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April 23, 2015
2015 ONTARIO
BUDGET ANALYSIS
The 2015 budget reflects the four priority pillars outlined by the Liberal government in the last
election: investing in a skilled workforce, building modern infrastructure, creating a dynamic
business environment and strengthening retirement security. Against the backdrop of a
$10.9 billion deficit which the government has committed to slaying by 2017/2018, the budget
contains two measures that will help the government move forward in these priority areas while
driving towards a balanced budget:
 A plan for increased asset optimization that will add an additional $2.6 billion to the
government’s coffers beyond what was anticipated in last year’s budget, and
 A fiscal plan that will see increased revenues while program spending is essentially flatlined over the next three years. The fiscal plan incorporates program review savings
targets of $500 million in each of the next three years.
Investing in People’s Talents and Skills
A number of new measures are aimed at ensuring Ontario’s workforce is well-educated and
competitive:
 Ontario Youth Jobs Strategy – The government has renewed the Ontario Youth
Jobs Strategy (YJS) with an increased investment of $250 million over two years. The
additional funding will bring the government’s youth employment programming to
more than $565 million over the next two years, and will be directed to programs such
as the Youth Business Acceleration Program. The additional funding will help 150,000
youth focus on skills development, labour market connections, entrepreneurship and
innovation.
 Modernizing Ontario Student Assistance Program (OSAP) to Strengthen
Financial Assistance – New measures will be implemented to help ensure all
students can afford to postsecondary education:
 Indexing Ontario maximum student aid levels annually to inflation (beginning
in 2015/2016)
 Launching the Ontario Student Loan Rehabilitation Program
 Indexing the debt cap to inflation
 Eliminating requirements for students to report their vehicle as an asset
 Streamlining and simplifying back-office administration
 Youth Job Connection – The government is creating Youth Job Connection, an
intensive employment support program to help youth who experience multiple barriers
to employment.
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John Capobianco @JCappy123
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Brianna Ames @BriAmes
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 (416) 214-0701 |  (416) 214-0720
Anne Marie Quinn @AnneQuinn
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Postsecondary Education Fund for Aboriginal Learners - The government has
committed an additional $5 million for the Postsecondary Education Fund for
Aboriginal Learners program, which ensures high-quality postsecondary education
and training are accessible to Aboriginal youth.
Experience Ontario – The government is investing $20 million to launch Experience
Ontario, a pilot program to help recent high school graduates identify goals, choose
appropriate postsecondary programs and ensure they succeed once they enroll.
Mechatronics Simulation and Demonstration Centre at Seneca College – To help
enhance manufacturing skills, the government has partnered with Siemens Canada to
create a new Mechatronics Simulation and Demonstration Centre at Seneca College.
The government is investing $651,000 in the Centre.
Support for Skilled Tradespeople - The government also announced a number of
new supports for the province’s apprenticeship system:
 Pre-apprenticeship Programs – additional $13 million over two years
 Per diem for apprenticeship classroom training - $19 million over three years.
This funding will mean an increase of the per diem to $61.36 in 2015/2016,
and $63.09 in 2016/2017 and beyond.
 Apprenticeship Enhancement Fund - $23 million over two years to help
colleges and other delivery agents train more people and deliver programs by
investing in equipment and technology.
The Budget also announced that in 2015 the province will begin reforming the postsecondary
education system funding model, starting with universities. A new model will look for better
ways to align public funding with desired outcomes and support greater differentiation in the
university sector.
Building Modern Infrastructure and Transportation
Networks
The 2015 budget builds on the government’s funding commitment in last year’s budget,
which provided $130 billion for public infrastructure over 10 years, including $29 billion in
dedicated funds to Moving Ontario Forward, which invests in transit, transportation and other
priority infrastructure projects across the province.
The government now expects to unlock an additional $2.6 billion in dedicated funding for
Moving Ontario Forward as a result of setting a higher target for asset optimization. This
increase will see net proceeds from asset sales increase to $5.7 billion rather than the $3.1
billion forecasted in the 2014 budget. Net proceeds from asset sales will be placed in the
Trillium Trust and used to support infrastructure investments under the Moving Ontario
Forward plan.
The additional $2.6 billion will increase funding for Moving Ontario Forward to $31.5 billion
over ten years. Under the initiative, the Greater Toronto and Hamilton Area (GTHA) will
receive $16 billion for transit infrastructure, and critical infrastructure projects elsewhere in
Ontario will receive $15 billion. The distribution of funds is based on each region’s relative
share of population.
These additional funds will help support the province in:
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Accelerating service enhancements on the GO Transit network, which will lay the
foundation for Regional Express Rail (RER)
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| 33 Bloor Street East | Toronto | M4W 3H1 | Canada |  (416) 214-0701 |  (416) 214-0720
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John Capobianco @JCappy123
[email protected]
Brianna Ames @BriAmes
[email protected]
Anne Marie Quinn @AnneQuinn
[email protected]
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Launching Connecting Links, a new program beginning in 2016/2017 that will provide
funding for municipal roads that connect to provincial highways. The province will
work with municipalities to design a program that will systematically address priority
projects.
Developing a new program to expand the province’s natural gas network. This will
help remove a barrier to growth in many municipalities. To accomplish this, the
government will develop a new program to help communities partner with utilities to
extend access to natural gas supplies.
Investing in Metrolinx’s Next Wave projects as part of the Big Move, including:
 Dundas Street Bus Rapid Transit
 Durham-Scarborough Bus Rapid Transit
 Toronto Relief Line
 Yonge-North Subway Extension
The Budget also announced that later this year the government will reveal an online portal
which will report publicly on construction progress. Finally, starting in 2015, the government
will begin working with regions, private sector and communities to design a new framework to
prioritize and evaluate infrastructure needs. The framework will be used to select the next
generation of infrastructure investments.
Unlocking the Value of Provincial Assets
As noted above, the government is targeting an additional $2.6 billion in revenue from asset
optimization. The Premier’s Advisory Council on Government Assets (Council) released its
final report, Striking the Right Balance, last week. As already widely reported, the
government is now acting on the Council’s recommendations, including:
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Hydro One – The province will move forward with an IPO of approximately 15 per
cent of Hydro One common shares in 2015/2016. Additional shares will be made
available in subsequent years, over time totaling up to 60 per cent of the province’s
common shares. The province would retain 40 per cent of shares, and no other
shareholder would be allowed to have more than a 10 per cent holding. Rate setting
will continue to be the responsibility of the Ontario Energy Board (OEB) and the
government will introduce legislation to further enhance the OEB’s ability to protect
electricity ratepayers. The government will also introduce legislation to require that
the company’s headquarters and grid control centre remain in Ontario, and that
substantially all of Hydro One’s senior executives with strategic decision-making
authority be located in Ontario.
Beer Retailing and Distribution – The government will authorize the sale of beer in
grocery stores. The target is to have beer in 150 stores by May 1, 2017, and up to
450 such stores over the next ten years, depending on consumer demand. The
government will also require The Beer Store to promote the sale of small brewers’
products, allowing small brewers to operate a second on-site store if they have more
than one production site. Finally, the government will direct the LCBO to amend its
beer delivery policies to allow small beer manufacturers to arrange for pooled delivery
of their products from Ontario production facilities to the LCBO and licensed
establishments as well as allow the use of third-party carriers and warehousing.
The Beer Store – The government is negotiating a New Beer Framework which will
be in effect for 10 years, subject to renewal for five years. Highlights include a 10store pilot across the province to explore the viability of offering 12-packs, and
changes to the Beer Store’s retailing and marketing practices to ensure all brewers
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John Capobianco @JCappy123
[email protected]
Brianna Ames @BriAmes
[email protected]
Anne Marie Quinn @AnneQuinn
[email protected]
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are treated fairly, including a new ‘craft’ category and dedicating a minimum of 20 per
cent shelf space to small brewers. The government will introduce legislation to permit
these changes.
Government revenue from beer sales – The government will introduce legislation
implementing a new three cents per litre beer tax beginning in November 2015. The
new tax will increase by three cents per litre every year until 2018. The charge is
expected to increase annual revenues by approximately $100 million.
Real estate assets – The government is moving forward with the process to sell the
LCBO’s head office lands as well as OPG’s head office building. Other real estate
assets under review include the former Lakeview generating station and the Seaton
lands in Pickering.
Creating an Innovative and Dynamic Business Environment
The budget contains a number of measures aimed at improving Ontario’s competitiveness,
including:
 The Jobs and Prosperity Fund will be increased by a total of $200 million starting in
2015/2016 to attract more business investments and create jobs – and extending
eligibility to the forestry sector to help increase production capacity, expand into new
markets, modernize the sector and support the adoption of new technologies
 Creating a new innovation initiative with an experienced group of senior business
leaders bringing their capital, knowledge and networks to scale up Ontario startups
 Extending electricity pricing support for qualifying large northern industrial facilities
beyond March 2016 with continued investment of up to $120 million annually
 A new school at Wilfrid Laurier University – the Lazaridis Institute for the
Management of Technology Enterprises will teach students the specific management
skills required by the technology sector. $1.5 million will be provided annually over
the next 10 years to leverage an investment of $20 million from the private sector.
 Adopting the recommendations of the Ontario Health Innovation Council,
including the appointment of a Chief Health Innovation Strategist and six innovation
brokers to connect health technology entrepreneurs with the resources needed to
advance their innovations; establishing a $20 million Health Technology Innovation
Evaluation Fund to support pre-market evaluations and early adoption of innovative
health technologies; shifting to strategic, value-based procurement and creating
incentives for innovation.
 Expanding the Industrial Conservation Initiative to provide a stronger incentive for
large and medium-sized electricity consumers to shift consumption away from peak
periods by lowering the threshold from five megawatts to three;
 Adopting Cap-and-Trade – Joining Quebec and California in implementing a capand-trade system as its carbon pricing mechanism. The government will be able to
set an overall cap on facilities included in the program; businesses will have their own
greenhouse gas quota and be able to sell their quota if they are under their emitting
limit; the government will consult over the summer on the design of the program – a
key element of which will be ensuring that proceeds from the program are directed to
key priorities that help lower greenhouse gas emissions and help businesses remain
competitive.
Strengthening Retirement Security
The government is taking the next step on the Ontario Retirement Pension Plan (ORPP), by
planning to introduce legislation to create an arm’s-length entity to administer the ORPP: the
FleishmanHillard
| 33 Bloor Street East | Toronto | M4W 3H1 | Canada |  (416) 214-0701 |  (416) 214-0720
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John Capobianco @JCappy123
[email protected]
Brianna Ames @BriAmes
[email protected]
Anne Marie Quinn @AnneQuinn
[email protected]
Ontario Retirement Pension Plan Administration Corporation (ORPP AC). The legislation will
reflect best practices of good governance, be based on key principles of independence,
accountability, transparency and cost-effectiveness and require legislative review within 10
years. Key attributes of the ORPP AC will include:
 Responsibility for operationalizing the ORPP, administering the plan and investing
contributions
 An independent, professional board of directors with between nine and 15 members
appointed by the province
 A board nomination process aimed at securing highly qualified board members
 A transparency and accountability framework based on best practices
 Directors and officers subject to duties consistent with prudent and responsible
pension management
 Contributions and investment funds would be held in trust for beneficiaries and would
not form part of general government revenues
Additional elements may include an Office of the Chief Actuary, modeled on the federal
initiative, and an appeals process for reviewing administrative decisions by the ORPP AC.
The budget cites many of the views expressed in response to the government’s consultation
paper on three key ORPP design questions, noting that they highlight the need for further
analysis and dialogue on the plan scope and achieving the right balance on the minimum
earnings threshold. The budget also calls for continued collaboration with the federal
government to enable the participation of the self-employed in the ORPP.
The government will put in place an interim board to oversee implementation of the ORPP
AC, along with an interim chair and a team of professionals. One of the initial implementation
priorities is identifying potential providers to deliver a pension service-delivery system for the
ORPP, with the government proceeding with a procurement to identify potential third-party
service delivery providers. The budget commits to providing employers and employees with
regular updates on implementation, and ensuring a simplified process to minimize
administrative costs.
Other Measures
Home and Community Care
The budget includes increased funding for home and community care of about five per cent
per year, with the government investing more than $750 million over the next three years,
including:
 $75 million to support more visits at home for people who need nursing services and
more hours of care for those with complex care needs and require in-home personal
support services
 Testing innovative approaches to bundle funding specific to patient needs as they
transition back to their communities
 $40 million over four years to enhance coordinated services for frail, complex-needs
seniors
Auto Insurance
The budget also contains measures to help reduce auto insurance costs by:
 Lowering the maximum interest rate charged on monthly auto insurance premiums to
1.3 per cent from three per cent
 Prohibiting premium increases for minor at-fault accidents that meet certain criteria
FleishmanHillard
| 33 Bloor Street East | Toronto | M4W 3H1 | Canada |  (416) 214-0701 |  (416) 214-0720
5
John Capobianco @JCappy123
[email protected]
Brianna Ames @BriAmes
[email protected]
Anne Marie Quinn @AnneQuinn
[email protected]
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Requiring that insurers offer a discount for the use of winter tires
To reduce costs in the auto insurance system, regulations will be amended to:
 Change the standard benefit level for medical and rehabilitation benefits to $65,000
(from $50,000) and include attendance care services under this limit
 Include attendant care services with the $1 million medical and rehabilitation benefit
for catastrophic impairments, providing the option for additional coverage of $1 million
 Reduce the standard duration of medical and rehabilitation benefits from 10 to five
years, except for children
 Change the standard deductible for comprehensive coverage to $500 from $300
Supporting Consolidation of Electricity Distribution Sector
In recognition of the need for consolidation in the electricity distribution sector, the
government is proposing time-limited relief on taxes pertaining to transfers of electricity
assets for all municipal electricity utilities (MEUs), including transfers to the private sector –
for the period between January 1, 2016 and December 31, 2018. The provisions include:
 Reducing the transfer tax rate from 33 to 22 per cent;
 Exempting MEUs with fewer than 30,000 customers from the transfer tax; and
 Exempting capital gains arising under the PILs Deemed Disposition Rules.
Property Tax Measures
The budget contains a number of changes to the provincial land tax regime (PLT) – property
tax paid in unincorporated areas of northern Ontario outside municipal boundaries. They
include:
 Adjusting the PLT for residential taxpayers by $10 per $100,000 of assessed value in
2015 and an additional $40 per $100,000 of assessed value in 2016;
 Unincorporated area businesses would make a proportionate contribution; and
 The minimum per property PLT would be set at $50 annually in 2016 to ensure all
property owners make a basic contribution towards the cost of services.
 Proposing the introduction of measures to support better information sharing with
local boards
 Continuing to work on PLT reform by launching a new series of consultations with
Northern Ontarians
The budget also notes that work to improve the property assessment system is continuing,
specifically mentioning the implementation of the Special Purpose Business Property
Assessment Review. To support full participation in the advance disclosure process, the
government is proposing to strengthen protections for commercial proprietary information
shared by taxpayers as part of the valuation process, as well as changes that would bolster
MPAC’s ability to obtain additional information about properties to facilitate the determination
of accurate assessed values. The government also proposes to clarify the tenure of future
MPAC board of director appointments and ensure consistency with other key corporations
created by provincial statute.
Fiscal Plan
The government is projecting a deficit of $10.9 billion in 2014/2015, $8.5 billion in 2015/2016,
$4.8 billion in 2016/2017 and a return to balance by 2017/2018. The government’s plan to
balance the budget is centred on:
 Program Review, Renewal and Transformation
 Managing compensation costs
FleishmanHillard
| 33 Bloor Street East | Toronto | M4W 3H1 | Canada |  (416) 214-0701 |  (416) 214-0720
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John Capobianco @JCappy123
[email protected]
Brianna Ames @BriAmes
[email protected]
Anne Marie Quinn @AnneQuinn
[email protected]
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Maintaining tax fairness and a level playing field for business
Strengthening government transparency, financial management and fiscal
accountability
Transformation and Savings Initiatives – 2015/2016
The budget contains a series of reductions in spending in the areas of education, training and
communities, business supports and health care, identified as part of the government’s new
Program Review, Renewal and Transformation Initiative. With respect to health care, the
government has established a Laboratory Services Expert Panel to conduct a review and
provide recommendations relating to funding reform options to shift the focus from physiciancentred, volume-driven service delivery to improving patient outcomes. The budget notes
this initiative will drive better value for money in lab services by negotiating costs down by
$50 million.
Total Revenue:
Total revenue is projected to grow from $124.4 billion to $134.4 billion over the next three
years:
2015/2016
2016/2017
2017/2018
$124.4 billion
$129.4 billion
$134.4 billion
Program Spending:
Program expense growth will be held to an average of 0.9 per cent between 2013/2014 and
2017/2018, somewhat below the 1.5 per cent average annual growth in program spending
over the past four years. Program spending is essentially flatlined over the next three years:
2015/2016
2016/2017
2017/2018
$120.5 billion
$120.6 billion
$120.0 billion
Opposition Reaction
In response to the budget, PC leader Jim Wilson criticized the government as overspending
its way into a corner, noting that service cuts and “future tax increases” are inevitable. Wilson
further noted “interest on the debt is the highest growth area in this budget — an average
annual increase of 5.7 per cent.”
In her reaction to the budget, NDP leader Andrea Horwath stated that the budget gives
handouts to those that don’t need them, saying that with inflation at more than 2 per cent
health and education are effectively being cut because budget increases do not keep pace
with inflation. Further, she declared that the budget “weakens social services” because it
does not keep up with inflation. She also stated that “Ontarians didn’t vote for a platform of
cuts and privatization […] This budget cuts education and closes schools, cuts health care
and fires nurses,” and warned that further labour strife looms. Further, she criticized the
government for its broken “promise to reduce auto insurance premiums by 15 per cent.”
FleishmanHillard
| 33 Bloor Street East | Toronto | M4W 3H1 | Canada |  (416) 214-0701 |  (416) 214-0720
7
John Capobianco @JCappy123
[email protected]
Brianna Ames @BriAmes
[email protected]
Anne Marie Quinn @AnneQuinn
[email protected]