Commission on the Reform of Ontario's Public Services

Chapter 19: Liability Management
Recommendation 19-12: To better protect the province against the costs of environmental
cleanup, adjust the current legislative framework so that more focus is placed on the
polluter-pays principle.
Other options include the introduction of a program like Superfund, currently in place in the
United States, that has federal authority to clean up the nation’s uncontrolled hazardous
waste sites.
Risks to Ontario Posed by the Federal Government
In some areas of responsibility, the federal and provincial governments work together to
help provide services to Ontarians, but as a sub-national jurisdiction Ontario is always subject
to the risk of a policy change by the federal government. Such policy changes can cause
disruptions to both provincial fiscal planning and public services; therefore, allowances
must be taken to account for unplanned changes.
Negotiations for a comprehensive free trade agreement with the European Union (EU) are
underway and the outcome of these negotiations could have significant impact on the cost of
prescription drugs in Ontario. The potential harmonization of patent rules with the EU could
cost Ontario dearly since generic drugs would be kept off the market for a longer time. If all
three of the EU pharmaceutical intellectual property proposals are adopted, estimates suggest
it could cost Ontarians up to $1.2 billion annually ($551 million for the Ontario government,
and $672 million for the private sector), 3 which would more than wipe out the savings achieved
through the government’s recent drug reforms. The province should work with the federal
government to ensure that a Canada–European Union Free Trade Agreement (CETA)
does not undermine Ontario’s interest in expanding the use of generic drugs.
Ontario and the federal government share a common personal income tax base to help
simplify the process of filing returns. This common tax base could lead to significant costs to
Ontario moving forward, since Ontario generally parallels any federal government tax changes
to maintain similarity. As an example, the federal government has proposed changes related
to the expansion of income-splitting and doubling the current annual limit on contributions to
Tax-Free Savings Accounts. These two proposals alone could result in $1.3 billion less in
revenue annually for Ontario.
3 Paul Grootendorst and Aidan Hollis, “The Canada-European Union Comprehensive Economic and Trade Agreement: An Economic
Impact Assessment of Proposed Pharmaceutical Intellectual Property Provisions,” 2001, Canadian Generic Pharmaceutical Association.
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