FORM 18-K/A
For Foreign Governments and Political Subdivisions Thereof
__________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
AMENDMENT NO. 10 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:
Vera Nicholas-Gervais
Head of the Provincial
Territorial and Parliamentary Affairs Section
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 (n) 2008 Ontario Economic Outlook and Fiscal Review
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this amendment to the annual report to be signed on
its behalf by the undersigned, thereunto duly authorized, at Toronto, Ontario.
PROVINCE OF ONTARIO
(Name of registrant)
October 22, 2008 By: /s/ Irene Stich
___________________________________________
Name: Irene Stich
Title: Director, Capital Markets Operations
Capital Markets Division
Ontario Financing Authority
Exhibit Index
Exhibit (n): 2008 Ontario Economic Outlook and Fiscal Review
EXHIBIT (n)
[THE ONTARIO COAT OF ARMS]
2008 Ontario Economic Outlook and Fiscal Review
Background Papers
The Honourable Dwight Duncan
Minister of Finance
For general inquiries regarding the 2008 Ontario Economic Outlook and Fiscal Review,
Background Papers please call:
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
A printed copy of this publication can be ordered:
Online at: www.serviceontario.ca/publications
By phone through the ServiceOntario Contact Centre
Monday to Friday, 8:30 AM to 5:00 PM
416 326-5300
416 325-3408 (TTY)
1 800 668-9938 Toll-free across Canada
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© Queen's Printer for Ontario, 2008
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 2008, Documents d'information
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TABLE OF CONTENTS
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FOREWORD
ANNEX I: FISCAL OUTLOOK
SECTION A: ONTARIO'S 2008-09 FISCAL OUTLOOK
2008-09 Fiscal Performance
2008-09 Revenue Changes Since 2008 Budget
Details of 2008-09 In-Year Revenue Changes
2008-09 Expense Changes Since 2008 Budget
Details of 2008-09 In-Year Expense Changes
Maintaining a Prudent Accumulated Deficit-to-GDP Ratio
Risks to the Fiscal Outlook
SECTION B: EXPENDITURE MANAGEMENT
EXPENDITURE MANAGEMENT
SECTION C: DETAILS OF ONTARIO'S FINANCES
DETAILS OF ONTARIO'S FINANCES
ANNEX II: ECONOMIC OUTLOOK
OVERVIEW
Financial Market Turmoil
Ongoing External Economic Challenges
Ontario's Economic Progress over the Past Five Years
The Ontario Economy in 2008
Heightened Global Economic Uncertainty
Private-Sector Economic Forecasts
Comparison to the 2008 Ontario Budget
ANNEX III: ROLE FOR THE FEDERAL GOVERNMENT
Canada's System of Transfers Is Outdated
Ontario's Fiscal Gap
Equalization
Employment Insurance
Health Care
Regional Economic Development
Infrastructure
Time-Limited Transfers
Need for a Federal Partner
ANNEX IV: BORROWING AND DEBT MANAGEMENT
LONG-TERM PUBLIC BORROWING
Deficit
Other Changes in the Financing Table
Debt
Debt-to-GDP Ratios
Total Debt Composition
Debt Management
Debt Maturities
Cost of Debt
ANNEX V: TRANSPARENCY IN TAXATION, 2008
TRANSPARENCY IN TAXATION
Structure of the Report
Scope
Method
Personal Income Tax
Personal Income Tax — Description of Tax Provisions
Ontario Non-refundable Tax Credits
Employee Ownership and Ontario Labour Sponsored Investment Fund Tax Credits
Ontario Refundable Tax Credits
Exemptions, Deductions, Deferrals and Other Measures Shared
with the Federal Government
Corporate Tax
Corporate Tax — Description of Tax Provisions
Corporate Income Tax
Sales and Commodity Tax
Sales and Commodity Tax — Description of Tax Provisions
Land Transfer Tax
Retail Sales Tax
Education Property Tax
Employer Health Tax
Estate Administration Tax
Gross Revenue Charge
ANNEX VI: HOW TO PARTICIPATE IN THE 2009 PRE-BUDGET CONSULTATIONS
HOW TO PARTICIPATE IN THE 2009 PRE-BUDGET CONSULTATIONS
Submissions
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LIST OF TABLES
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ANNEX I: FISCAL OUTLOOK
SECTION A: ONTARIO'S 2008-09 FISCAL OUTLOOK
Table 1: 2008-09 In-Year Fiscal Performance
Table 2: Summary of Revenue Changes Since 2008 Budget
Table 3: Summary of Expense Changes Since 2008 Budget
SECTION C: DETAILS OF ONTARIO'S FINANCES
Table 4: 2008-09 Fiscal Outlook
Table 5: Revenue
Table 6: Total Expense
Table 7: Other Expense
Table 8: 2008-09 Infrastructure Expenditures
Table 9: Ten-Year Review of Selected Financial and Economic Statistics
ANNEX II: ECONOMIC OUTLOOK
Table 1: Ontario Economic Outlook
Table 2: Key External Variables
Table 3: External Variables
Table 4: Impacts of Changes in Key Assumptions on Ontario Real GDP Growth
Table 5: Private-Sector Forecasts for Ontario Real GDP Growth
Table 6: Changes in Key Economic Forecast Assumptions,
2008 Fall Economic Statement Compared to 2008 Budget
ANNEX IV: BORROWING AND DEBT MANAGEMENT
Table 1: 2008-09 Borrowing Program: Province and OEFC
ANNEX V: TRANSPARENCY IN TAXATION, 2008
Table 1: Personal Income Tax
Table 2: Amounts on Which Indexed Non-refundable Tax Credits Are Based for 2008
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)
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LIST OF CHARTS
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ANNEX I: FISCAL OUTLOOK
SECTION A: ONTARIO'S 2008-09 FISCAL OUTLOOK
Chart 1: Ontario's Fiscal Performance
Chart 2: Accumulated Deficit-to-GDP
SECTION C: DETAILS OF ONTARIO'S FINANCES
Chart 3: Composition of Revenue, 2008-09
Chart 4: Composition of Total Expense, 2008-09
Chart 5: Composition of Program Expense, 2008-09
ANNEX II: ECONOMIC OUTLOOK
Chart 1: Ontario's International Merchandise Exports Are Diversifying
Chart 2: Jobs Created Since October 2003
Chart 3: Employment Growth Relatively Strong
Chart 4: Crude Oil Prices
Chart 5: Canadian Dollar
Chart 6: Private-Sector Forecasts
ANNEX III: ROLE FOR THE FEDERAL GOVERNMENT
Chart 1: Ontarians Pay into Equalization
Chart 2: Ontarians Do Not Receive Fair Treatment
Chart 3: Time-Limited Federal Transfers
ANNEX IV: BORROWING AND DEBT MANAGEMENT
Chart 1: Borrowing — All Markets
Chart 2: Borrowing — Domestic Market
Chart 3: Debt
Chart 4: Net Debt-to-GDP
Chart 5: Accumulated Deficit-to-GDP
Chart 6: Total Debt Composition
Chart 7: Net Interest Rate Resetting Exposure
Chart 8: Foreign Exchange Exposure
Chart 9: Debt Maturities
Chart 10: Effective Interest Rate (Weighted Average) of Debt
FOREWORD
The global economy is threatened in ways not imagined even a few short weeks
ago. The liquidity crisis in financial markets has undermined business and
consumer confidence around the world. The resulting impacts on investment and
jobs are real, present, and directly affect individuals, families, businesses
and governments. Ontario is no exception.
Using the best information available at October 16, 2008, the 2008 Ontario
Economic Outlook and Fiscal Review adjusts the economic assumptions contained in
the 2008 Ontario Budget. The impact of these changes is applied to the
government's revenue and expenditure projections, which revises the anticipated
financial results for the current fiscal year.
This document establishes the principles that will guide the government's
response to the range of challenges occasioned by the global economic situation.
It also details steps to be undertaken in the coming days that will help manage
the Province's finances through the balance of the fiscal year and it responds
to the new global reality. These steps begin a process that will culminate in
the 2009 Budget.
TODAY'S ENVIRONMENT
At the time of the 2008 Budget, the consensus private-sector forecast for growth
in the Ontario economy in 2008 was 1.2 per cent. Since then, the private-sector
average estimate for 2008 has declined to 0.1 per cent.
As a result, the Province's revenue is projected to decline in 2008-09 while
expenditures will increase in certain areas. Due primarily to lower revenues,
the government is now projecting a deficit of $500 million in 2008-09.
The new economic reality is forcing governments around the world to re-examine
their expenditures, adjust their assumptions and respond in an environment where
the only constant is uncertainty.
GUIDING PRINCIPLES
As a first principle, the McGuinty government's five-point economic plan will
continue to be the foundation of its approach to today's economy. Investing in
skills, infrastructure and innovation while lowering business costs and building
partnerships remains the right response in turbulent times.
The Reaching Higher Plan for postsecondary education and investments in skills
training means that 100,000 more Ontarians are being trained in colleges and
universities today and 50,000 more are learning a trade.
Three years ago, the government launched ReNew Ontario, a five-year, $30 billion
infrastructure investment that is building new roads, new schools, new
hospitals, new bridges and transit right across Ontario. Today there are over
100 major construction projects that have been initiated. The government's
projects will create over 100,000 jobs this year.
Innovation creates jobs. In addition to historic investments to attract new high
technology jobs to Ontario, the government has proposed a tax incentive to
commercialize Canadian ideas so that home-grown ideas turn into hometown jobs.
Strategic tax cuts announced since 2004 have already saved businesses more than
$1.5 billion and will save businesses nearly $3 billion annually when they are
fully implemented. These targeted measures promote new investment and create
jobs.
The McGuinty government understands that Ontario is at its best when partners
work together. Ontario is partnering with key sectors of the economy, with First
Nations, with municipalities and others to foster growth. The government will
also continue to press the federal government to respond to Ontario's needs
fairly.
These undertakings, coupled with Ontario's multi-billion-dollar investment in
the renewal of Ontario's public health care system, are coming to fruition at
the precise time they are most needed.
The five-point economic plan is creating jobs and enhancing Ontario's
competitive strength for tomorrow.
The second principle guiding the government's approach is that the Province must
continue to be prudent while maintaining the ability to respond quickly to
changing economic circumstances.
Since taking office, the McGuinty government has eliminated its inherited and
hidden $5.5 billion deficit, produced three consecutive balanced budgets,
decreased Ontario's debt-to-GDP ratio and kept the rate of growth in Provincial
expenditures below the rate of growth in revenue, all while making strategic
investments.
The government's Second Career Strategy, for example, which will be enhanced
this fall, helps retrain laid-off workers for new jobs. It is a key part of the
$2 billion Skills to Jobs Action Plan, which further enhances skills and builds
places to learn.
Most importantly, in spite of the downturn in North America's manufacturing and
forestry sectors, Ontario has seen an increase of more than half a million net
new jobs since assuming office. Real income has grown and unemployment is below
what it was in 2003.
Prudence dictates that the government take into account how global circumstances
will affect capital markets, labour markets and the Province's finances.
The government will never lose sight of the fact that underneath all the
statistics, all the uncertainty and all the turmoil, there are real people with
real fears, real concerns and very real needs.
The third principle that will guide the government's decisions recognizes that
the Province must protect the gains it has made while taking a balanced,
comprehensive approach to future growth.
Ontario cannot spend its way out of today's difficulties.
Initiatives taken as part of the five-point plan constitute an economic stimulus
package that is helping families, businesses and communities today.
The McGuinty government will continue to bring a laser-like focus to its
priorities and, as part of that focus, has begun a comprehensive review of
government expenditures. As a measured and balanced approach to slowing
revenues, the government will delay or slow down the implementation of some new
spending commitments.
Tax cuts alone are no substitute for a plan. Targeted business tax cuts coupled
with a strategy for smart regulation will encourage investment and job growth
over time.
The dramatic, unanticipated changes in the global economy mean Ontario will
experience a deficit this year. A deficit, followed by a plan for its
elimination, represents a balanced response to today's global reality. The
alternative would be deep cuts to the very programs and initiatives that are
helping families, businesses and communities weather the current storm.
THE NEXT SIX MONTHS
The McGuinty government will continue to update the people of Ontario through
quarterly economic updates. Uncertainty and anxiety about the global economy
will no doubt continue. The McGuinty government will diligently monitor and
respond to events as they unfold.
The government's plan is the right plan for the times. It is flexible so that it
can accommodate changing economic circumstances. As in other times of
uncertainty, Ontario will rise to the current challenges and seize opportunities
to strengthen economic growth, create new jobs and continue to be a great place
to live and invest.
** N.B. The following Annexes are based on the most recent information available
as of October 16, 2008.**
ANNEX I
Fiscal Outlook
SECTION A | ONTARIO'S 2008-09 FISCAL OUTLOOK
In the current environment of heightened economic uncertainty, many
international jurisdictions face an unparalleled economic crisis as slowing
economies result in lower revenue growth. Ontario is no exception. The
Province's 2008-09 revenue is currently projected to decline by 1.2 per cent
compared to 2007-08 — the first time Provincial revenues have declined since
2003-04. This projected decline in revenue, combined with increased spending on
health, has resulted in a forecasted deficit of $500 million for 2008-09, which
represents 0.5 per cent of the 2008-09 revenue outlook.
This government has successfully eliminated deficits in the past. The $5.5
billion deficit inherited in 2003-04 was eliminated within two years. The
government then posted three consecutive surpluses. This prudent fiscal
management of Ontario's finances was achieved while investing in key priorities.
These actions have strengthened Ontario's economic advantage and prepared the
province for the current economic downturn. The projected deficit in 2008-09 is
a clear indication of the government's commitment to do everything it can to
protect these investments.
[Chart 1: Ontario's Fiscal Performance - bar graph]
The government continues to strengthen the economy through its five-point
economic plan to invest in skills and knowledge; invest in infrastructure; lower
business costs; strengthen the environment for innovation; and form key
partnerships to strengthen Ontario. Recognizing the current economic
uncertainty, the government will continue to maintain a cautious and prudent
fiscal plan, including a reserve and contingency funds, while taking immediate
action to manage expense growth.
This Annex provides an update on the fiscal outlook for 2008-09. The government
continues to monitor risks to Ontario's economic and fiscal situation closely,
and will update Ontario's medium-term fiscal plan and outlook in the 2009
Budget.
2008-09 FISCAL PERFORMANCE
The 2008-09 First Quarter Ontario Finances noted that the consensus forecast
predicted slower economic growth for Ontario than was projected in the 2008
Budget but that it was still too early to determine the effect on the Province's
revenue and expense outlook. The current fiscal outlook reflects the estimated
impact of these economic risks and modifies the outlook projected in the 2008
Ontario Budget.
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2008-09 In-Year Fiscal Performance Table 1
($ Millions)
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Budget Current In-Year
Plan Outlook Change
----------------------------------------------
Revenue 96,920 96,002 (918)
Expense
Programs 87,279 87,411 132
Interest on Debt 8,891 8,891 -
----------------------------------------------
Total Expense 96,170 96,302 132
Reserve 750 200 (550)
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Surplus/(Deficit) 0 (500) (500)
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Total revenue in 2008-09 is currently projected to be $96,002 million, a
decrease of 0.9 per cent from the 2008 Budget forecast, reflecting projections
for slower economic growth. Total expense in 2008-09 is currently estimated to
be $96,302 million, 0.1 per cent higher than the 2008 Budget forecast, primarily
due to higher utilization-related expense in the Ontario Health Insurance Plan
(OHIP) program.
The 2008 Budget plan included prudence in the form of a $750 million reserve in
2008-09 to protect against adverse changes in the Province's revenue and
expense, including those resulting from changes in Ontario's economic
performance. A portion of the reserve has been drawn down to partially offset
the effects of slower economic growth on the Province's fiscal outlook. The
Province continues to maintain a $200 million reserve in recognition of the
continued global economic uncertainty that could further impact the Province's
finances.
2008-09 REVENUE CHANGES SINCE 2008 BUDGET
The revenue outlook at $96,002 million has decreased by $918 million from the
2008 Budget forecast, largely reflecting slower economic growth projections for
2008, partially offset by higher Government of Canada transfers.
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Summary of Revenue Changes Since 2008 Budget Table 2
($ Millions)
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Taxation Revenue Changes
Corporations Tax (880)
Land Transfer Tax (180)
Gasoline Tax (65)
--------------
Total Taxation Revenue Changes (1,125)
Changes in Government of Canada Transfers
Infrastructure Programs 25
All Other Government of Canada 182
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Total Changes in Government of Canada Transfers 207
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Total Revenue Changes Since 2008 Budget (918)
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Details of 2008-09 In-Year Revenue Changes
Key revenue changes include the following:
• Corporations Tax revenues are projected to be $880 million below the 2008
Budget projection, mainly due to slower projected 2008 corporate profit growth.
• Land Transfer Tax revenues are forecast to decline by $180 million,
reflecting a weaker resale housing market than projected in the 2008 Budget.
• Gasoline Tax revenue is projected to be $65 million lower than forecast in
the 2008 Budget due to lower gasoline consumption resulting from higher
gasoline pump prices.
• The $207 million increase in Government of Canada Transfers is mainly due to:
o $25 million in federal funding, related to the Building Canada
Plan, which will be received in 2008-09 instead of 2007-08, as the
infrastructure framework agreement was signed on July 24, 2008;
o $150 million federal payment related to corporate tax harmonization being
recorded in 2008-09 rather than 2007-08; and
o $31 million in funding under the Police Officers Recruitment Fund, which was
not previously booked by the Province pending decisions on use of the funds.
This amount is offset by an equivalent increase in expense as noted below.
2008-09 EXPENSE CHANGES SINCE 2008 BUDGET
Total expense in 2008-09 is currently projected to be $96,302 million, an
increase of $132 million from the 2008 Budget forecast. This change in total
expense primarily reflects an increase in the Ministry of Health and Long-Term
Care for utilization-related expense in the OHIP program.
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Summary of Expense Changes Since 2008 Budget Table 3
($ Millions)
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Program Expense Changes with Contingency Fund Offsets This Quarter
Ministry of Education - School Boards' Net Expense - Grants for Student Needs funding. 187.5
Other Changes in Program Expense with Contingency Fund Offsets - mainly funding for 7.1
flood relief response and repairs, and for the OMERS Administration Corporation.
Ministry of Finance - Operating Contingency Fund offsets (191.5)
Ministry of Energy and Infrastructure - Capital Contingency Fund offsets (3.1)
---------
Net Program Expense Changes with Contingency Fund Offsets This Quarter -
Additional Changes in Program Expense This Quarter
Ministry of Health and Long-Term Care - utilization-related expense in the OHIP program. 100.0
Ministry of Community Safety and Correctional Services - increase to support 31.0
recruitment of police officers.
Other Changes in Program Expense - primarily reflects funding for college training 1.1
equipment.
---------
Total Additional Changes in Program Expense This Quarter 132.1
Net Changes in Program Expense Reported in First Quarter Ontario Finances -
Interest on Debt Changes -
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Total Expense Changes Since 2008 Budget 132.1
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Details of 2008-09 In-Year Expense Changes
The following expense changes have occurred since the 2008-09 First Quarter
Ontario Finances:
Program Expense Changes with Contingency Fund Offsets:
• An increase of $187.5 million in the Ministry of Education School Boards'
Net Expense to enhance Grants for Student Needs funding to support salary
benchmark increases for education sector staff.
• Other Changes in Program Expense with Contingency Fund Offsets reflect a
net increase of $7.1 million, which includes funding for flood relief
services and repairs, and a one-time payment for the OMERS Administration
Corporation to administer supplemental benefit plans.
The Operating Contingency Fund has decreased by $191.5 million, and the Capital
Contingency Fund has decreased by $3.1 million, to fund ministries' expense
changes as outlined.
Additional Changes in Program Expense:
• An increase of $100.0 million in the Ministry of Health and Long-Term Care
due to higher utilization-related expense in the OHIP program.
• An increase of $31.0 million in the Ministry of Community Safety and
Correctional Services, fully offset by federal revenue from the Police
Officers Recruitment Fund announced in the 2008 federal budget. This
federal transfer provides partial support for the recruitment of police
officers to make communities safer.
• An increase of $1.1 million in Other Changes in Program Expense, primarily
due to funding for college training equipment, fully offset by federal
revenue.
MAINTAINING A PRUDENT ACCUMULATED DEFICIT-TO-GDP RATIO
A key element of the government's fiscal plan is the commitment to maintain a
prudent level of accumulated deficit relative to the size of Ontario's economy
as measured by nominal gross domestic product (GDP). This contributes to
responsible fiscal management that is long term in nature, so that future
generations are not faced with the erosion of key programs and services.
Although a $500 million deficit is forecast for 2008-09, the Province's
accumulated deficit-to-GDP ratio is projected to improve to 17.8 per cent in
2008-09, down from 25.2 per cent in 2003-04.
[Chart 2: Accumulated Deficit-to-GDP - line graph]
This year's deficit is primarily the result of lower revenue growth due to
heightened economic uncertainty, and is a clear indication of the government's
commitment to do everything it can to protect investments in key public
services.
Consistent with this approach, the government continues to pursue strategies to
contain spending while doing all it can to protect key investments.
RISKS TO THE FISCAL OUTLOOK
Like many jurisdictions around the world, Ontario faces a much more challenging
economic environment than both public and private forecasters expected at the
time of the 2008 Budget. As a result, the Province's fiscal outlook is
increasingly vulnerable to variances in both the revenue and expense outlooks.
In particular, revenue risks are greater due to heightened global economic and
financial uncertainty. Key cost drivers within the Province's expense outlook
could also be affected, including pressures in demand-driven programs and
services that arise from changes in the economic outlook, utilization or
enrolment rates. Although the $750 million reserve included in the 2008 Budget
has been adjusted to offset a lower revenue outlook, prudence remains in the
fiscal plan in the form of a reserve and contingency funds to help mitigate
further changes arising from global economic uncertainty that could have an
adverse impact on the Province's overall fiscal performance.
While the current outlook for Ontario's revenues has declined by $918 million,
risks that could have additional impacts on the revenue outlook for 2008-09
remain. In particular, ongoing developments in the world economy and financial
markets could affect Ontario's overall economic performance. As well, as in past
years, the revenue outlook could change as past years' tax return processing is
finalized over the coming months. Corporations Tax revenues are subject to the
greatest uncertainty, as these historically fluctuate considerably and
information arriving late in the fiscal year can result in substantial changes
to the outlook.
Risks to the expense outlook are especially evident in the health, education and
social services sectors, which account for over two-thirds of total Provincial
expense, and include assumptions about expected utilization, enrolment rates and
caseloads, many of which are demand-driven and impacted by changes in Ontario's
economic performance. For example, a one per cent increase in both Ontario Works
and Ontario Disability Support Program caseloads would cost the Province an
additional $46 million a year.
Compensation costs and wage settlements, together with the investment
performance of pension plans, are also key cost elements and could have a
substantial impact on the finances of both broader public-sector (BPS) partners
and the Province. With major contracts covering over 50 per cent of unionized
workers in the BPS and approximately 85 per cent of employees in the Ontario
Public Service (OPS) up for negotiation in 2008-09, the government will expect
its bargaining agent partners in this new fiscal environment to achieve
affordable agreements.
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. For example, a change of one per cent to total revenue or total
expense in 2008-09 represents close to a $1.0 billion change in the Province's
overall fiscal outlook. While this change may be small relative to the
government's $96 billion budget, it can cause significant swings in the
Province's surplus/deficit.
As part of its ongoing plan to prudently manage the Province's finances in the
face of risks arising from global economic uncertainty, the government continues
to pursue strategies to contain spending while doing everything it can to
protect investments in key public services. This expenditure management includes
delaying the implementation of and slowing down some new initiatives,
undertaking a number of discretionary restraint initiatives that will realize
savings, and requiring ministries to focus on the highest-priority programs and
services through the results-based planning process. The 2008-09 fiscal plan
also continues to maintain a cautious and prudent approach to fiscal planning,
including a reserve and contingency funds.
Given global economic uncertainty, the government's immediate priority is to
provide a fiscal update for 2008-09. The government continues to monitor
Ontario's economic and fiscal situation closely, and will provide details about
Ontario's medium-term fiscal plan and outlook in the 2009 Budget.
Detailed information on revenue and expense risks and sensitivities, including
compensation costs, can be found in Chapter II of the 2008 Ontario Budget,
Sections D and E respectively.
SECTION B | EXPENDITURE MANAGEMENT
The government has demonstrated its commitment to the prudent management of the
Province's finances. To improve delivery of public services while managing
growth in spending, the government has achieved efficiencies across the Ontario
Public Service (OPS). Reportable savings of $806 million were identified over
the 2004-05 to 2007-08 period, exceeding the target of $750 million. Savings
were made possible through streamlined purchasing processes; reduced
administrative costs; reduced energy and accommodation costs; improved use of
information technology; and better harmonization and coordination of government
operations.
The Province's commitment to finding efficiencies has reduced the overall cost
of government administration from 15 per cent in 2003-04 to 12 per cent in
2007-08. In addition, Ontario's spending on general government services was $124
per person in 2007-08 — the second-lowest rate among all provincial
governments.
The government continues to pursue strategies to contain spending while doing
everything it can to protect key public services that people depend on.
The government is taking action to manage its expenses in light of lower
revenues and to provide fiscal flexibility. It is:
1. Delaying the implementation of and slowing down some new initiatives.
Further information is available in materials released in conjunction with
the 2008 Ontario Economic Outlook and Fiscal Review.
2. Undertaking a number of discretionary restraint initiatives that will
realize savings, including restrictions on government travel, consulting
services, information technology and accommodation spending.
3. Requiring ministries through the 2009-10 results-based planning process to
focus on the highest-priority programs and services while ensuring
lower-priority programs are reviewed and assessed to look for improvements.
The Minister of Finance will continue to consult with Ontarians and other key
groups and individuals to discuss how the Province can continue to manage
expenses and do everything it can to protect key public services.
As Ontario faces these global economic conditions, the government is asking its
Broader Public Sector (BPS) partners to help it in meeting these challenges.
Broader Public Sector employers, as well as the OPS, face a heavy bargaining
calendar in 2008-09. Major contracts, covering over 50 per cent of unionized
workers in the BPS and approximately 85 per cent of employees in the OPS, are up
for negotiations sometime during 2008-09. The government will expect its
bargaining agent partners in this new fiscal environment to achieve affordable
agreements.
While the Ontario Government continues to manage its expenses, $76.6 billion (80
per cent) of total government spending in 2008-09 will be provided to transfer
payment recipients. Funding will not be increasing in fiscal 2009-10 according
to what was projected in the 2008 Budget last March. The government is confident
that its transfer partners will work together with the Province to rise to the
challenge of the current fiscal situation.
The Province continues to encourage its BPS partners to look for opportunities
to modernize. For example, the OntarioBuys program has been innovative in
extending supply-chain leading practices to hospitals, school boards, colleges
and universities to realize efficiencies. In Toronto, a one-time government
investment of $2.6 million at four major Toronto hospitals is leading to $21.1
million in savings over 10 years. A similar one-time government investment of $2
million in London-area hospitals has achieved annual savings of $1.9 million —
a payback period of about one year. These are but two examples of the work being
accomplished through the OntarioBuys program to ensure that Ontario tax dollars
are used efficiently, and that health services continue to improve to meet
Ontarians' needs. Once OntarioBuys is fully implemented across the hospital and
education sectors, savings of up to $100 million are expected, which can be
reinvested back into front-line services.
Ontario will also work with government agencies to look for efficiencies in
their operations.
SECTION C | DETAILS OF ONTARIO'S FINANCES
This section provides information on the Province's historical financial
performance, key fiscal indicators and details of Ontario's current fiscal
outlook.
- ------------------------------------------------------------------------------------------------------------------
2008-09 Fiscal Outlook Table 4
($ Millions)
- ------------------------------------------------------------------------------------------------------------------
Current Change
Actual Outlook -------------------------------
2007-08 2008-09 $ Millions Per Cent
----------------------------------------------------------------
Revenue 97,122 96,002 (1,120) (1.2)
Expense
Programs 87,608 87,411 (197) (0.2)
Interest on Debt 8,914 8,891 (23) (0.3)
------------------------------------------------
Total Expense 96,522 96,302 (220) (0.2)
Reserve - 200 200 -
------------------------------------------------
Surplus/(Deficit) 600 (500) (1,100) -
- ------------------------------------------------------------------------------------------------------------------
Net Debt(1) 142,418 146,311 3,893 2.7
Accumulated Deficit(1) 105,617 106,117 500 0.5
- ------------------------------------------------------------------------------------------------------------------
(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, the change in net assets
of hospitals, school boards and colleges and the change in the fair value of
the Ontario Nuclear Funds. 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.
- ------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Revenue Table 5
($ Millions)
- --------------------------------------------------------------------------------------------------------------------
Current
Actual Outlook
2004-05 2005-06 2006-07 2007-08 2008-09
-------------------------------------------------------------
Taxation Revenue
Personal Income Tax 19,320 21,041 23,655 24,538 25,171
Retail Sales Tax 14,855 15,554 16,228 16,976 17,206
Corporations Tax 9,883 9,984 10,845 12,990 11,459
Employer Health Tax 3,886 4,197 4,371 4,605 4,821
Ontario Health Premium 1,737 2,350 2,589 2,713 2,809
Gasoline Tax 2,277 2,281 2,310 2,360 2,315
Land Transfer Tax 1,043 1,159 1,197 1,363 1,163
Tobacco Tax 1,453 1,379 1,236 1,127 1,092
Fuel Tax 727 729 723 733 742
Electricity Payments-In-Lieu of Taxes 511 951 757 546 600
Other Taxes 283 292 399 481 472
-------------------------------------------------------------
55,975 59,917 64,310 68,432 67,850
Government of Canada
Canada Health Transfer (CHT) 5,640 7,148 7,702 8,487 8,826
Canada Social Transfer (CST) 2,912 3,324 3,478 3,778 4,089
CHST Supplements 775 584 - - -
Social Housing 522 520 532 525 514
Wait Times Reduction Fund 242 243 467 468 235
Infrastructure Programs 209 285 191 207 259
Medical Equipment Funds 387 194 - - -
Other Government of Canada 1,195 953 1,666 3,132 2,741
-------------------------------------------------------------
11,882 13,251 14,036 16,597 16,664
Income from Investment
in Government Business Enterprises
Ontario Lottery and Gaming Corporation 1,992 2,027 1,945 1,857 1,772
Liquor Control Board of Ontario 1,147 1,197 1,307 1,374 1,420
Ontario Power Generation Inc. and Hydro One Inc. 444 1,107 947 1,214 930
Other Government Enterprises (5) (23) (3) (8) -
-------------------------------------------------------------
3,578 4,308 4,196 4,437 4,122
Other Non-Tax Revenue
Reimbursements(1) 1,241 1,295 1,415 1,464 1,382
Vehicle and Driver Registration Fees 976 763 970 1,051 1,044
Electricity Debt Retirement Charge 997 1,021 991 982 1,004
Power Sales 610 779 863 929 856
Sales and Rentals 352 465 1,108 553 701
Other Fees and Licences(1) 506 550 624 668 672
Liquor Licence Revenue 489 516 467 475 454
Net Reduction of Power Purchase Contract Liability 236 396 412 398 373
Royalties(1) 278 191 215 193 215
Miscellaneous Other Non-Tax Revenue 721 773 790 943 665
-------------------------------------------------------------
6,406 6,749 7,855 7,656 7,366
-------------------------------------------------------------
Total Revenue 77,841 84,225 90,397 97,122 96,002
- --------------------------------------------------------------------------------------------------------------------
(1) The change from 2008 Budget Plan reflects reclassification to be consistent
with treatment in the 2007-2008 Public Accounts of Ontario.
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Expense Table 6
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Current
Actual Outlook
Ministry Expense 2004-05 2005-06(1) 2006-07 2007-08 2008-09
- ---------------------------------------------------------------------------------------------------------------------
Aboriginal Affairs(2) 21 50 25 33 55.6
Agriculture, Food and Rural Affairs(2) 795 861 796 731 945.6
Attorney General(3) 1,195 1,277 1,338 1,643 1,592.2
Board of Internal Economy 145 150 163 257 196.3
Children and Youth Services 2,793 3,271 3,264 3,721 4,086.1
Citizenship and Immigration(3) 62 89 112 90 88.1
Community and Social Services 6,360 6,717 7,181 7,547 7,726.5
Community Safety and Correctional Services 1,732 1,749 1,876 2,003 2,140.7
Culture(2) 346 478 414 350 379.8
Economic Development and Trade(2,4) 66 176 199 297 445.2
Education(2) 365 440 423 446 472.3
School Boards' Net Expense 10,274 10,886 11,290 11,830 12,857.2
Energy and Infrastructure(2,4) 246 325 525 401 282.7
Environment 305 274 314 349 398.0
Executive Offices 34 31 37 36 36.3
Finance(2) 534 578 564 455 557.4
Francophone Affairs, Office of 3 4 4 5 5.3
Government Services(2,4) 1,077 742 974 944 1,105.9
Health and Long-Term Care 17,512 17,799 19,121 20,375 21,712.4
Hospitals' Net Expense 13,877 14,816 16,145 17,381 18,436.3
Health Promotion 236 290 391 364 389.7
Labour 129 141 146 170 170.0
Municipal Affairs and Housing(2) 770 926 843 744 799.5
Natural Resources(3) 557 626 731 794 780.2
Northern Development and Mines 320 337 318 346 357.5
Research and Innovation(2) 236 332 316 301 382.8
Revenue 523 442 563 554 610.6
Small Business and Consumer Services(3,4) 20 26 25 31 29.8
Tourism(3) 167 210 204 234 177.4
Training, Colleges and Universities(2) 3,297 3,509 4,115 4,384 4,825.3
Colleges' Net Expense 1,289 1,185 1,273 1,403 1,415.6
Transportation(2) 1,744 1,802 1,794 1,899 1,960.9
Interest on Debt 9,368 9,019 8,831 8,914 8,891.0
Other Expense(2) 2,998 4,369 3,813 7,490 3,091.7
Year-End Savings(5) - - - - (1,100.0)
--------------------------------------------------------------
Total Expense 79,396 83,927 88,128 96,522 96,301.9
- ---------------------------------------------------------------------------------------------------------------------
(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) Details on Other Ministry Expense can be found in Table 7, Other Expense.
(3) Decline from 2007-08 to 2008-09 due to one-time initiatives in 2007-08.
(4) Pending finalization of new ministry structure. Future updates will reflect
adjusted ministry expense, including the newly formed Ministry of
International Trade and Investment.
(5) As in past years, the Year-End Savings provision reflects anticipated
underspending that has historically arisen at year-end due to factors such as
program efficiencies, and changes in project start-ups and implementation plans.
Note: Numbers may not add due to rounding.
- ---------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Other Expense Table 7
($ Millions)
- -------------------------------------------------------------------------------------------------------------------
Current
Actual Outlook
Ministry Expense 2004-05 2005-06(1) 2006-07 2007-08 2008-09
- -------------------------------------------------------------------------------------------------------------------
Aboriginal Affairs
One-Time Expense for the First Nations Gaming - - - 201 -
Agreement
Agriculture, Food and Rural Affairs
One-Time Extraordinary Assistance 458 125 259 274 -
Time Limited Assistance 143 157 19 76 166.5
Culture
One-Time Investments - - - 57 -
Economic Development and Trade(1)
One-Time Investments - - - 152 -
Education
Teachers' Pension Plan(2) 240 295 345 342 54.0
Energy and Infrastructure
Capital Contingency Fund - - - - 171.9
One-Time Investments in Municipal Infrastructure - - 140 450 -
Finance
Community Reinvestment Fund One-Time Transition 233 - - - -
Funding
Investing in Ontario - - - 1,149 -
Ontario Municipal Partnership Fund(3) 626 714 758 907 934.8
Operating Contingency Fund - - - - 193.4
Power Purchases 840 803 863 929 856.0
Government Services
Pension and Other Employee Future Benefits 458 729 557 531 715.0
Municipal Affairs and Housing
One-Time Investment in Municipal Social - - - 100 -
Housing Stock
Research and Innovation
One-Time Investments - - - 87 -
Training, Colleges and Universities
One-Time Investments - - - 699 -
Transportation
One-Time Transit and Infrastructure Investments - 1,546 872 1,536 -
------------------------------------------------------------
Total Other Expense 2,998 4,369 3,813 7,490 3,091.7
- -------------------------------------------------------------------------------------------------------------------
(1) Pending finalization of new ministry structure. Future updates will reflect
adjusted ministry expense.
(2) Numbers reflect accrued pension expense, not Ontario's contributions. Ontario's
matching contributions to the plan grow from $708 million in 2004-05 to
$808 million in 2007-08 and $1,061 million in 2008-09.
(3) The 2004-05 figure includes transfers under predecessor Community Reinvestment Fund.
Note: Numbers may not add due to rounding.
- -------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
2008-09 Infrastructure Expenditures Table 8
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
2008-09 Current Outlook
----------------------------------------------------------
Total Transfers
Infrastructure and Other Total
Expenditures Investment in Expenditures in Infrastructure
Sector 2007-08 Actual Capital Assets Infrastructure(1) Expenditures
- ---------------------------------------------------------------------------------------------------------------------
Transportation
Transit 1,857.6 901.0 349.9 1,250.9
Highway Construction 1,452.2 1,484.3 - 1,484.3
Other Transportation(2) 710.3 520.5 70.7 591.3
Health
Hospitals 638.0 1,045.7 2.5 1,048.2
Other Health 285.9 60.8 187.4 248.1
Education
School Boards 950.4 - 1,018.6 1,018.6
Colleges 183.3 202.0 - 202.0
Universities 677.6 - 54.8 54.8
Water/Environment 387.7 16.3 286.9 303.2
Municipal and Local Infrastructure(3) 1,794.8 33.1 274.9 308.0
Justice 215.2 426.2 49.7 475.9
Other 717.1 244.9 294.1 539.0
-----------------------------------------------------------------------------
Total(4) 9,870.1 4,934.7 2,589.5 7,524.2
- --------------------------------------------------------------------------------------------------------------------
(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 expense in Tables 6 and 7.
(2) Other Transportation includes planning activities, property acquisition, and
other infrastructure programs (e.g., Municipal/Local Roads/Remote Airports).
(3) Municipal and local water and wastewater infrastructure investments are
included in the Water/Environment sector. 2007-08 actual expenditures include
$1,149 million under the Investing in Ontario Act, 2008.
(4) Total expenditures in 2008-09 include $48 million in flow-throughs in
Investment in Capital Assets (for provincial highways) and $225 million in
flow-throughs in Transfers and Other Expenditures in Infrastructure ($15
million in Transportation, $15 million in Health, $67 million in
Water/Environment, $128 million in Municipal and Local Infrastructure).
Note: Numbers may not add due to rounding.
- ---------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Ten-Year Review of Selected Financial and Economic Statistics
($ Millions)
- -------------------------------------------------------------------------------------------------------------------
1999-00 2000-01 2001-02
-------------------------------------------------
Financial Transactions
Revenue 65,042 66,294 66,534
Expense
Programs 53,347 53,519 55,822
Interest on Debt 11,027 10,873 10,337
-------------------------------------------------
Total Expense 64,374 64,392 66,159
Reserve - - -
-------------------------------------------------
Surplus/(Deficit) 668 1,902 375
- -------------------------------------------------------------------------------------------------------------------
Net Debt (3,4) 134,398 132,496 132,121
Accumulated Deficit(5) 134,398 132,496 132,121
- -------------------------------------------------------------------------------------------------------------------
Gross Domestic Product (GDP) at Market Prices 409,020 440,759 453,701
Personal Income 321,702 347,653 361,187
- -------------------------------------------------------------------------------------------------------------------
Population — July (000s) 11,505 11,683 11,897
Net Debt per Capita (dollars) 11,682 11,341 11,106
Personal Income per Capita (dollars) 27,963 29,756 30,360
- -------------------------------------------------------------------------------------------------------------------
Total Expense as a per cent of GDP 15.7 14.6 14.6
Interest on Debt as a per cent of Revenue 17.0 16.4 15.5
Net Debt as a per cent of GDP 32.9 30.1 29.1
Accumulated Deficit as a per cent of GDP 32.9 30.1 29.1
- -------------------------------------------------------------------------------------------------------------------
(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 are 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, the change in net assets
of hospitals, school boards and colleges and, effective April 1, 2007, the
change in the fair value of the Ontario Nuclear Funds.
(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.
(5) 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 plus, effective April 1, 2007, the change in the
fair value of the Ontario Nuclear Funds. 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. For fiscal 2007-08, a $1.2 billion decrease in the Accumulated Deficit
is made up of $0.6 billion in the Province's operating surplus, with the
remainder resulting from a change in accounting policy. Under this change,
Ontario Nuclear Funds Agreement (ONFA) funds are reported at fair value on
Ontario Power Generation Inc. (OPG) books and, upon consolidation, on the
Province's consolidated financial statements.
Sources: Ontario Ministry of Finance and Statistics Canada.
- -------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Table 9
- --------------------------------------------------------------------------------------------------------------------
Current
Actual Outlook
2002-03(1) 2003-04 2004-05 2005-06(2) 2006-07 2007-08 2008-09
- --------------------------------------------------------------------------------------------------------------------
68,891 68,400 77,841 84,225 90,397 97,122 96,002
59,080 64,279 70,028 74,908 79,297 87,608 87,411
9,694 9,604 9,368 9,019 8,831 8,914 8,891
- --------------------------------------------------------------------------------------------------------------------
68,774 73,883 79,396 83,927 88,128 96,522 96,302
- - - - - - 200
- --------------------------------------------------------------------------------------------------------------------
117 (5,483) (1,555) 298 2,269 600 (500)
- --------------------------------------------------------------------------------------------------------------------
132,647 138,816 140,921 141,928 141,100 142,418 146,311
118,705 124,188 125,743 109,155 106,776 105,617 106,117
- --------------------------------------------------------------------------------------------------------------------
477,763 493,081 517,068 536,431 559,840 584,053 596,245
369,420 381,127 401,066 419,253 441,371 463,520 483,104
- --------------------------------------------------------------------------------------------------------------------
12,091 12,242 12,391 12,528 12,665 12,794 12,929
10,971 11,339 11,373 11,328 11,141 11,132 11,317
30,553 31,132 32,369 33,464 34,849 36,231 37,366
- --------------------------------------------------------------------------------------------------------------------
14.4 15.0 15.4 15.6 15.7 16.5 16.2
14.1 14.0 12.0 10.7 9.8 9.2 9.3
27.8 28.2 27.3 26.5 25.2 24.4 24.5
24.8 25.2 24.3 20.3 19.1 18.1 17.8
- --------------------------------------------------------------------------------------------------------------------
[Chart 3: Composition of Revenue - pie chart]
[Chart 4: Composition of Total Expense - pie chart]
[Chart 5: Composition of Program Expense - pie chart]
ANNEX II
Economic Outlook
OVERVIEW
The province's economic growth is expected to be soft in the near term due to
heightened global economic uncertainty. The Ministry of Finance is projecting
Ontario real gross domestic product (GDP) growth of 0.1 per cent for 2008. The
average private-sector forecast for Ontario real GDP growth, as of October 16,
2008, is 0.7 per cent in 2009.
- -------------------------------------------------------------------------------------------------------------------
Ontario Economic Outlook Table 1
(Per Cent)
- -------------------------------------------------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008e 2009p
------------------------------------------------------------------------------
Real GDP Growth 1.4 2.5 2.7 2.5 2.2 0.1 0.7
Employment Growth 3.0 1.7 1.3 1.5 1.6 1.5 0.4
CPI Inflation 2.7 1.9 2.2 1.8 1.8 2.3 2.0
- -------------------------------------------------------------------------------------------------------------------
e = estimate; p = private-sector average (October 16, 2008).
Sources: Statistics Canada, Ontario Ministry of Finance and Ontario Ministry of Finance Survey of Forecasts.
- -------------------------------------------------------------------------------------------------------------------
This is a time of unusually heightened global economic uncertainty that is
having an impact on many jurisdictions including Ontario. Private-sector
forecasts for economic growth were changing rapidly during the writing of this
document, reflecting the current environment. The Ministry of Finance will
update its economic growth projections for planning purposes in the 2009 Budget.
FINANCIAL MARKET TURMOIL
Recent global financial market and economic turmoil poses a significant threat
to economic growth. Virtually every economy has faced a decline in consumer and
business confidence over the past year. There have been significant liquidity
challenges in the investment and banking sectors. Equity markets worldwide have
experienced sharp price declines. Central banks have acted to prevent credit
markets from seizing up by injecting liquidity and lowering their policy
interest rates. The fall in interest rates for central government debt, however,
has not been fully matched by declines in interest rates for businesses,
consumers and other levels of government. As well, financial market uncertainty
has reduced credit availability and is dampening business and household
spending, which is having an adverse impact on Ontario.
- --------------------------------------------------------------------------------
SOURCES OF CREDIT MARKET TURMOIL AND RISKS TO GROWTH
The global financial crisis began with a sharp rise in defaults in the subprime
mortgage market in the United States. Many of these high-risk mortgages had been
packaged as securities and sold to investors around the world. Rising default
rates caused the value of these securities to plunge. Uncertainty regarding risk
led to reduced lending and higher interest rates for businesses and consumers.
Numerous well-known institutions have failed, been acquired by their governments
or bought by stronger competitors at marked-down values.
The Canadian banking and financial systems are in much better shape than their
counterparts south of the border. The subprime mortgage market in Canada is
estimated to account for less than five per cent of the mortgages outstanding,
compared to 22 per cent in the United States. Canadian banks, therefore, have
faced much lower loan losses. Risk aversion in U.S. financial markets has spread
to Canada, but to a lesser extent. The commercial paper market has frozen up,
making it very difficult for businesses to raise money through the traditional
capital-market channel. Canadian Treasury-bill yields have fallen as investors
look for safer assets. Inter-bank lending rates have increased sharply in
Canada, making it more costly and difficult for banks to do business.
The most serious risk going forward is the relationship between the financial
system and the economy. Tighter liquidity conditions lead to restrictions in
business and consumer lending, which contributes to weaker economic growth that
in turn leads to further weakening in financial markets. Recently, central banks
and governments worldwide have injected substantial additional liquidity and
provided other important measures to safeguard the financial system.
- --------------------------------------------------------------------------------
ONGOING EXTERNAL ECONOMIC CHALLENGES
Ontario has been facing an increasingly challenging external economic
environment. Until recently, oil prices have been increasing and the Canadian
dollar has been strengthening. More recently, weakening U.S. demand and
heightened global financial market turmoil have created additional challenges.
- ------------------------------------------------------------------------------------------------------------------
Key External Variables Table 2
- ------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008y
-------------------------------------------------------------------
Crude Oil ($ US per Barrel) 26.1 31.1 41.4 56.5 66.1 72.3 113.3
Canadian Dollar (Cents US) 63.7 71.4 76.8 82.5 88.2 93.1 98.2
U.S. Real GDP Growth (Per Cent) 1.6 2.5 3.6 2.9 2.8 2.0 2.3
Three-Month Treasury Bill Rate 2.6 2.9 2.2 2.7 4.0 4.2 2.6
10-Year Government Bond Rate 5.3 4.8 4.6 4.1 4.2 4.3 3.7
- ------------------------------------------------------------------------------------------------------------------
y = year-to-date average (October 16, 2008).
Sources: Bank of Canada, New York Mercantile Exchange and U.S. Bureau of Economic Analysis.
- ------------------------------------------------------------------------------------------------------------------
The price of oil has soared from a low of $18 US per barrel in January 2002 to a
record high of more than $147 US per barrel in mid-July 2008. Oil prices have
averaged $113 US per barrel so far this year, up $87 US per barrel over the past
six years ��� the largest increase on record. Higher oil prices are a challenge
for Ontario because they increase costs for businesses, consumers and
governments. In 2007, Ontario residents and industry spent an estimated $30
billion on crude oil and oil products, natural gas and coal, equivalent to about
five per cent of the province's GDP.
The Canadian dollar increased from a low of 61.8 cents US in January 2002 to a
peak of 110.3 cents US in November 2007, marking the largest five-year increase
on record. So far this year, the Canadian dollar has averaged 98.2 cents US. The
stronger Canadian dollar is a challenge as it makes Ontario's exports more
expensive and imports cheaper. As a result, Ontario businesses find it more
difficult to compete with foreign producers, both in the Canadian market and
abroad. On the other hand, the stronger Canadian dollar benefits Ontario
consumers and businesses by lowering the cost of imported goods and materials,
including productivity-enhancing machinery and equipment.
U.S. demand for Ontario-produced goods and services has been declining due to
the stronger Canadian dollar, weakening U.S. economic growth and increasing
competition from newly industrializing economies. The value of Ontario's
merchandise exports over the last five years to the United States, its largest
trading partner, has fallen by 12.2 per cent.
[Chart 1: Ontario's International Merchandise Exports Are Diversifying - bar graph]
While newly industrializing economies are a competitive challenge for Ontario
businesses, they also present new opportunities. Ontario's international
merchandise exports to countries other than the United States have more than
doubled over the past five years.
As a result, Ontario's export base has significantly diversified. For instance,
over the last five years, the value of merchandise exports to Russia has
increased by 377 per cent; exports to India by 258 per cent; and exports to
China by 95 per cent. Ontario has also increased its exports to other G7
countries. Over the last five years, exports to the United Kingdom have risen by
280 per cent; exports to Germany by 36 per cent; exports to Japan by 30 per
cent; and exports to Italy by 77 per cent.
ONTARIO'S ECONOMIC PROGRESS OVER THE PAST FIVE YEARS
Ontario's economic advantages include its proximity to large markets, a
well-educated population, a highly skilled workforce, diversified industrial
structure, competitive business costs, modern infrastructure and strong support
for innovation. The Ontario Government's five-point economic plan, outlined in
the Foreword, continues to enhance the foundation for long-term growth.
There has been continued economic growth in Ontario over the past five years,
despite an increasingly challenging global environment:
• Ontario real GDP growth averaged 2.3 per cent over the 2003 to 2007 period.
• Inflation has been low and stable in recent years, with the consumer price
index (CPI) inflation rate averaging close to two per cent over the 2003 to
2007 period.
• More than a half million net new jobs have been created since October 2003.
There has been strong employment growth in sectors paying above-average wages,
including educational services (98,000); health care and social assistance (89,200);
construction (73,500); professional, scientific and technical services (62,100); and
finance, insurance, real estate and leasing (47,800).
[Chart 2: Jobs Created Since October 2003 - bar graph]
• Solid wage and employment growth has led to strong income gains. Real
personal disposable income per capita has grown at an average annual pace
of 1.8 per cent over the past five years.
• Business investment has been robust. Real machinery and equipment
investment, a key component of increasing productivity in the province,
expanded by an average of 9.0 per cent annually between 2003 and 2007.
• Housing starts averaged 78,100 per year between 2003 and 2007. Unlike in
other jurisdictions, there is little evidence of overbuilding in the
Ontario housing market.
THE ONTARIO ECONOMY IN 2008
[Chart 3: Employment Growth Relatively Strong - bar graph]
As reported in the 2008 second-quarter Ontario Economic Accounts, Ontario
economic growth during the first half of 2008 was very modest. Real GDP
increased 0.3 per cent in the second quarter, following a contraction of 0.4 per
cent in the first quarter. The main drag on growth has been lower export
volumes, which are down more than seven per cent over the first half of the
year. Ontario is not alone in seeing modest growth during the first half of
2008. Canadian real GDP increased 0.1 per cent in the second quarter, following
a contraction of 0.2 per cent in the first quarter. All G7 economies are also
facing significant economic challenges. Among them, Germany, France, Italy and
Japan have seen at least one quarterly decline in output so far. Despite
avoiding a quarterly decline, there has been weakness in U.S. and U.K.
employment, housing construction and financial markets.
Ontario has created 104,100 jobs so far this year. About 83 per cent of these
have been in the private sector. Although Ontario has lost 16,200 manufacturing
jobs, there have been strong job gains in other industries paying above-average
wages including construction (37,500); health care and social assistance
(26,800); and professional, scientific and technical services (19,400). This
increase in employment has led to solid income gains. Labour income grew by 4.2
per cent over the first half of the year, supported by job gains and higher wages.
The side of the Ontario economy based on domestic demand has remained strong in
2008. Household spending continues to be firm, with real consumer spending up by
a robust 4.6 per cent in the first half of the year. Residential construction
spending has increased by 0.9 per cent in real terms. So far in 2008, housing
starts averaged 77,600 units (on an annualized basis), up from 69,100 units for
the same period in 2007. While housing starts have increased, home resales have
weakened from a record-setting year in 2007.
Corporate profits are down 2.8 per cent over the first half of this year,
reflecting the negative impact of record oil prices and the higher dollar. So
far this year, Ontario real non-residential construction has grown by 2.1 per
cent, and real machinery and equipment spending has risen 1.2 per cent.
Ontario's CPI inflation rate has averaged 2.2 per cent so far this year, up from
1.8 per cent in 2007. This was largely due to elevated gasoline prices and an
increase in food inflation. Ontario's core inflation rate, which excludes food
and energy, has averaged 1.1 per cent on a year-over-year basis and has remained
below 2.0 per cent for 11 straight months. The dramatic decline in oil prices
since mid-July 2008 will exert downward pressure on CPI inflation over the near
term. Over the first seven months of 2008, annual wage settlements have averaged
2.4 per cent.
Ontario's trade balance has deteriorated significantly in 2008, largely because
of a decline in automotive exports to the United States. Imports have declined,
but at a slower pace than exports, largely due to reduced demand for automotive
production inputs.
HEIGHTENED GLOBAL ECONOMIC UNCERTAINTY
The short-term Ontario economic outlook is heavily influenced by external
factors such as oil prices, the Canadian dollar exchange rate, interest rates,
U.S. economic growth and global financial market turmoil. In the current
economic environment there is an unusually wide range of views on the outlook
for each of these key factors as shown in the following table. The recent
dramatic movements in asset prices, foreign exchange and commodity markets mean
that relatively little confidence can be attached even to these wide
private-sector forecast ranges in 2009.
- ------------------------------------------------------------------------------------------------------------------
External Variables Table 3
Private-Sector Forecast
- ------------------------------------------------------------------------------------------------------------------
2008 2009
------------------------------------------------------------------
Low Avg. High Low Avg. High
------------------------------------------------------------------
Crude Oil ($US per Barrel) 105.0 110.4 119.1 78.0 103.3 130.0
Canadian Dollar (Cents US) 93.7 95.7 97.7 85.3 92.2 95.7
U.S. Real GDP Growth (Per Cent) 1.2 1.5 1.8 (0.7) 0.5 1.9
Three-Month Treasury Bill Rate 1.8 2.2 2.7 1.7 2.3 3.5
(Per Cent)
10-Year Government Bond Rate 3.4 3.6 4.0 3.4 3.9 4.5
(Per Cent)
- -----------------------------------------------------------------------------------------------------------------
Sources: Bank of Canada, Blue Chip Economic Indicators (October 2008) and Ontario Ministry of Finance Survey of
Forecasts (October 16, 2008).
- -----------------------------------------------------------------------------------------------------------------
Oil prices fell from a record intra-day high of $147.27 US per barrel on July 11
to less than $70 US per barrel in mid-October 2008. Weaker demand from
Organization for Economic Cooperation and Development (OECD) countries is
expected to continue to be more than offset by strong consumption in non-OECD
countries. Limited global surplus capacity will likely keep oil markets
relatively tight and oil prices vulnerable to major supply disruptions over the
forecast horizon. A significant amount of volatility still exists in oil
markets, and analysts' projections for 2009 range from a high of $130 US per
barrel to a low of $78 US.
[Chart 4: Crude Oil Prices - line graph]
[Chart 5: Canadian Dollar - line graph]
After hovering around parity with the U.S. dollar for the first seven months of
the year, the Canadian dollar depreciated significantly in October, reflecting
the sharp decline in commodity prices and weakening outlook for the domestic
economy. The value of the Canadian dollar could fluctuate a great deal in the
future depending on commodity prices, financial flows and interest rates. There
is a significant divergence of views on the outlook for the Canadian dollar,
with forecasts ranging from a low of 85.3 cents US to a high of 95.7 cents US in
2009.
Although overall U.S. economic growth has continued at a moderate pace, there
has been a significant reduction in U.S. demand for Ontario-produced goods and
services. For example, spending on autos has been particularly hard hit, with
auto sales expected to slow to 13.8 million units in 2008 — the lowest level
since 1992. There are considerable risks stemming from the U.S. economy, which
continues to face imbalances and significant issues in its financial markets.
Interest rates affect consumer and business costs as well as the projected
government expense for interest on the Province's debt. The Bank of Canada has
cut its benchmark target for the overnight interest rate by 200 basis points
since December 2007, including the 50 basis point cut on October 8, 2008, and
has taken additional measures to support liquidity in financial markets.
However, the turmoil in global financial markets has led to tighter credit
conditions for businesses, and some are facing higher borrowing costs. How
global financial markets evolve and how this impacts economic growth have
important implications for interest rate projections.
The wide range of views on each of these key assumptions represents a
significant risk to the forecast because a change in any of them can have a
major impact on Ontario's economic growth outlook. The following table 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 sustained 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.
- -------------------------------------------------------------------------------------------------------------------
Impacts of Changes in Key Assumptions on Ontario Real GDP Growth(1) Table 4
(Percentage Point Increase)
- -------------------------------------------------------------------------------------------------------------------
First Year Second Year
-----------------------------------------------
Canadian Dollar Depreciates by Five Cents US 0.1 to 0.8 0.5 to 1.2
World Crude Oil Prices Decrease by $10 US per Barrel 0.1 to 0.5 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.
- ------------------------------------------------------------------------------------------------------------------
PRIVATE-SECTOR ECONOMIC FORECASTS
The Ontario Economic Forecast Council was established as part of the Fiscal
Transparency and Accountability Act, 2004 to provide advice on macroeconomic
forecasts and assumptions. The council members are Peter Dungan from the
University of Toronto, Glen Hodgson from the Conference Board of Canada, Dale
Orr from Global Insight and Ernie Stokes from the Centre for Spatial Economics.
The Minister of Finance met with council members and other private-sector
forecasters in the process of preparing the 2008 Ontario Economic Outlook and
Fiscal Review and received their views on Ontario's economic outlook and other
economic policy advice.
- -------------------------------------------------------------------------------------------------------------------
Private-Sector Forecasts for Ontario Real GDP Growth Table 5
(Per Cent)
- -------------------------------------------------------------------------------------------------------------------
2008 2009
----------------------------------------
Conference Board of Canada (October) 0.3 1.5
Global Insight (October) 0.3 0.5
Centre for Spatial Economics (June) 0.4 1.9
University of Toronto (October) (0.4) 0.6
RBC Financial Group (October) 0.0 0.4
Scotiabank Group (October) (0.1) (0.9)
TD Bank Financial Group (October) 0.3 0.8
Desjardins Group (September) (0.1) 0.9
BMO Capital Markets (October) (0.1) 0.4
CIBC World Markets (October) 0.1 0.9
- -------------------------------------------------------------------------------------------------------------------
Private-Sector Survey Average 0.1 0.7
- -------------------------------------------------------------------------------------------------------------------
Source: Ontario Ministry of Finance Survey of Forecasts (October 16, 2008).
- -------------------------------------------------------------------------------------------------------------------
Private-sector forecasters are, on average, calling for modest Ontario real GDP
growth of 0.9 per cent in 2009. This modest pace of growth is due to the view
that the economic environment will remain challenging well into 2009. Views
regarding the outlook for 2009 have changed rapidly, making it especially
difficult for the government to determine appropriate planning projections.
COMPARISON TO THE 2008 ONTARIO BUDGET
The Ministry of Finance is lowering its projection for 2008 real GDP growth to
0.1 per cent from the 1.1 per cent released in the 2008 Budget last March. The
average private-sector forecast at the time of the budget was 1.2 per cent. This
adjustment largely reflects continued financial market turmoil and a more
negative outlook for U.S. demand. Weaker Ontario real GDP growth in 2008 is
largely reflected through weaker exports and profits. Exports are currently
expected to decline by 6.0 per cent rather than remaining flat as expected at
the time of the Budget. Corporate profits are now expected to be weaker than
forecast in March, falling by 5.0 per cent in 2008 instead of growing by 4.0 per
cent.
[Chart 6: Private-Sector Forecasts - bar graph]
Employment and wages, along with retail sales and housing starts, have performed
well so far this year, with growth forecasts now higher than at the time of the
Budget. Employment was forecast to grow by 1.0 per cent for 2008, but that
forecast has been revised up to 1.5 per cent. Solid employment gains have
contributed to stronger-than-expected income and spending growth. Personal
income is forecast to rise by 4.2 per cent — 1.1 percentage points above the
forecast at the time of the Budget. Retail sales for 2008 are now forecast to
grow by 4.6 per cent, up from 3.4 per cent in the Budget, and there are expected
to be 75,000 housing starts, up from a Budget forecast of 64,000.
The average private-sector forecast for Ontario real GDP growth is now 0.7 per
cent in 2009, significantly weaker than the Ministry of Finance's 2008 Budget
forecast of 2.1 per cent. This is primarily due to global financial market
turbulence and a substantially weaker outlook for U.S. demand. The table below
shows the changes in the projections for the key economic variables since the
2008 Budget.
- -------------------------------------------------------------------------------------------------------------------
Changes in Key Economic Forecast Assumptions, Table 6
2008 Fall Economic Statement Compared to 2008 Ontario Budget (Per Cent Change)
- -------------------------------------------------------------------------------------------------------------------
2008 2009
--------------------------------------------------------------------
2008 2008e 2008 2008p
Budget Fall Update Budget Fall Update
--------------------------------------------------------------------
Real GDP 1.1 0.1 2.1 0.7
Nominal GDP 2.8 2.1 3.9 2.2
Retail Sales 3.4 4.6 3.7 3.6
Housing Starts (000s) 64.0 75.0 63.0 64.9
Personal Income 3.1 4.2 4.0 3.8
Labour Income 3.4 4.3 3.9 3.9
Corporate Profits 4.0 (5.0) 4.9 1.7
Employment 1.0 1.5 1.1 0.4
Job Creation (000s) 68 101 76 25
Key External Variables
Crude Oil ($ US per Barrel) 85.0 108.0 80.0 103.3
U.S. Real GDP 1.7 1.5 2.6 0.5
Canadian Dollar (Cents US) 100.0 96.0 98.0 92.2
Three-Month Treasury Bill Rate 3.3 2.3 3.8 2.3
10-Year Government Bond Rate 3.9 3.6 4.5 3.9
- -------------------------------------------------------------------------------------------------------------------
e = estimate; p = private-sector average.
Sources: Blue Chip Economic Indicators (October 2008), Ontario Ministry of Finance and Ontario Ministry of
Finance Survey of Forecasts (October 16, 2008).
- -------------------------------------------------------------------------------------------------------------------
ANNEX III
Role for the Federal Government
All Canadians deserve to be treated fairly. Ontarians, however, are not being
treated like Canadians living in other provinces. Unemployed Ontario workers
deserve the same support that unemployed workers in other provinces receive.
Ontarians ought to have the same level of per-person health care funding now
provided to Canadians elsewhere in the country. And Ontario should receive its
fair share of federal investment in Canada's infrastructure.
Ontario has the wealth it needs, but needs to keep more of its own money during
challenging economic times.
CANADA'S SYSTEM OF TRANSFERS IS OUTDATED
Ontario's Fiscal Gap
Each year, under the current federal system of programs and transfers, the
federal government collects more than $20 billion from Ontario taxpayers to
deliver programs and services elsewhere in Canada. These funds — $1,815 per
Ontarian — are redistributed from Ontario taxpayers to other regions of the
country, despite the fact that some of these regions are as prosperous as
Ontario, if not more so.
In September of this year, the TD Bank Financial Group released a report that
estimated the portion of Ontario's fiscal gap for 2005 that resulted from
discriminatory federal programs to be $11.8 billion. The report noted that the
total fiscal gap amounts to four per cent of Ontario's gross domestic product (GDP).
If Ontario was able to keep more of its own money, it could further strengthen
the economy and enhance programs and services for its citizens.
The financial burden that Ontario carries within Canada must be reduced. In
recent years, under two different prime ministers, Ontario has made some
progress. The Canada Social Transfer is now provided on an equal per-capita
basis. And in 2005, Ontario negotiated a Canada-Ontario Immigration Agreement
(COIA) for $920 million in new investments for settlement and language training
services over five years.
Ontario welcomes these changes but, overall, Ontarians continue to be treated
unfairly.
Equalization
[Chart 1: Ontarians Pay into Equalization - bar graph]
Over the last 50 years, Ontarians have contributed over $100 billion in
equalization payments to other Canadian provinces — almost half of all funds
contributed to the program in that time. In 2008-09 alone, Ontario taxpayers
will contribute $5.7 billion to the equalization program. Unlike the other nine
provinces, Ontario has always been a contributor to the equalization program,
but never a recipient.
Ontarians contributed to equalization because it was the fair and right thing to
do. But when Ontario was eligible to receive equalization in the late 1970s, the
federal government changed the rules of the program to exclude it.
Now, some economists believe that under the new federal formula, Ontario may
once again soon qualify to receive equalization funds. A key factor contributing
to this development is the hardship that the North American manufacturing sector
is enduring. In contrast, the economies of Canada's oil-producing provinces are
growing faster than Ontario's.
If the Ontario Government received equalization, more of the tax dollars that
the federal government extracts from Ontarians would support investments and
public services needed in their own province. If Ontario does qualify, it
expects to receive its share of equalization from the federal government.
Employment Insurance
In difficult times, it is especially important to have a strong system of
support for laid-off workers. Canada's Employment Insurance (EI) system does not
meet the needs of Ontario's workers. Unemployed persons in Ontario, compared
with those in other provinces, are far less likely to be eligible for EI regular
benefits. As a result, average EI regular benefits in 2007 per unemployed person
were about $5,120 in Ontario and $9,750 in other provinces — a difference of
over $4,600 per unemployed person, or $2.1 billion in total.
The labour market support and training components of EI also fail to meet
Ontarians' needs. Although Ontario had 42 per cent of Canada's
unemployed population in 2007, Ontarians received only 27 per cent of EI funding
for labour market support and training in 2007-08.
[Chart 2: Ontarians Do Not Receive Fair Treatment - bar graph]
Health Care
Through the Canada Health Transfer (CHT), Ontario receives $773 million less than
its fair share, compared to other provinces, in per-person cash funding for its
health care system. Although the federal government recognized this unfairness in
its 2007 budget, Ottawa does not intend to fix the CHT until 2014. Ontario believes
it should be fixed immediately.
Regional Economic Development
The federal government provides regional economic development support to
Atlantic Canada, Quebec, the West and Northern Ontario. In 2008-09, the federal
government will spend $934 million on regional development in Canada, of which
only $41 million — or four per cent — is provided to northern and rural
Ontario through FedNor.
Despite Ontario's importance as the heart of Canada's manufacturing sector, no
economic development program exists for southern Ontario. If Ontario received
its fair share of federal regional development funding, Ontarians would benefit
from an additional $534 million in 2008-09.
Infrastructure
Building infrastructure is crucial to Ontario's future: it creates jobs in the
short term and builds a stronger economy in the long term.
The Ontario Government has made significant investments in the province's
infrastructure, but the Province is not receiving its fair share of federal
support in this area. Ontario is still awaiting a $6 billion federal
contribution to Metrolinx's regional transportation plan for the Greater Toronto
Area and Hamilton to complement the Province's $11.5 billion commitment. If
Ontario were to receive its fair share of the federal government's seven-year
Building Canada infrastructure plan on a per-capita basis, it would receive an
additional $970 million.
Time-Limited Transfers
The federal government has committed time-limited funding to support a variety
of provincial services, including wait times reduction for health care,
postsecondary education, transit and the environment. Federal support from these
time-limited transfers will decrease from 2008-09 levels by over $350 million in
2009-10 and by over $750 million in 2010-11.
Ontario's ongoing commitments in these areas will not stop when the federal
transfers end.
[Chart 3: Time-Limited Federal Transfers - bar graph]
NEED FOR A FEDERAL PARTNER
The Province is doing what it must to strengthen Ontario's economy and create
new jobs. But it could do much more, much faster, if it could keep more of
Ontarians' money in the province — and if it had a true partner in the federal
government.
Ontario therefore calls on the federal government to:
• recommit to a principled allocation formula for all federal transfers to reduce the drain on Ontario
• provide Ontario with its fair share of federal funding, including:
o its full share of funding payable under the equalization program, should Ontario qualify
o equal per-capita health care funding immediately through the Canada Health Transfer
o a fair share of federal infrastructure funding
o the continuation of time-limited federal funding
• modernize the EI program to better meet the needs of Ontario workers by
providing the same support and job training that workers receive in other
regions of Canada
• invest in Ontario's economic development, as it does everywhere else in the country.
Ontario needs a true partner in the federal government that will work with it to
make the province stronger than ever. Building a stronger Ontario means a
stronger Canada.
Ontario invites the federal government to engage in a substantive discussion of
these fairness issues, with the mutual goals of strengthening the Ontario
economy and building a more prosperous Canada.
ANNEX IV
Borrowing and Debt Management
LONG-TERM PUBLIC BORROWING
As an agency of the Ministry of Finance, the Ontario Financing Authority (OFA)
manages the borrowing, debt, investment and cash management activities of the
Province and the Ontario Electricity Financial Corporation (OEFC) in a
cost-effective manner.
The interim long-term public borrowing requirement for 2008-09 is $24.8 billion.
[Chart 1: Borrowing Markets - Pie chart]
Global financial markets are facing unprecedented challenges. The Province is
not immune to these conditions. However, the OFA has been able to maintain the
pace of its borrowing program.
As at October 10, 2008, $13.6 billion, or
55 per cent, of the long-term borrowing requirement was completed.
Despite extremely difficult financial market conditions, the Province maintained
a flexible approach to borrowing, monitoring both domestic and international
capital markets for cost-effective borrowing opportunities.
[Chart 2: Domestic Markets - Pie chart]
The Province typically targets 25 per cent of its borrowing from international
markets. About $4.7 billion, or 34 per cent, of borrowing has been raised from
international markets so far in 2008-09, compared to 14 per cent for the entire
2007-08 fiscal year. Bonds issued in foreign currencies were:
• three Global bond issues in U.S. dollars
• Euro Medium-Term Notes (EMTNs) in sterling, Swiss francs and U.S. dollars
• one Japanese yen loan.
About $8.9 billion, or 66 per cent, of borrowing was completed in the domestic
market through a number of instruments, including:
• syndicated issues
• bond auctions
• floating rate notes
• Ontario Savings Bonds
• domestic medium-term notes.
- ------------------------------------------------------------------------------------------------------------------
2008-09 Borrowing Program: Province and OEFC Table 1
($ Billions)
- ------------------------------------------------------------------------------------------------------------------
Budget Current In-Year
Plan Outlook Change
---------------------------------------------
Deficit/(Surplus) 0.0 0.5 0.5
Non-Cash Adjustments (0.9) 2.0 2.9
Investment in Capital Assets 4.9 4.9 0.0
Net Loans/Investments 1.3 1.1 (0.2)
Debt Maturities 20.5 20.5 0.0
Debt Redemptions 1.0 0.6 (0.4)
---------------------------------------------
Total Funding Requirement 26.9 29.6 2.7
Canada Pension Plan Borrowing (0.6) (0.5) 0.1
Decrease/(Increase) in Short-Term Borrowing (2.0) (2.9) (0.9)
Increase/(Decrease) in Cash and Cash Equivalents 0.0 (1.4) (1.4)
---------------------------------------------
Total Long-Term Public Borrowing Requirement 24.3 24.8 0.5
- ------------------------------------------------------------------------------------------------------------------
Note: Numbers may not add due to rounding.
- ------------------------------------------------------------------------------------------------------------------
Deficit
The total long-term public borrowing requirement of $24.8 billion is $0.5
billion higher than the Budget Plan and the First Quarter Ontario Finances, due
to the projected deficit.
Accumulated deficit is the difference between total liabilities and total
assets. It is projected to be $106.1 billion as at March 31, 2009, compared to
$105.6 billion as at March 31, 2008. The accumulated deficit is forecast to
increase by the amount of the deficit.
Total debt is also expected to increase due to the government's capital
investments in key priority areas, loans to school boards for capital projects
and increased short-term borrowing to maintain cash levels. The increase in net
debt is primarily a result of the government's capital investments.
Other Changes in the Financing Table
As at March 31, 2008, cash and cash equivalents were $1.4 billion higher than
forecast in the 2008 Budget as the OFA-funded expenditures that had been
anticipated to flow by the end of 2007-08 did not flow until 2008-09.
The increase in short-term borrowing is aimed at funding the timing difference
between accrual expenditures and cash outflows, while targeting liquid reserves
at $5.4 billion as at March 31, 2009, unchanged from the Budget Plan.
Debt redemptions are down $0.4 billion due to lower redemptions of Ontario
Savings Bonds. The $0.2 billion decrease in net loans/investments is mainly the
result of a decrease in loans to Ontario Power Generation Inc. (OPG). Canada
Pension Plan borrowing of $0.1 billion was used to buy back less cost-effective
debt.
The restructuring of the frozen asset-backed commercial paper (ABCP) market in
Canada has received all court approvals, and the Province expects to receive its
restructured notes within the next month. The Province plans to hold these notes
to maturity and no further writedown is expected at this time.
It is expected that by holding on to the restructured notes to maturity, the
Province will recover most of the accounting writedown taken last fiscal year.
In the last fiscal year, final Interest on Debt charges totalled $209 million
less than forecast in the 2007 Budget, even after the Province took a $107
million writedown related to its ABCP holdings. This $209 million saving allowed
the Province to make further investments in priority areas such as health care,
education and infrastructure.
Debt
Total debt, which represents all borrowing without offsetting financial assets,
was $172.3 billion as at September 30, 2008. Total debt as at March 31, 2009 is
projected to be $169.4 billion, compared to $162.2 billion as at March 31, 2008.
[Chart 3: Debt - Bar chart]
Ontario's net debt, the difference between total liabilities and total financial
assets, is projected to be $146.3 billion as at March 31, 2009, compared to
$142.4 billion as at March 31, 2008.
Debt-to-GDP Ratios
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. The current
outlook projects a ratio of 24.5 per cent in 2008-09.
[Chart 4: Net Debt-to-GDP - Line chart]
The Province's accumulated deficit-to-GDP ratio is forecast to improve from 25.2
per cent in 2003-04 to a forecast of 17.8 per cent in 2008-09.
[Chart 5: Accumulated Deficit-to-GDP - Line chart]
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 6: Total Debt Composition - Pie chart]
[Chart 7: Net Interest Rate Resetting Exposure - Bar chart]
[Chart 8: Foreign Exchange Exposure - Bar chart]
Public debt totals $152.4 billion, primarily consisting of bonds issued in the
domestic and international long-term public markets in 11 currencies. Ontario
also has $19.9 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 net interest rate resetting 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, 2008, the net interest rate resetting exposure was 13.4 per cent
and foreign exchange exposure was 0.1 per cent.
All exposures have remained well below policy limits in 2008-09.
Debt Maturities
The largest component of the borrowing program is the refinancing of maturing
debt. The year-to-year variation in debt maturities largely reflects past
borrowing activities. 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 9: Debt Maturities - Bar chart]
Cost of Debt
The effective interest rate (on a weighted-average basis) on total debt was 5.53
per cent as at September 30, 2008 (March 31, 2008, 5.76 per cent). For
comparison, as at March 31, 1993, the effective interest rate on total debt was
10.14 per cent.
[Chart 10: Effective Interest Rate (Weighted Average) of Debt - Line chart]
The effective interest rate on public debt was 5.16 per cent as at September 30,
2008, compared to 5.35 per cent as at March 31, 2008. The effective interest
rate on non-public debt was 8.35 per cent as at September 30, 2008, compared to
8.59 per cent as at March 31, 2008.
ANNEX V
Transparency in Taxation, 2008
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 2008 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.
This report includes descriptions only of tax provisions that are new or have
been modified since the 2007 Transparency in Taxation report. The descriptions
are intended to provide a basic understanding of the provisions and do not
replace the relevant legislation or regulations.
- -------------------------------------------------------
Descriptions of the tax provisions presented in this
report are available online at:
www.fin.gov.on.ca/english/budget/fallstatement/2008/
- -------------------------------------------------------
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 and the federal government are finalizing a corporate tax collection
agreement. The agreement provides for the federal collection and administration
of Ontario's Corporate Income Tax, Minimum Tax, Capital Tax and Special
Additional Tax on life insurers, effective for taxation years ending after 2008.
Similar to the tax collection agreement for Personal Income Tax, the corporate
tax collection agreement requires Ontario to harmonize with the federal
corporate income tax base.
METHOD
The estimates in this report were developed using the latest available taxation
or economic data, forecast to the 2008 calendar year. The data used to estimate
the values of the tax provisions come from a variety of sources. The estimated
value of a tax provision may differ from the amount reported in a prior year for
a variety of reasons including amendments to the provision, changes in economic
factors, revisions to the underlying data and improvements to the estimation
method. Some tax provision estimates are particularly sensitive to economic
conditions or other variables and, therefore, can 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 $1 million are denoted by the letter "s"
(small). This report also includes tax provisions for which relevant data from
the tax system are not currently available to the Ministry of Finance. Although
estimates may not be available, these items are listed to ensure greater
accountability and transparency.
Future annual reports will continue to refine Ontario's tax expenditure
estimates.
PERSONAL INCOME TAX
Table 1 provides estimates of tax provisions relating to the Ontario Personal
Income Tax system. Business provisions listed here are for unincorporated
businesses.
- ---------------------------------------------------------------------------------------------------------------------
Personal Income Tax(1) Table 1
- ---------------------------------------------------------------------------------------------------------------------
Tax Provisions 2008 Estimates(2)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Ontario Non-refundable Tax Credits
- ---------------------------------------------------------------------------------------------------------------------
Adoption Expense Credit s
Age Credit 265
Amounts Transferred from a Spouse or Common-law Partner 25
Basic Personal Credit 4,270
Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) Contributions Credit 555
Caregiver Credit 15
Charitable Donations Credit 645
Disability Credit 85
Eligible Dependant Credit 85
Employment Insurance (EI) Premiums Credit 190
Infirm Dependant Credit 1
Medical Expense Credit 145
Ontario Overseas Employment Tax Credit 6
Pension Income Credit 120
Spouse or Common-law Partner Credit 175
Student Loan Interest Credit 9
Tuition and Education Credits 290
- ---------------------------------------------------------------------------------------------------------------------
Ontario Tax Reduction (OTR)
- ---------------------------------------------------------------------------------------------------------------------
OTR — Basic Reduction 185
OTR — Reduction for Dependent Children Under 19 200
OTR — Reduction for Disabled or Infirm Dependants 10
OTR — Total 330
- ---------------------------------------------------------------------------------------------------------------------
Employee Ownership and Ontario Labour Sponsored Investment Fund Tax Credits
- ---------------------------------------------------------------------------------------------------------------------
Employee Ownership (EO) Tax Credit s
Labour Sponsored Investment Fund (LSIF) Tax Credit 25
Research Oriented Investment Fund (ROIF) Tax Credit 1
- ---------------------------------------------------------------------------------------------------------------------
Ontario Refundable Tax Credits
- ---------------------------------------------------------------------------------------------------------------------
Ontario Focused Flow-through Share Tax Credit 3
Ontario Political Contribution Tax Credit 5
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Personal Income Tax(1) Table 1
- ---------------------------------------------------------------------------------------------------------------------
Tax Provisions 2008 Estimates(2)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Ontario Property and Sales Tax Credits (OTCs)
OTCs — Non-seniors 450
OTCs — Seniors(3) 515
OTCs — Total(3) 965
- ---------------------------------------------------------------------------------------------------------------------
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 5
Deduction of Other Employment Expenses 270
Deduction of Union and Professional Dues 150
Employee Security Options 195
Moving Expense Deduction 20
Northern Residents Deductions 1
Items for Which an Estimate is not Available
Deduction for Artists and Musicians
Deduction for Tradespersons' and Apprentice Vehicle Mechanics' Tools
Deduction for Tuition Assistance for Adult Basic Education
Deferral of Salary Through Leave of Absence/Sabbatical Plans
Employee Benefit Plans
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 2008 Estimates(2)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
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 Farm or Fishing Property 165
and Small Business Shares
Deduction of Allowable Business Investment Losses 10
Deduction of Carrying Charges Incurred to Earn Income 295
Deduction of Resource-related Expenditures 185
Partial Inclusion of Capital Gains 1,130
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 Reserves
Deferral of Capital Gains Through Rollovers
Deferral of Capital Gains Through 10-year Reserves for Farm
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 35
Social Assistance Benefits and Provincial Supplements 25
Workers' Compensation Benefits 170
Items for Which an Estimate is not Available
Certain Federal Government Pensions and Allowances
Damages With Respect to Personal Injury or Death
Death Benefits of Up to $10,000
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Personal Income Tax(1) Table 1
- ---------------------------------------------------------------------------------------------------------------------
Tax Provisions 2008 Estimates(2)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
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 175
Pension Income Splitting 200
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 (RPPs) — Deduction for Contributions 705
Registered Retirement Savings Plans (RRSPs) — Deduction for Contributions 2,005
Items for Which an Estimate is not Available
Deferred Profit-sharing Plans
Registered Disability Savings Plans (RDSPs) — Non-taxation of Investment
Income and Federal Contributions
Registered Education Savings Plans (RESPs) — Non-taxation of Investment
Income and Federal Contributions
RPPs and RRSPs — 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 2005 tax-filer data forecast to represent the 2008
taxation year, unless otherwise noted.
(3) Estimate includes the enrichment of the income threshold for senior couples to
$24,300 proposed in the 2008 Ontario Budget.
- ---------------------------------------------------------------------------------------------------------------------
PERSONAL INCOME TAX — DESCRIPTION OF TAX PROVISIONS
The following Personal Income Tax provisions have been introduced or changed
since the 2007 Transparency in Taxation report.
Ontario Non-refundable Tax Credits
The non-refundable tax credits listed in the following table are based on
amounts that are adjusted for inflation each year.
- ---------------------------------------------------------------------------------------------------------------------
Amounts on Which Indexed Non-refundable Tax Credits Are Based for 2008 ($) Table 2
- ---------------------------------------------------------------------------------------------------------------------
Non-Refundable Tax Credits
Adoption Expense Credit, maximum claim 10,591
Age Credit, maximum claim 4,239
Reduced by 15 per cent of individual's net income in excess of $31,554
Fully phased out when individual's net income reaches $59,814
Basic Personal Credit 8,681
Caregiver Credit, maximum claim 4,092
Reduced by dependant's net income in excess of $13,999 Fully phased out when
dependant's net income reaches $18,091
Disability Credit 7,014
Disability supplement for individuals under 18 years of age, maximum claim 4,091
Eligible Dependant Credit, maximum claim 7,371
Reduced by dependant's net income in excess of $737
Fully phased out when dependant's net income reaches $8,108
Infirm Dependant Credit, maximum claim 4,091
Reduced by dependant's net income in excess of $5,817
Fully phased out when dependant's net income reaches $9,908
Medical Expense Credit
Qualifying medical expenses of self, spouse or common-law partner, and dependent
children in excess of the lesser of three per cent of net income and $1,965
no limit Qualifying medical expenses of other dependants in excess of the
lesser of three 10,591 per cent of the dependant's net income and $1,965,
maximum claim for each
Pension Income Credit, maximum claim 1,201
Spouse or Common-law Partner Credit, maximum claim 7,371
Reduced by spouse's or common-law partner's net income in excess of $737
Fully phased out when spouse or common-law partner's net income reaches
$8,108
Tuition and Education Credits
Education Credit, full time or eligible for Disability Credit (per month) 468
Education Credit, part time (per month) 140
Maximum transfer 6,003
- ---------------------------------------------------------------------------------------------------------------------
Medical Expense Credit — Tax filers may claim a credit for non-reimbursed
medical expenses, including those incurred on behalf of a tax
filer's spouse or common-law partner or minor children. For 2008,
the credit is calculated as 6.05 per cent of eligible expenses in
excess of the lesser of $1,965 and three per cent of the
individual's net income for the year. In addition, up to $10,591
of qualifying medical expenses paid on behalf of other dependent
relatives may be claimed to the extent that they exceed the lesser
of $1,965 and three per cent of the dependant's net income.
Beginning with 2008, the list of expenses eligible for the credit
will be expanded. This change parallels the 2008 federal budget
initiative.
Employee Ownership and Ontario Labour Sponsored Investment Fund Tax Credits
Labour Sponsored Investment Fund (LSIF) Tax Credit — LSIFs are venture
capital corporations designed to provide capital to small and
medium-sized Ontario businesses. Investors qualify for a 15 per
cent non-refundable tax credit on investment up to a certain
maximum. As announced in the 2007 Ontario Economic Outlook and
Fiscal Review, effective January 1, 2007, the maximum annual
eligible investment that qualifies for the LSIF tax credit
increased from $5,000 to $7,500. In addition, the phase-out of the
LSIF tax credit was delayed by one year to the end of 2011.
Research Oriented Investment Fund (ROIF) Tax Credit — Where an LSIF
qualifies as a ROIF, investors receive an additional five per cent
non-refundable tax credit. Effective January 1, 2007, the maximum
annual eligible investment that qualifies for the ROIF tax credit
increased from $5,000 to $7,500. In addition, the phase-out of the
ROIF tax credit was delayed by one year to the end of 2011.
Ontario Refundable Tax Credits
Ontario Property and Sales Tax Credits (OTCs) — The refundable OTCs may
be claimed by low- and moderate-income tax filers to offset the
cost of provincial property and retail sales taxes. The Property
Tax Credit is calculated as the lesser of occupancy cost and a
basic property tax credit amount ($250 for non-senior single
individuals or couples, or $625 for senior single individuals or
couples), plus 10 per cent of occupancy cost. Occupancy cost is
equal to property tax paid or 20 per cent of rent paid on an
individual's principal residence plus $25 if residing in a student
residence. 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. For non-seniors, the OTCs are jointly
reduced by two per cent of adjusted family net income in excess of
$4,000; for single seniors the credits are jointly reduced by four
per cent of family net income in excess of $22,000. For senior
couples, the 2008 Ontario Budget proposed that the credits be
jointly reduced by four per cent of family net income in excess of
$24,300. The maximum OTCs are $1,000 for non-seniors and $1,125
for seniors. The estimate includes the increase to the income
threshold for senior couples proposed in the 2008 Budget.
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Employment
Northern Residents Deductions — To offset the relatively higher cost of
living and travelling in the North, individuals living in a
qualifying remote location in Canada for a continuous period of at
least six months may claim certain deductions from income.
Beginning in 2008, the residency deduction will increase by 10 per
cent. This change parallels the 2008 federal budget initiative.
Investment
Item for Which an Estimate is not Available
Exemption for Capital Gains Arising from Certain Donations — Capital gains
on gifts of publicly listed securities to a qualified donee are
exempt from tax. In addition, capital gains on gifts of
ecologically sensitive land to a qualified donee (other than a
private foundation) are exempt from tax, as are capital gains on
certain objects certified as being of cultural importance to
Canada that are donated to a designated museum or art gallery. In
certain circumstances, the capital gains exemption applies to
gains from securities exchanged for publicly listed securities
that are then donated to a qualified donee after February 25,
2008. Extending the exemption to exchanged securities parallels
the 2008 federal budget initiative.
Tax-Deferred Savings
Item for Which an Estimate is not Available
Registered Disability Savings Plans (RDSPs) - Non-taxation of Investment
Income and Federal Contributions — In its 2007 budget, the
federal government introduced RDSPs to help parents and others
save for the future needs of persons with severe disabilities.
Investment income on contributions to RDSPs and federal assistance
will accumulate tax-free in the plans, and contributions will not
be included in income for tax purposes when they are withdrawn.
Only the portion of withdrawals from an RDSP that relates to
federal assistance and investment income will be included in the
income of the person with a disability. Individuals benefit from a
deferral of tax on investment income and federal contributions
until funds are withdrawn from these plans. This provision
parallels the 2007 federal budget initiative.
Registered Education Savings Plans (RESPs) - Non-taxation of Investment
Income and Federal Contributions — Individuals may contribute to
RESPs on behalf of designated children. Federal assistance and
investment income accrued within the plans are not taxed until
withdrawn for the postsecondary education of the named
beneficiaries. Beginning in 2008, the maximum contribution period
and the maximum lifespan of an RESP, as well as the contribution
age limit for a beneficiary of a family plan, will be extended by
10 years. This extension parallels the 2008 federal budget
initiative.
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 2008 Estimates(1)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Corporate Income Tax
Ontario Refundable Tax Credits
Apprenticeship Training Tax Credit(2) 70
Co-operative Education Tax Credit(2) 10
Ontario Book Publishing Tax Credit 2
Ontario Business Research Institute Tax Credit 7
Ontario Computer Animation and Special Effects Tax Credit 15
Ontario Film and Television Tax Credit 135
Ontario Innovation Tax Credit 215
Ontario Interactive Digital Media Tax Credit 13
Ontario Production Services Tax Credit 33
Ontario Sound Recording Tax Credit 1
Ontario Deductions and Exemptions
Additional Deduction for Credit Unions 5
Manufacturing and Processing (M&P) and Resource Sector Credit 245
Non-taxation of the Federal Investment Tax Credit(3),(4) 250
Ontario Current Cost Adjustment(3) 2
Ontario Depletion Allowance(3) 9
Ontario New Technology Tax Incentive(3) s
Ontario Political Contributions(3) 6
Ontario Resource Allowance(3),(5),(6) 120
Ontario Tax Exemption for Commercialization* s
Small Business Deduction(7) 1,125
- ---------------------------------------------------------------------------------------------------------------------
- --------------------------------
* The estimated cumulative impact of this proposed provision in the Ideas
for the Future Act, 2008, if passed, is $7 million over the period
2008-09 to 2010-11. The Ideas for the Future Act, 2008 is before the
Ontario legislature as of October 22, 2008.
- ---------------------------------------------------------------------------------------------------------------------
Corporate Tax Table 3
- ---------------------------------------------------------------------------------------------------------------------
Tax Provisions 2008 Estimates(1)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Allowable Business Investment Losses(8,)(9) 3
Deductibility of Charitable Donations(8) 95
Deductibility of Gifts to the Crown(8) s
Deductibility of Gifts of Cultural Property and Ecologically Sensitive Land(8) 3
Deferral of Income for Farmers(8) s
Holdback on Progress Payments to Contractors(8) 15
Non-taxation of Non-profit Organizations(8) 150
Partial Inclusion of Capital Gains(8) 1,360
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(10)
Cash-basis 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
Donations of Medicine 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(11)
- ---------------------------------------------------------------------------------------------------------------------
Capital Tax Deduction 460
Deferred Mining Exploration and Development Expenses(12) s
Deferred Ontario New Technology Tax Incentive (ONTTI) and Scientific Research s
and Experimental Development (SR&ED) Costs(12)
Exemption for Family Farm Corporations, Family Fishing Corporations, Credit Unions and s
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 2008 Estimates(1)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Mining Tax(13)
- ---------------------------------------------------------------------------------------------------------------------
Mining Tax Exemption s
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 44
Item for Which an Estimate is not Available
Fast Write-off of Exploration Costs
- ---------------------------------------------------------------------------------------------------------------------
(1) Estimates are forecast to the 2008 calendar year based on preliminary 2006
and 2007 Ontario tax administration data, unless otherwise noted. Estimates
do not include the revenue forgone from Corporate Income Tax provisions for
mutual fund corporations.
(2) Estimates include the impact of both the Corporate and Personal Income Tax
provisions.
(3) These Ontario differences from the federal definition of taxable income do not
apply for taxation years ending after 2008.
(4) For taxation years ending after 2008, a 4.5 per cent non-refundable tax
credit has been enacted to replace this provision.
(5) The resource allowance applies to the mining and oil and gas sectors. The
estimate is not net of mining taxes and Crown royalties paid.
(6) For taxation years ending after 2008, a tax credit/debit mechanism has been
enacted to replace this provision.
(7) Estimate includes the impact of the Small Business Deduction phase-out.
(8) Estimates are based on assessed 2006 federal tax administration data and
forecast to 2008.
(9) Estimate could overstate the true value as it does not reflect the future reduction
in tax revenues that would occur if those losses were instead deducted from
future capital gains.
(10)The 2008 cash flow impact of this provision, based on the 2008 Ontario
Budget estimate and adjusted to a calendar-year basis, is $195 million.
(11)Ontario has legislated a plan to eliminate the Capital Tax effective July 1, 2010.
(12)These provisions do not apply for taxation years ending after 2008.
(13)Estimates are forecast to the 2008 calendar year based on preliminary 2007 Ontario
Mining Tax administration data.
- ---------------------------------------------------------------------------------------------------------------------
CORPORATE TAX — DESCRIPTION OF TAX PROVISIONS
The following Corporate Income Tax provisions have changed since the 2007
Transparency in Taxation report.
Corporate Income Tax
Ontario Refundable Tax Credits
Ontario Film and Television Tax Credit — A refundable tax credit on
labour expenses is available to corporations for certified
domestic film and television productions in Ontario. As announced
in the 2007 Ontario Economic Outlook and Fiscal Review, effective
for labour expenses incurred after December 31, 2007 and before
January 1, 2010, the tax credit rate is increased from 30 per cent
to 35 per cent. First-time producers are eligible for a 40 per
cent credit on the first $240,000 of eligible labour expenses. A
10 per cent regional bonus credit is available where certain
production activities occur outside the Greater Toronto Area.
Ontario Innovation Tax Credit — A 10 per cent refundable tax credit is
available to small corporations with qualifying Scientific
Research and Experimental Development (SR&ED) expenditures in
Ontario. The 2008 Ontario Budget proposed to increase the
expenditure limit from $2 million to $3 million and extend the
taxable income phase-out range of between $400,000 and $600,000 to
a new upper limit of $700,000. These enhancements would parallel
the effective dates and phase-in rules of the federal SR&ED tax
credit enhancements announced in the 2008 federal budget.
Ontario Interactive Digital Media Tax Credit — A refundable tax credit is
available for the creation, marketing and distribution of
interactive digital media products. As announced in the 2008
Ontario Budget, the tax credit rate increased from 20 per cent to
25 per cent for qualifying expenditures incurred after March 25,
2008, and before January 1, 2012. The 2008 Ontario Budget also
extended the enhanced 30 per cent tax credit rate available to
small and medium-sized corporations that develop their own
products for two years, to qualifying expenditures incurred before
January 1, 2012.
Ontario Production Services Tax Credit — A refundable tax credit on
labour expenses is available to corporations for qualifying
foreign film and television production services and non-certified
domestic film and television productions in Ontario. As announced
in the 2007 Ontario Economic Outlook and Fiscal Review, effective
for labour expenses incurred after December 31, 2007 and before
January 1, 2010, the tax credit rate is increased from 18 per cent
to 25 per cent.
Ontario Deductions and Exemptions
Ontario Tax Exemption for Commercialization — The Ideas for the Future
Act, 2008, if passed, would provide new corporations established
after March 24, 2008 and before March 25, 2012, that commercialize
intellectual property developed at qualifying Canadian
universities, colleges or research institutes, with a refund of
Corporate Income Tax paid in their first 10 taxation years. This
measure was proposed in the 2008 Ontario Budget.
Small Business Deduction — Canadian-controlled private corporations are
eligible for a reduced corporate income tax rate of 5.5 per cent
on the first $500,000 of active business income. The benefit of
the lower rate is phased out as taxable income rises to $1.5
million. As announced in the 2007 Ontario Economic Outlook and
Fiscal Review, the active business income level was increased from
$400,000 to $500,000 and the taxable income level was increased
from $1,128,519 to $1.5 million, effective January 1, 2007.
Exemptions, Deductions, Deferrals and Other Measures Shared with the Federal Government
Items for Which an Estimate is not Available
Temporary Incentive for Manufacturing and Processing (M&P) Machinery and
Equipment — The 2008 Ontario Budget proposed to extend this
incentive by allowing eligible assets acquired in 2009 to be
depreciated on a 50 per cent straight-line basis and those assets
acquired in 2010 and 2011 on a declining balance basis. This
parallels the 2008 federal budget initiative.
Donations of Medicine for the Developing World — Corporations that make
donations of medicine from their inventory 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. For donations after June 30, 2008,
the definition of an eligible charity is changed to a registered
charity that, in the opinion of the federal Minister of
International Cooperation, meets conditions prescribed by
regulation. The definition change parallels the 2008 federal
budget measure.
Exemption for Capital Gains Arising from Certain Donations — Capital gains
on gifts of publicly listed securities to a qualified donee are
exempt from tax. In addition, capital gains on gifts of
ecologically sensitive land to a qualified donee (other than a
private foundation) are exempt from tax, as are capital gains on
certain objects certified as being of cultural importance to
Canada that are donated to a designated museum or art gallery. In
certain circumstances, the capital gains exemption applies to
gains from securities exchanged for publicly listed securities
that are then donated to a qualified donee after February 25,
2008. Extending the exemption to exchanged securities parallels
the 2008 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 2008 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) 60
Refunds
Auxiliary Power Take-off Equipment(5) 6
- ------------------------------------------------------------------------------------------------------------------
Gasoline Tax
- ------------------------------------------------------------------------------------------------------------------
Exemptions/Reduced Rates
Exemption for Methanol and Natural Gas 9
Reduced Rate for Aviation Fuel(6) 300
Reduced Rate for Propane(6) 7
Refunds
Auxiliary Power Take-off Equipment(5) s
Aviation Fuel(5) s
Tax-exempt Use in Unlicensed Equipment(5) 4
- ------------------------------------------------------------------------------------------------------------------
Land Transfer Tax
- ------------------------------------------------------------------------------------------------------------------
Exemptions
Deferrals and Exemptions for Corporate Reorganizations(5) 85
Family Business Conveyances(5) s
Family Farms(7) 6
Life Leases(3) s
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 2008 Estimates(1)
($ Millions)
- ------------------------------------------------------------------------------------------------------------------
Refunds
Refund for First-time Home Buyers(5) 115
- ------------------------------------------------------------------------------------------------------------------
Retail Sales Tax
- ------------------------------------------------------------------------------------------------------------------
Exemptions/Reduced Rates
25(cent) Coin Pay Phone Calls(7) s
Agricultural Goods 270
Audio Books Purchased for Use by Persons Who Are Legally Blind(7) 5
Automobile Insurance Premiums(7,8) 820
Basic Groceries 1,715
Books, Newspapers and Magazines Sold by Subscription 410
Children's Car Seats and Booster Seats(7) 5
Children's Clothing 140
Commercial and State Aircraft, Vessels Greater than 1,400 Cubic Metres and Commercial 165
Vessels of 1,400 Cubic Metres or Less
Custom Software(9) 100
Donations to Schools, Colleges and Universities(7) 7
Educational CDs and DVDs(7) 4
Energy 5,290
Feminine Hygiene Products(7) 21
Footwear Sold for $30 or Less 31
Goods Purchased for Use by Fishers and Fur-trappers s
Individual Life and Health Insurance Premiums(10) 480
Mobile Homes s
Municipal Fire-fighting Equipment 2
Nicotine Replacement Therapies(11) 5
Prepared Foods Sold for $4 or Less(7) 245
Prescription Drugs and Medical Supplies 1,065
Production Machinery and Equipment 685
Religious Equipment and Publications 12
Repairs and Replacements Performed Under Warranty(7,)(8) 155
Seedlings s
Services 11,065
Temporary Exemption for Bicycles and Related Safety Equipment(7) 16
Temporary Exemption for Destination Marketing Fees(7) 2
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Sales and Commodity Tax Table 4
- ------------------------------------------------------------------------------------------------------------------
Tax Provisions 2008 Estimates(1)
($ Millions)
- ------------------------------------------------------------------------------------------------------------------
Temporary Exemption for Energy Star® Household Products(7)
Toll-free Telephone Services(7) 50
Transient Accommodation(12) 120
University Research Equipment 7
Items for Which an Estimate is not Available
Admissions(13)
Modular Homes
Municipal, Hospital Restructuring
Used Adult Clothing or Footwear Sold for $50 or Less by Religious, Charitable,
Benevolent and Non-profit Organizations
Works of Art Purchased by Museums and Art Galleries
Credits/Rebates
Rebate for Alternative Fuel Vehicles(5) 6
Rebate for Building Materials for Religious, Charitable and Benevolent Organizations(5) 20
Tax Credit for Fuel Conservation(7) 7
Temporary Rebate for Solar Energy, Wind Energy, Micro Hydro-electric and Geothermal Energy 1
Systems(5)
Vendor Compensation(14) 110
- ------------------------------------------------------------------------------------------------------------------
Tobacco Tax
- ------------------------------------------------------------------------------------------------------------------
Compensation for Tax Collectors(14) s
- ------------------------------------------------------------------------------------------------------------------
(1) Estimates are forecast to the 2008 calendar year based on preliminary 2004
provincial Input-Output tables from Statistics Canada, unless otherwise noted.
(2) Based on estimated amount of biodiesel sold in Ontario.
(3) Based on best tax administration data currently available.
(4) Forgone revenue estimated as difference from the general fuel tax rate.
(5) Based on refunds filed or rebates/deferrals claimed.
(6) Forgone revenue estimated as difference from the general 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 2008.
(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)Transient accommodation is taxed at a reduced rate of five per cent. Forgone
revenue estimated as difference from the general RST rate of eight per cent.
(13)Includes the exemption for admissions to live theatres with 3,200 seats or
less, which is estimated to cost $18 million per year. There are currently
no data available to the Ministry of Finance 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 and Commodity Tax provisions have changed since the 2007
Transparency in Taxation report.
Land Transfer Tax (LTT)
Exemptions
Family Farms — The 2008 Ontario Budget announced the expansion of the
LTT exemption for conveyances of farmed land to include
conveyances from family farm corporations to individual family
members after March 25, 2008.
Refunds
Refund for First-time Home Buyers — The 2007 Ontario Economic Outlook
and Fiscal Review announced the expansion of the refund program to
include the purchase of resale homes. The maximum amount of the
refund is $2,000 and the expansion is effective for agreements of
purchase and sale entered into after December 13, 2007.
Retail Sales Tax (RST)
Exemptions/Reduced Rates
Books, Newspapers and Magazines Sold by Subscription — As announced in
December 2007 and noted in the 2008 Ontario Budget, the definition
of "newspaper" is being expanded to enable publications with
smaller circulation or less frequent publishing schedules, such as
community and ethnic newspapers, to qualify for the RST exemption
for newspapers. The expanded definition will be retroactive to
January 1, 2000 once the regulation is finalized.
Nicotine Replacement Therapies — The 2008 Ontario Budget made permanent
the RST exemption for nicotine replacement therapies registered
with a Health Canada Drug Identification Number or Natural Product
Number.
Temporary Exemption for Bicycles and Related Safety Equipment — The 2008
Ontario Budget extended the temporary RST exemption for bicycles
costing $1,000 or less and related bicycle safety equipment to
purchases made on or before December 31, 2010.
Temporary Exemption for Destination Marketing Fees — The 2008 Ontario
Budget extended this exemption by two years. Destination marketing
fees charged on transient accommodation are temporarily exempt
from RST until June 30, 2010.
Temporary Exemption for Energy Star(R) Household Products — The 2008
Ontario Budget extended the temporary RST exemption for eligible
Energy Star(R) qualified household appliances and light bulbs to
purchases made on or before August 31, 2009 (with delivery of
appliances on or before September 30, 2009).
Items for Which an Estimate is not Available
Admissions — A number of RST exemptions are available for admissions. The
2008 Ontario Budget made permanent the RST exemption on admissions
to live theatres with not more than 3,200 seats that present live
dramatic, comedic, choreographic or musical performances,
including a live theatrical play and a live ballet, orchestral or
operatic performance.
EDUCATION PROPERTY TAX
Table 5 provides estimates of tax provisions relating to the Education Property
Tax system.
- ---------------------------------------------------------------------------------------------------------------------
Education Property Tax(1) Table 5
- ---------------------------------------------------------------------------------------------------------------------
Tax Provisions 2008 Estimates(2)
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Brownfields Financial Tax Incentive Program(3) s
Charity Rebate 7
Conservation Land Property Tax Exemption Program 2
Eligible Convention Centres Exemption s
Eligible Live Performance Theatres Exemption and Professional Sports Facility Tax Rate 13
Reduction
Farm Property Class Tax Rate Reduction 65
Farmlands Awaiting Development Sub-class Tax Rate Reduction s
Heritage Property Tax Rebate s
Managed Forest Tax Incentive Program 3
Seniors and Persons with Disabilities Property Tax Relief(4) s
Tax Exemptions Under Private Statutes 6
Vacant Commercial and Industrial Unit Rebate 31
Vacant Land and Excess Land Sub-class Tax Rate Reduction 48
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 2008 education tax rates, 2008 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) 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.
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EMPLOYER HEALTH TAX
Table 6 provides an estimate of the tax exemption under the Employer Health Tax.
- ---------------------------------------------------------------------------------------------------------------------
Employer Health Tax (EHT) Table 6
- ---------------------------------------------------------------------------------------------------------------------
Tax Provision 2008 Estimate
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
$400,000 Exemption for Private-sector Employers(1) 725
- ---------------------------------------------------------------------------------------------------------------------
(1) Estimate is based on 2006 remuneration data forecast to represent the 2008 taxation year.
- ---------------------------------------------------------------------------------------------------------------------
ESTATE ADMINISTRATION TAX
Table 7 provides an estimate of the exemption under the Estate Administration Tax.
- ---------------------------------------------------------------------------------------------------------------------
Estate Administration Tax Table 7
- ---------------------------------------------------------------------------------------------------------------------
Tax Provision 2008 Estimate
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Exemption Where the Value of the Estate Does Not Exceed $1,000 s
- ---------------------------------------------------------------------------------------------------------------------
GROSS REVENUE CHARGE
Table 8 provides an estimate of the tax provision under the Gross Revenue Charge.
- ---------------------------------------------------------------------------------------------------------------------
Gross Revenue Charge (GRC)(1) Table 8
- ---------------------------------------------------------------------------------------------------------------------
Tax Provision 2008 Estimate
($ Millions)
- ---------------------------------------------------------------------------------------------------------------------
Gross Revenue Charge 10-year Holiday s
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(1) Expenditure does not include the provincial water rental portion of the GRC.
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ANNEX VI
How to Participate in the
2009 Pre-Budget Consultations
HOW TO PARTICIPATE IN THE 2009 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 during uncertain economic times to prudently manage
Ontario's finances and protect important public services.
When preparing your comments, please consider the following questions:
1. During this period of global economic uncertainty and fiscal challenges,
what should the Ontario Government's top priorities be for the 2009 Budget?
2. During uncertain economic times, should the Ontario Government work towards
achieving a balanced budget or run a deficit in order to do everything it
can to protect priority programs and services?
3. Given the current fiscal challenges, what government programs could be
delayed, phased in more slowly, or eliminated?
4. What further steps can the Ontario Government take to promote economic
growth and job creation?
5. How can the Ontario Government work more effectively with other levels of
government and other key partners during challenging economic times?
Information on which communities and locations the Minister plans to visit will
be posted at www.fin.gov.on.ca in late October 2008. 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 2009 pre-budget
consultations.
SUBMISSIONS
Visit the Ministry of Finance website at www.fin.gov.on.ca to submit your ideas
for the 2009 Budget. Click on the "Tell Us What You Think" item in the What's
New 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.
