUCT, 1992-2005
($ Billions)
---------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- --------- ---------
Real GDP (chained $1997) 307.2 310.2 328.5 340.1 343.8 359.4 376.7
Consumption 175.3 177.7 183.1 186.6 190.9 200.1 207.1
Government 72.6 72.1 72.9 73.3 70.6 70.5 72.0
Residential Construction 17.1 15.6 15.9 13.7 15.0 17.2 16.8
Non-residential Construction 10.9 8.8 7.8 7.5 9.2 10.0 10.2
Machinery and Equipment 18.5 17.7 20.2 22.3 23.7 29.3 31.3
Exports 165.5 179.4 198.1 213.8 225.6 242.6 260.4
Imports 149.8 158.7 169.4 180.5 189.4 213.3 223.3
Nominal Gross Domestic Product 286.5 293.4 311.1 329.3 338.2 359.4 377.9
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 1 (CONTINUED) ($ Billions)
- -------------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
--------- --------- --------- --------- --------- --------- ---------
Real GDP (chained $1997) 405.0 429.1 436.8 450.0 455.5 469.5 482.4
Consumption 216.6 227.2 232.9 242.1 249.7 257.4 266.4
Government 75.1 77.8 81.5 83.9 88.8 91.6 95.0
Residential Construction 18.8 20.1 22.1 24.2 25.0 25.9 26.1
Non-residential Construction 11.3 10.0 9.9 10.2 10.2 10.1 10.0
Machinery and Equipment 34.2 36.2 35.2 32.7 35.2 38.3 42.5
Exports 289.8 312.5 303.2 307.9 304.9 322.6 331.4
Imports 241.9 259.6 247.5 252.9 262.2 281.0 294.3
Nominal Gross Domestic Product 409.0 440.8 453.7 477.5 491.9 517.3 538.4
Sources: Statistics Canada and Ontario Ministry of Finance.
TABLE 2: ONTARIO, GROWTH IN GROSS DOMESTIC PRODUCT, 1992-2005
(Per Cent Change)
------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
------------------------------------------------------------------
Real GDP (chained $1997) 0.9 1.0 5.9 3.5 1.1 4.5 4.8
Consumption 1.4 1.3 3.1 1.9 2.3 4.8 3.5
Government 0.4 (0.7) 1.1 0.7 (3.7) (0.1) 2.0
Residential Construction 4.5 (8.7) 2.0 (14.0) 9.6 14.5 (1.8)
Non-residential Construction (12.9) (18.7) (12.2) (2.7) 21.5 9.2 1.6
Machinery and Equipment 2.4 (4.4) 14.6 9.9 6.7 23.3 6.8
Exports 3.9 8.4 10.4 7.9 5.6 7.5 7.3
Imports 5.3 5.9 6.8 6.6 4.9 12.6 4.7
Nominal Gross Domestic Product 1.2 2.4 6.0 5.9 2.7 6.3 5.2
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 2 (CONTINUED) (Per Cent Change)
- -------------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
------------------------------------------------------------------
Real GDP (chained $1997) 7.5 5.9 1.8 3.0 1.2 3.1 2.8
Consumption 4.6 4.9 2.5 3.9 3.1 3.1 3.5
Government 4.4 3.6 4.8 3.0 5.8 3.1 3.7
Residential Construction 11.6 7.1 9.7 9.6 3.2 3.5 0.8
Non-residential Construction 11.4 (11.8) (1.1) 3.4 0.2 (1.0) (1.1)
Machinery and Equipment 9.4 5.9 (2.8) (7.3) 7.8 8.9 11.0
Exports 11.3 7.8 (3.0) 1.6 (1.0) 5.8 2.7
Imports 8.4 7.3 (4.6) 2.2 3.7 7.2 4.7
Nominal Gross Domestic Product 8.2 7.8 2.9 5.3 3.0 5.2 4.1
Sources: Statistics Canada and Ontario Ministry of Finance.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 3: ONTARIO, SELECTED ECONOMIC INDICATORS, 1992-2005
- --------------------------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ---------- ---------- ----------
Retail Sales ($ Billions) 71.5 74.5 80.0 83.3 83.8 90.9 97.5
Housing Starts - Units (000s) 55.8 45.1 46.6 35.8 43.1 54.1 53.8
Personal Income ($ Billions) 253.8 256.1 260.7 271.4 276.3 289.5 304.7
Pre-tax Corporate Profits ($ Billions) 14.5 17.9 27.9 33.1 34.2 37.5 39.5
Consumer Price Index (1992 = 100) 100.0 101.8 101.8 104.3 105.9 107.9 108.9
Labour Force (000s) 5,529 5,544 5,548 5,589 5,680 5,776 5,877
Employment (000s) 4,933 4,938 5,014 5,100 5,167 5,291 5,453
Unemployment Rate (%) 10.8 10.9 9.6 8.7 9.0 8.4 7.2
- --------------------------------------------------- ----------------------------------------------------------------------------
TABLE 3 (CONTINUED)
- --------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1999 2000 2001 2002 2003 2004 2005
---------- ---------- ---------- ---------- ---------- ---------- ----------
Retail Sales ($ Billions) 104.6 111.5 114.3 121.0 125.1 129.1 135.2
Housing Starts - Units (000s) 67.2 71.5 73.3 83.6 85.2 85.1 78.8
Personal Income ($ Billions) 321.7 347.7 361.2 370.4 383.2 400.3 419.2
Pre-tax Corporate Profits ($ Billions) 49.7 54.4 49.3 60.6 56.9 64.7 64.4
Consumer Price Index (1992 = 100) 111.0 114.2 117.7 120.1 123.3 125.6 128.4
Labour Force (000s) 6,018 6,173 6,327 6,494 6,676 6,775 6,849
Employment (000s) 5,637 5,817 5,926 6,031 6,213 6,317 6,398
Unemployment Rate (%) 6.3 5.8 6.3 7.1 6.9 6.8 6.6
- --------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Sources: Statistics Canada, Ontario Ministry of Finance and Canada Mortgage and Housing Corporation.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 4: ONTARIO, SELECTED ECONOMIC INDICATORS, ANNUAL CHANGE, 1992-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Per Cent Change)
--------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
-------- ---------- -------- ---------- --------- -------- ---------
Retail Sales 2.7 4.2 7.5 4.0 0.7 8.5 7.2
Housing Starts 5.6 (19.1) 3.3 (23.2) 20.2 25.6 (0.4)
Personal Income 2.5 0.9 1.8 4.1 1.8 4.8 5.2
Pre-tax Corporate Profits (0.8) 23.1 55.8 18.7 3.3 9.9 5.2
Consumer Price Index 1.0 1.8 0.0 2.5 1.5 1.9 0.9
Labour Force (0.3) 0.3 0.1 0.7 1.6 1.7 1.7
Employment (1.7) 0.1 1.5 1.7 1.3 2.4 3.1
- ----------------------------------------------------------- --------------------------------------------------------------------
TABLE 4 (CONTINUED) (Per Cent Change)
- -----------------------------------------------------------
- ----------------------------------------------------------- -------- ---------- -------- ---------- --------- -------- ---------
1999 2000 2001 2002 2003 2004 2005
-------- ---------- -------- ---------- --------- -------- ---------
Retail Sales 7.3 6.6 2.5 5.9 3.4 3.2 4.7
Housing Starts 24.9 6.4 2.5 14.1 1.9 (0.1) (7.4)
Personal Income 5.6 8.1 3.9 2.6 3.4 4.5 4.7
Pre-tax Corporate Profits 25.9 9.3 (9.2) 22.7 (6.1) 13.7 (0.4)
Consumer Price Index 1.9 2.9 3.1 2.0 2.7 1.9 2.2
Labour Force 2.4 2.6 2.5 2.6 2.8 1.5 1.1
Employment 3.4 3.2 1.9 1.8 3.0 1.7 1.3
- ----------------------------------------------------------- -------- ---------- -------- ---------- --------- -------- ---------
Sources: Statistics Canada, Ontario Ministry of Finance and Canada Mortgage and Housing Corporation.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 5: ONTARIO, REAL GROSS DOMESTIC PRODUCT BY INDUSTRY
AT BASIC PRICES, 2002-2005
- --------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------- ---------------------------------------------------------
($1997 Chained Millions)
---------------------------------------------------------
2002 2003 2004 2005
-------------- ------------- -------------- -------------
Goods Producing Industries 126,216 126,822 130,568 133,411
Primary 7,365 7,191 7,457 7,500
Utilities 10,208 9,891 10,031 10,297
Construction 21,362 22,326 22,331 22,659
Manufacturing(1) 87,281 87,414 90,749 92,956
Services Producing Industries 287,647 294,244 302,419 312,210
Wholesale Trade 27,286 28,554 30,035 32,213
Retail Trade 22,399 23,010 23,734 24,624
Transportation and Warehousing 16,637 16,735 17,358 17,944
Information and Cultural (incl. Telecommunications) 17,753 18,082 18,165 18,846
Finance, Insurance, Real Estate, Rental and Leasing 89,397 91,477 94,711 97,891
Professional and Administrative Services 31,911 32,796 33,313 33,854
Education 17,409 17,554 17,853 18,594
Health Care and Social Services 22,233 23,127 23,715 24,131
Arts, Entertainment and Recreation 3,834 4,010 4,018 4,010
Accommodation and Food 8,864 8,115 8,265 8,264
Other Services 9,843 9,919 10,049 10,202
Public Administration 20,222 21,006 21,396 21,844
Total Production 413,944 421,110 432,903 445,300
- --------------------------------------------------------------------------------------------------------------------------------
(1) See Table 7 for detailed manufacturing industries.
Sources: Statistics Canada and Ontario Ministry of Finance.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 6: ONTARIO, GROWTH IN REAL GROSS DOMESTIC PRODUCT
- --------------------------------------------------------------------------------------------------------------------------------
BY INDUSTRY AT BASIC PRICES, 2002-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Per Cent Change)
------------------------------------------------
2002 2003 2004 2005
--------- ------------ ------------ ------------
Goods Producing Industries 2.9 0.5 3.0 2.2
Primary (3.0) (2.4) 3.7 0.6
Utilities 5.9 (3.1) 1.4 2.6
Construction 6.3 4.5 0.0 1.5
Manufacturing(1) 2.3 0.2 3.8 2.4
Services Producing Industries 2.9 2.3 2.8 3.2
Wholesale Trade 3.0 4.6 5.2 7.3
Retail Trade 7.3 2.7 3.1 3.8
Transportation and Warehousing 0.1 0.6 3.7 3.4
Information and Cultural (incl. Telecommunications) 2.7 1.8 0.5 3.7
Finance, Insurance, Real Estate, Rental and Leasing 2.4 2.3 3.5 3.4
Professional and Administrative Services 4.2 2.8 1.6 1.6
Education 2.0 0.8 1.7 4.2
Health Care and Social Services 2.5 4.0 2.5 1.8
Arts, Entertainment and Recreation 1.6 4.6 0.2 (0.2)
Accommodation and Food 1.0 (8.4) 1.8 0.0
Other Services 4.3 0.8 1.3 1.5
Public Administration 2.8 3.9 1.9 2.1
Total Production 2.9 1.7 2.8 2.9
- ------------------------------------------------------------------------------- --------- ------------ ------------ ------------
(1) See Table 8 for detailed manufacturing industries.
Sources: Statistics Canada and Ontario Ministry of Finance.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 7: ONTARIO, REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES IN
- --------------------------------------------------------------------------------------------------------------------------------
SELECTED MANUFACTURING INDUSTRIES, 2002-2005
- --------------------------------------------------------------------------------------------------------------------------------
($1997 Chained Millions)
------------ ----------- ------------ ------------
2002 2003 2004 2005
------------ ----------- ------------ ------------
Manufacturing 87,281 87,414 90,749 92,956
Food, Beverage and Tobacco Products 9,652 9,675 10,184 10,398
Textile, Clothing and Leather Products 1,865 1,726 1,616 1,445
Wood Products and Furniture 4,969 5,075 5,161 5,447
Paper Products and Printing 6,534 6,617 6,502 6,503
Chemical and Petroleum Products 8,614 8,631 9,227 8,946
Plastic and Rubber Products 6,014 6,009 6,121 6,054
Primary Metal and Fabricated Metal Products 12,961 13,072 13,471 13,634
Machinery 6,083 5,984 6,060 6,422
Electrical and Electronic Products 7,795 7,739 8,114 9,293
Transportation Equipment 18,484 18,399 19,675 20,309
Other Manufacturing 4,128 4,204 4,254 4,254
- --------------------------------------------------------------------------------------------------------------------------------
Sources: Statistics Canada and Ontario Ministry of Finance.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 8: ONTARIO, GROWTH IN REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES
- --------------------------------------------------------------------------------------------------------------------------------
IN SELECTED MANUFACTURING INDUSTRIES, 2002-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Per Cent Change)
------------ ----------- ------------ ------------
2002 2003 2004 2005
------------ ----------- ------------ ------------
Manufacturing 2.3 0.2 3.8 2.4
Food, Beverage and Tobacco Products (1.0) 0.2 5.3 2.1
Textile, Clothing and Leather Products (8.0) (7.4) (6.4) (10.6)
Wood Products and Furniture 3.2 2.1 1.7 5.5
Paper Products and Printing 0.1 1.3 (1.7) 0.0
Chemical and Petroleum Products 6.5 0.2 6.9 (3.0)
Plastic and Rubber Products 8.7 (0.1) 1.9 (1.1)
Primary Metal and Fabricated Metal Products 6.1 0.9 3.1 1.2
Machinery 1.2 (1.6) 1.3 6.0
Electrical and Electronic Products (3.3) (0.7) 4.8 14.5
Transportation Equipment 2.2 (0.5) 6.9 3.2
Other Manufacturing 5.1 1.8 1.2 0.0
- --------------------------------------------------------------------------------------------------------------------------------
Sources: Statistics Canada and Ontario Ministry of Finance.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 9: ONTARIO, HOUSING MARKET INDICATORS, 2002-2005
- --------------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005
-------------- -------------- -------------- --------------
New Housing Market
Residential Construction, Current $ Millions 28,266 30,601 33,673 35,138
Per Cent Change 14.6 8.3 10.0 4.4
Real Residential Construction ($1997 Millions) 24,220 24,999 25,868 26,070
Per Cent Change 9.6 3.2 3.5 0.8
Housing Starts (Units) 83,597 85,180 85,114 78,795
Per Cent Change 14.1 1.9 (0.1) (7.4)
Of which: Single-detached, urban areas (Units) 44,980 40,849 41,101 33,655
Per Cent Change 29.0 (9.2) 0.6 (18.1)
Multiple, urban areas (Units) (Units) 34,635 40,082 38,795 39,522
Per Cent Change (2.2) 15.7 (3.2) 1.9
New Housing Price Index (1997 = 100) 114.9 120.0 126.7 132.6
Per Cent Change 3.7 4.4 5.6 4.6
Resale Market
Home Resales (Units) 178,058 184,457 197,353 197,007
Per Cent Change 9.7 3.6 7.0 (0.2)
Average Resale Price ($) 210,901 226,824 245,230 263,042
Per Cent Change 9.1 7.5 8.1 7.3
- --------------------------------------------------------------------------------------------------------------------------------
Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Canadian Real Estate Association and Ontario Ministry of
Finance.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 10: SELECTED FINANCIAL INDICATORS, 1992-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Per Cent)
----------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
----------- ---------- ---------- ----------- ------------ ----------- -----------
Interest Rates
Bank Rate 6.8 5.1 5.8 7.1 4.5 3.5 5.1
Prime Rate 7.5 5.9 6.9 8.6 6.1 5.0 6.6
10-Year Government Bonds 8.1 7.2 8.4 8.1 7.2 6.1 5.3
Three-month T-Bills 6.6 4.8 5.5 6.9 4.2 3.3 4.7
Mortgage Rates
5-Year Rate 9.5 8.8 9.5 9.2 7.9 7.1 6.9
1-Year Rate 7.9 6.9 7.8 8.4 6.2 5.5 6.5
Canadian Household Debt Burden(1)
Consumer 21.3 21.3 22.7 23.5 24.6 26.2 27.7
Mortgage 59.2 62.2 65.3 65.4 67.1 68.5 69.0
Total 80.5 83.5 88.0 88.9 91.8 94.7 96.6
- --------------------------------------------- ----------------------------------------------------------------------------------
TABLE 10 (CONTINUED) (Per Cent)
- --------------------------------------------- ----------------------------------------------------------------------------------
- ---------------------------------------------
1999 2000 2001 2002 2003 2004 2005
----------- ---------- ---------- ----------- ------------ ----------- -----------
Interest Rates
Bank Rate 4.9 5.8 4.3 2.7 3.2 2.5 2.9
Prime Rate 6.4 7.3 5.8 4.2 4.7 4.0 4.4
10-Year Government Bonds 5.6 5.9 5.5 5.3 4.8 4.6 4.1
Three-month T-Bills 4.7 5.5 3.8 2.6 2.9 2.2 2.7
Mortgage Rates
5-Year Rate 7.6 8.3 7.4 7.0 6.4 6.2 6.0
1-Year Rate 6.8 7.9 6.1 5.2 4.8 4.6 5.1
Canadian Household Debt Burden(1)
Consumer 28.3 29.7 30.3 31.1 32.7 34.1 36.7
Mortgage 68.6 67.1 66.7 69.0 71.7 75.3 79.6
Total 96.9 96.8 97.0 100.1 104.4 109.4 116.3
- --------------------------------------------------------------------------------------------------------------------------------
(1) Household debt as a share of personal disposable income.
Note: All data are annual averages.
Sources: Statistics Canada, Finance Canada and Bank of Canada.
- --------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 11: ONTARIO AND THE G7, REAL GROSS DOMESTIC PRODUCT GROWTH,
1992-2005
- -------------------------------------------------------------------------------------------------------------------------------
(Per Cent)
------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 0.9 1.0 5.9 3.5 1.1 4.5 4.8
Canada 0.9 2.3 4.8 2.8 1.6 4.2 4.1
France 1.9 (0.8) 1.6 2.0 1.1 2.3 3.4
Germany 1.8 (0.8) 2.7 2.0 1.0 1.9 1.8
Italy 0.6 (0.9) 2.3 2.9 0.6 2.0 1.3
Japan 1.0 0.2 1.1 1.9 2.6 1.4 (1.8)
United Kingdom 0.3 2.4 4.4 2.9 2.7 3.2 3.2
United States 3.3 2.7 4.0 2.5 3.7 4.5 4.2
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 11 (CONTINUED) (Per Cent)
- ------------------------------------------------------ --------- ---------- --------- ---------- --------- --------- ----------
1999 2000 2001 2002 2003 2004 2005
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 7.5 5.9 1.8 3.0 1.2 3.1 2.8
Canada 5.5 5.2 1.8 2.9 1.8 3.3 2.9
France 3.2 4.1 2.1 1.3 0.9 2.1 1.4
Germany 1.9 3.5 1.4 0.1 (0.2) 1.1 1.1
Italy 1.9 3.8 1.7 0.3 0.1 0.9 0.1
Japan (0.2) 2.9 0.4 0.1 1.8 2.3 2.7
United Kingdom 3.0 4.0 2.2 2.0 2.5 3.1 1.8
United States 4.5 3.7 0.8 1.6 2.5 3.9 3.2
- -------------------------------------------------------------------------------------------------------------------------------
Sources: OECD, U.S. Bureau of Economic Analysis and Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 12: ONTARIO AND THE G7, EMPLOYMENT GROWTH, 1992-2005
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------------------
(Per Cent)
--------- ---------- --------- ---------- --------- --------- ----------
1992 1993 1994 1995 1996 1997 1998
--------- ---------- --------- ---------- --------- --------- ----------
Ontario (1.7) 0.1 1.5 1.7 1.3 2.4 3.1
Canada (1.0) 0.5 2.1 1.8 0.9 2.1 2.5
France (0.5) (1.3) 0.1 1.0 0.4 0.6 1.9
Germany (1.3) (1.1) (0.6) 0.1 (0.4) (0.4) 1.6
Italy (0.7) (4.5) (1.6) (0.6) 0.5 0.4 1.1
Japan 1.1 0.2 0.0 0.1 0.4 1.1 (0.7)
United Kingdom (2.4) (1.4) 0.7 0.9 0.9 1.7 0.9
United States 0.7 1.5 2.3 1.5 1.4 2.2 1.5
- ------------------------------------------------------ ------------------------------------------------------------------------
TABLE 12 (CONTINUED) (Per Cent)
- ------------------------------------------------------ --------- ---------- --------- ---------- --------- --------- ----------
1999 2000 2001 2002 2003 2004 2005
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 3.4 3.2 1.9 1.8 3.0 1.7 1.3
Canada 2.6 2.5 1.2 2.4 2.4 1.8 1.4
France 2.1 2.7 1.9 0.6 0.1 0.0 0.3
Germany 0.0 0.5 0.3 (0.9) (1.1) 0.0 1.6
Italy 1.2 1.9 2.0 1.5 1.0 1.5 0.7
Japan (0.8) (0.2) (0.5) (1.3) (0.2) 0.2 0.4
United Kingdom 1.1 1.4 1.0 0.6 0.8 0.5 0.6
United States 1.5 2.5 0.0 (0.3) 0.9 1.1 1.8
- -------------------------------------------------------------------------------------------------------------------------------
Sources: OECD, U.S. Bureau of Labor Statistics and Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 13: ONTARIO AND THE G7, UNEMPLOYMENT RATES, 1992-2005
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------------------
(Per Cent)
--------- ---------- --------- ---------- --------- --------- ----------
1992 1993 1994 1995 1996 1997 1998
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 10.8 10.9 9.6 8.7 9.0 8.4 7.2
Canada 11.2 11.4 10.4 9.5 9.6 9.1 8.3
France 10.4 11.7 12.1 11.5 12.1 12.1 11.5
Germany 5.7 6.9 7.3 7.1 7.7 8.6 8.1
Italy 8.8 9.9 10.9 11.3 11.3 11.4 11.5
Japan 2.2 2.5 2.9 3.1 3.4 3.4 4.1
United Kingdom 10.0 10.4 9.5 8.6 8.1 7.0 6.2
United States 7.5 6.9 6.1 5.6 5.4 4.9 4.5
- ------------------------------------------------------ ------------------------------------------------------------------------
TABLE 13 (CONTINUED) (Per Cent)
- ------------------------------------------------------ --------- ---------- --------- ---------- --------- --------- ----------
1999 2000 2001 2002 2003 2004 2005
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 6.3 5.8 6.3 7.1 6.9 6.8 6.6
Canada 7.6 6.8 7.2 7.7 7.6 7.2 6.8
France 10.8 9.4 8.7 9.0 9.8 10.0 9.9
Germany 7.5 6.9 6.9 7.6 8.7 9.2 9.1
Italy 11.1 10.2 9.2 8.7 8.6 8.1 7.8
Japan 4.7 4.7 5.0 5.4 5.3 4.7 4.4
United Kingdom 6.0 5.5 5.1 5.2 5.0 4.7 4.8
United States 4.2 4.0 4.7 5.8 6.0 5.5 5.1
- -------------------------------------------------------------------------------------------------------------------------------
Note: Labour market data are subject to differences in definitions across countries and to many series breaks, though the
latter are often of a minor nature.
Sources: OECD, U.S. Bureau of Labor Statistics and Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 14: ONTARIO AND THE G7, CPI INFLATION RATES, 1992-2005
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------------------
(Per Cent)
--------- ---------- --------- ---------- --------- --------- ----------
1992 1993 1994 1995 1996 1997 1998
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 1.0 1.8 0.0 2.5 1.5 1.9 0.9
Canada 1.5 1.8 0.2 2.2 1.6 1.6 0.9
France 2.5 2.2 1.7 1.8 2.1 1.3 0.7
Germany 5.1 4.4 2.7 1.7 1.2 1.5 0.6
Italy 5.0 4.5 4.2 5.4 4.0 1.9 2.0
Japan 1.7 1.3 0.7 (0.1) 0.0 1.7 0.7
United Kingdom 4.2 2.5 2.0 2.7 2.5 1.8 1.6
United States 3.0 3.0 2.6 2.8 3.0 2.3 1.6
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------------------
TABLE 14 (CONTINUED) (Per Cent)
- ------------------------------------------------------ --------- ---------- --------- ---------- --------- --------- ----------
1999 2000 2001 2002 2003 2004 2005
--------- ---------- --------- ---------- --------- --------- ----------
Ontario 1.9 2.9 3.1 2.0 2.7 1.9 2.2
Canada 1.7 2.7 2.6 2.2 2.8 1.9 2.2
France 0.6 1.8 1.8 1.9 2.2 2.3 1.9
Germany 0.6 1.4 1.9 1.4 1.0 1.8 1.9
Italy 1.7 2.6 2.3 2.6 2.8 2.3 2.2
Japan (0.3) (0.8) (0.8) (0.9) (0.3) 0.0 (0.3)
United Kingdom 1.3 0.8 1.2 1.3 1.4 1.3 2.0
United States 2.2 3.4 2.8 1.6 2.3 2.7 3.4
- -------------------------------------------------------------------------------------------------------------------------------
Sources: OECD, U.S. Bureau of Labor Statistics and Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 15: G7, EXCHANGE RATES, 1992-2005
- -------------------------------------------- ----------------------------------------------------------------------------------
(Foreign Currency per Canadian Dollar)
----------- ---------- ----------- ----------- ----------- ----------- -----------
1992 1993 1994 1995 1996 1997 1998
----------- ---------- ----------- ----------- ----------- ----------- -----------
Euro(1) - - - - - - -
France 4.380 4.390 4.066 3.637 3.752 4.211 3.968
Germany 1.292 1.282 1.188 1.044 1.104 1.251 1.183
Italy 1,019.6 1,219.8 1,180.7 1,186.9 1,131.6 1,228.5 1,168.2
Japan 104.8 86.2 74.8 68.5 79.8 87.3 87.8
United Kingdom 0.471 0.517 0.478 0.462 0.470 0.441 0.407
United States 0.827 0.775 0.732 0.729 0.733 0.722 0.674
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------------------
TABLE 15 (CONTINUED) (Foreign Currency per Canadian Dollar)
- -------------------------------------------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
1999 2000 2001 2002 2003 2004 2005
----------- ---------- ----------- ----------- ----------- ----------- -----------
Euro(1) 0.631 0.730 0.721 0.674 0.632 0.618 0.663
France 4.139 4.787 4.730 - - - -
Germany 1.234 1.427 1.410 - - - -
Italy 1,222.5 1,412.4 1,396.6 - - - -
Japan 76.3 72.6 78.4 79.7 82.7 83.1 90.6
United Kingdom 0.416 0.444 0.448 0.424 0.437 0.419 0.453
United States 0.673 0.673 0.646 0.637 0.714 0.768 0.825
- -------------------------------------------------------------------------------------------------------------------------------
(1) Introduced January 4, 1999.
Note: All data are annual averages.
Source: Bank of Canada.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 16: ONTARIO, INTERNATIONAL MERCHANDISE EXPORTS(1) BY MAJOR COMMODITY(2), 2005
Value Per Cent
($ Millions) of Total
----------------- ----------------
Motor Vehicles, Parts and Accessories 72,769 40.4
Machinery and Mechanical Appliances 19,433 10.8
Electrical Machinery and Equipment 10,062 5.6
Non-ferrous Metals and Allied Products 8,202 4.6
Plastics and Plastic Articles 7,354 4.1
Pulp; Paper and Allied Products 5,346 3.0
Precious Metals, Stones and Coins 4,927 2.7
Prepared Foodstuffs, Beverages and Tobacco 4,822 2.7
Furniture and Fixtures, Signs, Prefabricated Buildings 4,798 2.7
Iron and Steel 3,790 2.1
Mineral Products 3,786 2.1
Other Chemical Products 3,694 2.1
Articles of Iron and Steel 3,437 1.9
Wood and Wood Products 3,032 1.7
Pharmaceutical Products 2,960 1.6
Scientific, Professional and Photo Equipment, Clocks 2,454 1.4
Rubber and Rubber Articles 2,005 1.1
Inorganic Chemicals; Chemical Elements and Compounds 1,884 1.0
Vegetable Products; Fats and Oils 1,826 1.0
Live Animals; Animal Products 1,553 0.9
Organic Chemicals 1,427 0.8
Textiles and Textile Articles 1,296 0.7
Articles of Stone, Cement, Ceramic and Glass 1,219 0.7
Aircraft, Spacecraft and Parts 1,099 0.6
Printed Matter 766 0.4
Hides, Leather, Travel Goods and Furs 359 0.2
Apparel and Clothing Accessories 341 0.2
Toys, Games and Sports Equipment 327 0.2
Railway, Rolling Stock and Parts 294 0.2
Other Textile and Clothing Articles 243 0.1
Miscellaneous Articles; Works of Art 208 0.1
Ships, Boats and Floating Structures 56 0.0
Footwear 25 0.0
Headgear, Umbrellas, Artificial Flowers 22 0.0
Other Commodities(3) 4,298 2.4
Total Exports 180,113 100.0
(1) Domestic exports exclude re-exports.
(2) Ontario Ministry of Economic Development and Trade definition of product
groupings based on two-digit Harmonized System Codes. Data are customs
based.
(3) Other Commodities includes special transactions.
Source: Industry Canada.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 17: ONTARIO, INTERNATIONAL MERCHANDISE IMPORTS BY MAJOR COMMODITY(1), 2005
- --------------------------------------------------------------------------------------------------------------------------------
Value Per Cent
($ Millions) of Total
---------------- -----------------
Motor Vehicles, Parts and Accessories 50,984 22.3
Machinery and Mechanical Appliances 40,415 17.7
Electrical Machinery and Equipment 24,633 10.8
Plastics and Plastic Articles 9,512 4.2
Scientific, Professional and Photo Equipment, Clocks 8,300 3.6
Other Chemical Products 8,059 3.5
Non-ferrous Metals and Allied Products 7,255 3.2
Mineral Products 7,081 3.1
Pharmaceutical Products 6,535 2.9
Prepared Foodstuffs, Beverages and Tobacco 5,970 2.6
Iron and Steel 5,358 2.3
Vegetable Products; Fats and Oils 4,484 2.0
Articles of Iron and Steel 4,346 1.9
Pulp; Paper and Allied Products 4,222 1.8
Furniture and Fixtures, Signs, Prefabricated Buildings 4,174 1.8
Organic Chemicals 3,907 1.7
Rubber and Rubber Articles 3,505 1.5
Precious Metals, Stones and Coins 3,477 1.5
Articles of Stone, Cement, Ceramic and Glass 2,927 1.3
Apparel and Clothing Accessories 2,724 1.2
Printed Matter 2,431 1.1
Textiles and Textile Articles 2,425 1.1
Toys, Games and Sports Equipment 2,313 1.0
Aircraft, Spacecraft and Parts 2,235 1.0
Live Animals; Animal Products 1,619 0.7
Wood and Wood Products 1,403 0.6
Inorganic Chemicals; Chemical Elements and Compounds 1,102 0.5
Railway, Rolling Stock and Parts 773 0.3
Hides, Leather, Travel Goods and Furs 760 0.3
Footwear 709 0.3
Miscellaneous Articles; Works of Art 694 0.3
Other Textile and Clothing Articles 542 0.2
Ships, Boats and Floating Structures 309 0.1
Headgear, Umbrellas, Artificial Flowers 158 0.1
Other Commodities(2) 3,205 1.4
Total Imports 228,549 100.0
- --------------------------------------------------------------------------------------------- ---------------- -----------------
- --------------------------------------------------------------------------------------------------------------------------------
(1) Ontario Ministry of Economic Development and Trade definition of product
groupings based on two-digit Harmonized System Codes. Data are customs
based.
(2) Other Commodities includes trans-shipments from one province to another
through a foreign jurisdiction and special transactions.
Source: Industry Canada.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 18: ONTARIO, INTERNATIONAL MERCHANDISE TRADE(1) BY MAJOR REGION, 2005
Exports Per Cent Imports Per Cent
($ Millions) of Total ($ Millions) of Total
------------------ ------------------ ------------------ ------------------
United States 160,148 88.9 152,973 66.9
Western Europe 10,380 5.8 19,225 8.4
Eastern Europe 578 0.3 1,194 0.5
European Union 8,594 4.8 18,256 8.0
Asia 4,143 2.3 34,531 15.1
Oceania (Pacific) 787 0.4 713 0.3
Pacific Rim 4,609 2.6 33,777 14.8
Chinese Economic Area(2) 1,556 0.9 15,493 6.8
Caribbean 334 0.2 190 0.1
Latin America 2,402 1.3 15,673 6.9
Mexico 1,471 0.8 11,564 5.1
Middle East 813 0.5 882 0.4
Africa 524 0.3 781 0.3
Re-imports (Canada) 0 0.0 2,386 1.0
Total 180,113 100.0 228,549 100.0
(1) Data are customs based and do not include re-exports.
(2) Chinese Economic Area includes China, Hong Kong and Mongolia.
Source: Industry Canada.
TABLE 19: CANADA, INTERNATIONAL MERCHANDISE TRADE(1) BY MAJOR REGION, 2005
Exports Per Cent Imports Per Cent
($ Millions) of Total ($ Millions) of Total
----------------- ------------------ ------------------ ------------------
United States 343,287 84.1 215,136 56.5
Western Europe 24,457 6.0 52,036 13.7
Eastern Europe 1,582 0.4 4,394 1.2
European Union 22,439 5.5 45,618 12.0
Asia 24,886 6.1 65,116 17.1
Oceania (Pacific) 1,863 0.5 2,342 0.6
Pacific Rim 25,051 6.1 64,424 16.9
Chinese Economic Area(2) 7,801 1.9 30,223 7.9
Caribbean 1,042 0.3 1,489 0.4
Latin America 6,503 1.6 25,088 6.6
Mexico 3,110 0.8 14,592 3.8
Middle East 2,586 0.6 4,660 1.2
Africa 1,924 0.5 6,942 1.8
Re-imports (Canada) 0 0.0 3,544 0.9
Total 408,133 100.0 380,748 100.0
(1) Data are customs based and do not include re-exports.
(2) Chinese Economic Area includes China, Hong Kong and Mongolia.
Source: Industry Canada.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 20: ONTARIO, SELECTED DEMOGRAPHIC CHARACTERISTICS, 1986-2006(1)
- -------------------------------------------------------------------------------------------------------------------------------
- ----------------------- -------------------------------- ----------------------------------------------------------------------
Intercensal Estimates Postcensal Estimates(2)
1986 1991 1996 2001 2002 2003 2004 2005 2006
---------- ---------- ---------- ----------- ----------- ----------- ----------- ---------- -----------
Total Population 9,438 10,428 11,083 11,898 12,102 12,263 12,417 12,559 12,687
(000s)
Annual Average Growth
Over Preceding Year
Shown (%) 1.4 2.0 1.2 1.4 1.7 1.3 1.3 1.1 1.0
Median Age (Years) 31.9 33.3 35.0 36.7 37.0 37.4 37.7 37.9 NA
Age Group Shares (%)
0-4 6.8 7.0 6.8 6.0 5.8 5.6 5.5 5.4 NA
5-14 13.4 13.1 13.5 13.5 13.4 13.2 13.0 12.8 NA
15-24 17.1 14.5 13.2 13.4 13.4 13.5 13.5 13.5 NA
25-44 32.1 34.2 32.9 31.5 31.3 30.9 30.6 30.3 NA
45-64 19.8 19.6 21.3 23.2 23.6 24.1 24.7 25.2 NA
65-74 6.5 7.0 7.3 7.0 6.9 6.9 6.9 6.8 NA
75+ 4.2 4.6 5.0 5.6 5.7 5.8 5.9 6.0 NA
Total Fertility Rate(3) 1.6 1.7 1.6 1.5 1.5 1.5 1.5 NA NA
Life Expectancy at Birth (Years)(3)
Female 80.0 80.8 81.3 82.1 82.2 82.4 NA NA NA
Male 73.7 75.0 75.9 77.5 77.7 77.8 NA NA NA
Families (000s)(4) 2,445 2,727 2,933 3,191 NA NA NA NA NA
Households (000s)(4) 3,222 3,638 3,925 4,219 NA NA NA NA NA
- -------------------------------------------------------------------------------------------------------------------------------
(1) Population figures are for July 1 (Census year).
(2) Estimates by Statistics Canada based on the 2001 Census adjusted for net Census undercoverage.
(3) Calendar-year data.
(4) Families and households are Census data.
Source: Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 21: ONTARIO, COMPONENTS OF POPULATION GROWTH, 1996-97 TO 2005-06(1)
- -------------------------------------------------------------------------------------------------------------------------------
(Thousands)
--------------------------------------------------------------------------
1996-97 1997-98 1998-99 1999-00 2000-01
-------------- -------------- -------------- -------------- --------------
Population at Beginning of Period 11,083 11,228 11,367 11,506 11,685
Births 136 133 131 131 128
Deaths 80 80 80 81 81
Immigrants 119 106 92 117 150
Net Emigrants(2) 27 26 24 24 23
Net Change in Non-permanent Residents (3) (3) 6 16 21
Interprovincial Arrivals 70 75 73 79 75
Interprovincial Departures 68 66 56 57 56
Population Growth During Period 145 139 139 179 212
Population at End of Period(3) 11,228 11,367 11,506 11,685 11,898
Population Growth (%) 1.3 1.2 1.2 1.6 1.8
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 21 (CONTINUED) (Thousands)
- ---------------------------------------------------- -------------- -------------- -------------- -------------- --------------
2001-02 2002-03 2003-04 2004-05 2005-06
-------------- -------------- -------------- -------------- --------------
Population at Beginning of Period 11,898 12,102 12,263 12,417 12,559
Births 129 129 133 133 133
Deaths 81 83 86 88 91
Immigrants 153 110 128 130 133
Net Emigrants(2) 19 18 18 18 18
Net Change in Non-permanent Residents 17 22 4 (3) (7)
Interprovincial Arrivals 70 64 57 59 64
Interprovincial Departures 65 64 64 71 86
Population Growth During Period 204 161 154 142 128
Population at End of Period(3) 12,102 12,263 12,417 12,559 12,687
Population Growth (%) 1.7 1.3 1.3 1.1 1.0
- -------------------------------------------------------------------------------------------------------------------------------
(1) Data are from July 1 to June 30 (Census year).
(2) Net Emigrants = Emigrants plus net temporary emigrants minus returning emigrants.
(3) The sum of the components does not equal the total change in population due to residual deviation.
Source: Statistics Canada. Estimates based on the 2001 Census adjusted for net Census undercoverage.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 22: ONTARIO, LABOUR FORCE, 1992-2005
- -------------------------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
---------- ---------- ----------- ---------- ---------- ----------- ----------
Labour Force (000s) 5,529 5,544 5,548 5,589 5,680 5,776 5,877
Annual Labour Force Growth (%) (0.3) 0.3 0.1 0.7 1.6 1.7 1.7
Participation Rate (%)
Male 75.1 74.3 73.4 72.7 72.6 72.8 72.5
Female 59.9 59.4 58.8 58.6 58.9 59.0 59.6
Share of Labour Force (%)
Youth (15-24) 18.1 17.3 16.8 16.4 16.2 15.9 15.8
Older Workers (45+) 27.4 28.1 28.8 29.1 29.5 30.2 30.7
- -------------------------------------------------------------------------------------------------------------------- ----------
- ------------------------------------------------ ------------------------------------------------------------------------------
TABLE 22 (CONTINUED)
- ------------------------------------------------ ------------------------------------------------------------------------------
- ------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
---------- ---------- ----------- ---------- ---------- ----------- ----------
Labour Force (000s) 6,018 6,173 6,327 6,494 6,676 6,775 6,849
Annual Labour Force Growth (%) 2.4 2.6 2.5 2.6 2.8 1.5 1.1
Participation Rate (%)
Male 73.1 73.3 73.4 73.6 74.3 74.1 73.5
Female 60.3 61.0 61.4 62.0 63.0 63.0 62.7
Share of Labour Force (%)
Youth (15-24) 16.1 16.4 16.3 16.4 16.3 16.2 15.9
Older Workers (45+) 31.4 32.0 32.6 33.4 34.7 35.4 36.1
- ------------------------------------------------ ---------- ---------- ----------- ---------- ---------- ----------- ----------
- -------------------------------------------------------------------------------------------------------------------------------
Source: Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 23: ONTARIO, EMPLOYMENT, 1992-2005
- --------------------------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
--------- ---------- --------- ---------- ---------- --------- ----------
Total Employment (000s) 4,933 4,938 5,014 5,100 5,167 5,291 5,453
Male 2,658 2,673 2,714 2,761 2,791 2,870 2,936
Female 2,275 2,265 2,300 2,339 2,376 2,421 2,518
Annual Employment Growth (%) (1.7) 0.1 1.5 1.7 1.3 2.4 3.1
Net Job Creation (000s) (84) 5 76 86 67 124 162
Private-sector Employment (000s) 3,229 3,200 3,262 3,375 3,440 3,508 3,649
Public-sector Employment (000s) 1,029 1,027 1,028 1,003 977 938 938
Self-employment (000s) 676 711 724 723 750 845 867
Manufacturing Employment
(% of total) 17.3 16.6 16.8 17.2 17.6 17.7 18.0
Services Employment
(% of total) 72.6 73.7 73.8 73.6 73.5 73.5 73.3
Part-time (% of total) 18.5 19.5 19.0 18.7 19.2 19.2 18.7
Average Hours Worked
Per Week(1) 36.7 37.2 37.6 37.3 37.6 37.8 37.8
- --------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ --------- ---------- --------- ---------- ---------- --------- ----------
TABLE 23 (CONTINUED)
- ------------------------------------------------------ --------- ---------- --------- ---------- ---------- --------- ----------
- ------------------------------------------------------ --------- ---------- --------- ---------- ---------- --------- ----------
1999 2000 2001 2002 2003 2004 2005
--------- ---------- --------- ---------- ---------- --------- ----------
Total Employment (000s) 5,637 5,817 5,926 6,031 6,213 6,317 6,398
Male 3,035 3,125 3,167 3,209 3,301 3,349 3,390
Female 2,602 2,692 2,759 2,822 2,912 2,967 3,008
Annual Employment Growth (%) 3.4 3.2 1.9 1.8 3.0 1.7 1.3
Net Job Creation (000s) 183 180 109 105 182 103 81
Private-sector Employment (000s) 3,784 3,930 4,052 4,116 4,249 4,278 4,330
Public-sector Employment (000s) 962 994 1,002 1,038 1,050 1,107 1,140
Self-employment (000s) 891 894 873 878 914 932 928
Manufacturing Employment
(% of total) 18.4 18.5 18.0 18.1 17.6 17.4 16.6
Services Employment
(% of total) 72.8 72.9 73.4 73.4 73.8 74.1 74.4
Part-time (% of total) 18.0 18.0 17.8 18.3 18.5 18.1 18.1
Average Hours Worked
Per Week(1) 38.0 38.0 37.5 37.3 36.6 37.1 37.3
- ------------------------------------------------------ --------- ---------- --------- ---------- ---------- --------- ----------
- --------------------------------------------------------------------------------------------------------------------------------
(1) Average actual hours worked per week at all jobs, excluding persons not at work, in reference week.
Source: Statistics Canada.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 24: ONTARIO, UNEMPLOYMENT, 1992-2005
1992 1993 1994 1995 1996 1997 1998
--------- ---------- ---------- ---------- ---------- ---------- ----------
Total Unemployment (000s) 596 605 535 489 513 485 424
Unemployment Rate (%) 10.8 10.9 9.6 8.7 9.0 8.4 7.2
Male 11.9 11.5 10.0 8.9 9.0 8.1 7.2
Female 9.4 10.2 9.2 8.6 9.1 8.7 7.3
Toronto CMA(1) 11.3 11.3 10.4 8.6 9.1 7.9 7.0
Northern Ontario 12.8 12.7 11.7 10.0 10.7 10.4 11.1
Youth (15-24) 17.7 17.7 15.7 14.7 14.9 16.4 14.5
Older Workers (45+) 7.5 7.7 7.1 6.5 6.4 5.9 5.3
Share of Total Unemployment (%)
Long-term Unemployed (27 weeks+) 29.9 33.5 32.6 29.5 28.2 25.5 21.9
weeks+)
Youth (15-24) 29.6 28.1 27.5 27.7 26.8 31.0 31.6
Older Workers (45+) 19.2 19.7 21.2 21.6 20.8 21.4 22.6
Average Duration (weeks)(2) 23.4 26.9 27.7 25.9 24.8 26.5 23.2
Youth (15-24) 16.8 18.3 17.9 16.3 15.4 13.8 12.8
Older Workers (45+) 30.0 34.0 34.9 33.4 31.0 42.2 39.0
- --------------------------------------------------------------------------------------------------------------------- ----------
- ---------------------------------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
TABLE 24 (CONTINUED)
- ---------------------------------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
- ---------------------------------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
1999 2000 2001 2002 2003 2004 2005
--------- ---------- ---------- ---------- ---------- ---------- ----------
Total Unemployment (000s) 382 356 401 462 463 459 451
Unemployment Rate (%) 6.3 5.8 6.3 7.1 6.9 6.8 6.6
Male 6.2 5.6 6.5 7.4 7.1 6.9 6.6
Female 6.5 6.0 6.2 6.8 6.8 6.6 6.5
Toronto CMA(1) 6.1 5.5 6.3 7.4 7.7 7.5 7.0
Northern Ontario 9.1 8.3 8.0 8.1 7.4 7.8 7.0
Youth (15-24) 13.2 11.9 12.5 13.9 14.4 14.1 13.9
Older Workers (45+) 4.2 4.0 4.4 4.7 4.7 4.5 4.7
Share of Total Unemployment (%)
Long-term Unemployed (27 weeks+) 19.1 15.4 12.8 15.5 16.2 15.6 15.1
weeks+)
Youth (15-24) 33.7 33.7 32.2 32.1 33.9 33.9 33.5
Older Workers (45+) 20.8 22.4 22.9 22.0 23.5 23.4 25.9
Average Duration (weeks)(2) 21.3 17.7 15.3 16.3 17.0 16.1 16.1
Youth (15-24) 11.6 9.8 8.6 9.4 9.4 8.8 8.7
Older Workers (45+) 34.2 28.4 25.6 24.4 27.2 24.3 23.9
- ---------------------------------------------------- --------- ---------- ---------- ---------- ---------- ---------- ----------
(1) CMA is Census Metropolitan Area. Toronto CMA includes the city of Toronto;
the regions of York, Peel and Halton (excluding Burlington); Uxbridge,
Pickering, Ajax, Mono, Orangeville, New Tecumseth and Bradford West
Gwillimbury.
(2) Prior to 1997, unemployment of 100 or more weeks was recorded as 99 due to
data processing limitations. This restriction was removed for data after
1996.
Source: Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 25: ONTARIO, EMPLOYMENT INSURANCE (EI) AND SOCIAL ASSISTANCE, 1992-2005
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------- ---------- ---------- ---------- ----------- ---------- ---------- ----------
1992 1993 1994 1995 1996 1997 1998
---------- ---------- ---------- ----------- ---------- ---------- ----------
EI Regular Beneficiaries (000s) 322 294 228 181 180 151 131
EI Maximum Insurable Earnings ($)(1) 710 745 780 815 750 39,000 39,000
EI Maximum Weekly Entitlement ($) 426 425 429 448 413 413 413
EI Premium Rate
Employer ($/$100 Insurable Earnings) 4.20 4.20 4.30 4.20 4.13 4.06 3.78
Employee ($/$100 Insurable Earnings) 3.00 3.00 3.07 3.00 2.95 2.90 2.70
EI Total Benefits Paid ($ millions)(2) 5,845 5,406 4,511 3,796 3,653 3,436 3,141
EI Premiums Paid ($ millions)(2) 7,353 7,567 8,067 7,929 7,582 8,173 7,679
Social Assistance Caseload (000s)(4) 608 660 673 660 599 568 529
- ------------------------------------------------- -----------------------------------------------------------------------------
- ------------------------------------------------- -----------------------------------------------------------------------------
TABLE 25 (CONTINUED)
- ------------------------------------------------- -----------------------------------------------------------------------------
- ------------------------------------------------- ---------- ---------- ---------- ----------- ---------- ---------- ----------
1999 2000 2001 2002 2003 2004 2005
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
EI Regular Beneficiaries (000s) 110 101 122 136 142 136 132
EI Maximum Insurable Earnings ($)(1) 39,000 39,000 39,000 39,000 39,000 39,000 39,000
EI Maximum Weekly Entitlement ($) 413 413 413 413 413 413 413
EI Premium Rate
Employer ($/$100 Insurable Earnings) 3.57 3.36 3.15 3.08 2.94 2.77 2.73
Employee ($/$100 Insurable Earnings) 2.55 2.40 2.25 2.20 2.10 1.98 1.95
EI Total Benefits Paid ($ millions)(2) 3,051 2,787 3,524 4,328 4,342 4,429 4,325
EI Premiums Paid ($ millions)(2) 7,614 7,671 7,477 7,392 7,219 6,711(3) 6,947(3)
Social Assistance Caseload (000s)(4) 479 436 408 411 413 418 431
- -------------------------------------------------------------------------------------------------------------------------------
(1) Effective January 1, 1997, the maximum weekly insurable earnings of $750
was eliminated and replaced with an annual maximum set at $39,000.
(2) Employment Insurance benefit payments are on a cash basis; premiums are
paid on an accrual basis.
(3) Premiums paid in 2004 and 2005 are Ontario Ministry of Finance estimates.
(4) The number of social assistance cases from 1998 to 2005 includes recipients
of the Ontario Works program, the Ontario Disability Support Program,
Temporary Care Assistance and the Assistance for Children with Severe
Disabilities program. The Ontario Works Act was proclaimed in May 1998 and
replaced the General Welfare Act. The Ontario Disability Support Program
Act was proclaimed in June 1998.
Sources: Statistics Canada, Human Resources and Social Development Canada,
Ontario Ministry of Finance and Ontario Ministry of Community and Social
Services.
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 26: ONTARIO, LABOUR COMPENSATION, 1992-2005
- -----------------------------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
----------- ------------ ----------- ----------- ----------- ----------- ------------
Average Weekly Earnings ($)(1) 598.80 612.33 628.16 634.17 649.55 663.73 672.67
Increase (%) 3.9 2.3 2.6 1.0 2.4 2.2 1.3
CPI Inflation (%) 1.0 1.8 0.0 2.5 1.5 1.9 0.9
AWE Increase Less CPI Inflation (%) 2.9 0.5 2.6 (1.5) 0.9 0.3 0.4
AWE - Manufacturing ($) 716.55 739.20 761.95 770.80 794.09 821.28 841.78
Increase (%) 4.9 3.2 3.1 1.2 3.0 3.4 2.5
Increase Less CPI Inflation (%) 3.9 1.4 3.1 (1.3) 1.5 1.5 1.6
Wage Settlement Increases (%)(2)
All Sectors 2.7 1.0 0.4 1.0 1.1 1.2 1.6
Public 2.6 0.5 0.1 0.2 0.3 0.7 1.3
Private 2.7 1.9 1.1 1.7 2.2 2.3 2.1
Person Days Lost Due to Strikes and
Lockouts (000s) 578 371 488 477 1,915 1,904 1,061
Minimum Wage at Year-end ($/hour) 6.35 6.35 6.70 6.85 6.85 6.85 6.85
- ---------------------------------------------------------------------------------------------------------------------- ------------
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 26 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------- ----------- ------------ ----------- ----------- ----------- ----------- ------------
1999 2000 2001 2002 2003 2004 2005
----------- ------------ ----------- ----------- ----------- ----------- ------------
Average Weekly Earnings ($)(1) 683.70 700.12 712.88 726.21 734.78 748.10 768.59
Increase (%) 1.6 2.4 1.8 1.9 1.2 1.8 2.7
CPI Inflation (%) 1.9 2.9 3.1 2.0 2.7 1.9 2.2
AWE Increase Less CPI Inflation (%) (0.3) (0.5) (1.3) (0.1) (1.5) (0.1) 0.5
AWE - Manufacturing ($) 852.13 869.40 882.76 906.10 917.84 934.23 956.42
Increase (%) 1.2 2.0 1.5 2.6 1.3 1.8 2.4
Increase Less CPI Inflation (%) (0.7) (0.9) (1.6) 0.6 (1.4) (0.1) 0.2
Wage Settlement Increases (%)(2)
All Sectors 2.1 2.6 3.0 3.0 3.1 2.8 2.7
Public 1.4 2.7 2.9 2.9 3.5 3.1 2.7
Private 3.1 2.4 3.0 3.0 1.9 2.6 2.4
Person Days Lost Due to Strikes and
Lockouts (000s) 651 650 672 1,511 495 487 403
Minimum Wage at Year-end ($/hour) 6.85 6.85 6.85 6.85 6.85 7.15 7.45
- --------------------------------------------- ----------- ------------ ----------- ----------- ----------- ----------- ------------
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Average Weekly Earnings (AWE) includes overtime. In 2001, Statistics Canada
changed its estimates of AWE from the 1980 Standard Industrial
Classification (SIC) to the North American Industry Classification System
(NAICS).
(2) Wage settlement increases are for collective agreements covering 200 or
more employees, Ontario Ministry of Labour.
Sources: Statistics Canada, Ontario Ministry of Labour and Ontario Ministry
of Finance.
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 27: ONTARIO, EMPLOYMENT BY OCCUPATION, 1994-2005
(Thousands)
-------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
----------- ----------- ------------ ----------- ----------- ------------
----------- ----------- ------------ ----------- ----------- ------------
Management 504 544 535 546 550 546
Business, Finance and Administrative 979 982 981 974 1,010 1,031
Natural and Applied Sciences 275 304 295 327 354 398
Health 261 258 253 267 264 272
Social Science, Education, Government Service and 428 398 400 403 422 442
Religion
Art, Culture, Recreation and Sport 147 142 149 149 156 169
Sales and Service 1,129 1,152 1,185 1,199 1,237 1,281
Trades, Transport and Equipment Operators 737 756 769 808 825 820
Primary Industry 147 142 141 143 138 152
Processing, Manufacturing and Utilities 407 423 459 477 496 526
Total 5,014 5,100 5,167 5,291 5,453 5,637
- --------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ -------------------------------------------------------------------------
TABLE 27 (CONTINUED) (Thousands)
- ------------------------------------------------------ -------------------------------------------------------------------------
- ------------------------------------------------------ ----------- ----------- ------------ ----------- ----------- ------------
2000 2001 2002 2003 2004 2005
----------- ----------- ------------ ----------- ----------- ------------
----------- ----------- ------------ ----------- ----------- ------------
Management 562 551 562 587 620 625
Business, Finance and Administrative 1,056 1,115 1,119 1,149 1,203 1,176
Natural and Applied Sciences 427 455 445 448 437 470
Health 280 291 321 332 345 346
Social Science, Education, Government Service and 453 468 472 474 476 544
Religion
Art, Culture, Recreation and Sport 172 183 177 188 200 199
Sales and Service 1,342 1,359 1,393 1,457 1,435 1,448
Trades, Transport and Equipment Operators 835 850 867 890 899 910
Primary Industry 142 130 123 131 134 143
Processing, Manufacturing and Utilities 548 524 552 558 568 537
Total 5,817 5,926 6,031 6,213 6,317 6,398
Note: Occupational groupings based on National Occupational Classification for Statistics (NOC-S) 2001.
Source: Statistics Canada.
TABLE 28: ONTARIO, DISTRIBUTION OF EMPLOYMENT BY OCCUPATION, 1994-2005
(Per Cent)
----------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
------------ ------------ ----------- ------------ ------------ ------------
------------ ------------ ----------- ------------ ------------ ------------
Management 10.0 10.7 10.4 10.3 10.1 9.7
Business, Finance and Administrative 19.5 19.2 19.0 18.4 18.5 18.3
Natural and Applied Sciences 5.5 6.0 5.7 6.2 6.5 7.1
Health 5.2 5.1 4.9 5.1 4.8 4.8
Social Science, Education, Government Service and 8.5 7.8 7.7 7.6 7.7 7.8
Religion
Art, Culture, Recreation and Sport 2.9 2.8 2.9 2.8 2.9 3.0
Sales and Service 22.5 22.6 22.9 22.7 22.7 22.7
Trades, Transport and Equipment Operators 14.7 14.8 14.9 15.3 15.1 14.5
Primary Industry 2.9 2.8 2.7 2.7 2.5 2.7
Processing, Manufacturing and Utilities 8.1 8.3 8.9 9.0 9.1 9.3
Total 100.0 100.0 100.0 100.0 100.0 100.0
- --------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------ -------------------------------------------------------------------------
TABLE 28 (CONTINUED) (Per Cent)
- ------------------------------------------------------ -------------------------------------------------------------------------
- ------------------------------------------------------ ----------- ----------- ------------ ----------- ----------- ------------
2000 2001 2002 2003 2004 2005
----------- ----------- ------------ ----------- ----------- ------------
----------- ----------- ------------ ----------- ----------- ------------
Management 9.7 9.3 9.3 9.4 9.8 9.8
Business, Finance and Administrative 18.1 18.8 18.6 18.5 19.0 18.4
Natural and Applied Sciences 7.3 7.7 7.4 7.2 6.9 7.3
Health 4.8 4.9 5.3 5.3 5.5 5.4
Social Science, Education, Government Service and 7.8 7.9 7.8 7.6 7.5 8.5
Religion
Art, Culture, Recreation and Sport 3.0 3.1 2.9 3.0 3.2 3.1
Sales and Service 23.1 22.9 23.1 23.5 22.7 22.6
Trades, Transport and Equipment Operators 14.4 14.3 14.4 14.3 14.2 14.2
Primary Industry 2.4 2.2 2.0 2.1 2.1 2.2
Processing, Manufacturing and Utilities 9.4 8.8 9.1 9.0 9.0 8.4
Total 100.0 100.0 100.0 100.0 100.0 100.0
Note: Occupational groupings based on National Occupational Classification for Statistics (NOC-S) 2001.
Source: Statistics Canada.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 29: ONTARIO, EMPLOYMENT BY INDUSTRY, 1996-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Thousands)
------------------------------------------------------------
1996 1997 1998 1999 2000
----------- ----------- ------------ ----------- -----------
Goods Producing Industries 1,368 1,404 1,457 1,533 1,576
Primary Industries 150 141 143 152 133
Agriculture 103 100 105 114 98
Manufacturing 907 935 981 1,035 1,075
Construction 261 280 285 298 323
Utilities 51 48 48 49 46
Services Producing Industries 3,799 3,887 3,996 4,103 4,241
Trade 774 791 799 838 877
Transportation and Warehousing 245 249 261 259 273
Finance, Insurance, Real Estate and Leasing 368 371 370 378 379
Professional, Scientific and Technical Services 313 347 371 393 415
Business, Building and Other Support 179 195 208 222 242
Educational Services 341 342 345 363 367
Health Care and Social Assistance 503 496 518 515 541
Information, Culture and Recreation 235 248 244 258 282
Accommodation and Food Services 311 318 335 337 337
Public Administration 288 279 284 286 281
Other Services 243 252 263 254 248
Total Employment 5,167 5,291 5,453 5,637 5,817
- ------------------------------------------------------------------- ----------- ----------- ------------ ----------- -----------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 29 (CONTINUED): ONTARIO, EMPLOYMENT BY INDUSTRY, 1996-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Thousands)
------------------------------------------------------------
2001 2002 2003 2004 2005
----------- ----------- ------------ ----------- -----------
Goods Producing Industries 1,575 1,603 1,630 1,639 1,637
Primary Industries 119 112 113 113 128
Agriculture 84 77 82 79 93
Manufacturing 1,068 1,094 1,093 1,100 1,064
Construction 336 345 369 368 395
Utilities 51 53 55 58 50
Services Producing Industries 4,352 4,428 4,584 4,678 4,761
Trade 928 923 945 970 995
Transportation and Warehousing 275 279 290 295 289
Finance, Insurance, Real Estate and Leasing 389 393 415 436 452
Professional, Scientific and Technical Services 437 436 449 441 443
Business, Building and Other Support 241 247 264 278 283
Educational Services 358 369 376 390 428
Health Care and Social Assistance 559 582 612 635 626
Information, Culture and Recreation 303 298 289 303 301
Accommodation and Food Services 331 361 370 366 364
Public Administration 283 293 310 312 322
Other Services 248 247 264 254 257
Total Employment 5,926 6,031 6,213 6,317 6,398
- ------------------------------------------------------------------- ----------- ----------- ------------ ----------- -----------
- --------------------------------------------------------------------------------------------------------------------------------
Note: Industrial groupings based on North American Industry Classification System (NAICS).
Source: Statistics Canada.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 30: ONTARIO, GROWTH IN EMPLOYMENT BY INDUSTRY, 1996-2005
- --------------------------------------------------------------------------------------------------------------------------------
(Per Cent Change)
-------------------------------------------------------
1996 1997 1998 1999 2000
---------- ---------- ---------- ----------- ----------
Goods Producing Industries 1.6 2.6 3.8 5.2 2.8
Primary Industries 0.0 (5.9) 1.6 5.9 (12.5)
Agriculture (1.2) (3.0) 5.0 8.1 (13.6)
Manufacturing 3.2 3.1 4.8 5.6 3.8
Construction (2.8) 7.4 1.9 4.3 8.4
Utilities 1.6 (5.0) 0.2 1.9 (5.7)
Services Producing Industries 1.2 2.3 2.8 2.7 3.4
Trade 2.1 2.1 1.1 4.8 4.7
Transportation and Warehousing 1.3 1.6 4.8 (0.5) 5.2
Finance, Insurance, Real Estate and Leasing 2.1 0.7 (0.2) 2.2 0.2
Professional, Scientific and Technical Services 4.3 11.1 6.7 5.9 5.6
Business, Building and Other Support 4.8 9.0 6.7 7.1 8.8
Educational Services (4.3) 0.4 0.8 5.2 1.0
Health Care and Social Assistance (0.5) (1.4) 4.5 (0.7) 5.1
Information, Culture and Recreation 1.2 5.6 (1.8) 5.9 9.2
Accommodation and Food Services 7.1 2.3 5.1 0.7 0.1
Public Administration (4.5) (3.2) 1.6 0.9 (1.8)
Other Services 2.6 3.3 4.6 (3.3) (2.4)
Total Employment 1.3 2.4 3.1 3.4 3.2
- ------------------------------------------------------------------------ ---------- ---------- ---------- ----------- ----------
TABLE 30 (CONTINUED): ONTARIO, GROWTH IN EMPLOYMENT BY INDUSTRY, 1996-2005
(Per Cent Change)
--------------------------------------------------------
2001 2002 2003 2004 2005
----------- ----------- ----------- --------- ----------
Goods Producing Industries (0.1) 1.8 1.7 0.6 (0.1)
Primary Industries (10.0) (6.4) 1.0 0.2 13.2
Agriculture (14.7) (8.4) 6.3 (3.2) 18.0
Manufacturing (0.6) 2.5 (0.1) 0.6 (3.3)
Construction 4.2 2.4 7.1 (0.4) 7.4
Utilities 11.0 3.1 3.0 7.2 (14.6)
Services Producing Industries 2.6 1.8 3.5 2.1 1.8
Trade 5.9 (0.6) 2.4 2.6 2.6
Transportation and Warehousing 0.7 1.4 4.1 1.5 (1.8)
Finance, Insurance, Real Estate and Leasing 2.6 1.1 5.6 5.0 3.8
Professional, Scientific and Technical Services 5.5 (0.2) 2.8 (1.6) 0.5
Business, Building and Other Support (0.4) 2.5 7.0 5.0 1.8
Educational Services (2.4) 3.2 1.8 3.7 9.8
Health Care and Social Assistance 3.4 4.0 5.1 3.8 (1.4)
Information, Culture and Recreation 7.3 (1.5) (3.0) 4.7 (0.8)
Accommodation and Food Services (1.9) 9.2 2.4 (1.1) (0.4)
Public Administration 0.9 3.5 5.6 0.9 3.3
Other Services (0.3) (0.3) 7.1 (4.1) 1.3
Total Employment 1.9 1.8 3.0 1.7 1.3
Note: Industrial groupings based on North American Industry Classification System (NAICS).
Source: Statistics Canada.
TABLE 31: ONTARIO, EMPLOYMENT LEVEL BY ECONOMIC REGIONS, 1995-2005
(Thousands)
--------------------------------------------------------
-------- -------- -------- --------- --------- ---------
1995 1996 1997 1998 1999 2000
-------- -------- -------- --------- --------- ---------
Ontario 5,100 5,167 5,291 5,453 5,637 5,817
Region:*
East 673 675 686 723 749 758
Ottawa (510) 498 506 513 539 552 572
Kingston-Pembroke (515) 176 169 173 184 197 186
Greater Toronto Area (530)(1) 2,202 2,237 2,336 2,407 2,481 2,581
Central 1,182 1,202 1,222 1,267 1,311 1,358
Muskoka-Kawarthas (520) 144 146 147 148 156 159
Kitchener-Waterloo-Barrie (540) 466 475 493 512 541 550
Hamilton-Niagara Peninsula (550) 571 580 582 607 614 649
Southwest 683 697 702 711 741 760
London (560) 283 278 282 285 298 307
Windsor-Sarnia (570) 270 278 276 284 293 302
Stratford-Bruce Peninsula (580) 129 141 144 142 149 152
North 360 356 345 345 356 360
Northeast (590) 247 246 240 241 246 249
Northwest (595) 114 110 105 104 110 111
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------- --------------------------------------------------------
TABLE 31 (CONTINUED) (Thousands)
- ---------------------------------------------------------------------- --------------------------------------------------------
- ---------------------------------------------------------------------- -------- -------- -------- --------- --------- ---------
2001 2002 2003 2004 2005
-------- -------- --------- --------- ---------
Ontario 5,926 6,031 6,213 6,317 6,398
Region:*
East 784 793 816 818 830
Ottawa (510) 593 595 617 614 624
Kingston-Pembroke (515) 192 199 199 204 205
Greater Toronto Area (530)(1) 2,665 2,721 2,799 2,854 2,912
Central 1,363 1,387 1,451 1,476 1,494
Muskoka-Kawarthas (520) 152 155 175 180 170
Kitchener-Waterloo-Barrie (540) 559 579 597 611 637
Hamilton-Niagara Peninsula (550) 651 653 680 686 687
Southwest 755 765 775 801 797
London (560) 305 307 317 330 328
Windsor-Sarnia (570) 302 306 307 307 315
Stratford-Bruce Peninsula (580) 148 151 150 164 155
North 359 365 371 367 364
Northeast (590) 251 251 254 255 256
Northwest (595) 107 113 117 112 108
- ---------------------------------------------------------------------- -------- -------- -------- --------- --------- ---------
* Standard deviations vary significantly across regions, decreasing as the size of the region increases.
(1) Economic Region 530 closely matches the GTA, except that it excludes the city of Burlington.
Note: All figures are average annual employment levels.
Sources: Statistics Canada and Ontario Ministry of Finance.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 32: ONTARIO, EMPLOYMENT LEVEL BY INDUSTRY FOR ECONOMIC REGIONS, 2005
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------------------
(Thousands)
----------------------------------------------------------------------------------
All Industries Agriculture Resources(1) Manufacturing
------------------------- ----------------- ------------------ -------------------
------------------------- ----------------- ------------------ -------------------
Ontario 6,398 93 35 1,064
Region:
East 830 12 2 78
Ottawa (510) 624 7 - 54
Kingston-Pembroke (515) 205 5 - 24
Greater Toronto Area (530) 2,912 9 3 487
Central 1,494 33 5 293
Muskoka-Kawarthas (520) 170 4 - 24
Kitchener-Waterloo-Barrie (540) 637 13 2 142
Hamilton-Niagara Peninsula (550) 687 16 2 127
Southwest 797 35 3 170
London (560) 328 12 - 60
Windsor-Sarnia (570) 315 9 - 81
Stratford-Bruce Peninsula (580) 155 14 2 30
North 364 4 20 36
Northeast (590) 256 3 15 24
Northwest (595) 108 - 5 12
- -------------------------------------------- ----------------------------------------------------------------------------------
- -------------------------------------------- ----------------------------------------------------------------------------------
TABLE 32 (CONTINUED) (Thousands)
- -------------------------------------------- ----------------------------------------------------------------------------------
- -------------------------------------------- ------------------------- ----------------- ------------------ -------------------
Construction Distributive(2) Finance, Prof. Info. Culture
& Mgmt.(3) & Recreation(4)
------------------------- ----------------- ------------------ -------------------
------------------------- ----------------- ------------------ -------------------
Ontario 395 588 1,178 301
Region:
East 47 57 143 34
Ottawa (510) 33 38 117 28
Kingston-Pembroke (515) 14 19 26 7
Greater Toronto Area (530) 172 291 679 157
Central 108 134 213 63
Muskoka-Kawarthas (520) 16 15 21 7
Kitchener-Waterloo-Barrie (540) 49 57 89 23
Hamilton-Niagara Peninsula (550) 43 62 103 33
Southwest 47 72 102 32
London (560) 20 29 54 11
Windsor-Sarnia (570) 18 24 33 15
Stratford-Bruce Peninsula (580) 10 19 15 5
North 20 33 41 15
Northeast (590) 15 22 31 11
Northwest (595) 4 12 10 5
- -------------------------------------------- ------------------------- ----------------- ------------------ -------------------
- --------------------------------------------------- ---------------------------------------------------------------------------
TABLE 32 (CONTINUED)
- ---------------------------------------------------
- --------------------------------------------------- ------------------------- -------------------------- ----------------------
Retail Trade Personal Services(5) Education
------------------------- -------------------------- ----------------------
------------------------- -------------------------- ----------------------
Ontario 747 621 428
Region:
East 97 84 63
Ottawa (510) 73 61 45
Kingston-Pembroke (515) 25 23 18
Greater Toronto Area (530) 333 264 178
Central 175 161 104
Muskoka-Kawarthas (520) 25 18 13
Kitchener-Waterloo-Barrie (540) 72 66 45
Hamilton-Niagara Peninsula (550) 78 78 47
Southwest 91 74 53
London (560) 37 28 24
Windsor-Sarnia (570) 36 31 21
Stratford-Bruce Peninsula (580) 18 14 8
North 50 39 30
Northeast (590) 35 27 21
Northwest (595) 15 12 9
- --------------------------------------------------- ---------------------------------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------------------------------
TABLE 32 (CONTINUED) (Thousands)
- --------------------------------------------------- ---------------------------------------------------------------------------
- --------------------------------------------------- ------------------------------ --------------------------------------------
Health & Soc. Assistance Public Administration
------------------------------ --------------------------------------------
------------------------------ --------------------------------------------
Ontario 626 322
Region:
East 93 120
Ottawa (510) 64 104
Kingston-Pembroke (515) 29 16
Greater Toronto Area (530) 238 100
Central 150 54
Muskoka-Kawarthas (520) 20 7
Kitchener-Waterloo-Barrie (540) 56 23
Hamilton-Niagara Peninsula (550) 75 25
Southwest 92 25
London (560) 42 10
Windsor-Sarnia (570) 35 10
Stratford-Bruce Peninsula (580) 15 4
North 53 23
Northeast (590) 37 16
Northwest (595) 16 7
- --------------------------------------------------- ------------------------------ --------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
All figures are average annual employment levels.
Sub-regional figures may not add up to regional totals due to rounding.
Employment numbers under 1,500 are suppressed because they are statistically unreliable.
See standard deviation and GTA note for Table 31.
Industrial groupings based on North American Industry Classification System (NAICS).
(1) Includes Forestry, Fishing, Mining, Oil and Gas.
(2) Includes Transportation and Warehousing, Utilities and Wholesale Trade.
(3) Includes Finance, Insurance, Real Estate and Leasing; Management of
Companies, Administrative and Support Services; and Professional,
Scientific and Technical Services.
(4) Includes industries such as Publishing, Motion Picture and Sound Recording,
Broadcasting and Telecommunications, Information Services and Data
Processing Services, Performing Arts, Spectator Sports and Related
Industries, Heritage Institutions and Amusement, Gambling and Recreation.
(5) Includes Accommodation and Food Services and Other Services (such as Repair
and Maintenance, Personal and Laundry, Religious, Grant-making, Civic,
Professional and Similar Organizations).
Sources: Statistics Canada and Ontario Ministry of Finance.
- -------------------------------------------------------------------------------------------------------------------------------
TABLE 33: ONTARIO ECONOMIC REGIONS(1)
East
Ottawa (510) The united counties of Stormont, Dundas and Glengarry, Prescott and
Russell, Leeds and Grenville, the county of Lanark and the Ottawa Division
Kingston-Pembroke (515) The counties of Lennox and Addington, Hastings, Renfrew and Frontenac and
the Prince Edward Division
Central
Muskoka-Kawarthas (520) The counties of Northumberland, Peterborough, Haliburton, the Muskoka
District Municipality and the Kawartha Lakes Division
Kitchener-Waterloo-Barrie (540) The counties of Dufferin, Wellington and Simcoe and the Waterloo Regional
Municipality
Hamilton-Niagara Peninsula (550) The counties of Brant, Haldimand and Norfolk, the Niagara Regional
Municipality, the Hamilton Division and the city of Burlington in the
Halton Regional Municipality
Greater Toronto Area(2)
Toronto (530) Toronto Division, the regional municipalities of Durham, York, Peel and
Halton (excluding the city of Burlington)
Southwest
London (560) The counties of Oxford, Elgin and Middlesex
Windsor-Sarnia (570) The counties of Lambton and Essex and the Chatham-Kent Division
Stratford-Bruce Peninsula (580) The counties of Perth, Huron, Bruce and Grey
North
Northeast (590) The districts of Nipissing, Parry Sound, Manitoulin, Sudbury, Timiskaming,
Cochrane, Algoma and the Greater Sudbury Division
Northwest (595) The districts of Thunder Bay, Rainy River and Kenora
(1) As defined by Statistics Canada, Standard Geographical Classification SGC 2001.
(2) Economic Region 530 closely matches the GTA, except that it excludes the city of Burlington.
==========================================================================================================
ANNEX IX
HOW TO PARTICIPATE IN THE 2007 PRE-BUDGET CONSULTATIONS
===========================================================================================================================
HOW TO PARTICIPATE IN THE 2007 PRE-BUDGET CONSULTATIONS
The Minister of Finance will be hosting pre-budget consultations with individuals, organizations, associations
and other stakeholders across the province as part of the government's ongoing dialogue with the citizens of
Ontario.
In particular, the Minister of Finance is interested in hearing Ontarians' views on what more the government can
do to ensure a productive economy and better services for people, while eliminating the deficit.
Information identifying the communities and locations that the Minister plans to visit will be posted at
www.fin.gov.on.ca in November 2006. Individuals wishing to attend one of these consultations can call toll-free
1-800-263-7965 or 1-800-263-7776 TTY.
Below you will find additional information on how to participate in the 2007 pre-budget consultations.
WRITTEN SUBMISSIONS
Individuals and organizations can mail, e-mail or fax submissions directly to the Minister of Finance.
Mailing Address
The Honourable Greg Sorbara, Minister of Finance
c/o Budget Secretariat
Frost Building North, 3rd Floor
95 Grosvenor Street
Toronto, ON M7A 1Z1
E-mail Address: submissions@fin.gov.on.ca
Facsimile: 416-325-0969
ONLINE SUBMISSIONS
Individuals can also submit ideas for the 2007 Budget by completing a form on the Ministry of Finance website at
www.fin.gov.on.ca. Click on the "Tell Us What You Think" item in the Hot Topics menu.
