This publication provides an update on Ontario’s credit rating. This update summarizes the opinions of the four major international credit rating agencies, based on their assessment of Ontario’s debt. These credit ratings represent the agencies’ opinions on the ability of Ontario to meet its debt-related financial obligations.
This commentary examines Ontario’s 2018-19 budget deficit.
This commentary assesses the impact of an economic downturn on the government’s budget plan.
This commentary compares the Low-income Individuals and Families Tax (LIFT) credit to the cancelled minimum wage increase from $14 per hour to $15 per hour. The commentary estimates the change to the Province’s budget balance and reviews the impacts to individuals and families.
This commentary presents a list of all service fees charged by the Province’s ministries and agencies, and identifies which service fee rates changed in 2018-19. The commentary also identifies the most commonly paid service fees, discusses the growth rate of service fee revenue, and examines how cost recovery rates have changed from 2017-18 to 2018-19 for a selection of service fee categories.
This commentary provides an updated comparison of Ontario government revenue, spending, deficit and net debt with that of other provinces.
This commentary reviews Ontario’s labour market performance in 2018.
Ontario’s debt is rated by four principal international credit rating agencies, based on their assessments of the province’s economic and financial outlook and future risks. These credit ratings represent the agencies’ opinions on the ability of Ontario to meet its debt-related financial obligations. This backgrounder provides an update on Ontario’s credit rating.
Employee wages and salaries are a major expense category for the Ontario government. This commentary reviews past and current trends in public sector employment and wages, as well as recent developments in Ontario’s labour market, to assess the potential implications for the government’s compensation expense going forward.
Ontario posted a strong job gain of 128,400 net new jobs in 2017, as the unemployment rate declined to 6.0 per cent. Looking behind the strong headline results reveals a changing labour market with both improvements for some workers, as well as continuing challenges for others.
In 2016, the average Ontario household owed nearly $154,000, representing 171 per cent of household disposable income. As interest rates increase, the share of household income spent on debt payments is expected to rise from 13.9 per cent in 2016 to 15.3 per cent by 2021. For the average household, the FAO expects annual debt payments to increase by $3,000 to $15,500 by 2021.
As part of the Fair Workplaces, Better Jobs Act, the government proposes to raise Ontario’s general minimum wage from its current rate of $11.40 per hour to $14 per hour on January 1, 2018 and $15 per hour the following year. While almost 1.6 million workers will benefit from the increase, a significant number of lower wage workers will lose their jobs and some businesses will struggle to cover higher payroll costs.
In the 2017 Budget, the government restated its commitment to reduce the net debt-to-GDP ratio to its pre-recession level of 27 per cent. The Province’s commitment is based on three unlikely assumptions. If any of these assumptions fall short of expectations, the government’s debt-to-GDP target would not be achieved.
The 2017 Ontario Budget projects balanced budgets beginning in 2017-18 and continuing over the next two years. Given the government’s spending plans, maintaining a balanced budget relies critically on an optimistic revenue forecast – and in particular, on very strong growth in tax revenues. However, there appears to be significant downside risk to the government’s forecast.
The Impact of a Housing Market Correction on Ontario’s Fiscal Position provides the FAO’s assessment of risk to Ontario’s finances from a potential housing market correction.
Ontario posted a relatively strong job gain of 76,400 net new jobs in 2016, as the unemployment rate declined to 6.5 per cent. However, looking beyond the headline results reveals a labour market that is undergoing both structural and behavioural changes as well as continuing challenges for some workers.
The annual deficit is a headline number in the Provincial budget and Public Accounts, as well as in the Financial Accountability Officer’s own Economic and Fiscal Outlook. However, this number is not a cash concept. Rather, it is based on accrual accounting. This commentary reviews the importance of understanding cash flow and how the different sources and uses of Provincial cash have changed over time.
Based on the FAO’s analysis of the Government’s 2016 Economic Outlook and Fiscal Review, the Province’s plan to balance the budget continues to rely on optimistic assumptions for revenue growth and program spending restraint.
Home energy spending, how much Ontarians pay to heat and cool their homes and power their appliances, is a frequent topic of debate in Ontario’s Legislative Assembly. Average household spending on home energy varies significantly by region. Households in Toronto and Hamilton-Niagara spend the least, while households in Northern Ontario on average spend the most. Household home energy spending in Ontario rises with income, but is a greater burden for lower income households. In 2014 households in the bottom 20% of the income distribution spent on average 5.9% of income on home energy, while those in the top 20% spent only 1.7% of their much larger incomes. A variety of provincial programs exists to assist households with paying for home energy.
The funding that the Government of Ontario provides for postsecondary education (PSE) doubled between 1998-99 and 2014-15, from $3.1billion in 1998-99 to $6.3 billion in 2014-15. However, Provincial funding has declined as a share of the revenue of PSE institutions, as a result of relatively stronger growth in revenues from tuition, fees and other private sources.
Universities receive the largest share of the funding to the PSE sector. That share has declined over the last decade, from 65 per cent in 2005-06 to 59 per cent in 2014-15. On the other hand, the share of Provincial funding that goes to colleges and students has increased over this period. Despite the considerable increase in Provincial PSE funding, funding per student only increased by 31 per cent between 1998-99 and 2014-15, reflecting a growing number of students.