January 11, 2016

The Honourable Kathleen Wynne
Premier of Ontario
Room 281, Main Legislative Building
Queen’s Park
Toronto, Ontario
M7A 1A1

Dear Premier:

The Ministry of Finance is making solid progress on the priorities spelled out in my ministry’s mandate letter. Working with the Treasury Board Secretariat, we are taking deliberate steps to exceed our deficit reduction targets and balance the budget in 2017-18, while continuing to make the investments needed to strengthen Ontario’s economy.

We have put forward a positive plan to achieve greater prosperity for Ontarians. Since receiving your mandate letter, we have focused on the following key priorities:

Managing Ontario’s Revenues and Expenses and the Province’s Borrowing Program

  • Reduced the deficit to $10.3 billion in 2014-15, an improvement of $2.2 billion compared with the 2014 Budget projection.
  • Outlined a plan in the 2015 Budget to eliminate the deficit that centres on program review, renewal and transformation, managing compensation costs, addressing the underground economy and maintaining tax fairness, as well as sound financial management and fiscal accountability.
  • Forecasted revised deficits in the 2015 Ontario Economic Outlook and Fiscal Review to $7.5 billion in 2015-16, $4.5 billion in 2016-17, and balance in 2017-18.
  • Achieved several net-zero compensation agreements with public sector unions.
  • Increased revenue by $225 million over what was reported in the 2015 Budget by combatting the underground economy and tax avoidance activities.
  • Completed $21.9 billion of $30.1 billion of the 2015-16 provincial long-term borrowing requirement as of December 10, 2015, as part of a strategy to consistently keep interest-on-debt costs below budget projections.

Maintaining a Modern and Affordable Financial System

  • Completed the credit union review and launched reviews of key aspects of the financial services system, including the following major regulatory agencies: the Financial Services Commission of Ontario, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario.
  • Announced the Capital Markets Regulatory Authority chair and published revised draft capital markets legislation for comment.
  • Introduced auto insurance reforms that will help lower rates and increase consumer choice.
  • Undertaking a review of the solvency funding framework applicable to defined benefit pension plans.

Optimizing Government Assets

  • Amended the Liquor Control Act, struck a new framework agreement with The Beer Store and implemented new initiatives in Liquor Control Board of Ontario (LCBO) stores.
  • Supported the Ministry of Energy on the Hydro One initial public offering (IPO).
  • Driven by the Hydro One IPO, we anticipate that $2.7 billion in dedicated funds will be made available to the province in 2015-16 for strategic infrastructure investments — $1.1 billion over the 2015 Budget asset optimization target.

Building Retirement Security

  • Passed the Pooled Registered Pension Plans Act, 2015, the Ontario Retirement Pension Plan (ORPP) Act, 2015 and the Ontario Retirement Pension Plan Administration Corporation Act, 2015.
  • Announced key design elements of the ORPP related to plan comparability, phasing in of contribution rates and timing of stages of implementation, and minimum earnings threshold and eligibility age.
  • Developing regulatory frameworks for target benefit multi-employer pension plans and conversion of single-employer pension plans to jointly sponsored pension plans.

Supporting a Dynamic Business Climate

  • Maintained a competitive tax environment to support long-term growth.
  • Authorized 58 grocery stores to sell beer in December, following the new beer framework agreement and in a way that safeguards the LCBO’s central role as wholesaler, sustains government revenue, maintains Ontario’s high standards of social responsibility towards alcohol consumption, and enhances efficiency and consumer choice and convenience.
  • Implemented tobacco reforms designed to address the sale of contraband tobacco, including overhauling oversight through legislative amendments.
  • Made using electronic sales suppression devices an offence.
  • Oversaw Ontario Lottery and Gaming’s modernization efforts, including the procurement and selection of gaming bundle operators, and launched the Horse Racing Integration Plan.
  • Established a Sharing Economy Advisory Committee to harness opportunities in this emerging sector.
  • Fostering growth in the financial services sector through measures such as partnering with the Toronto Financial Services Alliance and supporting the launch of an Ontario renminbi trading hub, as well as supporting government-wide sector strategies in mining, agri-food, advanced manufacturing and many others.
  • Strengthened economic relationships through trips to China, Japan, New York City and Chicago.

Collaborating on Shared Responsibilities Across Government

  • Created the Trillium Trust to support asset optimization and infrastructure.
  • Supporting the Ministry of Environment and Climate Change in developing the policy and regulatory framework for the cap and trade program.
  • Collaborating with the Ministry of Economic Development, Employment and Infrastructure and other ministries to develop the Business Growth Initiative and support the Jobs and Prosperity Fund.
  • Working with other ministries to improve the administration and delivery of Ontario government benefits.
  • Providing fiscal planning and economic policy to support initiatives across government and individual ministry allocations.

Working with Other Levels of Government

  • As part of fund redesign, directed a larger share of the Ontario Municipal Partnership Fund to more fiscally challenged municipalities.
  • Partnering with Québec to develop a series of economic roundtables, which will include leaders of the business communities from both provinces.
  • Directly engaged with ministers and ministries of other jurisdictions in Canada to further shared priorities such as the Common Capital Markets Regulator and retirement income security.
  • Collaborated with the federal government on common goals: infrastructure, retirement income security, climate change, jobs and the economy, Aboriginal and other partnerships, health care, and refugee relief and settlement.

In summary, we are continuing to work hard and achieve our commitments. Our entire team at the Ministry of Finance has made significant progress in implementing the plan laid out in Budgets 2014 and 2015. Together, we are building Ontario up, and the Ministry of Finance is proud to do its part.

Sincerely,

Charles Sousa signature

Charles Sousa
Minister of Finance

Results achieved

Mandate Letter Commitment Progress to Date
Make fiscal discipline a priority, while continuing to make the investments needed to strengthen Ontario’s economy, support critical investments and protect public services for all Ontarians.
  • The 2015 Budget outlined a plan to eliminate the deficit by 2017–18 that centred on program review, renewal and transformation, managing compensation costs, and addressing the underground economy and maintaining tax fairness.
  • Ontario is committed to balancing the budget by 2017–18 in a fair and responsible way.
Work with the President of the Treasury Board to eliminate the deficit by 2017-18 through the effective management of Ontario’s revenue and expenditures and the province’s borrowing program.
  • The path to balance centred on program review, renewal and transformation, managing compensation costs, and addressing the underground economy and maintaining tax fairness.
  • Achievements reported in the 2015 Ontario Economic Outlook and Fiscal Review include: several net-zero compensation agreements and $225 million revenue over what was stated in the 2015 Budget through anti-underground economy activities.
Table an annual budget that aligns with the government’s fiscal objectives and key priorities.
  • The 2015 Budget, Building Ontario Up, was tabled on April 23. It outlines the province’s economic outlook, fiscal plan and other key priorities.
  • The 2015 Ontario Economic Outlook and Fiscal Review was tabled on November 26. It projected deficit improvements of $1.0 billion in 2015–16 ($7.5 billion) and $0.3 billion in 2016-17 ($4.5 billion) compared to 2015 Budget targets.
Providing strong oversight of Ontario’s regulatory system for pensions, insurance, financial services and capital markets. Your goal is to ensure that the financial system is modern, affordable, protects investors and consumers, and supports economic growth.
  • Completed consultations as part of an independent expert committee review of financial advisory and financial planning policy alternatives.
  • Released mandate review expert advisory panel’s preliminary position paper on financial services regulators.
  • The Parliamentary Assistant to the Minister of Finance submitted her Credit Unions and Caisses Populaires Act review recommendations in November.
Delivering on our commitment to reduce automobile insurance rates. You will continue to work with the Financial Services Commission of Ontario and stakeholders to drive the necessary regulatory reforms and fraud prevention measures to ensure that the auto insurance system is fair and affordable and that consumers are protected.
  • Implemented reforms announced in the 2015 Budget that will help lower rates while providing consumers with better choices to buy the coverage that best suits them.
  • In October, appointed David Marshall as an advisor on auto insurance and pensions to identify additional opportunities for reforms that will lead to better health outcomes, lower costs and more affordable auto insurance.
Working with the Attorney General to establish a Serious Fraud Unit, whose mandate will include addressing automobile insurance fraud.
  • The Ministry of Finance is working with the Ministry of the Attorney General on this initiative.
Taking a leadership role in developing a co-operative capital markets regulatory system that will ensure consistent, fair and transparent rules for investors, issuers and other capital market participants. I ask that you continue to work with other provinces and the federal government to seek a national consensus on a single regime that also recognizes Toronto’s key role in the financial services sector.
  • Ontario, with the participating provinces and Yukon, published for comment a revised consultation draft of the uniform provincial/territorial Capital Markets Act and draft initial regulations in August 2015.
  • Named William Black as Chairman of the Capital Markets Regulatory Authority Board and announced incorporation of the implementation organization in July 2015.
Continuing to pursue pension reform that increases the sustainability of Ontario’s public-sector pension plans. Consult with the Minister of Energy and the Minister of Training, Colleges and Universities on pension reforms in the electricity and postsecondary education sectors. I ask that these reforms include moving toward an equal cost-sharing model, increased risk-sharing and the establishment of sector-wide strategies.
  • A special advisor report on ways to make electricity sector pension plans more sustainable and affordable was released in August 2014.
  • Following consultations in November 2015, the ministry enacted regulations governing the process by which single-employer pension plans in the broader public sector can be merged with, or converted into, jointly sponsored pension plans in the broader public sector.
Continuing to review and provide advice and regulatory oversight related to privately and publicly held pensions. Your goal is to ensure the affordability and sustainability of these plans.
  • Released a consultation paper on a proposed framework for target benefit multi-employer pension plans on July 23, 2015.
  • Enacted regulations to enhance transparency of pension administration.
  • Posted draft regulations for consultation regarding eligibility for contribution holidays, funding of new benefit improvements and creation of pension plan advisory committees.
Advising the Premier’s Advisory Council on Government Assets on ways to maximize the value of Ontario Power Generation, Hydro One and the Liquor Control Board of Ontario (LCBO). You will engage with the public and stakeholders to communicate and implement the government’s decisions with respect to these assets.
  • Premier’s Advisory Council on Government Assets wine and spirits sectors recommendations are expected in early 2016.
  • New beer framework that introduces beer sales in grocery stores and enhances small brewer supports being implemented.
  • Hydro One Initial Public Offering (IPO) completed in November. Hydro One Brampton merger moving forward, supporting electricity distribution sector consolidation.
Building a strong and secure retirement income system to ensure that Ontarians enjoy their retirement years. You will continue to seek an enhancement to the Canada Pension Plan, but also recognize the need to act now to provide greater retirement income security to Ontarians.
  • Working to implement the Ontario Retirement Pension Plan (ORPP) in 2017.
  • Pooled Registered Pension Plans (PRPPs) Act, 2015 received Royal Assent in May 2015.
  • Developing regulations to make PRPPs available to Ontario employers and employees.
  • Exploring ways to collaborate with the federal government on implementing the ORPP.
Working in partnership with the Associate Minister of Finance to develop the Ontario Retirement Pension Plan (ORPP) so that it can be implemented in January 2017. The goal of the pension plan is to support working people who do not already participate in a comparable workplace pension plan. It should be similar to the Canada Pension Plan and provide a predictable stream of income in retirement, require contributions to be shared equally between employees and employers — and target a replacement rate of 15 per cent, up to an annual earnings threshold of $90,000.
  • Ontario Retirement Pension Plan Act, 2015 and Ontario Retirement Pension Plan Administration Corporation Act, 2015 in effect.
  • Comparability test and phase-in strategy announced in August 2015.
  • Established ORPP Administration Corporation, appointed initial board in November 2015.
  • ORPP minimum earnings threshold and eligibility age announced in the 2015 Ontario Economic Outlook and Fiscal Review.
Consulting and collaborating with the Minister of Economic Development, Employment and Infrastructure, the Minister of Labour, the Attorney General and the President of the Treasury Board during the development of the ORPP. I ask that you —in partnership with the Associate Minister of Finance — update Cabinet on your progress during the implementation of this important file.
  • Ongoing meetings and briefings with the Deputy Premier and relevant ministers leading up to Treasury Board and Cabinet submissions.
Maintaining and administering the tax system. You will need to balance the benefits of an internationally competitive tax system with the need to raise revenue to fund Ontario’s essential programs and services.
  • Ensuring that supports provided to businesses are effective, efficient and sustainable. Changes to media and training tax credits have saved over $200 million annually.
  • Cutting the marginal effective tax rate (METR) on new business investments in half since 2009 due to corporate income tax rate reduction, sales tax reform and capital tax elimination.
  • Ontario’s METR is well below that of the United States.
Continuing efforts to modernize Ontario’s tax system so that it supports key sectors of the economy appropriately and treats taxpayers fairly.
  • Through the 2015 Budget, better focused business tax supports related to training and film and media sectors.
  • Reviewing research and development and training supports to ensure assistance is more focused on outcomes.
  • Ensuring system efficiency and fairness by reviewing personal income taxes.
  • Established Sharing Economy Advisory Committee.
  • Proposed enhancements to the business property tax capping program.
Ensuring taxes are collected efficiently and that minimal revenue is lost because of non-compliance or the underground economy. You will implement the raw-leaf tobacco reforms and take action on illegal tobacco sales, while working with partner ministers and First Nations to support First Nation economic development goals.
  • Generated $225 million in revenue over what was reported in the 2015 Budget via anti-underground economy activities.
  • Made using electronic sales suppression devices an offence.
  • Assumed full provincial raw leaf tobacco oversight.
  • Engaged First Nations on tobacco through two pilot projects, and a formal review of the First Nations Cigarette Allocation System.
Providing oversight of Ontario revenue agencies, such as the LCBO and the Ontario Lottery and Gaming Corporation. You will maintain strong partnerships with these agencies to ensure that they embrace the government’s commitment to social responsibility.
  • Working with the Liquor Control Board of Ontario (LCBO) to implement the Premier’s Advisory Council recommendations.
  • Working with the Ministry of Health and Long-Term Care to develop a comprehensive alcohol policy framework.
  • Overseeing the modernization of Ontario Lottery and Gaming (OLG) gaming and lottery businesses.
  • In September 2015, OLG selected the operator for the East Gaming Bundle; seven additional procurements are underway.
Improving the province’s existing beer retailing system by reducing red tape and allowing new opportunities for retailing.
  • Secured government approval for new Beer Framework Agreement, the beer in grocery store operating model and related allocation process.
  • The first 58 grocery stores were authorized to sell beer in December 2015.
Providing advice to other ministries on fiscal planning and economic policy that supports effective budgetary and financial planning decisions.
  • From a government-wide perspective, ministries are working together to better deliver services to Ontarians through the program review, renewal and transformation process.
  • As part of the 2015 Ontario Economic Outlook and Fiscal Review, updated the 2015 Budget forecast risks to the province’s economic, revenue and expense outlooks.
Establishing dedicated and substantial funding for public transit and transportation infrastructure. You will work closely with the Minister of Transportation, the Minister of Economic Development, Employment and Infrastructure, and the Treasury Board Secretariat to establish and report on two dedicated funds and the Trillium Trust — which will make nearly $29 billion available over the next 10 years for investments in infrastructure projects across the province.
  • Driven by the Hydro One IPO, we anticipate $2.7 billion from the 2015-16 asset optimization, $1.1 billion over target. Plan to generate $5.7 billion from asset optimization, contributing to more than $134 billion total infrastructure investment over 10 years.
  • Passed Trillium Trust Act amendments that ensure net revenue gains from Hydro One IPO can be dedicated to the Trust.
Maintaining strong partnerships with other orders of government.
  • Will work with the federal government to build up Ontario and Canada on common goals: infrastructure, retirement income security, climate change, jobs and the economy, Aboriginal and other partnerships,  health care and refugees.
  • Ontario and Québec held a joint meeting of Cabinets in September 2015 to take action on key economic development and environmental issues.
Continuing to engage the federal government to make the case for equitable funding treatment for Ontarians. You will work to ensure the federal government preserves the integrity of our shared tax base and does not unilaterally impose measures that have a significant fiscal impact on Ontario.
  • The 2015 Budget noted the need to address the fiscal imbalance in the federation.
  • The 2015 Budget made the case for the federal government to build a stronger economic union through a Canadian infrastructure partnership.
  • The 2015 Budget called on the federal government to avoid unilateral actions that have lasting negative effects on the provinces and territories.
Supporting Ontario’s relationship with municipalities. You will work with partner ministries to establish appropriate levels of funding support — recognizing that municipalities have benefitted from the uploading of services that has allowed them to remove these costs from the municipal property tax base.
  • Consulted with municipalities on refining the design of the Ontario Municipal Partnership Fund (OMPF) for 2016. Its phase down will be completed in 2016, and it will further target funding to municipalities with the greatest need. Overall provincial support to municipalities will continue to increase, with the provincial uploads more than offsetting the reduction to OMPF.
Updated: June 01, 2021
Published: January 10, 2016