STANDING COMMITTEE ON ESTIMATES
COMITÉ PERMANENT DES BUDGETS DES DÉPENSES
Tuesday 11 June 2013 Mardi 11 juin 2013
The committee met at 0904 in room 151.
MINISTRY OF FINANCE
The Chair (Mr. Michael Prue): We’ll call the meeting to order. Good morning.
We are here today for the consideration of the estimates of the Ministry of Finance, for a total of 10 hours. The ministry is required to monitor the proceedings for any questions or issues that the ministry office undertakes to address. I trust that the deputy minister has made arrangements to have the hearings closely monitored with respect to questions raised so that the ministry can respond accordingly. If you wish, you may, at the end of the appearance, verify the questions and issues being tracked by the research officer.
Any questions before we start? Seeing none, I am now required to call vote 1201, which sets the review process in motion. We will begin with a statement of not more than 30 minutes by the minister, followed by statements of up to 30 minutes by the official opposition and 30 minutes by the third party. Then the minister will have 30 minutes for reply. The remaining time will be apportioned equally amongst the three parties.
Minister, the floor is yours.
Hon. Charles Sousa: Thank you, Mr. Chair. I appreciate the opportunity be here with all of you. I’d like to thank the members of the Standing Committee on Estimates for this opportunity to speak.
I’d like to begin by presenting the context in which we as a province find ourselves today. On May 2, I delivered the 2013 Ontario budget. This budget announced our plan for a prosperous and fair Ontario, and it proposed smart investments to strengthen the economy and help create jobs. Ontario enjoys strong economic fundamentals. We have a highly educated and diverse workforce to support greater prosperity. Our tax reforms have helped turn Ontario into one of the most investment-friendly places in North America to do business.
We must continue to build our strong and prosperous economy while protecting the high quality of public services that people expect and deserve. People also expect the cost of these services to be sustainable and affordable. They don’t want to see excessive debt levels. They want to see their government take a long-term view. That’s why our government is absolutely committed to eliminating the deficit by 2017-18, and then reducing the net debt-to-GDP ratio to the pre-recession level of 27%.
We’re taking a balanced approach in eliminating the deficit. We reject across-the-board cuts that threaten our priorities in health care, education and job creation.
Right now, we also cannot afford further reduction in Ontario’s low corporate taxes that would make it harder to eliminate the deficit. Above all, we reject uncontrolled growth in program spending because that would increase debt and interest costs that would take resources away from key priorities. We will not shift the burden of debt to future generations, nor will we ignore the responsibilities we face today.
This budget proposes making smart investment in Ontario’s long-term prosperity while remaining steadfast in our efforts to eliminate the deficit.
Ontario’s economic plan is one of jobs and growth. Our budget presented the government’s plan to create jobs and invest in Ontario’s future. Job creation is an important measure of a healthy economy. When an economy is growing steadily, job growth is steady too.
Since the depths of the global recession, Ontario has created more than 450,000 net new jobs. The current level of employment is more than 185,000 jobs above the high point before the recession.
Our balanced approach to eliminating the deficit is working. In fact, by beating our fiscal targets, we can continue to invest in the things that matter most to people every day. Ontario’s deficit for 2012-13 is now estimated to be $9.8 billion, a $5-billion improvement compared with the 2012 budget forecast.
This is the fourth year in a row that Ontario has reported a lower deficit than forecast. Ontario is the only government in Canada to achieve this level of success. It also marks the second year in a row that the rate of growth in program spending is projected to be less than 1%.
Some of this progress comes from being disciplined. It also comes from a lot of hard work. The ministry continues to hold the line on its own operating spending. For 2013-14, planned spending is $196 million lower than in 2012-13—largely due to lower requirements for the corporate transition fund. This three-year fund was part of the 2012-13 budget and assists ministries with the cost of transformational activities required to achieve savings and manage growth and spending, while protecting front-line core services.
My own office will not grow this year. Consistent with the government’s overall prudent and effective fiscal management, the budget for the main office remains unchanged from 2012-13. As stated in the 2013 budget, the ministry is one of 16 ministries that was projected to spend less than its 2012-13 allocation, helping to hold growth in program spending.
The staff complement for the ministry is also lower than in the past. Staff on board at March 31, 2013, was 2,575 full-time equivalents, approximately 78 less than on March 31, 2012, and 1,257 less than two years ago when we completed the transition to the harmonized sales tax.
Despite our challenges, Ontario’s economy is built on strong economic fundamentals. Our industries are well positioned to continue to support the province’s economic renewal. So our efforts as a government are best focused on creating a favourable economic environment, because when businesses and entrepreneurs take risks and make investments, Ontario’s economy grows and creates jobs.
Our six-point plan for jobs and growth builds on economic fundamentals to enable Ontario’s economy to be more productive and more competitive. I’ll outline these six areas, and then I’ll provide some details for each.
Our economic plan for jobs and growth focuses on:
(1) supporting a competitive business climate;
(2) investing in modern infrastructure;
(3) investing in a highly skilled workforce;
(4) promoting entrepreneurship and innovation;
(5) going global; and
(6) supporting vibrant and strong communities.
Supporting a competitive business climate: The first step in our six-point plan is just that. Over the last 10 years, we’ve done a lot of work to make Ontario a great place to do business. And working together, businesses, labour and government can drive change and move to a more outward-looking and innovative economy.
During our jobs summit consultations across Ontario, we’ve heard many business experts’ willingness to step up, drive economic growth and invest more in productivity, innovation and training. So it’s critical that business, labour, academia, the not-for-profit sector and government continue to make economic growth a provincial priority.
We have put in place a competitive tax system for businesses, made regulations smarter and less burdensome, and enhanced the safety and efficiency of capital markets, all while delivering lower-than-forecasted deficits. Eliminating the deficit remains critical to maintaining confidence for investors in capital markets.
Our tax reform in recent years has turned Ontario into one of the most investment-friendly places to do business. We’ve replaced the retail sales tax with the harmonized sales tax, a modern, more effective and value-added tax system. We have eliminated the capital tax, which was a significant disincentive to investment and was paid by corporations whether or not they made a profit. We’ve cut corporate income tax rates for small and large businesses. We’ve streamlined tax administration, saving businesses more than $635 million per year in reduced compliance costs.
We will extend the accelerated capital cost allowance for machinery and equipment, providing assistance to manufacturers to the tune of $265 million over the next three years as well.
We would also give greater tax relief to small employers by increasing the employer health tax exemption for private sector employers. This means that more than 60,000 employers would pay less EHT, including more than 12,000 that would no longer pay this tax. With this proposal, a total of 88% of Ontario’s private sector employers would not pay the EHT. They would also save the cost of filing an EHT return. The cost of this tax break for small businesses would be paid by eliminating the same exemption altogether for the larger employers.
The second step in our six-point economic plan for jobs and growth is investing in modern infrastructure. Our budget would provide more than $35 billion for infrastructure investments over the next three years, including a new fund to help small and rural communities and municipalities build roads, bridges and other critical infrastructure, because we know that in an increasingly competitive global economy, well-maintained and modern infrastructure helps to attract investment and lower business and manufacturing costs.
These investments would remain focused on the most critical areas, such as transportation, health care and education, and they would support over 100,000 jobs, on average, each year across the province.
We recognize that traffic congestion in the greater Toronto and Hamilton area poses a growing challenge as well. We heard during our pre-budget consultations that transportation bottlenecks are hurting the quality of life and productivity of the people in the area. That’s why we would commit to converting select high-occupancy vehicle lanes in the GTHA into HOT lanes.
In this model, carpooling drivers would continue to drive for free, but other drivers would have the option to drive in these lanes for a toll. Toll-free options would continue to exist on all highways that have these lanes. We’ve seen this model, and it has been successful in several places, including Florida, Texas and California.
The government is committed to moving forward with this plan regarding HOT and HOV lanes. We will bring forward legislation that lays out a plan for addressing congestion in the GTHA and including this proposal. This would give the Legislature an opportunity to fully review and decide on the merits of the HOV/HOT lanes being proposed.
Our budget would provide new funding for GO Transit over the next 10 years that would allow for an additional 50,000 riders per day, an increase of almost 20% at its current levels.
Beyond the GTHA, we would continue to invest in priority public transit projects, such as the Waterloo region rapid transit and Ottawa light rail. Our planned investments in public transit would support over 30,000 jobs on average in each of the next three years.
We would continue to invest two cents per litre of our provincial gas tax revenues in public transit systems across the province, an investment that has yielded $2.2 billion for public transit systems in Ontario since 2004, and would make this program permanent to allow municipalities to plan for their transit systems with more certainty.
We would also invest $100 million in small and rural municipalities for a new dedicated fund for municipal roads, bridges and other critical infrastructure. We’re already making substantial investments to rehabilitate and improve the provincial highway network, including projects to address bottlenecks and support economic growth.
The third step in our six-point economic plan for jobs and growth is investing in a highly skilled workforce. We know that a highly skilled and adaptable workforce is critical to Ontario’s success. It would help our province meet the challenges of rising global competition and technological change.
One of our key objectives is to ensure that more people get jobs, while employers find the skilled workers to improve their competitive position. We recognize the need to provide even more opportunities for Ontario’s youth, because despite job gains in our province since the end of the recession, youth unemployment is still unacceptably high. That’s why we would build on our previous achievements and create a youth job strategy to invest $295 million over two years to promote employment opportunities, entrepreneurship and innovation for youth in Ontario.
There are a number of measures within this youth job strategy. The new Ontario youth employment fund of $195 million over two years would create employment opportunities for 25,000 young people in the province. It would include hiring incentives to employers to offer youth in all regions of the province an entry point to long-term employment. Young people who participate in the program would learn life and work skills while earning an income, and it would also help employers better adapt and tap into youth talent available in the province.
The youth job strategy would also include the new Ontario Youth Entrepreneurship Fund of $45 million over two years to generate nearly 6,000 mentorship and job opportunities. It would help ensure that young entrepreneurs are connected to experienced entrepreneur mentors. It would offer small business loans, seed capital and other grants to help remove barriers to starting a company, and it would include high school entrepreneurship outreach funding to help strengthen the next generation of business leaders.
Another initiative in the youth job strategy is the Ontario Youth Innovation Fund of $30 million over two years. That would boost opportunities for students to enter the knowledge-based workforce and make positive contributions to the province’s innovation economy.
Lastly, the business labour connectivity and training fund would provide $25 million over two years to support better coordination among business, labour, educators and youth.
The fourth step in our six-point economic plan for jobs and growth is promoting entrepreneurship and innovation. Ontario’s continued prosperity depends on its ability to transform ideas into innovative goods and services for global markets. One of Ontario’s innovation strengths is our significant proportion of higher education research and development funded by business. Based on the latest available data, Ontario’s proportion of business-funded higher education R&D exceeded that of most other advanced economies, including the United States and the United Kingdom.
Breakthroughs by Ontario scientists and researchers, however, have not always turned into new products and services. The Jobs and Prosperity Council identified weak commercialization outcomes as a challenge to Ontario’s innovation economy. That’s why we’re acting on a council recommendation and implementing a commercialization and innovation voucher pilot program. The voucher will help entrepreneurs and small businesses to access innovation, productivity and commercialization services offered by Ontario’s research institutions.
Sometimes entrepreneurs have difficulty accessing capital that would help them grow their businesses, so we’re working with the federal government to put in place a new venture capital fund of up to $300 million, in partnership with the private sector. This new Ontario-based fund would help strengthen Ontario’s venture capital industry and help fund potential high-growth firms in the province. With discoveries ranging from insulin to stem cells, Ontario’s scientists have a long history of medical breakthroughs.
We continued our support of medical discoveries by committing $100 million to the Ontario Brain Institute over five years. The institute will use the funds to expand its patient-focused neurosciences research to include Alzheimer’s disease and depression and continue its work on cerebral palsy, autism and epilepsy.
The entertainment and creative sector is also an important component of Ontario’s economy. Knowledge-intensive and creative industries support a higher quality of life and good jobs, making Ontario an attractive place to live and work and visit.
We recognize the importance of this sector. That’s why we’re providing support, including an Ontario Music Fund of $45 million in grants over three years to support new digital and recording production and distribution of Canadian music, increase partnership opportunities, and promote Ontario’s music industry, both at home and abroad. Grants from the fund would help the industry to innovate, invest and take advantage of opportunities in the global music marketplace, bringing more recording activity to the province. The fund would also support Ontario’s live music strategy, positioning the province as a leading place to record and perform music.
We would also provide $8 million in 2013-14 to support Massey Hall’s revitalization. Massey Hall continues to play an important role in attracting leading performers from around the world. The renewal of this iconic landmark would allow Massey Hall to continue to contribute to the growth of Ontario’s performing arts scene as a fully functional modern venue.
We would also provide funding of $9 million over three years, starting in 2013-14, to support the Canadian Film Centre’s educational programs for advanced film, television and new media. This would also develop new market opportunities for its students and their projects.
Ontario leads the Canadian film and television industry as the top production centre, ahead of British Columbia and Quebec, and it is third, behind California and New York, here in North America. Ontario’s film and TV production activity accounts for more than 40% of all film and TV production activity in Canada.
The province offers a complete range of advantages, including top-notch technical and creative crews, world-class studios and post-production facilities, a dynamic talent pool, a variety of locations and financial support. As a result, in 2012 the province’s film and television industry contributed $1.28 billion to the economy.
The fifth step in our six-point economic plan for jobs and growth is going global. Ontario’s export-based economy is well positioned to take advantage of emerging global opportunities. However, in 2012, over 90% of Ontario’s exports were destined for slow-growing advanced economies. In fact, 78% of our exports went to the United States alone. Only 5% of Ontario’s exports were bound for fast-growing economies.
By 2030, the fast-growing economies’ share of the world economy is expected to rise sharply, from 28% to almost 50%. That’s why we would work with business to promote Ontario’s many export industries’ strengths and expand market access beyond Ontario’s borders to other provinces, the United States and rapidly growing emerging markets.
With more Ontario companies exporting, we would have increased competitiveness and productivity benefits. Successful exporters can overcome entry barriers, adapt to global competition, learn about new markets, products and innovative technologies and apply them here at home, while leading the way for other firms.
The Jobs and Prosperity Council identified a number of ways that Ontario could help maximize our export opportunities, including organizing trade missions, leveraging connections between Ontario’s multicultural population and emerging market economies, building management expertise and enhancing the export capacity of small and medium-sized enterprises.
Ontario can also take advantage of its favourable international perception and global brand to expand its exports abroad. This can be supported by the competitive strengths of our industries and international business contacts established through our many immigrant communities.
We are working with the federal government to expand trade agreements, and we’re helping exporters with over 60 trade missions to new markets over the next year.
The final step in our six-point economic plan for jobs and growth is supporting vibrant and strong communities. We know that Ontario’s communities and regions have different economic strengths and opportunities and challenges. For example, the economy of northern Ontario faces different competitive issues than large urban complexes of the greater Toronto or Hamilton area. Rural municipalities, of course, have different needs from major urban centres. We’re committed to working with municipalities and local industries to overcome their unique challenges, while helping them take advantage of emerging opportunities for jobs and growth.
Here are some of the things that we would do to support vibrant and strong communities: We would support local food. Ontario’s agriculture and food processing industry is a critical pillar of the province’s economy. The sector has proven resilient during tough economic times and continues to grow, driving jobs and economic growth in rural and urban communities.
We would also support rural Ontario. We would continue our existing investments made through the Rural Economic Development program. Through the Municipal Infrastructure Investment Initiative, we would also invest about $90 million over the next three years to help municipalities undertake critical infrastructure projects that strengthen local economies and create jobs.
Another component of our plan for vibrant and strong communities would include supporting the Ring of Fire. The Ring of Fire is an area with deposits of chromite and other minerals that is important in the immediate and long-term future of northern Ontario’s economy.
We’re also continuing to implement the Aboriginal Loan Guarantee Program. This program facilitates opportunities for aboriginal participation in the energy sector. We look forward to continuing to work with the aboriginal communities to create jobs and support investment for those communities, and to create benefits for the people of this province.
That concludes my overview of our six-point economic plan for jobs and growth. It is a smart plan that would enable Ontario’s economy to be more productive and competitive.
I would now like to move on and outline our plan for a fair society. Ontario is a great place to live and work. It has a resilient economy and a strong economic and social fabric. The people of this province can take pride in what they’ve accomplished. Ontario’s economic performance and social fabric become even stronger when everyone has the opportunity to succeed to their full potential. A fair society means everyone has access to high-quality public services that support their well-being and capacity to contribute to the economy.
Ontario is transforming health care services so that more people will quickly receive the care they need, where they need it. In the 2012 budget we committed to increasing investment in home and community care by an average of 4% per year. Ontario’s 2013 budget proposes that we go further. We’re introducing an additional 1% per year, an increase of over $700 million by 2015-16 compared to 2012-13. We want to make sure that people get the care they need in their communities and in their homes.
We’re also dedicated to improving health care services for small, rural and northern communities, and for First Nations, seniors and people living with mental health and addiction challenges, because all of us deserve the same great care, no matter where we live.
At the same time, our government has been making investments in young people to ensure they’re prepared for both the challenges and opportunities ahead. This supports the issue and the implementation of full-day kindergarten, through smaller class sizes in the early years, to improve graduation rates in high school, and through programs such as the 30% Off Ontario Tuition grant and the new tuition-free framework. The province must continue to provide world-class education, adding to the many opportunities we’ve created together.
Ontario is not served when people face barriers to employment or when there’s no incentive for them to find a job or keep working. That’s why Ontario’s budget removes barriers to employment for people who receive social assistance. As a result of Frances Lankin and Munir Sheikh’s work, the budget will create a $200 monthly earnings exemption for people who receive support from Ontario Works and the Ontario Disability Support Program, because people deserve to keep more of the money they earn through their hard work.
The budget will increase social assistance rates by 1% and improve benefit levels with an additional top-up for Ontario Works singles without children. The budget will increase cash and other liquid asset limits for people who receive Ontario Works so they have more financial security.
The budget will support a 15% cut, on average, in auto insurance rates.
As well, in 2012, our government introduced the Ontario Trillium Benefit to assist low- to moderate-income families. We heard that some recipients would like to choose between monthly payments or a single annual payment. Ontario’s 2013 budget proposes to offer this choice. A fair society protects those who are vulnerable, regardless of the source of their income.
A new transitional fund to support housing needs will expand eligibility for housing supports to all low-income people in First Nation communities.
The government remains committed to helping those with developmental disabilities. We will invest in reducing wait-lists, helping families in urgent need and creating a fair society that provides justice for all.
I will now talk about Ontario’s path to balance.
Our government believes eliminating the deficit is the single most important step we can take to grow the economy and create jobs. We’ve already been able to demonstrate significant progress towards meeting this commitment, and we’re taking additional steps to ensure its achievements. The deficit for 2012-13, the fiscal year just ended, is now estimated to be $9.8 billion. That’s a $5-billion improvement, compared with the 2012 budget forecast. This marks, as I’ve said before, the fourth year in a row that we’ve reported a deficit lower than forecast, making us the only government in Canada to achieve this level of success.
As a result, the province’s accumulated deficit is now almost $22 billion lower than it would otherwise have been, had we not been beating our fiscal targets each year for the past four years.
Net debt-to-GDP for 2012-13 is almost two percentage points lower than in the 2012 budget forecast. We’re currently one of only two governments in Canada that are on track to beat our fiscal target for 2012-13. These results are due to our focus on deficit elimination by 2017-18, a commitment that is reinforced by our goal of reducing net debt-to-GDP to pre-recession levels of 27% once the budget is balanced.
Moving forward, we’re on track to continue beating our targets. As a result of our forecasted balance, the deficit projection for 2013-14 is $11.7 billion. This is an improvement of more than $1 billion from what was projected in last year’s budget. Beyond 2013-14, we’re on track to meet the steadily declining deficit targets outlined in the 2012 budget and to return to balanced budgets beginning in 2017-18.
As the Commission on the Reform of Ontario’s Public Services indicated—
The Chair (Mr. Michael Prue): I’m just breaking in; you have 30 seconds.
Hon. Charles Sousa: —slowing the growth of program spending is essential to balancing the budget. We will do our efforts, and we will continue on our path to balance. We will continue to be dedicated to eliminating the deficit in a managed way.
We’re taking all the steps necessary, as provided by the Drummond commission, as outlined in our budget, to control our spending. Ontario currently has the lowest program spending per capita among all Canadian provinces, and this is so because of the work we’re doing to manage our growth and ensuring that we continue to work steadily with all levels of government. In fact, we’ve reached agreements with all four of the jointly sponsored pension plans as well, to control compensation on an ongoing basis, going out to the out years. We recognize that working together, all of us, we can achieve greater success.
With that, Chair, I turn it back to you.
The Chair (Mr. Michael Prue): Right to the second. Thank you very much. The floor is now to the official opposition. Mr. Leone.
Mr. Rob Leone: Thank you, Minister, for coming this morning. My first question, I think, is a very important one given what has happened over the last couple of weeks with respect to emails being deleted. I’m going to ask you: Can you 100% rule out that anyone in your office did not delete previous emails on their computers—in your office and the previous finance minister’s office?
Hon. Charles Sousa: Well, I can say this: We have put in place and recognized that all information that is FOIable is available to the public and to the committees. In fact, I know our ministry has just recently provided substantive amounts of materials to the justice committee, and we will continue to abide by what’s necessary and what’s required.
Mr. Rob Leone: So is that a 100% guarantee that no emails were deleted in your office or the previous finance minister’s office?
Hon. Charles Sousa: I can tell you that we will provide the information that is required and what’s requested, and that is what is being done.
Mr. Rob Leone: So, that’s a no?
Hon. Charles Sousa: No, I’m telling you that we will continue to provide the information that you request.
Mr. Rob Leone: Well, we’re looking for a 100% guarantee that no emails were deleted. Can you give that to us today?
Hon. Charles Sousa: I can tell you that we have established a set of requirements and a protocol, and we will continue to abide by them. We have told our staff that that is what they must do, and that is exactly what is being done. The deputy here has provided quite a number of materials and more beyond that which was requested initially because we want to make certain that we’re open and transparent. We want, exactly, full knowledge and understanding of the things that are happening. We’ve encouraged full disclosure, and we will continue to do so.
Mr. Rob Leone: I’m wondering if you can undertake an investigation of whether any email deletions have taken place. Can you do that and report back to this committee?
Hon. Charles Sousa: I will continue to provide all the information that you request and will continue to do just that. We have continued to abide by the requests of all committees, and full disclosure is exactly what we will do.
Mr. Rob Leone: Well, we haven’t received full disclosure from other ministries.
Can I ask the same question to the deputy minister? Could you 100% guarantee that no one in this finance minister’s office or the previous finance minister’s office has deleted any emails with respect to pertinent information that we’d consider pertinent?
Mr. Steve Orsini: Okay, my name is Steve Orsini, Deputy Minister of Finance. In response to your question, we have been responding to a number of committee motions from justice policy. I think there are three motions that have been responded to, to date. In the process of pulling together that information, we have struck a team to review the methodology. The details of that methodology had been submitted to the justice policy committee. The first two motions were really focused on the deputy’s office, the office of the treasury board and the Office of the Budget and Treasury Board. The third motion expanded to the entire ministry.
Mr. Rob Leone: Deputy Minister, the problem is that we can respect and understand that you’ve provided documents. We are concerned about the documents that have not been provided, that have been deleted, that are permanently erased from the public record. We’re just asking, since you’re here in committee under oath, can you guarantee us that nothing of that sort happened within the Ministry of Finance—100% guarantee, yes or no?
Mr. Steve Orsini: I just want to complete the methodology that we undertook. The third motion expanded it to the entire Ministry of Finance, which, by our understanding and interpretation of the motion, included the minister’s office. We undertook to pull together all the material for the Ministry of Finance that I’m responsible for, and the minister’s office undertook to pull together its information from the minister’s office. My understanding is that a number of boxes, maybe one or two, were submitted from the minister’s office as part of the third motion. That’s my understanding to date: that the information that the minister’s office had pulled together has been submitted to the committee.
Mr. Rob Leone: Minister, you stated in your opening address that you don’t want to shift the financial burden on to future generations. Now, of course, over the course of your government’s tenure, you’ve increased the financial burden on future generations by hundreds of billions of dollars, and your deficit target for next year is actually higher than this year—by about $12 billion is the total—and your debt is going to go up by $24 billion. I’m wondering how that squares with what you just said about shifting the financial burden on future generations. It doesn’t square to me.
Hon. Charles Sousa: What we want and what we’re doing is investing in our future. Much of the capital infrastructure, the continuing investment in transportation, investments in economic renewal, investing in our youth programs, is all about investing in future generations. The accumulation of debt that has occurred during these recessionary times was done with the purpose of stimulating economic growth and renewal.
What we do, and what we must do, is eliminate and tackle the deficit in our books so that future generations aren’t saddled with increased debt, especially as it relates to their GDP. We want to grow our economy, support growth so that we can afford the debt that’s being accumulated, while at the same time ensuring greater prosperity for future generations.
Mr. Rob Leone: So I guess you’re suggesting that your government, by accumulating hundreds of billions of dollars, has failed on that target.
My question to you, sir, is, can you guarantee me that there will be no credit downgrade after this budget passes today?
Hon. Charles Sousa: The notion that we’re improving and creating more jobs, over 450,000 net new jobs since the recession, and the fact that we have strong economic fundamentals in Ontario; the fact that many credit agencies that I’ve been meeting with over the last number of weeks have well received the economic plan that we put forward; the fact that we’re investing in our youth so that we can continue to, again, be more productive than other parts of the world, because our youth unemployment, while high, is still more productive than it is elsewhere; the fact that we’re continuing to attract more investments in Ontario than any other parts of North America; the fact that we have even greater economic prosperity today than we did at pre-recession levels; and the fact that we have a target to establish a net debt-to-GDP ratio of 27%, as it was prior to the recession, would tell me that we haven’t failed, that we actually are going forward to succeed and create a more prosperous Ontario, and that is exactly what our rating agencies are looking at. They’re looking at stability, and they recognize that Ontario has become a strong attraction in its bonds. In fact, recently in New York, our bonds were well received.
The two credit agencies have reaffirmed our rating, both DBRS and Standard and Poor’s, so I would say that, with a lot of hard work by a lot of Ontarians around this province, we’re all doing our part. We’re doing our part to ensure greater prosperity, and we’re also doing it in a way that doesn’t leave anybody behind, so those most vulnerable are also having an opportunity to be gainfully employed.
Mr. Rob Leone: So you’re saying there won’t be a credit downgrade—
Hon. Charles Sousa: I’m saying that we are succeeding and will continue to do so.
Mr. Rob Leone: Dwight Duncan suggested in a speech recently that the credit rating agencies would provide your government with some stern words with respect to the budget that’s about to be passed today. Your budget has steered clear of some of the things that he tried to do in terms of restraint. In particular, there was a wage freeze policy that he tried to implement and obviously failed at doing that.
I have to say, Minister, that we actually have lots of documents from your treasury board and your office that have stated that your plan is going down the wrong path and the fact that you’re preparing for a credit rating downgrade. The recent wage agreement with the LCBO is certainly not in keeping with the kind of wage restraint that your own bureaucrats say you need to balance your budget by 2017-18. So how does that square? You’re not giving me a guarantee that they won’t go up—there will be a credit downgrade, and your previous finance minister is saying that there are going to be stern words, yet you’ve presented this flowery picture of the fiscal situation that your own bureaucrats don’t even agree with. How does that square? How can you explain away those issues?
Hon. Charles Sousa: I’ll square it for you. Here it is: You’re talking about—there are three things you’ve just mentioned. One is the release of documents and the fact that you’ve received lots of them from treasury board and finance, well beyond that which pertains to the issues at hand before justice, which again speaks to the fact that we’re being open and transparent and we’re giving you all good stuff, lots of information about what it is that we’re doing, in a very open and transparent manner.
The other issue that you talked about is results. You talked about our wage freezes and our ability to work closely with labour, with employees, and at the same achieving zero-zero results. In fact, even arbitrated deals: Some of them are coming in at zero-zero. That speaks to the fact that our envelope for compensation—and it’s outlined in our budget—is frozen. We don’t have more room to negotiate higher contracts in the next two years.
The last piece that you talked about is very interesting, and that’s around austerity measures and the degree to which we need to cut. During my recent visits over the past month to talk to a number of agencies as well as other parts and other economies around the world—we need to take a balanced approach. Across-the-board cuts would actually hamper our sensitive recovery. In fact, the very rating agencies that we’re talking to, their biggest caution is, “Make certain you have a plan that’s effective, that has investments to create and attract business, and don’t be caught in excessive measures on either side of the spectrum.” The austerity measures that are facing Europe today aren’t so much a government-led initiative; it’s a reaction to the markets. The moment the markets are saying that they’re not going to support that particular jurisdiction, that’s when excessive cuts have to take place.
We’re trying to stay ahead of the market. S&P, DBRS and the bond agencies, the investment bankers that I’m speaking to: They’re selling our bonds. They’re underwriting our paper. They’re saying, “Ontario is an attractive place to do so,” because we have a strong economic plan. We’re doing it in conjunction with over 600,000 submissions of people across Ontario who brought forward their recommendations.
We recognize—and, more importantly, the public recognizes—that we have to take disciplined and determined measures now so that we hold our spending—not necessarily having to make across-the-board cuts because we still want to invest—but that we do so in a very controlled manner that stimulates economic growth, that stays ahead of the excessive issues that are happening in other parts of the world, that attracts that business investment and enables us to grow our economy and then grow our GDP.
Mr. Rick Nicholls: Thank you, Minister. First of all, I want you to know that I do appreciate the financial picture of Ontario. You’re saying all the right things, and even I was getting excited as I was listening to what you were saying.
Hon. Charles Sousa: You should be.
Mr. Rick Nicholls: But then I woke up and then I remembered the last 10 years. I remembered how the debt—from when you took over 10 years ago to today—has increased over 230%. Then I also took a look at it and I said, “Wow, your budget forecast for this year—you’re increasing expenses by $3.6 billion.”
I guess my first question to you, Minister, is simply this: Your plan to balance the budget really and truly is perhaps a little—and I say this respectfully—more fictional than it is reality. In looking at the numbers and what you’ve done—and I’m firm believer that past actions are an indicator of future actions—I’m concerned. That’s why we, as a party, are very concerned that with this new budget, that it’s pretty much more of the same, and that a lot isn’t going to change especially over the next, perhaps, three years as we look at what you have forecasted over the next three years.
What would your comments be to that?
Hon. Charles Sousa: I would agree with you. Past experience and past actions are a reflection on where you’ll see us going. What we’ve done and achieved in the past has been record-setting improvements to our economy. We’ve made record numbers of investments so that we can, again, promote and strengthen our fundamentals. These are critical.
You talked about what the debt level is today than what it was 10 years ago. Well, look around the rest of Canada. Recall what it was when the Conservatives were in power for 30 years and the degree of debt increases over that period of time. As the economy grows, as we invest in our infrastructure, what’s important is the degree at which we can afford the debt. What’s important is our debt-to-GDP. What’s important is how we can continue to support these investments so that we grow our economy. Listen: 30 years ago—even 20 years ago—I believe the overall budget was around $30 billion; it’s over $130 billion today. So the degree of activity, the degree of economy, the degree of strength of Ontario has improved dramatically.
Look at the federal government. You talk about growing debt levels. The whole of Canada has experienced the same initiatives. What we need to do, though, is have a strong plan for economic recovery and a strong plan to support this existence. That has been our past experience. That has been our actions to date. We know that we were deliberate in making these investments during the recession. That is why Ontario weathered the issues much more quickly and much more favourably than other parts of the world, because we were very pragmatic and very strategic in those investments to support long-term prosperity and long-term competitiveness.
Mr. Rick Nicholls: Well thanks, Minister, but we do realize too that Ontario is pretty much a bottom-feeder right now compared to the other provinces.
Looking at the current budget, our impression is simply this: You caved to NDP pre-budget demands in the amount of about $1 billion. That’s a path that we just cannot continue to follow.
Our concern is this: You really don’t have a plan, Minister. The deputy knows it; the entire Ministry of Finance knows it. Will you finally admit that this budget is more fictional than it is reality?
Hon. Charles Sousa: I know the line of questioning that you’re getting to, because you had the same questions even prior to reading the budget in the first place. You’ve been saying this for the last three years at least that I can recall, which unfortunately is not showing a lot of hope and positivity to the public or to the people out there who are working hard to make this recovery work.
We’re going to stand by the people of Ontario. This budget is very much the budget of Ontarians. It was submitted and contributed to by their recommendations. It wasn’t just one party’s initiative; in fact, I would say that a lot of these items that are included in this budget have shared issues and values with your party, too, because we’re talking about investing in people, and there are a number of initiatives that we all share in common.
It is more than any one political party. Frankly, the public doesn’t really care if you’re red, blue, orange or purple. What they care about is, what are you going to do to improve our lot in life? How are you going to support my kids so that they have a better start? What are you going to do for my mom and dad so that they have the care they need when they get older? This budget speaks to them. This is a budget that talks about investing and helping people in their everyday lives and creating jobs. We’re going to continue to do just that.
Mr. Rick Nicholls: Thank you, but again, we have brought forward many good ideas, we feel, as well, and of course, you’ve rejected them. One of the things that we felt would really help put this economy of Ontario back in place is an across-the-board public sector wage freeze. You’ve denied that, and you mentioned earlier that you reject across-the-board cuts to health and education, which probably could have saved this province around $2 billion per year. We were only saying for the next two years, but it may in fact be that that type of savings would need to last much longer than those two years.
I don’t have many more questions, Minister, other than the fact that we need to realize and understand that the buck stops with you. Of course, we realize too and you’ve indicated how positively Standard and Poor’s and the other agencies are saying, hey, they’re looking forward to Ontario and a positive outlook—yet, on the other hand, we also know that just a 1% increase in the interest rates will in fact cost you and I, Ontarians, about a half a billion dollars in additional interest charges. We also know that the interest payments, if that were in fact a ministry, that would probably be about the third-largest ministry in the Ontario government at this point.
I’m giving this over to my other colleague, Mr. Harris. I know that he has some questions that he would like to share with you.
Mr. Michael Harris: Good morning, Minister. Thank you for coming.
Hon. Charles Sousa: Good morning.
Mr. Michael Harris: I have to ask, you must be basing your goal of a balanced budget by 2017-18 on something. After all, there’s really no plan after 2015. I have to ask, do you believe in magic?
Hon. Charles Sousa: Sorry; repeat the question.
Mr. Michael Harris: You must be basing your goal of a balanced budget by 2017-18 on something, because there’s no plan after 2015 to do so. So I’m simply asking, do you believe in magic?
Hon. Charles Sousa: There’s a plan that’s outlined in the budget that talks about how it is that we’re going to achieve balance. We recognize that there are challenges in the out years. We’ve been very clear on those initiatives. We’ve dedicated a whole chapter to some of the issues that we face.
We recognize that the growth that was anticipated in previous budgets called for a 2.2% increase in GDP and revenue growth. That’s been reduced to 1.5%, recognizing the effects that are occurring around the world, recognizing that even the emerging markets themselves are having lower rates of growth. All that together makes it more difficult for us to achieve results. But Ontario’s fundamentals, the investments that we made in recent years, the fact that we have achieved and exceeded our targets as a result of those plans and determination, put us in a much better stead in these years that are coming forward.
We have a whole chapter dedicated to the Drummond commission’s report, of which now 60% is being utilized. Those transformational changes in the way we deliver public services will enable us to have less pressures on those out years.
It’s important that we continue to control our spending. That’s why our program spending is below 1% year over year—
Mr. Michael Harris: Thank you, Minister—
Hon. Charles Sousa: And that is why our plan is working. We’ve achieved them. We’ve shown that we can, and we will continue to do so.
Mr. Michael Harris: I’m wondering, then, if you reference your budget, if you can actually point to one chart or graph that actually details program expenses beyond 2015.
Hon. Charles Sousa: We’ll provide you with the information that you’re looking for. In the meantime, we recognize that it is critical in those out years, given the challenges that are coming forward, that we take the determined and disciplined steps that we’re taking now.
You talk about the requirements to control compensation. Well, we’ve achieved those results without having to find ourselves in constitutional debates or in legal wranglings that would create even greater havoc and would be proposed by the opposition.
You’ve also mentioned how you would like us to cut even more with health and education. These are critical investments that we make in our future and in our children and certainly in our society. We’ve got to not so much provide across-the-board cuts but transformational changes in the way we deliver those essential and critical services.
Mr. Michael Harris: Right, and I agree with that, but—
Hon. Charles Sousa: And one more item: All of this is about maintaining stability of our economy and making certain that rating agencies and the public value what we have.
Your colleague mentioned the degree of interest. Over the last 10 years, we’ve been able to control our interest costs, notwithstanding the increase in our debt, and that’s why we are locking in much of our paper over a 30-year span, to minimize the volatility and the exposure to interest. But we have to take those steps. We have to continue to do these things in order to create stability in our place.
Mr. Michael Harris: Well, maybe I can ask—
Hon. Charles Sousa: I’ll refer you to page 129, if I may. In it, it talks about some of our pension savings, and this is one of the items in the out years that’s going to be able for us to support some of our initiatives going forward.
As you can see, the forecast calls, in 2017, for $4.2 billion in projected pension expenses versus our current forecast of $2.4 billion, which is $1.8 billion less than what was anticipated.
These are just some of the initiatives that we’re doing in the out years to control our spending and to enable us to come to balance by 2017-18.
The Chair (Mr. Michael Prue): If the minister, when answering, can get a little bit back from the mike. They’re getting a lot of feedback here in recording.
Hon. Charles Sousa: I’ll speak more softly.
The Chair (Mr. Michael Prue): There’s about five minutes left.
Mr. Michael Harris: Maybe I can ask the deputy, then, to talk about why there are no real charts or graphs detailing any program expenses beyond 2015.
Mr. Steve Orsini: The fiscal plan is structured in a number of ways. There’s the current fiscal year, that has the most detail; the medium-term fiscal plan, which goes to 2015-16, that has it by major sector; and under the Fiscal Accountability and Transparency Act, it does require a plan to balance by 2017-18.
There is a chart that shows program spending, by major line item, that takes the fiscal plan to 2017-18. But the way the fiscal plan is struck, like it was in past years and years before that, the current fiscal year detailed ministry details; the medium-term fiscal plan, more details to 2015-16; and, as required under the legislation, a path to balance by 2017-18 or whatever the year it should be.
Mr. Michael Harris: Thank you. Back to the minister: Minister, what is the probability of actually balancing the budget by 2017-18? Do you have a plan to do so?
Hon. Charles Sousa: Well, that’s the plan. That’s what we’re doing. We have exceeded our plan for four years running, by the tune of $22 billion. We have achieved and shown the ability to continue to exceed—this year alone—by $5 billion. Every effort and every step that we’re taking is to balance the books by 2017-18.
Now, I recognize that other provinces and other parts are even more aggressive with a hockey-stick growth and recovery by 2015. We reject that notion. We want to be certain that we’re doing this in a very pragmatic and systematic way to balance the recovery and come to balance by 2017-18, as outlined in our budget.
Mr. Michael Harris: Minister, where are the numbers, though, from 2015 to 2017 on the expenditure side? Where are they? Did David Livingston delete them all?
Hon. Charles Sousa: We’ve outlined in our budget how it is that we’re achieving it. We’ve recognized what we’ve been able to do thus far. We know that next year’s budget forecast is going to be $1 billion lower than what was initially anticipated. We’ve renegotiated a number of pension agreements, to the tune of $1.8 billion to $2 billion annually in savings. Those things are outlined in our budget, and that is where we’re going to be headed.
Mr. Michael Harris: How much time do I have left?
The Chair (Mr. Michael Prue): I believe you have about three minutes.
Mr. Rob Leone: Mr. Chair, I’d like to move—I’ve got some motions—a couple of motions, if I could, or at least one.
The Chair (Mr. Michael Prue): You have a motion? It’s being handed out now. Okay. After it’s handed out, if you could read it into the record.
Mr. Rob Leone: I move that the Standing Committee on Estimates request from the Ministry of Finance, Cabinet Office and Office of the Budget and Treasury Board the following documentation: all fiscal journals produced for treasury board/Management Board of Cabinet between April 1, 2013, and June 11, 2013; medium- and long-term expense outlooks containing fiscal years 2015-16, 2016-17 and 2017-18; any documents dated 2013 containing consideration of user fees and/or revenue-generating fees, taxes or tolls; all fiscal and economic update presentations and/or slide decks provided to cabinet;
That the documents be provided to the committee by June 25, 2013;
That the documents be provided in a searchable electronic PDF.
The Chair (Mr. Michael Prue): We have a motion moved. Any discussion? Then I’ll go to Mr. Mauro.
Mr. Rob Leone: Yes. Just very briefly, Chair, we’re looking for this documentation because it’s a continuation of some of the documents that we already have in our possession that would give us and provide us with a clearer picture of the fiscal situation in the province of Ontario.
The Chair (Mr. Michael Prue): Mr. Mauro.
Mr. Bill Mauro: I’d just like to request a 20-minute recess, if I could, please.
The Chair (Mr. Michael Prue): The request would be in order. It’s usually done at the time of a vote, but if you want 20 minutes now—
Mr. Bill Mauro: Yes.
Mr. Rick Nicholls: Point of order, Chair.
The Chair (Mr. Michael Prue): Point of order, yes.
Mr. Rick Nicholls: I’d like to correct the record, if I may. I said earlier “across-the-board cuts to health and education,” and I should have said, actually, “across-the-board public sector wage freeze.”
The Chair (Mr. Michael Prue): Okay. It’s always in order to correct your own record.
There has been a request for a 20-minute recess. This will take us, I think, to the time that we have to—
The Chair (Mr. Michael Prue): Then we can come back for five minutes before question period starts.
We’ll take a 20-minute recess at this time. We’ll try to determine at that point whether or not this issue can reasonably be resolved. I don’t want to keep the minister or the staff here if it cannot be resolved.
A 20-minute recess has been requested. We’ll see everybody here promptly, according to that clock, at 10:24. That’s just before the bells start ringing.
The committee recessed from 1004 to 1022.
The Chair (Mr. Michael Prue): This meeting is resumed. Any discussion on the motion? Mr. Mauro.
Mr. Bill Mauro: I want to thank Mr. Leone for bringing forward this particular motion. On the surface, it seems relatively innocuous, but I would suggest that—and I hope that maybe he would agree and understand—the request, while being straightforward in terms of what’s requested, does place an incredible burden from a timeline perspective on the staff who are going to be tasked with trying to pull these documents together; it’s going to represent hundreds of thousands of pages of documents.
It’s also my understanding that many of these documents have already been released to the justice policy committee, so maybe that will actually relieve them of some of the work that is contemplated here in your resolution. But having said that, we’re happy to support it.
As the minister has said already, his ministry and other ministries have gone beyond what’s been requested in the past in terms of the release of documents to various standing committees of the Legislative Assembly.
We’re happy to support it, but I would like to move an amendment, Chair, to the motion, just asking if we could have the support of the other members in delaying the timeline from June 25 by about a month, to July 25.
The Chair (Mr. Michael Prue): I don’t know whether that’s a friendly amendment, but the amendment has been made.
Hon. Charles Sousa: Sir, can I speak to it? Am I allowed to?
The Chair (Mr. Michael Prue): Not really, no. The minister does not take part in the debate.
Hon. Charles Sousa: I just wanted to ask—
The Chair (Mr. Michael Prue): Okay. We have an amendment made to the motion. Any discussion on the amendment?
Mr. Rob Leone: I’d be willing to meet the member halfway. If we could perhaps move that date to the first week of July, I’d be happy to make an amendment—
The Chair (Mr. Michael Prue): You’re going to make an amendment to the amendment?
Mr. Rob Leone: Sure. Well, I don’t want to make an amendment—I mean if we could amend the date—
The Chair (Mr. Michael Prue): That’s what it is.
Mr. Rob Leone: If we could make the date—if he would change the date from the end of July to the beginning of July, I’d be happy—
Interjection: Well, it would change the initial motion.
Mr. Rob Leone: —happy to do it. Just asking.
The Chair (Mr. Michael Prue): Is there some form of compromise available here, Mr. Mauro?
Mr. Bill Mauro: Chair, I would say that we really felt like we’d compromised on July 25. There were people, before I came back into the room, who were contemplating that our amendment to the motion should have asked for a larger amendment than just simply July 25. There were some people who would have preferred to see Mr. Leone’s motion amended into August or perhaps even into September. It is a significant ask, and we do feel like July 25 is not being unreasonable at all. I guess I would say, back to Mr. Leone, if he could live with only two weeks more, I’m not sure why he couldn’t live with four weeks more in terms of what that might mean in terms of—
The Chair (Mr. Michael Prue): I’m not going to do that. If this is the only debate, I’m going to call that. If your amendment succeeds, that’s going to be it; if it doesn’t succeed, someone else can make another counter-amendment.
Ms. Catherine Fife: So you are not allowing Mr. Leone to amend the amended amendment?
The Chair (Mr. Michael Prue): No.
Mr. Rob Leone: No; it’s July 25.
Ms. Catherine Fife: July 25; okay.
The Chair (Mr. Michael Prue): He’s amending the main motion.
Ms. Catherine Fife: Just a point of clarification: How much of this information that has been requested by the PCs has already been provided through the justice committee? Because that would impact the way that we’ll be voting.
The Chair (Mr. Michael Prue): I don’t think there’s any way of knowing, of the 100,000 or so documents, how many have already been released.
Ms. Catherine Fife: Well, Mr. Mauro says that much of that information has already been provided through justice and if they already have most of that information then it shouldn’t be that timely—it shouldn’t take that much time. It’s a question of clarification, and it’s legitimate.
Mr. Michael Harris: Yes, and to a point on that, when the justice committee asked for documents, two weeks is a fair enough timeline and they’ve been following that request. So I don’t see why it should be any different with this.
The Chair (Mr. Michael Prue): Okay, we have Mr. Mauro’s amendment. We’re going to deal with that now. All those—
The Chair (Mr. Michael Prue): Mr. Mauro?
Mr. Bill Mauro: Sorry, I just want to address—the dialogue has changed slightly. I do want to address what Ms. Fife from the NDP has said. My comment on much of the documentation having been released to other standing committees—the justice policy committee is not a committee that I sit on but I believe that I did hear the minister make reference, in his 30-minute speech when we first began today, suggesting that in fact much of the same documentation has been released.
Having said that, it may be in different forms. There are serious issues of confidentiality, I would expect, that need to be dealt with in terms of dealing with the request. I would restate what I said initially. Perhaps Mr. Leone would be able to suggest to the committee why in fact two weeks is seemingly an egregious request in his mind or in the minds of the Conservatives in terms of simply delaying this from—I guess this would make it, instead of the 25th, would take it back to July 11. I mean, if there is some substantive reason as to why July 25 would place his particular party, in terms of what it is that they’re trying to accomplish, in a more difficult circumstance than July 11 would, I’d be interested in hearing it. But, quite frankly, I don’t understand. This is a staffing issue; it is no more, no less.
We are agreeing on the transparency point. We’re more than happy to support the motion to see that the documents are released. That is fundamentally what the discussion and the motion are about. I have no problem doing that. We’re here, prepared to vote and put up our hands to support the motion. We’re simply asking from a task and a staff perspective—summer holidays are starting; I don’t know what’s going to happen with the staffing in the relative ministries. We simply are asking to have a little bit of accommodation in terms of the timeline here to allow to ensure that the request is met. I don’t see it as egregious, difficult, contradictory or an unfriendly amendment. It seems to me it’s quite in keeping with the intent of Mr. Leone’s motion. We’re just simply asking for an extra four weeks.
The Chair (Mr. Michael Prue): Okay, I’m going to call the amendment at this point. All those in favour of the amendment made by Mr. Mauro? Opposed? I’m going to vote against the amendment and leave it back to the original motion.
All those in favour of the original—that’s Mr. Leone’s—motion? That carries. There’s none opposed. That’s 8-nothing; then that carries.
It now being 10:29—we have to break any second. We will let the minister know when he and his staff will be required to return. At this stage, because the House leaders have not finalized whether or not we’ll be meeting this summer, we don’t know, but the second we find out you’ll be the first to know. Failing that, we’ll see you in September.
Hon. Charles Sousa: Thank you very much.
The Chair (Mr. Michael Prue): Okay, meeting adjourned.
The committee adjourned at 1030.
Tuesday 11 June 2013
Ministry of Finance E-19
Hon. Charles Sousa
Mr. Steve Orsini
STANDING COMMITTEE ON ESTIMATES
Chair / Président
Mr. Michael Prue (Beaches–East York ND)
Vice-Chair / Vice-Président
Mr. Taras Natyshak (Essex ND)
Mr. Grant Crack (Glengarry–Prescott–Russell L)
Mr. Kim Craitor (Niagara Falls L)
Mr. Vic Dhillon (Brampton West / Brampton-Ouest L)
Mr. Michael Harris (Kitchener–Conestoga PC)
Mr. Rob Leone (Cambridge PC)
Mr. Bill Mauro (Thunder Bay–Atikokan L)
Mr. Taras Natyshak (Essex ND)
Mr. Rick Nicholls (Chatham–Kent–Essex PC)
Mr. Michael Prue (Beaches–East York ND)
Substitutions / Membres remplaçants
Mr. Joe Dickson (Ajax–Pickering L)
Ms. Catherine Fife (Kitchener–Waterloo ND)
Clerk / Greffier
Mr. Katch Koch
Staff / Personnel
Ms. Anne Marzalik, research officer,