FORM 18-K/A
For Foreign Governments and Political Subdivisions Thereof
__________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
AMENDMENT NO. 1 TO
ANNUAL REPORT
of
PROVINCE OF ONTARIO
(Canada)
(Name of Registrant)
___________________
Date of end of last fiscal year: March 31, 2007
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, 2007 (the "Annual Report") as follows:
The following additional exhibit is added to the Annual Report:
Exhibit (e) 2007 Ontario Economic Outlook and Fiscal Review
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this amendment to the annual report to be signed on
its behalf by the undersigned, thereunto duly authorized, at Toronto, Ontario.
PROVINCE OF ONTARIO
(Name of registrant)
December 13, 2007 By: /s/ Irene Stich
___________________________________________
Name: Irene Stich
Title: Director, Capital Markets Operations
Capital Markets Division
Ontario Financing Authority
Exhibit Index
Exhibit (e): 2007 Ontario Economic Outlook and Fiscal Review
EXHIBIT (e)
[THE ONTARIO COAT OF ARMS]
2007 Ontario Economic Outlook and Fiscal Review
The Honourable Dwight Duncan Background Papers
Minister of Finance
General inquiries regarding the 2007 Ontario Economic Outlook and Fiscal Review,
Background Papers should be directed to:
Ministry of Finance
95 Grosvenor Street, Queen's Park
Frost Building North, 3rd Floor
Toronto, Ontario M7A 1Z1
or call:
Ministry of Finance Information Centre
Toll-free English & French inquiries: 1-800-337-7222
Teletypewriter (TTY): 1-800-263-7776
For electronic copies of this document, visit our website at
www.fin.gov.on.ca
Printed copies are available from:
Service Ontario Publications
777 Bay Street, Market Level
Toronto, Ontario M5G 2C8
Telephone: (416) 326-5300
Toll-free: 1-800-668-9938
TTY Toll-free: 1-800-268-7095
Website: www.publications.serviceontario.ca
©Queen's Printer for Ontario, 2007
ISSN 1483-5967 (Print)
ISSN 1496-2829 (PDF/HTML)
Ce document est disponible en français sous le titre :
Perspectives économiques et revue financière de l'Ontario de 2007, Documents d'information
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TABLE OF CONTENTS
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FOREWORD
ANNEX I: A STRONGER ONTARIO
INTRODUCTION
INVESTMENTS FOR A STRONGER ONTARIO
1. Enhancing Competitiveness Through Immediate Tax Reductions
Investing in Tourism and Film
Encouraging Innovation
2. Investing in People and Communities
Helping Workers and Communities Adjust to Competitive Challenges
Ontario's Skilled and Highly Educated Workforce: A Key Advantage
3. Investing in Infrastructure
FEDERAL GOVERNMENT HAS A ROLE TO PLAY
Supporting Business Investment in Ontario
Supporting Ontario's Workers
Supporting Municipal Investment in Infrastructure and Public Transit
Fulfilling Ontario's Fair Share
ANNEX II: ENHANCING ONTARIO'S TAX COMPETITIVENESS
ENHANCING ONTARIO'S BUSINESS TAX COMPETITIVENESS
New Measures to Further Reduce and Eliminate Capital Tax
Expanding Eligibility for the Small Business Corporate Income Tax Rate
Labour-Sponsored Investment Funds (LSIFs)
Enhancing Tax Support for Ontario's Film and Television Industry Land
Transfer Tax (LTT) Refund for All First-Time Homebuyers
ANNEX III: ECONOMIC AND FISCAL OUTLOOK
SECTION A: INTRODUCTION
INTRODUCTION
SECTION B: ECONOMIC OUTLOOK
OUTLOOK FOR STRENGTHENING ONTARIO ECONOMIC GROWTH
Private-Sector Forecasts
Ontario's Resilience in the Face of Global Economic Challenges
Comparison to the 2007 Ontario Budget
CHALLENGING EXTERNAL ECONOMIC ENVIRONMENT
U.S. Sub-Prime Mortgage Defaults Challenge Financial Market Liquidity
Interest Rates to Trend Modestly Higher
United States Set to Overcome Setbacks
Oil Prices Are Expected to Remain High
Stronger Canadian Dollar Challenges Business
High Dollar Will Challenge Ontario's Trade Performance
Inflation Will Remain Stable
CONTINUED STRONG AND RESILIENT DOMESTIC ECONOMY
Strong Investment Spending to Continue
More Jobs Will Be Created
Incomes Will Continue to Grow
Employment and Income Gains Will Fuel Household Spending
Housing Market Remains Healthy
Details of the Ontario Economic Outlook
SECTION C: ONTARIO'S FISCAL PLAN
ONTARIO'S FISCAL PLAN
Key Elements of Ontario's Medium-Term Fiscal Plan
2007-08 Fiscal Outlook
Medium-Term Fiscal Outlook
Fiscal Prudence
Risks and the Fiscal Outlook
Maintaining a Prudent Debt-to-GDP Ratio
SECTION D: ONTARIO'S REVENUE OUTLOOK
ONTARIO'S REVENUE OUTLOOK
Inherent Uncertainty in Forecasting Revenues
Sources of 2007-08 Revenue Change Since 2007 Ontario Budget
Medium-Term Revenue Changes Since 2007 Ontario Budget
Sources of Medium-Term Revenue Change Since 2007 Ontario Budget
Potential Risks to Provincial Revenue
SECTION E: ONTARIO'S EXPENSE OUTLOOK
2007-08 In-Year Expense Changes
Investing in Infrastructure and Transportation
Agriculture Sector Support
Education Investments
Initiatives to Enhance Competitiveness
Investing in People and Communities
Health Sector Investments
Children's and Social Services Investments
Justice Sector Investments
Northern and Rural Investments
Other Investments
Medium-Term Expense Outlook
Expense Risks and Sensitivities
Contingent Liabilities
Ontario Nuclear Funds Agreement
Obligations Guaranteed by the Province
Social Housing — Loan Insurance Agreements
Claims Against the Crown
Canadian Blood Services
SECTION F: DETAILS ON ONTARIO'S FINANCES
DETAILS ON ONTARIO'S FINANCES
ANNEX IV: BORROWING AND DEBT MANAGEMENT
LONG-TERM PUBLIC BORROWING
Debt
Total Debt Composition
Debt Management
Debt Maturities
Cost of Debt
Net Debt-to-GDP
GLOSSARY OF FINANCIAL TERMS USED IN ANNEX IV
ANNEX V: TRANSPARENCY IN TAXATION
TRANSPARENCY IN TAXATION
Structure of the Report
Scope
Method
Personal Income Tax
Personal Income Tax — Description of Tax Provisions
Ontario Non-Refundable Tax Credits
Other Ontario Tax Credits
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Corporate Tax
Corporate Tax — Description of Tax Provisions
Corporate Income Tax
Ontario Refundable Tax Credits
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Sales and Commodity Tax
Sales and Commodity Tax — Description of Tax Provisions
Gasoline Tax
Retail Sales Tax
Education Property Tax
Employer Health Tax
Estate Administration Tax
Gross Revenue Charge
ANNEX VI: ECONOMIC DATA TABLES
ECONOMIC DATA TABLES
ANNEX VII: HOW TO PARTICIPATE IN THE 2008 PRE-BUDGET CONSULTATIONS
HOW TO PARTICIPATE IN THE 2008 PRE-BUDGET CONSULTATIONS
LIST OF TABLES
ANNEX II: ENHANCING ONTARIO'S TAX COMPETITIVENESS
Table 1: Ontario's Accelerated Capital Tax Elimination Plan with Proposed New Initiatives
Table 2: Fiscal Impact Summary of Proposed Tax Measures
ANNEX III: ECONOMIC AND FISCAL OUTLOOK
SECTION B: ONTARIO'S ECONOMIC OUTLOOK
Table 1: Ontario Economic Outlook
Table 2: Private-Sector Forecasts for Ontario Real GDP Growth
Table 3: Impacts of Changes in Key Assumptions on Ontario Real GDP Growth
Table 4: Key External Factors Affecting Ontario's Economy
Table 5: The Ontario Economy in 2007
Table 6: Canadian Interest Rate Outlook
Table 7: The Ontario Economy, 2005 to 2010
SECTION C: ONTARIO'S FISCAL PLAN
Table 8: 2007-08 Fiscal Outlook -- In-Year Change
Table 9: Medium-Term Fiscal Plan and Outlook
SECTION D: ONTARIO'S REVENUE OUTLOOK
Table 10: Summary of 2007-08 In-Year Revenue Change Since 2007 Ontario Budget
Table 11: Summary of Medium-Term Outlook
Table 12: Summary of Medium-Term Personal Income Tax Outlook
Table 13: Summary of Medium-Term Corporations Tax Outlook
Table 14: Summary of Medium-Term Revenue Change Since Budget
Table 15: Selected Economic and Revenue Risks and Sensitivities
SECTION E: ONTARIO'S EXPENSE OUTLOOK
Table 16: Summary of In-Year Expense Changes Since Budget
Table 17: Selected Expense Risks and Sensitivities
Table 18: Selected Compensation Costs
SECTION F: DETAILS ON ONTARIO'S FINANCES
Table 19: Medium-Term Fiscal Plan and Outlook
Table 20: 2007-08 Fiscal Outlook — In-Year Change
Table 21: Revenue
Table 22: Total Expense
Table 23: 2007-08 Infrastructure Expenditures
Table 24: Ten-Year Review of Selected Financial and Economic Statistics
ANNEX IV: BORROWING AND DEBT MANAGEMENT
Table 1: 2007-08 Borrowing Program
Table 2: Medium-Term Borrowing Outlook
ANNEX V: TRANSPARENCY IN TAXATION
Table 1: Personal Income Tax
Table 2: Amounts on Which Indexed Non-Refundable Tax Credits Are Based
Table 3: Corporate Tax
Table 4: Sales and Commodity Tax
Table 5: Education Property Tax
Table 6: Employer Health Tax (EHT)
Table 7: Estate Administration Tax
Table 8: Gross Revenue Charge (GRC)
ANNEX VI: ECONOMIC DATA TABLES
Table 1: Ontario, Gross Domestic Product, 1993-2006
Table 2: Ontario, Growth in Gross Domestic Product, 1993-2006
Table 3: Ontario, Selected Economic Indicators, 1993-2006
Table 4: Ontario, Selected Economic Indicators, Annual Change, 1993-2006
Table 5: Ontario, Real Gross Domestic Product by Industry at Basic Prices, 2003-2006
Table 6: Ontario, Growth in Real Gross Domestic Product by Industry at Basic Prices, 2003-2006
Table 7: Ontario, Real Gross Domestic Product at Basic Prices in Selected Manufacturing Industries, 2003-2006
Table 8: Ontario, Growth in Real Gross Domestic Product at Basic Prices in Selected Manufacturing Industries, 2003-2006
Table 9: Ontario, Housing Market Indicators, 2003-2006
Table 10: Selected Financial Indicators, 1993-2006
Table 11: Ontario and the G7, Real Gross Domestic Product Growth, 1993-2006
Table 12: Ontario and the G7, Employment Growth, 1993-2006
Table 13: Ontario and the G7, Unemployment Rates, 1993-2006
Table 14: Ontario and the G7, CPI Inflation Rates, 1993-2006
Table 15: G7, Exchange Rates, 1993-2006
Table 16: Ontario, International Merchandise Exports by Major Commodity, 2006
Table 17: Ontario, International Merchandise Imports by Major Commodity, 2006
Table 18: Ontario, International Merchandise Trade by Major Region, 2006
Table 19: Canada, International Merchandise Trade by Major Region, 2006
Table 20: Ontario, Selected Demographic Characteristics, 1991-2007
Table 21: Ontario, Components of Population Growth, 1997-98 to 2006-07
Table 22: Ontario, Labour Force, 1993-2006
Table 23: Ontario, Employment, 1993-2006
Table 24: Ontario, Unemployment, 1993-2006
Table 25: Ontario, Employment Insurance (EI) and Social Assistance, 1993-2006
Table 26: Ontario, Labour Compensation, 1993-2006
Table 27: Ontario, Employment by Occupation, 1995-2006
Table 28: Ontario, Distribution of Employment by Occupation, 1995-2006
Table 29: Ontario, Employment by Industry, 1997-2006
Table 30: Ontario, Growth in Employment by Industry, 1997-2006
Table 31: Ontario, Employment Level by Economic Regions, 1996-2006
Table 32: Ontario, Employment Level by Industry for Economic Regions, 2006
Table 33: Ontario Economic Regions
LIST OF CHARTS
ANNEX I: A STRONGER ONTARIO
Chart 1: Ontario's Combined CIT Rates Are Falling
Chart 2: Structure of Ontario's Economy, 2006
Chart 3: EI Funding Per Unemployed Person in Ontario and the Rest of Canada, 2006
ANNEX II: ENHANCING ONTARIO'S TAX COMPETITIVENESS
Chart 1: Eliminating Capital Tax for Manufacturing and Resource Activities
ANNEX III: ONTARIO'S ECONOMIC AND FISCAL OUTLOOK
SECTION B: ONTARIO'S ECONOMIC OUTLOOK
Chart 1: Private-Sector Forecasts
Chart 2: U.S. Sub-Prime Fallout
Chart 3: 10-Year Government of Canada Bond Rate
Chart 4: U.S. Real GDP Growth
Chart 5: Crude Oil Prices
Chart 6: Canadian Dollar
Chart 7: Ontario CPI Inflation Rate
Chart 8: Real Business Investment
Chart 9: Employment
Chart 10: Real After-Tax Income
Chart 11: Real Consumer Spending
Chart 12: Ontario Housing Starts
SECTION C: ONTARIO'S FISCAL PLAN
Chart 13: Ontario's Strong Fiscal Performance
Chart 14: Continual Improvement in Ontario's Debt-to-GDP Ratio
SECTION D: ONTARIO'S REVENUE OUTLOOK
Chart 15: 2006-07 Tax Revenue
SECTION F: DETAILS ON ONTARIO'S FINANCES
Chart 16: Composition of Revenue Outlook. 2007-08
Chart 17: Composition of Total Expense Outlook, 2007-08
Chart 18: Composition of Program Expense Outlook, 2007-08
ANNEX IV: BORROWING AND DEBT MANAGEMENT
Chart 1: Borrowing — All Markets
Chart 2: Borrowing — Domestic Market
Chart 3: Debt
Chart 4: Total Debt Composition
Chart 5: Interest Rate Reset Exposure
Chart 6: Foreign Exchange Exposure
Chart 7: Debt Maturities
Chart 8: Effective Interest Rate (Weighted Average) of Debt
Chart 9: Net Debt-to-GDP
FOREWORD
The McGuinty government has a vision of improving public services while
delivering balanced budgets. To realize this vision, Ontario must maintain its
prudent and disciplined fiscal management in the face of external challenges. At
the same time, it must continue investing in key priorities to improve
Ontarians' standard of living and further enhance Ontario's ability to thrive in
the global economy.
The government will implement its plan in the context of a strong Ontario
economy that has proven resilient in an increasingly challenging global economic
environment. However, Ontario's economic growth continues to be challenged by
external factors such as high oil prices, the strong Canadian dollar and an
increasingly competitive global economy. Recent softening in U.S. demand is
creating further challenges.
The government is taking immediate action to strengthen Ontario's economic
advantage and help manufacturing, forestry, agriculture and tourism weather
economic challenges. In the recent Throne Speech, the government presented its
commitment to a more prosperous Ontario. In this document, the McGuinty
government is delivering on that commitment with measures to further strengthen
Ontario's economic advantage by investing in people, businesses and communities.
Annex I: A Stronger Ontario expands on the steps being taken.
Maintaining a competitive tax structure supports the economy's fundamental
economic strengths. It also helps Ontario remain an advantageous place for
business investment and job creation. More information can be found in Annex II:
Enhancing Ontario's Tax Competitiveness.
The Ontario economy remains fundamentally strong and is on track to outperform
the 2007 Ontario Budget forecast. However, private-sector economists predict
that future economic growth prospects have been dampened by external challenges.
The Province's fiscal situation has improved from an inherited $5.5 billion
deficit in 2003-04 to a $2.3 billion surplus in 2006-07. Despite lower
projections for economic growth, Ontario is on track to deliver five consecutive
balanced budgets through 2009-10. As outlined in Annex III: Ontario's Economic
and Fiscal Outlook, the McGuinty government has a solid plan to maintain a
balanced budget while meeting the commitments of its 2007 Moving Forward
Together campaign platform.
One of the benefits of balanced budgets is that they keep down future costs
related to financing the debt. As a result of Ontario's fundamentally strong
economy and demonstrated success in managing the Province's finances, its credit
ratings are strong. Long-term public borrowing by the Province is summarized in
Annex IV: Borrowing and Debt Management.
In the interests of improving transparency and accountability, the McGuinty
government annually publishes estimated cost of expenditures made through the
tax system. These are provided in Annex V: Transparency in Taxation.
Annex VI: Economic Data Tables provides extensive information about the recent
performance of Ontario's economy.
The McGuinty government has an ambitious mandate. The 2008 Budget will take
further steps towards implementing the plan to move Ontario forward. Part of
this involves hearing firsthand from Ontarians. That is why the Minister of
Finance will soon be hosting pre-budget consultations with individuals,
organizations, associations and other stakeholders across the province. For more
information, see Annex VII: How to Participate in the 2008 Pre-Budget
Consultations.
ANNEX I:
A STRONGER ONTARIO
________________________________________________________________________________
INTRODUCTION
The Ontario economy has proven remarkably strong and resilient in the face of an
increasingly challenging global economic environment. Since 2002, higher oil
prices, a high Canadian dollar and increased competition from newly
industrializing countries have tested Ontario businesses' ability to compete and
thrive. More recently, businesses have felt further pressure due to a slowing
U.S. economy.
Despite these adverse developments, Ontario has seen continued strong job
creation and business investment. Incomes are on the rise and the standard of
living is one of the highest in the world. Ontario's economic growth continues
to exceed expectations. Private-sector forecasts of Ontario's 2007 real gross
domestic product (GDP) growth now average 2.0 per cent, up from 1.7 per cent at
the time of the 2007 Ontario Budget.
The clearest sign of the Ontario economy's resilience has been its job creation
record. Since October 2003, 417,900 net new jobs have been created. Over 95 per
cent of these jobs were in occupations that paid on average over $19.50 per
hour, including jobs in natural and applied sciences, management, social
sciences, and education.
Still, challenges remain. This strong job creation has not occurred across all
sectors of the economy, and many families and communities have been affected by
job losses. While total service-sector jobs (private and broader public sectors)
have expanded by 10.8 per cent since October 2003, employment in the
goods-producing sector has contracted.
There are continued risks on the horizon. The weakened outlook for the U.S.
economy, higher oil prices and the stronger Canadian dollar have reduced
private-sector Ontario economic growth projections since the time of the 2007
Budget. This also means greater pressure on Ontario businesses over the next few
years as they adapt to a much more challenging economic environment.
INVESTMENTS FOR A STRONGER ONTARIO
The Ontario Government is taking immediate action to further strengthen
Ontario's economic advantage and help the manufacturing, forestry, agriculture
and tourism industries weather economic challenges. The government's investment
strategy builds on its five-point economic plan set out in the 2007 campaign
platform, Moving Forward Together. In particular, the government is taking
immediate action to keep taxes competitive, support innovation and accelerate
its investment in infrastructure.
Measures announced in the 2007 Ontario Economic Outlook and Fiscal Review will
boost Ontario's ability to compete in the global economy by:
1. enhancing competitiveness through immediate tax reductions
2. investing in people and communities
3. investing in infrastructure.
In this document, the government is announcing more than $3 billion in new
investments and tax reductions. These actions will boost Ontario employment by
about 30,000 jobs over the next three years.
1. ENHANCING COMPETITIVENESS THROUGH IMMEDIATE TAX REDUCTIONS
The Province is proposing important new tax measures that support manufacturers
and other sectors in Ontario challenged by current economic conditions. They
would help Ontario manufacturers invest in their own businesses, creating and
preserving jobs.
These new measures, totalling $1.1 billion in tax reductions over three years, include:
• eliminating Capital Tax on January 1, 2008 for corporations primarily engaged
in manufacturing and resource activities
• providing a 21 per cent Capital Tax rate cut for all businesses retroactive to
January 1, 2007, on the way to full elimination in 2010
• increasing the small business deduction threshold to $500,000 from $400,000,
retroactive to January 1, 2007.
The measures proposed would provide immediate tax relief for businesses,
particularly for Ontario's manufacturing and resource industries. This will help
to further encourage business investment, strengthen manufacturing and enhance
the province's competitive position. See Annex II: Enhancing Ontario's Tax Competitiveness
for further details of these proposed tax cuts.
To assist manufacturers in acquiring new and advanced equipment and
technologies, Ontario is paralleling the 2007 federal budget incentives related
to accelerated capital cost allowances (CCA). A key incentive for manufacturers
is the 50 per cent accelerated tax writeoff for investments in manufacturing and
processing (M&P) machinery and equipment from March 19, 2007 until December 31,
2008. By paralleling the federal CCA measures, the Ontario Government will
provide more than $400 million in tax relief over three years to manufacturers
investing in the province. Ontario urges the federal government to quickly
commit to extend this incentive for three more years to 2012.
The government has worked steadily to enhance the competitiveness of Ontario's
tax system. Since 2004, it has implemented or announced more than $2 billion a
year in tax cuts for business when fully phased in. This support includes
accelerating Capital Tax elimination to July 1, 2010 and reducing high Business
Education Tax (BET) rates by $540 million when fully implemented in 2014.
Ontario's current combined federal–provincial CIT rate for manufacturers and
resource industries of 34.12 per cent is more than four percentage points below
the average federal–state rate among its main trading partners, the U.S. Great
Lakes States. Ontario's rate is also lower than the current corporate tax rates
in Japan, Germany and Italy.(1) Once the proposed federal tax measures are fully
implemented in 2012, Ontario's combined CIT rate for manufacturers and resource
industries will be even lower at 27 per cent.
______________________________
(1) International tax rates as reported in KPMG's Corporate and Indirect Tax Rate Survey 2007.
[Chart 1: Ontario's Combined CIT Rates Are Falling – bar graph]
Successful economies rely on a competitive tax and regulatory climate that
supports innovation and economic growth. Modern and flexible regulation that
promotes public policy goals while reducing compliance burdens can unleash the
growth potential of Ontario businesses of all sizes. Ontario will continue to
bring forward ways to reduce the regulatory burden on businesses to help them
thrive in today's competitive global economy.
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RECENT ONTARIO TAX INITIATIVES TO LOWER BUSINESS COSTS
Since 2004, the government has introduced initiatives to reduce business costs
and enhance the competitiveness of Ontario's tax system. They include:
• eliminating more than $1.3 billion in Capital Tax on July 1, 2010
• reducing high Business Education Tax rates by $540 million, when fully
implemented in 2014
• providing over $400 million in tax relief with a temporary two-year accelerated
CCA incentive for manufacturers and enhanced CCA for computer equipment, certain
buildings, pipelines and clean energy generation
• moving towards federal administration of Ontario corporate taxes, which will
save businesses up to $100 million per year in compliance costs and a further
$90 million per year in Ontario corporate income tax
• introducing a new Apprenticeship Training Tax Credit (ATTC) that provides a
25 per cent (30 per cent for small businesses) refundable tax credit for new
apprentices in designated trades.
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Investing in Tourism and Film
Ontario’s tourism industry has been challenged by the strong dollar. To meet
this challenge, the McGuinty government will invest an additional $30 million
this fiscal year to expand the Ministry of Tourism's successful promotion and
marketing campaign in the domestic and international markets. This new funding
will also more than double the funding available for economy–boosting festivals
and special events to promote tourism in every corner of the province.
The government is proposing further steps to support growth and increase jobs in
Ontario's film and television sector. Effective for labour expenditures incurred
after December 31, 2007, the Ontario Film and Television Tax Credit would
increase to 35 per cent from 30 per cent and the Ontario Production Services Tax
Credit would increase to 25 per cent from 18 per cent. These proposed
enhancements would provide an additional $50 million in financial support in
2008–09. The government will also be working with the film industry to explore
ways of advancing financial support for producers to the start of a production.
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CONTINUING INVESTMENTS FOR STRONG INDUSTRIES
More and more, global competitive challenges have prompted important sectors of
Ontario's economy to boost their competitiveness through a transition to
higher–value–added activities.
Ontario manufacturing, for instance, must continue to move to more
technology–intensive and higher–value–added activities, and the service sector
must continue to advance its higher–knowledge content.
Ontario has introduced strategic initiatives to help manufacturing and other key
sectors make the transition to higher-value-added production, which leads to a
greater ability to compete.
• The Ontario Government's auto strategy has helped leverage over $7 billion
in total new automotive investments to strengthen Ontario as a leading–edge
manufacturer.
• The Advanced Manufacturing Investment Strategy so far has generated over
$600 million in additional new investments.
• Ontario has made available over $1 billion in support to help
forest–products manufacturing transition to a more competitive position.
• Ontario is strengthening industries by helping them transition to green products
and processes.
• Dr. Robert Rosehart was recently appointed as Northwestern Ontario Economic Facilitator
to work with local stakeholders and governments at all levels to help this region build
a successful future.
• On December 4, 2007, the Ontario Government announced the appointment of Jayson Myers,
President of Canadian Manufacturers and Exporters, and Jim Stanford, Economist
with the Canadian Auto Workers, as vice–chairs of the new Ontario Manufacturing
Council. The council will advise the government on approaches to sustaining
growth and increasing global competitiveness.
• On November 30, 2007, the Premier announced that David Ramsay, MPP for
Timiskaming–Cochrane, will review the current competitive challenges and
drivers facing Ontario's manufacturers, particularly small and medium–sized businesses.
________________________________________________________________________________
Encouraging Innovation
Global competition and current market economic factors also make it imperative
to encourage ideas to reach the marketplace so that Ontario's firms can grow and
compete in the new global economy.
The Ontario Venture Capital Fund will help attract the capital and investment
expertise needed to bring new discoveries to market faster so they can create
high–value jobs in the knowledge economy.
• The government is investing $90 million in this fund and has signed a
letter of intent with leading Canadian corporate and institutional
investors for the $165 million first round of the fund.
• The government will seek additional private-sector investors to grow the
fund in the future.
The economy of tomorrow will also be built on the foundations of Ontario’s
strengths in research and the ability of its knowledge workers to bring ideas to
market. The Ministry of Research and Innovation will be making $50 million in
additional strategic investments in 2007–08 to further strengthen Ontario's
environment for world–class scientific research that leads to new discoveries,
higher quality of life and new jobs. These investments will support opportunities
for future growth in the knowledge economy.
As well, the government is proposing to extend the phase-out of the
Labour-Sponsored Investment Fund (LSIF) tax credit to the end of the 2011 tax
year, and increase the maximum qualifying investment from $5,000 to $7,500.
These proposed measures will provide an estimated $38 million in additional
financial support to the industry over three years.
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SUPPORT FOR THE DEVELOPMENT AND GROWTH OF INNOVATIVE FIRMS
Through the Ministry of Research and Innovation, the government is already
investing $1.7 billion over five years to 2009–10 in programs that will help
place Ontario on the leading edge of the knowledge economy. This includes:
• $160 million for the Ideas to Market Strategy
° $90 million for the new Ontario Venture Capital Fund
° $46 million for the Market Readiness program to help startups become more
“investor ready” by acquiring business management and entrepreneurial
skills
° $24 million for the Innovation Demonstration Fund to provide seed capital for
bio-based environmental and alternative energy technologies
• $25 million for the Ontario Research Commercialization Program and $171
million for Ontario Centres of Excellence to accelerate commercialization of
university research and innovative startups
• strategic investments in regional innovation centres across the province,
including in Sarnia, Waterloo, Hamilton, Toronto, Kingston and Sudbury.
Ontario also provides over $400 million per year in tax relief for firms conducting
research and development (R&D) in Ontario.
________________________________________________________________________________
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ONTARIO'S ECONOMY IS HIGHLY DIVERSIFIED AND INNOVATIVE
[Chart 2: Structure of Ontario's Economy, 2006 - pie chart]
Ontario's diversified economy — led by a wide range of high-value-added
services and manufacturing — helps provide underlying resilience to global
economic challenges. In a competitive global environment, the future prosperity
of any economy will also depend on its ability to innovate. Ontario accounts for
more than 50 per cent of the expenditures on R&D performed by Canadian industry.
Seventy-two per cent of Ontario's GDP is generated by the services sector, which
includes financial services and professional services. Among North American
cities, Toronto ranks third in financial-services employment, after New York and
Chicago, and Ontario as a whole employs around 350,000 people.
Professional and other services on their own account for 18 per cent of the
Ontario economy. This group, which involves well-paid, high-skill activities,
includes professionals in engineering, legal, accounting and management
consulting. It also includes information and communications services and
entertainment and creative services — two sectors in which Ontario ranks as the
third-largest jurisdiction in North America in terms of employment.
The province's manufacturing employment level ranks second in North America,
after California. Ontario is the largest motor-vehicle assembler in North
America, surpassing Michigan in each of the past three years, and is a base of
North American auto manufacturing for U.S. and Asian auto companies. Ontario
also benefits from a vibrant pharmaceutical industry that employed over 22,000
people in 2006.
In recent years, biotechnology has emerged as a strong player in Ontario's
knowledge economy, with strengths in the biomedical, pharmaceutical, medical
devices, agricultural-biotechnology and bioproducts fields. The Province leads
the country in biotechnology revenues, employees and R&D spending. In 2005,
about 5,200 people worked in biotechnology-related activities in Ontario, and
innovative biotechnology firms generated revenues of $2.8 billion and invested
about $650 million in R&D.
________________________________________________________________________________
2. INVESTING IN PEOPLE AND COMMUNITIES
Helping Workers and Communities Adjust to Competitive Challenges
The manufacturing, forestry, agriculture and tourism sectors are facing
competitive challenges, as are the families and communities that depend on them.
Assisting workers and communities is a key part of the immediate plan for
competitiveness.
Employment Ontario — the Province's nearly $1 billion annual jobs and training
strategy launched in 2007 — provides coordinated training, apprenticeship and
other labour market services.
As part of the Employment Ontario strategy, the Province will invest an
additional $40 million this year in skills development. This focuses on help for
Ontario workers and communities adjusting to current competitive challenges
through additional funding for the Rapid Re-employment and Training Service. The
new investment will assist workers in sectors such as manufacturing with
training and other employment supports so they can move to growing sectors of
the economy. It will also help increase the availability of skilled workers.
The Rapid Re-employment and Training Service provides immediate assistance to
workers affected by large layoffs with:
• special teams to help individual workers develop re-employment action plans
including skills assessment, resumé preparation, job search planning and
identification of training required to take on a new career
• customized training, skills upgrading, literacy, job placement and job relocation
services
• new placements and accelerated in-school learning for laid-off apprentices.
============================================================
THE GOVERNMENT'S RAPID RE-EMPLOYMENT
THREE-PART SERVICE PROMISE
This service:
• makes initial contact with the workers and employer
within one hour of a public announcement of major
downsizing or closure
• develops individual action plans, including training
where appropriate, within 15 days of each initial
assessment
• develops a Service Action Plan within 30 days of the
initial response detailing the government's response and
outlining the roles of local service providers.
_____________________________________________________________
Rapid re–employment teams have already provided immediate assistance in such
communities as London, Smiths Falls, Windsor, Nipigon and Hamilton.
The government will provide an additional $5 million in 2007–08 to the
Communities in Transition program. Through this program, the Ministry of
Economic Development and Trade works with communities facing significant
challenges, such as the loss of a major employer, to help them build a
successful future.
Some segments of agriculture currently face challenges that hinder industry
transformation to a more competitive state. Ontario is providing $150 million in
new funding for cattle, hog and horticulture farmers to help them manage the
effects of lower returns due to higher input costs, the stronger Canadian dollar
and lower market prices. This funding will also support transitional and
transformational initiatives to help strengthen competitiveness.
=============================================================
EMPLOYMENT ONTARIO
This program provides:
• nearly $1 billion annually for a comprehensive jobs
and training strategy
• training, apprenticeship, employment counselling,
job search supports and subsidized job placements
• 1,200 service providers in nearly 900 locations
across the province
• services for newcomers in multiple languages.
In addition to Employment Ontario, Ontario is investing
$160 million in 2007–08 to help newcomers settle,improve
their language skills and find jobs through training programs.
- ---------------------------------------------------------------
Ontario's Skilled and Highly Educated Workforce: A Key Advantage
Ontario's skilled and highly educated workforce is a key economic advantage.
Ontario has a higher proportion of adults aged 25 to 64 with university, college
or college–based apprenticeship credentials than any of the 30 OECD
(Organization for Economic Co–operation and Development) countries, at 59 per
cent in 2005.
Between 1997 and 2006, more than 90 per cent of the 1.2 million net new jobs
gained by Ontarians went to those with a university or college education. Those
with university degrees had an average annual employment growth rate of 5.1 per
cent, followed by those with a postsecondary certificate or diploma at 3.1 per
cent. The average annual employment growth rate for high school graduates was
significantly lower, at 2.3 per cent.
The importance of a strong training system to competitiveness was underscored by
a recent report by Colleges Ontario and a broad coalition of business
associations, unions and students. The report stated that Ontario must make a
concerted effort to address potential skills shortages as competitive pressures
grow and a wave of retirements begins.
To build on this advantage, Ontario is continuing to implement the $6.2 billion
Reaching Higher plan for postsecondary education.
================================================================================
REACHING HIGHER
The $6.2 billion Reaching Higher plan for postsecondary education has created
more opportunities, more student financial assistance and greater quality in
education:
• Increased grants for operating costs by over 40 per cent between 2003-04 and
2007-08, supporting the hiring of new faculty, increased student-faculty
interaction and improved student services and libraries.
• 86,000 more students enrolled in colleges and universities since 2002-03, a
22 per cent increase.
• Graduate spaces to be expanded by 14,000 by 2009-10.
• The number of grants increased threefold — now assisting 120,000
students compared to 2003-04, including 60,000 upfront tuition grants for low-
to middle-income students.
• Student debt capped — Ontario Student Opportunity Grants assist 80,000
students by forgiving student loans over $7,000 a year.
________________________________________________________________________________
3. INVESTING IN INFRASTRUCTURE
To encourage economic activity, help municipalities and enhance Ontario's
competitiveness, the government is investing an additional $1.4 billion to build
critical infrastructure.
The Province will allocate some $500 million for transit projects and to assist
municipal transit systems across Ontario in dealing with immediate demands. This
will help increase ridership, address state of good repair, manage congestion
and support the efficient movement of people and goods.
A $300 million investment will be provided for municipal infrastructure
priorities — for projects that stimulate local economies such as roads,
bridges, community facilities and water systems. Projects to be funded will be
chosen through a competitive application process. Some of the available funding
will be geared specifically to small, northern and rural communities to help
bolster their local economies.
In addition, $100 million will be dedicated to priority MoveOntario 2020
projects — the $17.5 billion transit and transportation plan for the Greater
Toronto Area (GTA). This will help municipal transit projects such as the
purchase of railcars and buses and track expansion at GO Transit that have been
identified as priorities by Metrolinx, formerly the Greater Toronto
Transportation Authority.
Manufacturers and other business investors cite the quality of infrastructure as
one of the most important factors in where to locate and where to invest.
Investing in transit and transportation infrastructure helps communities and
companies move products to markets and people to work. These investments also
have the added benefit of decreasing congestion and reducing greenhouse gases
and air pollutants.
These new investments are in addition to other funding support for
municipalities, including the gas tax and the Canada–Ontario Municipal Rural
Infrastructure Fund (COMRIF). The Ministry of Transportation will soon be
announcing the allocation of the gas tax. In the near future, the Ontario
Government, along with its federal and municipal partners, expects to announce
the final round of funding under COMRIF. Municipal infrastructure investments
represent another significant step forward in the Provincial-Municipal Fiscal
and Service Delivery Review.
The government will continue to make progress on the Highway 407 East extension
and the Windsor border because they are particularly important to the
manufacturing sector.
================================================================================
CONTINUING INVESTMENTS IN INFRASTRUCTURE
Investment in Ontario by all levels of government increased by more than 50 per
cent in real terms in 2006 compared to 1997. The most important factor behind
this growth is the Ontario Government's ReNew Ontario infrastructure plan, the
Province's comprehensive, long-term strategy that deals with infrastructure
planning and investment.
• ReNew Ontario is a five-year strategic plan of over $30 billion in
infrastructure investment, introduced in 2005, to upgrade and transform
Ontario's infrastructure to meet the needs of the 21st century.
• ReNew Ontario makes a significant direct contribution to employment during
the time the infrastructure is being built — some 400,000 jobs.
Ontario is also investing in rural infrastructure, with:
° $188 million in 2005-06 provided under Move Ontario for roads and bridges
° $85 million in the 2006-07 school year for school repairs and renovations
under the Good Places to Learn initiative
° $140 million in 2006-07 for key investments identified by local
communities under the Rural Infrastructure Investment Initiative.
• The Ontario Government recently launched the MoveOntario 2020 initiative to
continue to address transportation infrastructure challenges and further
advance Ontario's priorities in reducing greenhouse gases and air pollutants.
° This multi-year, $17.5 billion rapid transit action plan for the GTA and
Hamilton will reduce congestion and make the region a more attractive
place to invest.
° The federal government is also encouraged to collaborate with the Ontario
Government in funding MoveOntario 2020.
• Investments in Ontario's electricity infrastructure support and enhance the
province's competitiveness and quality of life. The government's policies
have initiated or supported one of the most ambitious near-term building
programs in North America for new electricity generation.
° About $13 billion in investments are being made in projects in progress for
new and refurbished generation.
• The 2007 Budget provided an additional $390 million for infrastructure investments
in higher education, supporting quality improvements that will provide students
with the best possible learning environments. This supplemented significant ongoing
investments under the Reaching Higher plan for postsecondary education.
• The Ontario Government reaffirms its commitment to moving forward on the
Windsor border gateway project and building on the progress it has made so far.
________________________________________________________________________________
The Province will announce further investments early in the new year.
FEDERAL GOVERNMENT HAS A ROLE TO PLAY
Ontario is doing its share. But Ottawa certainly has the financial means to do
more.
Since 1997-98, the federal government has consistently reported budgetary
surpluses and, in 2006-07, its surplus amounted to $13.8 billion. In its most
recent 2007 Economic Statement, the federal government projected that budgetary
surpluses will continue for at least the next five years and forecast an
underlying surplus for 2007-08 of $11.6 billion.
Supporting Business Investment in Ontario
While Ontario supports the federal government's efforts to phase in lower tax
rates for businesses by 2012, Ottawa must do more now to support the
manufacturing sector in Ontario.
Building on the success in attaining greater fairness for Ontarians from the
federal government in immigration and social service funding, the Province will
continue to fight for fairness by aggressively calling on the federal government
to match Ontario's strategic investments — in particular, the $1.15 billion
Next Generation Jobs Fund and the Advanced Manufacturing Investment Strategy.
Ontario is already providing immediate benefits to manufacturers by speeding up
the elimination of the Capital Tax, as well as continuing to reduce high BET
rates, investing in education and making strategic investments in the auto fund.
While the federal accelerated writeoff for M&P machinery equipment is a positive
initiative, its short time frame limits the potential for substantial investment,
as decisions to expand and invest are often planned years in advance. The federal
government can further support investments in manufacturing by extending the
temporary CCA incentive, which Ontario will parallel.
Ontario urges the federal government to quickly announce its intention to extend
this incentive. Extending this incentive by three more years, to 2012, would
provide manufacturers with a significant incentive to increase productivity and
contribute to job creation.
Supporting Ontario's Workers
Ottawa can do more to assist workers in Ontario.
Ontario is also pressing for the federal government to address the inequities
within the Employment Insurance (EI) program. The EI program has serious
shortcomings that result in a significant share of Ontario's unemployed not
receiving EI assistance when they need it most. If Ontario's unemployed workers
received the average of EI benefits paid to unemployed workers in the rest of
Canada, they would each get an additional $4,000 annually.
[Chart 3: EI Funding Per Unemployed Person in Ontario and the Rest of Canada,
2006 – bar graph]
Employment Insurance should play a crucial role in helping workers cope with
temporary and involuntary unemployment, as well as providing assistance to
people as they move from industries facing challenges to industries with growing
opportunities. However, the current EI system is not fulfilling this role for
Ontario workers.
Employment Insurance regular benefits are inaccessible to many of Ontario's
unemployed workers. As a result, many Ontario workers cannot depend on EI to
provide them with the temporary income support they would need to search or
train for new jobs if they became unemployed.
===============================================================
KEY FACTS ABOUT EMPLOYMENT INSURANCE
• In 2006, only 30 per cent of unemployed persons in
Ontario received regular EI benefits, compared with an average
of 54 per cent in other provinces.
• Ontario's workers and employers contributed about 40
per cent of all EI premiums in 2006, but its unemployed were
paid only 26 per cent of total regular EI benefits.
• In 2006, unemployed Ontarians accounted for 39 per cent
of Canada's unemployed, but Ontarians received only 27 per cent
of the national funding allocation for EI Part II.
_______________________________________________________________
Employment Insurance Part II, the labour-market support and training component
of the EI program, is also failing to meet the needs of Ontario workers. This is
a particular problem for workers in Ontario's manufacturing sector, where some
are experiencing layoffs due to economic challenges such as the high dollar and
global competition.
Employment Insurance contributions by Ontarians largely exceed the benefits they
receive. The EI Account had a cumulative surplus of $54 billion in 2006–07,
which is largely due to excess contributions by Ontarians. Annual EI surpluses
go directly into the federal Consolidated Revenue Fund. This practice clearly
indicates that the EI program has not been managed in the interests of
unemployed persons. The considerable cumulative EI surplus should be used to
fund new programs for sectors experiencing challenges, such as the manufacturing
sector.
The most recent federal Speech from the Throne committed the federal government
to taking measures to improve the governance and management of the EI Account.
Ontario welcomes this commitment and encourages the federal government to
quickly address the shortcomings of the EI program.
The Ontario Government calls on the federal government to immediately:
• implement a new income-support program, funded from the $54 billion EI
Account surplus, to provide long-tenure, permanently laid-off workers in the
manufacturing and other challenged sectors with the support they need while
they search or train for new jobs
• provide targeted resources for training and other employment supports
that supplement the EI program for workers who are laid off in the
manufacturing sector
• establish an arm's-length EI Account that is managed by a body independent
of the federal government. This change would ensure that any surpluses in the
EI Account are available to benefit workers instead of being consolidated with
general revenues and spent by the federal government on other initiatives.
Supporting Municipal Investment in Infrastructure and Public Transit Ottawa can
do more to assist Ontario municipalities to make much-needed investments in
public transit and infrastructure.
Ontario believes that the federal government has missed an opportunity to
support investments in infrastructure and transit systems by ignoring repeated
requests to provide $1.9 billion a year to municipalities in Ontario.
In June 2007, the Province launched the MoveOntario 2020 initiative to continue
to address transportation infrastructure challenges and further advance
Ontario's priorities in reducing greenhouse gases and air pollutants. This
multi-year, $17.5 billion rapid transit action plan for the GTA and Hamilton
will deliver jobs and investment by reducing congestion.
While Ontario continues to invest substantially in the quality of its
infrastructure, it is imperative that the federal government invest in it as
well. One example of a successful collaboration between the federal and Ontario
governments is the joint commitment with U.S. partners to build a new border
crossing at Windsor–Detroit.
Ontario is committed to improving its infrastructure, and encourages the federal
government to fulfil its commitments to public transit and such projects as the
Windsor border gateway as soon as possible.
Fulfilling Ontario's Fair Share
Since 2005, with the support of Ontarians across the province, the government
has worked with the federal government to achieve greater fiscal fairness for
Ontario. In its 2007 Budget, the federal government responded to these efforts
by taking some measures to address fairness.
However, this work is not complete as issues remain that affect the fairness of
federal transfers to Ontario.
The 2007 federal budget announced that the Canada Health Transfer (CHT) will be
placed on an equal per-capita cash basis, but not until 2014. It is unacceptable
that Ontarians should wait until 2014 for fairness in health transfers, when
Ottawa clearly has the fiscal room to address the issue immediately. The delay
in implementation will cost Ontarians $819 million in 2007-08 alone.
Accordingly, Ontario calls on the federal government to put the CHT on an equal
per–capita basis immediately.
CONCLUSION
Ontario's economy has remained strong in the face of increasing global economic
challenges. Its resilience is largely due to its highly skilled workforce, its
diversified economy and the government's sound investments for a strong Ontario.
ANNEX II:
ENHANCING ONTARIO'S TAX
COMPETITIVENESS
________________________________________________________________________________
ENHANCING ONTARIO'S BUSINESS TAX COMPETITIVENESS
A competitive tax system helps attract investment and jobs to Ontario. It also
helps ensure that Ontario's businesses are able to compete and thrive as well as
to improve the standard of living for all Ontarians.
================================================================================
ONTARIO'S PROPOSED NEW TAX INITIATIVES
• Eliminating Capital Tax for manufacturing and resource activities on
January 1, 2008 — a full two and one-half years earlier than scheduled.
• Cutting Capital Tax rates for all businesses by 21 per cent retroactive
to January 1, 2007 — a full two years earlier than scheduled.
• Extending the lower small business corporate income tax rate to more
small businesses effective January 1, 2007.
• Increasing the film tax credit rates effective January 1, 2008.
• Extending the phase-out of the Labour-Sponsored Investment Fund tax
credit and increasing the maximum eligible investment.
• Expanding the Land Transfer Tax Refund Program for First-time Homebuyers
to include resale homes for agreements of purchase and sale after
December 13, 2007.
________________________________________________________________________________
The government proposes new tax initiatives that would provide more than $1.4
billion in tax relief over three years. Of this amount, $1.1 billion in new tax
relief would go to business, particularly for those sectors feeling the impacts
of the high Canadian dollar and the slower U.S. economy.
These measures are in addition to the business tax cuts that the government has
announced since 2004 that will provide more than $2 billion annually when fully
implemented. These include Capital Tax elimination on July 1, 2010 and $540
million in reductions in high Business Education Tax rates.
For manufacturing and resource industries, previously announced and proposed new
measures would mean an estimated cumulative benefit of more than $1 billion in
tax relief from 2007-08 to 2009-10. This would further enhance Ontario's tax
competitiveness, provide support to the manufacturing sector, and stimulate
economic growth through increased investment.
New Measures to Further Reduce and Eliminate Capital Tax
The government has already taken significant steps towards lowering and
ultimately eliminating the Capital Tax burden for Ontario businesses. Further
action is proposed to enhance the Province's competitive advantages in business
taxation, particularly for manufacturing, including the auto sector, and
resource industries.
The government proposes to introduce legislation that would eliminate Capital
Tax effective January 1, 2008 for Ontario companies primarily engaged in
manufacturing or resource activities. The government also proposes to introduce
legislation to provide a 21 per cent cut for all businesses effective January 1,
2007 by accelerating the Capital Tax rate cuts currently scheduled for January
1, 2009.
Under these two proposed measures, Ontario businesses would save $910 million
over three years.
Eliminating Capital Tax for Manufacturing and Resource Activities
The proposed January 1, 2008 elimination of Capital Tax for manufacturing and
resource activities would apply to corporations whose salaries and wages
relating to manufacturing or processing, mining, logging, farming or fishing
activities in Ontario represent 50 per cent or more of their total salaries and
wages in Ontario.
[Eliminating Capital Tax for Manufacturing and Resource Activities – bar graph]
For corporations whose salaries and wages in Ontario for these activities comprise less than
50 per cent, but more than 20 per cent of their total salaries and wages in
Ontario, Capital Tax would be reduced proportionately on a straight-line basis.
For example, a corporation whose Ontario salaries and wages for these activities
comprise 35 per cent of total Ontario salaries and wages would have one-half of
its Capital Tax eliminated.
Capital Tax Rate Cut of 21 Per Cent for All Corporations
The government proposes to accelerate to January 1, 2007, the Capital Tax rate
cuts currently scheduled for January 1, 2009, two years ahead of schedule.
The government has been working steadily to reduce and eventually eliminate the
Capital Tax, which acts as a barrier to investment.
As previously legislated, the Capital Tax deduction will rise from $12.5 million
to $15 million on January 1, 2008. Capital Tax will be fully eliminated on July
1, 2010.
The following table sets out the Capital Tax elimination schedule with the
proposed new measures.
=======================================================================================================================
Ontario's Accelerated Capital Tax Elimination Plan with Proposed New Initiatives Table 1
_______________________________________________________________________________________________________________________
Rates (%)
_______________________________________________________________________________________
Non-Financial Institutions Financial Institutions
_______________________________________________________________________________________
Taxable Capital Over
1st $400 $400 Million
_____________ ______________ Million of __________________________________
Deduction M&P and Other Taxable Non-Deposit Deposit
($ M) Resources(1) Corporations Capital Taking Taking
_______________________________________________________________________________________________________________________
2004 5 0.3 0.3 0.6 0.72 0.9
Jan. 1, 2007 12.5 0.285 0.285 0.57 0.684 0.855
Jan. 1, 2007 12.5 0.225 0.225 0.45 0.54 0.675
Jan. 1, 2008 15 Eliminated 0.225 0.45 0.54 0.675
Jan. 1, 2009 15 0.225 0.45 0.54 0.675
Jan. 1, 2010 15 0.15 0.3 0.36 0.45
______________________________________________________________________________________________________
July 1, 2010 Legislated Accelerated Elimination Date
================ ======================================================================================================
Shading denotes proposed Capital Tax initiatives.
Measures would be pro-rated for taxation years straddling the effective date.
(1) Primarily engaged in manufacturing or processing, mining, logging, farming or fishing activities in Ontario.
_______________________________________________________________________________________________________________________
Expanding Eligibility for the Small Business Corporate Income Tax Rate
The government recognizes the important role of small businesses in job creation
and economic growth. The government provides tax relief to assist small
businesses with access to capital, to keep up with technological advancements
and to find highly skilled employees. Currently, the small business deduction
provides a lower Corporate Income Tax (CIT) rate of 5.5 per cent to
Canadian–controlled private corporations (CCPCs) on the first $400,000 of active
business income. The benefit of the small business deduction is gradually phased
out on income earned by a CCPC between $400,000 and $1,128,519. The small
business deduction currently provides almost $1.1 billion in tax relief to small
corporations in Ontario.
The government proposes to further enhance support for small businesses by
increasing the small business deduction threshold to $500,000 from $400,000,
effective January 1, 2007. This would immediately extend the preferential small
business CIT rate to the first $500,000 of business income. In addition, the
small business deduction would be phased out once income reaches $1,500,000,
rather than $1,128,519. The increase in the threshold would be pro-rated for
taxation years straddling the effective date.
This measure would provide Ontario small businesses with $29 million of
immediate tax relief. Over four years, the higher small business deduction
threshold and upper taxable income limit would reduce taxes for small business
by over $100 million. In particular, more than 20 per cent of this tax relief
would go to small businesses in the manufacturing and resource industries.
Labour-Sponsored Investment Funds (LSIFs)
On September 30, 2005, following consultations with the LSIF industry, the
government established a phase-out of the LSIF tax credit. The timetable of the
phase-out allows investors who purchase LSIF shares to receive a provincial tax
credit until the end of the 2010 tax year. The government also introduced
amendments to investment requirements and special wind-down rules to provide
LSIFs greater flexibility in managing their portfolios.
The government proposes to extend the phase-out of the LSIF tax credit by one
year by:
• maintaining the 15 per cent tax credit rate until the end of the 2009 tax year
• lowering the rate to 10 per cent for the 2010 tax year
• lowering the rate to five per cent for the 2011 tax year
• eliminating the credit for tax years after 2011.
The government also proposes to increase the maximum investment that qualifies
for the provincial tax credit from $5,000 to $7,500.
The proposed changes will provide an estimated $38 million in additional
financial assistance to the industry over three years. These measures are
intended to assist LSIFs in the development of their investment strategies and
in providing continuing support to the portfolio of companies in which they have
invested.
Enhancing Tax Support for Ontario's Film and Television Industry
The government is proposing further steps to support growth and job creation in
the film and television sector in Ontario. Creative industries and creative
people are a critical component of an innovative and knowledge-based economy.
The government proposes to increase the Ontario Film and Television Tax Credit
(OFTTC) rate from 30 to 35 per cent for labour expenditures incurred after
December 31, 2007 and before January 1, 2010. The 10 per cent regional bonus
would continue to be available for filming outside the Greater Toronto Area and
first-time producers would remain eligible for an enhanced rate of 40 per cent
on the first $240,000 of labour expenditures.
The government also proposes to increase the Ontario Production Services Tax
Credit (OPSTC) rate from 18 to 25 per cent for labour expenditures incurred
after December 31, 2007 and before January 1, 2010.
The OFTTC is available to Ontario-based, Canadian-controlled corporations for
eligible film and television productions. The OPSTC is available to
Ontario-based corporations for foreign and domestic productions not claimed
under the OFTTC. Effective January 1, 2005, the OFTTC was raised to 30 per cent
from 20 per cent until December 31, 2009, and the OPSTC rate was raised to 18
per cent from 11 per cent until March 31, 2006. The 18 per cent rate for the
OPSTC has since been extended until March 31, 2008.
The government will also be working with the film industry to explore ways of
advancing financial support for producers to the start of a production.
Land Transfer Tax (LTT) Refund for All First-Time Homebuyers
In keeping with the government's commitment to help Ontarians who are starting
out, it is proposed that the LTT Refund Program for First-time Homebuyers be
expanded to include purchases of resale homes. This measure would be effective
for agreements of purchase and sale entered into after December 13, 2007. As a
result of this change, first-time homebuyers of newly constructed or resale
homes would be able to receive a refund from the provincial government of up to
$2,000 of the LTT paid.
=====================================================================================================================
Fiscal Impact Summary of Proposed Tax Measures Table 2
($ Millions)
_____________________________________________________________________________________________________________________
2007-08 2008-09 2009-10
_________________________________________________
Cutting Capital Tax Rates and Eliminating Capital Tax for (340) (425) (145)
Manufacturing and Resource Activities
Increasing the Small Business Deduction Threshold (29) (26) (27)
Labour-Sponsored Investment Funds (LSIFs) (10) (12) (16)
Enhancing Film and Television Tax Credit Rates:
Ontario Film and Television Tax Credit (5) (20) (18)
Ontario Production Services Tax Credit (5) (30) (26)
Land Transfer Tax Refund for All First-Time Homebuyers (36) (125) (125)
=====================================================================================================================
Total (425) (638) (357)
_____________________________________________________________________________________________________________________
================================================================================
2007 TAX MEASURES TO SUPPORT JOBS AND PROSPERITY IN ONTARIO
Since the 2007 Ontario Budget, the government has implemented or is implementing
the following initiatives to encourage job growth and prosperity for all
Ontarians:
Personal Income Tax
• An increase in the lifetime capital gains exemption on farm or fishing
property or small business shares from $500,000 to $750,000 will reduce taxes
for individuals by about $18 million in 2007-08.
• An exemption for capital gains on gifts of publicly listed securities to
private foundations will provide a benefit to donors of about $22 million in
2007-08.
• An increase in the age limit for maturing Registered Pension Plans and
Registered Retirement Savings Plans, from 69 years of age to 71 years of age,
will provide $20 million in benefits to taxpayers in 2007-08.
• The deductible portion of business-related meal expenses for truck drivers
will be increased in stages from 50 per cent to 80 per cent by 2011.
Corporate Tax
• A temporary two-year accelerated capital cost allowance incentive for
manufacturers and enhanced capital cost allowances for computer equipment,
certain buildings, pipelines and clean energy generation, providing over $400
million in tax relief over three years to Ontario manufacturers.
• An additional Corporate Income Tax (CIT) deduction to support corporations
that make donations of medicine to the developing world.
• A CIT and Corporate Minimum Tax exemption in respect of capital gains for
gifts of publicly listed securities to private foundations.
Retail Sales Tax
• A retail sales tax (RST) exemption for bicycles costing $1,000 or less,
bicycle helmets, and other bicycle safety equipment will save Ontarians $16
million in a full year.
• An RST exemption for nicotine replacement therapies will provide a benefit
to Ontarians of $5 million in a full year.
• An RST exemption for Energy Star(R) household products including
non-commercial refrigerators, dishwashers, clothes washers, freezers,
dehumidifiers, room air conditioners, light bulbs and decorative light
strings will save Ontarians $51 million in a full year.
• An expansion of the RST farm exemption to provide an additional benefit to
farmers of $1 million annually.
________________________________________________________________________________
ANNEX III: ONTARIO'S
ECONOMIC AND FISCAL
OUTLOOK
________________________________________________________________________________
Section A: Introduction
________________________________________________________________________________
This annex outlines Ontario's economic and fiscal outlook.
The government is on track to deliver five consecutive balanced budgets by
2009-10 while also fulfilling the commitments made in the 2007 election
platform, Moving Forward Together. This will be achieved despite slower economic
growth projections thanks to the government's prudent and disciplined approach
to fiscal planning.
Section B: Ontario's Economic Outlook describes the Ministry of Finance's
current planning projections and explains how these projections have changed
since the 2007 Ontario Budget.
Section C: Ontario's Fiscal Plan outlines the government's medium-term fiscal
plan covering the 2007-08 to 2009-10 fiscal years, and summarizes how the
government will work to achieve its overall fiscal targets.
Section D: Ontario's Revenue Outlook outlines expected revenue performance in
2007-08 and current Ministry of Finance projections for 2008-09 and 2009-10;
describes how those projections have changed since the 2007 Budget; and outlines
potential risks to the outlook and associated sensitivities.
Section E: Ontario's Expense Outlook outlines planned expenses for 2007-08 to
2009-10 and outlines potential risks to the outlook and associated
sensitivities.
Section F: Details on Ontario's Finances presents graphs and tables that provide
useful information on the Province's finances.
Section B: Ontario's Economic Outlook
________________________________________________________________________________
OUTLOOK FOR STRENGTHENING ONTARIO ECONOMIC GROWTH
=====================================================================================================================
Ontario Economic Outlook Table 1
(Per Cent)
_____________________________________________________________________________________________________________________
2003 2004 2005 2006 2007e 2008p 2009p 2010p
_______________________________________________________________________________
Real GDP Growth 1.4 2.5 2.9 2.1 1.9 1.8 2.4 2.8
Nominal GDP Growth 3.2 4.8 3.9 3.9 5.0 3.8 4.0 4.7
Employment Growth 3.0 1.7 1.3 1.5 1.6 1.2 1.3 1.4
CPI Inflation 2.7 1.9 2.2 1.8 1.8 1.4 2.0 2.0
=====================================================================================================================
e = estimate; p = projection.
Sources: Statistics Canada and Ontario Ministry of Finance.
_____________________________________________________________________________________________________________________
This section outlines Ontario's current macroeconomic outlook, which is the
basis for the fiscal plan. Ontario's economy is projected to grow at a modest
pace in 2007 and 2008, and then strengthen over the following two years as it
adjusts to the challenging global environment.
The Ministry of Finance is projecting real gross domestic product (GDP) growth
of 1.9 per cent in 2007, 1.8 per cent in 2008, 2.4 per cent in 2009 and 2.8 per
cent in 2010. In keeping with prudent fiscal practices, these projections are
deliberately set below the average private-sector forecast in every year.
Over the 2002 to 2006 period, the resilient Ontario economy grew at a modest
pace despite an increasingly challenging global economic environment. Oil prices
increased from $26.10 US per barrel in 2002 to $66.10 US in 2006. Likewise, the
Canadian dollar increased from 63.7 cents US in 2002 to 88.2 cents US in 2006.
In 2006, the Ontario economy also had to contend with rising interest rates and
weaker U.S. demand for Ontario's key exports.
Ontario's real GDP rose at an annual rate of 2.3 per cent in the second quarter
of 2007, following growth of 3.2 per cent in the first quarter. Moderate growth
is expected to continue through 2008 as U.S. demand remains soft and the higher
Canadian dollar and oil prices create challenges for Ontario businesses.
Ontario's strong economic fundamentals include a well-educated and highly
skilled population, a diversified industrial structure, and modern
infrastructure. These strong fundamentals ensure the province is well positioned
to manage both the challenges and opportunities ahead. Ontario's strong economic
foundation and a rebound in U.S. economic activity are expected to boost growth
in 2009 and 2010. Business investment spending is expected to lead growth as
firms invest to improve their competitive position. Continued employment growth,
strong income gains, low interest rates and increasing wealth will support
growing household spending. Ontario's exports are expected to strengthen as U.S.
auto demand picks up, the new Toyota plant in Woodstock comes on stream and
exports to the rest of the world continue to accelerate.
PRIVATE-SECTOR FORECASTS
===================================================================================================================
Private-Sector Forecasts for Ontario Real GDP Growth Table 2
(Per Cent)
___________________________________________________________________________________________________________________
2007 2008 2009 2010
__________________________________________________________________
Conference Board of Canada (October) 2.4 2.6 3.2 3.2
Global Insight (November) 1.8 2.0 2.0 2.4
Centre for Spatial Economics (July) 1.7 2.1 2.7 2.9
University of Toronto (October) 2.0 1.1 2.6 3.2
RBC Financial Group (October) 1.9 1.8 2.5 -
Scotiabank Group (December) 1.9 1.6 - -
TD Bank Financial Group (November) 2.1 1.8 2.1 -
BMO Capital Markets (November) 1.9 1.7 - -
CIBC World Markets (October) 1.9 2.0 - -
___________________________________________________________________________________________________________________
Private-Sector Survey Average 2.0 1.9 2.5 2.9
___________________________________________________________________________________________________________________
Ontario's Planning Assumption 1.9 1.8 2.4 2.8
===================================================================================================================
Sources: Ontario Ministry of Finance and Ontario Ministry of Finance Survey of Forecasts (December 5, 2007).
___________________________________________________________________________________________________________________
Economic projections are a key building block for the government's fiscal plan.
To establish reasonable and accountable economic projections, the Ministry of
Finance consults with private-sector forecasters. The Ontario Economic Forecast
Council was formed to obtain the best possible advice on macroeconomic forecasts
and assumptions. Its members are Peter Dungan from the University of Toronto,
Ernie Stokes from the Centre for Spatial Economics, Dale Orr from Global
Insight, and Glen Hodgson from the Conference Board of Canada. The Minister of
Finance met with Council members and other private-sector forecasters in the
process of preparing the 2007 Ontario Economic Outlook and Fiscal Review.
ONTARIO'S RESILIENCE IN THE FACE OF GLOBAL ECONOMIC CHALLENGES
The short-term Ontario economic outlook is influenced by external factors such
as oil prices, the Canadian dollar exchange rate and U.S. economic growth. The
next section discusses the challenging outlook for external factors in greater
detail as well as the forecast for Ontario's exports. This is followed by a
discussion of the outlook for investment, jobs, incomes, household spending and
the housing market.
===================================================================================================================
Impacts of Changes in Key Assumptions on Ontario Real GDP Growth(1) Table 3
(Percentage Point Increase)
___________________________________________________________________________________________________________________
First Year Second Year
____________________________________________
Canadian Dollar Depreciates by Five Cents US 0.2 to 0.9 0.7 to 1.4
World Crude Oil Prices Decrease by $10 US per Barrel 0.3 to 0.7 0.1 to 0.5
U.S. Real GDP Growth Increases by One Percentage Point 0.3 to 0.7 0.4 to 0.8
Canadian Interest Rates Decrease by One Percentage Point 0.1 to 0.5 0.2 to 0.6
===================================================================================================================
(1) Impacts based on changes being sustained.
Source: Ontario Ministry of Finance.
___________________________________________________________________________________________________________________
Table 3 shows the typical range for the first- and second-year impacts of these
external factors on Ontario real GDP growth. These estimates are based on
historical relationships and illustrate the upper and lower limits for the
average response. They show the implications of changes in key assumptions in
isolation from changes to other external factors. The combination of changing
circumstances can also have a substantial bearing on the actual outcome.
=====================================================================================================================
Key External Factors Affecting Ontario's Economy Table 4
Average Private-Sector Forecast
_____________________________________________________________________________________________________________________
2007 2008 2009 2010
____________________________________________________________________________________
2007 2007 2007 2007
2007 Fall 2007 Fall 2007 Fall Fall
Budget Update Budget Update Budget Update Update
____________________________________________________________________________________
Canadian Dollar 85.8 93.4 87.2 100.8 87.3 98.1 96.7
(Cents US)
Crude Oil 60.0 71.7 59.7 78.3 60.0 72.3 68.6
($ US per Barrel)
U.S. Real GDP Growth 2.7 2.1 3.0 2.4 3.1 2.9 2.8
(Per Cent)
Three-Month Treasury Bill Rate 4.1 4.2 4.2 4.1 4.4 4.5 4.6
(Per Cent)
10-Year Government Bond Rate 4.1 4.3 4.5 4.4 5.0 4.9 5.2
(Per Cent)
=====================================================================================================================
Sources: Blue Chip Economic Indicators (November 2007) and Ontario Ministry of Finance Survey of Forecasts
(March 1, 2007 and December 5, 2007).
_____________________________________________________________________________________________________________________
COMPARISON TO THE 2007 ONTARIO BUDGET
[Chart 1: Private-Sector Forecasts - bar graph]
Since the 2007 Budget, there have been significant unanticipated changes in the
economic environment. The Canadian dollar climbed above parity with the U.S.
dollar, reaching as high as $1.10 in November 2007. Oil prices reached a recent
high of close to $100 US per barrel. Global financial turmoil and credit
tightening have recurred as a result of the sub-prime mortgage crisis in the
United States. These developments have resulted in private-sector forecasters
raising their projections for oil prices and the Canadian dollar, and lowering
their projections for U.S. economic growth. As a result of these changing
external conditions, private-sector projections for Ontario economic growth in
2008 and 2009 have been revised since the 2007 Budget. Ministry of Finance
assumptions remain prudent compared to the private-sector average.
Despite these challenges, Ontario's economy continues to be resilient. Ontario's
real GDP is expected to grow by 1.9 per cent in 2007 — 0.3 percentage points
higher than the Ministry of Finance's 2007 Budget forecast. Employment is now
expected to grow by 1.6 per cent — 0.5 percentage points above the Budget
forecast. Incomes have grown strongly in the first half of the year and are
expected to surpass the 3.9 per cent growth projected in the 2007 Budget.
Corporate profits are now expected to grow by 7.0 per cent in 2007, ahead of the
prudent Budget projection of 1.1 per cent growth. Nominal GDP is now expected to
grow by 5.0 per cent, above the 3.1 per cent projected in the Budget.
=======================================================================================================================
The Ontario Economy in 2007 Table 5
(Per Cent Change)
_______________________________________________________________________________________________________________________
2007 Budget 2007 Fall Update
_____________________________________________________
Real Gross Domestic Product 1.6 1.9
Personal consumption 2.8 3.0
Residential construction (3.0) (0.2)
Non-residential construction 2.5 3.8
Machinery and equipment 6.5 4.9
Exports 1.5 1.5
Imports 2.5 3.0
Nominal Gross Domestic Product 3.1 5.0
Other Economic Indicators
Retail sales 3.6 3.6
Housing starts (000s) 68.0 68.0
Personal income 3.9 5.3
Wages and salaries(1) 3.9 4.9
Corporate profits 1.1 7.0
Consumer Price Index 1.3 1.8
Labour Market
Employment 1.1 1.6
Job creation (000s) 71 103
Unemployment rate (per cent) 6.3 6.4
=======================================================================================================================
(1) Includes supplementary labour income.
Source: Ontario Ministry of Finance.
_______________________________________________________________________________________________________________________
CHALLENGING EXTERNAL ECONOMIC ENVIRONMENT
U.S. SUB-PRIME MORTGAGE DEFAULTS CHALLENGE
FINANCIAL MARKET LIQUIDITY
[Chart 2: U.S. Sub-Prime Fallout - line graph]
The recent rise in U.S. sub-prime mortgage defaults and the corresponding effect
on global financial markets represent a new challenge for Ontario's economy. For
example, much of the rise in the Canadian dollar since August is a consequence
of anticipated economic weakness and interest rate cuts in the United States,
largely triggered by the sub-prime mortgage default crisis. There has also been
a corresponding tightening in credit conditions around the world.
Many of the U.S. sub-prime mortgages were repackaged into securities and sold
around the world. Many of these collateralized debt obligations (CDOs) were
backed by high-yield bonds and loans as well as mortgages. These new, complex
financial arrangements resulted in a lack of transparency, making it difficult
for investors to determine the underlying value of the assets. The higher
default rate for sub-prime mortgages resulted in extreme risk aversion for
securities backed by these assets even if the exposure was not large.
Uncertainty among market participants began to build in early August 2007, and
perceptions of risk rose. Risk aversion increased. Financial institutions
increased their cash holdings due to uncertainty about their exposure, squeezing
liquidity.
As events unfolded around the world, central banks, including the Bank of
Canada, moved quickly to provide significant amounts of liquidity to their
financial systems to keep interest rates from rising. The U.S. Federal Reserve
has cut its federal funds rate and its discount rate since the crisis began in
early August. Following the crisis, the European Central Bank and the Bank of
Canada held off on interest rate hikes that had previously been expected. The
Bank of Canada cut the overnight rate by 25 basis points on December 4, noting
that the deteriorating international credit markets conditions point to greater
risks of weakness ahead. U.S. mortgage delinquencies are expected to rise over
coming quarters as large waves of sub-prime loan renewals are reset at higher
interest rates. As a result, further financial market volatility may occur. To
date, though, effective action by the Bank of Canada has kept Canadian financial
markets working smoothly and Ontario is confident markets will continue to
operate effectively.
There is uncertainty about the extent and duration of the tightening of credit
conditions in Canada and about the tempering effect this may have on growth.
Since the summer, credit spreads for riskier types of loans have widened,
leading to higher borrowing costs for some businesses and consumers. Tightening
credit conditions could cause lenders to make it more difficult for borrowers to
obtain business and consumer loans. Weakened business or consumer confidence
arising from tighter credit conditions could also restrain spending, which could
dampen economic growth.
The recent global liquidity crisis has not materially affected the Province's
liquidity. Details on Ontario's exposure to asset-backed commercial paper are
discussed in Annex IV: Borrowing and Debt Management.
INTEREST RATES TO TREND MODESTLY HIGHER
[Chart 3: 10-Year Government of Canada Bond Rate - bar graph]
Interest rates affect consumer spending and business investment as well as the
projected expense for interest on the Province's debt.
Once the current market turbulence is over, interest rates are expected to trend
up gradually. Private-sector forecasters project Canadian three-month treasury
bill rates will average 4.2 per cent in 2007, 4.1 per cent in 2008, 4.5 per cent
in 2009 and 4.6 per cent in 2010. There is a wide range of views on three-month
treasury bill yields next year, ranging from a low of 3.0 per cent to a high of
4.8 per cent. Private-sector forecasts for 10-year Government of Canada bonds in
2008 range from a low of 3.7 per cent to a high of 4.9 per cent. Ministry of
Finance interest rate assumptions are deliberately set above average
private-sector forecasts. Although interest rates are projected to edge higher
over the medium term, they are expected to remain well below their historical
averages.
==================================================================================================================
Canadian Interest Rate Outlook Table 6
(Annual Per Cent)
__________________________________________________________________________________________________________________
2007p 2008p 2009p 2010p
_____________________________________________________________________
Three-Month Treasury Bill Rate 4.1 4.2 4.6 4.7
10-Year Government Bond Rate 4.3 4.5 5.0 5.3
==================================================================================================================
p = projection.
Source: Ontario Ministry of Finance.
__________________________________________________________________________________________________________________
UNITED STATES SET TO OVERCOME SETBACKS
[Chart 4: U.S. Real GDP Growth - bar graph]
The economic performance in the United States is critical for Ontario as the
lion's share of the province's international merchandise exports is U.S.-bound.
Private-sector forecasters expect U.S. GDP growth of 2.1 per cent in 2007, well
below the previous three years when growth averaged 3.2 per cent.
Growth in the United States is expected to improve as financial market concerns
are resolved and the housing market recovers. Real GDP growth in the United
States is expected to grow by 2.4 per cent in 2008, 2.9 per cent in 2009 and 2.8
per cent in 2010. A pickup in U.S. growth is important to Ontario exports,
particularly U.S. spending on autos and building materials produced in Ontario.
OIL PRICES ARE EXPECTED TO REMAIN HIGH
[Chart 5: Crude Oil Prices - line graph]
Higher oil prices, which raise costs for Ontario businesses and consumers, tend
to dampen economic growth. Oil prices rose over 150 per cent from $26.10 US per
barrel in 2002 to $66.10 US per barrel in 2006. In 2007, oil prices soared from
less than $50 US per barrel in mid-January to a new record high of $99.29 US per
barrel in November. This was a result of strong global demand, numerous refinery
outages and geopolitical risks. It was also due to continued production
restraint by OPEC (Organization of the Petroleum Exporting Countries) members
and slower-than-expected growth in non-OPEC supply, which helped tighten
oil-market supply-and-demand balance.
Private-sector forecasters expect oil prices to remain elevated over the
forecast horizon, as healthy global demand and limited surplus capacity will
keep markets relatively tight and vulnerable to supply disruptions.
Private-sector forecasters call for oil prices to average $78.30 US per barrel
in 2008, $72.30 US per barrel in 2009 and $68.60 US per barrel in 2010.
Significant volatility still exists in oil markets as analysts' projections for
2008 range from less than $60 US per barrel to $80 US per barrel.
STRONGER CANADIAN DOLLAR CHALLENGES BUSINESS
[Chart 6: Canadian Dollar - line graph]
The stronger Canadian dollar is a serious challenge for businesses as it makes
it more difficult to compete with foreign producers, both in the Canadian market
and abroad.
On a trade-weighted basis, the Canadian dollar has appreciated more than any
other major currency since the beginning of 2002, creating challenges for
Ontario's economy — in particular, Ontario's export-oriented manufacturing,
agriculture and forestry sectors. Travel from the United States to Ontario also
has been adversely affected by the strength of the dollar. However, the higher
dollar lowers the cost of imported machinery and equipment since about 60 per
cent is imported, providing a good opportunity for factories to upgrade
technology and improve efficiencies.
The Canadian dollar has appreciated by about 65 per cent from early 2002 to
November 2007, climbing above parity with the U.S. currency in late September
for the first time since November 1976. The dollar has been quite volatile this
year. From a low of 84.2 cents US on February 8, the dollar climbed to a high of
110.3 cents on November 7. Recently, it has eased back to trade below parity
with the U.S. dollar. Through all this, the Canadian dollar has averaged about
93 cents US so far in 2007, on pace to mark the fifth straight annual increase.
Private-sector forecasters expect it to average about 98.5 cents US per year in
2008 through 2010.
There is a significant divergence of views on the Canadian dollar, with
forecasts ranging from an annual average of 104.7 cents US to 92.6 cents US next
year. The wide range of projections reflects differing views about global
growth, commodity prices and the long-run fair value of the dollar.
HIGH DOLLAR WILL CHALLENGE ONTARIO'S TRADE PERFORMANCE
Ontario's net export balance has diminished in both value and volume due to
reduced exports to the United States, largely attributable to the strong
Canadian dollar and weaker U.S. demand. While exports to the United States have
declined, those to the rest of the world have increased dramatically. Over the
past five years, the Canadian dollar value of Ontario merchandise exports to the
United States declined by 7.4 per cent while exports to other countries nearly
doubled (+93.8 per cent). This has occurred to a lesser degree on the import
side. Over the 2002 to 2006 period, the value of Ontario imports from the United
States fell 2.8 per cent, while imports from all other countries grew 38.5 per
cent, with China accounting for nearly half of that growth.
In recent years, interprovincial trade has also increased in importance to
Ontario, accounting for 31.5 per cent of the value of Ontario's exports in 2006.
Strong growth in Western Canada is expected to continue to boost Ontario's
exports.
Weaker growth in the United States, a stronger Canadian dollar and restructuring
in the auto industry will hold down exports in the near term. However, the
opening of a new Toyota plant in Woodstock in 2008 will give exports a lift. The
auto sector currently accounts for 41 per cent of Ontario's international
merchandise exports, with 97 per cent of auto exports destined for the United
States.
Strong global growth, particularly from India and China, will provide ongoing
strength for Ontario industrial goods and materials exports.
Ontario real exports are projected to rise by 1.5 per cent in 2007. In 2008,
real export growth is expected to slow to 1.0 per cent due to weaker U.S.
demand. Real export growth is expected to strengthen in 2009 and 2010, averaging
2.7 per cent, reflecting stronger domestic demand in the United States and
buoyant global demand. There is a wide range of views on the outlook for
Ontario's trade balance, reflecting different views on the dollar, U.S. demand
and how quickly Ontario exporters will adjust to the competitive global market.
INFLATION WILL REMAIN STABLE
[Chart 7: Ontario CPI Inflation Rate - bar graph]
Ontario's consumer price index (CPI) inflation rate has been low and stable in
recent years, averaging 2.1 per cent over the 2002 to 2006 period. It was 2.3
per cent in October and has averaged 1.7 per cent so far in 2007.
Inflation is expected to remain well contained over the forecast horizon.
Ontario's CPI inflation rate is expected to fall to 1.4 per cent in 2008. This
incorporates the one percentage point cut in the federal goods and services tax
(GST) on January 1, 2008 that will reduce the CPI inflation rate by an estimated
0.6 per cent. Ontario's CPI inflation rate is expected to average 2.0 per cent
in 2009 and 2010. The average private-sector forecast for Ontario inflation for
2009 to 2010 ranges from a low of 1.8 per cent to a high of 2.3 per cent. The
narrow forecast range over the medium term reflects the private sector's view
that the Bank of Canada's monetary policy will succeed in keeping inflation near
the mid-point of its one to three per cent target range.
CONTINUED STRONG AND RESILIENT DOMESTIC ECONOMY
STRONG INVESTMENT SPENDING TO CONTINUE
[Chart 8: Real Business Investment - bar graphs]
The outlook for business investment remains positive over the forecast horizon.
Healthy balance sheets will continue to contribute to a positive investment
climate. Ontario corporate profits have expanded in the last several years,
reaching 11.5 per cent of GDP in 2006. Corporate profits as a share of GDP are
projected to average 12.0 per cent in 2007 through 2010, above the historical
average of 10.0 per cent. Corporate profits are projected to increase by 7.0 per
cent in 2007 and by an average of 5.2 per cent from 2008 through 2010.
Investment spending rose strongly over the 2002 to 2006 period. Real machinery
and equipment spending advanced by an average of 5.2 per cent and
non-residential investment grew by 2.8 per cent annually. Strong investment
spending has continued through the first half of 2007, with real machinery and
equipment spending up 6.1 per cent and real non-residential construction
spending up 5.1 per cent over the same period of 2006.
Machinery and equipment investment gives firms access to leading-edge
technologies, improving productivity and enhancing competitiveness. Lower costs
of imports will continue to contribute to strong investment in machinery and
equipment. Real spending on machinery and equipment is projected to rise by 4.9
per cent in 2007, and 5.0 per cent annually from 2008 through 2010.
Strong growth in commercial and industrial construction is also expected,
reflecting investment by utilities; transportation and warehousing; retail
trade; and finance, insurance and real estate. Total real commercial and
industrial construction spending is expected to increase by 3.8 per cent in
2007, and 2.9 per cent annually from 2008 through 2010.
MORE JOBS WILL BE CREATED
[Chart 9: Employment - bar graph]
Almost 418,000 net new jobs have been created since October 2003. Over 95 per
cent of those jobs were in occupations that paid an average over $19.50 per
hour, including jobs in natural and applied sciences, management, social
sciences, and education. The strongest job growth over the past four years has
occurred in:
• educational services (109,600)
• wholesale and retail trade (80,600)
• health care and social services (56,300)
• finance, insurance, real estate and leasing (56,100)
• information, culture and recreation (43,700)
• professional, scientific and technical services (37,600)
• construction (36,200).
• public administration (31,900)
So far this year, the Ontario economy has created 102,800 net new jobs, with
full-time positions accounting for 60 per cent of the increase. Job gains have
been broadly based in the service sector and include 33,600 new positions in
health care and social services; 29,900 in accommodation and food services;
23,600 in professional, scientific and technical services; and 19,500 in
education. On the goods-producing side, the construction industry added 8,700
jobs and utilities created 9,600 jobs.
Employment is expected to grow by 1.6 per cent for 2007 as a whole, following a
1.5 per cent gain in 2006. The unemployment rate is anticipated to average 6.4
per cent in 2007 — compared to a 10-year average of 6.8 per cent. Ontario is
projected to create an additional 82,000 jobs in 2008, an increase of 1.2 per
cent. Job growth is expected to pick up in 2009 and 2010, with an average
increase of 1.3 per cent each year.
INCOMES WILL CONTINUE TO GROW
[Chart 10: Real After-Tax Income - bar graph]
Over the 2002 to 2006 period, personal income grew strongly, rising by an annual
average of 3.9 per cent, contributing to a 2.6 per cent annual gain in
inflation-adjusted after-tax income. This rise reflects strong gains in labour
income as employment growth averaged 1.8 per cent and hourly wage growth
averaged 2.6 per cent a year.
Real after-tax income is up 3.6 per cent over the first half of 2007, reflecting
buoyant labour income, unincorporated business income and investment income.
Both total personal and labour income growth are solid, reflecting strong job
creation, up 1.6 per cent, and healthy wage gains, up 2.8 per cent.
Personal income is projected to grow by 5.3 per cent in 2007, or 3.0 per cent
after adjusting for inflation and taxes. Personal income growth is expected to
soften to 3.8 per cent in 2008, leading to a 2.6 per cent increase in real
after-tax income. Looking ahead, personal income is forecast to grow by an
average of 4.4 per cent in 2009 and 2010, in part reflecting stronger employment
growth. Real after-tax income is expected to increase by an average of 2.7 per
cent in 2009 and 2010.
EMPLOYMENT AND INCOME GAINS WILL FUEL HOUSEHOLD SPENDING
[Chart 11: Real Consumer Spending - bar graph]
Solid income growth has led to healthy household finances and strong consumer
spending growth. Over the 2002 to 2006 period, retail sales expanded by an average
of 4.3 per cent a year. Over the first nine months of 2007, they were up 3.7 per cent.
Home-related purchases remain robust, with sales at furniture, home furnishings
and electronics stores expanding 8.3 per cent in the first nine months of this year.
Sales at new car dealers are up just 0.1 per cent compared to the same period
last year, reflecting modest unit sales and lower prices. The moderate growth in
new car sales has limited the growth in overall retail sales since new car sales
normally account for about 20 per cent of Ontario retail sales. Retail sales are
expected to grow by 3.6 per cent in 2007, 3.4 per cent in 2008, and by an average
of 4.1 per cent in 2009 and 2010.
Consumer spending on both goods and services, in real terms, increased by a
robust 3.4 per cent annually over the 2002 to 2006 period. Over the first half
of this year, real personal expenditure rose by 3.8 per cent over the same
period last year. Real consumer spending is expected to rise by 3.0 per cent in
2007, 2.4 per cent in 2008 and then average 2.8 per cent in 2009 and 2010, in
line with real after-tax income.
HOUSING MARKET REMAINS HEALTHY
[Chart 12: Ontario Housing Starts - bar graph]
Ontario's housing market was a source of strength in the economy over the 2002
to 2006 period. Housing starts averaged 81,200 units annually, outperforming
expectations. Housing resales also soared, reaching record levels in 2002, 2003
and 2004, and averaging gains of 3.7 per cent over the 2002 to 2006 period.
Ontario's housing market remains strong, with housing resales set to reach
record levels in 2007. Housing starts have eased from 73,400 units in 2006 to an
annual rate of 68,600 units so far this year. Rising house prices and upward
movement in mortgage rates have dampened housing affordability, but new mortgage
products such as longer amortization loans have helped to offset these effects
and increased accessibility for buyers.
Housing starts are expected to total 68,000 units in 2007 and average 66,300
units over the 2008 to 2010 period. Ongoing strong international immigration
will boost overall population and result in the creation of an average of 72,000
new Ontario households a year from 2008 through 2010.
Ontario's resale market has continued to surpass expectations. After slowing
slightly in 2005 and 2006, home resales have surged in 2007 and are up over 10
per cent so far this year. Resales are projected to rise by 9.0 per cent in 2007
before easing by 2.9 per cent in 2008, and then to grow by an average of 1.5 per
cent in 2009 and 2010. Strong demand has put upward pressure on prices. The
average price of an Ontario home is projected to increase from $299,000 in 2007
to $329,000 in 2010, an increase of close to 10 per cent. Ontario's housing
market is expected to remain healthy. There is little evidence of overbuilding
and although housing prices have increased, low interest rates and strong income
growth mean that mortgage payments as a share of household income remain well
below the peak in 1990.
Ontario's housing market does not face the same risks as the U.S. market.
Adjustable-rate mortgages are less prevalent in Canada, with the sub-prime
mortgage market accounting for only five per cent of total mortgage originations
in Canada in 2006 compared to 22 per cent in the United States. In addition,
Canadian financial institutions have tighter lending standards and most
homebuyers in Canada must purchase insurance if they lack the required 20 per
cent down payment.
DETAILS OF THE ONTARIO ECONOMIC OUTLOOK
The Ministry of Finance's outlook for the major external factors shaping
Ontario's economic prospects is closely tied to private-sector forecasts. These
factors include the U.S. economic outlook, interest rates, Canadian dollar
exchange rate, oil prices and economic growth in the rest of Canada. The
Ministry of Finance's forecast for real GDP growth is deliberately prudent, 0.1
percentage point below the average private-sector forecast in every year.
Developing revenue estimates requires highly detailed economic forecasts that
often go well beyond what is readily available from most private-sector
forecasters. As such, the more detailed components of the outlook, such as those
in this table, are based on a combination of private-sector forecasts and
macro-econometric models. Professional judgment also plays a role, especially in
interpreting model results, judging the reasonableness of private-sector
forecasts and incorporating the latest information.
Table 7 shows the key details of the Ministry of Finance's economic outlook for
the 2007 to 2010 period.
=====================================================================================================================
The Ontario Economy, 2005 to 2010 Table 7
(Per Cent Change)
_____________________________________________________________________________________________________________________
Actual Projected
_______________________________________________________________________
2005 2006 2007 2008 2009 2010
_______________________________________________________________________
Real Gross Domestic Product 2.9 2.1 1.9 1.8 2.4 2.8
Personal consumption 3.6 3.5 3.0 2.4 2.7 2.9
Residential construction 1.8 1.1 (0.2) 0.9 2.0 2.5
Non-residential construction 3.6 10.4 3.8 2.9 2.7 3.0
Machinery and equipment 9.1 11.2 4.9 5.4 5.0 4.5
Exports 2.2 (0.2) 1.5 1.0 2.5 2.9
Imports 3.9 2.7 3.0 2.7 3.0 3.0
Nominal Gross Domestic Product 3.9 3.9 5.0 3.8 4.0 4.7
Other Economic Indicators
Retail sales 4.8 4.1 3.6 3.4 4.1 4.2
Housing starts (000s) 78.8 73.4 68.0 65.0 66.0 68.0
Personal income 4.5 4.8 5.3 3.8 4.3 4.5
Wages and salaries(1) 5.0 4.5 4.9 3.8 4.0 4.2
Corporate profits (1.8) 3.9 7.0 5.4 4.9 5.2
Consumer Price Index 2.2 1.8 1.8 1.4 2.0 2.0
Labour Market
Employment 1.3 1.5 1.6 1.2 1.3 1.4
Job creation (000s) 81 95 103 82 86 94
Unemployment rate (per cent) 6.6 6.3 6.4 6.6 6.4 6.3
=====================================================================================================================
(1) Includes supplementary labour income.
Sources: Statistics Canada, Canada Mortgage and Housing Corporation and Ontario Ministry of Finance.
_____________________________________________________________________________________________________________________
Section C: Ontario's Fiscal Plan
________________________________________________________________________________
The government's sound leadership and prudent fiscal management have resulted in
a steady improvement from the inherited $5.5 billion deficit in 2003-04 to the
$2.3 billion surplus recorded in 2006-07. The solid progress made in the
Province's fiscal position is also reflected in the improvement in the level of
Provincial debt relative to Ontario's gross domestic product (GDP), which
improved from 25.2 per cent in 2003-04 to 19.1 per cent in 2006-07 — its lowest
level in 15 years.
While eliminating the deficit over this period, the government has also worked
to restore public services by increasing funding to priority areas such as
health care, education, social services, postsecondary education and training,
and infrastructure.
Moving forward, the government is projecting ongoing and sustainable balanced
budgets over the medium term. In fact, despite the slower economic growth
outlook for 2008 and 2009, the Province is on track to deliver five consecutive
balanced budgets between 2005-06 and 2009-10.
The fiscal plan remains prudent in the face of a slower economic growth outlook,
with reserves of $0.8 billion in 2007-08 and $0.9 billion in 2008-09 and
2009-10.
[Chart 13: Ontario's Strong Fiscal Performance - bar graph]
KEY ELEMENTS OF ONTARIO'S MEDIUM-TERM FISCAL PLAN
The Fiscal Transparency and Accountability Act, 2004 sets out a number of
criteria that the Province's fiscal plan must meet. These criteria ensure the
highest level of transparency and accountability in fiscal planning and
reporting.
The act requires the Ontario Government to plan for balanced budgets, which is
reflected in the fiscal plan outlined in the 2007 Ontario Economic Outlook and
Fiscal Review. Key elements of the government's fiscal plan that will ensure the
achievement of ongoing balanced budgets include:
• making disciplined decisions that hold the average annual rate of
growth in total expense to less than the average annual rate of growth in total
revenue over the medium term
• taking decisive action to strengthen Ontario's economic advantage through a
plan to enhance competitiveness and invest in people and communities and
infrastructure
• promoting principled and sustainable federal-provincial fiscal arrangements
• maintaining a prudent debt-to-GDP ratio
• maintaining a cautious and prudent fiscal plan, including an annual reserve.
2007-08 FISCAL OUTLOOK
The government is currently projecting a balanced budget in 2007-08. This
represents an in-year improvement of $400 million from the 2007 Ontario Budget
Plan and is consistent with the outlook presented in the 2007-08 First Quarter
Ontario Finances. Additional information on 2007-08 revenue and expense
projections can be found in Section D: Ontario's Revenue Outlook and Section E:
Ontario's Expense Outlook.
============================================================================
2007-08 Fiscal Outlook — In-Year Change Table 8
($ Millions)
____________________________________________________________________________
Budget Current
Plan Outlook In-Year
2007-08 2007-08 Change
______________________________________________
Revenue 91,503 94,100 2,597
Expense
Programs 82,030 84,283 2,253
Interest on Debt 9,123 9,067 (56)
______________________________________________
Total Expense 91,153 93,350 2,197
Reserve 750 750 -
______________________________________________
Surplus/(Deficit) (400) 0 400
============================================================================
Total revenue in 2007-08 is currently projected to be $94,100 million, an
increase of $2,597 million from the 2007 Budget Plan and $2,014 million from the
2007-08 First Quarter Ontario Finances. This increase is primarily due to a
higher taxation revenue outlook, which is boosted by higher revenues related to
processing of prior years' tax returns. In-year revenue changes are discussed in
greater detail in Section D: Ontario's Revenue Outlook.
The total expense outlook at $93,350 million is a net $2,197 million higher than
the 2007 Budget Plan and up $2,014 million from the 2007-08 First Quarter
Ontario Finances. This is mainly due to increased spending associated with the
government taking decisive action to strengthen Ontario's economic advantage by
enhancing Ontario's competitiveness, and investing in its people and communities
as well as infrastructure.
MEDIUM-TERM FISCAL OUTLOOK
The government is projecting balanced budgets in each year over the medium term,
while remaining prudent in light of the slower economic growth outlook in 2008
and 2009 than projected at the time of the 2007 Budget.
As compared to 2007-08, the revenue outlook in 2008-09 and 2009-10 is moderated
by a slower economic growth outlook in 2008 and 2009, reflecting a slower growth
outlook for the U.S. economy, higher oil prices and a higher Canadian dollar.
The expense outlook continues to reflect the government's commitment to building
and investing in public services as outlined in the 2007 Moving Forward Together
campaign platform.
Overall, the fiscal outlook remains prudent, and a balanced budget is projected
in both 2008-09 and 2009-10. The prudent fiscal outlook is reflected explicitly
in the reserves, which are set at $0.8 billion in 2007-08 and $0.9 billion in
each year over the medium term, in recognition of the risks that could
materialize due to unanticipated changes in Ontario's economic outlook or in
Provincial revenue and expense.
The improvement in Ontario's fiscal position is also reflected in an improving
Provincial debt-to-GDP ratio. Since 2003-04, Ontario's debt-to-GDP ratio (debt
is defined as accumulated deficit) has improved from 25.2 per cent to 19.1 per
cent in 2006-07 -- its lowest level in 15 years. It is now projected to improve
even further to 18.2 per cent in 2007-08, and to 16.9 per cent by 2009-10.
The following table provides the Province's medium-term fiscal plan and outlook
for 2006-07 to 2009-10. Further details are included in Section F: Details on
Ontario's Finances.
=====================================================================================================================
Medium-Term Fiscal Plan and Outlook Table 9
($ Billions)
_____________________________________________________________________________________________________________________
Actual Current Outlook
______________________________________________
2006-07 2007-08 2008-09 2009-10
_____________________________________________________________
Revenue 90.4 94.1 95.7 99.0
Expense
Programs 79.3 84.3 85.6 88.8
Interest on Debt 8.8 9.1 9.2 9.4
_____________________________________________________________
Total Expense 88.1 93.4 94.8 98.2
Reserve - 0.8 0.9 0.9
_____________________________________________________________
Surplus/(Deficit) 2.3 0.0 0.0 0.0
=====================================================================================================================
Note: Numbers may not add due to rounding.
_____________________________________________________________________________________________________________________
FISCAL PRUDENCE
The government is applying a disciplined approach to balancing strategic
investments in key priority areas with a plan to achieve fiscal balance every
year. The fiscal plan includes key elements of prudence each year to help
protect the government's overall fiscal objectives and ensure the achievement of
fiscal targets.
Consistent with the Fiscal Transparency and Accountability Act, 2004, the fiscal
plan incorporates prudence in the form of a reserve, in recognition of the risks
that could materialize due to unanticipated changes in Ontario's economic
outlook or in Provincial revenue and expense.
In light of the slower economic growth outlook and other risks to the economic
outlook, the fiscal plan now includes reserves of $0.8 billion in 2007-08, and
$0.9 billion in 2008-09 and 2009-10. While the reserve is higher over the medium
term than the current year to better reflect the uncertain nature of the
medium-term revenue and expense projections, it has been lowered from the levels
in the 2007 Budget to offset the impact of slower economic growth in 2008 and
2009, and to reflect the reserve as outlined in the 2007 Moving Forward Together
campaign platform.
RISKS AND THE FISCAL OUTLOOK
The fiscal outlook is subject to change and reflects a continuum of information
that begins with the Budget and ends with the Public Accounts. As new
information affecting the economic, revenue and expense assumptions arises
throughout the year, the fiscal forecasts change. In this context, it is
important to note that the forecasts presented in economic and fiscal updates,
including the 2007 Ontario Economic Outlook and Fiscal Review, represent a point
in time along this continuum and are based on the best available information at
the time.
The revenue forecast includes assumptions about tax-return filings and growth of
key factors such as wages, salaries, disposable income and housing prices. It
also reflects current federal-provincial funding arrangements and funding
formulas for major health and social transfers. Developing revenue estimates
also requires highly detailed economic forecasts, which include assumptions
about factors such as the U.S. economic outlook, the Canadian dollar exchange
rate, oil prices and economic growth in the rest of Canada.
Variances from revenue estimates arise due to inherent uncertainties involved in
predicting the future and lags in information flows. A variance in any of the
key factors underlying the revenue assumptions could result in a change to the
revenue forecast. A sensitivity analysis of key revenue assumptions and factors
is provided in Section D: Ontario's Revenue Outlook.
The total expense forecast includes assumptions about program growth and
demands, as well as additional planned spending in key priority areas. As many
ministries' expense forecasts are based on assumptions about utilization,
enrolment or caseloads, a change in these factors could impact total expense,
causing changes in the overall fiscal forecast. Section E: Ontario's Expense
Outlook provides a sensitivity analysis of the key factors affecting the expense
forecast.
For example, a change of one per cent to total revenue or total expense in
2009-10 represents about a $1.0 billion change in the Province's overall fiscal
outlook. While this change may be small compared to the government's overall
budget, it can cause significant swings in the Province's surplus/deficit. It is
due to this type of uncertainty that the fiscal plan includes prudence in the
form of a revenue forecast based on prudent economic assumptions, contingency
funds and a reserve. Prudent economic assumptions include growth rates for real
GDP that are set lower than the average of private-sector forecasts in each
year. These forms of prudence exist to help offset any negative impact to the
fiscal plan that could result from even a small variance in the revenue and
expense forecast.
As the factors and assumptions comprising the revenue and expense forecasts
interact and shift, fiscal and economic updates at various times of the fiscal
cycle may include adjustments to the revenue and expense forecasts to reflect
these changes. Updates such as those provided in the 2007 Ontario Economic
Outlook and Fiscal Review are based on the best available information, and
provide transparency around the changes to the fiscal forecast and information
on key risks and sensitivities that may affect the fiscal plan.
MAINTAINING A PRUDENT DEBT-TO-GDP RATIO
A key element of the government's medium-term fiscal plan is the commitment to
maintain a prudent level of Provincial debt (where debt is defined as
accumulated deficit) relative to the size of Ontario's economy as measured by
nominal GDP. Ongoing debt accumulation can significantly limit the extent to
which vital public services can be funded, as increasing debt charges can crowd
out funds available for spending on government priorities. Responsible fiscal
management, therefore, needs to be long term in nature to ensure that future
generations are not faced with the erosion of key programs and services.
[Chart 14: Continual Improvement in Ontario's Debt-to-GDP Ratio - line graph]
In line with Ontario's strong fiscal performance in recent years, the Province's
debt-to-GDP ratio improved from 25.2 per cent in 2003-04 to 19.1 per cent by
2006-07 — its lowest level in 15 years. It is projected to improve even
further to 16.9 per cent by 2009-10.
Section D: Ontario's Revenue Outlook
________________________________________________________________________________
The revenue forecast reflects the best use of information available at the time
the fiscal plan is developed, including the Ministry of Finance's economic
outlook and the estimated impacts of government policy decisions.
Since the 2007 Ontario Budget, the strength of the economy in 2007 has raised
the taxation revenue base for 2007-08 and beyond. The taxation revenue outlook
is also boosted by recent information related to processing of prior years' tax
returns.
There are, however, still risks to the 2007-08 outlook, with important revenue
information still to come later in the year. Changes in the current environment,
especially the stronger Canadian dollar and higher oil prices, could affect
economic performance over the rest of the fiscal year. As well, as past years'
tax return processing is finalized over the coming months, the revenue outlook
could change. Corporations Tax revenues are subject to the greatest uncertainty.
Growth in taxation revenues in 2008-09 and 2009-10 is moderated by a slower
economic growth outlook for 2008 and 2009, reflecting a higher Canadian dollar,
higher oil prices and a slower growth outlook for the U.S. economy. Uncertainty
still exists over the medium term, particularly as it relates to potential
sub-prime mortgage developments in the United States and their impacts on global
financial markets. For more details on the economic outlook, see Section B:
Ontario's Economic Outlook.
The revenue outlook reflects current federal-provincial funding arrangements and
formulas for major health and social transfers. The outlook for Government of
Canada Transfers has increased since the 2007 Budget due to new funding
arrangements announced in the 2007 federal budget and revised estimates of
Ontario's Canada Health Transfer and Canada Social Transfer entitlements.
The revenue outlook reflects a number of policy measures, including new tax
measures and the government's decision to upload from municipalities the total
cost of the Ontario Disability Support Program and Ontario Drug Benefits for
social assistance recipients over four years starting in 2008. Municipalities
currently reimburse the Province for a portion of the costs of delivering these
programs. By the time it is fully implemented in 2011, the upload will save
municipalities $935 million a year. Tax measures are discussed in greater detail
in Annex II: Enhancing Ontario's Tax Competitiveness.
INHERENT UNCERTAINTY IN FORECASTING REVENUES
[Chart 15: 2006-07 Tax Revenue - bar graph]
Variances from revenue estimates arise due to the inherent uncertainties of
predicting the future and lags in information flows. In recent years, actual
revenues have been higher than estimated for reasons outlined in each year's
provincial annual report. For example, 2006-07 taxation revenues were $3 billion
higher than projected in the 2006 Budget Plan, mainly due to
higher-than-expected Personal Income Tax and Corporations Tax revenue
performance in 2006-07 and adjustments in these tax revenues related to earlier
years. Other Canadian jurisdictions have had similar experiences. As Chart 15
shows, in 2006-07, Ontario taxation revenues were 5.0 per cent above forecast
compared to the 7.4 per cent absolute average variance for other Canadian
jurisdictions.
Taxation revenue estimates based on the economic outlook are largely developed
using macro-econometric and micro-simulation models. Model-based forecasting
that captures the relationship between a revenue source and its main economic
drivers, given the structure of the tax system, is generally accepted as a best
practice. Key assumptions and risks related to each major revenue source are
discussed below. Additional details on the impact of changes in key planning
assumptions are provided in Table 15, Selected Economic and Revenue Risks and
Sensitivities.
SOURCES OF 2007-08 REVENUE CHANGE SINCE 2007 ONTARIO BUDGET
=====================================================================================================================
Summary of 2007-08 In-Year Revenue Change Since 2007 Ontario Budget Table 10
($ Millions)
_____________________________________________________________________________________________________________________
Taxation Revenue
Personal Income Tax 1,033
Corporations Tax 816
Ontario Health Premium 92
Gasoline Tax (53)
Tobacco Tax (78)
Land Transfer Tax 183
Electricity Payments-In-Lieu of Taxes (42)
All Other Taxes 173
2,124
Government of Canada
Canada Health and Canada Social Transfer 464
All Other Government of Canada 140
604
Income from Government Business Enterprises
Ontario Lottery and Gaming Corporation (15)
Ontario Power Generation Inc. and Hydro One Inc. (84)
(99)
Other Non-Tax Revenue (32)
Total Revenue Change 2,597
=====================================================================================================================
Source: Ontario Ministry of Finance.
_____________________________________________________________________________________________________________________
Personal Income Tax (PIT) is estimated to be $1,033 million above forecast in
2007-08 mainly due to stronger 2007 wages and salaries growth and higher
revenues from processing 2006 tax returns. Since the 2007 Budget, processing of
2006 and prior years' tax returns has increased 2006-07 revenues above Budget
estimates, raising the base upon which growth is applied in forecasting PIT
revenues for 2007-08 and beyond. Higher revenues than estimated in the 2006-07
Public Accounts result in a one-time increase to PIT revenues of $250 million in
2007-08 as variances from past Public Accounts estimates are included in the
current year. Personal Income Tax revenues in 2007-08 also include a $120
million payment from the federal government in respect of past years' taxes.
Also included is the impact of tax measures announced in the 2007 federal budget
that Ontario paralleled and new proposed Ontario tax measures. Annex II:
Enhancing Ontario's Tax Competitiveness outlines proposed new tax initiatives.
Corporations Tax (CT) revenues for 2007-08 are estimated to be $816 million above the
2007 Budget projection mainly due to stronger 2007 corporate profit growth and
higher revenues from processing prior-year tax returns. Since the 2007 Budget,
processing of 2006 tax returns has increased estimated 2006-07 CT revenues. This
has raised the revenue base upon which growth is applied in forecasting CT
revenues for 2007-08 and beyond. Tax return processing has also boosted revenues
above the estimates in the 2006-07 Public Accounts. This has resulted in a
one-time increase to CT revenues of $400 million in 2007-08 as changes to
estimates from past Public Accounts are reflected in the current year. The CT
revenue change also captures the impact of a number of tax measures since the
2007 Budget, including 2007 federal budget measures that are paralleled by
Ontario and new Ontario tax measures as outlined in Annex II: Enhancing
Ontario's Tax Competitiveness.
The increase in Ontario Health Premium (OHP) revenues of $92 million largely
reflects stronger-than-anticipated growth in 2007 wages and salaries and,
similar to PIT and CT, a higher revenue base and a one-time revenue increase of
$48 million in 2007-08 related to processing 2006 tax returns.
Gasoline Tax revenue is estimated to be $53 million less than forecast in the
2007 Budget due to lower gasoline consumption resulting from higher gasoline
pump prices.
Tobacco Tax revenue is estimated to be $78 million below forecast based on
revenue performance to date. This reflects a combination of healthier lifestyles
among Ontarians and contraband activity in the cigarette market. Further
enforcement measures to combat illegal activity were introduced in the 2007
Budget.
The $183 million increase in estimated Land Transfer Tax revenues reflects
higher housing resale volumes and prices.
Electricity Payments-In-Lieu of Taxes are $42 million below forecast, reflecting
lower combined net incomes of Hydro One Inc. (HOI) and Ontario Power Generation
Inc. (OPG) (see below).
All Other Tax revenues are estimated to increase by $173 million, largely due to
higher Mining Profits Tax revenues arising from higher commodity prices and
higher Retail Sales and Employer Health Tax revenues consistent with stronger
2007 economic growth. The All Other Taxes change includes the impact of proposed
new Ontario tax measures as outlined in Annex II: Enhancing Ontario's Tax
Competitiveness.
Canada Health Transfer (CHT) and Canada Social Transfer (CST) revenues are
estimated to be $464 million above forecast mainly due to revised estimates of
current and past-year entitlements under these programs. This results in a $330
million increase in CHT and CST, including a one-time revenue increase of $220
million as variances from past Public Accounts estimates are reflected in the
current year. In addition, 2007 federal budget changes to the calculation of
entitlements under CHT and CST result in an additional $134 million in revenues.
The increase in Other Government of Canada Transfers in 2007-08 is largely
related to the 2007 federal budget announcement of funds for the patient
wait-times guarantee and an immunization program to provide the human
papillomavirus (HPV) vaccine. In addition, the federal government committed
funding for a portion of the costs incurred by the Province in responding to the
Caledonia situation.
The decrease in Ontario Lottery and Gaming Corporation's net income reflects
funding for enhanced regulations for the lottery system by the Alcohol and
Gaming Commission of Ontario in response to recommendations by the Ontario
Ombudsman.
The decline in the combined net incomes of HOI and OPG is largely related to the
Ontario Energy Board's August 16, 2007 decision on HOI's transmission rate
application, which included a lower allowed return on equity for HOI's
transmission business than assumed by the Province in the 2007 Budget.
Other Non-Tax Revenue is expected to decline, largely due to the government's
decision to upload the cost of the Ontario Disability Support Program and
Ontario Drug Benefits for social assistance recipients from municipalities over
four years starting in 2008. Municipalities currently reimburse the Province for
a portion of the costs of delivering these programs. When the upload is fully
implemented in 2011, it will save municipalities $935 million per year.
The overall 2007-08 fiscal outlook is discussed in Section C: Ontario's Fiscal Plan.
MEDIUM-TERM REVENUE CHANGES SINCE 2007 ONTARIO BUDGET
The medium-term revenue forecast reflects the Ministry of Finance's economic
outlook and the estimated impacts of government policy decisions. Total revenues
are projected to increase by $4.9 billion between 2007-08 and 2009-10, or 2.6
per cent a year on average.
==================================================================================================================
Summary of Medium-Term Outlook Table 11
($ Billions)
__________________________________________________________________________________________________________________
Actual
__________________________________________________________________________________________________________________
Revenue 2006-07 2007-08 2008-09 2009-10
______________________________________________________
Taxation Revenue 64.3 66.4 68.1 71.5
Personal Income Tax 23.7 24.3 25.3 26.9
Retail Sales Tax 16.2 16.7 17.5 18.4
Corporations Tax 10.8 11.4 11.2 11.5
Ontario Health Premium 2.6 2.7 2.8 2.9
All Other Taxes 11.0 11.3 11.4 11.8
Government of Canada 14.0 16.7 16.0 16.2
Income from Government Enterprises 4.2 3.9 4.4 4.4
Other Non-Tax Revenue 7.9 7.1 7.1 6.9
__________________________________________________________________________________________________________________
Total Revenue 90.4 94.1 95.7 99.0
==================================================================================================================
Note: Numbers may not add due to rounding.
Source: Ontario Ministry of Finance.
__________________________________________________________________________________________________________________
The Personal Income Tax (PIT) revenue forecast is consistent with the economic
outlook for strong wages and salaries growth in 2007 and more modest wages and
salaries growth in 2008 and 2009. Personal Income Tax revenues are boosted in
2007-08 by a one-time adjustment of $0.3 billion due to underestimation of
2006-07 PIT revenues in the Public Accounts and a further $0.1 billion due to a
payment from the federal government primarily related to a correction to
Ontario's 2005 tax entitlements.
The PIT revenue forecast takes into account the impact of tax measures announced
in the current and previous fiscal updates. In addition, the PIT revenue
forecast reflects previously announced tax measures such as paralleling of
federal government measures related to pension income splitting. The PIT revenue
base tends to grow at a faster rate than incomes due to the progressive nature
of the tax system.
=====================================================================================================================
Summary of Medium-Term Personal Income Tax Outlook Table 12
($ Billions)
_____________________________________________________________________________________________________________________
2007-08 2008-09 2009-10
___________________________________________________
Total Projected Revenue 24.3 25.3 26.9
Measures Included in Total (0.2) (0.4) (0.4)
Adjustments for Prior Years 0.3 - -
Other One-Time Revenue 0.1 - -
_____________________________________________________________________________________________________________________
Base Revenue 24.1 25.7 27.3
Base Revenue Growth (Per Cent) 7.0 6.3 6.3
Wages and Salaries Growth (Per Cent) 4.9 3.8 4.0
=====================================================================================================================
Notes: Numbers may not add due to rounding.
“Measures Included in Total” represents the incremental revenue impact of all tax measures, announced
previously and in this fiscal update, relative to their impact on revenue in 2006-07.
“Base Revenue” is “Actual Revenue” less the impact of tax measures or other one-time factors
such as prior-year adjustments. Base revenues reflect the impact of underlying macroeconomic factors.
Source: Ontario Ministry of Finance.
_____________________________________________________________________________________________________________________
Retail Sales Tax (RST) revenue growth is based on the forecast for increased
spending by households and businesses. The RST outlook includes previously
announced tax exemptions, which have been announced since the 2007 Budget.
The Corporations Tax (CT) revenue outlook largely reflects the outlook for
pre-tax corporate profits. Corporations Tax revenues in 2007-08 include a
one-time adjustment of $0.4 billion due to underestimation of 2006-07 CT
revenues in the Public Accounts. The 2007-08 CT outlook prudently includes an
adjustment of $0.2 billion due to risks associated with writedowns by
corporations related to asset-backed commercial paper. The CT revenue outlook
also reflects a number of tax measures proposed in the current and previous
fiscal updates. Annex II: Enhancing Ontario's Tax Competitiveness outlines
Ontario's proposed new tax initiatives.
=====================================================================================================================
Summary of Medium-Term Corporations Tax Outlook Table 13
($ Billions)
_____________________________________________________________________________________________________________________
2007-08 2008-09 2009-10
___________________________________________________
Total Projected Revenue 11.4 11.2 11.5
Measures Included in Total (0.6) (0.9) (1.0)
Asset-Backed Commercial Paper Risk (0.2) - -
Adjustments for Prior Years 0.4 - -
_____________________________________________________________________________________________________________________
Base Revenue 11.8 12.1 12.6
Base Revenue Growth (Per Cent) 4.5 2.9 3.7
Profit Growth (Per Cent) 7.0 5.4 4.9
=====================================================================================================================
Notes: Numbers may not add due to rounding.
“Measures Included in Total” represents the incremental revenue impact of all tax measures, announced
previously and in this fiscal update, relative to their impact on revenue in 2006-07.
“Base Revenue” is “Actual Revenue” less the impact of tax measures or other one-time factors
such as prior-year adjustments. Base revenues reflect the impact of underlying macroeconomic factors.
Source: Ontario Ministry of Finance.
_____________________________________________________________________________________________________________________
The Ontario Health Premium forecast is based on the outlook for rising
employment and personal incomes.
The forecast for All Other Taxes is based on the economic growth outlook
outlined in Section B: Ontario's Economic Outlook. The forecast is developed on
an item-by-item basis. For example, the forecast for Employer Health Tax
revenues is based on the outlook for wages and salaries growth. The forecast for
all other taxes takes into account the estimated impact of tax measures included
in the 2007 Moving Forward Together campaign platform, such as Land Transfer Tax
measures to expand assistance to first-time homebuyers.
The forecast for Government of Canada transfers is based on existing
federal-provincial funding arrangements and formulas for major health and social
transfers. The outlook is lower in the medium term due to one-time funding in
2007-08 related to Canada-Ontario Agreement commitments and the declining level
of time-limited Trust funds such as the Wait Times Reduction Fund and those
announced in the 2006 federal budget.
The Income from Government Business Enterprises outlook is based on information
provided by the enterprises. Total income is forecast to increase by $0.5
billion or an average annual rate of 6.5 per cent from 2007-08 to 2009-10, with
increased net incomes across all major business enterprises. Government business
enterprises include the Liquor Control Board of Ontario, Ontario Lottery and
Gaming Corporation, OPG and HOI.
The forecast for Other Non-Tax Revenue is based on information provided by
government ministries and provincial agencies. Between 2007-08 and 2009-10,
other non-tax revenues are forecast to decline slightly by $0.1 billion. This is
due to the government's decision to upload from municipalities the total cost of
the Ontario Disability Support Program and Ontario Drug Benefits for social
assistance recipients over four years starting in 2008.
The medium-term fiscal plan is discussed in Section C: Ontario's Fiscal Plan.
SOURCES OF MEDIUM-TERM REVENUE CHANGE SINCE 2007 ONTARIO BUDGET
=====================================================================================================================
Summary of Medium-Term Revenue Change Since Budget Table 14
($ Billions)
_____________________________________________________________________________________________________________________
Key Revenue Changes Since 2007 Ontario Budget 2007-08 2008-09 2009-10
_____________________________________________________________________________________________________________________
Prior-Year Tax Return Processing — Ongoing 0.9 1.1 1.2
Prior-Year Tax Return Processing — One Time 0.9 - -
Stronger 2007-08 Economic Growth 1.4 1.5 1.5
Slower Economic Growth in 2008 and 2009 0.0 (0.5) (0.6)
Tax Policy Measures (0.7) (1.0) (0.7)
Government of Canada Transfers (2007 Federal Budget) 0.3 0.1 0.1
Other (0.1) (0.3) (0.4)
_____________________________________________________________________________________________________________________
Total Revenue Changes 2.6 1.0 1.2
=====================================================================================================================
Notes: Numbers may not add due to rounding.
Source: Ontario Ministry of Finance.
_____________________________________________________________________________________________________________________
The medium-term forecast for total revenues is higher in each year compared to
the 2007 Budget.
Since the 2007 Budget, processing of prior years' tax returns has boosted the
estimated 2006-07 revenue base upon which growth is applied for 2007-08 and
beyond. Higher past-year tax return processing amounts than estimated at the
time of the 2006-07 Public Accounts result in a one-time revenue pickup in
2007-08. Under Public Sector Accounting Board (PSAB) accounting rules, variances
from past Public Accounts estimates are picked up in the current year.
Strong revenue growth as a result of stronger 2007-08 economic growth also
contributes to a higher revenue base upon which growth is applied for 2008-09
and onwards.
A slower economic growth outlook in 2008 and 2009 reduces revenues in 2008-09 and
2009-10. The economic outlook is discussed in greater detail in Section B:
Ontario's Economic Outlook.
New tax policy measures announced since the 2007 Budget lower the revenue
outlook.
These include paralleling of tax measures announced in the 2007 federal budget
and other measures announced by the Province. More details on proposed tax
measures can be found in Annex II: Enhancing Ontario's Tax Competitiveness.
The 2007 federal budget included measures that result in a net increase in
Government of Canada transfers over the medium term. Among these were changes to
the CHT and CST, including a move to a 10-province standard for calculating
equalization entitlements under the CHT and a move to a per-capita basis for
calculating CST entitlements. The 2007 federal budget also included funding for
the patient wait-times guarantee and for an immunization program to provide the
HPV vaccine.
Other changes largely reflect the government's decision to upload from
municipalities the entire cost of the Ontario Disability Support Program and
Ontario Drug Benefits for social assistance recipients over four years starting
in 2008 and the impact on electricity-sector revenues of the Ontario Energy
Board's August 16, 2007 decision regarding the allowed return on equity for
HOI's transmission business.
POTENTIAL RISKS TO PROVINCIAL REVENUE
A growing economy with rising incomes, corporate profits and consumer spending
generates higher revenues to pay for public services. Taxation revenues make up
the largest category of Provincial revenue. Of the $94.1 billion in total
revenues forecast for 2007-08, $66.4 billion, or 71 per cent, is expected to
come from taxation revenues. Three revenue sources within this category —
Personal Income Tax, Retail Sales Tax and Corporations Tax — account for 56 per
cent of total revenues. Inherent in any multi-year forecast is uncertainty about
the future, making cautious and prudent planning a critical element of managing
public finances.
This section highlights some of the key sensitivities and risks to the fiscal
plan that could arise from unexpected changes in economic conditions. It should
be cautioned that these estimates, while useful, are only guidelines and actual
results can vary depending on the composition and interaction of the various
factors. The risks are those that could have the most material impact on the
largest revenue sources. There is a broader range of potential additional risks
that are not included because either they are not as material or are difficult
to quantify. For example, Income from Government Business Enterprises,
representing roughly four per cent of total revenues, could be affected by
changes in each business's particular business environment. This environment
could be affected, for instance, by economic, market, policy and regulatory
developments. Likewise, the outlook for Government of Canada transfers reflects
current federal-provincial funding agreements but could change with new funding
arrangements.
====================================================================================================================
Selected Economic and Revenue Risks and Sensitivities Table 15
____________________________________________________________________________________________________________________
Item/Key Components 2007-08 Assumption 2007-08 Sensitivities
____________________________________________________________________________________________________________________
Total Revenues
- - Real GDP 1.9 per cent growth in 2007 $720 million revenue change for each
- - GDP Deflator 3.0 per cent increase in 2007 percentage point change in real GDP
growth. Can vary significantly, depending
on composition and source of changes in
GDP growth.
- - Canadian Interest Rates 4.1 per cent three-month treasury Between $70 million and $360 million
bill rate in 2007 revenue change in the opposite direction
for each percentage point change in
interest rates.
- - U.S. Real GDP 2.1 per cent growth in 2007 Between $215 million and $505 million
revenue change for each percentage point
change in U.S. real GDP growth.
- - Canadian Dollar Exchange Rate 94.0 cents US in 2007 Between $30 million and $130 million
revenue change in the opposite
direction for each one cent change in
the Canadian dollar exchange rate.
____________________________________________________________________________________________________________________
Total Taxation Revenues
- - Revenue Base(1) 4.7 per cent growth in 2007-08 $620 million revenue change for each
- - Nominal GDP 5.0 per cent growth in 2007 percentage point change in nominal GDP
growth. Can vary significantly, depending
on composition and source of changes in
GDP growth.
____________________________________________________________________________________________________________________
Personal Income Tax (PIT) Revenues
- - Revenue Base 7.0 per cent growth in 2007-08
Key Economic Assumptions
- - Wages and Salaries 4.9 per cent growth in 2007 $320 million revenue change for each
percentage point change in wages and
salaries growth.
- - Employment 1.6 per cent growth in 2007
- - Unincorporated Business Income 4.9 per cent growth in 2007 $34 million revenue change for each
percentage point change in
unincorporated business income.
Key Revenue Assumptions
- - Net Capital Gains Income 14.4 per cent increase in 2007 $12 million revenue change for each
percentage point change in net capital
gains income growth.
- - RRSP Deductions 5.2 per cent growth in 2007 $16 million revenue change in the
opposite direction for each percentage
point change in RRSP deductions growth.
- - 2006 Tax-Year Assessments(2) $21.0 billion $420 million revenue change for each
percentage point change in 2006 PIT
assessments.(4)
____________________________________________________________________________________________________________________
Selected Economic and Revenue Risks and Sensitivities
____________________________________________________________________________________________________________________
Item/Key Components 2007-08 Assumption 2007-08 Sensitivities
____________________________________________________________________________________________________________________
- - 2005 Tax-Year and Prior $1.0 billion $20 million revenue change for each
Assessments(2) percentage point change in 2005 and
prior PIT assessments.(4)
____________________________________________________________________________________________________________________
Retail Sales Tax Revenues
- - Revenue Base 3.3 per cent growth in 2007-08
Includes:
- - Taxable Household Spending 2.8 per cent growth in 2007-08
- - Other Taxable Spending 3.8 per cent growth in 2007-08
Key Economic Assumptions
- - Retail Sales 3.6 per cent growth in 2007
- - Nominal Consumption Expenditure 4.4 per cent growth in 2007 $125 million revenue change for each
percentage point change in nominal
consumption expenditure growth.
_____________________________________________________________________________________________________________________
Corporations Tax Revenues
- - Revenue Base 4.5 per cent growth in 2007-08
- - Corporate Profits 7.0 per cent growth in 2007 $60 million revenue change for each
percentage point change in pre-tax
corporate profit growth.
- - 2006-07 Tax Assessment Refunds(3) $1.5 billion payable in 2007-08 $30 million revenue change in the
opposite direction for each percentage
point change in 2006-07 refunds.(4)
- - 2006-07 Tax Payments upon Filing $1.1 billion receivable in $22 million revenue change for each
2007-08 percentage point change in 2006-07
payments upon filing.(4)
- - 2006-07 Tax Assessment Payments $1.1 billion receivable in $22 million revenue change for each
2006-07 and 2007-08 percentage point change in 2006-07
assessment payments.(4)
____________________________________________________________________________________________________________________
Employer Health Tax Revenues
- - Revenue Base 5.1 per cent growth in 2007-08
- - Wages and Salaries 4.9 per cent growth in 2007 $42 million revenue change for each
percentage point change in wages and
salaries growth.
____________________________________________________________________________________________________________________
Ontario Health Premium (OHP) Revenues
- - Revenue Base 4.2 per cent growth in 2007-08
- - Personal Income 5.3 per cent growth in 2007 $24 million revenue change for each
percentage point change in personal
income growth.
- - 2006 Tax-Year Assessments $2.4 billion in 2006 $48 million revenue change for each
percentage point change in 2006 OHP
assessments.
====================================================================================================================
Selected Economic and Revenue Risks and Sensitivities
____________________________________________________________________________________________________________________
Item/Key Components 2007-08 Assumption 2007-08 Sensitivities
____________________________________________________________________________________________________________________
Gasoline Tax Revenues
- - Revenue Base 0.0 per cent growth in 2007-08
- - Gasoline Pump Prices 99.6 cents per litre in 2007 $5 million revenue change in the
opposite direction for each cent per
litre change in gasoline pump prices.
____________________________________________________________________________________________________________________
Fuel Tax Revenues
- - Revenue Base 3.5 per cent growth in 2007-08
- - Real GDP 1.9 per cent growth in 2007 $6 million revenue change for each
percentage point change in real GDP
growth.
____________________________________________________________________________________________________________________
Land Transfer Tax Revenues
- - Revenue Base 17.5 per cent decline in 2007-08
- - Housing Resales 9.0 per cent increase in 2007 $14 million revenue change for each
percentage point change in both the
number and prices of housing resales.
- - Resale Prices 7.5 per cent growth in 2007
____________________________________________________________________________________________________________________
Canada Health Transfer(5)
- - Ontario Population Share 38.8 per cent in 2007-08 $32 million revenue change for each
tenth of a percentage point change in
population share.
- - Ontario Basic Federal PIT Share 42.2 per cent in 2007-08 $8 million revenue change in the
opposite direction for each tenth of a
percentage point change in Ontario's
basic federal PIT share.
____________________________________________________________________________________________________________________
Canada Social Transfer(5)
- - Ontario Population Share 38.8 per cent in 2007-08 $10 million revenue change for each
tenth of a percentage point change in
population share.
====================================================================================================================
(1) Revenue base is revenue excluding the impact of measures, adjustments for past Public Accounts estimate
variances and other one-time factors.
(2) Ontario 2006 Personal Income Tax (PIT) is a forecast estimate because 2006 tax returns have not yet been
finalized by the Canada Revenue Agency.
(3) Corporation Tax Refunds arising during 2006-07 are still an estimate because tax returns for corporate
fiscal years ending in Ontario's 2006-07 fiscal year are still being assessed by the Tax Revenue Division
of the Ministry of Revenue.
(4) Now that the 2006-07 Public Accounts of Ontario have been finalized, any change in 2006 PIT and OHP
assessments or 2006-07 Corporations Tax revenues will have a dual effect on 2007-08 revenues through:
a) a change in the revenue base upon which this year's growth is applied, and b) a revenue adjustment
applied against the current year in respect of any variance from the estimate included in the 2006-07
Public Accounts.
(5) These sensitivities have been updated since the 2007 Ontario Budget to reflect changes to these programs
announced in the 2007 federal budget, including a move to determining Canada Social Transfer entitlements
based solely on population share.
_____________________________________________________________________________________________________________________
Section E: Ontario's Expense Outlook
2007-08 IN-YEAR EXPENSE CHANGES
The total expense outlook for 2007-08 is $93,350 million, a net $2,197 million
higher than the 2007 Budget Plan and up $2,014 million from the outlook
presented in the 2007-08 First Quarter Ontario Finances, reflecting government
announcements made since July and new investments that are being announced as
part of this Economic Outlook and Fiscal Review. Changes in spending are
associated with the government taking immediate action to further strengthen
Ontario's economic advantage, and help the manufacturing, forestry, agriculture
and tourism sectors better weather Ontario's economic challenges.
=====================================================================================================================
Summary of In-Year Expense Changes Since Budget Table 16
($ Millions) 2007-08
_____________________________________________________________________________________________________________________
Program Expense Changes:
Investing in Infrastructure and Transportation 1,360
Agriculture Sector Support 285
Education Investments 124
Initiatives to Enhance Competitiveness 83
Investing in People and Communities 53
Health Sector Investments 39
Children's and Social Services Investments 30
Justice Sector Investments 26
Northern and Rural Investments 14
Other Investments 7
____________
Total Program Expense Changes 2,021
Operating Contingency Fund - increase for future investments(1) 149
Operating Contingency Fund - offsets (137)
Capital Contingency Fund - offsets (19)
____________
Total Expense Changes This Quarter 2,014
Total Expense Changes Reported in First Quarter Ontario Finances 183
_____________________________________________________________________________________________________________________
Total Expense Changes Since Budget 2,197
=====================================================================================================================
(1) The total increase to the Operating Contingency Fund is $169 million, of which $20 million will be invested in
tourism to expand tourism marketing initiatives and has, therefore, been included under the Initiatives to
Enhance Competitiveness.
_____________________________________________________________________________________________________________________
The following is a detailed explanation of the in-year expense changes since the
2007-08 First Quarter Ontario Finances.
Investing in Infrastructure and Transportation
The government is investing an additional $1,360 million in infrastructure and
transportation. Key expense changes include:
• An additional $916 million to the Capital Contingency Fund for infrastructure
priorities.
• An in-year increase of $301 million in the Ministry of Public Infrastructure
Renewal, including $300 million in municipal infrastructure funding to support
priorities such as local roads, bridges, water systems and community infrastructure,
and $1 million related to the recent purchase of a downtown Toronto office building
for future government accommodation, which is fully offset from the Capital
Contingency Fund.
• An increase of $100 million in the Ministry of Transportation to support
municipal and regional transit projects that are part of MoveOntario 2020 and
priorities for Metrolinx (Greater Toronto Transportation Authority).
• An additional net increase of $43 million in the Ministry of Transportation,
which includes $41 million for various initiatives such as road safety, curbing
speeding, highway maintenance and programs targeting greenhouse gas emissions,
all offset from the Operating Contingency Fund. An increase of $3 million in
capital expense for the transfer of Black Creek property to the City of Toronto
and infrastructure improvements, $2 million of which is offset from the Capital
Contingency Fund. The total increase in funding is offset by a $1 million transfer
to Colleges for marine simulator training equipment at the Owen Sound campus of
Georgian College.
Agriculture Sector Support
Since the First Quarter Ontario Finances, the government has devoted $285
million for support to the agriculture sector. Key expense changes include:
• An additional $150 million in the Ministry of Agriculture, Food and
Rural Affairs to provide financial assistance to help the cattle, hog and
horticultural farmers manage the effects of current market conditions, as
well as supporting transitional and transformational initiatives to strengthen
competitiveness.
• An in-year increase in the Ministry of Agriculture, Food and Rural
Affairs of $135 million for the Risk Management Program to assist grain
and oilseed farmers impacted by international subsidies, and additional
funding over the medium term of $326 million.
Education Investments
The government has invested an additional $124 million in Ontario's publicly
funded education system. Key expense changes since the First Quarter Ontario
Finances include:
• An in-year increase of $112 million in the Ministry of Education school boards' net
expense, including $109 million in education funding enhancements to strengthen
the school funding formula, with additional funding of $607 million over the
medium term; and an increase of $3 million reflecting a transfer from the Ministry
of Children and Youth Services to support and expand Parenting and Family
Literacy Centres across the province.
• An additional $11 million in the Ministry of Education to provide further support
for programs to improve student achievement, offset from the Operating
Contingency Fund.
Initiatives to Enhance Competitiveness
The government has invested an additional $83 million since the First Quarter
Ontario Finances to enhance Ontario's competitiveness by encouraging innovation
and stimulating tourism.
Encouraging Innovation
Investments to encourage innovation amount to about $53 million and include:
• A $50 million increase to the Capital Contingency Fund, which will be allocated to
initiatives that further strengthen Ontario as a leading innovation-based
economy where ideas created by cutting-edge research will reach the global
market and serve as a foundation for tomorrow's jobs.
• Additional spending of more than $3 million by the Ministry of Research and Innovation
to support the development of a Bioindustrial Innovation Centre at the University
of Western Ontario's Sarnia-Lambton Research Park, offset from the Capital
Contingency Fund.
Investing in Tourism
• The government will invest an additional $30 million in the tourism industry,
given the challenges it has faced as a result of the strong Canadian dollar.
This investment includes $20 million to expand tourism marketing initiatives
that will attract new domestic and international visitors to communities and
major attractions across the province, and $10 million to support festivals
and events in Ontario's communities.
Investing in People and Communities
Investing in Ontario's people remains a key priority for the government. Since
the First Quarter Ontario Finances, the government has invested an additional
$53 million in people and their communities. Key expense changes include:
• An increase of $40 million to the Ministry of Training, Colleges and Universities
for skills development and Rapid Re-employment and Training Services, which
help Ontario workers in hard-hit sectors such as manufacturing with training
and other employment supports.
• An increase of $7 million in the Ministry of Training, Colleges and Universities,
which includes funding for the expansion of the Nurse Practitioner and the
Midwifery Education Programs. Funding offsets include about $7 million from
the Capital Contingency Fund and almost $1 million from the Operating Contingency
Fund. Colleges net expense increased by $1 million as a result of a transfer
from the Ministry of Transportation for the marine simulator training equipment
at the Owen Sound campus at Georgian College.
• An additional $5 million to the Ministry of Economic Development and Trade to
support the Communities in Transition program, for communities facing significant
challenges, such as the loss of a major employer, and to help them build a
successful future.
Health Sector Investments
Investing in Ontario's health care system remains a key priority for the
government. Key expense changes include:
• An in-year increase of $39 million in the Ministry of Health and Long-Term Care
to introduce the new, voluntary human papillomavirus (HPV) vaccination program
for Ontario's 84,000 young women in Grade 8, offset from the Operating Contingency
Fund, and additional funding of $78 million over the next two years.
Children's and Social Services Investments
Since the First Quarter Ontario Finances, the government has devoted an
additional $30 million to children's and social services programs. Key expense
changes include:
• An increase of $32 million in the Ministry of Community and Social Services,
primarily for funding enhancements to the Developmental Services program and
the Family Responsibility Office, the latter offset by $7 million from the
Operating Contingency Fund. This increase also includes funding for low-income
families to assist with the cost of filters to minimize lead exposure from
drinking water, offset by $3 million from the Operating Contingency Fund and
by a transfer from the Ministry of the Environment, as well as enhanced funding
to support victims of domestic violence, offset by revenue from the Victims'
Justice Fund.
• A net decrease of $2 million in the Ministry of Children and Youth Services,
largely the result of a $3 million transfer to the Ministry of Education to
support and expand Parenting and Family Literacy Centres across the province.
Justice Sector Investments
The government has invested an additional $26 million for justice sector
initiatives. These investments include:
• An increase of $22 million to the Ministry of the Attorney General, including
$12 million for the Smith Inquiry, offset from the Operating Contingency Fund,
$4 million for the transition of the Ontario human rights system and $1 million
for co-location of various tribunals, both offset from the Capital Contingency
Fund. Also included in this amount is $5 million for victims of crime, offset
by revenue from the Victims' Justice Fund.
• An additional $4 million in the Ministry of Community Safety and Correctional
Services, which includes $3 million to establish the Provincial Crime Enforcement
Team and support the Safe Schools Police Officer Project, and $1 million to
support the Office of the Chief Coroner during the Smith Inquiry, the latter
offset from the Operating Contingency Fund.
Northern and Rural Investments
The government continues to support Ontario's northern and rural communities
with $14 million in new investments since the First Quarter Ontario Finances.
Key expense changes include:
• An increase of $10 million in the Ministry of Aboriginal Affairs, primarily for
land claim negotiations, the new ministry structure and the preliminary response
to the Ipperwash Inquiry, offset from the Operating Contingency Fund.
• An additional $4 million in the Ministry of Natural Resources, including an
in-year increase of $2 million for resources to start Far North planning processes,
and $2 million for the first year of a commitment to plant 50 million trees in
southern Ontario by 2020, both offset from the Operating Contingency Fund.
Other Investments
Other key areas of strategic government investments since the First Quarter
Ontario Finances include:
• An increase of $20 million in the Ministry of Revenue related to the transfer
of funding from the Ministry of Finance for administrative costs associated
with implementing various Budget initiatives, including the Tobacco Enforcement
Initiative and the transfer of Corporate Tax administration to the federal
government.
• A net decrease of $19 million in the Ministry of Finance as a result of funding
transferred to the Ministry of Revenue for administrative costs associated
with implementing various Budget initiatives, including the Tobacco Enforcement
Initiative and the transfer of the Corporate Tax Administration program to
the federal government; and an increase of $1 million to support mediated
settlements, offset from the Operating Contingency Fund.
• A net increase of $2 million in the Ministry of the Environment resulting from
a variety of changes including a transfer from the Ministry of Government and
Consumer Services to promote the Go Green Ontario climate change plan;
increased funding for initiatives to help address climate change, including
the Community Go Green Fund, offset by $2 million from the Operating Contingency
Fund; and a transfer to the Ministry of Community and Social Services to
support the drinking water filter program to minimize lead exposure from
drinking water.
• An in-year increase of $2 million in the Ministry of Energy to support the
development of low-carbon fuel standards, a pilot project for the use of E-85
fuel in government vehicles and funding for an East-West Grid; all initiatives
are part of the Go Green Ontario climate change plan and are offset from the
Operating Contingency Fund.
• An additional $2 million in the Ministry of Tourism to form the Ontario
Vancouver Olympic Committee (VANOC) Secretariat and fund the Own the Podium
program, which supports Canadian athletes pursuing podium success at the 2010
Vancouver Olympics, offset from the Operating Contingency Fund.
• An increase of $1 million in the Office of Francophone Affairs to create
the Office of the Commissioner of French Language Services, offset from the
Operating Contingency Fund.
• A decrease of $1 million in the Ministry of Government and Consumer Services
for a transfer of funding to the Ministry of the Environment to promote the
Go Green Ontario climate change plan.
The Operating Contingency Fund is a net $32 million higher, reflecting a
$169 million increase arising from the revenue improvements identified
since the First Quarter Ontario Finances that will be invested in
initiatives that further strengthen Ontario's economic advantage. This
increase is offset by a $137 million decrease that was allocated to fund
ministries' expense changes as outlined.
The Capital Contingency Fund has increased by a net $947 million as a
result of a $966 million increase associated with revenue improvements
identified since the First Quarter Ontario Finances, which will be invested
in Ontario's infrastructure. This increase in the Capital Contingency Fund
is offset by a decrease of approximately $19 million that was allocated to
fund ministries' capital expense changes as outlined.
MEDIUM-TERM EXPENSE OUTLOOK
A key element of the fiscal plan is maintaining a prudent and disciplined
approach to fiscal planning by ensuring that, over the medium term, the average
annual growth in total expense does not exceed the average annual growth in
total revenue. Currently, total expense is projected to grow at an average
annual rate of 2.5 per cent, which is less than the 2.6 per cent rate at which
revenue is expected to grow on an average annual basis.
Program spending, which includes both operating and capital program expense,
increases by $4.5 billion over the medium term, from $84.3 billion in 2007-08 to
$88.8 billion in 2009-10. This reflects the government's commitments in its 2007
Moving Forward Together campaign platform to continue spending in key priority
areas such as health, education, postsecondary education and training, social
services, and infrastructure. In 2007-08, spending in health, education and
children's and social services will account for almost three-quarters of program
spending. Given that much of this Provincial spending is based on assumptions
about program utilization, enrolment and caseloads, it is important that the
government maintain a focused approach to investing in key public services while
remaining prudent and disciplined.
Interest on debt expense is included in the total expense of the Province, and
is expected to grow over the next three years primarily due to the increase in
net debt needed to finance capital projects. Interest on debt is expected to
grow from $9.1 billion in 2007-08 to $9.4 billion in 2009-10.
Total expense over the medium term will increase from $93.4 billion in 2007-08
to $98.2 billion in 2009-10. This represents an increase of $4.8 billion,
reflecting the government's commitments in the 2007 Moving Forward Together
campaign platform to invest in health, education, postsecondary education and
training, social services, and infrastructure.
EXPENSE RISKS AND SENSITIVITIES
Many programs delivered by the Province are subject to potential risks and cost
drivers, such as utilization growth or enrolment and caseload changes. The
following sensitivities are guidelines only, and are based on averages for
program areas that could change depending on the nature and composition of the
potential risk. Revenue risks and sensitivities can be found in Section D:
Ontario's Revenue Outlook.
=====================================================================================================================
Selected Expense Risks and Sensitivities Table 17
_____________________________________________________________________________________________________________________
Program/Sector 2007-08 Assumption 2007-08 Sensitivities
_____________________________________________________________________________________________________________________
Health Sector Annual growth of 6.3 per cent. One per cent change in health spending: $380
million.
Hospitals Net Expense Annual growth of 7.7 per cent. One per cent change in hospitals net expense:
$174 million.
Drug Programs Annual utilization growth of One per cent change in utilization of all
9.0 per cent. drug programs: $41 million (seniors and
social assistance recipients).
Long-Term Care Homes 75,770 funded long-term care home One per cent change in number of beds:
beds. Annual average Provincial approximately $29 million.
operating cost per bed, after resident
co-payment revenue, in a long-term
care home is $37,700.
Home Care Over 17 million hours of homemaking One per cent change in hours of homemaking
and support services; 10 million and support services: $5 million. One per
nursing and professional visits. cent change in nursing and professional
visits: $6 million.
_____________________________________________________________________________________________________________________
Elementary and Secondary Almost 1.94 million average daily One per cent enrolment increase: $150 million
Schools(1) pupil enrolment. increase in school boards' net expense.
University Students(2) 322,000 full-time undergraduate and One per cent enrolment change: $29 million of
graduate students. net expense.
College Students(1) 154,000 full-time students. One per cent enrolment change: $13 million.
Ontario Works(2) 199,000 average annual caseload. One per cent caseload change: $16 million.
Ontario Disability Support 222,000 average annual caseload. One per cent caseload change: $26 million.
Program(2)
Correctional System 3.0 million adult inmate days per One per cent change in inmate days:
year. Average cost of $160 per inmate $5 million.
per day.
Interest on Debt Average cost of 2007-08 borrowing is The 2007-08 impact of a 100 basis-point
forecast to be approximately change in borrowing rates is forecast to be
5.1 per cent. approximately $250 million.
=====================================================================================================================
(1) Based on 2007-08.
(2) Based on 2006-07.
_____________________________________________________________________________________________________________________
=====================================================================================================================
Selected Compensation Costs Table 18
_____________________________________________________________________________________________________________________
Sector Cost of 1% Salary Increase Size of Sector
_____________________________________________________________________________________________________________________
OHIP Payments to Physicians(1) $82 million Over 22,000 physicians in Ontario, comprising
11,100 family doctors and 11,600 specialists.
Hospital Nurses1 $46 million Over 54,000 full-time equivalent (FTE) nurses
in hospitals.
Elementary and Secondary School $145 million Almost 200,000 FTEs including teachers,
Staff(2) principals, administrators, and support and
maintenance staff.
College Staff(3) $13 million About 35,000 staff including faculty,
administrators, and support and maintenance
staff.
Ontario Public Service(4) $52 million Over 64,000 public servants.
=====================================================================================================================
(1) OHIP Payments to Physicians is based on 2007-08; compensation to Hospital Nurses is based on 2006-07.
(2) One per cent increase in salary benchmarks in Grants for Student Needs based on 2007-08 school year.
(3) Based on 2006-07.
(4) Based on 2005-06, reflects total compensation costs.
_____________________________________________________________________________________________________________________
CONTINGENT LIABILITIES
In addition to the key demand sensitivities and economic risks to the fiscal
plan, there are other risks stemming from the government's contingent
liabilities. Whether these contingencies will result in actual liabilities for
the Province is beyond the direct control of the government. Losses could result
from legal settlements, defaults on projects, and loan and funding guarantees.
Provisions for losses that are likely to occur and can be reasonably estimated
are expensed and reported as liabilities in the Province's financial statements.
Significant contingent liabilities are described as follows.
Ontario Nuclear Funds Agreement
The Province has certain responsibilities with respect to nuclear used fuel
waste management and nuclear station decommissioning. The Province, Ontario
Power Generation Inc. (OPG), a wholly owned subsidiary, and certain subsidiaries
of OPG are parties to the Ontario Nuclear Funds Agreement (ONFA), to establish,
fund and manage segregated funds to ensure sufficient funds are available to pay
the costs of nuclear station decommissioning and nuclear used fuel waste
management. Under ONFA, the Province is liable to make payments should the cost
estimate for nuclear used fuel waste management rise above specified thresholds
for a fixed volume of used fuel. As well, under ONFA, the Province guarantees a
return of 3.25 per cent over the Ontario consumer price index for the nuclear
used fuel waste management fund. Ontario has also provided a direct Provincial
guarantee to the Canadian Nuclear Safety Commission on behalf of OPG for up to
$1.5 billion, as at March 31, 2007, which relates to the portion of the
decommissioning and waste management obligations not funded by the segregated
funds.
Obligations Guaranteed by the Province
Ontario provides guarantees on loans on behalf of various parties. The
authorized limit for loans guaranteed by the Province as at March 31, 2007, was
$2.9 billion. The outstanding loans guaranteed and other contingencies amounted
to $2.6 billion at March 31, 2007. A provision of $416 million based on an
estimate of the likely loss arising from guarantees under the Student Support
Programs has been reflected in the 2006-07 Consolidated Financial Statements of
the Province.
Social Housing — Loan Insurance Agreements
The Province is liable to indemnify and reimburse the Canada Mortgage and
Housing Corporation for any net costs, including any environmental liabilities
incurred as a result of project defaults, for all non-profit housing projects in
the Provincial portfolio. At March 31, 2007, there were $8.3 billion of mortgage
loans outstanding.
Claims Against the Crown
There are claims outstanding against the Crown arising from legal action, either
in progress or threatened, in respect of aboriginal land claims, breach of
contract, damages to persons and property, and like items. At March 31, 2007,
there were 111 claims outstanding against the Crown that were for amounts over
$50 million.
Canadian Blood Services
The provincial and territorial governments of Canada have entered into a
Canadian Blood Services Excess Insurance Captive Support Agreement (the "Captive
Support Agreement") with Canadian Blood Services (CBS) and Canadian Blood
Services Captive Insurance Company Limited (CBSI), a wholly owned subsidiary of
CBS established under the laws of British Columbia. Under the Captive Support
Agreement, each government indemnifies CBSI for its pro rata share of any
payments that CBSI becomes obliged to make under a comprehensive blood risks
insurance policy it provides to CBS. The policy has an overall limit of $750
million, which may cover settlements, judgments and defence costs. The policy is
in excess of, and secondary to, a $250 million comprehensive insurance policy
underwritten by CBS Insurance Company Limited, a subsidiary of CBS domiciled in
Bermuda. Given current populations, Ontario's maximum potential liability under
the Captive Support Agreement is approximately $376 million. The Province is not
aware of any proceedings that could lead to a claim against it under the Captive
Support Agreement.
Section F: Details on Ontario's Finances
________________________________________________________________________________
====================================================================================================================
Medium-Term Fiscal Plan and Outlook Table 19
($ Billions)
____________________________________________________________________________________________________________________
Actual Current Outlook
_________________________________________
2006-07 2007-08 2008-09 2009-10
____________________________________________________________________________________________________________________
Revenue 90.4 94.1 95.7 99.0
Expense
Programs 79.3 84.3 85.6 88.8
Interest on Debt 8.8 9.1 9.2 9.4
_______________________________________________________
Total Expense 88.1 93.4 94.8 98.2
Reserve - 0.8 0.9 0.9
_______________________________________________________
Surplus/(Deficit) 2.3 0.0 0.0 0.0
____________________________________________________________________________________________________________________
Investment in Capital Assets 2.1 3.5 3.5 4.0
Net Debt(1) 141.1 143.1 145.1 147.6
Accumulated Deficit(1) 106.8 106.8 106.8 106.8
____________________________________________________________________________________________________________________
Gross Domestic Product (GDP) at Market Prices 557.8 585.7 607.9 632.2
Net Debt as a per cent of GDP 25.3 24.4 23.9 23.3
Accumulated Deficit as a per cent of GDP 19.1 18.2 17.6 16.9
====================================================================================================================
(1) Net Debt is calculated as the difference between liabilities and financial assets. The annual change in Net Debt
is equal to the surplus/deficit of the Province plus the change in tangible capital assets and the change in net
assets of hospitals, school boards and colleges. Accumulated Deficit is calculated as the difference between
liabilities and total assets including tangible capital assets and net assets of hospitals, school boards and
colleges. The annual change in the Accumulated Deficit is equal to the surplus/deficit. For fiscal 2006-07,
the change in the Accumulated Deficit includes an adjustment to the unfunded liability of the Ontario Electricity
Financial Corporation made at the beginning of the year.
Note: Numbers may not add due to rounding.
____________________________________________________________________________________________________________________
====================================================================================================================
2007-08 Fiscal Outlook — In-Year Change Table 20
($ Millions)
____________________________________________________________________________________________________________________
Budget Current
Plan Outlook In-Year
2007-08 2007-08 Change
_____________________________________________________________________________________________________________________
Revenue 91,503 94,100 2,597
Expense
Programs 82,030 84,283 2,253
Interest on Debt 9,123 9,067 (56)
_________________________________________________________
Total Expense 91,153 93,350 2,197
Reserve 750 750 -
_________________________________________________________
Surplus/(Deficit) (400) 0 400
=====================================================================================================================
=====================================================================================================================
Revenue Table 21
($ Millions)
_____________________________________________________________________________________________________________________
Current
Actual Outlook
2003-04 2004-05 2005-06 2006-07 2007-08
_____________________________________________________________________________________________________________________
Taxation Revenue
Personal Income Tax 18,301 19,320 21,041 23,655 24,318
Retail Sales Tax 14,258 14,855 15,554 16,228 16,711
Corporations Tax 6,658 9,883 9,984 10,845 11,421
Employer Health Tax 3,753 3,886 4,197 4,371 4,598
Ontario Health Premium - 1,737 2,350 2,589 2,730
Gasoline Tax 2,264 2,277 2,281 2,310 2,348
Fuel Tax 681 727 729 723 748
Tobacco Tax 1,350 1,453 1,379 1,236 1,139
Land Transfer Tax 909 1,043 1,159 1,197 1,370
Electricity Payments-In-Lieu of Taxes 627 511 951 757 664
Other Taxes 347 283 292 399 396
_________________________________________________________
49,148 55,975 59,917 64,310 66,443
_____________________________________________________________________________________________________________________
Government of Canada
Canada Health and Social Transfer (CHST) 7,345 - - - -
Canada Health Transfer (CHT) - 5,640 7,148 7,702 8,439
Canada Social Transfer (CST) - 2,912 3,324 3,478 3,869
CHST Supplements 577 775 584 - -
Social Housing 528 522 520 532 528
Infrastructure Programs 150 209 285 191 161
Wait Times Reduction Fund - 242 243 467 468
Medical Equipment Funds 192 387 194 - -
Other Government of Canada 1,101 1,195 953 1,666 3,245
_________________________________________________________
9,893 11,882 13,251 14,036 16,710
_____________________________________________________________________________________________________________________
Income from Investment in Government Business Enterprises
Ontario Lottery and Gaming Corporation 2,106 1,992 2,027 1,945 1,786
Liquor Control Board of Ontario 1,045 1,147 1,197 1,307 1,343
Ontario Power Generation Inc. and Hydro One Inc. (17) 444 1,107 947 756
Other Government Enterprises (64) (5) (23) (3) 2
_________________________________________________________
3,070 3,578 4,308 4,196 3,887
_____________________________________________________________________________________________________________________
Other Non-Tax Revenue
Reimbursements 1,206 1,241 1,295 1,415 1,448
Electricity Debt Retirement Charge 1,000 997 1,021 991 1,013
Vehicle and Driver Registration Fees 985 976 763 970 1,032
Power Sales 510 610 779 863 831
Other Fees and Licences 594 506 550 624 585
Liquor Licence Revenue 488 489 516 467 455
Net Reduction of Power Purchase Contract Liability 104 236 396 412 398
Sales and Rentals 532 352 465 1,108 430
Royalties 248 278 191 215 217
Miscellaneous Other Non-Tax Revenue 622 721 773 790 651
_________________________________________________________
6,289 6,406 6,749 7,855 7,060
_____________________________________________________________________________________________________________________
Total Revenue 68,400 77,841 84,225 90,397 94,100
=====================================================================================================================
=====================================================================================================================
Total Expense Table 22
($ Millions)
_____________________________________________________________________________________________________________________
Current
Actual Outlook
2003-04 2004-05 2005-06(1) 2006-07 2007-08
_____________________________________________________________________________________________________________________
Ministry Expense
Aboriginal Affairs 15 21 50 25 38
Agriculture, Food and Rural Affairs 843 799 865 800 880
Attorney General 1,225 1,204 1,287 1,347 1,409
Board of Internal Economy 196 145 150 163 245
Children and Youth Services 2,597 2,788 3,267 3,260 3,669
Citizenship and Immigration 55 64 92 116 86
Community and Social Services 5,972 6,361 6,718 7,182 7,373
Community Safety and Correctional Services 1,690 1,732 1,750 1,877 1,931
Culture 327 344 475 410 350
Democratic Renewal Secretariat - 2 2 6 8
Economic Development and Trade 76 70 176 199 332
Education 350 361 440 423 451
School Boards' Net Expense 9,423 10,274 10,886 11,290 12,102
Energy 169 194 207 229 312
Environment 263 305 274 314 327
Executive Offices 24 19 19 19 18
Finance 691 539 583 569 445
Ontario Municipal Partnership Fund/Community Reinvestment 651 626 714 758 917
Fund
Francophone Affairs, Office of 3 3 4 4 5
Government and Consumer Services 530 962 625 856 885
Health and Long-Term Care(2) 16,218 17,555 17,841 19,162 20,207
Hospitals' Net Expense(2) 12,946 13,877 14,816 16,145 17,384
Health Promotion 202 236 290 391 373
Intergovernmental Affairs 6 13 10 11 9
Labour 117 129 141 147 161
Municipal Affairs and Housing 634 770 926 843 760
Natural Resources 623 559 628 734 782
Northern Development and Mines 189 320 337 318 356
Public Infrastructure Renewal(3) (35) 41 107 426 444
Research and Innovation 160 236 332 316 328
Revenue 533 523 442 563 598
Small Business and Entrepreneurship 15 20 26 25 26
Tourism 212 167 210 204 209
Training, Colleges and Universities 2,811 3,293 3,504 4,110 4,452
Colleges' Net Expense 1,090 1,289 1,185 1,273 1,454
Transportation 1,800 1,815 2,188 2,733 2,056
Other Expense
Capital Contingency Fund - - - - 1,115
Community Reinvestment Fund One-Time Transition Funding - 233 - - -
Electricity Consumer Price Protection Fund 253 - - - -
Interest on Debt 9,604 9,368 9,019 8,831 9,067
Move Ontario - - 1,232 6 -
One-Time and Extraordinary Assistance to Agricultural Sector 64 601 282 278 359
Operating Contingency Fund - - - - 614
Pension and Other Employee Future Benefits 309 458 729 557 533
Power Purchases 797 840 803 863 831
Teachers' Pension Plan 235 240 295 345 349
Year-End Savings - - - - (900)
_____________________________________________________________________________________________________________________
Total Expense 73,883 79,396 83,927 88,128 93,350
=====================================================================================================================
(1) Starting in 2005-06, the Province's financial reporting was expanded to include hospitals, school boards and
colleges using one-line consolidation. Prior to 2005-06, historical figures reflect grants to these entities for
comparison purposes.
(2) The 2003-04 expenses for Health and Long-Term Care and Hospitals include $824 million of SARS-related and major
one-time health costs. The 2007-08 figures reflect a change in the presentation of expense in the Health Sector
to be consistent with the 2006-07 Public Accounts. This change in presentation does not affect total expense.
(3) Credit expense amount relates to consolidation adjustments between Ontario Realty Corporation and ministry to
reflect net spending for the year.
_____________________________________________________________________________________________________________________
=====================================================================================================================
2007-08 Infrastructure Expenditure Table 23
($ Millions)
_____________________________________________________________________________________________________________________
2007-08 Current Outlook
________________________________________________________
Total Transfers
Infrastructure Investment and Other Total
Expenditures in Capital Expenditures in Infrastructure
Sector 2006-07 Actual Assets Infrastructure(1) Expenditures
_____________________________________________________________________________________________________________________
Transportation
Transit 1,624 598 493 1,091
Highways 1,426 1,549 154 1,703
Other Transportation 76 5 28 33
Health
Hospitals 375 623 5 628
Other Health 183 50 176 226
Education
School Boards 1,000 - 1,016 1,016
Colleges 73 184 0 184
Universities 52 - 77 77
Water/Environment 360 32 230 262
Municipal and Local Infrastructure(2) 473 2 549 551
Justice 102 89 47 136
Other 682 287 1,164 1,451
_____________________________________________________________________________________________________________________
Total(3) 6,426 3,419 3,939 7,358
=====================================================================================================================
(1) Mainly consists of transfers for capital purposes to municipalities and universities, expenditures for servicing
capital-related debt of schools, and expenditures for the repair and rehabilitation of schools. These expenditures
are included in the Province's Total Expenses in Table 22.
(2) Municipal and local water and wastewater infrastructure investments are included in the Water/Environment sector.
(3) Total expenditures include $86 million in flow-throughs in Investment in Capital Assets (for provincial highways)
and $160 million in flow-throughs in Transfers and Other Expenditures in Infrastructure ($28 million in
Transportation, $45 million in Water/Environment, $87 million in Municipal and Local Infrastructure).
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ten-Year Review of Selected Financial and Economic Statistics
($ Millions)
_____________________________________________________________________________________________________________________
1998-99 1999-00 2000-01
_____________________________________________________________________________________________________________________
Financial Transactions
Revenue 56,050 65,042 66,294
Expense
Programs 49,036 53,347 53,519
Interest on Debt 9,016 11,027 10,873
_________________________________________________
Total Expense 58,052 64,374 64,392
Reserve - - -
_________________________________________________
Surplus/(Deficit) (2,002) 668 1,902
_____________________________________________________________________________________________________________________
Net Debt3, (4) 114,737 134,398 132,496
Accumulated Deficit(3) 114,737 134,398 132,496
_____________________________________________________________________________________________________________________
Gross Domestic Product (GDP) at Market Prices 377,897 409,020 440,759
Personal Income 304,652 321,702 347,653
_____________________________________________________________________________________________________________________
Population (000s) 11,367 11,506 11,685
Net Debt per Capita (dollars) 10,094 11,681 11,339
Personal Income per Capita (dollars) 26,801 27,959 29,752
_____________________________________________________________________________________________________________________
Total Expense as a per cent of GDP 15.4 15.7 14.6
Interest on Debt as a per cent of Revenue 16.1 17.0 16.4
Net Debt as a per cent of GDP 30.4 32.9 30.1
Accumulated Deficit as a per cent of GDP 30.4 32.9 30.1
=====================================================================================================================
(1) Starting in 2002-03, major tangible capital assets owned by Provincial ministries (land, buildings and
transportation infrastructure) are accounted for on a full accrual accounting basis. Other tangible capital
assets owned by Provincial ministries will continue to be accounted for as expense in the year of acquisition
or construction. All capital assets owned by consolidated organizations are accounted for on a full accrual basis.
(2) Starting in 2005-06, the Province's financial reporting was expanded to include hospitals, school boards and
colleges using one-line consolidation. Total expense prior to 2005-06 has not been restated to reflect expanded
reporting.
(3) Net Debt is calculated as the difference between liabilities and financial assets. The annual change in Net Debt
is equal to the surplus/deficit of the Province plus the change in tangible capital assets and the change in net
assets of hospitals, school boards and colleges. Accumulated Deficit is calculated as the difference between
liabilities and total assets including tangible capital assets and net assets of hospitals, school boards and
colleges. The annual change in the Accumulated Deficit is equal to the surplus/deficit. For fiscal 2005-06,
the change in the Accumulated Deficit includes the opening combined net assets of hospitals, school boards and
colleges that were recognized upon consolidation of these Broader Public Sector entities. For fiscal 2006-07,
the change in the Accumulated Deficit includes an adjustment to the unfunded liability of the Ontario Electricity
Financial Corporation made at the beginning of the year.
(4) Net Debt is restated in 2003-04, 2004-05 and 2005-06 to reflect the value of hydro corridor lands transferred to
the Province from Hydro One Inc.
Sources: Ontario Ministry of Finance and Statistics Canada.
_____________________________________________________________________________________________________________________
=====================================================================================================================
Table 24
_____________________________________________________________________________________________________________________
Current
Actual Outlook
2001-02 2002-03(1) 2003-04 2004-05 2005-06(2) 2006-07 2007-08
_____________________________________________________________________________________________________________________
66,534 68,891 68,400 77,841 84,225 90,397 94,100
55,822 59,080 64,279 70,028 74,908 79,297 84,283
10,337 9,694 9,604 9,368 9,019 8,831 9,067
_____________________________________________________________________________________________________________________
66,159 68,774 73,883 79,396 83,927 88,128 93,350
- - - - - - 750
_____________________________________________________________________________________________________________________
375 117 (5,483) (1,555) 298 2,269 0
_____________________________________________________________________________________________________________________
132,121 132,647 138,816 140,921 141,928 141,100 143,079
132,121 118,705 124,188 125,743 109,155 106,776 106,776
_____________________________________________________________________________________________________________________
453,701 477,763 493,081 516,792 536,908 557,784 585,673
361,187 369,420 381,127 399,828 417,835 438,030 461,037
_____________________________________________________________________________________________________________________
11,898 12,102 12,263 12,420 12,565 12,705 12,804
11,104 10,961 11,320 11,346 11,295 11,106 11,175
30,357 30,526 31,079 32,192 33,253 34,476 36,008
_____________________________________________________________________________________________________________________
14.6 14.4 15.0 15.4 15.6 15.8 15.9
15.5 14.1 14.0 12.0 10.7 9.8 9.6
29.1 27.8 28.2 27.3 26.4 25.3 24.4
29.1 24.8 25.2 24.3 20.3 19.1 18.2
=====================================================================================================================
[Chart 16: Composition of Revenue Outlook, 2007-08 - pie chart]
[Chart 17: Composition of Total Expense Outlook, 2007-08 - pie chart]
[Chart 18: Composition of Program Expense Outlook, 2007-08 - pie chart]
ANNEX IV:
BORROWING AND
DEBT MANAGEMENT
________________________________________________________________________________
LONG-TERM PUBLIC BORROWING
The total long-term public borrowing requirement for the Province and the
Ontario Electricity Financial Corporation (OEFC) in 2007-08 is projected at
$17.7 billion, down $1.1 billion from the $18.8 billion estimated in the 2007
Budget Plan.
As at September 30, 2007, the Province had raised approximately $9.5 billion. As
at December 6, 2007, the Province had raised an additional $4.0 billion, for a
total of $13.5 billion, with $4.2 billion remaining to be borrowed.
Bond markets have been very volatile in recent months, but the Province
continues to have steady access to the domestic bond market due to both investor
confidence in Ontario and the liquidity provided by its benchmark bond issues.
[Chart 1: Borrowing - All Markets - pie chart]
[Chart 2: Borrowing - Domestic Market - pie chart]
Approximately $12.4 billion, or 92 per cent, of the borrowing requirement was
raised in the domestic market, using the following instruments:
• syndicated bonds
• bond auctions
• Ontario Savings Bonds
• floating rate notes
• medium-term notes.
Internationally, the Province issued one five-year US$1 billion global bond
issue.
The Province will continue to maintain a flexible approach to borrowing,
monitoring both domestic and international capital markets for opportunities to
diversify its borrowing program. The Province typically targets 25 per cent of
borrowing from international markets. So far this fiscal year, eight per cent
has been raised internationally as borrowing costs have been much higher abroad.
====================================================================================================================
2007-08 Borrowing Program Table 1
($ Billions)
____________________________________________________________________________________________________________________
Budget Current In-Year
Plan Outlook Change
______________________________________________
Deficit/(Surplus) 0.4 0.0 (0.4)
Non-cash Adjustments (0.5) (0.9) (0.5)
Investment in Capital Assets 3.3 3.4 0.1
Net Loans/Investments 1.2 2.7 1.5
Debt Maturities 14.4 14.2 (0.2)
Debt Redemptions 0.9 1.0 0.1
Total Funding Requirement 19.7 20.4 0.7
Canada Pension Plan Borrowing (0.4) (0.4) 0.1
Decrease/(Increase) in Short-Term Borrowing (0.6) (1.3) (0.8)
Increase/(Decrease) in Cash and Cash Equivalents 0.0 (1.0) (1.0)
____________________________________________________________________________________________________________________
Total Long-Term Public Borrowing Requirement 18.8 17.7 (1.1)
====================================================================================================================
Note: Numbers may not add due to rounding.
____________________________________________________________________________________________________________________
The total long-term public borrowing requirement for 2007-08 remains at $17.7
billion as in the First Quarter Ontario Finances, down $1.1 billion from the
2007 Budget Plan.
A major in-year change from the Budget Plan is a $1.5 billion increase in net
loans/investments, of which $0.9 billion represents loans to Ontario Power
Generation Inc. (OPG) and $0.7 billion for the transfer of third-party
asset-backed commercial paper (ABCP) to a long-term investment portfolio, offset
by a $0.1 billion payment by the Ontario Power Authority (OPA) towards its line
of credit with the Province. Other in-year changes include a $0.5 billion change
in non-cash adjustments and a $1.0 billion decrease in cash and cash
equivalents, both attributable to a higher-than-forecast surplus in 2006-07,
resulting in lower cash needs.
A notable financing activity in the second quarter was the transfer of $0.7
billion in third-party ABCP to a long-term investment portfolio, offset by an
increase in short-term borrowing. The ABCP transfer decision was made due to
ongoing deliberations resulting from the Montreal Accord, which the Province and
a majority of third-party ABCP investors joined in August 2007. The Accord is an
agreement to determine a process for the orderly restructuring of the
third-party ABCP market. The agreement, originally set to expire on October 15,
2007, was extended to December 14, 2007.
The Province does not want to pre-judge the outcome of the Montreal Accord or
how markets will trade afterwards, but it is estimated that the potential
provincial writedown will be less than $100 million out of its $720 million of
ABCP holdings. This amount will be offset by in-year savings on the Province's
other interest on debt costs. Ontario's potential ABCP writedown will not have
any material impact on the fiscal plan.
====================================================================================================================
Medium-Term Borrowing Outlook Table 2
($ Billions)
____________________________________________________________________________________________________________________
2007-08 2008-09 2009-10
____________________________________________________
Deficit/(Surplus) 0.0 0.0 0.0
Non-Cash Adjustments (0.9) (0.8) (0.7)
Investment in Capital Assets 3.4 3.5 4.0
Net Loans/Investments 2.7 1.3 0.5
Debt Maturities:
Currently Outstanding 14.2 19.9 14.6
Incremental Impact of Future Financing 0.0 0.0 0.5
Debt Redemptions 1.0 0.7 0.7
Total Funding Requirement 20.4 24.5 19.6
Canada Pension Plan Borrowing (0.4) (0.6) (0.7)
Decrease/(Increase) in Short-Term Borrowing (1.3) (0.6) 0.8
Increase/(Decrease) in Cash and Cash Equivalents (1.0) (0.4) (0.7)
____________________________________________________________________________________________________________________
Total Long-Term Public Borrowing Requirement 17.7 22.9 19.0
====================================================================================================================
Note: Numbers may not add due to rounding.
____________________________________________________________________________________________________________________
Refinancing maturing debt remains the primary component of the medium-term
borrowing outlook. Debt maturities for the Province and the OEFC are projected
at $14.2 billion in 2007-08, $19.9 billion in 2008-09 and $15.1 billion in
2009-10.
The Province closely monitors the level of annual maturities on a yearly basis.
The year-to-year variation in debt maturities largely reflects past borrowing
activities.
DEBT
The Province's total debt as at September 30, 2007 was $160.8 billion. Total
debt, which represents all borrowing without offsetting financial assets, is
projected to be $162.9 billion as at March 31, 2008, compared to $157.3 billion
as at March 31, 2007.
[Chart 3: Debt - bar graph]
The projected increase in total debt is mainly due to the government's capital
investments in key priority areas and loans to school boards for capital
projects. Total debt, but not net debt, is also expected to increase due in part
to short-term borrowing being used to maintain cash levels and fund the transfer
of the Province's ABCP holdings to a long-term investment portfolio. The
Province could have opted to reduce cash levels instead of increasing short-term
borrowing but decided in the current credit environment it is more prudent to
keep cash and liquidity levels high.
Ontario's net debt — the difference between the Province's total liabilities
and total financial assets — is projected to be $143.1 billion as at March 31,
2008, compared to $141.1 billion as at March 31, 2007. The increase in net debt
is primarily a result of the government's capital investments.
TOTAL DEBT COMPOSITION
Total debt is composed of bonds issued in both the short- and long-term public capital
markets and non-public debt.
[Chart 4: Total Debt Composition - pie graph]
Public debt totals $139.0 billion, primarily consisting of bonds issued in the
domestic and international long-term public markets in 11 currencies. Ontario
also has $21.8 billion outstanding in non-public debt issued in Canadian
dollars. Non-public debt consists of debt instruments issued to public-sector
pension funds in Ontario and the Canada Pension Plan Investment Board (CPPIB).
This debt is not marketable and cannot be traded.
DEBT MANAGEMENT
The Province limits itself to a maximum interest rate reset exposure of 35 per
cent of debt issued for Provincial purposes and a maximum foreign exchange
exposure of five per cent of debt issued for Provincial purposes.
As at September 30, 2007, interest rate reset exposure was 15.2 per cent and
foreign exchange exposure was 0.5 per cent.
[Chart 5: Interest RateReset Exposure - bar graph]
[Chart 6: Foreign Exchange Exposure - bar graph]
DEBT MATURITIES
The most significant component of the borrowing program is the refinancing of
maturing debt.
The Province will continue to aim for a balanced maturity profile and take
advantage of opportunities to schedule maturities into years that currently have
lower levels of maturing debt.
[Chart 7: Debt Maturities - bar graph]
COST OF DEBT
The effective interest rate (on a weighted-average basis) on total debt as at
September 30, 2007 was 5.95 per cent, compared to 6.02 per cent as at March 31,
2007. For comparison, as at March 31, 1993, the effective interest rate on total
debt was 10.14 per cent.
[Chart 8: Effective Interest Rate (Weighted Average) of Debt - line graph]
The effective interest rate on public debt was 5.47 per cent as at September 30,
2007, compared to 5.48 per cent as at March 31, 2007. The effective interest
rate on non-public debt was 9.00 per cent as at September 30, 2007, compared to
9.23 per cent as at March 31, 2007.
NET DEBT-TO-GDP
Net debt-to-GDP peaked at 32.9 per cent in 1999-2000, the year the Province
first consolidated the unfunded liability (or "stranded debt") of the OEFC.
Since then, Ontario's net debt-to-GDP ratio has trended downward, declining to
25.3 per cent in 2006-07. The current outlook projects a ratio of 24.4 per cent
in 2007-08, 23.9 per cent in 2008-09 and 23.3 per cent in 2009-10.
[Chart 9: Net Debt-to-GDP - line graph]
GLOSSARY OF FINANCIAL TERMS USED IN ANNEX IV
________________________________________________________________________________
Note: The descriptions of the terms in the glossary are solely intended
for the assistance of readers of the 2007 Economic Outlook and
Fiscal Review. The glossary and the descriptions of the terms in
the glossary are not intended to affect or alter the meaning of
any terms under law.
________________________________________________________________________________
Amortization: the portion of an asset's cost allocated to an accounting
period as a result of writeoff over its estimated useful life.
Asset-Backed Commercial Paper (ABCP): consists of short-term investments
secured by a pool of assets such as accounts receivable, auto loans
and credit-card receivables that are structured into a trust. The
administrator of the trust provides credit enhancement through a
combination of cash, deferred payment arrangements, letters of credit
and credit derivatives.
Canada Pension Plan (CPP) Borrowing: the Province has the option of
borrowing from the Canada Pension Plan Investment Board (CPPIB) as a
source of long-term borrowing.
Debt: an obligation resulting from the borrowing of money.
Debt Maturities: total forecast amount of debt due for repayment on
specific dates.
Debt Redemptions: total forecast amount of bond issues expected to be
redeemed prior to maturity. Debt redemptions primarily relate to
Ontario Savings Bonds.
Debt Term: remaining term to maturity of long-term debt.
Domestic Bonds: debt securities issued in the domestic market, settling
through the domestic clearing system.
Euro Medium-Term Notes (EMTNs): debt issued outside the United States and
Canada and structured to meet individual investor requirements.
Financial Assets: assets that could be used to discharge existing
liabilities or finance future operations and are not for consumption
in the normal course of operations. Financial assets include cash, an
asset that is convertible to cash, a contractual right to receive cash
or another financial asset from another party, a temporary or
portfolio investment, and a financial claim on an outside organization
or individual and inventory.
Floating Rate Notes (FRNs): debt instruments that bear a variable rate of
interest. Coupons are linked to a floating interest rate index.
Global Bonds: debt securities issued simultaneously in the international
and domestic markets, settling through various worldwide clearing
systems. These can be issued in a variety of currencies, including
Canadian and U.S. dollars.
Increase/(Decrease) in Cash and Cash Equivalents: the change in cash or
other short-term liquid low-risk instruments that are readily
convertible to cash typically within three months or less.
Interest on Debt Expense: the amount reported as an expense for borrowed
money. Interest is calculated as a percentage of the amount of debt
for each period of time.
Investment in Capital Assets: the cost of acquiring or upgrading major
tangible capital assets owned by the Province and its consolidated
organizations during the year, including land, buildings, highways and
bridges.
Medium-Term Notes (MTNs): debt instruments offered under a program and
structured to meet specific investor needs.
Net Debt: the difference between the Province's total liabilities and
financial assets.
Net Debt-to-GDP Ratio: a measurement of the government's debt as a
percentage of gross domestic product (GDP). It is a measure of the net
debt in relation to the economy and capacity to carry and repay debt.
Net Loans/Investments: the total funds paid by the Province towards
loans/investments netted against
loan repayments.
Non-Cash Adjustments: adjustments required to determine the cash flows
resulting from operating activities. Non-cash adjustments include
changes in balance-sheet accounts such as accounts receivable and
payable, prepaid expenses and deferred revenue. Amortization of
capital assets is also a non-cash adjustment.
Non-Public Debt: consists of debt instruments issued to public-sector
pension funds in Ontario and the CPPIB. This debt is not marketable
and cannot be traded.
Syndicated Bond Issues: debt securities that are underwritten by a group of
investment dealers.
Total Debt: the Province's total borrowings outstanding without taking into
consideration any of the Province's assets.
Treasury Bills: short-term debt instruments issued by governments on a
discount basis.
Weighted-Average Interest Rate: takes into account the proportion of debt
at each level of interest rate in the debt portfolio.
ANNEX V:
TRANSPARENCY IN TAXATION
________________________________________________________________________________
TRANSPARENCY IN TAXATION
Tax expenditure reporting is an important element of improved fiscal
accountability. It increases fiscal transparency by providing a complete picture
of revenue forgone in the tax system.
STRUCTURE OF THE REPORT
This report provides estimates of revenue forgone in 2007 with respect to
provisions in the following taxes:
• Personal Income Tax
• Corporate Tax
• Sales and Commodity Tax
• Education Property Tax
• Employer Health Tax
• Estate Administration Tax
• Gross Revenue Charge.
A description of each tax provision was provided in the government's first
Transparency in Taxation report, presented in Annex III of the 2005 Ontario
Economic Outlook and Fiscal Review. Descriptions of tax provisions that had been
introduced or changed since 2005 were provided in Annex V of the 2006 Ontario
Economic Outlook and Fiscal Review. Please refer to the 2005 and 2006 reports
for those descriptions.
Electronic copies of the 2005 and 2006 Ontario Economic Outlook and Fiscal
Review are available via the Internet at:
www.fin.gov.on.ca/english/budget/fallstatement/2005/05fs-paperc.html and
www.fin.gov.on.ca/english/budget/fallstatement/2006/06fs-papere.html.
This report includes descriptions only for tax provisions that are new or have
been modified since the 2006 Ontario Economic Outlook and Fiscal Review. The
descriptions are intended to provide a basic understanding of the provisions and
do not replace the relevant legislation or regulations. The estimates do not
reflect the impact of tax measures proposed in the 2007 Ontario Economic Outlook
and Fiscal Review (see Annex II: Enhancing Ontario's Tax Competitiveness).
SCOPE
Given the absence of a universally accepted definition of a "tax expenditure,"
this report continues the broad approach adopted in previous reports of listing
estimates of forgone revenue that could potentially be included under a
broad-based tax system.
Personal and Corporate Income Tax expenditures identified in this report include
tax expenditures shared with the federal government and Ontario-only tax
expenditures.
Under a tax collection agreement between Ontario and Canada, the federal
government determines the Personal Income Tax base. Ontario has limited policy
control over the individual components of taxable income and the associated tax
expenditures related to the federally defined tax base.
Ontario currently collects and administers its own Corporate Income Tax, Minimum
Tax, Capital Tax and Special Additional Tax on life insurers. However, pursuant
to a Memorandum of Agreement with the federal government dated October 6, 2006,
Ontario enacted legislation to enable the federal government to collect and
administer these taxes, effective for taxation years ending after 2008, once a
tax collection agreement has been signed by both governments.
METHOD
The estimates in this report were developed using the latest available taxation
or economic data, forecast to the 2007 calendar year. The data used to estimate
the values of the tax provisions come from a variety of sources. Revisions to
the underlying data, as well as improvements to the estimation method, may
result in changes to the estimated value of a provision in future publications.
As well, some tax provision estimates are particularly sensitive to economic
conditions or other variables and those values could fluctuate significantly
from year to year.
It is important to note that the estimates in this report are not intended to
represent the potential revenue gain for the Province if the tax provisions were
not in place. Each estimate has been determined separately and in isolation of
other factors, such as the economic impact of any change, behavioural responses,
the interaction among various tax provisions, or any modifications in policy
that might reasonably accompany the change. As a result, the estimates cannot be
added together to determine the total cost of a particular group of tax
expenditures.
Tax expenditure estimates of less than $1 million are denoted by the letter "s"
(small). This report also includes tax provisions for which relevant data from
the tax system are not currently available to the Ministry of Finance. Although
estimates may not be available, these items are listed to ensure greater
accountability and transparency.
Future annual reports will continue to refine Ontario's tax expenditure
estimates.
PERSONAL INCOME TAX
Table 1 provides estimates of tax provisions relating to the Ontario Personal
Income Tax system. Business provisions listed here are for unincorporated
businesses.
====================================================================================================================
Personal Income Tax(1) Table 1
____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates(2)
($ Milllions)
____________________________________________________________________________________________________________________
Ontario Non-Refundable Tax Credits
____________________________________________________________________________________________________________________
Adoption Expense Credit s
Age Credit 260
Amounts Transferred from Spouse or Common-law Partner 25
Basic Personal Credit 4,275
Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) Contributions Credit 550
Caregiver Credit 15
Charitable Donations Credit(3) 560
Disability Credit 80
Eligible Dependant Credit 90
Employment Insurance (EI) Premiums Credit 195
Infirm Dependant Credit 1
Medical Expense Credit 110
Ontario Overseas Employment Tax Credit 6
Pension Income Credit 115
Spouse or Common-law Partner Credit 175
Student Loan Interest Credit 9
Tuition Fee and Education Credits 290
Ontario Tax Reduction (OTR)
OTR — Basic Reduction 185
OTR — Reduction for Dependent Children Under 19 190
OTR — Reduction for Disabled or Infirm Dependants 9
OTR — Total 315
Other Ontario Tax Credits
Ontario Focused Flow-through Share Tax Credit 3
Ontario Political Contribution Tax Credit 10
__________________________________________________________________________________________________________________________
====================================================================================================================
Personal Income Tax(1) Table 1
____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates(2)
($ Milllions)
____________________________________________________________________________________________________________________
Ontario Non-Refundable Tax Credits
____________________________________________________________________________________________________________________
Ontario Property and Sales Tax Credits (OPSTCs)
OPSTCs — Non-seniors 435
OPSTCs — Seniors(4) 545
OPSTCs — Total(4) 980
Ontario Labour-Sponsored Investment Fund and Employee Ownership Tax Credits(5)
Employee Ownership (EO) Tax Credit s
Labour-Sponsored Investment Fund (LSIF) Tax Credit 20
Research-oriented Investment Fund (ROIF) Tax Credit s
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Business
Items for Which an Estimate is not Available
Assistance for Artists and Deduction for Canadian Art Purchased by
Unincorporated Businesses
Assistance for Prospectors and Grubstakers
Deduction of Accelerated Capital Cost Allowance
Deferral Through Use of Billed-basis Accounting by Professionals
Employment
Deduction for Clergy Residence 15
Deduction of Home Relocation Loans s
Deduction for Military and Police Deployed to High-risk International Missions 4
Deduction of Other Employment Expenses 270
Deduction of Union and Professional Dues 140
Employee Stock Options 170
Moving Expense Deduction 15
Northern Residents' Deductions 1
Items for Which an Estimate is not Available
Deductions for Tradespersons' and Apprentice Vehicle Mechanics' Tools
Deductions for Artists and Musicians
Deduction for Tuition Assistance for Adult Basic Education
Deferral of Salary Through Leave of Absence/Sabbatical Plans
Employee Benefit Plans
Increased Deduction for Meal Expenses of Truck Drivers
Non-taxation of Business-paid Health and Dental Benefits
Non-taxation of Certain Non-monetary Employment Benefits
Special Tax Computations for Certain Retroactive Lump-sum Payments
______________________________________________________________________________________________________________________
====================================================================================================================
Personal Income Tax(1) Table 1
____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates(2)
($ Milllions)
____________________________________________________________________________________________________________________
Ontario Non-Refundable Tax Credits
____________________________________________________________________________________________________________________
Farming and Fishing
Items for Which an Estimate is not Available
Cash-basis and Flexibility in Inventory Accounting
Deduction of Farm Losses for Part-time Farmers
Deferral of Income for Farmers
Net Income Stabilization Account for Farmers
Investment
$750,000 Lifetime Capital Gains Exemption for Farming or Fishing Property 170
and Small Business Shares(3)
Deduction of Allowable Business Investment Losses 10
Deduction of Carrying Charges Incurred to Earn Income 255
Deduction of Resource-related Expenditures 100
Partial Inclusion of Capital Gains 1,140
Items for Which an Estimate is not Available
Capital Gains Exemptions — $1,000 on Personal-use Property
and $200 on Foreign Exchange Transactions
Deduction of Limited Partnership Losses
Deferral of Capital Gains Through Five-year Reserve
Deferral of Capital Gains Through Rollovers
Deferral of Capital Gains Through 10-year Reserve for Farming
or Fishing Property and Small Business Shares
Deferral of Capital Gains Through Transfers to a Spouse or Spousal Trust
Exemption for Capital Gains Arising from Certain Donations
Non-taxation of Capital Gains on Principal Residences
Taxation of Capital Gains Upon Realization
Non-taxable Income
Guaranteed Income Supplement and Allowance Benefits 25
Social Assistance Benefits 25
Workers' Compensation Benefits 160
Items for Which an Estimate is not Available
Certain Government Pensions and Allowances
Damages With Respect to Personal Injury or Death
Death Benefits of Up to $10,000
____________________________________________________________________________________________________________________
====================================================================================================================
Personal Income Tax(1) Table 1
____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates(2)
($ Milllions)
____________________________________________________________________________________________________________________
Ontario Non-Refundable Tax Credits
____________________________________________________________________________________________________________________
Employer-paid CPP/QPP Contributions and EI Premiums
Gifts and Bequests
Income of Status Indians on Reserves
Income from the Office of the Governor General and Allowances for Diplomats
and other Government Employees Posted Abroad
Investment Income on Life Insurance Policies
Lottery and Gambling Winnings
Strike Pay
Special Circumstances
Child Care Expense Deduction 160
Pension Income Splitting 170
Treatment of Alimony, Maintenance and Child Support Payments 35
Items for Which an Estimate is not Available
Deduction Related to Vows of Perpetual Poverty
Disability Supports Deduction
Exemption of Scholarship, Fellowship and Bursary Income
Tax-free Amount for Emergency Service Volunteers
Tax-deferred Savings
Registered Pension Plans (RPP) — Deduction for Contributions 660
Registered Retirement Savings Plans (RRSP) — Deduction for Contributions 1,940
Items for Which an Estimate is not Available
Deferred Profit-sharing Plans
Registered Education Savings Plans (RESP)
RPP and RRSP -- Non-taxation of Investment Income
=====================================================================================================================
(1) Estimates do not include the impact of revenue forgone from Personal Income Tax provisions for trusts,
which are taxed as individuals under the Income Tax Act.
(2) Estimates are based on 2004 tax-filer data forecast to represent the 2007 taxation year, unless otherwise noted.
(3) Estimate is also based on federal estimates for provisions that have changed since 2006.
(4) Estimate includes the enrichment of the income threshold for senior couples to $23,820 proposed in the 2007
Ontario Budget.
(5) Estimates are based on tax-sharing statements.
_____________________________________________________________________________________________________________________
PERSONAL INCOME TAX — DESCRIPTION OF TAX PROVISIONS
The following Personal Income Tax provisions have been introduced or changed
since 2006.
Ontario Non-Refundable Tax Credits
The non-refundable tax credits listed in the following table are based on
amounts that are adjusted for inflation each year.
===================================================================================================================
Amounts on Which Indexed Non-Refundable Tax Credits Are Based ($) Table 2
___________________________________________________________________________________________________________________
Non-Refundable Tax Credits
Adoption Expense Credit, maximum claim 10,435
Age Credit, maximum claim 4,176
Reduced by 15 per cent of individual's net income in excess of 31,088
Basic Personal Credit 8,553
Caregiver Credit, maximum claim 4,031
Reduced by dependant's net income in excess of 13,792
Disability Credit 6,910
Eligible Dependant Credit, maximum claim 7,262
Reduced by dependant's net income in excess of 726
Dependant's net income less than 7,988
Infirm Dependant Credit, maximum claim 4,031
Reduced by dependant's net income in excess of 5,731
Medical Expense Credit
Qualifying medical expenses in excess of the lesser of three per cent of 1,936
net income and
Qualifying medical expenses of other dependant, maximum claim 10,435
Pension Income Credit, maximum claim 1,183
Spouse or Common-law Partner Credit, maximum claim 7,262
Not exceeding spouse's or common-law partner's net income deducted from 7,988
Tuition Fee and Education Credits
Education Credit, full time (per month) 461
Education Credit, part time (per month) 138
Maximum transfer 5,914
===================================================================================================================
Other Ontario Tax Credits
Ontario Property and Sales Tax Credits (OPSTCs) — The Property Tax Credit
is the lesser of occupancy cost and a basic property tax credit
amount plus 10 per cent of occupancy cost. Occupancy cost is
property tax or 20 per cent of rent paid on an individual's
principal residence plus $25 if residing in a student's residence.
The basic property tax credit amount is $250 for non-senior
individuals or couples and $625 for senior individuals or couples.
The Sales Tax Credit is $100 for an individual plus $100 for a
spouse or common-law partner and $50 for each dependent child aged
18 or under. The credits for non-seniors are jointly reduced by
two per cent of adjusted family net income in excess of $4,000;
the credits for seniors are jointly reduced by four per cent of
adjusted family net income in excess of $22,000 for single seniors
and $23,090 for senior couples, which the 2007 Ontario Budget
proposed to increase. The maximum OPSTCs are $1,000 for
non-seniors and $1,125 for seniors. The estimate includes the
proposed increase to the income threshold for senior couples,
which is expected to be $23,820 for 2007.
Exemptions, Deductions, Deferrals and Other Measures Shared
with the Federal Government
Employment
Item for Which an Estimate is not Available
Increased Deduction for Meal Expenses of Truck Drivers — In general,
employees may deduct only 50 per cent of otherwise allowable
business-related meal expenses. Effective March 19, 2007,
long-haul truck drivers may deduct 60 per cent of meal expenses
incurred during eligible periods of travel. The deductible portion
will increase each year, rising to 80 per cent after 2010. The
increased deduction for meal expenses of truck drivers parallels
the 2007 federal budget initiative.
Investment
$750,000 Lifetime Capital Gains Exemption for Farming or Fishing Property
and Small Business Shares — A $500,000 lifetime capital gains
exemption is available for gains from the disposition of qualified
farming or fishing property and small business shares. The
cumulative exemption increases to $750,000 for capital gains
realized by an individual on dispositions of qualified property on
or after March 19, 2007. This increase parallels the 2007 federal
budget initiative.
Item for Which an Estimate is not Available
Exemption for Capital Gains Arising from Certain Donations — Capital gains
on gifts of publicly listed securities and ecologically sensitive
land donated to public charities are exempt from tax. In addition,
capital gains on certain objects certified as being of cultural
importance to Canada are exempt from tax if donated to a
designated museum or art gallery. Effective March 19, 2007,
capital gains arising from gifts of publicly listed securities to
private foundations are exempt from tax. In addition, when an
arm's-length employee acquires a publicly listed security under an
option granted by the employer and donates it to a private
foundation within 30 days, the associated employment benefit is
exempt from tax. Previously, capital gains and income on such
donations were subject to the normal 50 per cent inclusion rate
for capital gains. These changes parallel the 2007 federal budget
initiative.
Special Circumstances
Pension Income Splitting — Starting in the 2007 taxation year,
individuals can allocate up to half of their qualifying pension
income to their spouse or common-law partner and can claim a
deduction from income for the allocated amount. The person to whom
the amount is allocated must include the allocated amount in
income, and can claim the pension income credit to the extent that
the allocated amount is eligible, based on the transferee's age,
not the age of the pensioner.
Allocating pension income to a lower-income spouse or common-law
partner may increase tax expenditures for measures claimed by
those individuals, such as the age credit or pension income
credit. At the same time, pension income splitting may reduce tax
expenditures for other measures provided by the tax system to
recognize that an individual's income can support other family
members. Such measures include the spouse or common-law partner
credit and the transfer of unused amounts from a spouse or
common-law partner (e.g., age credit, pension income credit,
disability credit, tuition fee and education credits). This
happens because increasing the income reported by a lower-income
spouse or common-law partner reduces the amounts that can be
claimed by the higher-income spouse or common-law partner in
respect of these measures.
CORPORATE TAX
Estimates of tax provisions relating to the Ontario Corporate Income Tax,
Capital Tax and Mining Tax systems are presented in Table 3.
=====================================================================================================================
Corporate Tax Table 3
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (1)
($ Millions)
_____________________________________________________________________________________________________________________
Corporate Income Tax
_____________________________________________________________________________________________________________________
Ontario Refundable Tax Credits
Apprenticeship Training Tax Credit(2) 70
Co-operative Education Tax Credit(2) 9
Ontario Book Publishing Tax Credit 2
Ontario Business Research Institute Tax Credit 4
Ontario Computer Animation and Special Effects Tax Credit 14
Ontario Film and Television Tax Credit 120
Ontario Innovation Tax Credit 200
Ontario Interactive Digital Media Tax Credit 8
Ontario Production Services Tax Credit 37
Ontario Sound Recording Tax Credit 1
Ontario Deductions and Exemptions
Additional Deduction for Credit Unions 6
Assets Used to Generate Clean Energy s
Manufacturing and Processing (M&P) and Resource Sector Credit 285
Non-taxation of the Federal Investment Tax Credit(3)(,)(4)(,5) 220
Ontario Current Cost Adjustment(4) 7
Ontario Depletion Allowance(4) s
Ontario New Technology Tax Incentive(4) s
Ontario Political Contributions(4) s
Ontario Resource Allowance(4,)(6,7) 100
Small Business Deduction(8) 1,090
_____________________________________________________________________________________________________________________
=====================================================================================================================
Corporate Tax Table 3
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (1)
($ Millions)
_____________________________________________________________________________________________________________________
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Allowable Business Investment Losses(9,10) 3
Deductibility of Charitable Donations(9) 140
Deductibility of Gifts to the Crown(9) s
Deductibility of Gifts of Cultural Property and Ecologically Sensitive Land(9) s
Deferral of Income for Farmers8 s
Holdback on Progress Payments to Contractors(9) 16
Non-taxation of Non-profit Organizations(9) 130
Partial Inclusion of Capital Gains(9) 1,300
Items for Which an Estimate is not Available
Accelerated Write-off of Capital Assets and Resource-related Expenditures
Temporary Incentive for Manufacturing and Processing (M&P) Machinery
& Equipment(11)
Cash-basis Accounting and Flexibility in Inventory Accounting
Deductibility of Countervailing and Anti-dumping Duties
Deferral Through Capital Gains Rollovers
Deferral Through Use of Billed-basis Accounting by Professionals
Donation of Medicines for the Developing World
Exemption for Capital Gains Arising from Certain Donations
Expensing of Advertising Costs
Non-taxation of Provincial, Municipal and Federal Crown Corporations
Non-taxation of Registered Charities
Tax Exemption on Income of Foreign Affiliates of Canadian Corporations
Taxation of Capital Gains upon Realization
Capital Tax(12)
Capital Tax Deduction 435
Deferred Mining Exploration and Development Expenses(13) 4
Deferred Ontario New Technology Tax Incentive and Scientific Research and
Experimental Development Costs(13) s
Exemption for Assets Used to Generate Clean Energy s
Exemption for Family Farm Corporations, Family Fishing Corporations, s
Credit Unions and Other Specified Entities
Small Business Investment Tax Credit for Financial Institutions 20
Item for Which an Estimate is not Available
Renounced Mining Expenses
_____________________________________________________________________________________________________________________
=====================================================================================================================
Corporate Tax Table 3
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (1)
($ Millions)
_____________________________________________________________________________________________________________________
Mining Tax (14)
_____________________________________________________________________________________________________________________
Mining Tax(1)(4)
Mining Tax Exemption 1
Mining Tax Holiday for Mines (other than remote mines) s
Mining Tax Holiday for New Remote Mines s
Mining Tax Rate for Remote Mines s
Processing Allowance 55
Item for Which an Estimate is not Available
Fast Write-off of Exploration Costs
=====================================================================================================================
(1) Estimates are forecast to the 2007 calendar year based on preliminary 2005 and 2006 Ontario tax administration
data, unless otherwise noted. Estimates do not include the revenue impact of corporate income tax expenditures
provided to mutual fund corporations.
(2) Estimates include the impact of both the corporate and personal income tax provisions.
(3) Relating to qualifying Ontario Research and Development expenses.
(4) The proposed Ontario Corporate Income Tax collection agreement with the federal government would require Ontario
to fully harmonize with the federal definition of corporate taxable income. As a result, these Ontario differences
from the federal definition of taxable income will expire for taxation years ending after 2008.
(5) For taxation years ending after 2008, a new 4.5 per cent non-refundable tax credit has been enacted to replace
this tax provision.
(6) The resource allowance applies to the mining and oil and gas sectors. The estimate is not net of mining taxes
and Crown royalties paid.
(7) For taxation years ending after 2008, a tax credit/debit mechanism has been enacted to replace this provision.
(8) Includes the impact of the Ontario surtax on Canadian-controlled private corporations.
(9) Estimates based on assessed 2005 and 2006 federal tax administration data and forecast to 2007.
(10)Estimate could overstate true value as it does not reflect the future reduction in tax revenues that would
occur if those losses were instead deducted from future capital gains.
(11)The 2007 Ontario cash-flow impact provided by the federal Department of Finance and adjusted to a calendar-year
basis is $60 million. The cumulative impact to Ontario of this tax provision over 2007-08 to 2009-10 is estimated
at over $400 million.
(12)Ontario has legislated a plan to eliminate the Capital Tax by July 1, 2010.
(13)Does not apply for taxation years ending after 2008 as a result of the proposed Corporate Income Tax collection
agreement with the federal government.
(14)Estimates are forecast to the 2007 calendar year based on preliminary 2004 Ontario mining tax administration data.
______________________________________________________________________________________________________________________
CORPORATE TAX — DESCRIPTION OF TAX PROVISIONS
The following Corporate Income Tax provisions have changed since 2006.
Corporate Income Tax
Ontario Refundable Tax Credits
Apprenticeship Training Tax Credit — A 25 per cent (30 per cent for small
businesses) refundable corporate/personal income tax credit is
available for corporations and unincorporated business hiring
apprentices in industrial, construction, motive power and certain
service trades. The 2007 Ontario Budget extended this incentive
for four years for eligible apprentices who commence employment
before January 1, 2012, and for salaries and wages paid prior to
January 1, 2015. In addition, in 2007, the following trades have
been added to the list of skilled trades that currently qualify
for the tax credit:
• entertainment industry power technician
• process operator - power
• process operator - food manufacturing
• tractor trailer commercial driver
• exterior insulated finish systems mechanic
• information technology call centre inside sales agent
• information technology call centre customer care agent.
The Ministry of Revenue's Interpretation Bulletin 3020R2 regarding the
Apprenticeship Training Tax Credit provides the complete listing
of eligible trades and is available at:
www.rev.gov.on.ca/english/bulletins/ct/3020.html
Ontario Production Services Tax Credit — An 18 per cent refundable tax
credit is available for foreign-based and non-certified domestic
film and television production activity in Ontario. In 2007, the
18 per cent rate was extended for one year, from March 31, 2007 to
March 31, 2008. (Further enhancements to this tax credit are
proposed in Annex II: Enhancing Ontario's Tax Competitiveness.)
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Items for Which an Estimate is not Available
Accelerated Write-off of Capital Assets and Resource-related Equipment
Temporary Incentive for Manufacturing and Processing (M&P) Machinery and
Equipment — An accelerated capital cost allowance (CCA) rate of 50 per
cent on a straight-line basis is available for M&P machinery
and equipment acquired on or after March 19, 2007, and before
2009. This measure parallels the 2007 federal budget initiative.
Donations of Medicines for the Developing World — Corporations that make
donations of medicines from their inventory on or after March 19,
2007 may claim an additional charitable deduction equal to the
lesser of 50 per cent of the difference between the value of the
donated medicine and its cost, and the cost of the medicine. This
measure parallels the 2007 federal budget initiative.
Exemption for Capital Gains Arising from Certain Donations — Capital gains
on gifts of publicly listed securities and ecologically sensitive
land donated to public charities are exempt from tax. In addition,
capital gains on certain objects certified as being of cultural
importance to Canada are exempt from tax if donated to a
designated museum or art gallery. Effective March 19, 2007,
capital gains arising from gifts of publicly listed securities to
private foundations are exempt from tax. Previously, capital gains
and income on such donations were subject to the normal 50 per
cent inclusion rate for capital gains. These changes parallel the
2007 federal budget initiative.
SALES AND COMMODITY TAX
Estimates of tax provisions relating to sales and commodity taxes, including the
Fuel Tax, Gasoline Tax, Land Transfer Tax, Retail Sales Tax and Tobacco Tax, are
presented in Table 4.
=====================================================================================================================
Sales and Commodity Tax Table 4
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (1)
($ Millions)
_____________________________________________________________________________________________________________________
Fuel Tax
_____________________________________________________________________________________________________________________
Exemptions/Reduced Rates
Exemption for Biodiesel(2) s
Exemption for Coloured Fuel(3) 410
Reduced Rate for Railway Diesel(4) 55
Refunds
Auxiliary Power Take-off Equipment(5) 7
Gasoline Tax
Exemptions/Reduced Rates
Exemption for Methanol and Natural Gas 5
Reduced Rate for Aviation Aircraft(6) 285
Reduced Rate for Propane(6) 8
Refunds
Auxiliary Power Take-off Equipment(5) s
Aviation Fuel(5) s
Tax-exempt Use in Unlicensed Equipment(5) 7
Land Transfer Tax
Exemptions
Life Leases(7) s
Deferrals and Exemptions for Corporate Reorganizations(5) 43
Items for Which an Estimate is not Available
Hospital Restructuring
Oil/Pipeline Easements and Mineral Lands
Other Transfers and Dispositions
_____________________________________________________________________________________________________________________
=====================================================================================================================
Sales and Commodity Tax Table 4
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (1)
($ Millions)
_____________________________________________________________________________________________________________________
Refunds
Refund for First-time Home Buyers(5) 32
Retail Sales Tax
Exemptions
25& Coin Pay Phone Calls(7) 3
Agricultural Goods 280
Audio Books Purchased by Persons Who Are Legally Blind(7) 4
Automobile Insurance Premiums(7,8) 815
Basic Groceries 1,675
Bicycles and Bicycle Helmets(7) 1
Books, Newspapers and Magazines Sold by Subscription 395
Children's Car Seats and Booster Seats(7) 4
Children's Clothing 130
Commercial Aircraft, Vessels Greater than 1,400 Cubic Metres and Commercial Vessels Less than 120
1,400 Cubic Metres
Custom Software(9) 80
Donations to Schools, Colleges and Universities(7) 7
Educational CD-ROMs and DVDs(7) 3
Energy 4,575
Feminine Hygiene Products(7) 20
Footwear Sold for $30 or Less 30
Goods Purchased for Use by Fishers and Fur-trappers s
Individual Life and Health Insurance Premiums(10) 460
Mobile Homes s
Municipal Fire-fighting Equipment 1
Nicotine Replacement Therapies(11) 2
Prepared Foods Sold for $4 or Less(7) 255
Prescription Drugs and Medical Supplies 945
Production Machinery and Equipment 735
Religious Equipment 12
Repairs and Replacements Performed Under Warranty(8) 155
Seedlings s
Services 10,195
Temporary Exemption for Destination Marketing Fees(7) 2
Temporary Exemption for Energy Star® Household Products 23
_____________________________________________________________________________________________________________________
=====================================================================================================================
Sales and Commodity Tax Table 4
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (1)
($ Millions)
_____________________________________________________________________________________________________________________
Toll-free Telephone Services(7) 47
Transient Accommodation(12) 90
University Research Equipment 7
Items for Which an Estimate is not Available
Admissions(13)
Municipal, Hospital Restructuring
Museums and Art Galleries
Used Adult Clothing or Footwear Sold for $50 or Less by Religious, Charitable and
Benevolent Organizations
Credits/Rebates
Rebate for Alternative Fuel Vehicles(5) 5
Rebate for Building Materials for Religious, Charitable and Benevolent Organizations(5) 25
Tax Credit for Fuel Conservation(7) 6
Temporary Rebate for Building Materials Incorporated into Electricity Generating, Qualifying 12
Nuclear and Deep Lake-water Cooling Facilities(5)
Temporary Rebate for Solar Energy, Wind Energy, Micro Hydro-electric and Geothermal Energy s
Systems(5)
Vendor Compensation(14) 105
Tobacco Tax
Compensation for Tax Collectors(14) s
=====================================================================================================================
(1) Estimates are forecast to the 2007 calendar year based on preliminary 2003 provincial Input-Output tables from
Statistics Canada, unless otherwise noted.
(2) Based on estimated amount of biodiesel sold in Ontario.
(3) Based on returns filed by registered dyers.
(4) Forgone revenue estimated as difference from the regular fuel tax rate.
(5) Based on refunds filed or rebates/deferrals claimed.
(6) Forgone revenue estimated as difference from the regular gasoline tax rate.
(7) Based on the best information currently available from a variety of sources, such as industry data and
Statistics Canada surveys, projected to 2007.
(8) Estimates assume items would be taxed at eight per cent general RST rate.
(9) Based on Statistics Canada Computer Software and Related Services Industry Revenue Profile.
(10)Based on insurance premiums data provided by the Canadian Life and Health Insurance Association Inc.
(11)Based on Statistics Canada CANSIM Table 105-0055: Smoking Cessation Aids.
(12)The RST rate on accommodations is five per cent. Forgone revenue estimated as difference from the regular
RST rate of eight per cent.
(13)Includes the exemption for admissions to live theatres with 3,200 seats or less, enacted through Order in
Council, which is estimated to cost $15 million to $20 million per year. There are currently no data for the
cost of other admissions exemptions of general application.
(14)Based on returns filed by registered tax collectors.
_____________________________________________________________________________________________________________________
SALES AND COMMODITY TAX — DESCRIPTION OF TAX PROVISIONS
The following Sales andCommodity Tax provisions have changed since 2006.
Gasoline Tax
Exemption for Methanol and Natural Gas — In previous reports, this
exemption also applied to ethanol. Effective January 1, 2007,
ethanol became subject to the same tax treatment as gasoline. This
change coincided with the implementation of the Renewable Fuels
Standard under the Environmental Protection Act.
Retail Sales Tax (RST)
Exemptions
Bicycles and Bicycle Helmets — Bicycles costing $1,000 or less, bicycle
helmets, and other bicycle safety equipment are exempt from RST if
purchased on or after December 1, 2007 and on or before November
30, 2008.
Nicotine Replacement Therapies — Nicotine replacement therapies registered
with a Health Canada Drug Identification Number are exempt from
RST if purchased on or after August 13, 2007 and on or before
August 12, 2008.
Temporary Exemption for Destination Marketing Fees — Destination marketing
fees charged on transient accommodation are temporarily exempt
from RST. The 2007 Ontario Budget extended the exemption to
include fees billed on or before June 30, 2008.
Temporary Exemption for Energy Star(R) Household Products — Energy Star(R)
qualified non-commercial refrigerators, dishwashers, clothes
washers (including inseparable washer-dryer combinations),
freezers, dehumidifiers, room air conditioners, light bulbs and
decorative light strings are exempt from RST if purchased on or
after July 20, 2007 and on or before July 19, 2008.
Credits/Rebates
Temporary Rebate for Solar Energy, Wind Energy, Micro Hydro-electric and
Geothermal Energy Systems — A rebate is available for RST paid on
the purchase of a new solar energy, wind energy, micro
hydro-electric or geothermal energy system installed into a
residential premises, including a multi-residential building, or
on any expansion or upgrade to an existing system. The 2007
Ontario Budget extended the rebate to include purchases made on or
before December 31, 2009.
EDUCATION PROPERTY TAX
Table 5 provides estimates of tax provisions relating to the Education Property
Tax system.
=====================================================================================================================
Education Property Tax(1) Table 5
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates (2)
($ Millions)
_____________________________________________________________________________________________________________________
Brownfields Financial Tax Incentive Program(3) s
Charity Rebate 7
Conservation Land Property Tax Exemption Program 2
Eligible Convention Centres Exemption 1
Farm Property Class Tax Rate Reduction 65
Farmlands Awaiting Development Sub-class Tax Rate Reduction s
Heritage Property Tax Rebate s
Live Performance Theatres Exemption and Professional Sports Facility Tax Rate Reduction(4) 10
Managed Forest Tax Incentive Program 3
Seniors and Persons with Disabilities Property Tax Relief(5) s
Tax Exemptions Under Private Statutes 6
Vacant Commercial and Industrial Unit Rebate 30
Vacant Land and Excess Land Sub-class Tax Rate Reduction 50
Items for Which an Estimate is not Available
Other Tax Exemptions Under Public Statutes
Discretionary exemptions granted by municipalities to special purpose properties
(e.g., legions, navy leagues, public-private capital facilities)
Mandatory exemptions granted to special purpose/institutional properties
(e.g., places of worship, cemeteries, Boy Scouts Association of Canada and
Canadian Girl Guides Association, charitable institutions including
Canadian Red Cross, St. John Ambulance and charitable, non-profit
philanthropic corporations organized for the relief of the poor)
Relief from Property Taxes That are Unduly Burdensome for Residential,
Farm or Managed Forest Properties
=====================================================================================================================
(1) Expenditures related to provincial land taxes or payments made in lieu of taxes have not been included.
(2) Estimates based on 2007 education tax rates, 2007 Assessment Roll, 2006 Municipal Financial Information
Returns and municipal tax policies.
(3) Effective October 1, 2004, municipalities may pass bylaws cancelling municipal property taxes on eligible
brownfields properties. The Province may match the municipal reduction with an education property tax reduction.
(4) In 2007, improved information allowed a much more precise estimate of the exemptions given to live performance
theatres.
(5) Estimate does not include expenditures due to the exemption from taxation on 10 per cent of the assessment of
improvements to accommodate seniors and persons with disabilities in newly built homes or the expenditure on such
improvements in existing homes.
_____________________________________________________________________________________________________________________
EMPLOYER HEALTH TAX
Table 6 provides an estimate of the tax exemption under the Employer Health Tax
system.
=====================================================================================================================
Employer Health Tax (EHT) Table 6
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates
($ Millions)
_____________________________________________________________________________________________________________________
$400,000 Exemption for Private-Sector Employers(1) 780
=====================================================================================================================
(1) Estimate is based on 2005 remuneration data forecast to represent the 2007 taxation year.
_____________________________________________________________________________________________________________________
ESTATE ADMINISTRATION TAX
Table 7 provides an estimate of the exemption under the Estate Administration
Tax system.
=====================================================================================================================
Estate Administration Tax Table 7
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates
($ Millions)
_____________________________________________________________________________________________________________________
Exemption Where the Value of the Estate Does Not Exceed $1,000 s
=====================================================================================================================
GROSS REVENUE CHARGE
Table 8 provides an estimate of the tax provision under the Gross Revenue
Charge.
=====================================================================================================================
Gross Revenue Charge (GRC)(1) Table 8
_____________________________________________________________________________________________________________________
Tax Provisions 2007 Estimates
($ Millions)
_____________________________________________________________________________________________________________________
Gross Revenue Charge 10-Year Holiday s
=====================================================================================================================
(1) Expenditure does not include the provincial water rental portion of the GRC.
_____________________________________________________________________________________________________________________
ANNEX VI:
ECONOMIC DATA TABLES
________________________________________________________________________________
ANNEX VI
ECONOMIC DATA TABLES
ONTARIO ECONOMY TABLE NUMBER
Ontario, Gross Domestic Product, 1993-2006................................................................ 1
Ontario, Growth in Gross Domestic Product, 1993-2006...................................................... 2
Ontario, Selected Economic Indicators, 1993-2006.......................................................... 3
Ontario, Selected Economic Indicators, Annual Change, 1993-2006........................................... 4
Ontario, Real Gross Domestic Product by Industry at Basic Prices, 2003-2006............................... 5
Ontario, Growth in Real Gross Domestic Product by Industry at
Basic Prices, 2003-2006................................................................................... 6
Ontario, Real Gross Domestic Product at Basic Prices in Selected
Manufacturing Industries, 2003-2006....................................................................... 7
Ontario, Growth in Real Gross Domestic Product at Basic Prices
in Selected Manufacturing Industries, 2003-2006........................................................... 8
Ontario, Housing Market Indicators, 2003-2006..............................................................9
Selected Financial Indicators, 1993-2006..................................................................10
G7 COMPARISON
Ontario and the G7, Real Gross Domestic Product Growth, 1993-2006.........................................11
Ontario and the G7, Employment Growth, 1993-2006..........................................................12
Ontario and the G7, Unemployment Rates, 1993-2006.........................................................13
Ontario and the G7, CPI Inflation Rates, 1993-2006........................................................14
G7, Exchange Rates, 1993-2006.............................................................................15
ONTARIO, INTERNATIONAL MERCHANDISE TRADE
Ontario, International Merchandise Exports by Major Commodity, 2006.......................................16
Ontario, International Merchandise Imports by Major Commodity, 2006.......................................17
Ontario, International Merchandise Trade by Major Region, 2006............................................18
CANADA, INTERNATIONAL MERCHANDISE TRADE
Canada, International Merchandise Trade by Major Region, 2006.............................................19
ECONOMIC DATA TABLES (CONT'D)
DEMOGRAPHIC CHARACTERISTICS TABLE NUMBER
Ontario, Selected Demographic Characteristics, 1991-2007..................................................20
Ontario, Components of Population Growth, 1997-98 to 2006-07..............................................21
ONTARIO LABOUR MARKETS
Ontario, Labour Force, 1993-2006..........................................................................22
Ontario, Employment, 1993-2006............................................................................23
Ontario, Unemployment, 1993-2006..........................................................................24
Ontario, Employment Insurance (EI) and Social Assistance, 1993-2006.......................................25
Ontario, Labour Compensation, 1993-2006...................................................................26
Ontario, Employment by Occupation, 1995-2006..............................................................27
Ontario, Distribution of Employment by Occupation, 1995-2006..............................................28
Ontario, Employment by Industry, 1997-2006................................................................29
Ontario, Growth in Employment by Industry, 1997-2006......................................................30
Ontario, Employment Level by Economic Regions, 1996-2006..................................................31
Ontario, Employment Level by Industry for Economic Regions, 2006..........................................32
Ontario Economic Regions..................................................................................33
(Note: Data in the tables may not add to totals due to rounding.)
================================================================================================================
Ontario, Gross Domestic Product, 1993-2006 Table 1
________________________________________________________________________________________________________________
($ Billions)
_______________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_______________________________________________________________
Real GDP (chained $1997) 329.1 348.5 360.8 364.8 381.2 399.7 429.7
Consumption 194.3 200.2 204.0 208.7 218.8 226.4 236.9
Government 79.7 80.5 81.0 78.0 77.9 79.6 82.9
Residential Construction 18.2 18.6 16.0 17.5 20.0 19.7 22.0
Non-residential Construction 10.2 8.9 8.7 10.6 11.5 11.7 13.1
Machinery and Equipment 17.5 20.1 22.0 23.5 29.0 31.0 33.9
Exports 188.1 207.7 224.1 236.6 254.3 273.0 303.9
Imports 172.7 184.4 196.5 206.2 232.1 243.0 263.3
Nominal Gross Domestic Product 293.4 311.1 329.3 338.2 359.4 377.9 409.0
________________________________________________________________________________________________________________
Table 1 (continued) ($ Billions)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_______________________________________________________________
Real GDP (chained $1997) 455.2 463.4 477.8 484.3 496.2 510.7 521.6
Consumption 248.5 254.7 264.5 272.7 281.5 291.6 301.7
Government 85.9 90.0 92.8 97.8 101.3 104.4 108.2
Residential Construction 23.5 25.8 28.3 29.0 30.1 30.6 30.9
Non-residential Construction 11.5 11.4 11.8 11.5 11.5 11.9 13.1
Machinery and Equipment 35.9 34.9 32.6 34.6 37.1 40.4 44.9
Exports 327.6 317.9 322.7 322.4 334.6 341.9 341.3
Imports 282.5 269.4 275.3 283.9 302.7 314.4 322.9
Nominal Gross Domestic Product 440.8 453.7 477.8 493.1 516.8 536.9 557.8
================================================================================================================
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Growth in Gross Domestic Product, 1993-2006 Table 2
________________________________________________________________________________________________________________
(Per Cent Change)
__________________________________________________________
1993 1994 1995 1996 1997 1998 1999
__________________________________________________________
Real GDP (chained $1997) 1.0 5.9 3.5 1.1 4.5 4.8 7.5
Consumption 1.3 3.1 1.9 2.3 4.8 3.5 4.6
Government (0.6) 1.0 0.6 (3.7) (0.1) 2.1 4.2
Residential Construction (8.7) 2.0 (14.0) 9.6 14.5 (1.8) 11.6
Non-residential Construction (18.7) (12.2) (2.8) 21.5 9.3 1.6 11.4
Machinery and Equipment (4.4) 14.6 9.9 6.7 23.3 6.8 9.4
Exports 8.4 10.4 7.9 5.6 7.5 7.3 11.3
Imports 5.9 6.8 6.6 4.9 12.6 4.7 8.4
Nominal Gross Domestic Product 2.4 6.0 5.9 2.7 6.3 5.2 8.2
________________________________________________________________________________________________________________
Table 2 (continued) (Per Cent Change)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
__________________________________________________________
Real GDP (chained $1997) 5.9 1.8 3.1 1.4 2.5 2.9 2.1
Consumption 4.9 2.5 3.8 3.1 3.2 3.6 3.5
Government 3.6 4.7 3.2 5.3 3.5 3.1 3.7
Residential Construction 7.1 9.7 9.6 2.6 3.6 1.8 1.1
Non-residential Construction (11.8) (1.1) 3.7 (2.4) (0.6) 3.6 10.4
Machinery and Equipment 5.9 (2.8) (6.5) 6.1 7.1 9.1 11.2
Exports 7.8 (3.0) 1.5 (0.1) 3.8 2.2 (0.2)
Imports 7.3 (4.6) 2.2 3.1 6.6 3.9 2.7
Nominal Gross Domestic Product 7.8 2.9 5.3 3.2 4.8 3.9 3.9
================================================================================================================
Source: Statistics Canada.
________________________________________________________________________________________________________________
===============================================================================================================
Ontario, Selected Economic Indicators, 1993-2006 Table 3
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
__________________________________________________________________
Retail Sales ($ Billions) 74.5 80.0 83.3 83.8 90.9 97.5 104.6
Housing Starts - Units (000s) 45.1 46.6 35.8 43.1 54.1 53.8 67.2
Personal Income ($ Billions) 256.1 260.7 271.4 276.3 289.5 304.7 321.7
Pre-tax Corporate Profits ($ Billions) 17.9 27.9 33.1 34.2 37.5 39.5 49.7
Consumer Price Index (2002 = 100) 84.7 84.7 86.8 88.2 89.8 90.6 92.4
Labour Force (000s) 5,544 5,548 5,589 5,680 5,776 5,877 6,018
Employment (000s) 4,938 5,014 5,100 5,167 5,291 5,453 5,637
Unemployment Rate (%) 10.9 9.6 8.7 9.0 8.4 7.2 6.3
________________________________________________________________________________________________________________
Table 3 (continued)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
__________________________________________________________________
Retail Sales ($ Billions) 111.5 114.3 121.0 125.1 129.1 135.3 140.8
Housing Starts - Units (000s) 71.5 73.3 83.6 85.2 85.1 78.8 73.4
Personal Income ($ Billions) 347.7 361.2 369.4 381.1 399.8 417.8 438.0
Pre-tax Corporate Profits ($ Billions) 54.4 49.3 60.5 58.2 63.1 62.0 64.4
Consumer Price Index (2002 = 100) 95.1 98.0 100.0 102.7 104.6 106.9 108.8
Labour Force (000s) 6,173 6,327 6,494 6,676 6,775 6,849 6,927
Employment (000s) 5,817 5,926 6,031 6,213 6,317 6,398 6,493
Unemployment Rate (%) 5.8 6.3 7.1 6.9 6.8 6.6 6.3
================================================================================================================
Sources: Statistics Canada and Canada Mortgage and Housing Corporation.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Selected Economic Indicators, Annual Change, 1993-2006 Table 4
________________________________________________________________________________________________________________
(Per Cent Change)
___________________________________________________________
1993 1994 1995 1996 1997 1998 1999
________________________________________________________________________________________________________________
Retail Sales 4.2 7.5 4.0 0.7 8.5 7.2 7.3
Housing Starts (19.1) 3.3 (23.2) 20.2 25.6 (0.4) 24.9
Personal Income 0.9 1.8 4.1 1.8 4.8 5.2 5.6
Pre-tax Corporate Profits 23.1 55.8 18.7 3.3 9.9 5.2 25.9
Consumer Price Index 1.8 0.0 2.5 1.6 1.8 0.9 2.0
Labour Force 0.3 0.1 0.7 1.6 1.7 1.7 2.4
Employment 0.1 1.5 1.7 1.3 2.4 3.1 3.4
________________________________________________________________________________________________________________
Table 4 (continued) (Per Cent Change)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
___________________________________________________________
Retail Sales 6.6 2.5 5.9 3.4 3.2 4.8 4.1
Housing Starts 6.4 2.5 14.1 1.9 (0.1) (7.4) (6.8)
Personal Income 8.1 3.9 2.3 3.2 4.9 4.5 4.8
Pre-tax Corporate Profits 9.3 (9.2) 22.5 (3.7) 8.5 (1.8) 3.9
Consumer Price Index 2.9 3.0 2.0 2.7 1.9 2.2 1.8
Labour Force 2.6 2.5 2.6 2.8 1.5 1.1 1.1
Employment 3.2 1.9 1.8 3.0 1.7 1.3 1.5
================================================================================================================
Sources: Statistics Canada and Canada Mortgage and Housing Corporation.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Real Gross Domestic Product by Industry at Basic Prices, 2003-2006 Table 5
________________________________________________________________________________________________________________
($2002 Chained Millions)
_________________________________________________
2003 2004 2005 2006
_________________________________________________
Goods Producing Industries 135,581 138,377 140,476 137,928
Primary 7,748 8,087 8,328 8,306
Utilities 9,180 9,525 9,992 9,720
Construction 23,088 23,468 25,052 26,446
Manufacturing(1) 95,557 96,603 96,264 92,480
Services Producing Industries 311,791 326,926 337,062 350,443
Wholesale Trade 26,251 27,368 29,025 31,059
Retail Trade 24,243 25,103 25,817 26,901
Transportation and Warehousing 17,121 17,568 18,064 18,415
Information and Cultural (incl. Telecommunications) 16,656 17,961 18,654 19,223
Finance, Insurance, Real Estate, Rental and Leasing 95,465 98,501 101,575 105,690
Professional and Administrative Services 37,027 38,334 39,727 41,529
Education 20,226 20,916 21,792 22,273
Health Care and Social Services 26,693 27,445 27,844 28,944
Arts, Entertainment and Recreation 4,354 4,618 4,608 4,754
Accommodation and Food 9,218 9,428 9,538 9,858
Other Services 10,976 11,340 11,514 11,774
Public Administration 23,564 24,065 24,519 25,509
Total Production 447,367 460,425 472,586 483,505
================================================================================================================
(1) See Table 7 for detailed manufacturing industries.
Sources: Statistics Canada and Ontario Ministry of Finance.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Growth in Real Gross Domestic Product Table 6
by Industry at Basic Prices, 2003-2006
________________________________________________________________________________________________________________
(Per Cent Change)
__________________________________________
2003 2004 2005 2006
__________________________________________
Goods Producing Industries 0.5 2.1 1.5 (1.8)
Primary 0.3 4.4 3.0 (0.3)
Utilities (0.6) 3.7 4.9 (2.7)
Construction 3.3 1.6 6.8 5.6
Manufacturing(1) (0.1) 1.1 (0.4) (3.9)
Services Producing Industries 2.1 4.9 3.1 4.0
Wholesale Trade 5.1 4.3 6.1 7.0
Retail Trade 4.0 3.5 2.8 4.2
Transportation and Warehousing (1.5) 2.6 2.8 1.9
Information and Cultural (incl. Telecommunications) (0.4) 7.8 3.9 3.1
Finance, Insurance, Real Estate, Rental and Leasing 1.7 3.2 3.1 4.1
Professional and Administrative Services 3.5 3.5 3.6 4.5
Education 1.7 3.4 4.2 2.2
Health Care and Social Services 3.6 2.8 1.5 3.9
Arts, Entertainment and Recreation 0.7 6.1 (0.2) 3.2
Accommodation and Food (7.8) 2.3 1.2 3.4
Other Services 1.7 3.3 1.5 2.3
Public Administration 4.6 2.1 1.9 4.0
Total Production 1.6 2.9 2.6 2.3
================================================================================================================
(1) See Table 8 for detailed manufacturing industries.
Sources: Statistics Canada and Ontario Ministry of Finance.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Real Gross Domestic Product at Basic Prices in Table 7
Selected Manufacturing Industries, 2003-2006
________________________________________________________________________________________________________________
($2002 Chained Millions)
___________________________________________
2003 2004 2005 2006
___________________________________________
Manufacturing 95,557 96,603 96,264 92,480
Food, Beverage and Tobacco Products 10,194 10,457 10,668 10,732
Textile, Clothing and Leather Products 1,845 1,776 1,594 1,456
Wood Products and Furniture 5,059 5,036 4,977 4,854
Paper Products and Printing 7,074 6,970 7,005 6,091
Chemical and Petroleum Products 9,840 9,676 9,430 9,136
Plastic and Rubber Products 5,821 5,624 5,638 5,474
Primary Metal and Fabricated Metal Products 13,638 13,034 12,982 12,061
Machinery 6,780 6,578 6,953 6,504
Electrical and Electronic Products 5,580 5,889 5,849 6,017
Transportation Equipment 25,446 27,485 26,968 25,873
Other Manufacturing 4,403 4,455 4,497 4,623
================================================================================================================
Sources: Statistics Canada and Ontario Ministry of Finance.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Growth in Real Gross Domestic Product at Basic Prices Table 8
in Selected Manufacturing Industries, 2003-2006
________________________________________________________________________________________________________________
(Per Cent Change)
___________________________________________
2003 2004 2005 2006
___________________________________________
Manufacturing (0.1) 1.1 (0.4) (3.9)
Food, Beverage and Tobacco Products (0.8) 2.6 2.0 0.6
Textile, Clothing and Leather Products (8.6) (3.7) (10.2) (8.7)
Wood Products and Furniture (6.1) (0.4) (1.2) (2.5)
Paper Products and Printing (2.2) (1.5) 0.5 (13.0)
Chemical and Petroleum Products 1.6 (1.7) (2.5) (3.1)
Plastic and Rubber Products (0.4) (3.4) 0.2 (2.9)
Primary Metal and Fabricated Metal Products 0.0 (4.4) (0.4) (7.1)
Machinery (2.3) (3.0) 5.7 (6.5)
Electrical and Electronic Products (6.0) 5.5 (0.7) 2.9
Transportation Equipment 4.4 8.0 (1.9) (4.1)
Other Manufacturing 2.0 1.2 0.9 2.8
================================================================================================================
Sources: Statistics Canada and Ontario Ministry of Finance.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Housing Market Indicators, 2003-2006 Table 9
________________________________________________________________________________________________________________
2003 2004 2005 2006
____________________________________________________
New Housing Market
Residential Construction, Current $ Millions 30,542 33,590 35,635 37,677
Per Cent Change 8.0 10.0 6.1 5.7
Real Residential Construction ($1997 Millions) 29,024 30,070 30,622 30,944
Per Cent Change 2.6 3.6 1.8 1.1
Housing Starts (Units) 85,180 85,114 78,795 73,417
Per Cent Change 1.9 (0.1) (7.4) (6.8)
Of which: Single-detached, urban areas (Units) 40,849 41,101 33,655 30,369
Per Cent Change (9.2) 0.6 (18.1) (9.8)
Multiple, urban areas (Units) 40,082 38,795 39,522 37,411
Per Cent Change 15.7 (3.2) 1.9 (5.3)
New Housing Price Index (1997 = 100) 120.0 126.7 132.6 137.5
Per Cent Change 4.4 5.6 4.6 3.7
Resale Market
Home Resales (Units) 184,457 197,353 197,007 194,793
Per Cent Change 3.6 7.0 (0.2) (1.1)
Average Resale Price ($) 226,824 245,230 263,042 278,455
Per Cent Change 7.5 8.1 7.3 5.9
================================================================================================================
Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Canadian Real Estate Association and
Ontario Ministry of Finance.
________________________________________________________________________________________________________________
================================================================================================================
Selected Financial Indicators, 1993-2006 Table 10
________________________________________________________________________________________________________________
(Per Cent)
_______________________________________________________
1993 1994 1995 1996 1997 1998 1999
_______________________________________________________
Interest Rates
Bank Rate 5.1 5.8 7.1 4.5 3.5 5.1 4.9
Prime Rate 5.9 6.9 8.6 6.1 5.0 6.6 6.4
10-Year Government Bonds 7.2 8.4 8.1 7.2 6.1 5.3 5.6
Three-month T-Bills 4.8 5.5 6.9 4.2 3.3 4.7 4.7
Mortgage Rates
5-Year Rate 8.8 9.5 9.2 7.9 7.1 6.9 7.6
1-Year Rate 6.9 7.8 8.4 6.2 5.5 6.5 6.8
Canadian Household Debt Burden(1)
Consumer 21.3 22.7 23.5 24.6 26.2 27.7 28.3
Mortgage 62.2 65.3 65.4 67.5 68.8 69.4 69.0
Total 83.5 88.0 88.9 92.1 95.0 97.1 97.3
________________________________________________________________________________________________________________
Table 10 (continued) (Per Cent)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_______________________________________________________
Interest Rates
Bank Rate 5.8 4.3 2.7 3.2 2.5 2.9 4.3
Prime Rate 7.3 5.8 4.2 4.7 4.0 4.4 5.8
10-Year Government Bonds 5.9 5.5 5.3 4.8 4.6 4.1 4.2
Three-month T-Bills 5.5 3.8 2.6 2.9 2.2 2.7 4.0
Mortgage Rates
5-Year Rate 8.3 7.4 7.0 6.4 6.2 6.0 6.7
1-Year Rate 7.9 6.1 5.2 4.8 4.6 5.1 6.3
Canadian Household Debt Burden(1)
Consumer 29.7 30.3 31.1 32.7 34.4 36.9 38.1
Mortgage 67.4 67.0 69.3 72.2 75.2 79.2 82.4
Total 97.1 97.3 100.4 104.9 109.7 116.1 120.6
================================================================================================================
(1) Household debt as a share of personal disposable income.
Note: All data are annual averages.
Sources: Statistics Canada, Finance Canada and Bank of Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario and the G7, Real Gross Domestic Product Growth, 1993-2006 Table 11
________________________________________________________________________________________________________________
(Per Cent)
_______________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_______________________________________________________________
Ontario 1.0 5.9 3.5 1.1 4.5 4.8 7.5
Canada 2.3 4.8 2.8 1.6 4.2 4.1 5.5
France (0.9) 2.3 2.1 1.1 2.3 3.5 3.3
Germany (0.8) 2.7 1.9 1.0 1.8 2.0 2.0
Italy (0.9) 2.2 2.8 0.7 1.9 1.4 1.9
Japan 0.2 1.1 2.0 2.7 1.6 (2.0) (0.1)
United Kingdom 2.3 4.3 2.9 2.8 3.1 3.4 3.0
United States 2.7 4.0 2.5 3.7 4.5 4.2 4.5
________________________________________________________________________________________________________________
Table 11 (continued) (Per Cent)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_______________________________________________________________
Ontario 5.9 1.8 3.1 1.4 2.5 2.9 2.1
Canada 5.2 1.8 2.9 1.9 3.1 3.1 2.8
France 3.9 1.8 1.0 1.1 2.5 1.7 2.0
Germany 3.2 1.2 0.0 (0.2) 1.1 0.8 2.9
Italy 3.6 1.8 0.3 0.0 1.2 0.1 1.9
Japan 2.9 0.2 0.3 1.4 2.7 1.9 2.2
United Kingdom 3.8 2.4 2.1 2.8 3.3 1.8 2.8
United States 3.7 0.8 1.6 2.5 3.6 3.1 2.9
================================================================================================================
Sources: OECD, U.S. Bureau of Economic Analysis and Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario and the G7, Employment Growth, 1993-2006 Table 12
________________________________________________________________________________________________________________
(Per Cent)
_______________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_______________________________________________________________
Ontario 0.1 1.5 1.7 1.3 2.4 3.1 3.4
Canada 0.5 2.1 1.8 0.9 2.1 2.5 2.6
France (0.7) (1.0) 1.4 0.6 (0.4) 1.1 0.9
Germany (1.2) (0.7) 0.0 (0.4) (0.4) 1.4 (0.3)
Italy (3.5) (1.6) (0.7) 0.5 0.5 1.0 1.2
Japan 0.2 0.0 0.1 0.4 1.2 (0.7) (0.8)
United Kingdom (1.4) 0.6 1.0 0.9 1.6 0.9 1.2
United States 1.5 2.3 1.5 1.4 2.2 1.5 1.5
________________________________________________________________________________________________________________
Table 12 (continued) (Per Cent)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_______________________________________________________________
Ontario 3.2 1.9 1.8 3.0 1.7 1.3 1.5
Canada 2.5 1.2 2.4 2.4 1.8 1.4 1.9
France 2.6 2.1 0.8 3.1 0.4 0.6 0.9
Germany 0.5 0.3 (0.9) (1.1) 0.0 1.7 2.3
Italy 1.7 1.9 1.3 1.0 1.2 0.7 1.9
Japan (0.3) (0.5) (1.3) (0.3) 0.3 0.4 0.4
United Kingdom 1.3 0.9 0.5 1.0 0.7 0.6 0.5
United States 2.5 0.0 (0.3) 0.9 1.1 1.8 1.9
================================================================================================================
Sources: OECD, U.S. Bureau of Labor Statistics and Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario and the G7, Unemployment Rates, 1993-2006 Table 13
________________________________________________________________________________________________________________
(Per Cent)
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_______________________________________________________________
Ontario 10.9 9.6 8.7 9.0 8.4 7.2 6.3
Canada 11.4 10.4 9.5 9.6 9.1 8.3 7.6
France 11.1 11.7 11.1 11.6 11.5 11.1 10.5
Germany 7.6 8.2 8.0 8.7 9.4 9.0 8.2
Italy 9.8 10.6 11.2 11.2 11.3 11.4 10.9
Japan 2.5 2.9 3.1 3.4 3.4 4.1 4.7
United Kingdom 10.2 9.3 8.5 7.9 6.8 6.1 5.9
United States 6.9 6.1 5.6 5.4 4.9 4.5 4.2
________________________________________________________________________________________________________________
Table 13 (continued) (Per Cent)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_______________________________________________________________
Ontario 5.8 6.3 7.1 6.9 6.8 6.6 6.3
Canada 6.8 7.2 7.7 7.6 7.2 6.8 6.3
France 9.1 8.4 8.7 9.5 9.6 9.7 9.5
Germany 7.5 7.6 8.3 9.3 9.8 10.6 9.8
Italy 10.1 9.1 8.6 8.4 8.0 7.7 6.8
Japan 4.7 5.0 5.4 5.3 4.7 4.4 4.1
United Kingdom 5.3 5.0 5.1 4.9 4.7 4.8 5.3
United States 4.0 4.7 5.8 6.0 5.5 5.1 4.6
================================================================================================================
Note: Labour market data are subject to differences in definitions across countries and to many series breaks,
though the latter are often of a minor nature.
Sources: OECD, U.S. Bureau of Labor Statistics and Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario and the G7, CPI Inflation Rates, 1993-2006 Table 14
________________________________________________________________________________________________________________
(Per Cent)
_______________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_______________________________________________________________
Ontario 1.8 0.0 2.5 1.6 1.8 0.9 2.0
Canada 1.9 0.1 2.2 1.5 1.7 1.0 1.8
France 2.1 1.7 1.8 2.0 1.2 0.6 0.5
Germany 4.4 2.7 1.7 1.4 1.9 0.9 0.6
Italy 4.6 4.1 5.2 4.0 2.0 2.0 1.7
Japan 1.3 0.7 (0.1) 0.1 1.8 0.7 (0.3)
United Kingdom 2.5 2.0 2.7 2.5 1.8 1.6 1.3
United States 3.0 2.6 2.8 3.0 2.3 1.6 2.2
________________________________________________________________________________________________________________
Table 14 (continued) (Per Cent)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_______________________________________________________________
Ontario 2.9 3.0 2.0 2.7 1.9 2.2 1.8
Canada 2.7 2.5 2.2 2.8 1.8 2.2 2.0
France 1.7 1.6 1.9 2.1 2.1 1.7 1.7
Germany 1.5 2.0 1.4 1.0 1.7 2.0 1.7
Italy 2.5 2.8 2.5 2.7 2.2 2.0 2.1
Japan (0.7) (0.8) (0.9) (0.2) 0.0 (0.3) 0.2
United Kingdom 0.8 1.2 1.3 1.4 1.3 2.0 2.3
United States 3.4 2.8 1.6 2.3 2.7 3.4 3.2
================================================================================================================
Sources: OECD, U.S. Bureau of Labor Statistics and Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
G7, Exchange Rates, 1993-2006 Table 15
________________________________________________________________________________________________________________
(Foreign Currency per Canadian Dollar)
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
________________________________________________________________________
Euro(1) - - - - - - 0.631
France 4.390 4.066 3.637 3.752 4.211 3.968 4.139
Germany 1.282 1.188 1.044 1.104 1.251 1.183 1.234
Italy 1,219.8 1,180.7 1,186.9 1,131.6 1,228.5 1,168.2 1,222.5
Japan 86.2 74.8 68.5 79.8 87.3 87.8 76.3
United Kingdom 0.517 0.478 0.462 0.470 0.441 0.407 0.416
United States 0.775 0.732 0.729 0.733 0.722 0.674 0.673
________________________________________________________________________________________________________________
Table 15 (continued) (Foreign Currency per Canadian Dollar)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
________________________________________________________________________
Euro(1) 0.730 0.721 0.674 0.632 0.618 0.663 0.702
France 4.787 4.730 - - - - -
Germany 1.427 1.410 - - - - -
Italy 1,412.4 1,396.6 - - - - -
Japan 72.6 78.4 79.7 82.7 83.1 90.6 102.5
United Kingdom 0.444 0.448 0.424 0.437 0.419 0.453 0.479
United States 0.673 0.646 0.637 0.714 0.768 0.825 0.882
================================================================================================================
(1) Introduced January 4, 1999.
Note: All data are annual averages.
Source: Bank of Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, International Merchandise Exports(1) by Major Commodity(2), 2006 Table 16
________________________________________________________________________________________________________________
Value ($ Millions) Per Cent of Total
_____________________________________________
Motor Vehicles, Parts and Accessories 67,808 38.2
Machinery and Mechanical Appliances 18,433 10.4
Electrical Machinery and Equipment 10,552 5.9
Non-ferrous Metals and Allied Products 9,875 5.6
Plastics and Plastic Articles 7,087 4.0
Precious Metals, Stones and Coins 6,491 3.7
Prepared Foodstuffs, Beverages and Tobacco 4,905 2.8
Furniture and Fixtures, Signs, Prefabricated Buildings 4,635 2.6
Pulp; Paper and Allied Products 4,510 2.5
Iron and Steel 3,949 2.2
Other Chemical Products 3,725 2.1
Mineral Products 3,550 2.0
Pharmaceutical Products 3,487 2.0
Articles of Iron and Steel 3,214 1.8
Scientific, Professional and Photo Equipment, Clocks 2,511 1.4
Wood and Wood Products 2,432 1.4
Inorganic Chemicals; Chemical Elements and Compounds 1,907 1.1
Rubber and Rubber Articles 1,888 1.1
Vegetable Products; Fats and Oils 1,864 1.1
Aircraft, Spacecraft and Parts 1,670 0.9
Organic Chemicals 1,618 0.9
Live Animals; Animal Products 1,384 0.8
Articles of Stone, Cement, Ceramic and Glass 1,296 0.7
Textiles and Textile Articles 1,286 0.7
Printed Matter 696 0.4
Hides, Leather, Travel Goods and Furs 456 0.3
Railway, Rolling Stock and Parts 387 0.2
Apparel and Clothing Accessories 357 0.2
Toys, Games and Sports Equipment 324 0.2
Other Textile and Clothing Articles 261 0.1
Miscellaneous Articles; Works of Art 215 0.1
Ships, Boats and Floating Structures 63 0.0
Headgear, Umbrellas, Artificial Flowers 32 0.0
Footwear 20 0.0
Other Commodities(3) 4,479 2.5
Total Exports 177,365 100.0
================================================================================================================
(1) Domestic exports exclude re-exports.
(2) Ontario Ministry of Economic Development and Trade definition of product groupings based on two-digit
Harmonized System Codes. Data are customs based.
(3) Other Commodities includes special transactions.
Source: Industry Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, International Merchandise Imports by Major Commodity(1), 2006 Table 17
________________________________________________________________________________________________________________
Value ($ Millions) Per Cent of Total
_____________________________________________
Motor Vehicles, Parts and Accessories 52,026 22.3
Machinery and Mechanical Appliances 40,023 17.1
Electrical Machinery and Equipment 25,935 11.1
Plastics and Plastic Articles 9,414 4.0
Scientific, Professional and Photo Equipment, Clocks 8,156 3.5
Other Chemical Products 8,079 3.5
Non-ferrous Metals and Allied Products 8,008 3.4
Pharmaceutical Products 7,238 3.1
Prepared Foodstuffs, Beverages and Tobacco 6,566 2.8
Mineral Products 6,017 2.6
Iron and Steel 5,206 2.2
Organic Chemicals 4,910 2.1
Vegetable Products; Fats and Oils 4,575 2.0
Articles of Iron and Steel 4,429 1.9
Precious Metals, Stones and Coins 4,377 1.9
Furniture and Fixtures, Signs, Prefabricated Buildings 4,333 1.9
Pulp; Paper and Allied Products 4,277 1.8
Rubber and Rubber Articles 3,380 1.4
Articles of Stone, Cement, Ceramic and Glass 2,827 1.2
Apparel and Clothing Accessories 2,820 1.2
Printed Matter 2,507 1.1
Toys, Games and Sports Equipment 2,281 1.0
Textiles and Textile Articles 2,268 1.0
Aircraft, Spacecraft and Parts 1,885 0.8
Live Animals; Animal Products 1,774 0.8
Wood and Wood Products 1,385 0.6
Inorganic Chemicals; Chemical Elements and Compounds 1,155 0.5
Railway, Rolling Stock and Parts 862 0.4
Hides, Leather, Travel Goods and Furs 760 0.3
Miscellaneous Articles; Works of Art 723 0.3
Footwear 699 0.3
Other Textile and Clothing Articles 539 0.2
Ships, Boats and Floating Structures 359 0.2
Headgear, Umbrellas, Artificial Flowers 164 0.1
Other Commodities(2) 3,628 1.6
Total Imports 233,586 100.0
================================================================================================================
(1) Ontario Ministry of Economic Development and Trade definition of product groupings based on two-digit
Harmonized System Codes. Data are customs based.
(2) Other Commodities includes trans-shipments from one province to another through a foreign jurisdiction and
special transactions.
Source: Industry Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, International Merchandise Trade(1) by Major Region, 2006 Table 18
________________________________________________________________________________________________________________
Exports Per Cent Imports Per Cent
($ Millions) of Total ($ Millions) of Total
___________________________________________________________________
United States 153,459 86.5 152,341 65.2
European Union 10,964 6.2 19,931 8.5
Germany 954 0.5 5,150 2.2
United Kingdom 5,878 3.3 3,360 1.4
Italy 343 0.2 2,284 1.0
France 1,000 0.6 1,928 0.8
Ireland 146 0.1 1,701 0.7
Other Europe 2,615 1.5 2,366 1.0
Asia Pacific 5,527 3.1 38,822 16.6
China(2) 1,840 1.0 18,020 7.7
Japan 1,085 0.6 8,501 3.6
Latin America 2,953 1.7 16,448 7.0
Mexico 1,967 1.1 12,176 5.2
Caribbean 435 0.2 189 0.1
Middle East 822 0.5 976 0.4
Africa 590 0.3 699 0.3
Re-imports (Canada) - 0.0 1,814 0.8
Total 177,365 100.0 233,586 100.0
================================================================================================================
(1) Data are customs based and do not include re-exports.
(2) Chinese economic area: China, Hong Kong and Mongolia.
Source: Industry Canada.
________________________________________________________________________________________________________________
================================================================================================================
Canada, International Merchandise Trade(1) by Major Region, 2006 Table 19
________________________________________________________________________________________________________________
Exports Per Cent Imports Per Cent
($ Millions) of Total ($ Millions) of Total
_________________________________________________________________
United States 336,707 81.9 217,638 54.9
European Union 26,405 6.4 49,278 12.4
Germany 3,482 0.8 11,128 2.8
United Kingdom 9,219 2.2 10,847 2.7
Italy 1,806 0.4 4,918 1.2
France 2,417 0.6 5,186 1.3
Ireland 347 0.1 2,556 0.6
Other Europe 4,162 1.0 9,382 2.4
Asia Pacific 29,569 7.2 74,122 18.7
China(2) 8,500 2.1 35,194 8.9
Japan 9,221 2.2 15,327 3.9
Latin America 7,905 1.9 27,317 6.9
Mexico 4,031 1.0 16,009 4.0
Caribbean 1,244 0.3 1,776 0.4
Middle East 2,966 0.7 5,330 1.3
Africa 2,347 0.6 8,422 2.1
Re-imports (Canada) - 0.0 3,362 0.8
Total 411,305 100.0 396,626 100.0
================================================================================================================
(1) Data are customs based and do not include re-exports.
(2) Chinese economic area: China, Hong Kong and Mongolia.
Source: Industry Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Selected Demographic Characteristics, 1991-2007(1) Table 20
________________________________________________________________________________________________________________
Intercensal
Estimates Postcensal Estimates(2)
__________________________________________________________________________________________
1991 1996 2001 2002 2003 2004 2005 2006 2007
__________________________________________________________________________________________
Total Population 10,428 11,083 11,898 12,102 12,263 12,420 12,565 12,705 12,804
(000s)
Annual Average 2.0 1.2 1.4 1.7 1.3 1.3 1.2 1.1 0.8
Growth Over
Preceding Year
Shown (%)
Median Age (Years) 33.3 35.0 36.7 37.0 37.4 37.7 37.9 38.2 NA
Age Group Shares (%)
0-4 7.0 6.8 6.0 5.8 5.6 5.5 5.4 5.3 NA
5-14 13.1 13.5 13.5 13.4 13.2 13.0 12.8 12.5 NA
15-24 14.5 13.2 13.4 13.4 13.5 13.5 13.6 13.6 NA
25-44 34.2 32.9 31.5 31.3 30.9 30.6 30.3 29.9 NA
45-64 19.6 21.3 23.2 23.6 24.1 24.6 25.2 25.8 NA
65-74 7.0 7.3 7.0 6.9 6.9 6.8 6.8 6.8 NA
75+ 4.6 5.0 5.6 5.7 5.8 5.9 6.0 6.1 NA
Total Fertility 1.7 1.6 1.5 1.5 1.5 1.5 1.5 NA NA
Rate(3)
Life Expectancy at Birth (Years)(3)
Female 80.8 81.3 82.2 82.2 82.4 82.7 NA NA NA
Male 75.0 75.9 77.5 77.7 77.8 78.3 NA NA NA
Families (000s)(4) 2,727 2,933 3,191 NA NA NA NA 3,422 NA
Households (000s)(4) 3,638 3,925 4,219 NA NA NA NA 4,555 NA
================================================================================================================
(1) Population figures are for July 1 (Census year).
(2) Estimates by Statistics Canada based on the 2001 Census adjusted for net Census undercoverage.
(3) Calendar-year data.
(4) Families and households are Census data.
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Components of Population Growth, 1997-98 to 2006-07(1) Table 21
________________________________________________________________________________________________________________
(Thousands)
_________________________________________________________________
1997-98 1998-99 1999-00 2000-01 2001-02
_________________________________________________________________
Population at Beginning of Period 11,228 11,367 11,506 11,685 11,898
Births 133 131 131 128 129
Deaths 80 80 81 81 81
Immigrants 106 92 117 150 153
Net Emigrants(2) 26 24 24 23 19
Net Change in Non-permanent Residents (3) 6 16 21 17
Interprovincial Arrivals 75 73 79 75 70
Interprovincial Departures 66 56 57 56 65
Population Growth During Period 139 139 179 212 204
Population at End of Period(3) 11,367 11,506 11,685 11,898 12,102
Population Growth (%) 1.2 1.2 1.6 1.8 1.7
________________________________________________________________________________________________________________
Table 21 (continued) (Thousands)
________________________________________________________________________________________________________________
2002-03 2003-04 2004-05 2005-06 2006-07
_________________________________________________________________
Population at Beginning of Period 12,102 12,263 12,420 12,565 12,705
Births 129 133 133 134 134
Deaths 83 84 84 87 90
Immigrants 110 128 130 133 115
Net Emigrants(2) 18 17 20 20 21
Net Change in Non-permanent Residents 22 5 (1) (2) (5)
Interprovincial Arrivals 64 57 59 56 71
Interprovincial Departures 64 64 71 73 108
Population Growth During Period 161 158 145 140 99
Population at End of Period(3) 12,263 12,420 12,565 12,705 12,804
Population Growth (%) 1.3 1.3 1.2 1.1 0.8
================================================================================================================
(1) Data are from July 1 to June 30 (Census year).
(2) Net Emigrants = Emigrants plus net temporary emigrants minus returning emigrants.
(3) The sum of the components does not equal the total change in population due to residual deviation.
Source: Statistics Canada. Estimates based on the 2001 Census adjusted for net Census undercoverage.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Labour Force, 1993-2006 Table 22
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
____________________________________________________________________
Labour Force (000s) 5,544 5,548 5,589 5,680 5,776 5,877 6,018
Annual Labour Force Growth (%) 0.3 0.1 0.7 1.6 1.7 1.7 2.4
Participation Rate (%)
Male 74.3 73.4 72.7 72.6 72.8 72.5 73.1
Female 59.4 58.8 58.6 58.9 59.0 59.6 60.3
Share of Labour Force (%)
Youth (15-24) 17.3 16.8 16.4 16.2 15.9 15.8 16.1
Older Workers (45+) 28.1 28.8 29.1 29.5 30.2 30.7 31.4
________________________________________________________________________________________________________________
Table 22 (continued)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
____________________________________________________________________
Labour Force (000s) 6,173 6,327 6,494 6,676 6,775 6,849 6,927
Annual Labour Force Growth (%) 2.6 2.5 2.6 2.8 1.5 1.1 1.1
Participation Rate (%)
Male 73.3 73.4 73.6 74.3 74.1 73.5 72.8
Female 61.0 61.4 62.0 63.0 63.0 62.7 62.9
Share of Labour Force (%)
Youth (15-24) 16.4 16.3 16.4 16.3 16.2 15.9 15.9
Older Workers (45+) 32.0 32.6 33.4 34.7 35.4 36.1 37.1
================================================================================================================
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Employment, 1993-2006 Table 23
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
________________________________________________________
Total Employment (000s) 4,938 5,014 5,100 5,167 5,291 5,453 5,637
Male 2,673 2,714 2,761 2,791 2,870 2,936 3,035
Female 2,265 2,300 2,339 2,376 2,421 2,518 2,602
Annual Employment Growth (%) 0.1 1.5 1.7 1.3 2.4 3.1 3.4
Net Job Creation (000s) 5 76 86 67 124 162 183
Private-sector Employment (000s) 3,200 3,262 3,375 3,440 3,508 3,649 3,784
Public-sector Employment (000s) 1,027 1,028 1,003 977 938 938 962
Self-employment (000s) 711 724 723 750 845 867 891
Manufacturing Employment
(% of total) 16.6 16.8 17.2 17.6 17.7 18.0 18.4
Services Employment
(% of total) 73.7 73.8 73.6 73.5 73.5 73.3 72.8
Part-time (% of total) 19.5 19.0 18.7 19.2 19.2 18.7 18.0
Average Hours Worked Per Week(1) 37.2 37.6 37.3 37.6 37.8 37.8 38.0
________________________________________________________________________________________________________________
Table 23 (continued)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
________________________________________________________
Total Employment (000s) 5,817 5,926 6,031 6,213 6,317 6,398 6,493
Male 3,125 3,167 3,209 3,301 3,349 3,390 3,418
Female 2,692 2,759 2,822 2,912 2,967 3,008 3,074
Annual Employment Growth (%) 3.2 1.9 1.8 3.0 1.7 1.3 1.5
Net Job Creation (000s) 180 109 105 182 103 81 95
Private-sector Employment (000s) 3,930 4,052 4,116 4,249 4,278 4,330 4,388
Public-sector Employment (000s) 994 1,002 1,038 1,050 1,107 1,140 1,170
Self-employment (000s) 894 873 878 914 932 928 935
Manufacturing Employment
(% of total) 18.5 18.0 18.1 17.6 17.4 16.6 15.5
Services Employment
(% of total) 72.9 73.4 73.4 73.8 74.1 74.4 75.3
Part-time (% of total) 18.0 17.8 18.3 18.5 18.1 18.1 17.7
Average Hours Worked Per Week(1) 38.0 37.5 37.3 36.6 37.1 37.3 36.9
================================================================================================================
(1) Average actual hours worked per week at all jobs, excluding persons not at work, in reference week.
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Unemployment, 1993-2006 Table 24
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_________________________________________________________________
Total Unemployment (000s) 605 535 489 513 485 424 382
Unemployment Rate (%) 10.9 9.6 8.7 9.0 8.4 7.2 6.3
Male 11.5 10.0 8.9 9.0 8.1 7.2 6.2
Female 10.2 9.2 8.6 9.1 8.7 7.3 6.5
Toronto CMA(1) 11.3 10.4 8.6 9.1 7.9 7.0 6.1
Northern Ontario 12.7 11.7 10.0 10.7 10.4 11.1 9.1
Youth (15-24) 17.7 15.7 14.7 14.9 16.4 14.5 13.2
Older Workers (45+) 7.7 7.1 6.5 6.4 5.9 5.3 4.2
Share of Total Unemployment (%)
Long-term Unemployed (27 weeks+) 33.5 32.6 29.5 28.2 25.5 21.9 19.1
Youth (15-24) 28.1 27.5 27.7 26.8 31.0 31.6 33.7
Older Workers (45+) 19.7 21.2 21.6 20.8 21.4 22.6 20.8
Average Duration (weeks)(2) 26.9 27.7 25.9 24.8 26.5 23.2 21.3
Youth (15-24) 18.3 17.9 16.3 15.4 13.8 12.8 11.6
Older Workers (45+) 34.0 34.9 33.4 31.0 42.2 39.0 34.2
________________________________________________________________________________________________________________
Table 24 (continued)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_________________________________________________________________
Total Unemployment (000s) 356 401 462 463 459 451 435
Unemployment Rate (%) 5.8 6.3 7.1 6.9 6.8 6.6 6.3
Male 5.6 6.5 7.4 7.1 6.9 6.6 6.4
Female 6.0 6.2 6.8 6.8 6.6 6.5 6.2
Toronto CMA(1) 5.5 6.3 7.4 7.7 7.5 7.0 6.6
Northern Ontario 8.3 8.0 8.1 7.4 7.8 7.0 7.4
Youth (15-24) 11.9 12.5 13.9 14.4 14.1 13.9 13.1
Older Workers (45+) 4.0 4.4 4.7 4.7 4.5 4.7 4.3
Share of Total Unemployment (%)
Long-term Unemployed (27 weeks+) 15.4 12.8 15.5 16.2 15.6 15.1 14.3
Youth (15-24) 33.7 32.2 32.1 33.9 33.9 33.5 33.3
Older Workers (45+) 22.4 22.9 22.0 23.5 23.4 25.9 25.4
Average Duration (weeks)(2) 17.7 15.3 16.3 17.0 16.1 16.1 15.8
Youth (15-24) 9.8 8.6 9.4 9.4 8.8 8.7 8.7
Older Workers (45+) 28.4 25.6 24.4 27.2 24.3 23.9 23.7
================================================================================================================
(1) CMA is Census Metropolitan Area. Toronto CMA includes the city of Toronto; the regions of York, Peel and
Halton (excluding Burlington); Uxbridge, Pickering, Ajax, Mono, Orangeville, New Tecumseth and Bradford West
Gwillimbury.
(2) Prior to 1997, unemployment of 100 or more weeks was recorded as 99 due to data processing limitations.
This restriction was removed for data after 1996.
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Employment Insurance (EI) and Social Assistance, 1993-2006 Table 25
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
________________________________________________________________________
EI Regular Beneficiaries (000s) 294 228 181 180 151 131 110
EI Maximum Annual Insurable Earnings 38,740 40,560 42,380 39,000 39,000 39,000 39,000
($)
EI Maximum Weekly Benefit ($) 447/425(1) 445/429(1) 448 465/413(1) 413 413 413
EI Premium Rate
Employer 4.20 4.30 4.20 4.13 4.06 3.78 3.57
($/$100 Insurable Earnings)
Employee 3.00 3.07 3.00 2.95 2.90 2.70 2.55
($/$100 Insurable Earnings)
EI Total Benefits Paid ($ millions)(2) 5,406 4,511 3,796 3,653 3,436 3,141 3,051
EI Contributions ($ millions)(2) 7,567 8,067 7,929 7,582 8,173 7,679 7,614
Social Assistance Caseload (000s)(4) 660 673 660 599 568 529 479
________________________________________________________________________________________________________________
Table 25 (continued)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
________________________________________________________________________
EI Regular Beneficiaries (000s) 101 122 136 142 136 132 129
EI Maximum Annual Insurable Earnings 39,000 39,000 39,000 39,000 39,000 39,000 39,000
($)
EI Maximum Weekly Benefit ($) 413 413 413 413 413 413 413
EI Premium Rate
Employer 3.36 3.15 3.08 2.94 2.77 2.73 2.62
($/$100 Insurable Earnings)
Employee 2.40 2.25 2.20 2.10 1.98 1.95 1.87
($/$100 Insurable Earnings)
EI Total Benefits Paid 2,787 3,524 4,328 4,342 4,429 4,325 4,421
($ millions)(2)
EI Contributions ($ millions)(2) 7,671 7,477 7,384 7,282 6,913 7,108 6,332(3)
Social Assistance Caseload (000s)(4) 436 408 411 413 418 431 443
================================================================================================================
(1) EI maximum weekly benefits for 1993, 1994 and 1996 were changed in-year.
(2) EI benefits are paid on a cash basis; contributions are paid on an accrual basis.
(3) EI contributions for 2006 are Ontario Ministry of Finance estimates.
(4) The number of social assistance cases from 1998 to 2006 includes recipients of the Ontario Works program,
the Ontario Disability Support Program, Temporary Care Assistance and the Assistance for Children with Severe
Disabilities program. The Ontario Works Act was proclaimed in May 1998 and replaced the General Welfare Act.
The Ontario Disability Support Program Act was proclaimed in June 1998.
Sources: Statistics Canada, Human Resources and Social Development Canada, Department of Finance Canada,
Ontario Ministry of Finance and Ontario Ministry of Community and Social Services.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Labour Compensation, 1993-2006 Table 26
________________________________________________________________________________________________________________
1993 1994 1995 1996 1997 1998 1999
_________________________________________________________________
Average Weekly Earnings ($)(1) 612.33 628.16 634.17 649.55 663.73 672.67 683.70
Increase (%) 2.3 2.6 1.0 2.4 2.2 1.3 1.6
CPI Inflation (%) 1.8 0.0 2.5 1.6 1.8 0.9 2.0
AWE Increase Less CPI Inflation (%) 0.5 2.6 (1.5) 0.8 0.4 0.4 (0.4)
AWE - Manufacturing ($) 739.20 761.95 770.80 794.09 821.28 841.78 852.13
Increase (%) 3.2 3.1 1.2 3.0 3.4 2.5 1.2
Increase Less CPI Inflation (%) 1.4 3.1 (1.3) 1.4 1.6 1.6 (0.8)
Wage Settlement Increases (%)(2)
All Sectors 1.0 0.4 1.0 1.1 1.6 1.6 2.1
Public 0.5 0.1 0.2 0.3 0.7 1.3 1.4
Private 1.9 1.1 1.7 2.2 3.3 2.1 3.1
Person Days Lost Due to Strikes and
Lockouts (000s) 371 488 477 1,915 1,904 1,061 651
Minimum Wage at Year-end ($/hour) 6.35 6.70 6.85 6.85 6.85 6.85 6.85
________________________________________________________________________________________________________________
Table 26 (continued)
________________________________________________________________________________________________________________
2000 2001 2002 2003 2004 2005 2006
_________________________________________________________________
Average Weekly Earnings ($)(1) 700.12 709.37 722.97 731.07 743.43 764.52 782.02
Increase (%) 2.4 1.3 1.9 1.1 1.7 2.8 2.3
CPI Inflation (%) 2.9 3.0 2.0 2.7 1.9 2.2 1.8
AWE Increase Less CPI Inflation (%) (0.5) (1.7) (0.1) (1.6) (0.2) 0.6 0.5
AWE - Manufacturing ($) 869.40 884.38 909.22 918.82 935.25 955.16 970.15
Increase (%) 2.0 1.7 2.8 1.1 1.8 2.1 1.6
Increase Less CPI Inflation (%) (0.9) (1.3) 0.8 (1.6) (0.1) (0.1) (0.2)
Wage Settlement Increases (%)(2)
All Sectors 2.6 3.0 3.0 3.1 2.9 2.7 2.5
Public 2.7 2.9 2.9 3.5 3.2 2.7 3.0
Private 2.4 3.0 3.0 1.9 2.7 2.4 1.8
Person Days Lost Due to Strikes and
Lockouts (000s) 650 672 1,511 495 487 403 395
Minimum Wage at Year-end ($/hour) 6.85 6.85 6.85 6.85 7.15 7.45 7.75
================================================================================================================
(1) Average Weekly Earnings (AWE) includes overtime. In 2001, Statistics Canada changed its estimates of AWE
from the 1980 Standard Industrial Classification (SIC) to the North American Industry Classification System
(NAICS).
(2) Wage settlement increases are for collective agreements covering 200 or more employees, Ontario Ministry
of Labour.
Sources: Statistics Canada, Ontario Ministry of Labour and Ontario Ministry of Finance.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Employment by Occupation, 1995-2006 Table 27
________________________________________________________________________________________________________________
(Thousands)
________________________________________________________________
1995 1996 1997 1998 1999 2000
________________________________________________________________
Management 544 535 546 550 546 562
Business, Finance and Administrative 982 981 974 1,010 1,031 1,056
Natural and Applied Sciences 304 295 327 354 398 427
Health 258 253 267 264 272 280
Social Science, Education, Government 398 400 403 422 442 453
Service and Religion
Art, Culture, Recreation and Sport 142 149 149 156 169 172
Sales and Service 1,152 1,185 1,199 1,237 1,281 1,342
Trades, Transport and Equipment Operators 756 769 808 825 820 835
Primary Industry 142 141 143 138 152 142
Processing, Manufacturing and Utilities 423 459 477 496 526 548
Total 5,100 5,167 5,291 5,453 5,637 5,817
________________________________________________________________________________________________________________
Table 27 (continued) (Thousands)
________________________________________________________________________________________________________________
2001 2002 2003 2004 2005 2006
________________________________________________________________
Management 551 562 587 620 625 660
Business, Finance and Administrative 1,115 1,119 1,149 1,203 1,176 1,225
Natural and Applied Sciences 455 445 448 437 470 469
Health 291 321 332 345 346 356
Social Science, Education, Government 468 472 474 476 544 547
Service and Religion
Art, Culture, Recreation and Sport 183 177 188 200 199 199
Sales and Service 1,359 1,393 1,457 1,435 1,448 1,479
Trades, Transport and Equipment Operators 850 867 890 899 910 912
Primary Industry 130 123 131 134 143 158
Processing, Manufacturing and Utilities 524 552 558 568 537 489
Total 5,926 6,031 6,213 6,317 6,398 6,493
================================================================================================================
Note: Occupational groupings based on National Occupational Classification for Statistics (NOC-S) 2001.
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Distribution of Employment by Occupation, 1995-2006 Table 28
________________________________________________________________________________________________________________
(Per Cent)
__________________________________________________________________
1995 1996 1997 1998 1999 2000
__________________________________________________________________
Management 10.7 10.4 10.3 10.1 9.7 9.7
Business, Finance and Administrative 19.2 19.0 18.4 18.5 18.3 18.1
Natural and Applied Sciences 6.0 5.7 6.2 6.5 7.1 7.3
Health 5.1 4.9 5.1 4.8 4.8 4.8
Social Science, Education, Government 7.8 7.7 7.6 7.7 7.8 7.8
Service and Religion
Art, Culture, Recreation and Sport 2.8 2.9 2.8 2.9 3.0 3.0
Sales and Service 22.6 22.9 22.7 22.7 22.7 23.1
Trades, Transport and Equipment Operators 14.8 14.9 15.3 15.1 14.5 14.4
Primary Industry 2.8 2.7 2.7 2.5 2.7 2.4
Processing, Manufacturing and Utilities 8.3 8.9 9.0 9.1 9.3 9.4
Total 100.0 100.0 100.0 100.0 100.0 100.0
________________________________________________________________________________________________________________
Table 28 (continued) (Per Cent)
________________________________________________________________________________________________________________
2001 2002 2003 2004 2005 2006
__________________________________________________________________
Management 9.3 9.3 9.4 9.8 9.8 10.2
Business, Finance and Administrative 18.8 18.6 18.5 19.0 18.4 18.9
Natural and Applied Sciences 7.7 7.4 7.2 6.9 7.3 7.2
Health 4.9 5.3 5.3 5.5 5.4 5.5
Social Science, Education, Government Service 7.9 7.8 7.6 7.5 8.5 8.4
and Religion
Art, Culture, Recreation and Sport 3.1 2.9 3.0 3.2 3.1 3.1
Sales and Service 22.9 23.1 23.5 22.7 22.6 22.8
Trades, Transport and Equipment Operators 14.3 14.4 14.3 14.2 14.2 14.1
Primary Industry 2.2 2.0 2.1 2.1 2.2 2.4
Processing, Manufacturing and Utilities 8.8 9.1 9.0 9.0 8.4 7.5
Total 100.0 100.0 100.0 100.0 100.0 100.0
================================================================================================================
Note: Occupational groupings based on National Occupational Classification for Statistics (NOC-S) 2001.
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Employment by Industry, 1997-2006 Table 29
________________________________________________________________________________________________________________
(Thousands)
____________________________________________________
1997 1998 1999 2000 2001
____________________________________________________
Goods Producing Industries 1,404 1,457 1,533 1,576 1,575
Primary Industries 141 143 152 133 119
Agriculture 100 105 114 98 84
Manufacturing 935 981 1,035 1,075 1,068
Construction 280 285 298 323 336
Utilities 48 48 49 46 51
Services Producing Industries 3,887 3,996 4,103 4,241 4,352
Trade 791 799 838 877 928
Transportation and Warehousing 249 261 259 273 275
Finance, Insurance, Real Estate and Leasing 371 370 378 379 389
Professional, Scientific and Technical Services 347 371 393 415 437
Business, Building and Other Support 195 208 222 242 241
Educational Services 342 345 363 367 358
Health Care and Social Assistance 496 518 515 541 559
Information, Culture and Recreation 248 244 258 282 303
Accommodation and Food Services 318 335 337 337 331
Public Administration 279 284 286 281 283
Other Services 252 263 254 248 248
Total Employment 5,291 5,453 5,637 5,817 5,926
================================================================================================================
================================================================================================================
Table 29 (continued): Ontario, Employment by Industry, 1997-2006
________________________________________________________________________________________________________________
(Thousands)
____________________________________________________
2002 2003 2004 2005 2006
____________________________________________________
Goods Producing Industries 1,603 1,630 1,639 1,637 1,601
Primary Industries 112 113 113 128 139
Agriculture 77 82 79 93 100
Manufacturing 1,094 1,093 1,100 1,064 1,007
Construction 345 369 368 395 405
Utilities 53 55 58 50 49
Services Producing Industries 4,428 4,584 4,678 4,761 4,892
Trade 923 945 970 995 1,016
Transportation and Warehousing 279 290 295 289 296
Finance, Insurance, Real Estate and Leasing 393 415 436 452 477
Professional, Scientific and Technical Services 436 449 441 443 454
Business, Building and Other Support 247 264 278 283 296
Educational Services 369 376 390 428 445
Health Care and Social Assistance 582 612 635 626 638
Information, Culture and Recreation 298 289 303 301 320
Accommodation and Food Services 361 370 366 364 373
Public Administration 293 310 312 322 315
Other Services 247 264 254 257 264
Total Employment 6,031 6,213 6,317 6,398 6,493
================================================================================================================
Note: Industrial groupings based on North American Industry Classification System (NAICS).
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Growth in Employment by Industry, 1997-2006 Table 30
________________________________________________________________________________________________________________
(Per Cent Change)
________________________________________________
1997 1998 1999 2000 2001
________________________________________________
Goods Producing Industries 2.6 3.8 5.2 2.8 (0.1)
Primary Industries (5.9) 1.6 5.9 (12.5) (10.0)
Agriculture (3.0) 5.0 8.1 (13.6) (14.7)
Manufacturing 3.1 4.8 5.6 3.8 (0.6)
Construction 7.4 1.9 4.3 8.4 4.2
Utilities (5.0) 0.2 1.9 (5.7) 11.0
Services Producing Industries 2.3 2.8 2.7 3.4 2.6
Trade 2.1 1.1 4.8 4.7 5.9
Transportation and Warehousing 1.6 4.8 (0.5) 5.2 0.7
Finance, Insurance, Real Estate and Leasing 0.7 (0.2) 2.2 0.2 2.6
Professional, Scientific and Technical Services 11.1 6.7 5.9 5.6 5.5
Business, Building and Other Support 9.0 6.7 7.1 8.8 (0.4)
Educational Services 0.4 0.8 5.2 1.0 (2.4)
Health Care and Social Assistance (1.4) 4.5 (0.7) 5.1 3.4
Information, Culture and Recreation 5.6 (1.8) 5.9 9.2 7.3
Accommodation and Food Services 2.3 5.1 0.7 0.1 (1.9)
Public Administration (3.2) 1.6 0.9 (1.8) 0.9
Other Services 3.3 4.6 (3.3) (2.4) (0.3)
Total Employment 2.4 3.1 3.4 3.2 1.9
================================================================================================================
================================================================================================================
Table 30 (continued): Ontario, Growth in Employment by Industry, 1997-2006
________________________________________________________________________________________________________________
(Per Cent Change)
__________________________________________________
2002 2003 2004 2005 2006
__________________________________________________
Goods Producing Industries 1.8 1.7 0.6 (0.1) (2.2)
Primary Industries (6.4) 1.0 0.2 13.2 8.8
Agriculture (8.4) 6.3 (3.2) 18.0 7.8
Manufacturing 2.5 (0.1) 0.6 (3.3) (5.3)
Construction 2.4 7.1 (0.4) 7.4 2.6
Utilities 3.1 3.0 7.2 (14.6) (1.8)
Services Producing Industries 1.8 3.5 2.1 1.8 2.8
Trade (0.6) 2.4 2.6 2.6 2.1
Transportation and Warehousing 1.4 4.1 1.5 (1.8) 2.3
Finance, Insurance, Real Estate and Leasing 1.1 5.6 5.0 3.8 5.5
Professional, Scientific and Technical Services (0.2) 2.8 (1.6) 0.5 2.3
Business, Building and Other Support 2.5 7.0 5.0 1.8 4.7
Educational Services 3.2 1.8 3.7 9.8 3.8
Health Care and Social Assistance 4.0 5.1 3.8 (1.4) 1.9
Information, Culture and Recreation (1.5) (3.0) 4.7 (0.8) 6.3
Accommodation and Food Services 9.2 2.4 (1.1) (0.4) 2.4
Public Administration 3.5 5.6 0.9 3.3 (2.5)
Other Services (0.3) 7.1 (4.1) 1.3 2.8
Total Employment 1.8 3.0 1.7 1.3 1.5
================================================================================================================
Note: Industrial groupings based on North American Industry Classification System (NAICS).
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Employment Level by Economic Regions, 1996-2006 Table 31
________________________________________________________________________________________________________________
(Thousands)
__________________________________________________
1996 1997 1998 1999 2000 2001
__________________________________________________
Ontario 5,167 5,291 5,453 5,637 5,817 5,926
Region:*
East 675 686 723 749 758 784
Ottawa (510) 506 513 539 552 572 593
Kingston-Pembroke (515) 169 173 184 197 186 192
Greater Toronto Area (530)(1) 2,237 2,336 2,407 2,481 2,581 2,665
Central 1,202 1,222 1,267 1,311 1,358 1,363
Muskoka-Kawarthas (520) 146 147 148 156 159 152
Kitchener-Waterloo-Barrie (540) 475 493 512 541 550 559
Hamilton-Niagara Peninsula (550) 580 582 607 614 649 651
Southwest 697 702 711 741 760 755
London (560) 278 282 285 298 307 305
Windsor-Sarnia (570) 278 276 284 293 302 302
Stratford-Bruce Peninsula (580) 141 144 142 149 152 148
North 356 345 345 356 360 359
Northeast (590) 246 240 241 246 249 251
Northwest (595) 110 105 104 110 111 107
________________________________________________________________________________________________________________
Table 31 (continued) (Thousands)
________________________________________________________________________________________________________________
2002 2003 2004 2005 2006
_______________________________________
Ontario 6,031 6,213 6,317 6,398 6,493
Region:*
East 793 816 818 830 844
Ottawa (510) 595 617 614 624 642
Kingston-Pembroke (515) 199 199 204 205 202
Greater Toronto Area (530)(1) 2,721 2,799 2,854 2,912 2,947
Central 1,387 1,451 1,476 1,494 1,529
Muskoka-Kawarthas (520) 155 175 180 170 181
Kitchener-Waterloo-Barrie (540) 579 597 611 637 655
Hamilton-Niagara Peninsula (550) 653 680 686 687 693
Southwest 765 775 801 797 812
London (560) 307 317 330 328 331
Windsor-Sarnia (570) 306 307 307 315 324
Stratford-Bruce Peninsula (580) 151 150 164 155 157
North 365 371 367 364 360
Northeast (590) 251 254 255 256 256
Northwest (595) 113 117 112 108 105
================================================================================================================
* Standard deviations vary significantly across regions, decreasing as the size of the region increases.
(1) Economic Region 530 closely matches the GTA, the main exception being that it excludes the city of Burlington.
Note: All figures are average annual employment levels.
Source: Statistics Canada
________________________________________________________________________________________________________________
================================================================================================================
Ontario, Employment Level by Industry for Economic Regions, 2006 Table 32
________________________________________________________________________________________________________________
(Thousands)
________________________________________________________________________
All Industries Agriculture Resources(1) Manufacturing
________________________________________________________________________
Ontario 6,493 100 39 1,007
Region:
East 844 14 2 83
Ottawa (510) 642 8 - 56
Kingston-Pembroke (515) 202 6 - 27
Greater Toronto Area (530) 2,947 8 5 448
Central 1,529 36 5 275
Muskoka-Kawarthas (520) 181 5 2 24
Kitchener-Waterloo-Barrie (540) 655 11 2 137
Hamilton-Niagara Peninsula (550) 693 20 2 114
Southwest 812 38 4 166
London (560) 331 13 - 62
Windsor-Sarnia (570) 324 9 - 76
Stratford-Bruce Peninsula (580) 157 16 3 28
North 360 5 23 35
Northeast (590) 256 4 18 24
Northwest (595) 105 - 5 11
________________________________________________________________________________________________________________
Table 32 (continued) (Thousands)
________________________________________________________________________________________________________________
Construction Distributive(2) Finance, Prof. Info., Culture &
& Mgmt.(3) Recreation(4)
________________________________________________________________________
Ontario 405 590 1,226 320
Region:
East 44 57 148 42
Ottawa (510) 32 39 121 35
Kingston-Pembroke (515) 11 17 27 7
Greater Toronto Area (530) 176 296 697 169
Central 114 137 232 67
Muskoka-Kawarthas (520) 16 15 23 9
Kitchener-Waterloo-Barrie (540) 49 57 101 27
Hamilton-Niagara Peninsula (550) 49 65 108 31
Southwest 48 68 109 29
London (560) 18 27 52 13
Windsor-Sarnia (570) 18 25 40 12
Stratford-Bruce Peninsula (580) 12 16 16 4
North 23 32 41 12
Northeast (590) 18 22 29 9
Northwest (595) 5 10 12 3
________________________________________________________________________________________________________________
================================================================================================================
Table 32 (continued) (Thousands)
________________________________________________________________________________________________________________
Retail Trade Personal Services(5) Education
__________________________________________________________________
Ontario 771 637 444
Region:
East 97 91 62
Ottawa (510) 72 67 42
Kingston-Pembroke (515) 24 24 19
Greater Toronto Area (530) 348 269 191
Central 183 160 107
Muskoka-Kawarthas (520) 23 22 15
Kitchener-Waterloo-Barrie (540) 76 68 43
Hamilton-Niagara Peninsula (550) 84 69 50
Southwest 97 81 54
London (560) 37 32 27
Windsor-Sarnia (570) 39 36 20
Stratford-Bruce Peninsula (580) 21 13 7
North 47 36 30
Northeast (590) 33 25 20
Northwest (595) 14 11 9
________________________________________________________________________________________________________________
Table 32 (continued) (Thousands)
________________________________________________________________________________________________________________
Health & Soc. Assistance Public Administration
__________________________________________________________________
Ontario 638 314
Region:
East 92 113
Ottawa (510) 65 102
Kingston-Pembroke (515) 27 11
Greater Toronto Area (530) 246 95
Central 154 60
Muskoka-Kawarthas (520) 20 8
Kitchener-Waterloo-Barrie (540) 61 24
Hamilton-Niagara Peninsula (550) 73 28
Southwest 97 21
London (560) 41 9
Windsor-Sarnia (570) 39 8
Stratford-Bruce Peninsula (580) 17 4
North 50 26
Northeast (590) 35 19
Northwest (595) 15 7
================================================================================================================
All figures are average annual employment levels.
Sub-regional figures may not add up to regional totals due to rounding.
Employment numbers under 1,500 are suppressed because they are statistically
unreliable. See standard deviation and GTA note for Table 31.
Industrial groupings based on North American Industry Classification System (NAICS).
(1) Includes Forestry, Fishing, Mining, Oil and Gas.
(2) Includes Transportation and Warehousing, Utilities and Wholesale Trade.
(3) Includes Finance, Insurance, Real Estate and Leasing; Management of Companies, Administrative and
Support Services; and Professional, Scientific and Technical Services.
(4) Includes industries such as Publishing, Motion Picture and Sound Recording, Broadcasting and
Telecommunications, Information Services and Data Processing Services, Performing Arts, Spectator
Sports and Related Industries, Heritage Institutions and Amusement, Gambling and Recreation.
(5) Includes Accommodation and Food Services and Other Services (such as Repair and Maintenance, Personal
and Laundry, Religious, Grant-making, Civic, Professional and Similar Organizations).
Source: Statistics Canada.
________________________________________________________________________________________________________________
================================================================================================================
Ontario Economic Regions(1) Table 33
________________________________________________________________________________________________________________
East
Ottawa (510) The united counties of Stormont, Dundas and Glengarry, Prescott and
Russell, Leeds and Grenville, the county of Lanark and the Ottawa
Division
Kingston-Pembroke (515) The counties of Lennox and Addington, Hastings, Renfrew and Frontenac
and the Prince Edward Division
Central
Muskoka-Kawarthas (520) The counties of Northumberland, Peterborough, Haliburton, the Muskoka
District Municipality and the Kawartha Lakes Division
Kitchener-Waterloo-Barrie (540) The counties of Dufferin, Wellington and Simcoe and the Waterloo
Regional Municipality
Hamilton-Niagara Peninsula (550) The counties of Brant, Haldimand and Norfolk, the Niagara Regional
Municipality, the Hamilton Division and the city of Burlington in the
Halton Regional Municipality
Greater Toronto Area(2)
Toronto (530) Toronto Division, the regional municipalities of Durham, York, Peel
and Halton (excluding the city of Burlington)
Southwest
London (560) The counties of Oxford, Elgin and Middlesex
Windsor-Sarnia (570) The counties of Lambton and Essex and the Chatham-Kent Division
Stratford-Bruce Peninsula (580) The counties of Perth, Huron, Bruce and Grey
North
Northeast (590) The districts of Nipissing, Parry Sound, Manitoulin, Sudbury,
Timiskaming, Cochrane, Algoma and the Greater Sudbury Division
Northwest (595) The districts of Thunder Bay, Rainy River and Kenora
================================================================================================================
(1) As defined by Statistics Canada, Standard Geographical Classification SGC 2001.
(2) Economic Region 530 closely matches the GTA, the main exception being that it excludes the city of
Burlington.
________________________________________________________________________________________________________________
ANNEX VII:
HOW TO PARTICIPATE
IN THE 2008
PRE-BUDGET CONSULTATIONS
________________________________________________________________________________
HOW TO PARTICIPATE IN THE
2008 PRE-BUDGET CONSULTATIONS
The Minister of Finance will be hosting pre-budget consultations with
individuals, organizations, associations and other stakeholders across the
province as part of the government's ongoing dialogue with the citizens of
Ontario.
In particular, the Minister is interested in hearing Ontarians' views on what
more the government can do to ensure a productive economy and better services
for people.
Information on which communities and locations the Minister plans to visit will
be posted at www.fin.gov.on.ca in December 2007. Individuals who wish to attend
one of these consultations can call toll-free 1-800-263-7965 or 1-800-263-7776 TTY.
The information below describes how to participate in the 2008 pre-budget
consultations.
SUBMISSIONS
Visit the Ministry of Finance website at www.fin.gov.on.ca to submit your ideas
for the 2008 Budget. Click on the "Tell Us What You Think" item in the Hot
Topics menu and complete the form provided.
Submissions may also be e-mailed to submissions@ontario.ca, sent by fax to
416-325-0969 or mailed to: The Honourable Dwight Duncan, Minister of Finance,
c/o Budget Secretariat, Frost Building North, 3rd Floor, 95 Grosvenor Street,
Toronto, ON M7A 1Z1.
