Foreword

I am pleased to present the Province of Ontario’s Public Accounts for 2019–20. Each year, the government releases the Public Accounts to give the people of Ontario a clear, honest and transparent view into how their taxpayer dollars were managed.

The Public Accounts of Ontario 2019–2020 reveal that our government made prudent investments in critical health care and frontline services, while expanding the government’s fiscal capacity to weather future challenges. For example, in the health sector we invested $63.7 billion - including $300 million above planned spending in the 2019 Budget. In the education sector we invested $30.2 billion - including $400 million higher than planned spending in the 2019 Budget. These historic investments have been instrumental in our fight against COVID-19.

The financial impacts of COVID-19 began late in the fourth quarter of 2019–20. As such, the majority of the government’s COVID-19 investments will be recorded in the 2020–21 fiscal year.

In 2018–19, we took action to protect taxpayer dollars through a number of steps including the establishment of the Audit and Accountability Committee. The committee continues its critical work, supporting strong fiscal management, directing internal audit services to priority areas, and embedding more scrutiny and discipline at earlier stages in the fiscal process. The committee also reinforces the valued work of the Auditor General of Ontario and remains committed supporting progress on the implementation of the Auditor General’s recommendations.

To complement this important work, in February 2020, the government announced the creation of the Office of the Comptroller General. This new Deputy Minister level position is mandated to anticipate financial risks and offer proactive guidance to ministries and public sector agencies to mitigate potential risks. This position is not only a first in Ontario, it is a first for any province in Canada. Ontario’s first-ever Comptroller General will assume the position in fall 2020.

Our rigorous, laser-like focus on improving efficiency and value for money for Ontarians throughout 2019–20 is part of a broader effort to modernize government operations and build a government that works for you. This includes a number of initiatives that will, collectively, result in a nimble, data-driven and customer focused government that will improve how the people of Ontario access government programs and services, while respecting Ontarians’ tax dollars. Initiatives include:

  • Digital First – to make it easier for the people of Ontario to connect with government and get the services they need. For example, allowing Ontarians to go online to renew their driver’s licence, licence plate sticker, or health card quickly, error-free and with ease.
  • Agency Review Task Force – that reviewed over 190 provincial agencies to ensure they continue to be effective and efficient for the people of Ontario; improving the customer experience, adopting service innovation, and eliminating redundancies.
  • Supply Chain Centralization – to leverage purchasing power across the public sector and create an integrated supply chain system to reduce costs and make it easier to do business with the public sector. This is estimated to save the government $1 billion annually.
  • Transfer Payment Consolidation – to fund programs and services in a streamlined way through a standardized digital platform — the Transfer Payment Ontario System — that allows ministries and transfer payment partners to spend less time on inefficient administration and more time providing services to the people of Ontario.

Our government is proud of the results achieved in 2019–20. However, we also know there is much more work to be done to ensure Ontario is well positioned to meet the challenges ahead. We recognize that many Ontarians are struggling, and we have a responsibility to continue to spend taxpayer dollars wisely so the services they depend on are there when they need them most.

Original signed by

The Honourable Peter Bethlenfalvy
President of the Treasury Board

Introduction

The Annual Report is a key element of the Public Accounts of the Province of Ontario and is central to demonstrating the Province’s transparency and accountability in reporting its financial activities and position. Ontario’s Consolidated Financial Statements present the financial results for the 2019–20 fiscal year against the 2019 Budget released in April 2019, and the financial position of the government as at March 31, 2020. As in previous years, the Annual Report also compares the current year’s results to the prior year’s results and provides a five-year trend analysis for many key financial ratios.

Producing the Public Accounts of Ontario requires the teamwork and collaboration of many stakeholders across Ontario’s public sector. The Office of the Auditor General plays a critical role in auditing and reporting on the Province’s financial statements, and the Standing Committee on the Public Accounts also plays an important role in providing legislative oversight and guidance. I would like to thank everyone for their contributions.

We welcome your comments on the Public Accounts. Please share your thoughts by email to infoTBS@ontario.ca, or by writing to the Office of the Provincial Controller, Re: Annual Report, Treasury Board Secretariat, Second Floor, Frost Building South, 7 Queen’s Park Crescent, Toronto, Ontario M7A 1Y7.

Original signed by

Kevin French
Deputy Minister, Treasury Board Secretariat
and Secretary of Treasury Board and
Management Board of Cabinet

Statement of Responsibility

The Consolidated Financial Statements are prepared by the Government of Ontario in accordance with the accounting principles for governments issued by the Public Sector Accounting Board (PSAB).

The Consolidated Financial Statements are audited by the Auditor General of Ontario in accordance with the Auditor General Act, and with Canadian generally accepted assurance standards. The Auditor General expresses an independent audit opinion on these Consolidated Financial Statements. Her report, which appears on pages 43-45, provides her audit opinion and the basis for this opinion.

Management prepares the Consolidated Financial Statements in accordance with generally accepted accounting principles for the public sector. Management is also responsible for maintaining systems of financial management and internal controls to provide reasonable assurance that transactions recorded in the Consolidated Financial Statements are within statutory authority, assets are properly safeguarded and reliable financial information is available for preparation of these Consolidated Financial Statements.

Original signed by

Kevin French
Deputy Minister,
Treasury Board Secretariat and Secretary of Treasury Board and Management Board of Cabinet
September 11, 2020

Original signed by

Greg Orencsak
Deputy Minister,
Ministry of Finance
September 11, 2020

Original signed by

Maureen Buckley, CPA, CA
Assistant Deputy Minister and Provincial Controller,
Treasury Board Secretariat
September 11, 2020

The Government of Ontario is responsible for the Consolidated Financial Statements and accepts responsibility for the objectivity and integrity of these Consolidated Financial Statements and the Financial Statement Discussion and Analysis. Those charged with governance are responsible for overseeing the Government of Ontario’s financial reporting process.

Original signed by

The Honourable Peter Bethlenfalvy
President of the Treasury Board
September 11, 2020

Original signed by

The Honourable Rod A. Phillips
Minister of Finance
September 11, 2020

Financial statement discussion and analysis

Highlights

2019–20 Financial highlights ($ Billions) - table 1

Consolidated statement of operations for the fiscal year ended March 312019 Budgetfootnote 12019–20 Actual2018–19 ActualChange from 2019 BudgetChange from 2018–19 Actual
Total revenue154.2156.1153.71.92.4
Expense

Programs

150.1152.3148.72.23.6

Interest on debt

13.312.512.4(0.8)0.1
Total expense163.4164.8161.11.43.7
Reserve1.0(1.0)
Annual deficit(10.3)(8.7)(7.4)1.6(1.3)
Consolidated statement of financial position as at March 31

Financial assets

 94.187.2 6.9

Liabilities

 447.4425.7 21.7
Net debt (353.3)(338.5) (14.8)

Non-financial assets

 127.6121.9 5.7
Accumulated deficit (225.8)(216.6) (9.1)

Note: Numbers may not add due to rounding.

Financial highlights

  • The Province posted an $8.7 billion deficit for the fiscal year ended March 31, 2020, which is lower than the 2019 Budget due to higher revenues and lower interest on debt, and partially offset by an increase in program spending (see Table 1 above).
  • Total revenues are $156.1 billion, which are $1.9 billion or 1.2 per cent higher than the 2019 Budget mainly due to higher taxation revenues (see details on pages 7-8).
  • Total program expenses are $152.3 billion, which are $2.2 billion or 1.5 per cent higher than the 2019 Budget. While investments are higher in health, education, children’s and social services, justice and other programs, program expenses in postsecondary education are lower due to lower demand in government programs (see details on pages 12-15).
  • The Province took decisive action on March 17, 2020 by declaring a state of emergency to protect the health and safety of all individuals and families and to help contain the spread of the novel coronavirus (COVID-19) outbreak.
  • In 2019–20, the government invested $53 million in the health and long-term care sectors, targeted towards increased public health funding, surveillance, and laboratory and home testing, while also investing in virtual care and Telehealth Ontario.
  • COVID-19 has impacted the province financially in 2019–20 as demonstrated by the increased investments made in hospitals, long-term care and through the Support for Families program. It is anticipated that COVID-19 will have a more significant financial impact in 2020–21. As the pandemic unfolds, the impacts on the economy are continually re-evaluated and assessed.
  • Interest on debt is lower than the 2019 Budget by $0.8 billion due to lower than forecast interest rates, but slightly higher by $0.1 billion, or 0.8 per cent from the previous year (see details on page 20).
  • The net book value of Ontario’s capital assets, such as buildings and transportation infrastructures, grew by $5.6 billion during the year. Ontario invested $11.8 billion in assets owned by the Province reflecting new capital investments, mainly in the transportation, health and education sectors. The Province also made $2.3 billion in additional investments in transfers to non-consolidated partners and other infrastructure expenditures (see details on pages 22-24).
  • Total liabilities increased by $21.7 billion and total financial assets increased by $6.9 billion, resulting in an increase of $14.8 billion or 4.4 per cent in net debt from the previous year (see details on pages 21-26). Accumulated deficit increased by $9.1 billion or 4.2 per cent from the previous year mainly as a result of the reported deficit of $8.7 billion and other adjustments (see details on page 49).

Analysis of 2019–20 results

Details of 2019–20 actual results ($ Billions) - table 2

Item2019 Budget2019–20 Actual2018–19 ActualChange from 2019 BudgetChange from 2018–19 Actual
Revenue: Taxation106.1108.3105.52.22.8
Revenue: Government of Canada25.525.425.1(0.1)0.3
Revenue: Income from government business enterprises5.85.95.50.10.4
Other non-tax revenue16.816.517.6(0.2)(1.1)
Total revenue154.2156.1153.71.92.4

Note: Numbers may not add due to rounding.

Revenue

Change from the 2019 Budget

In the 2019 calendar year, Ontario’s real GDP grew by 1.7 per cent, driven by gains in consumer spending and exports. Growth was above the Ministry of Finance forecast of 1.4 per cent in the 2019 Budget. Ontario’s real gross domestic product (GDP) declined 2.0 per cent in the first quarter of 2020, largely reflecting the combined impacts of the national rail blockade early in the year and the COVID-19 pandemic during the last two weeks of the quarter.

Revenues for 2019–20 were $156.1 billion, 1.2 per cent higher than the 2019 Budget projection. See Chart 1 for a breakdown of revenues by source.

  • Taxation revenues were $108.3 billion, 2.1 per cent higher than projected in the 2019 Budget mainly due to higher Personal Income Tax (PIT), Harmonized Sales Tax (HST), Corporations Tax (CT) and Land Transfer Tax (LTT). PIT is $1.1 billion higher mainly due to higher amounts from processed 2018 tax returns as well as stronger growth in employment and compensation of employees in 2019. HST was $0.5 billion higher largely due to a higher 2018 entitlement than forecast estimated by the federal government. CT was $0.2 billion higher reflecting higher amounts from processing tax returns for 2018 and prior years partially offset by weaker than expected business profits in 2019. LTT was $0.2 billion higher due to stronger-than-expected housing resales in 2019. Tobacco Tax was $0.1 billion lower due to the decline in consumption of taxable cigarettes.
  • Transfers from the Government of Canada were lower by $0.1 billion, mainly reflecting revenue recognized for infrastructure projects due to project delays, partially offset by higher transfers for other purposes such as one-time support for the COVID-19 pandemic and Low Carbon Economy Leadership Funding.
  • Income from Government Business Enterprises (GBEs) was $0.1 billion higher, mainly reflecting higher-than-projected net income from Ontario Power Generation Inc. (OPG), Hydro One Ltd. (HOL) and the Liquor Control Board of Ontario (LCBO), partially offset by lower net income from the Ontario Lottery and Gaming Corporation (OLG).
  • Other non-tax revenues were lower, on aggregate, than the Budget forecast by $0.2 billion, mainly reflecting lower revenue from sales and rentals.

Chart 1: 2019–20 Revenue by Source This chart shows the percentage composition of Ontario’s Total Revenues in 2019–20 by source. Total revenue is $156.1 billion.
Personal income tax accounts for 24.2 per cent. Sales tax accounts for 18.3 per cent. Federal transfers account for 16.3 per cent. Other taxes account for 13.0 per cent. Corporations tax accounts for 9.9 per cent. Fees, donations and other revenues from Broader Public Sector accounts for 6.0 per cent. Other non-tax revenue accounts for 4.6 per cent. Education property tax accounts for 4.0 per cent. Income from government business enterprises accounts for 3.8 per cent.
Note: Percentages may not add to 100 per cent due to rounding.

Change from 2018–19 Actuals and earlier years

Total revenues for 2019–20 increased by $2.4 billion, or 1.6 per cent, from the previous year.

  • Taxation revenues grew by $2.8 billion, or 2.7 per cent, mostly reflecting a $2.4 billion increase in PIT, $0.8 billion increase in Sales Tax and a $0.3 billion increase in LTT, partially offset by a $1.2 billion decrease in CT. PIT revenue grew by 6.7 per cent, mostly reflecting employment and compensation of employees’ growth in 2019. Growth in Sales Tax of 2.9 per cent was supported by growth in nominal household consumption spending. LTT growth of 11.1 per cent was consistent with strong growth in housing resales. The decline in CT of 7.2 per cent was due to a decrease in business profits in 2019 and the impact of policy measures taken to support business investment and economic growth, mainly accelerating capital cost expense allowances for business investment.
  • Revenues from the Government of Canada were higher in 2019–20 by $0.3 billion, reflecting higher transfers to major federal funding programs including the Canada Health Transfer, the Canada Social Transfer and support for Home Care and Mental Health, one-time federal support for the COVID-19 pandemic and the Low Carbon Economy Leadership Fund. This increase was partially offset by Equalization payments to the Province ending with $1.0 billion received in 2018–19 and lower transfers for infrastructure programs revenues recognized for infrastructure projects.
  • Income from Government Business Enterprises (GBEs) was higher in 2019–20 by $0.4 billion largely reflecting higher revenue from HOL, LCBO, and the Ontario Cannabis Retail Corporation (OCRC) operating as the Ontario Cannabis Store (the OCS). This increase is partially offset by lower revenue from OPG and the OLG.
  • Other non-tax revenue including revenue from the Broader Public Sector (BPS) was lower by $1.1 billion in 2019–20, mainly reflecting the ending of revenues from Carbon Allowance Proceeds due to the cancellation of the Cap and Trade Program, and one-time revenue in 2018–19 recognized in respect of recoveries of prior year expenditures.

Revenue trend

Chart 2 shows the recent trends in revenue for the Ontario’s major revenue sources.

Chart 2: Revenue by Source—5-year Comparison This bar graph shows recent trends in revenue for Ontario’s major revenue sources. The source categories include: taxation, federal transfers, income from government business enterprises, and other revenues for the period between 2015–16 to 2019–20.
Note: Government business enterprises are: Hydro One Limited, Liquor Control Board of Ontario, Ontario Lottery and Gaming Corporation, Ontario Power Generation Inc. and Ontario Cannabis Retail Corporation. Provincial revenue from Hydro One Limited’s net income is proportional to the province’s ownership share.

Taxation revenue

Between 2015–16 and 2019–20, taxation revenue grew at an annual average rate of 4.2 per cent, consistent with the average annual nominal GDP growth of 4.0 per cent.

Although economic growth and taxation revenue growth are closely linked, the relationship is affected by several factors, including but not limited to: growth in some revenue sources, such as corporations tax and mining tax, which can diverge significantly from economic growth in any given year due to the inherent volatility of business profits as well as the use of tax provisions such as the option to carry losses forward or backward; the impact of housing completions and resales on HST and land transfer tax revenue which is proportionately greater than their contribution to GDP; changes in volume-based gasoline and fuel taxes which are more closely aligned to growth in real GDP as opposed to nominal GDP since these revenue sources are less influenced by price changes.

Much of the rising trend in taxation revenues between 2015–16 and 2019–20 reflects GDP growth during this period.

Federal government transfers

Between 2015–16 and 2019–20, Government of Canada transfers grew at an annual average rate of 2.4 per cent. Government of Canada transfers include major federal transfers such as the Canada Health Transfer, Canada Social Transfer and Equalization. There are also a number of federal transfers to the Province which are largely program specific such as social housing, infrastructure and labour market programs. Some transfers are ongoing while others are time limited.

Income from government business enterprises

Between 2015–16 and 2019–20, income from GBEs increased at an annual average rate of 4.7 per cent, broadly in line with economic growth. This is mostly due to the rising net income of OLG and LCBO, with HOLfootnote 2, OPG and OCS combined also contributing to growth.

Other non-tax revenues

Other non-tax revenues grew at an annual average rate of 0.4 per cent between 2015–16 and 2019–20. These are comprised of a number of sources, including but not limited to: vehicle and driver registration fees, sales and rentals of goods and services, other fees, licences and permits, reimbursements of provincial expenditures in delivering certain services, royalties for the use of Crown resources, and electricity sector revenues such as power supply contract recoveries.

Expense

Details of 2019–20 actual results ($ Billions) - table 3

Item2019 Budgetfootnote 42019–20 Actual2018–19 ActualChange from 2019 BudgetChange from 2018–19 Actual
Expense
Health sector63.463.761.90.31.8
Education sectorfootnote 329.830.228.70.41.5
Children’s and social services sector16.617.116.90.50.2
Postsecondary and training sector11.411.312.0(0.1)(0.7)
Justice4.34.74.40.40.3
Other programsfootnote 324.625.324.80.70.5
Total program expense150.1152.3148.72.23.6
Interest on debt13.312.512.4(0.8)0.1
Total expense163.4164.8161.11.43.7
Reserve1.0(1.0)

Note: Numbers may not add due to rounding.

Change from the 2019 Budget

Total expense in 2019–20 was $164.8 billion, which was $1.4 billion higher than the 2019 Budget. Program spending was $152.3 billion, up $2.2 billion from the plan of $150.1 billion. Spending in health, education, children’s and social services, justice and other programs was higher than planned, partially offset by lower spending in postsecondary and training (see Table 3). Interest on debt expense was $12.5 billion, which was $0.8 billion below the plan of $13.3 billion, primarily due to lower than expected interest rates.

See Chart 3 for details of program expense by sector.

Chart 3: 2019–20 Program Expense by Sector This chart shows the percentage composition of Ontario’s program expenses in 2019–20 by sector. Program expense equals total expense minus interest on debt expense. Total program expense in 2019–20 was $152.3 billion.
The detail of the program expenses by sector is as follows: Health accounts for 41.8 per cent; Education accounts for 19.8 per cent; Other programs account for 16.6 per cent; Children’s and social services account for 11.2 per cent; Postsecondary and training accounts for 7.4 per cent; and Justice accounts for 3.1 per cent.
Note: The Teachers’ Pension Plan expense is included in Other programs and align with the presentation in Table 3.9 of the 2019 Budget. Percentages may not add to 100 per cent due to rounding.

Total program spending was $2.2 billion higher than the 2019 Budget, resulting in an actual program expense of $152.3 billion. The increase was primarily attributable to:

  • Health sector expense that was $0.3 billion above plan, mainly due to the early response to the onset of the COVID-19 pandemic, addressing utilization pressures in the OHIP program, supporting small-and-medium-sized hospitals, addressing key risks in some large community, teaching and other hospitals, and providing relief to long-term care residents by removing the prescription co-payment requirement;
  • Education sector expense that was $0.4 billion higher than planned, mainly due to costs related to the Support for Parents and Support for Families initiatives, partially offset by lower than forecasted school board spending. On March 25, the new Support for Families program was announced, offering direct financial support to parents while Ontario schools and child care centers remain closed as a result of the COVID-19 pandemic. This program provided a one-time payment of $200 per child 0 to 12 years of age, and $250 for children and youth 0 to 21 years of age with special needs;
  • Children’s and social services sector expense that was $0.5 billion higher than planned, mainly due to supports for social assistance clients, children with autism, developmental services, child welfare and other programs in order to help vulnerable populations while transformation is underway;
  • Justice sector expense that was $0.4 billion higher than planned, mainly due to compensation costs for the Ontario Provincial Police (OPP), correctional services staff, provincial lawyers and judicial officers as a result of recent agreements, higher than expected costs for services that support frontline officers with post-traumatic stress disorder (PTSD) and obligations to support payments related to OPP operations and the Crown Liabilities and Proceedings Act, 2019; and
  • Other programs expense was $0.7 billion higher than planned mainly due to:
    • Significantly higher Production Insurance claims due to poor weather conditions in spring 2019 and higher than expected prices for two main crops;
    • Higher than forecasted cultural media tax credit claims;
    • Higher than projected costs for electricity rate mitigation programs primarily as a result of higher than projected electricity commodity costs, and the Ontario Electricity Rebate program which replaced Global Adjustment Refinancing and the 8 per cent Ontario Rebate for Electricity Consumers on November 1, 2019; and
    • Costs associated with the cancellation of the Hamilton Light Rail Transit (LRT) project and investments for Stage 2 of the Ottawa LRT project.

The increase in 2019–20 was partially offset by:

  • Delays in construction progress by municipalities and other stakeholders in programs such as the Ontario Community Infrastructure Fund (OCIF), delays in project approvals for federal and provincial programs such as Investing in Canada Infrastructure Program and procurement delays for municipal projects under Ontario’s Broadband and Cellular Infrastructure Action Plan; and
  • Revised timelines for municipal transit projects under the federal Public Transit Infrastructure Fund and Investing in Canada Infrastructure Program.

Higher program expenses were partially offset by:

  • Postsecondary and training sector expense that was $0.1 billion lower, primarily due to:
    • Decrease in Student Financial Assistance Programs due to lower than expected numbers of Ontario Student Grant recipients and average Ontario Student Grant amount in the 2019–20 academic year. Additionally, there was lower than anticipated uptake in the Repayment Assistance Program (RAP), Canada Student Grant for Services and Equipment for Students with Permanent Disabilities, and Ontario Indigenous Travel Grants;
    • Increase in international student recoveries due to the increase in international student enrolment; and
    • Decrease in Employment Ontario due to lower than expected uptake in employment and training demand-driven programs, such as Second Career, and the decision not to launch the Graduated Apprenticeship Grant for Employers (GAGE).

Note: the savings were partially due to an increased forecast in tax credits and additional funding to publicly assisted colleges, universities and Indigenous Institutes to help address each institution’s most pressing needs in the wake of COVID-19 such as deep cleaning, purchasing medical supplies or offering mental health supports.

Chart 4 shows spending by type of expense. Government spending related to salaries and benefits includes those expenses for organizations consolidated as part of the government reporting entity including hospitals, school boards and colleges as well as the Ontario Public Service.

The expense labelled “Transfers” in Chart 4 reflect payments to a variety of service providers that support the delivery of public services. These outside parties include child care providers, social service agencies, municipalities, universities and health care professionals including physicians. As service providers, a large share of the spending of these third parties typically go to salaries and benefits. Transfers do not include transfers to hospitals, school boards and colleges — these are reflected in the other expense types as reported by the organizations.

Chart 4: 2019–20 Spending by Type of Expense This chart shows the percentage composition of Ontario’s total expenses in 2019–20 by type of expense. Total expense is $164.8 billion.
Transfers account for 40.2 per cent. Salaries and benefits account for 34.7 per cent. Operating costs account for 15.7 per cent. Debt charges account for 7.6 per cent. Other expenses account for 1.8 per cent.
Note: Compensation related costs for non-consolidated entities (e.g., municipalities, universities) and payments to doctors for physician services are included in Transfers. Percentages may not add to 100 per cent due to rounding.

Change from 2018–19 Actuals and earlier years

Total program expenses for 2019–20 increased by $3.6 billion, from $148.7 billion in the previous fiscal year to $152.3 billion.

  • Health sector expense increased by $1.8 billion over the previous fiscal year including: increases in OHIP utilization, increased investments to address operating pressures in Ontario hospitals, additional community investments to address hallway health care, additional funding for cancer and chronic kidney disease quality-based procedures, as well as for new cancer drugs through the New Drug Funding Program (NDFP), additional investments for mental health and addictions programs and increased investments in the long-term care sector including funding to prevent and contain the spread of COVID-19 in long-term care homes.
  • Education sector expense increased by $1.5 billion over the previous fiscal year, mainly due to increased spending in the school board sector, higher child care spending and one-time education sector initiatives.
  • Children’s and social services sector expense increased by $0.2 billion over the previous fiscal year mostly reflecting an increase in the Ontario Disability Support Program (ODSP) caseloads, supports for children with autism, and increased program uptake for developmental services programs.
  • Postsecondary and training sector decreased by $0.7 billion from the previous fiscal year, mostly reflecting lower than anticipated demand for the Ontario Student Assistance Program (OSAP) and lower than anticipated average Ontario Student Grant resulting from changes in OSAP and the 10 per cent reduction in the tuition fee framework. Decreases from the previous year included $0.2 billion related to reduced capital expenditures resulting from the wind-down of the Strategic Investment Fund and Graduate and Medical Enrolment Expansion Programs.
  • Justice sector expense increased by $0.3 billion over last fiscal year, mostly reflecting compensation costs for the OPP, correctional services staff, provincial lawyers and judicial officers as a result of recent agreements as well as obligations to support payments related to OPP operations and the Crown Liabilities and Proceedings Act, 2019.
  • Other programs expense increased by $0.5 billion, mostly reflecting:
    • Higher costs in electricity rate mitigation programs, primarily as a result of higher than forecasted costs related to Global Adjustment (GA) Refinancing, the 8 per cent Ontario Rebate for Electricity Consumers (OREC), and the new Ontario Electricity Rebate program which replaced GA Refinancing and OREC as of November 1, 2019; and
    • Investments for capital projects such as Stage 2 of the Ottawa Light Rail Transit (LRT) project, higher amortization expense due to a greater number of assets in service and costs associated with the cancellation of the Hamilton LRT project.

The increase was partially offset by:

  • The ending or scaling back of various business support programs;
  • Larger expenses in 2018–19 due to contingent liabilities related to Indigenous land and land-related claims and a one-time investment to the Mercury Disability Fund to retroactively index payments to the rate of inflation for each beneficiary in accordance with Ontario's obligations under the English and Wabigoon River Systems Mercury Contamination Settlement Agreement Act, 1986;
  • A $200 million investment made in 2018–19 to support small and rural municipalities in their modernization efforts, a non-cash expense accounted for in 2018–19 related to the use of provincial lands to address housing affordability and the winding down of the Investment in Affordable Housing Program in 2019–20;
  • Delays in construction progress by municipalities and other stakeholders in programs such as the OCIF, delays in project approvals for federal and provincial programs including the Investing in Canada Infrastructure Program and procurement delays for municipal projects under Ontario’s Broadband and Cellular Infrastructure Action Plan;
  • Revised timelines for the federal Public Transit Infrastructure Fund; and
  • Cancellation of the Electric and Hydrogen Vehicle Incentive Program in 2018–19.

Expense trend

Chart 5 shows the recent trends in spending for major program areas.

Chart 5: Expense by Sector—5-year Comparison This bar graph shows the trend in total spending for major program areas: health, education, children’s and social services, postsecondary and training, justice, other programs, and interest expense for the period between 2015–16 to 2019–20.
Note: The Teachers’ Pension Plan is included in Other programs to align with the presentation in Table 3.9 of the 2019 Budget. Actual results for 2015–16 to 2018–19 have been restated for changes in reporting revenues and expenses for hospitals, school boards and colleges. Actual results for 2015–16 to 2016–17 also reflect a change in accounting treatment for net pension assets of jointly sponsored pension plans.

  • Health sector expense increased from $55.2 billion in 2015–16 to $63.7 billion in 2019–20, or on average by 3.7 per cent per year. The increased expense primarily reflects the higher demand for health services provided under the Ontario Health Insurance Plan (OHIP) for an increase of $2.4 billion, higher usage and related expenses in the Ontario Public Drug Programs with expense growth of $862.3 million and an increased expense of $443.0 million for cancer care treatment and chronic kidney disease services, and $2.0 billion for the hospital sector. There is also additional spending of $432.1 million in the long-term care home sector on various programs such as a 2 per cent increase in Resident Care Needs, the Behavioural Supports Ontario Initiative, the Construction Funding Subsidy, High Intensity Needs, and to meet demands in long-term care homes especially on direct care and specialized supports for complex residents.
  • Education sector expense increased from $25.9 billion in 2015–16 to $30.2 billion in 2019–20, or on average by 3.9 per cent per year. The increase is mainly due to:
    • Negotiated school boards labour outcomes such as compensation increases, investments in staffing and local priorities, as well as enrollment growth; and
    • Investments in child care sector including $487.5 million in 2019–20 for the Ontario Child Care Tax Credit.
    • Children’s and social services sector expense increased from $15.2 billion in 2015–16 to $17.1 billion in 2019–20, or on average by 3.1 per cent per year. The increase primarily reflects increasing ODSP caseloads, investments in the Ontario Autism Program, and growing demand and complexity of service required for individuals with developmental disabilities.
    • Postsecondary and training sector expense increased from $10.0 billion in 2015–16 to $11.3 billion in 2019–20, or on average by 3.0 per cent per year. The increase is mainly due to growth in student financial assistance programs and continued funding to support postsecondary institutions.
    • Justice sector expense increased from $4.2 billion in 2015–16 to $4.7 billion in 2019–20, or on average by 3.0 per cent per year. The increase is mainly due to the investments in the corrections system — providing police, prosecutors and justice partners with new tools and resources to protect the people of Ontario from drug-, gun-and-gang-related violence; supporting regulatory and compliance activities to prepare for private cannabis retail operations; compensation for the OPP, correctional services staff and provincial lawyers; and statutory obligations under the Crown Liability and Proceedings Act, 2019. These investments improved conditions of confinement within correctional facilities, provided additional digital, investigative and analytical resources to fight drug gangs and criminals, and provided support for the development of a private cannabis retail system which is intended to combat the illegal market and protect children.
    • Other programs expense increased from $19.4 billion in 2015–16 to $25.3 billion in 2019–20, or on average by 6.8 per cent per year. The increase is due to:
      • Primarily higher costs related to changes in electricity rate mitigation programs, including the introduction of the 8 per cent Ontario Rebate for Electricity Consumers (OREC) in 2016–17 and providing approximately $2.8 billion through the introduction of Global Adjustment (GA) Refinancing, and expanded mitigation for eligible rural or remote customers, low income customers, and on reserve First Nations customers in 2017–18. The suite of rate mitigation initiatives in 2016–17 and 2017–18 provided immediate rate relief across all residential and small business electricity consumers in Ontario. GA Refinancing and the OREC have since been replaced by the new Ontario Electricity Rebate (OER) program which has increased transparency on electricity bills in Ontario by showing the true cost of power and clearly displaying the OER for residential customers, farmers and small businesses, while maintaining rate mitigation initiatives;
      • Investments in 2018–19 and 2019–20 to support small and rural municipalities in their modernization efforts;
      • Investments in Clean Water and Wastewater Funding, Toronto Waterfront Revitalization and Natural Gas Access programs; and
      • An increase in investments in public transit and provincial highways including: capital funding for municipal transit projects; amortization expenses for provincial assets in service; and operating costs for Metrolinx to provide more transit services.

Interest on debt

Interest on debt expense was over $0.8 billion below plan in 2019–20, mainly as a result of lower-than-forecast interest rates.

Interest expense grew from $12.4 billion in 2018–19 to $12.5 billion in 2019–20 as a result of increased debt to fund the deficit and investments in capital assets (see Table 3).

Chart 6 shows that the ratio of interest on debt to total revenue has fallen for Ontario over the past five years, from a high of 8.5 per cent in 2015–16 to the current level of 8.0 per cent. The decrease from 8.1 per cent in 2018–19 to 8.0 per cent in 2019–20 is a result of the rate of increase in Ontario’s total revenues outstripping the rate of increase in the province’s total debt expense.

Chart 6: Interest on Debt to Total Revenue— 5-year Trend This graph shows that although interest costs have grown in absolute terms, they have steadily fallen as a percentage of the province’s revenues since 2015–16. This is mainly due to prevailing low interest rates coupled with cost-effective debt management.
Note: Actual results for 2015–16 have been restated for changes in reporting revenues and expenses for hospitals, school boards and colleges

Statement of financial position analysis

Financial assets

Financial assets ($ Billions) - table 4
Item2019–20 Actual% of Total2018–19 Actual% of TotalVariance increase (decrease)
Cash and cash equivalents23.124.5%13.415.4%9.7
Investments26.127.7%26.330.2%(0.2)
Accounts receivable9.810.4%12.214.0%(2.4)
Loans receivable12.112.9%11.913.6%0.2
Other assets1.21.3%1.21.4%(0.0)
Investment in government business enterprises21.823.2%22.225.4%(0.4)
Total financial assets94.1100.0%87.2100.0%6.9

Note: Numbers may not add due to rounding.

Financial assets consist of items that include: cash and cash equivalents and investments that are available to the province to meet its expenditure needs, accounts and loans receivable, which are amounts it expects to receive from third parties and other items including investment in GBEs.

The province’s financial assets increased by $6.9 billion in 2019–20 over the prior fiscal year. These increases were attributable to (see Table 4):

  • Cash and cash equivalents were $9.7 billion higher mainly due to operating, investing, capital and financial activities including pre-borrowing of $7.6 billion; and
  • Loans receivable that was $0.2 billion higher, mainly due to increase in loans provided by government organizations to industrial and commercial sectors, and municipalities.

These increases were partially offset by:

  • Investment of $0.2 billion lower than the prior fiscal year, mainly driven by an increase in the province’s short-term investments as a result of pre-borrowing of $7.6 billion, partially offset by a decrease in investments by the BPS and other government organizations; and
  • Accounts receivable that was $2.4 billion lower year-over-year, mainly due to a decrease in receivables for corporate tax, personal income tax and sales tax, and in other receivables including payments from Government of Canada for programs and projects.

Chart 7 shows the recent trends in financial assets for the province.

Chart 7: Financial Assets—5-year Comparison This bar graph shows the trend in Ontario’s financial assets by category: cash, investments, accounts receivable, loans receivable, other assets, and investment in government business enterprises from 2015–16 to 2019–20.
Note: Government business enterprises include: Hydro One Limited, Liquor Control Board of Ontario, Ontario Lottery and Gaming Corporation, Ontario Power Generation Inc. and Ontario Cannabis Retail Corporation.
Actual results for 2015–16 to 2016–17 reflect a change in accounting treatment for net pension assets of jointly sponsored pension plans. Actual results for 2015–16 and 2016–17 also reflect a change in accounting treatment for market accounts. Actual results for 2015–16 to 2017–18 reflect a change in presentation to investments.

Total investment in GBEs decreased from 2015–16 to 2019–20 mainly due to the government’s decrease in ownership interest in HOL from 2015–16 to 2017–18 and the sale in 2016–17 of Hydro One Brampton Networks Inc.

The level of other financial assets including cash, accounts receivable and investments, tends to be more variable since these assets often reflect specific circumstances at fiscal year end such as pre-borrowing for the following period’s needs.

Tangible capital assets

The government is responsible for a large portfolio of non-financial assets which is almost entirely made up of tangible capital assets.

Tangible capital assets owned by the province and its consolidated entities represent the largest component of Ontario’s infrastructure investments. These assets include those it owns directly, such as provincial highways, as well as the assets of hospitals, school boards, colleges and agencies that are consolidated in its financial statements. The assets of GBEs are reflected in the province’s statement of financial position as an investment in GBEs under financial assets.

The reported net book value of Ontario’s tangible capital assets was $126.5 billion in 2019–20, increasing by $5.6 billion over the prior fiscal year. Buildings, including hospitals, schools and college facilities, make up the single largest share at $60.4 billion in aggregate. The total also includes assets under construction, some of which are being built using the Public Private Partnership (P3) model, in which the private sector finances the assets during construction. The balance sheet includes assets under construction. The impacts of P3s on balance sheet liabilities are discussed in the Other Long-Term Financing section.

Growth in the net book value of capital assets has averaged 5.4 per cent annually over the period between 2015–16 and 2019–20. Most of the growth has been in new and renewed buildings and in transportation infrastructure including provincial highways, bridges and the transit network owned by Metrolinx, an agency of the Province.

See Chart 8 for the recent trends in the net book value of provincial tangible capital assets by sector.

Chart 8: Trends in the Net Book Value of Provincial Tangible Capital Assets—5-year Comparison This bar graph shows the trends in net book value of provincial tangible capital assets by sector: transportation and transit, health, education, postsecondary and training and other for the period between 2015–16 to 2019–20.

Infrastructure expenditures

The province’s infrastructure spending in 2019–20 was $14.1 billion (see Table 5). This included $11.8 billion invested in assets owned by the province and its consolidated entities as discussed in the Tangible Capital Assets section, and $2.3 billion provided for capital investment to non-consolidated partners such as universities and municipalities and other infrastructure expenditures. The total was lower than the $16.6 billion set out in the 2019 Budget primarily driven by revised timelines and lower-than-forecast construction activity in the transportation and transit sector such as Metrolinx transit projects and federal infrastructure programs.

Infrastructure expenditures, 2019–20 ($ Billions) - table 5

SectorInvestment in Capital Assetsfootnote 5Transfers and other infrastructure expendituresfootnote 6Total Infrastructure Expenditures
Transportation and transit6.21.07.1
Health2.40.22.6
Education2.10.02.1
Postsecondary and training0.40.10.5
Other sectorsfootnote 70.81.01.8
Totals footnote 8 11.82.314.1

Note: Numbers may not add due to rounding.

Liabilities

The province’s liabilities consist of debt and other financial obligations including accounts payable, unspent funds it received from the federal government and the estimated cost of future payments, including pensions and other employee future benefits liability. See Table 6.

Liabilities ($ Billions) - table 6

Item2019–20 Actual% of Total2018–19 Actual% of TotalVariance increase (decrease)
Accounts payable and accrued liabilities28.66.4%24.35.7%4.3
Debt372.883.3%354.383.2%18.5
Other long-term financing15.03.4%15.43.6%(0.4)
Deferred revenue and capital contributions13.23.0%12.93.0%0.3
Pensions and other employee future benefits liability12.12.7%11.62.7%0.5
Other liabilities5.71.3%7.31.7%(1.6)
Total liabilities447.4100.0%425.7100.0%21.7

Notes: Beginning in 2019–20, Fair Hydro Trust became a government organization controlled by the Province. The outstanding debt of Fair Hydro Trust is reflected as a part of total debt for the province. In 2018–19, outstanding debt was presented as a part of other liabilities. See Note 7 in the Consolidated Financial Statements.

Numbers may not add due to rounding.

Debt

Debt and other long-term financing make up the largest share of liabilities. From 2018–19 to 2019–20, debt increased by $18.5 billion to $372.8 billion at fiscal year-end, primarily to finance the operating deficit as well as investments in infrastructure.

Table 7 summarizes how the province used its net new financing in 2019–20.

Use of new financing by the province, 2019–20 ($ Billions) - table 7
ItemAmount
Operating deficit and other transactionsfootnote 9(4.9)
Investment in capital assets owned by the province and its consolidated organizations, including hospitals, school boards and collegesfootnote 1011.1
Increase in the province’s cash and investments funded by cash holdingsfootnote 119.5
 15.7
Decrease in other long-term financing, Tangible Capital Assets financed by Public-Private Partnership (P3)footnote 121.1
Net new financing footnote 13 16.8

Note: Numbers may not add due to rounding.

The government completed an annual borrowing program of $39.5 billion in 2019–20, compared to $39.6 billion borrowing program completed in 2018–19.

Other long-term financing

This category includes debt incurred to finance construction of public assets including those procured through the P3 model. All assets that are owned by the province and its consolidated entities, and the associated financing liabilities, are reflected on the province’s balance sheet during construction and as the liabilities are incurred. For information on asset investments, see the Tangible Capital Assets section.

Other types of liabilities

Other types of liabilities include accounts payable, pensions and other employee future benefits, unspent transfers received from the federal government representing deferred revenues and other liabilities.

Chart 9 shows the recent trends in liabilities for the province. This trend over the period between 2015–16 and 2019–20 shows public debt rising, mainly to fund capital investments and the annual deficit. Other types of liabilities, including accounts payable and deferred revenue, tend to be more variable since they often reflect specific circumstances at fiscal year-end such as accrued liabilities for goods and services.

Chart 9: Liabilities—5-year Trend This bar graph shows the recent trends in total liabilities for the province by type: debt, other long term financing and other types of liabilities from 2015–16 to 2019–20.
Note: Actual results for 2015–16 to 2016–17 reflect a change in accounting treatment for net pension assets of jointly sponsored pension plans. Actual results for 2015–16 and 2016–17 also reflect a change in accounting treatment for market accounts. Actual results for 2015–16 to
2017–18 reflect a presentation change to debt.

Risks and risk management

The province’s financial results and financial reporting are subject to various risks and uncertainties over which the government may have limited or no control. These include, but are not limited to:

  • Scope of the COVID-19 pandemic and associated expenditure requirements, and revenue loss during the fourth quarter of the fiscal year;
  • Pandemic implications on consolidated organizations and related financial reporting disclosures;
  • Actual economic and/or revenue growth that differs from forecast;
  • Significant changes in financial statement items, especially taxation revenues, arising from actual results that differ from accounting estimates;
  • Unforeseen changes in transfer payments from the federal government;
  • Demand for entitlement-based public services or a change in other expense, including pension expense, that reflects actual experience that is significantly different than forecast;
  • Unusual weather patterns, extreme weather events and natural disasters with major financial impacts;
  • Security breaches or other malicious behaviour that could interrupt services, result in loss of information, compromise privacy and/or damage equipment or facilities;
  • The outcomes of legal settlements, arbitration and negotiations, and possible defaults on projects and potential defaults affecting loan and funding guarantees;
  • Financial market conditions, including access to capital markets, currency exchange rates and interest rates, that differ from expectations; and
  • Changes in accounting standards.

Ontario’s revenues rely heavily on the level and pace of economic activity in the province. Ontario manages risks to the revenue forecast by consulting with private-sector economists and tracking their economic forecasts to inform the government’s planning assumptions. For prudent fiscal planning, the Ministry of Finance’s real GDP growth projections are typically set slightly below the average private-sector forecast.

The Province monitors information flows regarding revenues on an ongoing basis to assess potential risks to its finances. It also works continually to enhance information flows for the same purpose. Collaboration with the Canada Revenue Agency (CRA), which administers approximately 77 per cent of Ontario’s taxation revenues, is essential to achieving this. As well, Ontario is currently leading a federal, provincial and territorial working group that is exploring ways to enhance corporate income tax revenue forecasting and monitoring.

There are also risks arising from other sources of revenue, such as federal transfers and income from GBEs. Since these represent a smaller share of total revenue compared to larger revenue sources such as tax revenue — the risks they present are relatively less material to the fiscal plan. In addition, these risks are difficult to predict and quantify; for example, the federal transfers are subject to federal policy changes while GBEs’ net incomes are subject to regulatory decisions and market conditions. Note 1 to the Consolidated Financial Statements provides additional details on measurement uncertainty.

On the expense side, the fiscal plan includes contingency funds to help mitigate risks. In the 2019 Budget these totaled $1.1 billion: $0.8 billion for operating and $0.3 billion for capital. Funds were used to support initiatives such as:

  • Emergency forest firefighting;
  • Municipal partners providing child care programs;
  • Social assistance, developmental services, child welfare and other programs to help vulnerable populations;
  • Investments in youth justice services while the government continues work on modernization approaches; and
  • Early COVID-19 response initiatives including Off-Peak Time of Use electricity rate.

Provisions for losses that are likely to occur as a result of contingent liabilities such as ongoing litigation and land claims, and that can be reasonably estimated are expensed and reported as liabilities. Note 1 to the Consolidated Financial Statements provides further details.

Note 3 to the Consolidated Financial Statements explains the Province’s risk management strategies which are intended to ensure that exposure to borrowing-related risk is managed in a prudent and cost-effective manner.

Changes in Canadian generally accepted accounting principles (GAAP) for the public sector issued by the Public Sector Accounting Board can have an impact on Ontario’s budgets, estimates and actual results. While changes in Canadian GAAP had no material impacts in the current fiscal year, the Treasury Board Secretariat actively monitors proposed changes and provides input to standard setters to support the development of standards that support sound public policy decision-making, transparency and accountability in reporting.

As required under the Fiscal Sustainability, Transparency and Accountability Act, 20191footnote 14, a reserve is included in the projected surplus/deficit each year to guard against unforeseen revenue and expense changes that could have a negative impact on the province’s fiscal performance. The 2019 Budget Plan included a $1.0 billion reserve for 2019–20. Excluding this reserve, the projected deficit for 2019–20 in the 2019 Budget deficit was $9.3 billion. The final deficit for the 2019–20 fiscal year is $8.7 billion, which is $0.6 billion below the 2019 Budget projection of a deficit of $9.3 billion excluding the reserve.

Key financial ratios

In this section of the Annual Report, the use of key measures of financial position will be used to assess Ontario’s financial position. The levels and trends of these measures indicate the impacts of economic and other events on the province’s finances. The ratio and the level of each over the past five fiscal years are outlined in Table 8.

Key financial ratios - table 8

as at the end of the fiscal period

ItemItem2015–162016–172017–182018–192019–20
SustainabilityNet debt-to-GDP (%)40.3%39.7%39.2%39.4%39.7%
SustainabilityNet debt to total revenue (%)225.0%223.2%215.0%219.9%226.4%
SustainabilityNet debt per capita ($)$ 22,350$ 22,636$ 23,012$ 23,604$ 24,256
FlexibilityInterest on debt to total revenue (%)8.5%8.3%7.9%8.1%8.0%
FlexibilityOwn-source revenue to GDP (%)14.9%14.7%15.2%15.0%14.7%
VulnerabilityFederal transfers to total revenue (%)17.0%17.4%16.5%16.3%16.3%
VulnerabilityForeign currency debt to revised total debt (%)19.1%17.1%17.9%17.1%16.1%
VulnerabilityUnhedged foreign currency debt (%)0.3%0.2%0.2%0.2%0.2%

Notes:

  1. Actual results for 2015–16 to 2016–17 used for calculation have been restated to reflect the presentation change for hospitals, school boards and colleges, to classify third-party revenue with government revenue.
  2. Actual results for 2015–16 to 2017–18 also reflects a change in accounting treatment for net pension assets of jointly sponsored pension plans.
  3. Net debt was restated to reflect prepaid expenses and inventory supplies being reclassified as non-financial assets, as opposed to financial assets in prior years.
  4. Beginning in 2019–20, Ontario will begin to present public debt less of any investments in its own bonds and treasury bills.
  5. The forecasts of net debt and related ratios in the annual Budget are based on a calculation that excludes the reserve.

Sources: Nominal GDP is based on Ontario Economic Accounts, First Quarter 2020–21, released in August 2020 by the Ontario Ministry of Finance. Population estimates for July 1 are from Statistics Canada (Table 17-10-0009-01 released on September 27, 2018).

Measures of sustainability

Net debt provides a measure of the future government revenues that will be required to pay for the government’s past transactions. Net debt as a percentage of the province’s GDP shows the financial demands on the economy resulting from the government’s spending and taxation policies. A lower ratio of net debt-to-GDP generally indicates higher sustainability.

The province’s net debt-to-GDP ratio was 39.7 per cent at the end of fiscal year 2019–20, lower than the 40.7 per cent forecast in the 2019 Budget. As shown in Table 8, this ratio is in the middle of the range of the past five years. The ratio of net debt to total revenue is another key measure of sustainability, since net debt reflects the future revenue that is required to pay for past transactions and events. A lower net debt-to-revenue ratio generally indicates higher sustainability. From its peak in 2014–15 at 233.5 per cent, the ratio has declined by 2019–20 to 226.4 per cent, primarily due to revenue rising faster than net debt.

Measures of flexibility

The ratio of Interest on Debt to Total Revenue shows the share of provincial revenue that is being used to pay interest expense on debt and therefore is not available for programs. A lower ratio generally indicates that a government has more flexibility to direct its revenues to programs. The ratio has fallen for Ontario over the past five years, from a high of 8.5 per cent in 2015–16 to the current level of 8.0 per cent. Lower interest rates, as well as the Province’s strategy of extending the duration terms of its borrowing program and locking in historically low interest rates for a longer period, has also contributed to lower interest costs. This strategy has extended the weighted-average term to maturity of provincially issued debt from approximately eight years in 2009–10 to 14 years in 2019–20.

Own-source revenue as a share of Ontario’s GDP shows the extent to which the government is leveraging funds from the provincial economy collected through taxation, user fees and other revenue sources it controls. A high taxation burden may make a jurisdiction less competitive, therefore increases in this ratio may reduce future revenue flexibility. Ontario’s ratio was stable between 2015–16 and 2019–20.

Measures of vulnerability

Transfers from the federal government as a percentage of total revenue, is an indicator of the degree to which the province relies on the federal government for revenue. A higher ratio may imply that a provincial government is more reliant on federal transfers. Provinces may have limited control over the value of these transfers and changes in federal policies can result in shifts in federal revenues to provinces.

Ontario’s share of revenue from federal transfers (including direct transfers to the BPS) declined from 17.0 per cent in 2015–16 to 16.3 per cent in 2019–20, the lowest share in the past five fiscal years. The gradual declining trend over this period largely reflects lower Equalization entitlements and a lower rate of growth relative to past years in the Canada Health Transfer.

Foreign currency debt to total debt is a measure of vulnerability to changes in foreign currency exchange rates. Accessing borrowing opportunities in foreign currencies allows Ontario to diversify its investor and funding base. It also ensures that the province will continue to have adequate access to capital in the event that domestic market conditions become more challenging. Ontario manages foreign currency risk by hedging its exposure to foreign currencies through the use of financial instruments. Effective hedging has allowed the province to consistently limit its exposure to foreign currency fluctuations to 0.3 per cent of debt issued for provincial purposes in 2015–16, declining to 0.2 per cent in 2019–20.

Fiscal management

Efficient and effective use of taxpayer dollars

The government has continued to make government more modern and citizen-centered, working to provide better services and increased value for the people of Ontario. As part of this effort, the government launched the Smart Initiatives, which includes high-impact projects that will change the culture of government, leverage technology and innovation, respect taxpayer dollars and eliminate inefficiencies.

This has included, for example:

  • Passing new legislation in December 2019 to support the Supply Chain Centralization initiative. The legislation allowed the government to implement critical measures in March 2020 as part of its COVID-19 response to ensure that it could deploy critical supplies, equipment and services to where they were needed most.
  • Completing a review of 191 provincial agencies to improve services, fix inefficiencies and take a smarter approach to spending taxpayer dollars. As a result of the review, the government is implementing recommendations that will improve service delivery, support new digital services and tackle redundancies.

Ontario’s 2019–20 multi-year planning process also focused on developing long-term plans to modernize government to sustainable levels. As part of this effort, an evidence-based approach to government decision-making has led to a reduction in administrative costs and duplication, while further identifying opportunities for better value for money.

In addition, the expansion of voluntary exit programs to non-bargaining staff, managers, and senior executives was successful in streamlining the overall size of the Ontario Public Service and in achieving long-term savings.

Through these efforts, the government has been well positioned to respond to emerging events such as the COVID-19 pandemic. As Ontario moves further into economic recovery, the government’s multi-year business planning process will continue to focus on transforming the way ministries do business and making government smarter, nimbler and more efficient. This will help to ensure that Ontario continues to be ready to respond to future crises and protect the long-term sustainability of the programs and services that the people and businesses of Ontario rely on.

Managing interest on debt

The interest on debt expense of $12.5 billion reported for 2019–20 was an improvement of over $0.8 billion over the 2019 Budget, but $0.1 billion higher than the interest on debt expense in 2018–19. Through a combination of lower-than-forecast interest rates and cost-effective debt management, interest on debt has consistently come in below plan in each year since the 2010 Budget.

Non-financial activities

This section discusses key non-financial results of major sectors. The purpose is to provide highlights of government spending and the related activities in these sectors.

Health care

The government acts as a steward of the health care sector, providing overall direction and leadership for the system, including planning and resource management. The government also manages key provincial programs including hospitals, long-term care, home and community care, OHIP, the assistive devices program, drug programs, emergency services, independent health facilities and laboratory services.

Ontario has begun to move forward with large-scale capacity and health system transformations to build a more modern, sustainable and integrated health care system focused on the needs of the patient, while implementing the government’s plan to end hallway health care. This work was impacted in the final quarter of 2019–20 by the COVID-19 global pandemic. Some modernization priorities saw an acceleration as they were part of ministry plans to respond to COVID-19, most notably Ontario Health taking on a key operational role.

Results reported in 2019–20 include:

  • Creating Ontario Health, an agency to coordinate health care delivery oversight, reduce health care bureaucracy and regional administration silos in order to build an integrated public health care system, improve clinical guidance and support for health service providers, and enable better quality of care for patients. The government transferred five existing provincial health agencies and select non-home and community care executives from the Local Health Integration Network (LHIN) into Ontario Health on December 2, 2019. In addition, the 14 LHINs were clustered into five interim geographic regions and the number of CEO positions reduced from fourteen to five.
  • Introducing Ontario Health Teams, a new model of care that brings health care providers together to work as a team to improve patient outcomes. In the fall of 2019, the first cohort of 24 Ontario Health Teams were announced.
  • Launching the Digital First for Health strategy to bring the patient experience into the 21st century and help address hallway health care by offering more choices and making health care simpler, easier and more convenient for patients. Once this new strategy is fully implemented, patients can expect more virtual care options and greater access to their own health care information.
  • Providing $175 million in 2019–20 through the Health Infrastructure Renewal Fund to help 131 hospitals across the province maintain their infrastructure and ensure a safe and comfortable environment for patients to receive care.
  • To ensure that Ontario’s public drug programs are sustainable and available to those who need it most, the government implemented changes to improve the value of pharmacy payments, including changing the payment model for professional pharmacy services for long-term care homes from a fee-for-service model to a fee-per-bed capitation model.
  • Launching “Roadmap to Wellness: A Plan to Build Ontario’s Mental Health and Addictions System,” and invested an additional $174 million in funding in mental health and addictions to address the critical gaps in Ontario's system and to support patients and families living with mental health and addictions challenges. This funding also supports child and youth community mental health services, addictions services such as opioid addictions treatment, youth residential treatment and withdrawal management and supportive housing programs for people who are homeless and face mental health and addictions issues.
  • Introducing the Connecting People to Home and Community Care Act, 2020 to modernize the delivery of home and community care services allowing Ontario Health Teams to deliver more innovative models of home and community care.
  • Demonstrating that long-term care is a top priority for the government by announcing the creation of a standalone ministry on June 25, 2019, to improve the quality of life for residents and with the goal of reducing long-term care waitlists across the province as well as addressing hallway health care in hospitals.
  • Conducting consultations with the long-term care sector to develop a modernized funding model to accelerate the creation of thousands of new and redeveloped long-term care beds as well as having 128 active projects underway across the province.
  • Reviewing and developing a plan to address the recommendations from The Honourable Eileen E. Gillese, Commissioner of the Public Inquiry into the Safety and Security of Residents in the Long-term Care Homes System directed at the Ministry of Long-Term Care.
  • Launching a staffing study to inform the development of a comprehensive staffing strategy for the long-term care sector, including staffing models and best practices for the training, recruitment and retention of personal support workers (PSWs

The government also made additional commitments in response to the COVID-19 outbreak as follows:

  • The government invested $53 million in 2019–20 in the health and long-term care sectors targeted towards increased public health funding, surveillance and laboratory and home testing, while also investing in virtual care and Telehealth Ontario.
  • These investments also allowed for an increase in supply of personal protective equipment (PPE) and critical medical supplies to frontline staff as part of Ontario’s Action Plan: Responding to COVID-19.
  • Included in this investment was initial emergency funding to the long-term home sector for infection control and to respond to staffing challenges, of which $23 million was spent in the 2019–20 fiscal year.

Education

Ontario’s publicly funded early years and education system is focused on preparing Ontario’s children and students for success, ensuring that young people develop monetizable skills that can be applied to the labour market for good, high paying jobs.

Results reported in 2019–20 include:

  • For the 2019–20 school year, approximately two million students were enrolled in elementary and secondary education through Ontario’s publicly funded education system — an increase of approximately 1 per cent over 2018–19.
  • Improving child care. In 2019–20, there were 462,802 licensed child care spaces for children 0-12 years of age, which is a 4 per cent increase from 2018–19.
  • Providing more before-and-after school care programs. In 2019–20, 86 per cent of elementary schools offered before and after school programs for children 4-12 years of age. There were more than 10,000 additional licensed care spaces for children in this age group than in 2018–19.
  • For the 2019–20 school year, the parents of more than 825,000 children were supported with $146 million to offset the inconvenience of education labour action in their local school boards through the Support for Parents program.
  • The Support for Families program ($377.8 million) provided a one-time payment per child for families to support the purchase of educational materials during the school and child care closure period due to COVID-19. As of June 19, 2020, the program had received over 1.65 million applications of which 1.6 million had been processed for payment. This program closed on August 31, 2020, after which no new applications were accepted.

Postsecondary and training

Postsecondary and training helps prepare people with the knowledge and skills required for the modern workforce. Ontario’s economic prosperity and competitive advantage are increasingly dependent on a highly skilled, diverse and adaptive workforce.

Ontario’s skilled trades offer careers leading to secure jobs that are also vital to the health and growth of the economy. Apprenticeship opportunities help businesses harness new talent while equipping workers with the practical skills and qualifications that the economy needs now and in the future.

Results reported in 2019–20 include:
  • A 71 per cent postsecondary education attainment rate in 2019–20, up from 69 per cent in 2018–19.
  • Supporting training for over 75,400 apprentices and certification for almost 8,900 trade professionals, up from 72,900 apprentices and down from 9,800 trade professionals in 2018–19.
  • Employment, training and labour market programs and services were provided to approximately one million Ontarians through Employment Ontario.
  • In the 2019–20 fiscal year, OSAP issued approximately $4.6 billion in student aid helping more than 440,000 students.
  • Funding additional classes for in-demand trades and new classes where there was evidence of demand. As a result, an additional 178 classes were made available, and wait times for classes were reduced for over 4,000 apprentices.
  • Reducing complexity, cutting red tape, allowing Ontario businesses to hire more apprentices, encouraging young people to develop a career in the trades, and bringing quality jobs back to the province. Eliminating college membership fees for apprentices and reducing annual membership fees for journeypersons by 50 per cent.

Children’s and social services

The Ministry of Children, Community and Social Services (MCCSS) funds and delivers programs and services that promote thriving and inclusive communities, help the people of Ontario build independence and improve their quality of life. During the 2019–20 fiscal year, the MCCSS’ focus was on streamlining program delivery and reducing costly and unnecessary administration work in an effort to improve outcomes for people.

Results reported in 2019–20 include:

  • Investing more than $2.9 billion in services for people with developmental disabilities, women and children escaping domestic violence, Indigenous peoples, children with mental health needs and others being supported in community settings.
  • Investing $1.6 million in more than 60 projects that will upgrade and repair residential settings operated by community agencies that provide services for people with developmental disabilities, as well as for women and children escaping gender-based violence, Indigenous peoples, children with mental health needs and others being supported in community settings.
  • Providing about one million Ontarians receiving some form of monthly social assistance. Efforts were focused on service excellence, organizational effectiveness and accountability. The province also made technology advancements, enhanced staff training, built stronger partnerships with community partners and streamlined processes to improve service delivery and ensure fiscal responsibility.
  • Transforming social assistance and employment programs into simpler, more effective supports so that everyone can contribute to the success of the province. By embracing technology to reform the social assistance system, the government is making service simpler for social assistance recipients and allowing frontline staff to spend more time with their clients.
  • Transforming the Family Responsibility Office (FRO) through investments in service improvements and technology including: alternative service channels for clients; accessible, efficient and proactive case management processes; and enhancements to FRO’s case management IT system.
  • In December 2019, after receiving and reviewing the Autism Advisory Panel’s recommendations, the government announced key elements of the new needs-based Ontario Autism Program (OAP). The OAP will offer a range of services and interventions designed to respond to the individual needs of children and youth on the autism spectrum, and their families. Beginning in January 2020, the OAP provided eligible families on the waitlist with access to interim one-time funding to purchase eligible services. Expenditures related to interim one-time funding for families will be recognized in the 2020–21 fiscal year.
  • Investing more than $68 million in a continuum of health, healing and wellness programs that are designed and delivered by and for Indigenous peoples, both on- and off-reserve. The ministry is also investing $86.4 million in Indigenous Community and Prevention Supports to support improved outcomes and well-being for Indigenous children, youth and families.
  • Investing more than $161 million in community-based agencies across the province to provide services and supports to women and dependents who have experienced violence or are at risk of experiencing violence. This funding directly supports more than 400 agencies including Indigenous centres providing supports to Indigenous women and children.
  • Implementing a new anti-human trafficking strategy with a comprehensive action plan to combat human trafficking and child sexual exploitation. It will leverage interconnected programs and partnerships to maximize investment outcomes with a coordinated and aligned response to human trafficking in Ontario.

Justice

The justice sector supports the administration and delivery of justice services, including the administration of courts, prosecution of offences, and provision of legal services and supports to victims and vulnerable persons, as well as administers the public safety, policing and correctional systems to ensure that Ontario’s diverse communities are supported and protected.

Results reported in 2019–20 include:

  • Creation of the first fully provincial government-based animal welfare enforcement system when Ontario’s Provincial Animal Welfare Services Act, 2019 (PAWS) came into force on January 1, 2020. The new system is anchored by a toll-free number, 1-833-9AN-IMAL (26-4625) for people to report concerns about animal distress or abuse. The provincial call centre is open 24/7.
  • Amendment of the Missing Persons Act, 2018 which addresses barriers faced by police in Ontario when investigating missing persons by providing police with new tools to use in certain circumstances where there is no evidence a crime has been committed. The Act allows police to apply for judicial orders to access records, such as information about travel or telephone and other electronic communications, or to authorize entry onto premises to locate a missing person, as well as provides police with the ability to make an urgent demand for records without a court order in very narrow and urgent circumstances.
  • Investments in Ontario’s Guns, Gangs and Violence Reduction Strategy to address guns and gangs in Ontario. The strategy balances the government’s policy objective to deliver a comprehensive and effective solution to the gun and gang crisis in Ontario, with the government’s fiscal priorities and commitments. It also takes a comprehensive approach to addressing guns and gangs across the province by combining enforcement, intervention and prevention initiatives tailored to targeted groups.
  • To protect children and keep communities safe, Ontario continued to combat the illegal cannabis market in response to the federal government’s legalization of cannabis. To support this effort, the government moved to an open market for retail cannabis licensing to provide consumers with greater access and a safe, legal supply of cannabis in order to keep communities safe and cannabis out of the hands of youth.
  • Implementing a new anti-human trafficking strategy to combat human trafficking and child sexual exploitation. This comprehensive action plan takes a proactive approach in raising awareness about human trafficking, protecting victims and intervening early, supporting survivors and holding offenders accountable.

Condition of provincial tangible capital assets

Infrastructure investments should be made using an evidence-based approach. This includes a focus on asset management to ensure the delivery of high-quality public services, while efficiently managing the costs.

  • The Province compiled its first asset inventory in 2016 as a key step in managing provincial assets more effectively. The inventory is now updated annually and currently contains information such as the location, age, condition and value of over 15,000 tangible capital assets including buildings and the province’s entire bridges and road network. This covers the majority of the infrastructure assets owned or consolidated (i.e., certain BPS organizations) by the province, as well as some other assets that are funded in part, but not owned or consolidated, by the province.
  • The Province uses the inventory to track, monitor and report on the physical condition of assets. For example, the inventory contains indicators such as Facility Condition Indexes (FCIs), Bridge Condition Indexes (BCIs) and Pavement Condition Indexes (PCIs), which help to inform the state of infrastructure assets.
  • Ontario is expanding infrastructure asset data management to include other relevant data such as the current and projected capacity and utilization of assets. This integrated data will provide a base to support evidence-based infrastructure planning decisions which help ensure that infrastructure investments provide value for money and are made at the right time and the right place.

Transparency and accountability

Ontario continues to take steps that enhance government transparency and fiscal accountability in financial reporting.

Recent developments in public sector accounting standards

The province’s financial reports are prepared in accordance with the accounting principles for governments issued by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada (CPA Canada).

As described in Note 1 to the Consolidated Financial Statements, future changes in both public sector and private sector accounting standards may affect how assets, liabilities, revenues and expenses are reported in Ontario’s consolidated financial reports. Other current projects that are being closely monitored by Ontario include PSAB’s review of its employment benefits standard which includes accounting for pensions as well as accounting for financial instruments, foreign currency translation, asset retirement obligations, revenue reporting and public-private partnerships.

The C.D. Howe Institute fiscal accountability report

In August 2020, the C.D. Howe Institute issued its annual commentary on fiscal reporting transparency of senior Canadian governments, with a focus on the relevance, accessibility, timeliness and reliability of these government financial reports. Each government is assigned a letter grade based on the quality of the numbers presented in these reports, access and user friendliness, and the ability to use them for various decision-making purposes.

The August 2020 report covers the Public Accounts of Ontario 2018–2019. In the report, for the second consecutive year, Ontario has improved its grading.