Commission on the Reform of Ontario's Public Services

That does not take into account either population growth or inflation. Meeting the target of a
balanced budget means that program spending for every man, woman and child living in
Ontario would have to fall by 2.7 per cent over the next seven years, or 0.4 per cent annually.
In real terms, with inflationary increases removed, the cut in programs per person would
amount to 16.2 per cent, making for steady 2.5 per cent declines on average in every year
from 2010–11 through 2017–18. For Ontario, indeed for any province, this represents a
decline in government spending that is almost certainly unprecedented.
The big picture then is this: Ontario must keep the growth in total program spending to a
meagre 0.8 per cent per year for seven years if it is to reach the official target of balancing the
budget by 2017–18. (Given that it is by now too late to reduce the growth in program expenses
to that level in the current 2011–12 fiscal year, the actual rate for the subsequent six years
would have to be even lower.)
We can express these numbers another way — in actual dollars. The 3.5 per cent annual
growth in projected program spending under the Status Quo Scenario would lead to outlays in
2017–18 that are $30.2 billion higher than they were in 2010–11. The 0.8 per cent growth rate
in our Preferred Scenario leads to an increase of only $6.3 billion. 6
Our mandate was to provide advice on how to balance the books before 2017–18. Our
projections indicate that even getting to balance as late as 2017–18 requires a degree of
government spending restraint that is perhaps unprecedented in Canadian history.
The restraint must be so tight that many people will inevitably suggest that we go in the other
direction and let the target date for fiscal balance slip still further into the future. We examined
this option, but found that it offers little relief from the need for severe spending curbs. If we
delay the target for balance by one year to 2018–19, we could allow program spending to grow
by 1.0 per cent annually instead of 0.8 per cent. But the <strong>Commission</strong> does not recommend
such slippage. The minor additional flexibility on spending does not outweigh the risk of
slipping out of fiscal control.
6 For perspective, here are the changes in the key numbers between 2010–11 and 2017–18. In the Status Quo Scenario: revenue,
up $26.1 billion; program spending, up $30.2 billion; interest on debt, up $10.2 billion; total spending, up $40.4 billion; the reserve,
up $1.9 billion; the deficit, up $16.2 billion; net debt, up $196.9 billion. In the Preferred Scenario: revenue, up $28.0 billion, program
spending, up $6.3 billion; interest on debt, up $5.9 billion; total spending, up $12.1 billion; the reserve, up $1.9 billion; the deficit,
down $14.0 billion; net debt, up $85.5 billion.
102