Ontario Releases first Pre-Election Report On Ontario's Finances



    First of Its Kind in Canada

    TORONTO, April 23 /CNW/ - The Ontario Government today released the
first-ever Pre-Election Report on Ontario's Finances. The report, which will
be reviewed by the Auditor General, is designed to inform Ontarians about the
province's fiscal plan.
    "Before the last general provincial election, the previous government's
approach to balancing the budget was to count on phantom revenues like asset
sales which they knew would not materialize," Finance Minister Greg Sorbara
said. "It is essential that the real state of the province's finances be known
before and not after an election."
    The 2007 Pre-Election Report on Ontario's Finances follows the
recommendations made by the former provincial auditor, Erik Peters, who
reviewed the fiscal outlook presented by the previous government on the eve of
the last general election in 2003 and noted that rather than a balanced
budget, a deficit of $5.6 billion was likely to be incurred.
    Following this review, the Fiscal Transparency and Accountability Act was
passed in 2004 to ensure a new level of transparency and accountability in
Ontario and to make it mandatory for the government to publish a pre-election
financial statement reviewed by the Auditor General.
    "We hope this report will encourage discussions about the fiscal
well-being of the province," said Sorbara. "And, we hope that this will set a
precedent to prevent governments from surprising Ontarians with unexpected
financial burdens."
    It is expected that the Auditor General will release the results of his
review in June 2007.

    
    Disponible en français

                 For more information visit www.fin.gov.on.ca


    Backgrounder

    -------------------------------------------------------------------------

    2007 Pre-Election Report on Ontario's Finances Highlights
    The 2007 Pre-Election Report on Ontario's Finances is Ontario's first such
report. Its purpose is to outline the province's estimated revenues and
expenses and other details of the fiscal plan before the provincial election
on October 10, 2007.
    The requirement for a pre-election report is mandated by the Fiscal
Transparency and Accountability Act (FTAA) that was passed in December 2004.
Under FTAA, the Ministry of Finance must release a pre-election report on
Ontario's finances before every provincial general election. FTAA also
requires that the Auditor General of Ontario review the report to determine
whether it is reasonable and release the results of his review. The results of
the Auditor General's review are expected to be released in June 2007.

    In compliance with FTAA, the report includes the following information on
the most recent fiscal plan:
    -   the economic forecasts and assumptions that were used to prepare the
        most current fiscal plan (as set out in the March 22, 2007
        Ontario Budget)
    -   an estimate of Ontario's revenues and expenses
    -   details of the reserve
    -   the ratio of provincial debt to Ontario's Gross Domestic Product
    

    This report also provides an update on events that happened after the
Budget was finalized on March 16 but before the pre-election report was
finalized on April 17.

    OVERVIEW OF THE FISCAL PLAN

    The fiscal plan in the 2007 Pre-Election Report on Ontario's Finances
covers the fiscal years ending March 31, 2008, March 31, 2009 and March 31,
2010. The estimated revenues and expenses for these years are the same as
those reflected in the 2007 Ontario Budget. The estimates provided in the
pre-election report are based on government policy decisions and direction, as
well as estimates built on the most reasonable assumptions at the time the
fiscal plan was developed. They were developed through economic and revenue
forecasts and the province's results-based planning process. In line with
FTAA, the government has taken measures to ensure an appropriate level of
prudence and flexibility are built into the fiscal plan to help ensure that
its objectives are met. The pre-election report provides details related to
estimated revenues, expenses and resulting surplus (deficit) for each of the
years covered by the plan, as well as the reserve as defined by FTAA. These
estimates are as follows:

    
    -------------------------------------------------------------------------
    ONTARIO'S ESTIMATED REVENUES, EXPENSES AND RESERVE
    ($ BILLIONS)
    -------------------------------------------------------------------------
                                                       Estimated
                                             --------------------------------
    For the years ending March 31               2008      2009    2010
                                             --------------------------------
    Revenues
    Personal Income Tax                         23.3      24.7    26.4
    Retail Sales Tax                            16.7      17.5    18.4
    Corporations Tax                            10.6      10.7    10.6
    Ontario Health Premium                       2.6       2.8     2.9
    Other Taxes                                 11.1      11.5    12.0
    -------------------------------------------------------------------------
    Total Taxation                              64.3      67.2    70.1
    Government of Canada                        16.1      15.8    15.9
    Income from Investment in Government         4.0       4.5     4.5
    Business Enterprises
    Other                                        7.1       7.3     7.3
    -------------------------------------------------------------------------
    Total Revenues                              91.5      94.7    97.8
    Expenses
    Program Expenses:
    Health Sector                               37.9      39.8    41.5
    Education Sector                            12.4      12.8    12.9
    Postsecondary Education and Training         5.9       6.0     6.1
    Sector
    Children's and Social Services Sector       10.9      11.2    11.3
    Justice Sector                               3.3       3.4     3.4
    Other Programs                              11.6      11.2    11.6
                                             --------------------------------
    Total Program Expenses                      82.0      84.2    86.8
    Interest on Debt                             9.1       9.2     9.4
    -------------------------------------------------------------------------
    Total Expenses                              91.2      93.4    96.2
                                             --------------------------------
    Annual Surplus Before Reserve                0.4       1.3     1.6
    Reserve                                      0.8       1.0     1.3
                                             --------------------------------
    Annual Surplus (Deficit) After Reserve      (0.4)      0.3     0.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Note: Numbers may not add due to rounding.
    -------------------------------------------------------------------------

    

    Total revenues are estimated to reach $91.5 billion in 2007-08 and to
rise to $97.8 billion by 2009-10, an average annual growth rate of 3.4 per
cent over this period. This increase is due mainly to economic growth.

    Total expenses are estimated to rise from $91.2 billion in 2007-08 to
$96.2 billion in 2009-10, an average annual growth rate of 2.7 per cent over
this period.

    Expenses in the health, education, postsecondary education and children's
and social services sectors account for almost 75 per cent of total provincial
expenses. The growth in expenses is largely due to increases in these sectors.

    Economic growth is a major driver of revenue growth. The fiscal plan
assumes growth in real GDP of 1.6 per cent in 2007, rising to 2.8 per cent in
2008 and 3.1 per cent by 2009.

    Provincial debt is defined as accumulated deficit. It is estimated to be
$109.2 billion at the end of the 2007-08 fiscal year, and to fall to
$108.6 billion by the end of 2009-10 if the reserve were required in each of
the years included in the period covered by the plan.

    Details of the Reserve
    As required by FTAA, the fiscal plan includes a reserve in each year to
protect against unexpected and adverse changes in the revenue and expense
outlook. A reserve of $0.8 billion is included for 2007-08, $1.0 billion in
2008-09 and $1.3 billion in 2009-10, with the increase in the last two years
reflecting the greater uncertainty of projecting further into the future.

    THE RATIO OF PROVINCIAL DEBT TO ONTARIO GDP
    Over the fiscal planning period, the ratio is projected to improve as
both the province's overall fiscal position improves and Ontario's nominal GDP
grows, thereby reducing the ratio from 19.2 per cent at March 31, 2008 to 17.4
per cent by March 31, 2010, if the reserve were required in each year.

    The above information provides only highlights from the 2007 Pre-Election
Report on Ontario's Finances. For a copy of the full report and/or more
information about it, please call toll-free:

    1-800-263-7965 visit www.fin.gov.on.ca

    To provide your comments on the 2007 Pre-Election Report on Ontario's
Finances, please send them to: PER2007@ontario.ca





For further information:

For further information: Michael Arbour, Minister's Office, (416)
325-4138; Scott Blodgett, Ministry of Finance, (416) 325-0324

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