Commission on the Reform of Ontario's Public Services

Chapter 1: The Need for Strong Fiscal Action
Not every program should grow at the 0.8 per cent rate, however. Ontarians and their
government attach different priorities to different programs, and some offer more opportunities
for efficiency gains than others.
Anyone with even a smattering of arithmetic will realize that if some programs grow faster than
0.8 per cent annually, other programs will have to grow more slowly. Health care is always the
highest priority of Ontarians and it is difficult to know how far down its growth rate can be
driven without compromising the services delivered. The system needs fundamental reform in
its organization, as we will argue later in more detail, but it is worth noting here that health care
is unique in that new technology increases costs rather than reduces them. Few countries
have succeeded in achieving a sustainable growth rate in health spending of less than
four per cent in real terms; that is, before accounting for inflation.
Our basic problem is simple: the faster health spending grows, the more other programs will
be squeezed. If, over the period from 2010–11 to 2017–18, health spending continues to grow
by 6.3 per cent per year — its track record in the five years from 2005–06 to 2010–11 —
then all programs other than health would have to contract by 4.1 per cent annually to meet
our target of 0.8 per cent growth in total program spending. Over the whole period, total health
spending would rise by 53.4 per cent; all other program spending would fall by 25.2 per cent.
By 2017–18, health would account for 58.5 per cent of Ontario’s program spending, compared
with 40.3 per cent in 2010–11.
This cannot be our future. Important as it is, health care must not be allowed to run roughshod
over every other priority. It must not be allowed to gut every other government service that
Ontarians rely on for their education, social welfare, justice system, infrastructure needs and
a host of other programs that matter to the people of this province.
While total program spending growth must come to an average of 0.8 per cent annually,
there is an almost infinite set of possibilities for allocating spending across the government’s
many programs.
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