Budget Plan

® ^Ontario

1995

Ontario

Budget Plan

Floyd Laughren

Minister of Finance

Ontario

in 2012withfundingfrom

University ofGuelph, UniversityofWindsor,YorkUniversityand UniversityofToronto Libraries

1995 Ontario Budget Plan

Floyd Laughren

Minister of Finance

Ontario

1995 Ontario BudgetPlan should be directed to:

Ministryof Finance

Frost Building South,

Queen's

Park Toronto,Ontario

M7A 1Y7

(416)325-0333

Copies are availablefree from:

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Bay

^Street,Toronto

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call:

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© ^Queen's

Printer forOntario, 1995

ISBN

0-7778-4148-7

Cover

Photo: Courtesy ofMinistry ofNatural Resources

Le document

Plan budgetairedeI'Ontariode 1995est disponibleen

franqais.

The

Ontario

Budget

Plan 1

We Have Kept Our Commitments

^to Ontarians 1

We Have Cut

the Deficit in HalfSince the Recession 7

We Have

Protected Public Services 11

We Have Worked With our

Partners to Create_Jobs ... 12

Our

Planis

Working — and

^it Doesn't Stop

Here

... 21 Balanced LeadershipThat Builds

on What we Value

.... 30

Appendices

33

($ Millions)

PerCent Change

Interim Plan from

1994-95 1995-96 1994-95

Revenue 45,589 48,397 6.2

Operating Expenditure:

Programs 43,679 43,494 -0.4

CapitalDebtServicing 106 229

PublicDebt Interest 7,880 8,600 9.1

Total 51,665 52,323 1.3

Operating Deficit 6,076 3,926

CapitalExpenditure* 2,020 1,900

BudqetarvRequirements 8,096 5,826

EconomicIndicators:

Consumer PriceIndex (%) ^{0.1 2.2}

EmploymentGrowth_(%) 1.4 2.2

RealGross DomesticProduct (%) ^{5.3 4.5}

CapitalExpendituresexclude investments usingalternative capitalfinancing of $1.6 billion in1994-95 and$2.0billion in 1995-96. CapitalDebtServicingnotedaboveprovidesforbothinterestandprincipalrepaymentsofalternative capital financing, resultinginthe retirementofdebttotalling$15.7millionin1994-95and$32.7millionin1995-96

Highlightsof theGovernment's Plan

» TheGovernment'sBudgetPlanwillprotect jobs, universalmedicare, education forourchildren,andservicesforthosewhoaremostvulnerable.

Theoperatingbudgetwillbe balanced twoyearsfromnowin 1997

—

a year aheadofschedule.

Wewillholdthelineontaxes

—

inspiteofmassivetederalfundingcuts.

» The Governmentwilllaunch a province-wide grass-rootsconsultationtoensure thatOntarianscanhavetheirsayonhowtohandle the $3.6billioninfederal cuts. ThesolutionswillbeintroducedintheLegislaturethisfall.

The Governmentwillinvestanadditional$300millionover three yearsⁱⁿ JUMPstert

—

asetofmeasuresthatwillhelp66,000moreyoungOntarians get jobs.

I

am

heretoday to put before the peopleofOntario

our Government's

planfor the

budget we

will introduce in the

Legislature afterthe election. Premier

Rae

has advised

me

that

we

will

be

going to thepeople shortly to ask

them

to

renew our mandate

to govern. Before that happens,

we want

to get the facts

and

^figuresabout the

economy and

theProvince's finances

on

^the publicrecord.

Over

thelast 4V2years,

my

colleagues

and

^I

have opened up

the

budget

processin a

way

that

had

never

been done

beforein this province.

We

^{arecontinuing}

our Government's

tradition of

openness and

frankness today.

I

am

^providingdetails

on

expenditures

and

revenues

planned

for this fiscal year,

and our medium-term

fiscal plan. I

am

announcing new measures

that will helpOntario's

young

people getjobs.

And

^I

am

laying out

our

plans for a province-wide consultationwith thepeople of Ontario

on

the best

way

to

handle

the $3.6billion in

new

cuts that the federal

government

has

imposed on

Ontarians.

Our Budget

Planis realistic

and

responsible. It

does

not

promise

simple solutions. It

does

not slash

and burn

valued

services

and

people'sjobs. It

does

notcall forirresponsible taxcuts before the

budget

isbalanced.

Our

plan provides moderate,

made-

for-Ontario solutions.

We Have Kept Our Commitments to Ontarians

The

1990s

have been

a timeof

enormous

challenges forboth the

Government and

thepeople of Ontario: the

most

brutal recession in half acentury, afederal

government

that insists

on denying

Ontarians their fairshareof

funding

forpublic services,

and

a legacyofundisciplined

spending from

previous provincial governments.

The Government

of

Premier Bob Rae

has faced those

challenges squarely.

Through tough

times, our balanced plan has

been meeting

the

needs

ofOntario's people.

Ontarians told us they

wanted

us^to support jobs

and

economic

growth, to get the deficit

down, and

to protect vital services like medicare, education for

our

children,

and programs

for those

who

are

most

vulnerable. That's

what we have

done.

And we have

beaten the targets

we

^set last year.

280

|

^27°

S

²⁶⁰

</>

<g 250 00

C

O) ²⁴⁰ Q_

Q

230 CD

"cO 220

CD t_

210

The Economy

is

Growing...

273

W'^J2\

263.2

217.7- 218.9.

__

I 1

1991 1992 1993 1994 1995 1996 1997 1998

Source: OntarioMinistryofFinance.

Last year,

we

forecast that the

economy would produce

over 100,000

new

jobs in the year ahead. In fact,over the past year,Ontario

employers have

created 137,000 ^full- timejobs.

Last year,

we

forecast that the

economy would grow by

3.3 percentin 1994. In fact, it

grew by

5.3 per cent.

Last year,

we

^{said that}

we would

balance theoperating

budget

in 1998. Infact,

we

will

do

it ayear

ahead

of schedule, in 1997.

Last year,

we

^{said that}

we would

hold theline

on spending and we would

not raisetaxes. In fact, the

budget

plan I

am

^outlining todaycalls for

program spending

to be lower thisyear than it

was

fouryears

ago

—

without

new

taxes

and

without tax increases.

—

¹²

C/)

Q.

3

Balanced

Operating

Budget

in

Two Years

12.4

9.3 ^{[[^3 Budgetary}Requirement

8.1

H

^OperatingDelicit/Surplus

8.8

I

I ^{ft H}

^{58 3.9 1.4}_0.2

Operating Surplus

1996-97 1992-93 1993-94 1994-95 1995-96

(interim)

Thedifferencebetweenthebudgetaryrequirement/surplusandtheoperating deficit/surplusisequaltothebudgetarycapitalexpenditure.

Source. OntarioMinistry ofFinance

1997-98

Lastyear,

we

said that

we would

protect public services like universal

medicare and

education. In fact,

our

hospitals arecaring for

more

patients than

when we

took

office;

our

schools, colleges

and

universities are

educating

more

students;

and more

seniors

and

people with physical disabilities arereceiving long-term care services in their

own homes.

1995 ONTARIO

BUDGET

PLAN

Better ServicesforMore People Table2

1990 1994 Chanqe

Studentsinelementaryandhighschool 1,770,000 1,893,000 +7%

Studentsⁱⁿcollegesanduniversities^' 319,000 361 ,000 +13%

Hospitalcases/patientvisits(millions)² 14.7 15.4 +5%

Womencovered by payequity 360,000 780,000 + 117%

Subsidizedchild-carespaces 46,600 68,300 +47%

Peopleintrainingprograms ³ 313,000 376,000 +20%

People receivingin-homelong-term care

services 207,000 300.000 +45%

1 Based onfull-timeenrolments. Preliminaryfigurefor1994,based onfallsurvey 2 1989-90fiscalyear versuspreliminary1993-94fiscalyear.

3 Traininginterventionsandjobplacementsplus literacyprograms.

4 Estimatedfigurefor1994.

We

^said lastyear that

we would

supportjob creation,preserve

vital services,

and

bring thedeficit

down

while holding the line

on

taxes

— and we have done

it.

We have

kept

our commitments

to the peopleofOntario.

Thatdoesn't

mean

that all

our problems

are solved. Butit

means we have

a trackrecord

on which

^tobuild.

One

of the challenges

we

are

determined

to tackle this yearis

helping Ontario's

young

people get the training

and work

experience they

need

to get thatvital firstjob.

Over

the next three years, startingin September,

our new JUMPsfarf program

will help 66,000

more young

peopleget a job.

A

Balanced

Approach

Our Government

has learned a great deal

from

thechallenges

we have

faced.

One

ofthe

tough

lessons

we have

learned is that thepeopleof Ontariocannot count

on

^theirfederal

government

^to

treat

them

^fairly.

The

current federal

government,

like the

Mulroney

government

before ^it, has

backed away from

its

commitments

to thepeopleofthisprovince. It has continued to

deny

Ontarians theirfair shareof fundingfor social assistance, training,

and immigrant

settlement. That discrimination will

have

cost the peopleofOntario$12.4 billion

between

1990-91

and

^1995-96.

Despite the severityofthat financial blow,

our Government

will

keep

to ourfiscal course, maintainvital services,

and

continue

The

Challengeofthe Martin Budget

Now

^the Martin

budget

will take

away

^another$3.6 billion

from

Ontarians formedicare, education

and

social services in 1996- 97

and

1997-98. Let

me

illustrate

what

a billion dollars

pays

for in Ontario.

A

^{billion dollars}

^would pay

forall the hospitals in the

North and

threeout offour hospitals in southwestern Ontario

—

or

all thelong-term carefacilities across the province

—

or halfof

our

universities

—

or ^all of

our community

colleges.

Ottawa

^is

Imposing

$3.6 Billion in

New Cuts

1995-96 1996-97 1997-98

Continuing lossesdueto unfairtreatmentolOntario

I ILossesduetonewcutsinfederal fundingforhealth,educationandsocialprograms

^WhatOntarioactuallygetsforhealth,educationandsocialprograms Source OntarioMinistry ofFinance

Ontarians,

who make up

38 percent of

Canada's

population, willbe forced to shoulder 54 percent of thenetreductions in federal transfers for health, education,social services

and

equalization

between

^1994-95

and

^1996-97

— more

than allthe otherprovinces

combined.

Rather than fixing theunfairness that alreadyexists, theMartin

budget makes

it worse.

Their

budget

alsosendsa clear signalthat the federal

government

is

no

longerwillingto preserve a national

medicare program.

Their

new

block-fund

scheme

takes us

down

a path that will

end

thefederal

government's

ability to enforce national

standards.

As

cashtransfers to theprovinces dwindle, the federal

government

will lose

any

clout ithas

had

to maintain standards across the country.

30

25

20 c o 15

q3 Q.

10

5

Feder;

inOnt.

Sourc<

The ^Federal Government

^is

Abandoning

Its

Commitments

25

20

15

Q

3

19848510 1988 8919899010 1993-94 1994-95101998 99 1999-2000102003-042004-05102008-092009-10to2013-14

ilgovernment'scontributiontomedicare, collegesanduniversitiesandsocialprograms

irio Average cashentitlementoverfive-yearperiods.

): OntarioMinistry ofFinance.

The

federal

government

^is

abandoning

its

commitment

to medicare.

We

arenot. Universal medicare is

one

of the finest

achievements of

Canadian

society. This

Government

is going to fight to

keep

it

and make

^it

work

better.

Of

course the federal

government

faced a difficult deficit

problem. But the Martin

budget

took the easy

way

out. Itoff-loads

by

far the largest share ofits cuts

on

to the provinces. Fully 42 per centofthe cutsare

coming

out of federal cashtransfers to

provinces,

which

representonly 15 percent oftotalfederal

program

spending. This isnotdeficit-cutting

—

it is deficit- shifting.

Instead ofprotecting services,the Martin

budget

cuts the very services,like universal

medicare and

education, thatOntarians valuemost. It perpetuates the

Mulroney

government'spolicies of highinterest rates,

slow economic

growth, persistenthigh

unemployment, and

the

GST.

It will costOntarians

an

estimated 90,000jobs

by

1997,

and

^itwill cost

even more

jobsif interestrates continue torise unnecessarily.

And

^itraises taxes.

Our Government's

planprotects services, supportsjobs,

and

brings thedeficit

down

while holding the line

on

taxes.

We Have Cut ^the

Deficit in

Half Since the Recession The

peopleofOntario

do

not

want governments

to gut

medicare

or

make

highereducation unaffordablefor families.

They want governments

to live within their

means

while preservingvital services.

Our Government

has putin place thetightest

spending

controls in half a century.

Program spending

in the

coming

year will be lower than ^it

was

fouryears ago.

No

Ontario

government

in 50 yearscan equal that record.

And

^lookingacross thecountry, our

budgetary spending

perperson this year will be the third lowest ofall theprovinces.

6,500

Ontario's Spending Third Lowest

in

Canada

4,000

Nfld PEI Que NB BC Alta Sask Ont Man NS

Totalbudgetaryexpenditures percapita.

Sources: 1995provincialbudgets (1994forQuebec) andOntarioMinistry ofFinance.

The

lastprovincial

government

rode thecrestofa

major economic

expansion.

During

their

term

ofoffice,

government spending grew by

66 percent. Their

budgets

simplylayered

new programs on

top ofold ones,

and pushed spending up by an

average ofabout 10 percent everysingle year.

They

did not reduce the debt

by one penny

during those

boom

years.

c o

Q.

5o

O) TO3 CC

(0 Q)

cn

>

CD

Turning Around the Program Spending Growth

of

the 1980s

11.5

1980-81to1984-85 (11985-86to1989-90

D

^{1990-91to1995-96}

Nominal Source: OntarioMinistryofFinance

Real

In their last

budget

in 1990, they forecast that the

economy would

continue to

grow

withoutinterruption.

And

they

promised

a balanced

budget

in 1990-91. In reality,

by

the time

my

colleagues

and

I tookoffice, the recession

had

already taken 100,000jobs out of the Ontario

economy, and

^{the so-called balanced}

budget had

already turned into a deficitthat reached $3^billion that year.

Putting

Our Own House

in Order

We have had

to face

an even

tougherdeficit challenge, proportionately, than thefederal government.

We ^made

^the

hard decisions toget thedeficit

down, and we have

thescars to

show

forit.

Our Government went back

to square one.

We examined

every

program. We found ways

to run

them more

efficiently.

Our

Expenditure Control Planput an

end

to the

upward

spiral of

government spending

^created

by our

predecessors. Itis

now

saving $6billion a year.

We

put

our own house

in order.

Spending on government overhead

willbe$1.3billionless thisyear thanfour years ago. It is

lower

now

than it

was when

theformer

government

leftoffice.

Through

attrition

and

early retirements,

we have

cut the sizeofthe public service

by

6,000 positions since

March

1991, with almost

no

layoffs.

Our tough

decisions are

paying

offforOntario. In theyearjust

ended,

our

^deficit

was

$8.1 billion. Thatis

more

than $400 million

below

^the target

we

^set.

In 1995-96,the deficit will

drop by

$2.3 billion to $5.8billion.

That is$700 million

below

thetarget set lastyear. That's

two

years ina

row we have

beaten

our

targets.

The

deficitwill

be

less than half

what

^it

was

at its

peak

during theworstof therecession.

C/3c

o

10

Government Overhead Costs Have Been Cut by $1.3

billion

1991-92 1995-96

Includessalaryand wages,employeebenefits,transportation,communications, services,suppliesandequipment.

Source: OntarioMinistry ofFinance.

The budget we

planfor1995-96 callsfor totaloperating

spending

of $52.3 billion.

Program spending

is

planned

at

$43.5 billion,

which

is lower than lastyear.

Revenues

^areprojected to

be

$48.4billion. For the

second

yearin a row,

our

plancallsfor

no new

taxes,

and no

tax increases.

BetterHealthCareforOntarians

We^arechangingour heaitn caresystemtopromotehealthycommunitiesand ensurethatthe healthneeds^ofOntarians aremetnowandⁱⁿthefuture.

Therearemoreelderlypeopleinourpopulation,andmorepeoplewithphysicaldisabilities

whowanttoliveindependently. Wenave launched "Neighbours

—

HomeandHealth ServicesforIndependent Living" toensurethatin-homeserviceslikenursing,meals, physiotherapyandhomemakingareavailabletothosewhoneedthem.

NearlyeveryfamilyinOntariohasbeen touchedinsomewaybycancer. Ontariospends morethan $1 billiona yearon cancercare. NowOntariohasaprovincialcancerstrategythat looksatevery aspectofcancercare,fromearlydetectiontotreatment,communitysupport andpalliativecare.

Since 1990,wehaveinvested morethan$370million toexpandcancerfacilitiesin

placeslikeOshawa, London,Ottawa, PeelandToronto.

TheBreastCancerScreeningProgramisnowscreening60,000womenayear. The numberofscreening centreswasincreasedinthefallof1994from 10to16.

Someindividualsandfamilieswhoarestruckbyconditionslikemultiplesclerosis orAIDSare having a hard time payingforalltheprescriptiondrugsthey need. ThenewTrilliumDrug Program^will helpabout250,000Ontarianscopewith unmanageabledrugexpenses.

Newtechnologies are transforming healthcare. Forexample:

Ontariowillprovideover$3.4millionayeartohospitalstooperateupto23new MRI machinestoensure accessforOntariansacross the provinceto thishigh-tech diagnosticimagingtool.

We^haveestablished theHealthNetwork, anelectroniclinkconnectingpharmacists withaprovincial database sotheycan check whether peoplereceivingOntariodrug benefitsaretakingdrugsthatmayhave dangeroussideeffectswhentakentogether.

TheNetwork hasalsoidentifiedover15,000duplicateprescriptions, avoiding

$380,000incosts.

Ourhealthsystemmustbecomemoreattunedtotheneedsofconsumers. Manywomen

wantto havetheirbabiesunderthecareofamidwife. Ontarioisthefirstprovinceto recognizemidwives asa regulated health profession.

Since1990,wehaveincreased fundingfordialysisby$70^{milliontotreat}2,000morepatients.

Another $13.5millionhasbeenprovidedinone-timegrantsforequipmentandothercosts.

Undera 10-year reformplan,weareinvesting$20^milliontoexpand communityhealth services.

TheAboriginalHealingand WellnessStrategyisafive-yearinitiativetosupport Aboriginal communitiesintacklingsomeofthehealth andsocialproblemsthey faceandtoimprove accesstoprimary healthcare.

We Have Protected Public Services

Our

planisbringing thedeficit

down

withoutcosting people theirjobs

and

withoutslashingimportant services, like medicare, educationfor ourchildren,

and

services forthose

who

are

most

vulnerable.

The

Social Contract issaving $2 billiona year,

and

ithas preserved

up

to40,000 public-sectorjobs.

The

SocialContract will expire next year,but the $2billionwillnot be put

back

into the system.

Our

partnersin thebroaderpublic sector are

working

hard

to find

permanent

savings.

The government's own

share of the

permanent

savings will

be

$210 million in 1996-97.

Management and

labourrepresentatives

have

already

found

half of that

amount.

Protecting Medicare

— and

Making ^it

Work

Better

With

thehelp ofourpartnersin thehealth care system,

we

have been

able to contain costs

even though demand

for services hasincreased. But

our

highest priority isprovidingbetter health care forOntarians.

Even though our

total

spending on programs

is falling,

we

will

spend

almost $300 million

more on

health carethis

year than

two

years ago.

And we

are directingdollars to

where

they are

needed

most.

We ^have

^increased support for cancerresearch,treatment

and

prevention,

and we have expanded community-based

supports for people with cancer

and

their families.

We

arebuilding

new

health carefacilities, like thePrincess

Margaret

Hospital,

which

specializes in cancercases

and

serves patients

from

acrossOntario.

The new

Trillium

Drug Program

will help almostaquarter- million individuals

and

families

touched by

conditions like multiplesclerosis,cystic fibrosis

and AIDS. When

their

prescription

drug

costs exceed a deductiblethatis

based on

their income, this

new program

will help to

pay

the balance.

About

300,000 seniors

and

people withphysicaldisabilities are receiving long-termcare services in their

own homes —

45 per cent

more

than fiveyears ago.

Through

Neighbours,

our community-

based

approach

to

home and

healthservices for

independent

living,

we

will continue

expansion

of

in-home

long-termcare services in the

coming

years.

11

To improve

the

management

of the health caresystem,

we

are introducing

new

photo health cards that will prevent $60million a year in

OHIP

fraud.

These

^decisions

show how

to save

medicare —

not

by

slashing fundingor

by

turningmedicare into a

program

just forfinancial emergencies, but

by making

the health

system work

better.

New

Foundations forEducation

Our Government

^is

moving

forward with the

most sweeping

reformof the Ontarioschoolsystem since the 1960s.

And we

will achieve those reformswithoutincreasing the Province's funding to school boards.

We

^{are telling} schoolboards to take resourcesout ofthe educationbureaucracy

and

put

them

intotheclassroom to

meet

theneeds ofstudents.

We

^are getting parents,students

and community members

involved in the operationofschools through schoolcouncils.

We

^are

^expanding

testing forstudents

on

a province-

wide

basis,

and

requiring

more

training for teachers.

And we

will eliminate

up

to halfthe schoolboardsⁱⁿ Ontario

by

the

end

of 1997.

Our

colleges

and

universities will see theirprovincial funding maintained ^{in 1995-96.}

We

^willnot support the federal cutsthat

would

force tuition fees to double.

The

future of

our young

people

depends on

protecting access to college

and

university forall

deservingOntarians.

The

^{future of}

our economy

does,too.

We Have Worked With our Partners to Create Jobs

This

Government's

plan has

made

Ontario a betterplace to

do

business thanit

was

fiveyears ago.

Business has

demonstrated

its confidencein theprovince's future through its record-level investment. Business investmentin

new machinery and equipment

last yearreached itshighest level in

Ontario history

— and

itwillbe

even

higherthis year.

5 25 o

!5

«/>

r ^**"'

0) r 20

h

</i E

ID Q.

> 3

0) 1b

o c

tt> (D co (T)

&

to_>

£10

Q. o

(0

E E ₅

Business ^Investment

is at

an Ail-Time High

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

Sources: StatisticsCanadaandOntarioMinistryofFinance.

22.7

1995

Forecast

And

that

equipment

^isbeing put touse

by workers who ^have

more

education

and more

training than everbefore.

Combined

with the effectsofa

more

competitive dollar,Ontario'sexports

grew by

13.9 percent lastyear,

and

theywill

grow

another 15.7per centin 1995.

More

than everbefore,Ontario is

an

excellent placeto

do

business.

co CDO

CD

(/>

a

c

ro

^

CD

Q.-^

X

CD 0J CD

240

200

160

120

Ontario Exports are Booming

+15.7%

1990 1991 1992

Source: OntarioMinistryofFinance.

1993 1994 1995

Forecast

13

The

autoindustry alone has planned or

completed

$5.5 billion in expansion inOntario since this

Government

tookoffice in 1990.

Among

the latest

announcements —

a majoraddition toToyota's

assembly

plant in

Cambridge, and

over$1 ^{billion in}

new

investmentsat Ford facilities in Oakville

and

Windsor.

c

Strong Productivity Growth Has Made

Ontario Business More Competitive

1990to1991 Recession

1992to1994 Recovery Sources: U.S.BureauofLaborStatisticsandOntarioMinistryofFinance

Close to 150,000 Ontarians recently

showed

theirconfidence in the futureof theprovince

by

purchasing$1.6 billion in thefirst issue ofOntarioSavings Bonds.

Partnershipswith Businessto Create

Jobs

Ever

sinceour

Government

took office,

we have worked

in partnership with the privatesector tocreate jobs

and

support sustainable

economic

growth. Together with

our

partners,

we have

directly created or supported

an

average ofalmost 150,000 private- sector jobs every yearsince 1991-92.

A good example

ofthe successof partnerships with theprivate sectoris SpruceFalls Inc. in Kapuskasing,

where we brought

together theworkers, a

new

investor, the

community and

Ontario

Hydro

tobring in

new ownership and

a modernization plan that has keptthat mill in operation.

1995ONTARIO

BUDGET

PLAN

CO

.Q

O

D

c/)

a

CO CO

o

240 210 180 150\

120 90 60 30

Public Investments Have Supported Thousands

^of

Jobs

177,600 152,780

135,760

147,000 154,800

JUMPstart

Othermajorinitiatives

^

jobsOntario Training Capitalinvestmentprojects

Person Source

"""

'("' "• _mi.ni,mi,I ,

,,,,,,,nn. .Minn pimi

1991-92 1992-93 1993-94 1994-95*

yearsand placements based onOntario pluspartners'funding OntarioMinistryofFinance

1995-96*

*projected

Our Government

has

worked

with the forestindustry to ensure that

our

forestsare

managed

responsibly

and

with a sustainableyield.

From now

on, Ontariowill dedicate timber- cutting fees to a special trustfund, ratherthan puttingthat

money

into general revenues,as previous

governments have

done.

The

industry is investing

more

than $1 billion inOntario this year,

much

of ^it to

develop

specialty

lumber and wood

products that

make

betteruse of the forestresource.

More

than4,300 direct

and

indirectjobs will becreated

by

these value-added industries,

mainly

in

Northern

Ontario.

Inagriculture, the

FarmPLUS program

^is

earmarking

funds

at local creditunions

and

caisses populaires for

farm

loans

and

mortgages. This innovative

way

forrural

communities

to support their

own growth

has

made

$30 million availableto Ontario's farmers.

Our

industrial support

programs

areproviding

customized

assistance to smallerinnovative

and growing

companies.

Almost

400 firms

have been

assisted

by

this

new

service.

These

firms expectto increase

employment by

14,000jobs overthree years.

And we

areassisting the

growth

ofgreen industries

by

providing technical support

and

assistance in commercializing

environmentallyfriendly technologies.

15

ONTARIO HYDRO:

The LargestCorporateRestructuringinCanadianHistory ThisGovernmenthasworkedclosely withOntario Hydrototurnarounda long history ofescalatingcostsandrisingdebt, brinqingtoanendalmosttwodecades of

unrelentingrateincreasestoconsumers.

Ontario Hydroisundergoing thelargestcorporaterestructuringin Canadian history.

Thisrestructuringisessentialtocontrol electrical ratesand ensurethatOntario industries getpoweratreasonablecostto helpthembe competitive. Theresultwill be amorebusiness-like,flexibleand responsive Hydro.

Thevigorouscost-control measuresinthecorporaterestructuringplanandthe introductionofaflexibleratestructureallowed Hydrotofreezeratesin1994 and 1995, andtoreduceratesforlarge industrialcustomersby0.7per centin1995. Therewill

be noincreasein ratesthrough 1997,and Hydrois proposing afurtherreductioninthe industrial rateof 1.4per centin 1996. Thisisthefirsttime inthreedecadesthat Hydro'slargestuserswillgetsomereliefontheirrates

—

improvingthecompetitive positionofOntariofirms.

Therestructuringhasinvolved:

scrapping plansformorecostlymega-projects

—

decisionsbyprevious

governmentsto buildthe Darlingtonnuclearmega-projectwere largelyresponsioie for rateincreasesofover30per centinthe early 1990s.

reducingthe sizeofOntarioHydro byalmost athird

—

withinayear, therewill be 8,000 fewerHydro employeesthanin 1992. Thisdownsizing hasbeen achieved largelythroughvoluntaryexitprogramsto easetheadjustmentforstaff.

becomingmoreefficientand moreresponsivetocustomers

—

theHydro bureaucracy hasbeen streamlinedandthereisanewclimatethatencourages

staffinitiativeandefficiency. The newflexibleratestructureallows Hydroto

respondbettertotheneedsofitsindustrialconsumers.

gettingthedebtundercontrol

—

Hydro'sfinancial situation andoutlookhave improvedsignificantly. Netincomein 1994, before one-time restructuringcharges, was$855million,a dramatic turnaround from previousyears. Debtlevelspeaked

in 1992andwillfallbyanestimated $4.6billion by 1997. Theseestimates assume nogrowthinelectricitysales.

Our Government

has

worked

closely with Ontario

Hydro

to turn

around

along historyof escalating costs

and

rising

power

rates.

As

a result,electricityrates for

consumers and

businesses

have

not increased since 1993,

and

there will continueto

be no

increases

through

atleast 1997.

Escalating

Electricity

Rates Brought Under Control

-i ^{1 1 1 1 1 1 1 1 1 1 1 1 1 1 1} r

1980198119821983 1984 19851986 1987 1988 1989 19901991199219931994199519961997 Sources: OntarioMinistryofFinanceandOntario Hydro.

We

^are

^working

with business to identify

ways

to reduce the

paperwork burden

for

employers through new

technology,

and

to clear thepath for

new

business

and

job creation.

And we have lowered

taxes to

keep

Ontario'sbusinesses competitive.

(0 CD CO

« ²⁰

CO

O

c

CD

Payroll

Taxes on

a

New Employee

w

<d en co

5

COw o

cn

"o

c

CDo

CD Q.

15

10

"2 Afteroneyear Employee'sfirstyear

10.4

Represents averageeffectivepayrolltax rate

Payrolltaxes includemandatory employer-paidcontributions(e.g.CPP.UIC,WCB,andEHT)and employer-paid contributionsforhealth,accidentandsicknessOntario's8.6%ratereflectsEHT^holidayforemployerswhoexpand theirpayrolls.

Source: Ontario MinistryofFinance based on 1993datafromStatisticsCanadaandUS Departmentof

Commerce.

17

O

CD

Ontario's

Business Tax Rate

¹

is

Competitive

389 398 399 408

-r

416

-r- Onlano² Michigan Tennessee Illinois U S Average³ Ohio NewYork Representshighestcombined(federalandprovincial/state)statutorycorporateincometaxrate formanufacturers as ofJan 1.1995 US rateshavebeenad|ustedtotakeintoaccountthedeductibility ofstatetaxesatthe federallevel Includes federal surtaxincreaseeffectiveFebruary28.1995

Weightedaverage.

Source Ontario MinistryofFinance

Bringing Social and

Economic

Policy Together

During

therecession, our

Government

introduced jobsOntario Training tohelp get

more

Ontarians offwelfare

and

into the

workforce.

In partnershipwith 42,000 private-sector employers, jobsOntario Training will

have

created over90,000 job

opportunitiesfor out-of-work Ontarians

by

the

end

of 1995-96.

This

program

putspeople intosteadyjobs with average

wages

of

$21,000 a year. It gives

them

skills training that

improves

their future prospects.

When we

surveyed those

who

got

work

through jobsOntario Training, about 80 percent

were

^{still in} thosejobs several

months

after the one-yeartraining credit

had

ended.

Nearly half theOntariansin the jobsOntario Training

program used

tobe

on

welfare.

As

a result of getting these peopleoff

welfare

and

intojobs, jobsOntario Training will save taxpayers

$420 millioninwelfarecosts.

And

^{there will}be a return

on

this

investmentforyears to

come

as people

who were

receiving welfare

become

taxpayers instead.

Now

thatthe recession is over,

we

^are taking

new

steps to

bring thesocial assistancecaseload

down. Our new

investments in

mean

a

pay cheque

^{instead of a} welfarecheque.

And

^tobuild

on

the success ofjobsOntario Training,

we have

introduced

jobLink

to

help people

on

social assistance get

back

to work.

The

federal

government

has

withdrawn from

cost-sharingof

jobLink

after only

one

year.

The

Provincewill continueto

fund

this innovative

program

thathelpspeople

on

welfareget

employment

counselling, training

and

jobs.

And

as with jobsOntario Training, there will

be

substantial returns

on

this investment

through

lower welfarecosts.

The

social assistance caseload has

dropped by more

than

16,000 overthe last 12 months.

During

the

boom

years of the 1980s,

under

the previous

government,

the averageannual social assistancecaseload never

went down. Now

^{that the}

economy

is

growing

strongly again, this

Government

is goingto ensure that thecaseload keeps going

down — by

activelyhelping people^to get offwelfare

and

into a job,

and by

^{continuing to tighten}

administration

and

enforce

tough measures

against fraud.

The

Largest Public Investmentsin Ontario's History

Our

planfor this yearincludes $4.4 billion in capital

investments. This represents the largestsingle-yearinvestment in public infrastructure inthe province's history. Itbrings thetotal

investmentⁱⁿ long-term public assets to

more

than $19 ^billion since 1991-92.

This

was

a clearchoice

we made —

to investinOntario's future.

We

^{believe that it}

was

theright choice.

Across thisprovince,

we have

invested inthe roads,

water and sewer

systems

and

transit lines that

make

Ontario a

good

place to

do

business.

We have

invested in theschools, hospitals, colleges, universities

and community

centres that

make

Ontario a

good

placeto live

and

raisea family.

Our

capitalinvestments arehelping tolead the

economic redevelopment and renewal

of

communities

like St. Catharines,

Windsor,

Peterborough,

Oshawa and

SaultSte. Marie.

The new super-highway

across the topof

Toronto — Highway

407

—

willspur

growth

in the Greater

Toronto Area (GTA) by making

the transport of

goods and

services faster

and

^easier.

The

first section will

be opened

a year

from now.

19

The Largest Public Investments

in

Ontario's History

Hospitals,long-termcare andcommunityhealth facilities ($1.2billion)

Courthousesand jails

($900^million)

Schools,collegesand universities ($23billion)

Governmentrelocation ($300^million)

Waterandsewers economic development

($4.2billion)

Capitalinvestments 1991-92 through 1995-96.

Source OntarioMinistryofFinance.

Social services, publichousing maintenance, childcarecentres

($900million)

Highways, roadsandtransit

($9 4billion)

Highway

407 illustrates

what

canbeaccomplished

when

government and

the private sector

work

togetherto find innovative solutions.

Our new approach

to financing

and

building the407

means

that ^itwill be

completed

20 years

ahead

ofthe schedule set

by

the previous

government.

Over

therest ofthe decade,

we

will complete

Highway

407,

and

build four

new subway

lines

and

a

new

trade centre in

Metro

Toronto.

These massive

projectsare part of the

economic

revitalization of the

GTA, which

^is

home

to halfofOntario's

economy. We have

also initiated a major review of

how

governments

can

work

togetherin the

GTA

tocontribute to that revitalization.

We ^have

^introduced

^{new ways}

^ofplanning

^and

^financing

capital investments.

Through

a

new

budgetingsystem, lastyear

we

started to

pay down

^thecapital debt, both ^interest

and

principal,outofoperating spending, ratherthan letting it

accumulate

and grow

over time.

We

will

make

$229 million in

payments on

those assets thisyearin the

same way

that

homeowners make payments on

^theirmortgages.

The economic

payoff

from

theseinvestmentsis notjust in today'sconstructionjobs, but in the foundationforsustainable future growth.