Canada: Ontario Budget Highlights 2012

Overview

On March 27, 2012, the Honourable Dwight Duncan, Ontario's Minister of Finance, introduced the province's 2012 budget. The key elements of the budget include a deficit elimination plan that reduces overall program spending by $17.7 billion over the next three years while protecting core services in health care and education. The government is also moving forward on transforming the delivery models of public services that will assist in driving cost reductions. Examples include: streamlining business support programs, using office space more efficiently, pursuing public private partnerships and divesting parts of Ontario Northland Transportation Commission.

The key initiatives in this budget include:

  • Implementing cost reductions of $4.9 billion over the next three years;
  • Freezing the Corporate Income Tax rate (11.5%) and the Business Education Tax rate at their current levels and until the budget is balanced;
  • Capping eligibility for the Ontario Clean Energy Benefit at 3,000 kWh per month;
  • Changing the Ontario Drug Benefit program to ensure that senior citizens with incomes over $100,000 pay a larger share of their prescription drug costs;
  • Expending the pay freeze for public sector executives (including universities, colleges, hospitals) and Members of Provincial Parliament for two more years;
  • Restraining wages for physicians, teachers, school board officials and all Ontario public servants;
  • Restructuring public sector pension plans into larger entities;
  • Introducing legislation to create more transparency and accountability in the public sector arbitration system.

The provincial deficit for 2012 is estimated to be $15.3 billion – roughly $1 billion lower than forecast last year. The government forecasts that by 2015, the provincial deficit will be $10.7 billion.

Next Steps for Budget Approval:

The Minister tabled the Budget Bill – An Act to Implement Budget Measures and to Enact Various Acts, 2012 (or "Bill 55") for first reading. Debate on the bill will occur over the coming days and it will then require a motion to move the bill to second reading. At that point the Progressive Conservative Party ("PCs") and the NDP will have the opportunity to reject or support the bill. Since the Liberals are in a minority government situation, they need some opposition members to support the budget bill otherwise the government will lose the confidence of the Legislature and the Lieutenant Governor will be required to either call for an election or ask the opposition to form government. At this stage of debate, the PCs have made it clear that they will vote against the bill and the NDP state that they will consult with Ontarians before making any decisions. Since the NDP hold the balance of power in this Legislature, attention will be focused on their decision in the coming days and weeks.

This Bulletin provides a high level summary of the key features of the Ontario 2012 budget of interest to BLG's clients.

Electricity Sector Initiatives:

  • Introduce legislation to cap the Ontario Clean Energy Benefit program for those using more than 3,000 kWh of electricity monthly. The goal would be to have the legislation in force by September 1, 2012. This restriction would save approximately $500 million over four years or 11% of the total expenditure of the program during that time frame.
  • Develop a plan to conduct a comprehensive review of the electricity sector and its various agencies in an effort to improve efficiency reduce costs.
  • Initiate a benchmarking analysis of Hydro One and OPG to determine how these entities can deliver further cost reductions to their operations. This will involve independent advisors to develop comparison with similar utilities across North America.
  • Pursue the federal government to provide financial support and the appropriate regulatory regime to facilitate the development of an east-west grid and further develop existing interconnections with other provinces.
  • Propose a new regulation under the Electricity Act, 1998, to establish the amount of residual stranded debt. It is currently estimated to be $4.5 billion.

Health Care Reform:

  • Reduce the rate of growth of spending to an average of 2.1% for the next three years. This will include holding the growth of hospitals' overall base operating funding to 0% in 2012–2013. However, total operating funding will grow by 2% due to support for reducing wait times and priority treatments;
  • Enhance community-based care in order to treat patients in non-profit clinics, at home and in other local facilities;
  • Move to a patient centred funding model to improve care;
  • Integrate primary care into the Local Health Integration Networks;
  • Maintain physician compensation at their current levels;
  • Changing the Ontario Drug Benefit program to include an income-tested deductible.

For high-income single seniors with an income of over $100,000 the deductible will amount to $100 plus 3% of income over $100,000.

  • Promote health by reducing childhood obesity and combating smoking. This will include creating a panel of advocates, health care leaders, non-profit agencies to develop a Childhood Obesity Strategy that will target a reduction of obesity levels by 20% over five years.
  • Expand comprehensive screening programs for cervical, breast and colorectal cancer.

Balancing the Budget:

Average annual growth in program spending will be held to 1% between 2012 and 2015. This includes capping compensation costs and removing administrative inefficiencies. The government's plan is outlined in the graph below:

Medium Term Fiscal Plan and Outlook:

Total revenue is projected to grow at an average annual rate of 3.5% between 2012 and 2015. Total expense is project to grow at an average annual rate of 1.5% over the same time frame. The chart below summarizes the medium term fiscal plan and outlook:

Fiscal and Economic Situation:

Ontario's real Gross Domestic Product ("GDP") has recovered from the global recession of 2008-2009. Ontario's GDP has increased in 2011 to 1.8% and the forth quarter of 2011 had real GDP 1.6% above the pre-recession level in the second quarter of 2008.

The government is planning that GDP will grow at a rate of 1.7% in 2012, 2.4% in 2014 and 2.5% in 2015. Inflation is expected to be 3.1% in 2012, 2.0% in 2013 and 22.2% in 2015. Unemployment levels are at 7.6% as of February 2012 and employment growth is expected to be 1% to 2% from 2012 to 2015.

Jobs and Prosperity Council and Fund:

The government announced it is creating a "Jobs and Prosperity Council" to provide advice on consolidating and refocusing existing business support programs and improving productivity. Experts from labour, universities and non-governmental organizations will comprise the Council.

Existing business support programs amount to $2 billion in annual spending across various government departments. The government is committed to reducing those programs that do not fit its new productivity focus. The target for savings by 2015 is $250 million.

Public Sector Pension Reform:

The budget proposes to develop a legislative framework to deal with rising pension plan deficits and pension costs that pose significant risks to the long-term viability of these income supports.

  • Jointly sponsored plans: the proposed legislation would require plans to reduce future benefits before further increasing employer contributions. In limited circumstances, a limit would be placed on the amount of benefit reductions before additional contribution increases would be considered. These plans would also move toward a 50-50 employee and employer contribution model. In cases where sponsors cannot agree on benefit reductions, a new third-party dispute resolution process would be invoked.
  • Single-Employer plans: as with jointly sponsored plans, move toward a 50-50 contribution model between employees and employers over the next five years. Employers would continue to be responsible for plan deficits.

In addition to these measures, the government will introduce separate legislation in the fall of 2012 to create larger public sector pension funds. This would pool investment functions of smaller public sector pension plans. Management of assets could be transferred to a new entity or to an existing large public sector fund.

Ministry of Natural Resources Transformation:

The government is moving forward with a series of legislative initiatives that aim to make the conservation and stewardship of the province's natural resources more efficient and cost effective. Key initiatives include:

  • changing various key statutes, regulations and guidelines to streamline and automate spermitting processes;
  • conduct resource management with a stronger regional focus and fewer field offices;
  • redesign the Ministry's science and delivery activities to shift away from a species by species approach to a risk-based ecosystem/regional approach.

Additional changes will also be implemented to the Crown Forest Sustainability Act that would provide some flexibility in forest management planning and allow charging of fees. Changes to the Endangered Species Act will also be proposed to streamline approvals and permitting. Several other statutes will also be amended to better facilitate planning, job growth and other objectives of the Ministry.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions