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The goals and the challenges of Ontario's budget

Six key areas of cost savings:

1. Health care

The goal: Cut rate of growth of spending to an average of 2.1 per cent annually over next three years and introduce a wage freeze.

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The challenge: True zeroes are hard to achieve. Doctors who are still paid on a fee-for-service basis can simply work more, and other health care workers are on a grid system that increases their pay as they garner seniority. "You can't really run a hospital or anything else if your wage costs are going up two and three per cent and they're not being funded," said Michael Decter, an economist and a former deputy health minister of Ontario.

Examples: Ontario's Drug Benefit program will be changed so the five per cent of seniors with the highest incomes will pay a larger share of prescription costs. Savings of $210-million over three years from long-term care homes.

2. Elementary/Secondary Education

The goal: To find enough savings in salaries and benefits, which make up the majority of public education costs, to protect flagship Liberal initiatives like full-day kindergarten and caps on class sizes, as well as teaching jobs.

The challenge: Teachers' unions have balked at the government's "parameters" for ongoing negotiations, which have already begun in anticipation of the current contract's expiry in August. And though the budget also finds savings in other areas, if it loses the salary battle, the government will be hard pressed to find the savings it needs without scaling back one of its core initiatives.

Examples: The government is looking for a two-year freeze on wages, as well as the teachers' pay scale, and an end to some benefits. They are also looking at amalgamating underused schools and school boards, and capping the number of credits high school students can take to discourage them from staying on for a fifth year.

3. Postsecondary Education

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The goal: To find efficiencies in universities and colleges while standing by their major promise of a tuition grant for more than 300,000 students and expecting the system to continue growing (taking in more people).

The challenge: Where to find those efficiencies remains vague. Partly, the budget depends on keeping salaries and benefits under control, and revamping the way university pension plans are structured – areas where these institutions may push back and assert their autonomy. The budget also promises savings from enhancing "innovation and productivity" while protecting quality, with details on that plan to come in the summer. Meanwhile, universities have already been cutting, as their costs have outstripped revenues for years.

Examples: University pension liabilities have been eating into operating funds, so the government wants to pool and centrally administer the plans for all 20 Ontario universities. The province is also eliminating some subsidies and grants, such as study-abroad scholarships, and has cut back funding for medical school training.

4. Business support programs

The goal: To replace the hodgepodge of direct support and indirect tax help that businesses receive from the government with a new, co-ordinated approach.

The challenge: There are dozens of programs, from many different ministries, and many businesses have become attached to the payments they get.

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Examples: A new Jobs and Prosperity Council, staffed by non-government advisers, will be set up to figure out what sectors of the economy need support to boost job growth and productivity improvements.

5. Energy/environment

The goal: Reduce the clean-energy benefit for large users and target cost savings on a hazardous waste initiative.

The challenge: Maintain commitment to environmental standards without risking public health. Backlash from environmental groups, and larger businesses might complain that their energy bills will go up.

Examples: Capping the amount of the clean-energy benefit at 3,000 kilowatt hours per month, so only residential customers and small businesses will get the credit, for a cost savings of $470-million.

6. The arts

The goal: In the next three years, the Ontario government plans to winnow tens of millions of dollars from its support of culture, tourism and sport, including a 23 per cent reduction in funding to Toronto's high-profile Luminato festival and modest decreases in operating assistance to such venerable institutions as the Royal Ontario Museum and the Art Gallery of Ontario.

The challenge: The fate of TVOntario is unclear. The McGuinty government wants to reduce its annual direct investment in the educational broadcaster – last year, it gave $52-million against TVO's total budget of almost $90-million – and find new sources of funding. However, Tuesday's budget was lacking specifics on how big a reduction the government wishes to initiate and where it expects to locate new revenue.

Examples: seven cultural "attractions" – the AGO, ROM, the Ontario Science Centre in Toronto, the McMichael Canadian Art Collection in Kleinburg, Burlington's Royal Botanical Gardens, Ontario Heritage Trust (a conservation agency) and Science North in Sudbury – along with the St. Lawrence Park Commission are on tap to take an almost $5-million cut over the next three years.

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About the Authors
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

James More

Banking Reporter

James Bradshaw is banking reporter for the Report on Business. He covered media from 2014 to 2016, and higher education from 2010 to 2014. Prior to that, he worked as a cultural reporter for Globe Arts, and has written for both the Toronto section and the editorial page. More

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