Commission on the Reform of Ontario's Public Services

The Budget Scenario
Chapter 1: The Need for Strong Fiscal Action
Ontario’s revenues now do not cover its spending. In 2010–11, the latest full fiscal year, the
government ran a deficit of $14.0 billion — equivalent to $1,059 for every Ontarian and
2.3 per cent of the province’s gross domestic product (GDP), the largest deficit relative to GDP
of any province. This is not because spending is particularly high; relative to GDP, Ontario’s
spending is one of the lowest among the provinces. Net debt amounted to $214.5 billion,
which is $16,216 per capita and 35.0 per cent of GDP. Relative to the government’s budget a
year earlier, which had projected a deficit of $19.7 billion, the outcome was much better
than expected.
The most recent Budget, in March 2011, set out a recovery plan that would return the
province’s finances to balance — with the sum of total spending and the $1 billion contingency
reserve equal to revenue — by the 2017–18 fiscal year. The choice of 2017–18 as the target
year for a balanced budget put Ontario on a schedule at least three years behind that of any
other province. It was three years behind the original federal target of 2014–15 for a return to
a balanced budget, but is now two years behind after the revised target set out in the federal
government’s fall fiscal update. To achieve its goal, the government presented a scenario
of revenue projections and spending estimates that would meet its target date for balance.
This path towards a balanced budget was reiterated (though only as far as 2013–14) in
Finance Minister Dwight Duncan’s Pre-Election Report on Ontario’s Finances, in which the
minister also expressed the hope that this <strong>Commission</strong> “would help accelerate the plan to
eliminate the deficit while still protecting the gains made in health care and education.”
Since our job as a <strong>Commission</strong> is to make recommendations to meet — or even better —
this target, we must assess the Budget Scenario and then develop, first, our own view of how
we believe the seven years from 2010–11 to 2017–18 will unfold in the absence of any change
in government policies, programs or practices. This, in other words, is our Status Quo outlook.
If it fails to meet the target, we must devise a Preferred Scenario for the budget that does.
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