Commission on the Reform of Ontario's Public Services

Chapter 1: The Need for Strong Fiscal Action
Since our mandate expressly forbids us from proposing new or increased taxes, most of the
burden of eliminating the $30.2 billion shortfall revealed by the Status Quo Scenario must fall
on spending. As we veer from the Status Quo outlook (with its persistent deficits) by aiming
for a balanced budget in 2017–18, we would run ever-declining deficits along the way, which
would reduce interest costs on the debt below those seen in the Status Quo outlook. This
would save about $4.3 billion 3 in 2017–18, but the province would still need to spend about
$23.9 billion less on programs than the $141.4 billion that we see as the current Status Quo
projection — a difference of 17 per cent. That implies, to put it mildly, a wrenching reduction
from the path that spending is now on. It is, however, necessary if Ontario is to escape its
recent history of rising public debt that forces the government to spend more than it should on
interest payments — money that could otherwise be used to finance programs.
These are bold assertions, very clearly at odds with the recent public debate over Ontario’s
fiscal outlook. During the recent election, all political parties pledged to balance the budget by
2017–18, but none presented a credible plan to accomplish this outcome. Our assertions
therefore demand explanation and substantiation. We will spell out the details of the Preferred
Scenario later in this chapter. Here, we will simply note that we lay out a plan designed to
secure a budget balance in 2017–18 through spending restraint. And to foreshadow the rest of
the report, we make recommendations throughout for reforming programs and service delivery
to achieve the overall degree of spending restraint required. But before describing the
Preferred Scenario in detail, we will briefly review Ontario’s fiscal record (Do we really have
a debt problem?) and then set out the recent performance of the Ontario economy and its
prospects for the future. This economic outlook is critical because it establishes the context
in which budget policy must be set over the next several years.
3 This does not add due to rounding.
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