FORM 18-K/A
For Foreign Governments and Political Subdivisions Thereof
__________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
AMENDMENT NO. 4 TO
ANNUAL REPORT
of
PROVINCE OF ONTARIO
(Canada)
(Name of Registrant)
______________________
Date of end of last fiscal year: March 31, 2006
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, 2006 (the "Annual Report") as follows:
The following additional exhibit is added to the Annual Report:
Exhibit (h) Public Accounts of Ontario: 2006-2007 Province of Ontario
Annual Report and Consolidated Financial Statements
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)
August 17, 2007 By: /s/ Irene Stich
---------------------------------------------
Name: Irene Stich
Title: Director, Capital Markets Operations
Capital Markets Division
Ontario Financing Authority
Exhibit Index
Exhibit (h): Public Accounts of Ontario: 2006-2007 Province of Ontario
Annual Report and Consolidated Financial Statements
EXHIBIT (h)
Public Accounts of Ontario: 2006-2007 Province of Ontario
Annual Report and Consolidated Financial Statements
[The Ontario Coat of Arms]
To The Honourable
James K. Bartleman
Lieutenant Governor of Ontario
May It Please Your Honour:
The undersigned has the honour to present to Your Honour the Public Accounts of the Province of Ontario for the
fiscal year ended March 31, 2007, in accordance with the requirements of the Ministry of Treasury and Economics Act.
Respectfully submitted,
/s/ Greg Sorbara
- ---------------------------
The Honourable Greg Sorbara
Minister of Finance
Toronto, August 2007
- -------------------------------------------------------------------------------------------------------------------------
Financial Statement Discussion and Analysis, 2006-2007
- -------------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
Foreword..............................................................................................................iii
Introduction............................................................................................................1
Guide to the Public Accounts............................................................................................3
Annual Report......................................................................................................3
Supporting Volumes.................................................................................................4
Statement of Responsibility.............................................................................................5
FINANCIAL STATEMENT DISCUSSION AND ANALYSIS
Highlights..............................................................................................................9
Analysis of 2006-07 Results............................................................................................11
2006-07 Revenues..................................................................................................11
2006-07 Expenses..................................................................................................12
2006-07 Infrastructure Investments and Borrowing Program..........................................................15
Government Management of Finances......................................................................................17
Prudence in the 2006-07 Plan......................................................................................17
Pre-Election Report...............................................................................................18
In-Year Financial Management......................................................................................18
Interim Results...................................................................................................19
Impact on Future Planning Periods.................................................................................20
Ten-Year Overview of Financial Results.................................................................................22
Revenues: 10-Year Overview........................................................................................23
Expenses: 10-Year Overview........................................................................................25
Investing in Ontario's Infrastructure and Reducing Provincial Debt................................................26
The Value of a Responsible Approach...............................................................................27
CONSOLIDATED FINANCIAL STATEMENTS
Auditor's Report.......................................................................................................31
Consolidated Statement of Operations...................................................................................33
Consolidated Statement of Financial Position...........................................................................34
Consolidated Statement of Change in Net Debt...........................................................................35
Consolidated Statement of Cash Flow....................................................................................36
Notes to the Consolidated Financial Statements.........................................................................37
Schedules to the Consolidated Financial Statements.....................................................................57
Sources of Additional Information......................................................................................74
FOREWORD
I am pleased to present the 2006-2007 Ontario Public Accounts. These
accounts confirm a $2.3 billion surplus for 2006-07, the second
consecutive balanced budget.
When the government took office in October 2003, Ontario was facing
deficits on many fronts. Our education and health care systems were
struggling. Our infrastructure investments were not keeping pace.
Ontario's most vulnerable lacked a fair chance to succeed.
At the same time, Ontario faced a $5.5 billion fiscal deficit, rooted
in a mismatch of revenues and expenditures between 2000-01 and 2003-04.
During that period, provincial program spending increased by 21 per
cent, while taxation revenue actually declined by 0.7 per cent. This
imbalance created the conditions for a structural deficit.
Our mandate was clear: restore Ontario's fiscal health; address the
deficits in education and skills, health care and infrastructure;
expand opportunity for all Ontarians; and grow a more vibrant economy.
Our first Budget included measures to address Ontario's structural
deficit, while investing in our key priorities of health care and
education. The 2005 Budget launched the most significant investment in
higher education in a generation. The 2006 Budget invested $1.2 billion
in public transit, roads and bridges through Move Ontario.
Throughout this period, we have steadily reduced Ontario's deficit
through a more disciplined approach that included a prudent fiscal
planning process, measures to control spending in non-priority areas,
and key investments to strengthen the Ontario economy. The 2005-2006
Public Accounts showed a balanced budget, although the structural
deficit was still not fully addressed and storm clouds loomed on
Ontario's economic horizon.
Rising oil prices, the high Canadian dollar and an economic slowdown in
the United States resulted in a period of more modest economic growth
in Ontario in the third quarter of 2006. To help mitigate the impact,
we introduced a number of targeted measures in the fall of 2006 to help
job-threatened or laid-off workers, fast-track infrastructure projects,
encourage interprovincial trade and boost tourism.
By the fourth quarter of 2006, private-sector forecasts anticipated
Ontario real gross domestic product (GDP) growth would strengthen over
the next three years. The Ontario Economic Accounts for the first
quarter of 2007 confirm that Ontario has returned to more healthy
levels of growth, with real GDP up 0.7 per cent.
The 2007 Budget continued to invest in education, health care and
infrastructure, while launching initiatives to expand opportunities for
children and families and to protect the environment. It also projected
another balanced budget, with indications that we were on track to post
five consecutive surpluses.
Over the course of its mandate, the government has taken a number of
steps to enhance transparency and accountability. The Fiscal
Transparency and Accountability Act (FTAA), passed by the Ontario
legislature in 2004, requires the government to publish a report on
Ontario's finances in advance of a general election and to have it
reviewed by the Auditor General. The Province's first Pre-Election
Report on Ontario's Finances was published on April 23, 2007 and, on
June 18, 2007, the Auditor General published his review. Among other
things, his review confirms that the government's expense and revenue
estimates are reasonable and that the assumptions, on which the
projections are based, are consistent with the plans of the government.
This Annual Report, which forms part of the Public Accounts of Ontario,
confirms a balanced budget for 2006-07. In fact, we have exceeded our
fiscal target by posting a surplus of $2.3 billion. The results in
Ontario are similar to those in most other Canadian jurisdictions,
including Saskatchewan, Nova Scotia, Alberta and British Columbia, each
of which achieved surpluses in 2006-07 that went well beyond budgetary
plan. While the federal government has yet to release its 2006-07
public accounts, indications are that those accounts will show
surpluses beyond budgetary plan.
Ontario's results demonstrate that our economy is growing and that our
approach to financial management, based as it is on discipline and
prudence, has been successful. The "wisdom of the practice of building
a healthy dose of prudence into the budget revenue projections" was
noted in the Auditor General's review of our Pre-Election Report.
This Annual Report represents, in exhaustive detail, the results of one
year in this government's mandate. It itemizes, with precision, the
steps we have taken to:
• make our schools better places to learn
• strengthen the reach of our colleges and universities
• reduce health wait times and build new health centres
• address the harsh realities of poverty
• build and repair infrastructure around the province
• expand opportunity in Ontario's workplaces
• create a greener and cleaner province
...and much more.
Our plan is working. Ontario is growing again and has entered a new era
of balanced budgets and sustainable surpluses. This strength provides
an opportunity for us to become an even stronger province in the years ahead.
/s/ Greg Sorbara
---------------------------
The Honourable Greg Sorbara
Minister of Finance
INTRODUCTION
This Annual Report, which forms part of the Public Accounts of the
Province of Ontario, outlines Ontario's financial position and the
results of operations for the fiscal year ended March 31, 2007. This
report is one of the major financial accountability documents of the
Province, wrapping up the financial results of the past year. It
represents the final outcome of the Budget for 2006-07 that was
released in March 2006, and explains actual financial results for the
year against those planned.
The Province has taken a number of steps to improve its financial
reporting to enhance transparency and accountability. Part of that
effort has been to release the Budget and this Annual Report earlier
and to improve their presentation. Further underlining a commitment to
providing timely and useful financial information, this year the
Province released Ontario's first Pre-Election Report on Ontario's
Finances, in line with the requirements of the Fiscal Transparency and
Accountability Act, 2004. The first document of its kind in Canada, the
Pre-Election Report was independently reviewed by the Province's
Auditor General, who noted that "the report enhances the accountability
and transparency of the government's fiscal-planning process."
The Financial Statement Discussion and Analysis provided in this Annual
Report builds on the commitment to openness and transparency in
financial information. It has been reorganized to make it easier to
understand, and to highlight the financial management principles
underlying improvements in the Province's financial health over the
past several years.
Producing the Public Accounts of Ontario requires the teamwork and
cooperation of a large number of staff in ministries, agencies and
organizations in the broader public sector. In addition, the Office of
the Auditor General plays a critical role in reviewing and reporting on
the Province's financial statements. I would like to thank everyone who
was involved in preparing the 2006-07 Public Accounts for their very
important contributions.
Comments on the Public Accounts are welcome. Please share your thoughts
by e-mail at annualreport@ontario.ca, or by writing to the Office of
the Provincial Controller, Re: Annual Report, Ontario Ministry of
Finance, First Floor, Frost Building South, 7 Queen's Park Crescent,
Toronto ON M7A 1Y7.
/s/ Bruce L Bennett
---------------------------------------------------
Bruce L. Bennett, CA
Assistant Deputy Minister and Provincial Controller
Ontario Ministry of Finance
GUIDE TO THE PUBLIC ACCOUNTS
The Public Accounts of the Province of Ontario comprise this Annual
Report and three supporting volumes.
Annual Report
The Annual Report includes the Consolidated Financial Statements of the
Province of Ontario and a Financial Statement Discussion and Analysis
that explains the results in more detail.
The Consolidated Financial Statements are made up of several documents
and schedules:
• The Auditor General's Report on the Consolidated Financial
Statements expresses the opinion of the Auditor General that
the statements fairly report the activities of the government
in accordance with Canadian generally accepted accounting
principles.
• The Consolidated Statement of Operations reports the annual
deficit/surplus from operations in the period. It shows
government revenues, the cost of providing services and other
expenses, and the difference between them.
• The Consolidated Statement of Financial Position shows the
financial resources of the Province against its obligations.
The resulting figure is called net debt. The Province's
accumulated deficit is its net debt less the value of its
tangible capital assets and the net assets of hospitals,
school boards and colleges.
• The Consolidated Statement of Change in Net Debt shows the
combined impact on net debt of the Province's annual
deficit/surplus and its investments during the year in
tangible capital assets and the net assets of hospitals,
school boards and colleges.
• The Consolidated Statement of Cash Flow shows the sources and
uses of cash over the period. Government's operating
activities, including the annual surplus or deficit, and
changes in its financial investments, may use or provide cash
over the fiscal year. Increases in debt are a source of cash,
while investments in tangible capital assets and the net assets
of hospitals, school boards and colleges are uses of cash.
• Notes and schedules provide further information and detail on
the items in the various statements and form an integral part
of the Consolidated Financial Statements. The notes also
include a summary of the significant accounting policies that
guide the financial statement reporting.
Supporting Volumes
• Volume 1 contains ministry statements and detailed schedules
of debt and other items. The ministry statements reflect the
financial activities of the government's ministries on the
accrual basis of accounting, providing a comparison of
appropriations with actual spending. Ministry expenses include
all expenses that are subject to appropriation approved by the
Legislative Assembly, but exclude adjustments arising from
consolidation of government organizations whose expenses are
not appropriated.
• Volume 2 contains the financial statements of significant
provincial corporations, boards and commissions that are part
of the government's reporting entity, and other miscellaneous
financial statements.
• Volume 3 contains detailed schedules of ministry payments.
STATEMENT OF RESPONSIBILITY
The Consolidated Financial Statements are prepared by the Government of
Ontario in compliance with legislation, and in accordance with accounting
principles for governments recommended by the Public Sector Accounting
Board (PSAB) of the Canadian Institute of Chartered Accountants (CICA)
and, where applicable, the recommendations of the Accounting Standards
Board (AcSB) of the CICA.
The Financial Statement Discussion and Analysis section of this Annual
Report is also prepared by the Government of Ontario in compliance with
legislation and in accordance with the financial reporting principles
and practices recommended for governments by PSAB.
The government accepts responsibility for the objectivity and integrity
of these Consolidated Financial Statements and the Financial Statement
Discussion and Analysis.
The government is also responsible for maintaining systems of financial
management and internal control to provide reasonable assurance that
transactions recorded in the Consolidated Financial Statements are
within statutory authority, assets are properly safeguarded and
reliable financial information is available for preparation of these
Consolidated Financial Statements.
The Consolidated Financial Statements have been audited by the Auditor
General of Ontario and his report appears on page 31 of this document.
/s/ Colin Andersen /s/ Philip Howell /s/ Bruce L. Bennett
-------------------- ------------------------- ----------------------------
Colin Andersen Philip Howell Bruce L. Bennett, CA
Deputy Minister Associate Deputy Minister Assistant Deputy Minister
and Provincial Controller
August 7, 2007 August 7, 2007 August 7, 2007
FINANCIAL STATEMENT DISCUSSION
AND ANALYSIS
HIGHLIGHTS
• The Province's financial results continued to improve, moving
to a $2.3 billion surplus position in the year ended March 31,
2007, from a $5.5 billion deficit in 2003-04.
[column chart shows surplus numbers from 2005-2007]
• The 2007 Budget concluded that Ontario could achieve five
consecutive surpluses from 2005-06 through to 2009-10, depending
on 2007-08 results. This Annual Report confirms a second consecutive
surplus, for the 2006-07 fiscal year. The surplus for 2006-07
includes a number of one-time revenue gains that are not expected
to carry forward into future years. Nevertheless, the Province's
updated fiscal plan for 2007-08 puts Ontario clearly on track to
achieve five consecutive surpluses.
• Improved financial management and strong fiscal performance
have allowed the Province to eliminate the annual deficit
earlier than its original goal, while at the same time improving
services and making major investments in critical infrastructure.
• Total spending on the core areas of education, health care and
children's and social services grew by $11.7 billion between
2003-04 and 2006-07. At the same time, the Province has made
major investments in new buildings and facilities for hospitals,
schools, colleges and universities, transportation and public
transit systems, and other key assets.
• The Province's investments in core services and infrastructure
have brought real and measurable change to the lives of Ontario's
people: children and young people are doing better in school,
waiting times for key medical procedures are shorter, our health
care system is more responsive and effective, and stewardship over
Ontario's air and water is stronger.
----------------------------------------------------------------------------------------------------------------
2006-07 Actual Results Against Budget Plan Table 1
($ Billions)
- ----------------------------------------------------------------------------------------------------------------
2006-07 2006-07
Budget Actual Change
----------------------------------------------------
Revenues 85.7 90.4 4.7
Expenses
Programs 77.7 79.3 1.6
Interest on Debt 9.4 8.8 (0.6)
----------------------------------------------------
Total Expenses 87.1 88.1 1.0
----------------------------------------------------
Annual Surplus (Deficit)(1) (1.4) 2.3 3.6
----------------------------------------------------------------------------------------------------------------
(1) A reserve of $1.0 billion included in the Budget plan is not shown in the above results, as it was not
needed during the year.
Note: Budget numbers and related variances may not add due to rounding.
- ----------------------------------------------------------------------------------------------------------------
• Revenues exceeded the level expected in the 2006-07 fiscal
plan presented in the March 2006 Budget by $4.7 billion. The
change reflected an unanticipated and time-limited increase in
federal transfer payments of $0.5 billion and a one-time gain
of $0.6 billion related to the initial public offering of
Teranet. It also included $1.4 billion in one-time adjustments
to tax revenues for earlier years. Taxation revenues relating
to 2006-07, income from government business enterprises and
other revenue sources were also stronger than projected.
• The government used about one-third of the additional revenues
to increase overall spending on government priorities by
$1.6 billion. The remaining two-thirds of the revenue increase
went to further reducing the Province's accumulated deficit.
• The annual surpluses of $2.3 billion this year and $0.3 billion
for 2005-06 have reduced the accumulated deficit by a total of
$2.6 billion.
• Much of the information underlying these positive final
results was discussed earlier this year in the 2007 Budget,
which provided interim results for 2006-07. The change from
the interim estimate of a $0.3 billion surplus reflects new
information about revenues, as well as final expenses that
were lower than estimated in the interim results.
• The results of the past four years and the improved outlook
for future years underscore the wisdom of the government's
careful and disciplined approach to financial management. This
approach will continue to protect Ontario's fiscal health —
and benefit its citizens — going forward.
ANALYSIS OF 2006-07 RESULTS
The analysis that follows compares the actual 2006-07 results to
the plan presented in the Budget of March 23, 2006.
--------------------------------------------------------------------------------------------------------
2006-07 Operating Results against Budget Plan Table 2
($ Billions)
- --------------------------------------------------------------------------------------------------------
2006-07 2006-07
Budget Actual Change
--------------------------------------------
Revenues
Taxation 61.3 64.3 3.0
Federal transfers 13.6 14.0 0.5
Income from government business enterprises 3.9 4.2 0.3
Other non-tax revenue 7.0 7.9 0.9
--------------------------------------------
Total Revenues 85.7 90.4 4.7
Expenses
Health 35.5 35.7 0.2
Education, postsecondary and training 17.2 17.4 0.2
Children's and social services 10.2 10.4 0.2
Other programs 14.6 15.8 1.1
--------------------------------------------
Total Program Expenses 77.7 79.3 1.6
Interest on debt 9.4 8.8 (0.6)
--------------------------------------------
Total Expenses 87.1 88.1 1.0
--------------------------------------------
Surplus (Deficit) (1.4) 2.3 3.6
--------------------------------------------------------------------------------------------------------
Note: Budget numbers and related variances may not add due to rounding.
- --------------------------------------------------------------------------------------------------------
Revenues increased by $4.7 billion over the amount in the Budget plan
of March 2006. The Province used about one-third of the additional
revenues to increase overall program expenses by $1.6 billion to
support its priorities. The remaining two-thirds of the additional
revenues went to further reducing the accumulated deficit, as did
savings of $0.6 billion in expense for interest on debt. The Province
achieved a $2.3 billion surplus for the year, instead of the $1.4 billion
deficit originally forecast in March 2006.
2006-07 Revenues
The increase in revenues above plan was due mainly to stronger taxation
revenues relating to 2006-07, adjustments in tax revenues relating to
earlier years, a one-time gain on the initial public offering of
Teranet, an unanticipated and time-limited increase in federal transfer
payments, and higher income from government business enterprises.
Taxation revenues, the largest component of revenue, were $3.0 billion
higher than expected in the 2006 Budget plan, mainly because of higher
Personal Income Tax and Corporations Tax revenues. Of this, $1.4 billion
reflected adjustments relating to earlier years to both Personal Income
Tax and Corporations Tax revenues, which does not carry forward into
future years.
• Personal Income Tax revenue was $2.0 billion above plan.
During 2006-07, the processing of tax returns for 2005 and
other earlier years increased revenues related to those years
by $1.2 billion. The increases were recorded as higher revenue
in 2006-07, as was an upward adjustment of $0.1 billion
related to a re-estimate by the federal government of
Ontario's tax entitlement for 2003. The rest of the increase
reflects stronger revenues for 2006-07 than forecast in the
2006 Budget plan.
• Corporations Tax revenue was $1.0 billion above the 2006 Budget
plan. Final 2006 tax remittances for most Ontario corporations,
which were received towards the very end of the 2006-07 fiscal
year, were particularly strong. As well, Corporations Tax revenue
for 2006-07 reflected an adjustment of $0.1 billion resulting
from an underestimation of 2005-06 figures.
• Tobacco taxes were $249 million lower than projected. This
decrease was offset by higher revenues from other taxes,
including retail sales tax, employer health tax, land transfer
tax and mining tax.
Transfer payments from the federal government were $454 million higher
than anticipated, largely because of time-limited payments announced in
the 2006 federal budget after Ontario's 2006 Budget was presented. The
funds were contingent on the federal government's final results for
2005-06 as reported in its public accounts in the fall of 2006. This
arrangement created considerable uncertainty well into Ontario's fiscal
year, making effective allocation of the funds more difficult.
Income from government business enterprises was $276 million higher
than expected in the 2006 Budget plan. The most significant gain was a
$202 million increase from plan in the income of Ontario Lottery and
Gaming, mainly reflecting stronger performance of commercial and
charity casinos, lotteries and racetracks.
Other non-tax revenue, which consists mainly of fees, licences and
various sales and rentals, was $901 million higher than expected. A
one-time gain of $573 million resulted from the initial public offering
in 2006 of Teranet, the company that operates the electronic land
registration system in Ontario. Although the Province sold its 50 per
cent interest in Teranet in 2003, it retained the right to share in the
value of any future sale.
2006-07 Expenses
The additional revenues provided the government the opportunity to
invest additional funds in high-priority program areas.
• Investments in public transit and transportation included an
increase of $769 million from plan to reflect the Province's
commitment to cleaner air and reduced greenhouse gas emissions.
The additional spending included $352 million to municipalities
for public transit infrastructure. A further $346 million went
to the City of Toronto for the Toronto Transit Commission and
the replacement and refurbishment of its vehicles.
• In the health care sector, expenses rose by $182 million over
the $35.5 billion planned in the 2006 Budget. Investments were
made to reduce wait times, cover higher costs for drug
programs, and implement the Emergency Department Action Plan.
As well, hospitals received more funds to improve efficiency
and address operational pressures. In some areas, actual
expenses were lower than planned. For example, the hospital
sector ended the fiscal year with a budgetary surplus.
• Additional spending on agriculture and rural communities
provided farmers with a one-time increase of $96 million in
assistance to match the federal Canadian Agricultural Income
Stabilization Inventory Transition Initiative. Rural
municipalities got an additional $140 million to meet pressing
infrastructure needs such as improving water and wastewater
systems, roads and bridges.
• Municipalities were provided with an increase of $127 million
in capital grants for affordable housing initiatives and $10
million for brownfield initiatives.
• In the children's and social services sector, an additional
$153 million was provided to help deliver social assistance,
child protection and developmental services and to allow
service agencies to make needed capital investments.
• Provincial universities received additional one-time funding
of $210 million.
The composition of final program expenses in 2006-07 reflected the
Budget plan and these new initiatives:
[Pie Chart shows Expenses for 2006-07]
Support for the core areas of health care, education, postsecondary
education and training, and children's and social services all grew
in 2006-07 over the previous year. Government spending in these and
other areas is focused on continuing to achieve measurable improvement
for people in Ontario.
Families and their children are benefiting from real improvements:
• Almost all children in junior kindergarten to Grade 3 are now
in classes of 23 or fewer students. In 2006-07, 65 per cent
were in classes of 20 or fewer students — more than double
the 31 per cent share in 2003-04.
• Students in Grades 3 and 6 are doing better at reading,
writing and math. The most recent results, for 2005-06, show
an increase in the share of students performing at or above
the standard on the provincial reading and math test, from
54 per cent in 2002-03 to 64 per cent in 2005-06.
• The high school graduation rate increased to 73 per cent in
2005-06 from 68 per cent in 2003-04. This means that 12,000
more students are graduating.
• Full-time enrolment in postsecondary education has increased
by about 86,000 students since 2002-03.
• Families have improved access to quality child care through
the creation of almost 22,000 new licensed child care spaces
across the province over the past two years, including almost
15,000 new spaces in 2006-07.
• The number of children with autism spectrum disorder receiving
intensive behavioural intervention has more than doubled since
2003, with over 1,100 children receiving these services in
2006-07.
The health of Ontarians is benefiting from real improvements:
• Wait times have been shortened for five key health services —
MRI/CT scans, hip and knee joint replacements, selected cancer
surgeries, selected cardiac procedures and cataract surgeries.
Regularly updated information on reduced wait times is
available at www.ontariowaittimes.com. The 2007 Budget added
pediatric surgeries to Ontario's wait time strategy.
• The formation of 150 family health teams, in which family
doctors, nurses, nurse practitioners and other health
professionals work in partnership, is improving access to
primary health care and increasing its effectiveness. The
number of Ontarians with regular access to a family doctor has
increased by 500,000 since 2003.
• The government is increasing access to health care professionals
by moving forward on: hiring 8,000 new nurses since 2003;
increasing first-year medical school spaces by 23 per cent; and
expanding family medicine training positions by 70 per cent.
• New accountability agreements with hospitals have set funding
expectations and clear performance targets, including a
commitment to the principle of balanced budgets, to help
ensure a sustainable hospital system for Ontario.
• The government is moving forward with more than 100 health
care projects to modernize, expand and upgrade health care
facilities across the province.
• Since 2004, 1.8 million children and young people have
benefited, free of charge, from three new vaccines against
meningitis, invasive pneumococcal disease and chickenpox.
• Between 2003-04 and 2005-06, the most recent year for which
data are available, the share of Ontarians aged 15 and older
who reported smoking fell from 20 per cent to 16 per cent.
Ontario's environment is benefiting from real improvements:
• Between 2003 and 2006, the reduction in electricity generation
from coal plants resulted in a 29 per cent decrease in carbon
dioxide emissions, the equivalent of taking two million cars
off the road for a year. Over the same period, coal plants'
emissions of sulphur dioxide fell by 44 per cent and nitrogen
oxides by 46 per cent.
• In 2003, there were only 10 windmills in the province. More
than 700 are now in place or contracted for, and one of the
largest solar farms in the world is being developed in Ontario.
• Through the Clean Water Act, Ontario enjoys some of the
best-protected drinking water in North America.
• Ontario is permanently protecting 1.8 million acres of green
space on the outskirts of cities through its 2005 greenbelt
legislation.
• Since becoming law in 2005, the Places to Grow Act has helped
ensure sustainable growth in Ontario. The first growth plan,
for the Greater Golden Horseshoe area, was released in June
2006 after extensive consultation with stakeholders and
communities and is now being put into action.
The Province has achieved these results while meeting another of its
commitments: modernizing government and making it more efficient. It
has reduced ongoing expenses by $806 million a year through program
reviews, exceeding its target of $750 million.
2006-07 Infrastructure Investments and Borrowing Program
Under the ReNew Ontario initiative, Ontario has committed to invest
more than $30 billion in infrastructure with its partners by 2010 to
improve quality of life and build on the province's economic advantages.
The focus is on such priority areas as health and education, as well as
investments to strengthen Ontario's communities and economy.
In 2006-07, as part of ReNew Ontario, the Province provided $6.4 billion
for infrastructure — highways, hospitals, schools, college and
university buildings and equipment, and water and wastewater systems —
across Ontario. This included $2.6 billion in expenditure on tangible
capital assets owned by the Province and by hospitals and colleges. The
Province also provides capital-related funds to school boards, which
are consolidated in its financial statements.
In addition, the Province's expenses included other infrastructure
expenditures and funds for capital purposes provided to universities,
municipalities, social service agencies and other organizations that
deliver important public services. These included investments in water
and wastewater systems and other infrastructure to protect the
environment. These investments totalled $3.9 billion and were reflected
in the Province's operating statement. The increase in these expenses
of $1.1 billion over the Budget plan reflected the government's
decision to provide additional funds for capital projects to its
transfer partners because of strong in-year financial results.
--------------------------------------------------------------------------------------------------------------
Investments in Infrastructure Table 3
($ Billions)
--------------------------------------------------------------------------------------------------------------
2006-07 2006-07
Budget Actual Change
--------------------------------------------------------
Transportation 2.4 3.1 0.7
Health 0.5 0.6 -
Education, postsecondary and training 1.2 1.1 -
Other(2) 1.2 1.6 0.4
--------------------------------------------------------
Totals 5.3 6.4 1.1
---------------------------------------------------------------------------------------------------------------
(1) These totals consist of the Province's own investments in capital assets; transfers for capital purposes to
municipalities and universities; expenditures for servicing capital-related debt of schools; expenditures
for the repair and rehabilitation of schools; and other infrastructure expenditures. Transfers for
capital-related purposes and other infrastructure expenditures are recorded as expenses in the Province's
Statement of Operations.
(2) "Other" includes expenditures for water and wastewater systems and environmental capital projects; municipal
capital projects; courthouses and other capital spending in the justice sector; cultural institutions; and
other public infrastructure.
Note: Budget numbers and related variances may not add due to rounding.
---------------------------------------------------------------------------------------------------------------
Like a family buying a house, the Province borrows to invest in major
assets that will provide decades of service to Ontarians. The Fiscal
Transparency and Accountability Act defines provincial debt as the
Province's total liabilities less its total assets, which include
highways, bridges, government buildings and the net assets of
hospitals, colleges and school boards. This approach, in which the
impact of borrowings to invest in capital is offset by the value of the
assets, is similar to the way families and individuals net the amount
of their mortgage against the value of their home to calculate net worth.
In accounting terms and on the Province's financial statements, the
difference between total liabilities and total assets is referred to as
the "accumulated deficit" rather than provincial debt. Accumulated
deficit, or provincial debt, decreased by $2.4 billion during 2006-07,
from $109.2 billion as at March 31, 2006 to $106.8 billion as at
March 31, 2007. This improvement was made up of the surplus of $2.3 billion
plus an adjustment of $0.1 billion that is discussed in Note 4 to the
financial statements.
Rating agencies and investors look at the Province's net debt, which
equals its total liabilities less its financial assets, in assessing
creditworthiness. Net debt decreased by $0.8 billion to $141.1 billion
during 2006-07. This improvement reflected the Province's $2.3 billion
surplus, partially offset by increased net investment of $1.2 billion
in its own tangible capital assets and an increase of $0.3 billion in
the net assets of hospitals, school boards and colleges.
The Province's "total debt," on the other hand, simply records all
borrowings. In 2006-07, the bulk of the funds for the Province's
investment in capital assets were provided by a net increase of $2.0 billion
in total debt, which stood at $157.3 billion as at March 31, 2007.
GOVERNMENT MANAGEMENT OF FINANCES
A major responsibility of governments is to manage public finances in a
responsible way. Good financial management starts with a sound budget.
The budget sets out a fiscal plan that reflects government priorities
in the allocation of public finances.
Financial management must also address changing circumstances as the
fiscal year unfolds. If revenues are less than expected, the
government's flexibility to respond is limited. This problem can be
compounded because some costs tend to increase as slower economic
activity causes revenues to fall. It is therefore good public policy to
ensure that fiscal targets are still achievable even if outcomes are
worse than expected. This starts by using cautious forecasts for
revenues and building other elements of prudence into the budget plan.
Prudence in the 2006-07 Plan
The 2006 Budget followed the government's practice of outlining the
major risks to the plan and their potential impact, with detailed
information appearing on pages 85 through 89 of the 2006 Budget papers.
To help protect the plan from the unexpected negative impacts that
might result from these or other risks, the Budget plan for 2006-07
included these prudent elements:
• Revenue projections were based on a projection of real GDP
growth of 2.3 per cent in 2006, as opposed to the
private-sector average projection of 2.6 per cent.
• Contingency funds for both operating and capital that together
totalled about 1.3 per cent of total expected expense provided
protection against higher spending due to unforeseen events.
• The forecast for interest on debt expense was deliberately
cautious (Note 3 to the Consolidated Financial Statements
discusses the management of interest-rate risk and other risks
relating to the Province's borrowing program).
• A reserve, separate from the contingency funds, of $1.0 billion
was included to protect against unforeseen adverse events.
Ministries tend to spend below budget, since program spending above
plan requires approval. To reflect this, the Budget includes a global
amount each year for spending below plan. The amount of such year-end
savings in the 2006 Budget plan was projected at $700 million, or about
0.8 per cent of total expected spending.
Pre-Election Report
In 2007, for the first time, the Budget was followed by the
Pre-Election Report on Ontario's Finances, as required by the Fiscal
Transparency and Accountability Act for years in which a general
election is scheduled. As also required by the act, the Auditor General
reviewed the report, which outlined the approach to planning used by
Ontario for several years.
The Auditor General observed that in addition to being required by the
act, prudent financial planning in Ontario reflected the recommendations
of an independent panel in 1995 and "has been the norm over the last
decade — in nine of the last 10 years, the government exceeded
its original fiscal targets and therefore had more funds available at
year-end than what was expected."
The Auditor General's review of the Pre-Election Report concluded that
the revenue and spending estimates for the period it covered and the
assumptions underlying them were reasonable. Much of the discussion of
revenue forecasting focused on taxation, which is the largest component
of revenues. An assessment by an independent expert of the models and
methods used in forecasting revenues from four major taxes concluded
that these were consistent with what is considered to be best practice
among revenue forecasters.
In-Year Financial Management
During 2006-07, the Ontario Government managed both upside and downside
risks to the fiscal plan. After the first quarter, it revised its
deficit projection from the $1.4 billion in the Budget to $0.9 billion,
if the reserve were not needed, to reflect new information.
In response to concerns about the potential impact of slower economic
growth, the government announced a stimulus package in the Fall
Economic Outlook and Fiscal Review, released in October 2006. The
measures focused on four key areas: providing services and programs to
help job-threatened or laid-off workers; fast-tracking infrastructure
projects to generate immediate economic activity and job creation;
boosting interprovincial trade; and launching a new campaign to
encourage Ontarians to vacation in Ontario. Some of the funds for these
measures came from the net proceeds of the Teranet initial public offering.
Late in the fiscal year, tax processing data and other information
suggested revenues would be higher than expected. The Province actively
examined options for additional investments in strategic areas.
Ministries had been asked to identify potential initiatives well before
year-end to ensure time for suitable analysis. Details on all in-year
approvals are included in Volume 1 of the Public Accounts. The Province
continues to work with the Auditor General, its transfer partners and
ministries to improve the openness and transparency of processes for
deciding on year-end grants. An updated directive on transfer payment
accountability, clarifying the approvals process for grants and
providing controls in line with the size of the allocation, also
supports that goal.
To ensure that future spending would be equal to or less than what a
prudent forecast of ongoing revenues could support, the Province did
not use one-time or time-limited revenues for initiatives with
significant expense impacts that went beyond the availability of the
funding source.
Interim Results
The Province provided interim estimates of results for 2006-07 in the
2007 Budget, tabled in March of this year.
At the time the 2007 Budget was finalized on March 16, the interim
estimate of total revenues was $3.4 billion higher than in the Budget
plan. The improvement over plan grew to $4.7 billion in final results,
reflecting new information unavailable at the time of the 2007 Budget.
• Revenues from Corporations Tax were $369 million higher in the
final results than the interim numbers. The variance between
the interim estimates and final results arose from stronger
tax receipts after the 2007 Budget was finalized. Personal
Income Tax revenues were $370 million higher than in the
interim estimate, reflecting new information from the
processing of 2006 tax returns. Taxation receipts from all
other sources increased by $81 million.
• As well, income from investment in government business
enterprises was $208 million above the interim numbers.
Revenue from other sources was $368 million higher, largely
because of higher recoveries by ministries of previous years'
expenses.
• These increases were somewhat offset by lower receipts of
federal government transfers than estimated in interim
results, leaving a net increase of $1.3 billion in total
revenues against interim figures.
Similarly, the receipt of additional information after the 2007 Budget
allowed greater accuracy in the estimate of spending for the year.
Total spending by ministries and consolidated organizations such as
hospitals, colleges and school boards was $705 million lower in final
results than the interim estimate.
------------------------------------------------------------------------------------------------------------------
Comparison of 2006-07 Interim and Actual Results Table 4
($ Billions)
- ------------------------------------------------------------------------------------------------------------------
2006-07 2006-07
Interim Actual Change
----------------------------------------------------
Revenues
Personal Income Tax 23.3 23.7 0.4
Corporations Tax 10.5 10.8 0.4
Other taxation 29.7 29.8 0.1
Government of Canada 14.2 14.0 (0.1)
Income from government business enterprises 4.0 4.2 0.2
Other 7.5 7.9 0.4
----------------------------------------------------
Total Revenues 89.1 90.4 1.3
Expenses
Programs 80.0 79.3 (0.7)
Interest on debt 8.8 8.8 -
----------------------------------------------------
Total Expenses 88.8 88.1 (0.7)
----------------------------------------------------
Annual Surplus(1) 0.3 2.3 2.0
-------------------------------------------------------------------------------------------------------------------
(1) A reserve of $1.0 billion included in the Budget plan is not shown in the above results, as it was not needed
during the year.
Note: Interim numbers and related variances may not add due to rounding.
- -------------------------------------------------------------------------------------------------------------------
Impact on Future Planning Periods
Ontario is not alone in achieving better results than expected in
recent years. All provinces that have released their public accounts
for 2006-07 have reported better revenue results than expected. In
2005-06, the public accounts of all provinces and the federal
government showed they exceeded their budget plans.
Like other Canadian governments, the Province must assess the extent to
which the outcomes of a single year might affect future years.
Developments since the 2007 Budget confirm that Ontario is clearly on
track to achieve five consecutive surpluses. The Province is projecting
a balanced budget in 2007-08, even if the reserve is needed. The
updated medium-term plan takes into account the portion of higher
revenue from 2006-07 that carries forward into 2007-08 and the remaining
years covered by the plan, and reflects the fact that most of the
increase is being invested in priority program areas.
In his review of the Pre-Election Report, the Auditor General noted
that because of prudent planning practices, "it is quite possible that
the estimated deficit of $400 million for the 2007/08 fiscal year could
turn out to be a surplus and the estimated surpluses of $300 million
for 2008/09 and $400 million for 2009/10 could approach $1 billion."
The medium-term fiscal plan remains consistent with that view.
[Column chart shows actual and projected numbers from year 2005 to 2010.jpg]
At the same time, the Auditor General's review identified a strengthening
Canadian dollar as a risk to the economic outlook. The review concluded
that the flexibility provided by prudent planning should more than offset
any impact. It was noted that this "underlines the wisdom of the practice
of building a healthy dose of prudence into the budget-revenue projections."
In line with this view, the Province remains prudent in its medium-term
fiscal targets because of the greater fiscal and economic risks and
uncertainties that exist further into the future. In addition to the
appreciating Canadian dollar, these include higher oil prices and
interest rates and a slowing U.S. economy. The Province will provide
a financial update as of the end of the second quarter.
TEN-YEAR OVERVIEW OF FINANCIAL RESULTS
[Line chart shows progress Revenues and Expenses in 10 years]
The government committed in 2003 to returning Ontario's fiscal plans to
a sustainable path. The prudent approach of the past four years has
achieved that goal, as the Province recorded surpluses in 2005-06 and
2006-07, eliminating the deficit ahead of schedule. An updated fiscal
plan has projected a balanced budget for 2007-08, for a third
consecutive surplus.
The commitment to financial sustainability was a response to a
structural deficit that emerged as a result of cuts to taxation rates
starting in the mid-1990s. Initially, taxation revenues increased
because of continuing economic growth. As rate cuts continued and
economic growth slowed, however, revenues flattened. Taxation revenues,
the largest ongoing component of revenues, fell by $1.5 billion between
2000-01 and 2001-02.
Slower economic growth put pressure on expenses, which had been tightly
constrained for much of the period. The mismatch between expense and
revenue growth became most pronounced in 2003-04, when assumed revenues
did not materialize and spending rose above plan, resulting in a
deficit of $5.5 billion.
The government took steps to improve the management of financial risks
and the ability of fiscal plans to absorb unexpected shocks. It
introduced the Fiscal Transparency and Accountability Act, which
required Budget plans to include a reserve against adverse unforeseen
events. In line with the requirements of the act, the government put in
place a fiscal recovery plan to eliminate the deficit. The plan was
based on a disciplined approach to spending, making government more
efficient, focusing on results in key areas, and ensuring a sustainable
base for taxation revenues. This analysis focuses in particular on the
outcomes of that plan.
The outcome of careful financial management has been a steady
improvement in results from operations, including the second straight
surplus recorded in the fiscal year just ended. The updated fiscal
recovery plan presented in the 2005 Budget projected that the
Province's deficit would be eliminated by 2007-08 if the budgetary
reserve was not needed and no later than 2008-09 even if it was. Better
financial results helped the Province to eliminate the deficit in
2005-06, well ahead of schedule, while allowing spending to grow at an
average annual rate of 6.1 per cent. This was well below the average
annual growth rate in revenues of 9.7 per cent over the same period.
When revenues can accommodate the expected growth in expenses over
time, a fiscal plan is sustainable. Many expenses for government arise
from important public needs that must be met on an ongoing basis, such
as health care, social programs and education. The government's actions
over the past three years have strengthened financial management by
relying on only those revenues known to be sustainable to fund major
ongoing public needs. This approach will continue.
Revenues: 10-Year Overview
[column chart shows numbers for Revenue composition in millions]
Revenues have grown in recent years largely because of economic growth,
changes in taxation policies, increased transfer payments from the
federal government, and changes in the electricity sector.
The largest element in the Province's revenues is taxation, currently
accounting for a roughly 70 per cent share of the total. Tax revenue is
generally sensitive to economic conditions, and the 5.3 per cent
average annual increase over the past 10 years is closely in line with
economic growth, as measured by nominal GDP, of about the same rate.
While taxation revenue responds to economic changes, its components
respond in differing ways. Corporations Tax tends to be the most
volatile. This component fell sharply in 2001-02 and remained stagnant
for the next two years, reflecting difficult economic conditions and
tax-rate cuts. It has rebounded over the past three-year period,
growing at a faster rate than the economy.
Personal Income Tax, Retail Sales Tax and other taxation revenues were
generally flat from 1999-2000 through to 2003-04. While not as volatile
as Corporations Tax, growth in Personal Income Tax revenues has
accelerated in the past three years, also contributing to the improved
revenue picture. Personal Income Tax is progressive — that is, taxable
income is subject to higher taxation rates as it rises — so revenues
from this source grow faster than incomes overall. Personal Income Tax
revenues have also been boosted by strong growth in capital gains
income and improved tax administration practices by the Canada Revenue
Agency. The growth in other taxation revenues after 2003-04 also
reflects in part the introduction of a health care premium in 2004.
Transfer payments from the federal government have grown faster than
overall revenues in the past several years. By 1998-99, after major
cuts in previous years, federal transfer payments amounted to only
8.1 per cent of the Province's revenues.
The federal government moved into a surplus position in 1997-98, and
only after that point began restoring transfers to provinces and
territories. It frequently provided these increases by using part of
its year-end surplus to allocate additional transfers to the provinces.
This generally happened after provincial fiscal plans were announced.
As well, these additional transfers were of limited term and were often
for specific purposes consistent with federal priorities.
It is much more difficult for the Province to rely on transfers of this
type for implementing its fiscal plan and supporting its own priorities
over the long term. So, while federal transfers reached 15.5 per cent
of the Province's revenues by 2006-07, much of the increase was
provided on a less certain basis than ongoing transfers, such as the
Canada Health Transfer and Canada Social Transfer.
Income from government business enterprises, which include Ontario
Power Generation Inc., Hydro One Inc., the Liquor Control Board of
Ontario and Ontario Lottery and Gaming, has generally reflected
economic conditions as well as factors specific to the sector in which
each enterprise operates. For example, as of April 1, 2005, Ontario
Power Generation began receiving regulated prices on the output from
some of its assets, which has tended to improve its net income.
In total, revenue from all sources has grown at a faster rate than the
economy over the past 10 years — 6.2 per cent, as opposed to 5.2 per cent.
This rate, however, reflects several factors on which the Province cannot
rely over the long term, such as transfers from the federal government
reflecting its year-end surpluses, and, in 2006-07, one-time adjustments
and gains like the Teranet transaction.
Expenses: 10-Year Overview
[3D column chart shows expense composition numbers]
Increased revenues over the past three years have allowed the Province
to focus on funding its priorities in the largest sectors — health,
education, postsecondary education and training, and children's and
social services. Together, these sectors represent almost
three-quarters of the Province's expenses. It has also made major
investments in public transit and other infrastructure needs through
transfers to municipalities and other public organizations.
The largest expense area is health care, which comprises the expenses
of hospitals, payments to physicians and other practitioners, drugs and
other health-related programs. Spending on health care has grown fairly
consistently over the past 10 years. It reached $35.7 billion in
2006-07, or about 45.0 per cent of program expenses.
Access to many health care programs is provided through a government
statute or regulation to anyone who meets eligibility criteria. For
example, all Ontario residents over the age of 65 are eligible for drug
benefits. Programs must accommodate the public's need for such
services, which has contributed to the continuing growth of the sector.
Since 2003-04, the government has addressed the needs driven by the
spending constraint of previous years and has invested in key
priorities. In particular, it budgeted for growth in expenses for
schools, postsecondary education and the needs of families. Because
results have been better than planned over that period, the extra funds
have been used to increase those commitments and make strategic
investments in other priorities.
Investing in Ontario's Infrastructure and Reducing Provincial Debt
One of the Province's most important activities is investing in
infrastructure that is critical to economic growth and quality of life:
public transit and other transportation systems, hospitals, colleges,
schools and universities. The ReNew Ontario program, launched in 2005,
is on track to meet its five-year investment goal of $30 billion.
Over the past two years, the Province has invested more than $12 billion,
directly and through transfers to its partners in the broader public
sector, to address major gaps in infrastructure across Ontario.
Investments in Ontario's electricity infrastructure are essential to
support and enhance the province's economic competitiveness and high
quality of life. Since 2003, about 3,900 megawatts of new electricity
generation, conservation and demand management have come online. In
addition, about 7,200 megawatts of new electricity generation projects
are underway. New generation sources include 18 electricity contracts
with the Province's Ontario Power Authority for renewable energy
projects to provide a total of 1,300 megawatts of new supply, as well
as 98 contracts for more than 500 megawatts under the Renewable Energy
Standard Offer Program.
These generation projects also include investments by the Province's
electricity generation corporation, Ontario Power Generation Inc. In
addition, the Province's electricity transmission and distribution
corporation, Hydro One Inc., is investing to maintain and improve its
wires infrastructure. In total, Ontario Power Generation and Hydro One
invested more than $5.0 billion to maintain and expand their capital
assets from 2003-04 to 2006-07.
As noted, the Province borrows to invest in capital assets, with the
value of the assets providing an offset to the borrowing when looking
at provincial debt (or accumulated deficit, as it is known on the
financial statements). Provincial debt changes from year to year, with
annual surpluses from government operations having the effect of
decreasing it, while annual deficits increase it.
The accumulated deficit or provincial debt currently stands at its
lowest point in the past 10 years. At the end of the 1997-98 fiscal
year, it was $112.7 billion. It increased the following year because of
the Province's operating deficit. The accumulated deficit jumped
sharply in 1999-2000, the year in which the Province consolidated about
$20 billion in stranded debt from the electricity sector.
In 2002-03, the Province adopted the recommendations of the Public
Sector Accounting Board (PSAB), the Canadian authority on government
accounting, related to accounting for its tangible capital assets in
the Public Accounts. This reduced the accumulated deficit by almost
$14 billion, as the value of the Province's infrastructure was
recognized in its books.
The accumulated deficit fell by a significant amount again in 2005-06,
when the Province followed guidance from PSAB to consolidate Ontario's
hospitals, school boards and colleges in its accounts. The decrease in
accumulated deficit was $16.6 billion, reflecting past investments in
these sectors.
These major changes were in addition to the normal year-by-year impact
on the accumulated deficit of annual deficits and surpluses. Between
1997-98 and 2003-04, the cumulative impact of deficits less surpluses
was an increase in the accumulated deficit of $8.4 billion. The
accumulated deficit rose by $1.5 billion in 2004-05. It has fallen,
however, in the past two fiscal years as a result of surpluses of
$298 million in 2005-06 and $2.3 billion in 2006-07, and stood at
$106.8 billion on March 31, 2007.
The ratio of provincial debt to GDP (or accumulated deficit to GDP in
accounting terms) is a key measure of future demands on the economy to
pay for past government decisions. The ratio is now 19.1 per cent, down
considerably from 31.4 per cent 10 years ago. This decline is due in
part to the accounting changes discussed above, and reflects that the
rate of growth in the accumulated deficit has been slower, on average,
than the growth in the economy. The decline has been especially strong
over the past three years, in part because of the two consecutive
surpluses.
The Value of a Responsible Approach
The strong results of the past several years and the improved outlook
for the future illustrate the value of responsible financial
management. Prudent planning often provides better-than-expected
results that give government more fiscal flexibility, which allows the
government to make additional investments in important priorities,
including programs and the reduction of accumulated deficits.
Responsible financial management over the past four years based on
prudent and disciplined planning has turned Ontario's fiscal situation
around. The outlook for five consecutive budgetary surpluses will
reduce future demands on Ontario's resources. But the results go far
beyond that benefit. They also include better health care, a stronger
education system, more support for families, and investments in
infrastructure to help Ontario build on its economic advantages.
CONSOLIDATED
FINANCIAL
STATEMENTS
Auditor's Report
To the Legislative Assembly of the
Province of Ontario
I have audited the consolidated statement of financial position of the Province of Ontario as at March 31, 2007
and the consolidated statements of operations, change in net debt, and cash flow for the year then ended. These
financial statements are the responsibility of the Government of Ontario. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require
that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. The audit also includes assessing the accounting principles used and significant
estimates made by the Government, as well as evaluating the overall financial statement presentation.
In my opinion, these consolidated financial statements present fairly, in all material respects, the financial
position of the Province as at March 31, 2007 and the results of its operations, the changes in its net debt,
and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
/s/ Jim McCarter
--------------------------
Toronto, Ontario Jim McCarter, CA
July 23, 2007 Auditor General
Licensed Public Accountant
Province of Ontario
Consolidated Statement of Operations
- ------------------------------------------------------------------------------------------------------------------------
2006-07 2006-07 2005-06
Budget(1) Actual Actual
($ Millions)
- ------------------------------------------------------------------------------------------------------------------------
Revenues (Schedule 1)
Personal Income Tax 21,671 23,655 21,041
Retail Sales Tax 16,165 16,228 15,554
Corporations Tax 9,845 10,845 9,984
Employer Health Tax 4,314 4,371 4,197
Gasoline and Fuel Taxes 3,045 3,033 3,010
Ontario Health Premium 2,551 2,589 2,350
Other Taxes 3,683 3,589 3,781
- ------------------------------------------------------------------------------------------------------------------------
Total Taxation 61,274 64,310 59,917
Government of Canada 13,582 14,036 13,251
Income from Investment in Government Business Enterprises (Schedule 8) 3,920 4,196 4,308
Other 6,954 7,855 6,749
- -----------------------------------------------------------------------------------------------------------------------
85,730 90,397 84,225
Expenses (Schedules 2 and 3)
Health 35,516 35,698 32,947
Education 12,062 12,058 11,621
Children's and Social Services 10,227 10,442 9,985
Interest on Debt 9,429 8,831 9,019
Environment, Resources and Economic Development 6,534 7,697 8,441
Postsecondary Education and Training 5,201 5,383 4,689
Justice 3,167 3,224 3,037
General Government and Other 4,944 4,795 4,188
- -----------------------------------------------------------------------------------------------------------------------
87,080 88,128 83,927
Reserve 1,000
Annual Surplus (Deficit) (2,350) 2,269 298
Accumulated Deficit at Beginning of Year (109,155) (125,743)
Less: Ontario Electricity Financial Corporation Unfunded Liability 110
Adjustment at Beginning of Year (Note 4)
Less: Net Assets of Broader Public Sector Organizations at Beginning of Year - 16,290
- ------------------------------------------------------------------------------------------------------------------------
Accumulated Deficit at End of Year (106,776) (109,155)
------------------------------------------------------------------------------------------------------------------------
See accompanying Notes and Schedules to the Financial Statements.
(1) Amounts reported in 2006 Budget.
- ------------------------------------------------------------------------------------------------------------------------
Province of Ontario
Consolidated Statement of Financial Position
- -----------------------------------------------------------------------------------------------------------------------
As at March 31 2007 2006
($ Millions)
- -----------------------------------------------------------------------------------------------------------------------
Liabilities
Accounts Payable and Accrued Liabilities (Schedule 4) 12,463 13,206
Debt (Note 2) 156,993 154,906
Unamortized Foreign Exchange Gains 318 426
------------- ------------
157,311 155,332
Power Purchase Contracts (Note 4) 2,977 3,389
Nuclear Funding Liability (Note 4) - 768
Pensions and Other Employee Future Benefits (Note 5) 1,398 1,686
Other Liabilities (Note 6) 4,398 3,858
- -----------------------------------------------------------------------------------------------------------------------
178,547 178,239
- -----------------------------------------------------------------------------------------------------------------------
Financial Assets
Cash and Cash Equivalents 4,329 4,447
Temporary Investments (Note 7) 2,293 2,979
Accounts Receivable (Schedule 5) 7,876 6,423
Loans Receivable (Schedule 6) 7,378 6,875
Other Assets 1,590 2,417
Investment in Government Business Enterprises (Schedule 8) 13,981 13,170
- -----------------------------------------------------------------------------------------------------------------------
37,447 36,311
- -----------------------------------------------------------------------------------------------------------------------
Net Debt (141,100) (141,928)
Non-Financial Assets
Tangible Capital Assets (Note 8) 17,245 16,034
Net Assets of Broader Public Sector Organizations
(Schedule 9) 17,079 16,739
- -----------------------------------------------------------------------------------------------------------------------
34,324 32,773
- -----------------------------------------------------------------------------------------------------------------------
Accumulated Deficit (106,776) (109,155)
-----------------------------------------------------------------------------------------------------------------------
Contingent Liabilities (Note 9) and Contractual Obligations (Note 10)
See accompanying Notes and Schedules to the Financial Statements.
- -----------------------------------------------------------------------------------------------------------------------
Province of Ontario
Consolidated Statement of Change in Net Debt
- ------------------------------------------------------------------------------------------------------------------------
For the year ended March 31 2007 2006
($ Millions)
- ------------------------------------------------------------------------------------------------------------------------
Annual Surplus 2,269 298
Acquisition of Tangible Capital Assets (2,120) (1,675)
Amortization of Tangible Capital Assets (Note 8) 838 815
Proceeds on Sale of Tangible Capital Assets 20 45
Loss (Gain) on Sale of Tangible Capital Assets 51 (41)
Increase in Net Assets of Broader Public Sector Organizations
(Schedule 9) (340) (449)
------------- -------------
(1,551) (1,305)
- ------------------------------------------------------------------------------------------------------------------------
Decrease (Increase) in Net Debt 718 (1,007)
Net Debt at Beginning of Year (141,928) (140,921)
Less: Ontario Electricity Financial Corporation Unfunded
Liability Adjustment at Beginning of Year (Note 4) 110 -
- ------------------------------------------------------------------------------------------------------------------------
Net Debt at End of Year (141,100) (141,928)
------------------------------------------------------------------------------------------------------------------------
See accompanying Notes and Schedules to the Financial Statements.
- ------------------------------------------------------------------------------------------------------------------------
Province of Ontario
Consolidated Statement of Cash Flow
- -----------------------------------------------------------------------------------------------------------------------
For the year ended March 31 2007 2006
($ Millions)
- -----------------------------------------------------------------------------------------------------------------------
Operating Transactions
Annual Surplus 2,269 298
Amortization of Tangible Capital Assets (Note 8) 838 815
Loss (Gain) on Sale of Tangible Capital Assets 51 (41)
Income from Investment in Government Business Enterprises (Schedule 8) (4,196) (4,308)
Remittances from Government Business Enterprises (Schedule 8) 3,385 3,381
Decrease in Liability for Pensions and Other Employee Future Benefits (Note 5) (288) (61)
Decrease in Power Purchase Contracts (Note 4) (412) (396)
Decrease in Nuclear Funding Liability (Note 4) (768) (642)
Decrease in Accounts Payable and Accrued Liabilities (Schedule 4) (743) (371)
Decrease in Other Items (479) (2,153)
- -----------------------------------------------------------------------------------------------------------------------
Cash Applied to Operating Transactions (343) (3,478)
- -----------------------------------------------------------------------------------------------------------------------
Capital Transactions
Acquisition of Tangible Capital Assets (2,120) (1,675)
Proceeds from Sale of Tangible Capital Assets 20 45
Increase in Net Assets of Broader Public Sector Organizations (Schedule 9) (340) (449)
- -----------------------------------------------------------------------------------------------------------------------
Cash Applied to Capital Transactions (2,440) (2,079)
- -----------------------------------------------------------------------------------------------------------------------
Investing Transactions
Decrease in Temporary Investments (Note 7) 686 1,342
- -----------------------------------------------------------------------------------------------------------------------
Cash Provided by Investing Transactions 686 1,342
- -----------------------------------------------------------------------------------------------------------------------
Financing Transactions
Debt Issued 19,210 19,955
Debt Retired (17,231) (21,424)
- -----------------------------------------------------------------------------------------------------------------------
Cash Provided by (Applied to) Financing Transactions 1,979 (1,469)
- -----------------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (118) (5,684)
Cash and Cash Equivalents at Beginning of Year 4,447 10,131
- -----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year 4,329 4,447
-----------------------------------------------------------------------------------------------------------------------
See accompanying Notes and Schedules to the Financial Statements.
- -----------------------------------------------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABLES IN MILLIONS OF DOLLARS)
1. Summary of Significant Accounting Policies
Basis of Accounting
The Consolidated Financial Statements are prepared in accordance with
the accounting principles for governments recommended by the Public
Sector Accounting Board (PSAB) of the Canadian Institute of Chartered
Accountants (CICA) and, where applicable, the recommendations of the
Accounting Standards Board (AcSB) of the CICA.
Reporting Entity
These financial statements report the activities of the Consolidated
Revenue Fund combined with those organizations that are controlled by
the government.
Public hospitals, specialty psychiatric hospitals, school boards and
colleges, collectively referred to as the "Broader Public Sector (BPS)
organizations," are consolidated on a sector basis in these financial
statements.
Other organizations that are controlled by the Province are
individually consolidated provided they meet one of the following
criteria: i) their revenues, expenses, assets or liabilities are
greater than $50 million, or ii) their outside sources of revenues,
deficit or surplus are greater than $10 million. A listing of these
organizations is provided in Schedule 7.
The activities of organizations that do not meet the materiality
thresholds are reflected in these financial statements through the
accounts of the ministries responsible for them. Trusts administered
by the government on behalf of other parties are excluded from the
reporting entity but are disclosed in Note 11.
Principles of Consolidation
Government organizations, except for government business enterprises
and broader public sector organizations, are consolidated on a
line-by-line basis with the Consolidated Revenue Fund in these
financial statements. Where necessary, adjustments are made to present
the accounts of these organizations on a basis consistent with the
accounting policies described below, and to eliminate significant
inter-organizational accounts and transactions.
Government business enterprises are defined as those government
organizations that i) have the financial and operating authority to
carry on a business; ii) have as their principal activity and source of
revenue the selling of goods and services to individuals and
non-government organizations; and iii) are able to maintain their
operations and meet their obligations from revenues generated outside
the government reporting entity. The activities of government business
enterprises are recorded in the financial statements using the modified
equity method. Under this method, government business enterprises are
reported in accordance with the accounting principles generally
accepted for business enterprises. Their combined net assets are
included in the financial statements as Investment in Government
Business Enterprises on the Consolidated Statement of Financial
Position and their combined net income is shown as a separate item,
Income from Investment in Government Business Enterprises, on the
Consolidated Statement of Operations.
Broader Public Sector (BPS) organizations are recorded in the financial
statements using the equity method. Under the equity method or
"one-line" basis, BPS organizations are reported in accordance with the
accounting principles generally accepted for governments. Significant
gains and losses resulting from inter-organizational transactions
occurring from within the government reporting entity are eliminated
upon consolidation. Their combined net assets are included in the
financial statements as Net Assets of Broader Public Sector
Organizations on the Consolidated Statement of Financial Position.
Their combined net expenses, that is, the total annual expenses of all
BPS organizations net of revenues they receive from sources other than
the Province, are included in Expenses on the Consolidated Statement of
Operations. The combined net expenses of hospitals are included with
Health expenses, school board net expenses are included with Education
expenses, and college net expenses are included in Postsecondary
Education and Training expenses in the Consolidated Statement of
Operations.
Measurement Uncertainty
Uncertainty in the determination of the amount at which an item is
recognized in the financial statements is known as measurement
uncertainty. Such uncertainty exists when it is reasonably possible
that there could be a material variance between the recognized amount
and another reasonably possible amount.
Measurement uncertainty in these financial statements and notes thereto
exists in the valuation of the power purchase contracts, the accruals
for pensions and other employee future benefits obligations, the value
of tangible capital assets, and the accruals for personal income and
corporations tax revenues.
The nature of the uncertainty in the valuation of the power purchase
contracts arises from fluctuations in market prices that would impact
this liability. The uncertainty related to pensions and other employee
future benefits accruals arises because actual results may differ
significantly from the Province's best estimate of expected results
(for example, the difference between actual results and actuarial
assumptions regarding return on investment of pension fund assets and
health care cost trend rates for retiree benefits). Uncertainty in the
value of tangible capital assets exists because of differences between
estimated useful lives and actual useful lives. Uncertainty related to
the accrual for personal tax and corporations tax revenues arises
because of the possible difference between the estimated and actual
economic growth and the impact of future tax assessments on taxes
receivable.
Estimates are based on the best information available at the time of
preparation of the financial statements and are reviewed annually to
reflect new information as it becomes available.
Revenues
Revenues are recognized in the fiscal year that the events giving rise
to the revenues occur and they are earned. Amounts received prior to
the end of the year, which relate to revenues that will be earned in a
subsequent fiscal year, are deferred and reported as liabilities.
Expenses
Expenses are recognized in the fiscal year that the events giving rise
to the expense occur and resources are consumed. Expenses include:
• accounts payable accruals
• transfer payments
• interest accruing on debt
• pension and other employee future benefits
• the amortization of tangible capital assets
• net expenses of hospitals, school boards and colleges.
Transfer payments are recognized in the year during which the payment
is authorized, all eligibility criteria are met and a reasonable
estimate of the amount can be made.
Interest on Debt includes the following: i) interest on outstanding
debt net of interest income on investments and loans; ii) amortization
of foreign exchange gains or losses; iii) amortization of debt
discounts, premiums and commissions; iv) amortization of deferred
hedging gains and losses; and v) servicing and other costs.
Employee future benefits such as pensions, other retirement benefits
and entitlements upon termination are recognized as expenses over the
years in which the benefits are earned by employees. These expenses are
the government's share of the cost of benefits including the current
year's cost of benefits, interest on the net benefits liability or
surplus, amortization of actuarial gains or losses, cost of or gain on
plan amendment, and other adjustments.
Other employee future benefits are either recognized in the period when
the event that obligates the government occurs or when the benefits are
earned and accumulated by employees.
The costs of buildings and transportation infrastructure owned by the
Province are amortized and recognized as expenses over their estimated
useful lives on a straight-line basis. Amortization of tangible capital
assets owned by government organizations consolidated in these
financial statements is also included in expenses.
The Province is phasing in the implementation of PSAB recommendations
on tangible capital assets. Consequently, the costs of acquisition of
other tangible capital assets owned by the Province, such as furniture
and vehicles, are recorded as expenses. Also, for significant capital
leases entered into by the Province, an amount equal to the present
value of the minimum lease payments required over the term of the lease
is recorded as an expense at the inception of the lease, with an
offsetting liability recorded for the lease obligation.
Liabilities
Liabilities are recorded to the extent that they represent present
obligations of the government to outside parties as a result of events
and transactions occurring prior to the end of the fiscal year. The
settlement of liabilities will result in the sacrifice of economic
benefits in the future.
Liabilities include present obligations for environmental costs,
probable losses on loan guarantees issued by the government, and
contingencies when it is likely that a loss will be realized and
the amount can be reasonably determined.
Liabilities also include obligations to government business enterprises.
Debt
Debt consists of treasury bills, commercial paper, medium and long-term
notes, savings bonds, debentures and loans.
Debt denominated in foreign currencies that has been hedged is recorded
at the Canadian dollar equivalent using the rates of exchange
established by the terms of the hedge agreements. Other foreign
currency debt, liabilities and assets are translated to Canadian
dollars at year-end rates of exchange and any exchange gains or losses
are amortized over the remaining term to maturity.
The Province uses derivative financial instruments (derivatives) for
the purposes of minimizing interest costs and managing risk. The
Province does not use derivatives for speculative purposes. Derivatives
are financial contracts, the value of which is derived from underlying
instruments. Gains or losses arising from derivative transactions are
deferred and amortized over the remaining life of the related debt
issue.
Pensions and Other Employee Future Benefits
The liabilities for pensions and other employee future benefits are
calculated on an actuarial basis using the government's best estimates
of future inflation rates, investment returns, employee salary levels
and other underlying assumptions, and where applicable, the
government's borrowing rate. When actual plan experience of pensions,
other retirement benefits and termination pay differs from that
expected, or when assumptions are revised, actuarial gains and losses
arise. These gains and losses are amortized over the expected average
remaining service life of plan members.
The liabilities for selected employee future benefits (such as
pensions, other retirement benefits and termination pay) represent the
government's share of the actuarial present values of benefits
attributed to services rendered by employees and former employees, less
its share of the assets of the plans. In addition, the liability
includes the Province's share of the unamortized balance of actuarial
gains or losses, and other adjustments primarily for differences
between the fiscal year-ends of the pension plans and the Province.
Assets
Assets are resources controlled by the government from which it will
derive future benefits. Assets are recognized in the year the events
giving rise to the government's control of the benefit occur.
Financial Assets
Financial assets are resources that can be used to discharge existing
liabilities or finance future operations. They include cash, temporary
investments, accounts receivable, loans receivable, advances, and
investments in government business enterprises.
Temporary investments are recorded at the lower of cost or fair value.
Accounts receivables are recorded at cost. A valuation allowance is
recorded when collection of the receivable is considered doubtful.
Loans receivable with significant concessionary terms are considered in
part as grants and are recorded on the date of issuance at face value
discounted by the amount of the grant portion. The grant portion is
recognized as an expense at the date of issuance of the loan. The
amount of the loan discount is amortized to revenue over the term of
the loan. Loans receivable include amounts owing from government
business enterprises.
Investment in government business enterprises represents the net assets
of government business enterprises recorded on the modified equity
basis as described under Principles of Consolidation.
Net Assets of Broader Public Sector Organizations
The net assets of the broader public sector (BPS) organizations consist
of tangible capital and financial assets of BPS organizations net of
their liabilities. While the assets of BPS organizations are consolidated,
they are owned, managed and operated by BPS organizations. Tangible capital
assets of hospitals and colleges are recorded at historical cost in their
financial statements. Interest incurred during construction of major
projects is capitalized and included in historical cost when specific
project financing is provided. Although school boards do not presently
record tangible capital assets in their financial statements, an adjustment
is made upon consolidation to record the estimated historical cost of
their land and building assets in the Province's financial statements.
Tangible Capital Assets
Tangible capital assets are recorded at historical cost. Historical
cost includes the costs directly related to the acquisition, design,
construction, development, improvement or betterment of tangible
capital assets. Cost includes overheads directly attributable to
construction and development but excludes interest. Estimated
historical cost was used to record existing tangible capital assets if
actual cost was unknown when the Province first implemented tangible
capital assets accounting.
As the Province is phasing in the implementation of PSAB recommendations
on provincially owned tangible capital assets, the following categories
are included under tangible capital assets and recorded at historical
cost: land, buildings and transportation infrastructure owned by the
Province; and all tangible capital assets owned by government organizations
that are consolidated in these financial statements. The remaining other
tangible capital assets, including leased assets, computers, equipment,
vehicles and furniture, are expensed as acquired. The Province intends
to apply PSAB's recommendations on the remaining other tangible capital
assets in 2009-10.
Maintenance and repair costs are recognized as an expense when incurred.
Betterments or improvements that significantly increase or prolong the
service life or capacity of a tangible capital asset are capitalized.
External contributions for acquisition of tangible capital assets are
recorded as deferred revenue and amortized on the same basis as the
related tangible capital assets.
2. Debt
The Province borrows in both domestic and international markets. Debt
of $157.0 billion, as at March 31, 2007 (2006, $154.9 billion), is
composed of mainly 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. Debt comprises Debt
Issued for Provincial Purposes of $129.1 billion (2006, $126.9 billion)
and Ontario Electricity Financial Corporation (OEFC) debt of $27.9
billion (2006, $28.0 billion). The table on page 43 presents the
maturity schedule of the Province's outstanding debt, by currency of
repayment, expressed in Canadian dollars, and reflects the effects of
related derivative contracts.
----------------------------------------------------------------------------------------------------------------------
Debt
As at March 31 2007 2006
- --------------------------------------------------------------------------------------------- ---------- -------------
Canadian U.S. Japanese Other
Currency Dollar Dollar Yen Euro(1) Currency(2) Total Total
- ----------------------------------------------------------------------------------------------------------------------
Maturing in:
2007 $21,421
2008 $13,213 5,461 320 - 228 $19,222 14,019
2009 15,406 4,090 - 795 265 20,556 19,416
2010 9,069 1,629 709 1,443 870 13,720 13,115
2011 6,186 - - - 252 6,438 6,254
2012 5,944 1,136 - - 47 7,127 -
- ----------------------------------------------------------------------------------------------------------------------
1-5 years 49,818 12,316 1,029 2,238 1,662 67,063 74,225
6-10 years 22,902 7,606 98 1,188 2,018 33,812 29,980
11-15 years 6,424 - - - - 6,424 4,694
16-20 years 12,300 - - - - 12,300 11,766
21-25 years 13,606 - - - - 13,606 12,843
26-40(3) years 23,788 - - - - 23,788 21,398
- ----------------------------------------------------------------------------------------------------------------------
Total(4), (5) $128,838 19,922 1,127 3,426 3,680 $156,993 $154,906
----------------------------------------------------------------------------------------------------------------------
Debt Issued for
Provincial 105,180 16,617 1,127 3,426 2,753 129,103 126,873
Purposes(6)
OEFC Debt 23,658 3,305 - - 927 27,890 28,033
- ----------------------------------------------------------------------------------------------------------------------
Total(4), (5) $128,838 19,922 1,127 3,426 3,680 $156,993 $154,906
----------------------------------------------------------------------------------------------------------------------
Effective Interest Rates (Weighted Average)
2007 6.28% 4.93% 3.48% 5.13% 4.46% 6.02% -
2006 6.39% 5.04% 4.09% 5.61% 4.44% - 6.14%
----------------------------------------------------------------------------------------------------------------------
(1) Euro debt includes debt issues in Euro and French franc legacy currency.
(2) Other currencies comprise Australian dollar, New Zealand dollar, Pound sterling, Swiss franc, Hong Kong dollar,
South African rand and New Turkish lira.
(3) The longest term to maturity is to June 2, 2047.
(4) Total foreign currency denominated debt as at March 31, 2007, was $28.2 billion (2006, $27.4 billion). Of that,
$27.2 billion or 96.4% (2006, $26.3 billion or 95.9%) was fully hedged to Canadian dollars. The remaining 3.6%
(2006, 4.1%) of foreign debt was unhedged as follows: $291 million (2006, $384 million) U.S. dollar denominated debt,
$686 million (2006, $695 million) Japanese yen denominated debt and $24 million (2006, $23 million) Swiss franc
denominated debt.
(5) Total debt includes issues totalling $3.3 billion (2006, $4.8 billion), which have embedded options exercisable by
either the Province or the bond holder under specific conditions.
(6) Debt denominated in Canadian dollars as at March 31, 2007 includes $1.0 billion (2006, $1.0 billion) long-term debt
purchased and held by the Province.
- ----------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Debt
As at March 31 2007 2006
- --------------------------------------------------------------------------------------------------------------------
Debt Payable to:
Public Investors $134,431 $130,760
Canada Pension Plan Investment Fund 10,233 10,233
Ontario Teachers' Pension Plan 6,411 7,596
Public Service Pension Plan 2,502 2,705
Ontario Public Service Employees Union Pension Fund 1,188 1,285
Canada Mortgage and Housing Corporation 914 960
Others(1) 1,314 1,367
- --------------------------------------------------------------------------------------------------------------------
Total $156,993 $154,906
--------------------------------------------------------------------------------------------------------------------
(1) Debt payable to others includes debt payable to Ryerson Retirement Pension Plan, the School Board Trust Debt,
debt of Ontario Immigrant Investor Corporation, debt of Royal Ontario Museum and Independent Electricity System
Operator.
- --------------------------------------------------------------------------------------------------------------------
Fair value of debt issued approximates amounts at which debt instruments
could be exchanged in a current transaction between willing parties. In
valuing the Province's debt, fair value is estimated using discounted cash
flows and other valuation techniques and is compared to public market
quotations where available. These estimates are affected by the assumptions
made concerning discount rates and the amount and timing of future cash flows.
The estimated fair value of debt at March 31, 2007 was $174.7 billion
(2006, $170.6 billion). This is higher than the book value of $157.0 billion
(2006, $154.9 billion) because current interest rates are generally lower
than the interest rates at which the debt was issued. The fair value of
debt does not reflect the effect of related derivative contracts.
School Board Trust Debt
A School Board Trust was created in June 2003 to permanently refinance
debt incurred by 55 school boards. The Trust issued 30-year sinking
fund debentures amounting to $891 million in June 2003. The Trust
provided $882 million of the proceeds to the 55 school boards in
exchange for the irrevocable right to receive future transfer payments
from the Province related to this debt. These amounts will be reduced
over the 30-year period by the transfer payments made by the Ministry
of Education to the Trust under the School Board Operating Grant
program. As at March 31, 2007, the outstanding amount of $840 million
(2006, $854 million) advanced to school boards is included in Other
Assets and outstanding debentures of $848 million (2006, $863 million)
are included in Debt.
3. Risk Management and Derivative Financial Instruments
The Province employs various risk management strategies and operates within
strict risk exposure limits to ensure exposure to risk is managed in a
prudent and cost-effective manner. A variety of strategies are used,
including the use of derivative financial instruments ("derivatives").
Derivatives are financial contracts, the value of which is derived from
underlying instruments. The Province uses derivatives to hedge and to
minimize interest costs. Hedges are created primarily through swaps,
which are legal contracts under which the Province agrees with another
party to exchange cash flows based on one or more notional amounts
using stipulated reference interest rates for a specified period. Swaps
allow the Province to offset its existing obligations and thereby
effectively convert them into obligations with more desirable
characteristics. Other derivative instruments used by the Province
include forward foreign exchange contracts, forward rate agreements,
futures, options, caps and floors.
Foreign exchange or currency risk is the risk that foreign currency
debt principal and interest payments and foreign currency transactions
will vary in Canadian dollar terms due to fluctuations in foreign
exchange rates. To manage currency risk, the Province uses derivative
contracts including foreign exchange forward contracts, futures,
options and swaps to convert foreign currency cash flows into Canadian
dollar denominated cash flows. Most of the derivative contracts hedge
the underlying debt by matching all the critical terms to achieve
effectiveness. In the instances where the term of foreign exchange
forward contracts used for hedging is shorter than the term of the
underlying debt, the effectiveness is maintained by continuously
rolling the foreign exchange forward contract over the remaining term
of the underlying debt, or until replaced with a long-term derivative
contract.
The current policy allows the net of unhedged foreign currency debt
principal net of foreign currency holdings to reach a maximum of 5 per
cent of Debt Issued for Provincial Purposes and OEFC debt. At March 31,
2007, the respective unhedged levels were 0.7 and nil per cent (2006,
0.8 and nil per cent). For every one-cent increase in the Canadian
dollar versus the U.S. dollar, there would be an increase in the debt
amount of $2.5 million (2006, $3.0 million) and an increase in Interest
on Debt of $2.4 million (2006, $1.7 million). For every one Japanese
yen decrease versus the Canadian dollar, there would be an increase in
debt amount of $7.0 million (2006, $7.0 million) and an increase in
Interest on Debt of $2.4 million (2006, $2.0 million). Total foreign
exchange gains recognized in the Statement of Operations for 2006-07
were $127 million (2005-06, $112 million).
Interest on debt expense may also vary as a result of changes in
interest rates. In respect of Debt Issued for Provincial Purposes and
OEFC debt, the risk is measured as interest rate resetting risk, which
is the net of floating rate exposure, liquid reserves and fixed rate
debt maturing within the next 12-month period as a percentage of Debt
Issued for Provincial Purposes and OEFC debt respectively. Depending on
market conditions, the Province creates or reduces its exposure to
interest rate changes by issuing or retiring short-term debt, or by
entering into or closing out derivative positions. The current policy
limits interest rate resetting risk for Debt Issued for Provincial
Purposes and OEFC to a maximum of 35 per cent.
As at March 31, 2007, interest rate resetting risk for Debt Issued for
Provincial Purposes and OEFC debt was 15.3 per cent and 14.4 per cent
(2006, 14.1 per cent and 20.3 per cent). Based on floating rate
interest-bearing financial instruments on hand at the balance sheet
date plus planned refinancing of maturing debt in the coming year, a
one per cent (100 basis points) increase in interest rates would result
in an increase in Interest on Debt of $250 million (2006, $250 million).
Liquidity risk is the risk that the Province will not be able to meet
its current short-term financial obligations. To reduce liquidity risk,
the Province maintains liquid reserves, that is, cash and temporary
investments (Note 7), at levels that will meet future cash requirements
and will give the Province flexibility in the timing of issuing debt.
In addition, the Province has short-term note programs as alternative
sources of liquidity.
The table below presents a maturity schedule of the Province's
derivatives, by type, outstanding at March 31, 2007, based on the
notional amounts of the contracts. Notional amounts represent the
volume of outstanding derivative contracts and are not indicative of
credit risk, market risk or actual cash flows.
--------------------------------------------------------------------------------------------------------------------------
Derivative Portfolio Notional Value
As at March 31 2007 2006
- --------------------------------------------------------------------------------------------------------------------------
Maturity in 6-10 Over 10
Fiscal Year 2008 2009 2010 2011 2012 Years Years Total Total
- --------------------------------------------------------------------------------------------------------------------------
Swaps:
Interest Rate $13,798 $12,152 $8,716 $2,111 $2,536 $24,032 $5,220 $68,565 $64,735
Cross Currency 6,106 5,301 5,717 499 1,231 12,466 - 31,320 28,435
Forward Foreign
Exchange Contracts 1,771 32 - - - - - 1,803 3,639
Caps and Floors 50 - 88 - - - - 138 532
Futures - - - - - - - - -
- --------------------------------------------------------------------------------------------------------------------------
Total $21,725 $17,485 $14,521 $2,610 $3,767 $36,498 $5,220 $101,826 $97,341
--------------------------------------------------------------------------------------------------------------------------
The use of derivatives introduces credit risk, which is the risk of a
counterparty defaulting on contractual derivative obligations in which
the Province has an unrealized gain. The table below presents the credit
risk associated with the derivative financial instrument portfolio, measured
through the replacement value of derivative contracts, at March 31, 2007.
---------------------------------------------------------------------------------------------------------------------
Credit Risk Exposure 2007 2006
As at March 31
- ---------------------------------------------------------------------------------------------------------------------
Gross Credit Risk Exposure(1) $1,083 $1,507
Less: Netting(2) (898) (1,395)
- ---------------------------------------------------------------------------------------------------------------------
Net Credit Risk Exposure $ 185 $ 112
---------------------------------------------------------------------------------------------------------------------
(1) Gross credit risk exposure is the gross credit exposure to counterparties with net positive exposure (that is,
the Province has an unrealized gain).
(2) "Netting" is the gross negative credit exposure to counterparties with net positive credit exposures covered by
master agreements providing for close out netting when contracts do not have co-terminus settlement dates.
- ---------------------------------------------------------------------------------------------------------------------
The Province manages its credit risk exposure from derivatives by,
among other things, dealing only with high credit quality counterparties
and regularly monitoring compliance to credit limits. In addition, the
Province enters into contractual agreements ("master agreements") that
provide for termination netting and, if applicable, payment netting with
most of its counterparties. Gross credit risk exposure represents the
loss that the Province would incur if every counterparty to which the
Province had credit risk exposure were to default at the same time, and
the contracted netting provisions were not exercised or could not be
enforced. Net credit risk exposure is the loss including the mitigating
impact of these netting provisions.
4. Ontario Electricity Financial Corporation Liabilities
The Ontario Electricity Financial Corporation (OEFC) is consolidated as
a government organization in these financial statements. The opening
accumulated deficit of the Province has been adjusted to reflect an
adjustment to the opening Unfunded Liability of the OEFC. The opening
Unfunded Liability of OEFC was reduced by $110 million to reflect the
elimination of a working capital adjustment payable to Ontario Power
Generation Inc. (OPG) that was originally recorded in OEFC's Unfunded
Liability. It was subsequently determined that there was no obligation
for this amount.
In addition to the current liabilities and long-term debt of OEFC,
recorded in these financial statements under Accounts Payable and
Accrued Liabilities and Debt respectively, the following liabilities
of OEFC are also reflected in these financial statements:
i) Power Purchase Contracts
Power purchase contracts and related loan agreements were entered into
by Ontario Hydro with non-utility generators (NUGs) located in Ontario.
As the legal continuation of Ontario Hydro, OEFC is the counterparty to
these contracts. A liability arose because these contracts, expiring on
various dates to 2048, provided for the purchase of power at prices
that were expected to be in excess of the market price.
The NUG liability had been valued at $4.3 billion on a discounted
cash-flow (DCF) basis since Ontario Hydro was continued as OEFC on
April 1, 1999. Prior to open access to the electricity market in May 2002,
power purchased from NUGs was resold at cost to the revenue pool managed
by OPG. After the market opened, OEFC sustained annual losses on power
purchased from NUGs. The DCF model was updated as of March 31, 2003, which
reduced the estimated liability by $422 million to $3.7 billion. This
revaluation change is being amortized to operations over a 10-year period.
Under the Electricity Restructuring Act, 2004, effective January 1, 2005,
OEFC began receiving actual contract prices for power from ratepayers and
will no longer incur losses on these power purchase contracts. At that time,
Ministry of Finance estimated that the bulk of the liability would be
eliminated over 12 years as existing electricity contracts expire. The
decrease in the liability for power purchase contracts for 2006-07 was
$412 million (2005-06, $396 million). This results in a liability of
$3.0 billion as at March 31, 2007 (2006, $3.4 billion).
ii) Nuclear Funding Liability
The OEFC, as the continued Ontario Hydro, assumed a liability in the
amount of $2.4 billion representing nuclear waste management and
station decommissioning liabilities that were incurred prior to
April 1, 1999. The Province and OPG are parties to the Ontario Nuclear
Funds Agreement (ONFA) to establish, fund and manage segregated funds to
ensure that sufficient funds are available to pay for costs of nuclear
waste management and station decommissioning for existing OPG nuclear
stations.
The board of directors of OEFC approved the funding of OEFC's nuclear
liability to the Decommissioning Segregated Fund over a four-year
period. Contributions by OEFC began in 2003 and the entire liability
including interest has been discharged with a final payment on
March 30, 2007.
5. Pensions and Other Employee Future Benefits
- -----------------------------------------------------------------------------------------------------------------------
Pensions and Other Employee Future Benefits Liability (Asset)
As at March 31 2007 2007 2007 2006
Other
Employee
Pensions Future Benefits Total Total
- -----------------------------------------------------------------------------------------------------------------------
Obligation for benefits $61,236 $5,818 $67,054 $64,512
Less: plan fund assets (68,407) (364) (68,771) (64,111)
Unamortized actuarial gains (losses) 2,850 (1,059) 1,791 (189)
Adjustments(1) 1,324 - 1,324 1,474
- -----------------------------------------------------------------------------------------------------------------------
Total $(2,997) $4,395 $1,398 $ 1,686
-----------------------------------------------------------------------------------------------------------------------
(1) Adjustments for pensions consist of:
i) differences for amounts reported by the pension plans at December 31, instead of the Province's year-end of March 31
ii) unamortized difference between employer and employee contributions for jointly sponsored pension plans
iii) unamortized employee contribution reductions for solely sponsored plans
iv) unamortized initial unfunded liabilities of jointly sponsored plans
v) amounts payable by the Province that are reflected as contributions in the pension plan assets.
- ------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Pensions and Other Employee Future Benefits Expense
For the year ended
March 31 2007 2007 2007 2006
Other
Employee
Pensions Future Benefits Total Total
- ------------------------------------------------------------------------------------------------------------------------
Cost of benefits $1,533 $327 $1,860 $1,768
Amortization of actuarial losses (gains) (336) 94 (242) (387)
Employee contributions (186) - (186) (173)
Cost of plan amendments - - - 255
Interest expense (revenue) (285) 224 (61) (110)
Adjustments(1) (209) - (209) (113)
- ------------------------------------------------------------------------------------------------------------------------
Total(2) $517 $645 $1,162 $1,240
------------------------------------------------------------------------------------------------------------------------
(1) Adjustments for Pensions consist of amortization of:
i) the difference between employer and employee contributions for jointly sponsored pension plans
ii) employee contribution reductions for solely sponsored plans
iii) initial unfunded liability of jointly sponsored pension plans.
(2) Total Pensions and Other Employee Future Benefits Expense is reported in Schedule 2. The Teachers' Pension expense of
$345 million (2005-06, $295 million) is included in the Education expense in the Consolidated Statement of Operations
and is disclosed separately in Schedule 3. The Public Service and OPSEU Pension expense of $172 million (2005-06,
$227 million) and Other Employee Future Benefits — Retirement Benefits expense of $385 million (2005-06, $502 million)
are included in the General Government and Other expense in the Consolidated Statement of Operations. The combined total
of Public Service and OPSEU Pension and Other Employee Future Benefits — Retirement Benefits expense of $557 million
(2005-06, $729 million) is disclosed separately in Schedule 3. The remainder of Other Employee Future Benefits expense
is included in the relevant ministries' expenses in Schedule 3.
- ------------------------------------------------------------------------------------------------------------------------
Pensions
The Province sponsors several pension plans. It is the sole sponsor of
the Public Service Pension Plan (PSPP) and joint sponsor of the Ontario
Public Service Employees Union (OPSEU) Pension Plan and the Ontario
Teachers' Pension Plan (OTPP).
These three plans are contributory defined benefit plans that provide
Ontario government employees and elementary and secondary school
teachers and administrators with a guaranteed amount of retirement
income. Benefits are based primarily on the best five-year average
salary of members and their length of service, and are indexed to
changes in the Consumer Price Index to provide protection against
inflation. Plan members normally contribute seven to nine per cent of
their salary to these plans. The Province matches these contributions.
Funding of these plans is based on statutory actuarial funding valuations
undertaken at least every three years. The Province contributed $797 million
to OTPP in 2006-07 (2005-06, $740 million), $218 million (including
$75 million special payment) to PSPP (2005-06, $136 million) and
$143 million to OPSEU Pension Plan (2005-06, $143 million). During calendar
year 2006, OTPP paid benefits, including transfers to other plans of
$3.8 billion (2005, $3.6 billion), PSPP paid $822 million (2005, $793 million)
and OPSEU Pension Plan paid $529 million (2005, $524 million). Under
agreements between the Province and OPSEU, and between the Province and
the Ontario Teachers' Federation (OTF), gains and losses arising from
statutory actuarial funding valuations are shared by the co-sponsors.
The government's best estimate of the future annual inflation rate used
in the pension and other employee future benefits calculations disclosed
in these financial statements is 2.5 per cent; the salary escalation rate
is 3.5 per cent; and the discount rate and expected rate of return on
pension plan assets are 6.75 per cent for OTPP, 6.5 per cent for PSPP and
6.75 per cent for OPSEU Pension Plan. Actuarial gains or losses are
amortized over periods of 10 to 14 years.
The Province is also responsible for sponsoring the Ontario Teachers'
Retirement Compensation Arrangement and the Public Service Supplementary
Benefits Plan. Expenses and liabilities of these plans are included in
the Pensions Expense and Pensions Liability reported in the above tables.
Other Employee Future Benefits
Other Employee Future Benefits are non-pension retirement benefits,
post-employment benefits and compensated absences. The discount rate
used in the Other Employee Future Benefits (except retirement benefits)
calculation for 2006-07 is 4.90 per cent (2005-06, 4.65 per cent).
Retirement Benefits
The Province provides dental, basic life insurance, supplementary
health and hospital benefits to retired employees through a self-insured,
unfunded defined benefit plan. The Province paid $122 million for benefits
under the plan in 2006-07 (2005-06, $119 million). The liability for
non-pension retirement benefits of $2.7 billion as at March 31, 2007
(2006, $2.5 billion) is included in the Other Employee Future Benefits
Liability. The expense for 2006-07 of $385 million (2005-06, $502 million)
is included in the Other Employee Future Benefits Expense.
The discount rate used in the other retirement benefits calculation for
2006-07 is 5.10 per cent (2005-06, 5.15 per cent).
The Province entered into an agreement with OPSEU to change various
supplemental health benefits in 2005. The cost of these changes of
$211 million was included in the 2005-06 Other Employee Future Benefits
Expense.
Post-Employment Benefits
For employees who have completed five years of service, the Province
provides termination pay equal to one week's salary for each year of
service up to a maximum of 50 per cent of their annual salary.
Employees who have completed one year of service but less than five
years are also entitled to termination pay in the event of death,
retirement or release from employment. The termination pay benefits are
unfunded and are administered by the Province. The Province paid out
$48 million in termination pay in 2006-07 (2005-06, $49 million). The
liability for termination pay of $834 million as at March 31, 2007
(2006, $805 million) is included in the Other Employee Future Benefits
Liability. The expense for 2006-07 of $78 million (2005-06, $76
million) is included in the Other Employee Future Benefits Expense.
The Province also provides, on a self-insured basis, workers' compensation
benefits, long-term disability benefits and regular benefits to employees
who are on long-term disability. The liability for workers' compensation
of $416 million as at March 31, 2007 (2006, $360 million) net of deposits
of $2 million (2006, $3 million) is included in the Other Employee Future
Benefits Liability. The expense for 2006-07 of $98 million (2005-06,
$53 million), including a $42 million payment made in 2006-07 (2005-06,
$41 million), is included in the Other Employee Future Benefits Expense.
The unfunded liability for long-term disability benefits of $222 million
as at March 31, 2007 (2006, $209 million) is net of deposits of
$362 million (2006, $322 million), and is included in the Other Employee
Future Benefits Liability. The 2006-07 expense of $77 million (2005-06,
$82 million) is included in the Other Employee Future Benefits Expense.
A $64 million payment for long-term disability benefits was made in
2006-07 (2005-06, $56 million).
6. Other Liabilities
- ---------------------------------------------------------------------------------------------------------------------
Other Liabilities
As at March 31 2007 2006
- ---------------------------------------------------------------------------------------------------------------------
Deferred Revenue:
Federal Transfers $1,628 $1,407
Vehicle and Driver Licences 636 579
Other 782 562
- ---------------------------------------------------------------------------------------------------------------------
Total Deferred Revenue 3,046 2,548
Other Funds and Liabilities 1,352 1,310
- ---------------------------------------------------------------------------------------------------------------------
Total $4,398 $3,858
---------------------------------------------------------------------------------------------------------------------
Federal transfers were received by the Province to provide multi-year
funding for provincial expenditures. They are recognized as revenue in
the periods identified by the federal government in the underlying agreements.
-------------------------------------------------------------------------------------------------------------------------
Deferred Revenue — Federal Transfers
- -------------------------------------------------------------------------------------------------------------------------
Included in Revenue Deferred to Deferred
Revenue Future Periods Revenue
----------------------------------------------------------------------------
Total As at
Transfer 2005-06 2008-09 and March 31,
Received and prior 2006-07 2007-08 thereafter 2007
- -------------------------------------------------------------------------------------------------------------------------
Wait Times Reduction $1,655 $485 $467 $468 $235 $703
Post-Secondary Education 390 - 195 195 - 195
Infrastructure
Public Transit Capital 352 - 117 117 118 235
Affordable Housing 312 - 117 117 78 195
Other Federal Transfers 346 7 39 85 215 300
- -------------------------------------------------------------------------------------------------------------------------
Total $3,055 $492 $935 $982 $646 $1,628
-------------------------------------------------------------------------------------------------------------------------
The Province provides a two-year vehicle licence plate renewal option
and multi-year driver licence renewals (two years for seniors and five
years for all others). Amounts received under these multi-year renewals
are recognized as revenue over the periods covered by the licences.
Other deferred revenue includes deferred capital contributions of $531
million (2006, $313 million) from external sources for the acquisition
and construction of tangible capital assets owned by the Province.
Other funds and liabilities include pension and benefit funds related
to the Provincial Judges' Pension Fund, the Public Service and the
Deputy Ministers' Supplementary Benefit Accounts, externally restricted
funds and other miscellaneous liabilities.
7. Temporary Investments
- ----------------------------------------------------------------------------------------------------------------------
Temporary Investments
As at March 31 2007 2006
- ----------------------------------------------------------------------------------------------------------------------
Temporary Investments $7,764 $7,327
Add: Assets Purchased under Resale Agreements - 80
Less: Assets Sold under Repurchase Agreements (5,471) (4,428)
- ----------------------------------------------------------------------------------------------------------------------
Total $2,293 $2,979
----------------------------------------------------------------------------------------------------------------------
The fair value of temporary investments, including assets purchased and
sold under resale and repurchase agreements, at March 31, 2007 is
$2.4 billion (2006, $3.1 billion). Temporary investments primarily
consist of investments in government bonds. Fair value is determined
using quoted market prices.
A resale agreement is an agreement between two parties to purchase and
subsequently resell a security at a specified price on a specified
date. A repurchase agreement is an agreement between two parties to
sell and subsequently repurchase a security at a specified price on a
specified date.
8. Tangible Capital Assets
- ---------------------------------------------------------------------------------------------------------------------
Tangible Capital Assets
As at March 31 2007 2007 2007 2006
Accumulated Net Book Net Book
Cost Amortization Value Value
- ---------------------------------------------------------------------------------------------------------------------
Land $5,558 $ - $5,558 $5,366
Buildings 4,375 1,456 2,919 2,791
Transportation Infrastructure 13,220 5,608 7,612 6,932
Other 2,460 1,304 1,156 945
- ---------------------------------------------------------------------------------------------------------------------
Total $25,613 $8,368 $17,245 $16,034
---------------------------------------------------------------------------------------------------------------------
Land includes land acquired for transportation infrastructure, parks,
buildings and other program use, and land improvements that have an
indefinite life and are not being amortized. Land excludes Crown lands
acquired by right.
Buildings include administrative and service structures, and buildings
under construction, but leased premises are excluded.
Transportation infrastructure includes provincial highways, railways,
bridges and related structures and facilities, but excludes land and
buildings.
Other includes railway equipment, computer equipment, vehicles,
furniture, and administrative and service equipment owned by government
organizations that are consolidated. It is planned to include similar
assets owned by provincial ministries in the Province's financial
statements in 2009-10. Works of art and historical treasures including
the Legislative Building are excluded from tangible capital assets.
All tangible capital assets, except buildings under construction, land
and land improvements with an indefinite life, are being amortized on a
straight-line basis over their estimated useful lives. Amortization
expense for the fiscal year 2006-07 totalled $838 million (2005-06,
$815 million). The useful lives of the Province's tangible capital
assets have been estimated as:
Buildings 20 to 40 years
Transportation Infrastructure 10 to 60 years
Other 3 to 25 years
9. Contingent Liabilities
Obligations Guaranteed by the Province
The authorized limit for loans guaranteed by the Province as at March
31, 2007 was $2.9 billion (2006, $3.8 billion). The outstanding loans
guaranteed and other contingencies amounted to $2.6 billion at March
31, 2007 (2006, $3.3 billion). A provision of $416 million (2006,
$504 million) based on an estimate of the likely loss arising from
guarantees under the Student Support Programs has been reflected in
these financial statements.
Ontario Nuclear Funds Agreement
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. The likelihood and amount
by which the cost estimate could rise above these thresholds cannot be
determined at this time. The cost estimate will be updated periodically,
to reflect new developments in the management of nuclear used fuel waste.
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. If the earnings on assets in that fund exceed the
guaranteed rate, the Province is entitled to the excess.
Two agreements are in place to satisfy the Canadian Nuclear Safety
Commission (CNSC) licensing requirements for financial guarantees in
respect of OPG's nuclear station decommissioning and nuclear waste
management obligations. One agreement gives the CNSC access to the
segregated funds established under ONFA. The other agreement provides a
direct provincial guarantee to the CNSC on behalf of OPG. This guarantee,
for up to $1.5 billion, relates to the portion of the decommissioning
and waste management obligations not funded by the segregated funds. In
return, the Province receives from OPG an annual fee equal to 0.5 per cent
of the value of the direct provincial guarantee.
Social Housing — Loan Insurance Agreements
For all non-profit housing projects in the provincial portfolio, the
Province is liable to indemnify and reimburse the Canada Mortgage and
Housing Corporation (CMHC) for any net costs, including any
environmental liabilities, incurred as a result of project defaults,
directly or indirectly, through the Ministry of Municipal Affairs and
Housing or the Ontario Housing Corporation.
At March 31, 2007, there were $8.3 billion (2006, $8.6 billion) of
mortgage loans outstanding. As operating subsidies provided are
sufficient to ensure that all mortgage payments can be made when due,
default is unlikely. To date, there have been no claims for defaults on
insured mortgage loans.
Claims Against the Crown
There are claims outstanding against the Crown of which 111 (2006, 94)
are for amounts over $50 million. These claims arise 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. The
cost to the Province, if any, cannot be determined because the outcome
of these actions is uncertain.
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.
10. Contractual Obligations
- -------------------------------------------------------------------------------------------------------------------
Contractual Minimum Payments to be made in:
Obligations 2013 and
As at March 31 2007 2006 2008 2009 2010 2011 2012 thereafter
- -------------------------------------------------------------------------------------------------------------------
Ontario Power Generation $11,064 $10,930 $2,542 $2,077 $1,262 $1,650 $1,012 $2,521
Transfer payments 5,158 5,193 1,536 639 364 264 245 2,110
Leases 1,487 1,452 238 197 159 133 104 656
Construction Contracts 1,879 1,007 1,197 467 73 105 4 33
Other 3,477 6,581 809 471 409 355 328 1,105
- -------------------------------------------------------------------------------------------------------------------
Total Contractual Obligations $23,065 $25,163 $6,322 $3,851 $2,267 $2,507 $1,693 $6,425
-------------------------------------------------------------------------------------------------------------------
Ontario Power Generation Inc.'s contractual obligations include future
contributions under the Ontario Nuclear Funds Agreement of $3.2
billion, long-term debt repayment obligations of $3.2 billion and fuel
supply agreements of $2.1 billion.
11. Trust Funds Under Administration
Summary financial information from the most recent financial statements
of trust funds under administration is provided below.
---------------------------------------------------------------------------------------------------------------------
Workplace Safety and Insurance Board
As at December 31 2006 2005
- ---------------------------------------------------------------------------------------------------------------------
Assets $16,398 $14,547
Liabilities 22,395 21,057
- ---------------------------------------------------------------------------------------------------------------------
Unfunded Liability (5,997) (6,510)
- ---------------------------------------------------------------------------------------------------------------------
Revenues 5,341 4,416
Expenditures 4,828 4,506
- ---------------------------------------------------------------------------------------------------------------------
Surplus (Deficit) 513 (90)
Unfunded Liability, Beginning of Year (6,510) (6,420)
- ---------------------------------------------------------------------------------------------------------------------
Unfunded Liability, End of Year $(5,997) $(6,510)
---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Other Trust Funds
As at March 31, 2007
- ---------------------------------------------------------------------------------------------------------------------
Fund Balance
Assets Liabilities (Unfunded Liability)
- ---------------------------------------------------------------------------------------------------------------------
The Public Guardian and
Trustee for Province of Ontario $1,292 $1,203 $89
- ---------------------------------------------------------------------------------------------------------------------
Motor Vehicle Accident Claims Fund $54 $232 $(178)
- --------------------------------------------------------------------------------------------------------------------
Pension Benefits Guarantee Fund $152 $265 $(113)
--------------------------------------------------------------------------------------------------------------------
As at December 31, 2006 Assets Liabilities Fund Balance
- --------------------------------------------------------------------------------------------------------------------
Deposit Insurance Corporation of Ontario $111 $11 $100
- ---------------------------------------------------------------------------------------------------------------------
Any unfunded liability of trusts under administration are not included
in the Province's financial statements as they are the responsibility
of external parties. The most recent financial statements of these
trusts are reproduced in Volume 2 of the Public Accounts of Ontario.
12. Comparative Figures
The comparative figures have been reclassified as necessary to conform
to the 2007 presentation.
SCHEDULES TO THE CONSOLIDATED FINANCIAL STATEMENTS PAGE
Schedule 1 Revenues................................................................................59
Schedule 2 Expenses by Object .....................................................................61
Schedule 3 Expenses by Ministry ...................................................................62
Schedule 4 Accounts Payable and Accrued Liabilities ...............................................63
Schedule 5 Accounts Receivable ....................................................................63
Schedule 6 Loans Receivable .......................................................................64
Schedule 7 Government Organizations ...............................................................65
Schedule 8 Government Business Enterprises ........................................................70
Schedule 9 Broader Public Sector Organizations.....................................................73
Province of Ontario
Schedule 1: Revenues
- ---------------------------------------------------------------------------------------------------------------------
2006-07 2006-07 2005-06
Budget(1) Actual Actual
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Taxation
Personal Income Tax 21,671 23,655 21,041
Retail Sales Tax 16,165 16,228 15,554
Corporations Tax 9,845 10,845 9,984
Employer Health Tax 4,314 4,371 4,197
Ontario Health Premium 2,551 2,589 2,350
Gasoline Tax 2,303 2,310 2,281
Tobacco Tax 1,485 1,236 1,379
Land Transfer Tax 1,125 1,197 1,159
Electricity Payments-In-Lieu of Taxes 790 757 951
Fuel Tax 742 723 729
Other Taxes 283 399 292
- ---------------------------------------------------------------------------------------------------------------------
61,274 64,310 59,917
- ---------------------------------------------------------------------------------------------------------------------
Government of Canada
Canada Health Transfer 7,619 7,702 7,148
Canada Social Transfer 3,166 3,225 3,052
CHST Supplements - - 584
Social Housing 530 532 520
Wait Times Reduction Fund 467 467 243
Early Learning and Child Care 254 253 272
Post Secondary Education Infrastructure Trust - 195 -
Infrastructure Programs 359 191 285
Medical Equipment Funds - - 194
Labour Market Development Agreement - 184 -
Indian Welfare Services Agreement 168 179 182
Public Transit Capital Trust - 117 -
Affordable Housing Trust - 117 -
Bilingualism Development 79 82 86
Labour Market Agreement for Persons with Disabilities 72 76 81
Youth Criminal Justice 66 64 67
Public Health and Immunization Trust 53 53 52
Legal Aid Criminal 43 51 51
Other 706 548 434
- ---------------------------------------------------------------------------------------------------------------------
13,582 14,036 13,251
---------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 1: Revenues (cont'd)
- ---------------------------------------------------------------------------------------------------------------------
2006-07 2006-07 2005-06
Budget(1) Actual Actual
($ Millions)
- ----------------------------------------------------------------------------------------------------------------------
Income from Investment in Government Business 3,920 4,196 4,308
Enterprises (Schedule 8)
- ----------------------------------------------------------------------------------------------------------------------
Other
Sales and Rentals 396 1,108 465
Electricity Debt Retirement Charge 1,027 991 1,021
Vehicle and Driver Registration Fees 1,021 970 763
Power Sales 988 863 779
Local Services Realignment 811 809 775
Other Fees and Licences 556 624 550
Liquor Licence Board of Ontario Revenues 453 467 516
Net Reduction of Power Purchase Contracts 412 412 396
Royalties 243 215 191
Independent Electricity System Operator Revenue 145 124 141
Miscellaneous 902 1,272 1,152
- ----------------------------------------------------------------------------------------------------------------------
6,954 7,855 6,749
- ----------------------------------------------------------------------------------------------------------------------
Total Revenues 85,730 90,397 84,225
----------------------------------------------------------------------------------------------------------------------
(1) Amounts reported in 2006 Budget.
- ----------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 2: Expenses by Object
- --------------------------------------------------------------------------------------------------------------------
For the year ended March 31 2007 2006
($ Millions)
- --------------------------------------------------------------------------------------------------------------------
Transfer Payments 66,571 62,636
Interest on Debt 8,831 9,019
Salaries and Wages 4,707 4,477
Services 3,202 2,747
Pensions and Other Employee Future Benefits (Note 5) 1,162 1,240
Power Purchases 863 803
Supplies and Equipment 858 794
Amortization of Tangible Capital Assets (Note 8) 838 815
Employee Benefits 636 573
Transportation and Communication 322 445
Increase in Net Assets of Broader Public Sector Organizations
(Schedule 9) (340) (449)
Other 478 827
- --------------------------------------------------------------------------------------------------------------------
Total Expenses 88,128 83,927
--------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 3: Expenses by Ministry
- ---------------------------------------------------------------------------------------------------------------------
2006-07 2006-07 2005-06
Budget(1) Actual Actual
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Aboriginal Affairs Secretariat 21 25 50
Agriculture, Food and Rural Affairs 896 1,078 1,147
Attorney General 1,297 1,348 1,287
Board of Internal Economy 169 163 150
Children and Youth Services 3,198 3,260 3,267
Citizenship and Immigration 90 116 92
Community and Social Services 7,029 7,182 6,718
Community Safety and Correctional Services 1,870 1,876 1,750
Culture 366 410 475
Democratic Renewal Secretariat 10 6 2
Economic Development and Trade 328 199 176
Education 472 423 440
School Boards (Schedule 9) 11,182 11,290 10,886
Teachers' Pension (Note 5) 408 345 295
Energy 229 229 207
Environment 301 314 274
Executive Offices 19 19 19
Finance 1,192 1,327 1,297
Contingency Fund 995 - -
Interest on Debt 9,429 8,831 9,019
Power Purchases 988 863 803
Government Services 795 856 625
Public Service/OPSEU Pension and Other Employee Future Benefits (Note 5) 594 557 729
Health and Long-Term Care 19,028 19,162 17,841
Hospitals (Schedule 9) 16,133 16,145 14,816
Health Promotion 355 391 290
Intergovernmental Affairs 9 11 10
Labour 150 147 141
Municipal Affairs and Housing 692 843 926
Natural Resources 678 734 628
Northern Development and Mines 347 318 337
Office of Francophone Affairs 4 4 4
Public Infrastructure Renewal 114 426 107
Capital Contingency Plan 175 - -
Research and Innovation 317 316 332
Revenue 580 563 442
Small Business and Entrepreneurship 23 25 26
Tourism 161 204 210
Training, Colleges and Universities 3,842 4,110 3,504
Colleges (Schedule 9) 1,359 1,273 1,185
Transportation 1,935 2,739 3,420
Year-End Savings(2) (700) - -
- ---------------------------------------------------------------------------------------------------------------------
Total Expenses 87,080 88,128 83,927
---------------------------------------------------------------------------------------------------------------------
(1) Amounts reported in 2006 Budget.
(2) For Budget purposes, these items were not allocated to individual ministries.
- ---------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 4: Accounts Payable and Accrued Liabilities
- ---------------------------------------------------------------------------------------------------------------------
As at March 31 2007 2006
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Transfer Payments 4,807 5,125
Interest on Debt 4,014 4,313
Liability for CRA(1) Overpayment 931 1,064
Salaries, Wages and Benefits 569 521
Restructuring 88 200
Other 2,054 1,983
- ---------------------------------------------------------------------------------------------------------------------
Total Accounts Payable and Accrued Liabilities 12,463 13,206
---------------------------------------------------------------------------------------------------------------------
(1) CRA - Canada Revenue Agency.
- ---------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 5: Accounts Receivable
- ---------------------------------------------------------------------------------------------------------------------
As at March 31 2007 2006
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Taxes 6,473 5,045
Transfer Payments(1) 1,376 1,349
Other Accounts Receivable 784 929
- ---------------------------------------------------------------------------------------------------------------------
8,633 7,323
Less: Provision for Doubtful Accounts(2) (2,172) (2,004)
- ---------------------------------------------------------------------------------------------------------------------
6,461 5,319
Government of Canada 1,415 1,104
- ---------------------------------------------------------------------------------------------------------------------
Total Accounts Receivable 7,876 6,423
---------------------------------------------------------------------------------------------------------------------
(1) The transfer payment receivable consists primarily of recoverables of $857 million (2006, $838 million) for the
Ontario Disability Support Program - Financial Assistance, and $422 million (2006, $404 million) for Student
Support.
(2) The provision for doubtful accounts includes a provision of $788 million (2006, $770 million) for the Ontario
Disability Support Program - Financial Assistance, and $344 million (2006, $342 million) for Student Support.
- ---------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 6: Loans Receivable
- ---------------------------------------------------------------------------------------------------------------------
As at March 31 2007 2006
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Government Business Enterprises(1) 3,453 3,979
Students(2) 2,159 1,986
Municipalities(3) 1,370 1,172
School Boards and Colleges(4) 866 110
Pension Benefit Guarantee Fund(5) 297 308
Industrial and Commercial(6) 286 274
Universities(7) 165 165
Other 52 44
- ---------------------------------------------------------------------------------------------------------------------
8,648 8,038
Unamortized Concession Discounts(8) (378) (283)
Allowance for Doubtful Accounts(9) (892) (880)
- ---------------------------------------------------------------------------------------------------------------------
Total Loans Receivable 7,378 6,875
---------------------------------------------------------------------------------------------------------------------
(1) Loans to government business enterprises bear interest at rates of 4.38% to 6.65% (2006, 3.85% to 6.65%).
(2) Loans to students bear interest at rates of 4.25% to 5.00% (2006, 4.25% to 5%).
(3) Loans to municipalities bear interest at rates up to 8.00% (2006, 7.38%).
(4) Loans to school boards and colleges bear interest at rates of 4.56% to 11.04% (2006, 7.25% to 11.04%).
(5) The loan to the Pension Benefit Guarantee Fund bears is interest-free.
(6) Loans to industrial and commercial enterprises bear interest at rates up to 7.47% (2006, 11.25%) and include
forgivable loans totalling $8.9 million (2006, $19.3 million), which are fully provided for in the allowance for
doubtful accounts.
(7) Loans to universities are mortgages bearing interest at rates of 6.13% to 11.04% (2006, 5.88% to 10.81%).
(8) Unamortized concession discounts are related to loans to municipalities of $128 million (2006, $51 million),
loans to Pension Benefit Guarantee Fund of $145 million (2006, $151 million), and loans to industrial and
commercial enterprises of $105 million (2006, $81 million).
(9) Allowance for doubtful accounts is related to loans to students of $714 million (2006, $693 million), loans to
municipalities of $158 million (2006, $158 million), loans to industrial and commercial enterprises and other of
$20 million (2006, $29 million).
- ---------------------------------------------------------------------------------------------------------------------
Repayment terms are as follows: Principal Repayment
Years to Maturity 2007 2006
- ---------------------------------------------------------------------------------------------------------------------
1 year 1,561 1,818
2 years 661 658
3 years 868 627
4 years 748 832
5 years 337 711
- ---------------------------------------------------------------------------------------------------------------------
1-5 years 4,175 4,646
6-10 years 1,313 1,006
11-15 years 400 197
16-20 years 366 161
21-25 years 297 60
Over 25 years 157 120
- ---------------------------------------------------------------------------------------------------------------------
Subtotal 6,708 6,190
No fixed maturity 1,940 1,848
- ---------------------------------------------------------------------------------------------------------------------
Total 8,648 8,038
---------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 7: Government Organizations
- ----------------------------------------------------------------------------------------------------------------------
Government Business Enterprises(1) Responsible Ministry
- ----------------------------------------------------------------------------------------------------------------------
Algonquin Forestry Authority (AFA) Natural Resources
Hydro One Inc. (HOI) Energy
Liquor Control Board of Ontario (LCBO) Public Infrastructure Renewal
Niagara Parks Commission (NPC) Tourism
Ontario Clean Water Agency (OCWA) Environment
Ontario Lottery and Gaming Corporation (OLGC) Public Infrastructure Renewal
Ontario Northland Transportation Commission (ONTC) Northern Development and Mines
Ontario Power Generation Inc. (OPG) Energy
Provincial Agencies(1) Responsible Ministry
- ----------------------------------------------------------------------------------------------------------------------
Agricorp Agriculture, Food and Rural Affairs
Agricultural Research Institute of Ontario(2) Agriculture, Food and Rural Affairs
Cancer Care Ontario Health and Long-Term Care
Education Quality and Accountability Office Education
Independent Electricity System Operator Energy
Infrastructure Ontario(3) Public Infrastructure Renewal
GO Transit (Toronto Area Transit Operating Authority Transportation
and Greater Toronto Transit Authority)
Legal Aid Ontario Attorney General
Metropolitan Toronto Convention Centre Tourism
Northern Ontario Heritage Fund Corporation Northern Development and Mines
Ontario Educational Communications Authority Education
Ontario Electricity Financial Corporation Finance
Ontario Energy Board Energy
Ontario Financing Authority Finance
Ontario Mortgage and Housing Corporation(4) Municipal Affairs and Housing
Ontario Immigrant Investor Corporation Economic Development and Trade
Ontario Place Corporation Tourism
Ontario Power Authority Energy
Ontario Racing Commission Government Services
Ontario Realty Corporation Public Infrastructure Renewal
Ontario Science Centre Culture
Ontario Securities Commission Finance
Ontario Tourism Marketing Partnership Corporation Tourism
Ontario Trillium Foundation Culture
Royal Ontario Museum Culture
Smart Systems for Health Agency Health and Long-Term Care
Toronto Waterfront Revitalization Corporation Public Infrastructure Renewal
- ----------------------------------------------------------------------------------------------------------------------
(1) The most recent audited financial statements of these organizations are reproduced in Volume 2, Public Accounts
of Ontario.
(2) The organization met the criteria for consolidation in fiscal year 2006-07.
(3) Ontario Strategic Infrastructure Financing Authority was amalgamated with Infrastructure Ontario in 2006-07.
(4) The name of Ontario Housing Corporation was changed to Ontario Mortgage and Housing Corporation in 2006-07.
- ----------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 7: Government Organizations
- ----------------------------------------------------------------------------------------------------------------------
Broader Public Sector Organizations
- ----------------------------------------------------------------------------------------------------------------------
Public Hospitals - Ministry of Health and Long-Term Care
Alexandra Hospital Ingersoll Hopital Montfort
Alexandra Marine & General Hospital Hopital Notre Dame Hospital
Almonte General Hospital Hopital regional de Sudbury Regional Hospital
Anson General Hospital Hornepayne Community Hospital
Arnprior and District Memorial Hospital Hospital for Sick Children
Atikokan General Hospital Hotel-Dieu Hospital (Cornwall)
Baycrest Centre for Geriatric Care Hotel-Dieu Grace Hospital
Bingham Memorial Hospital Humber River Regional Hospital
Blind River District Health Centre Huronia District Hospital
Bloorview MacMillan Centre James Bay General Hospital
Bluewater Health Joseph Brant Memorial Hospital
Brantford General Hospital Kemptville District Hospital
Bridgepoint Hospital Kingston General Hospital
Brockville General Hospital Kirkland and District Hospital
Cambridge Memorial Hospital Lady Dunn Health Centre
Campbellford Memorial Hospital Lady Minto Hospital at Cochrane
Carleton Place and District Memorial Hospital Lake of the Woods District Hospital
Casey House Hospice Lakeridge Health Corporation
Chatham-Kent Health Alliance Leamington District Memorial Hospital
Children's Hospital of Eastern Ontario Lennox and Addington County General Hospital
Clinton Public Hospital Listowel Memorial Hospital
Collingwood General and Marine Hospital London Health Sciences Centre
Cornwall Community Hospital Manitoulin Health Centre
Credit Valley Hospital Manitouwadge General Hospital
Deep River and District Hospital Corporation Markham Stouffville Hospital
Dryden Regional Health Centre Mattawa General Hospital
Englehart and District Hospital McCausland Hospital
Espanola General Hospital Mount Sinai Hospital
Four Counties Health Services Muskoka Algonquin Healthcare
Geraldton District Hospital Niagara Health System
Grand River Hospital Nipigon District Memorial Hospital
Grey Bruce Health Services Norfolk General Hospital
Groves Memorial Community Hospital North Bay General Hospital
Guelph General Hospital North Wellington Health Care Corporation
Haldimand War Memorial Hospital North York General Hospital
Haliburton Highlands Health Services Corporation Northumberland Hills Hospital
Halton Healthcare Services Corporation Orillia Soldiers' Memorial Hospital
Hamilton Health Sciences Corporation Ottawa Hospital
Hanover & District Hospital Pembroke Regional Hospital Inc.
Headwaters Health Care Centre Penetanguishene General Hospital Inc.
Hopital Général de Hawkesbury and District General Perth and Smiths Falls District Hospital
Hospital Inc.
Hopital Glengarry Memorial Hospital Peterborough Regional Health Centre
Province of Ontario
Schedule 7: Government Organizations
- ----------------------------------------------------------------------------------------------------------------------
Public Hospitals - Ministry of Health and Long-Term Care (cont'd)
Providence Healthcare St. Mary's Memorial Hospital
Queensway-Carleton Hospital St. Mary's of the Lake Hospital
Quinte Healthcare Corporation St. Michael's Hospital
Red Lake Margaret Cochenour Memorial Hospital St. Peter's Hospital
Religious Hospitallers of St. Joseph of the Hotel Dieu St. Thomas - Elgin General Hospital
of Kingston
Religious Hospitallers of St. Joseph of the Hotel Dieu St. Vincent de Paul Hospital
of St. Catharines
Renfrew Victoria Hospital Stevenson Memorial Hospital
Riverside Health Care Facilities Inc. Stratford General Hospital
Ross Memorial Hospital Strathroy Middlesex General Hospital
Rouge Valley Health System Sunnybrook Health Sciences Centre
Royal Victoria Hospital of Barrie Inc. Temiskaming Hospital
Runnymede Healthcare Centre Thunder Bay Regional Health Sciences Centre
Salvation Army Toronto Grace Hospital Tillsonburg District Memorial Hospital
Sault Area Hospital Timmins and District Hospital
Scarborough Hospital Toronto East General Hospital
Seaforth Community Hospital Toronto Rehabilitation Institute
Sensenbrenner Hospital Trillium Health Centre
Services de sante de Chapleau Health Services University Health Network
Sioux Lookout Meno-Ya-Win Health Centre University of Ottawa Heart Institute
Sisters of Charity of Ottawa Hospital West Haldimand General Hospital
Smooth Rock Falls Hospital West Lincoln Memorial Hospital
South Bruce Grey Health Centre West Nipissing General Hospital
South Huron Hospital Association West Park Healthcare Centre
Southlake Regional Health Centre West Parry Sound Health Centre
St. Francis Memorial Hospital Willett Hospital
St. John's Rehabilitation Hospital William Osler Health Centre
St. Joseph's Care Group Wilson Memorial General Hospital
St. Joseph's General Hospital, Elliot Lake Incorporated Winchester District Memorial Hospital
St. Joseph's Health Care, London Windsor Regional Hospital
St. Joseph's Health Centre (Toronto) Wingham and District Hospital
St. Joseph's Health Centre (Guelph) Women's College Hospital
St. Joseph's Healthcare Hamilton Woodstock General Hospital
St. Mary's General Hospital York Central Hospital
Specialty Psychiatric Hospitals - Ministry of Health and Long-Term Care
Centre for Addiction and Mental Health Royal Ottawa Health Care Group
Northeast Mental Health Centre Whitby Mental Health Centre
Province of Ontario
Schedule 7: Government Organizations
- ----------------------------------------------------------------------------------------------------------------------
School Boards - Ministry of Education
Airy and Sabine District School Area Board Hornepayne Roman Catholic Separate School Board
Algoma District School Board Huron-Perth Catholic District School Board
Algonquin and Lakeshore Catholic District School Board Huron-Superior Catholic District School Board
Asquith-Garvey District School Area Board James Bay Lowlands Secondary School Board
Atikokan Roman Catholic Separate School Board Kawartha Pine Ridge District School Board
Avon Maitland District School Board Keewatin-Patricia District School Board
Bloorview MacMillan School Authority Kenora Catholic District School Board
Bluewater District School Board KidsAbility School Authority
Brant Haldimand Norfolk Catholic District School Board Lakehead District School Board
Bruce-Grey Catholic District School Board Lambton Kent District School Board
Campbell Children's School Authority Limestone District School Board
Caramat District School Area Board London District Catholic School Board
Catholic District School Board of Eastern Ontario Mine Centre District School Area Board
Collins District School Area Board Missarenda District School Area Board
Connell and Ponsford District School Area Board Moose Factory Island District School Area Board
Conseil de district des écoles publiques Peterborough Victoria Northumberland and
de langue francaise no 59 Clarington Catholic District School Board
Conseil scolaire de district catholique Centre-Sud Moosonee Roman Catholic Separate School Board
Conseil scolaire de district catholique de l'Est Murchison and Lyell District School Area Board
ontarien
Conseil scolaire de district catholique des Nakina District School Area Board
Aurores boréales
Conseil scolaire de district catholique des Near North District School Board
Grandes Rivières
Conseil scolaire de district catholique du Niagara Catholic District School Board
Centre-Est de l'Ontario
Conseil scolaire de district catholique du Niagara Peninsula children's Centre School Authority
Nouvel-Ontario
Conseil scolaire de district catholique Franco-Nord Nipissing-Parry Sound Catholic District School Board
Conseil scolaire de district des écoles catholiques du Northeastern Catholic District School Board
Sud-Ouest
Conseil scolaire de district du Centre Sud-Ouest Northern District School Area Board
Conseil scolaire de district du Grand Nord de l'Ontario Northwest Catholic District School Board
Conseil scolaire de district du Nord-Est de l'Ontario Ottawa Children's Treatment Centre School Authority
District School Board of Niagara Ottawa Catholic District School Board
District School Board Ontario North East Ottawa-Carleton District School Board
Dubreuilville Roman Catholic Separate School Board Parry Sound Roman Catholic Separate School Board
Dufferin-Peel Catholic District School Board Peel District School Board
Durham Catholic District School Board Penetanguishene Protestant Separate School Board
Durham District School Board Moosonee District School Area Board
Essex County Children's Rehabilitation Centre School Rainbow District School Board
Authority
Foleyet District School Area Board Rainy River District School Board
Foleyet Roman Catholic Separate School Board Red Lake Area Combined Roman Catholic Separate School Board
Gogama District School Area Board Renfrew County Catholic District School Board
Gogama Roman Catholic Separate School Board Renfrew County District School Board
Grand Erie District School Board Simcoe County District School Board
Greater Essex County District School Board Simcoe Muskoka Catholic District School Board
Halton Catholic District School Board St. Clair Catholic District School Board
Halton District School Board Sudbury Catholic District School Board
Hamilton-Wentworth Catholic District School Board Superior North Catholic District School Board
Hamilton-Wentworth District School Board Superior-Greenstone District School Board
Hastings and Prince Edward District School Board Thames Valley District School Board
Province of Ontario
Schedule 7: Government Organizations
- ----------------------------------------------------------------------------------------------------------------------
School Boards - Ministry of Education (cont'd)
Thunder Bay Catholic District School Board Waterloo Catholic District School Board
Toronto Catholic District School Board Waterloo Region District School Board
Toronto District School Board Wellington Catholic District School Board
Trillium Lakelands District School Board Windsor-Essex Catholic District School Board
Upper Canada District School Board York Region District School Board
Upper Grand District School Board York Catholic District School Board
Upsala District School Area Board
Colleges - Ministry of Training, Colleges and Universities
Algonquin College of Applied Arts and Technology Le college d'arts appliques et de technologie la Cité
collégiale
Cambrian College of Applied Arts and Technology Lambton College of Applied Arts and Technology
Canadore College of Applied Arts and Technology Loyalist College of Applied Arts and Technology
Centennial College of Applied Arts and Technology Mohawk College of Applied Arts and Technology
College Boreal d'arts appliques et de technologie Niagara College of Applied Arts and Technology
Conestoga College of Applied Arts and Technology Northern College of Applied Arts and Technology
Confederation College of Applied Arts and Technology Sault College of Applied Arts and Technology
Durham College of Applied Arts and Technology Seneca College of Applied Arts and Technology
Fanshawe College of Applied Arts and Technology Sheridan College of Applied Arts and Technology
George Brown College of Applied Arts and Technology Sir Sandford Fleming College of Applied Arts and Technology
Georgian College of Applied Arts and Technology St. Clair College of Applied Arts and Technology
Humber College Institute of Technology and Advanced St. Lawrence College of Applied Arts and Technology
Learning
Province of Ontario
Schedule 8: Government Business Enterprises
Summary financial information of Government Business Enterprises is provided below.(1)
-----------------------------------------------------------------------------------------------------------------------
Liquor
Algonquin Control Niagara
For the year ended March 31, 2007 Forestry Hydro Board of Parks
($ Millions) Authority One Inc. Ontario Commission
- -----------------------------------------------------------------------------------------------------------------------
Assets
Cash and Temporary Investments 2 331 136 -
Accounts Receivable 5 842 24 1
Inventories - 61 321 6
Prepaid Expenses - - 20 -
Long-Term Investments - - - -
Fixed Assets 1 10,609 233 132
Other Assets 3 830 - -
- -----------------------------------------------------------------------------------------------------------------------
Total Assets 11 12,673 734 139
- -----------------------------------------------------------------------------------------------------------------------
Liabilities
Bank Indebtedness 2 16 - 12
Accounts Payable - 770 369 6
Deferred Revenue - - - -
Long-Term Debt - 5,657 54 2
Other Liabilities - 1,367 - 3
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities 2 7,810 423 23
- -----------------------------------------------------------------------------------------------------------------------
Net Assets 9 4,863 311 116
- -----------------------------------------------------------------------------------------------------------------------
Revenue 28 4,663 3,928 79
- -----------------------------------------------------------------------------------------------------------------------
Expenses 28 4,211 2,621 80
- -----------------------------------------------------------------------------------------------------------------------
Net Income (Loss) - 452 1,307 (1)
Net Assets — Beginning of Year 9 4,709 283 118
Payments from (to) CRF - (298) (1,279) (1)
- -----------------------------------------------------------------------------------------------------------------------
Net Assets 9 4,863 311 116
- -----------------------------------------------------------------------------------------------------------------------
(1) The information in this table represents unaudited results of government business enterprises for the year ended
March 31, 2007. Adjustments have been made to eliminate fair market value gains and losses recorded by government
business enterprises.
- -----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Ontario Ontario
Lottery and Northland
Ontario Clean Gaming Transportation Ontario Power
Water Agency Corporation Commission Generation Inc. Total
- -------------------------------------------------------------------------------------------------------------------
42 704 - 15 1,230
12 79 17 397 1,377
- - 19 678 1,085
3 59 1 - 83
8 - - - 8
4 2,412 261 12,738 26,390
125 80 89 9,227 10,354
- -------------------------------------------------------------------------------------------------------------------
194 3,334 387 23,055 40,527
- -------------------------------------------------------------------------------------------------------------------
- - 14 - 44
10 444 31 820 2,450
- 13 1 141 155
- 392 36 3,384 9,525
8 174 63 12,757 14,372
- -------------------------------------------------------------------------------------------------------------------
18 1,023 145 17,102 26,546
- -------------------------------------------------------------------------------------------------------------------
176 2,311 242 5,953 13,981
- -------------------------------------------------------------------------------------------------------------------
122 6,085 144 5,613 20,662
- -------------------------------------------------------------------------------------------------------------------
117 4,140 151 5,118 16,466
- -------------------------------------------------------------------------------------------------------------------
5 1,945 (7) 495 4,196
171 2,044 250 5,586 13,170
- (1,678) (1) (128) (3,385)
- -------------------------------------------------------------------------------------------------------------------
176 2,311 242 5,953 13,981
- -------------------------------------------------------------------------------------------------------------------
Province of Ontario
Schedule 8: Government Business Enterprises
- ------------------------------------------------------------------------------------------------------------------------
Algonquin Forestry Authority (AFA)
The Algonquin Forestry Authority is responsible for forest management
in Algonquin Park.
Hydro One Inc. (HOI)
The principal business of Hydro One is the transmission and
distribution of electricity to customers within Ontario. It is
regulated by the Ontario Energy Board.
Liquor Control Board of Ontario (LCBO)
The Liquor Control Board of Ontario regulates the purchase, sale and
distribution of liquor for home consumption and liquor sales to
licensed establishments through Liquor Control Board stores, Brewers'
Retail stores and winery retail stores throughout Ontario. The Board
buys wine and liquor products for resale to the public and tests all
products sold to the public to maintain high standards of quality. The
Board also establishes prices for beer, wine and spirits.
Niagara Parks Commission (NPC)
The Commission maintains, preserves and enhances the beauty and
surroundings of the Horseshoe Falls and the Niagara River from Fort
Erie to Niagara-on-the-Lake.
Ontario Clean Water Agency (OCWA)
The Agency assists municipalities in providing more cost-effective
water and sewage services and encourages Ontario residents,
municipalities and industries to conserve water. The Agency also
finances, builds and operates water and sewage systems, as well as
providing services to communities, all on a cost-recovery basis.
Ontario Lottery and Gaming Corporation (OLGC)
Under the Ontario Lottery and Gaming Corporation Act, 1999, the
Corporation conducts lottery games and operates commercial casinos,
charity casinos, and slot machines at 15 Ontario racetracks.
Ontario Northland Transportation Commission (ONTC)
The Commission provides rail, bus, ferry, air and telecommunications
services to northern Ontario.
Ontario Power Generation Inc. (OPG)
The principal business of Ontario Power Generation Inc. is the
generation and sale of electricity in the Ontario wholesale market and
in the interconnected markets of Quebec, Manitoba and the northeast and
midwest United States.
Province of Ontario
Schedule 9: Broader Public Sector Organizations
Summary financial information of Broader Public Sector Organizations is provided below.
-------------------------------------------------------------------------------------------------------------------
For the year ended March 31, 2007(1) School
($ Millions) Hospitals Boards Colleges Total
- -------------------------------------------------------------------------------------------------------------------
Expense
Salaries, Wages and Benefits 12,413 14,396 1,535 28,344
Bursaries, Student Aid and Other Grants - - 82 82
Interest Expense 67 335 45 447
Amortization Expense 788 492 149 1,429
Other 5,651 3,586 762 9,999
- -------------------------------------------------------------------------------------------------------------------
Total Expenses 18,919 18,809 2,573 40,301
- -------------------------------------------------------------------------------------------------------------------
Revenue
School Property Taxes - 6,243 - 6,243
Fees, Donations and Other Primary Revenues 1,000 438 1,071 2,509
Interest and Investment Income 37 84 21 142
Other 1,737 754 208 2,699
- -------------------------------------------------------------------------------------------------------------------
Total Revenue 2,774 7,519 1,300 11,593
- -------------------------------------------------------------------------------------------------------------------
Net Expenses 16,145 11,290 1,273 28,708
- -------------------------------------------------------------------------------------------------------------------
Transfers from the Province 16,453 11,223 1,372 29,048
Increase/(Decrease) in Net Assets of Broader
Public Sector 308 (67) 99 340
Net Assets - Beginning of Year 7,752 7,340 1,647 16,739
- -------------------------------------------------------------------------------------------------------------------
Net Assets 8,060 7,273 1,746 17,079
- -------------------------------------------------------------------------------------------------------------------
Financial Assets 4,585 2,532 904 8,021
Liabilities 8,276 10,947 1,440 20,663
- -------------------------------------------------------------------------------------------------------------------
Net Debt (3,691) (8,415) (536) (12,642)
Tangible Capital Assets 11,751 15,688 2,282 29,721
- -------------------------------------------------------------------------------------------------------------------
Net Assets 8,060 7,273 1,746 17,079
- -------------------------------------------------------------------------------------------------------------------
(1) Amounts reported include consolidation adjustments made to eliminate significant inter-organizational gains and
losses, to record tangible capital assets for school boards, and to conform school boards to the Province's
fiscal year.
- -------------------------------------------------------------------------------------------------------------------
SOURCES OF ADDITIONAL INFORMATION
The Ontario Budget
The Ontario government presents a Budget each year, usually in the
early spring. This document outlines expected expense and revenue for
the upcoming fiscal year. For an electronic copy of the Ontario Budget,
visit the Ministry of Finance website at www.fin.gov.on.ca.
The Estimates of the Province of Ontario
The government's spending Estimates for the fiscal year commencing
April 1 are presented to members of the Legislative Assembly following
the presentation of the Ontario Budget by the Minister of Finance. The
Estimates outline the spending plans of each ministry and are submitted
for approval to the Legislative Assembly according to the Supply Act.
For electronic access, go to: www.fin.gov.on.ca.
Ontario Finances
This is a quarterly report on the performance of the government's
Budget for the fiscal year. It covers developments during a quarter and
provides a revised outlook for the remainder of the year. Copies may be
obtained free by writing to the Ministry of Finance, Communications and
Corporate Affairs Branch, 3rd Floor, Frost Building North, 95 Grosvenor
Street, Toronto ON M7A 1Z1. For electronic access, go to:
www.fin.gov.on.ca.
Ontario Economic Accounts
This quarterly report contains data on Ontario's economic activity.
Copies may be obtained free by writing to the Ministry of Finance,
Communications and Corporate Affairs Branch, 3rd Floor, Frost Building
North, 95 Grosvenor Street, Toronto ON M7A 1Z1. For electronic access,
go to: www.fin.gov.on.ca.
2007 Pre-Election Report on Ontario's Finances
This report presents the government's fiscal plan for the 2007-08 to
2009-10 fiscal years. Copies may be obtained free by writing to the
Ministry of Finance, Communications and Corporate Affairs Branch, 3rd
Floor, Frost Building North, 95 Grosvenor Street, Toronto ON M7A 1Z1.
For electronic access, go to: www.fin.gov.on.ca.
