Consistent with private-sector forecasts, the government expects Ontario’s economy to grow at a solid pace over the next two years being driven by the combination of stronger U.S. growth, lower oil prices and a lower Canadian dollar. As a result, the Ministry of Finance is forecasting that growth in Ontario’s real GDP will rise from 2.2% in 2014 to 2.7% in 2015, and then average 2.2% between 2016 and 2018. The government expects that exports and business investment will continue to play a key role for economic growth and projects increases in employment, household income, housing starts, and machinery and equipment investment over the medium term.
The 2015 Ontario budget commits to investing more than $130 billion on an assortment of public infrastructure projects over the next 10 years. In addition to increased provincial revenues, the province plans to raise funds through tight controls on education and health care spending, a new beer tax, sales of provincial real estate, and the sale of up to 60% of Hydro One’s shares on the stock market. On average, provincial program spending is set to grow a mere 0.9% until 2018, well below the 2.0% expected rate of inflation over this same period, effectively representing program spending cuts in real terms. These measures form part of the provincial government’s aim to return to a budgetary balance by 2017-2018 from the projected 2014-2015 $10.9 billion deficit.