Commission on the Reform of Ontario's Public Services

Discussed in greater detail in the federal-provincial relations portion of Chapter 20,
Intergovernmental Relations, changes in the Canada Health Transfer (CHT) beginning in
2017–18 stand to cost Ontario about $239 million per annum based on current forecasts, but
could reach about $421 million if GDP growth falls to the three per cent floor. These reductions
will grow over time. By 2023–24, Ontario’s CHT payment could be $2.3 billion to $3.8 billion
lower than under the current formula. As discussed in Chapter 5, Health, over the long run,
health costs tend to increase more rapidly than nominal GDP. By tying the federal transfer
for health to GDP growth, it is almost inevitable that, over time, the federal government’s
contribution to total health spending will continuously decline.
In Canada, responsibility for the Criminal Code rests with the federal government while
responsibility for implementation lies mainly with the provinces. As addressed in Chapter 14,
Justice Sector, and Chapter 20, Intergovernmental Relations, recent crime legislation will
place further demands on the provincial court and corrections systems, only adding to the
fiscal burden of the provinces as the federal government has not yet recognized or addressed
the additional cost. The provincial government has projected Ontario’s inmate count to
increase by 1,265 to 1,530 inmates in 2015–16 as a result of Bill C-10. The lowest cost
estimate of the impact of the federal crime bill is ongoing annual increases in operating
budgets of $22 million to $26 million per year at maturity. In the worst-case scenario, the
province would be required to procure a new 1,000-bed facility to offset the resulting impact.
The estimated capital cost of a new facility is $900 million, with ongoing operating costs of
$60 million per year.
Recommendation 19-13: Work with the federal government to mitigate risks to the
Ontario fiscal framework from federal policy changes. Known risks at the time include the
Canada–European Union Free Trade Agreement (CETA) being negotiated, proposed
changes to personal income taxes and the federal omnibus crime bill (Bill C-10).
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