On November 22, 2011 Ontario's Lieutenant Governor delivered
the new Liberal minority government's Speech from the Throne
outlining its legislative priorities for the coming session of the
Legislature. In addition, on November 23, 2011 the Minister of
Finance delivered his Fall Economic Outlook and Fiscal Review
outlining the state of Ontario's economic and fiscal position,
as well as providing additional information on key policy
priorities of the new Liberal government. This bulletin provides a
summary of both of these announcements.
SPEECH FROM THE THRONE
In the context of continuing economic uncertainty globally and
slower economic growth over the next four years, the
government's key priority is to create jobs and stimulate long
term economic growth. The government made it clear that it is
committed to moving forward with modernizing the electricity system
with new clean and renewable forms of generation, while continuing
to make new investments in the transmission grid. The government is
also maintaining its commitments to develop the mining sector in
Ontario's North through the "Ring of Fire"
Initiative. The government will also move forward to build further
ties to emerging markets in China and India.
The government is also committed to delivering public services
in a more cost effective and efficient manner. It's on track to
reduce the public service by 5 per cent by March 2012. It is also
attempting to find savings of $200 million by 2014 by reducing the
number of government agencies. The forthcoming report from the
Commission on the Reform of Public Services chaired by Don Drummond
("Drummond Commission") will provide a key blueprint for
how the government will restructure its core services.
The initiatives that were outlined in the Speech from the Throne
largely reflect the election platform commitments of the
Reduce postsecondary education tuition by 30 per cent for
families earning less than $160,000 annually and selecting three
new sites for undergraduate campuses;
Introduce a Health Homes Renovation Tax Credit to assist
seniors to live independently;
Increase home care services for seniors;
Press the federal government for a 10 year Health Accord to
fund health care services;
Adding two-way, all day GO train services in the GTA;
Introduce a Great Lakes Protection Act;
Work with the federal government to improve educational
opportunities for First Nations communities; and
Re-commit to balancing the budget by 2017-18.
ECONOMIC OUTLOOK AND FISCAL REVIEW
Gross Domestic Product ("GDP")
Over the last eight months, the global economy has seen a
widespread, downward shift in projections for economic growth. In
March, when the government released its 2011 Budget, the average
private-sector forecast for Ontario's economy was real gross
domestic product (GDP) growth of 2.6 per cent for 2011. This has
declined to 2.0 per cent. The degree of change is even greater for
2012. In March 2011, the average private-sector forecast placed GDP
growth at 2.8 per cent but, by November, those forecasts had fallen
to1.9 per cent. The Ontario Ministry of Finance is now projecting
continued growth of 1.8 per cent in 2012, 2.5 per cent in 2013 and
2.6 per cent in 2014.
Below is a table taken from the Economic Outlook and Fiscal
Review that illustrates changes to key economic indicators in
FISCAL PERFORMANCE AND OUTLOOK
In terms of fiscal performance, the current deficit IS $16.0
billion 2011-2012, slightly below the forecast in the March Budget
of $16.3 billion. The current forecast projects declining deficits
of $15.2 billion in 2012-2013 and $13.3 billion in 2013-2014. The
government is still targeting the elimination of the deficit by
2017-2018 but that will require fundamental reform of how the
province provides services. This is where the recommendations of
the Drummond Commission will have their impact.
GOVERNMENT REVENUE AND EXPENSE
Slower economic growth since the March Budget has lowered the
revenue projections by roughly $443 million. Program expenditures
levels have been maintained at the 2011 budget levels but total
expense is forecast to decrease by $264 million due to lower
interest rates than those forecast in the March Budget.
The table below provides a snapshot of the current revenue and
expenditures of the province:
Total revenues are expected to rise to $116.3 billion by 2013-14
based on the Ministry of Finance's economic outlook.
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