Health care funding falls far short even as Ontario heads out of deficit

A new report from the Financial Accountability Office (FAO) confirms the difficulties government cuts are placing on public health care in Ontario.  

The FAO is a government-funded but somewhat independent office that reviews Ontario government economic and fiscal claims. This is not a left wing think tank -- rather it is very much part of the received establishment.  

Its latest report notes that government spending plans will fall $4 billion short of what is required to maintain services at 2015/16 levels by 2018/19: 

“If the quality and nature of public services remain unchanged over the outlook, the FAO estimates that program spending would need to increase by 2.7 per cent per year on average from 2014-15 to 2018-19. However, the 2016 Budget limits annual program spending growth to just 1.9 per cent on average, 0.8 percentage points lower than the growth in the underlying cost factors that drive public sector spending.”

"The government’s plans to restrain spending are occurring across most program areas, notably in the health, education and justice sectors, where planned spending growth is about half the rate of growth in underlying spending pressures.  The FAO estimates that by 2018-19, there would be about $4.0 billion in spending pressures to maintain the quality and nature of public services provided in 2015, assuming no further action by the government.” (My emphasis-DA)

The biggest funding gap is in health care. 

Health care is facing 5.2% cost pressures the FAO notes: 2.2% due to population growth and aging and 3% due to growing wealth and inflation.  
“Assuming that the quality and type of health care services provided in 2015 remains the same over the outlook, the FAO estimates that population growth and aging would contribute 2.2 percentage points per year on average to the growth in health spending. A stronger economy, which leads to higher incomes and price inflation would contribute a further 3.0 percentage points. Combined, these factors would lead to 5.2 per cent annual growth in health spending.”
The FAO notes the government plans health care funding increases of 1.8% over the next four years.   

Accordingly it concludes:“Given these factors, it is unclear how the government will achieve its target of 1.8 per cent annual spending increases (for health) over the next four years.” (My emphasis.-DA)

As can be seen in the chart above, the projected health spending is a major cut compared with the past:

…”Provincial health spending grew by 7.2 per cent on average annually from 2005-06 to 2009-10. Following the financial crisis, the Province limited health spending growth to 3.1 per cent per year from 2009-10 to 2014-15 period. According to the 2016 Budget, the government plans to further limit health spending growth to just 1.8 per cent per year from 2014-15 to 2018-19, below the already restrained pace of growth of the past five years.”

While in the past, our health care system was getting "enrichments" -- it is now getting significant "efficiencies". 

Ontario's Economic and Fiscal Situation: The news from the FAO is a little better than it has been in the past.

According to the FAO, the economy is improving, revenue is growing (albeit not quite so quickly as the government hopes), and spending pressures are building.  As a result, the government (absent new policies) will briefly achieve little or no deficit in 2017-18, but then return to deficit.  The key debt to GDP ratio however has stopped getting worse and is beginning to modestly improve.  

Economic Growth: 

"The FAO is forecasting solid growth for the Ontario economy, with real GDP rising by 2.5 per cent in both 2016 and 2017, in-line with the current average outlook of private sector economists. Beyond 2017, Ontario’s economic growth will moderate slightly, averaging 2.2 per cent per year. However, there are significant risks for both the global and Canadian economies that could lead to weaker economic growth for Ontario."

The real growth forecast by the FAO for 2016 and 2017 is a little higher than the 2016 Budget forecast. Growth of 2.5% in 2016 and 2017 would be an increase from 2.1% average growth over 2011-2015.  This level of growth is also better than the level FAO predicts for Canada as a whole (1.7% in 2016 and 2.4% in 2017).

Government Revenue: Revenue growth for 2016 -2019 is predicted to be a little more modest than the Ontario 2016 Budget forecast, falling in total 0.8% behind over 4 years, with the bulk of that in 2017.   Taxation revenue will be stronger than it has been as with better nominal economic growth, and revenue from the federal government is expected to grow at 4%, much as predicted in the Budget.  The FAO also puts revenue growth from governmental enterprises and other non-tax revenue at a similar level as forecast in the provincial Budget.

Coming out of deficit:  Notably, the FAO deficit forecast for this year is $300 million less than in the 2016 budget. Moreover, the province is in a position to balance the budget in 2017-18.    

Based on the revenue and spending outlooks, the FAO forecasts budget deficits of $5.7 billion in 2015-16, $4.0 billion in 2016-17, and $580 million in 2017-18, somewhat larger than the 2016 Ontario Budget projections.  However, given the flexibility built into the government’s fiscal projections, the Province is in a position to achieve its commitment of balancing the budget in 2017-18.

This breaks with the many who have claimed that Ontario would definitely not balance the budget in 2017-18.   Moody's had downgraded Ontario's long term debt and had expressed skepticism last year that the government would balance the budget in 2017/18 as planned.  They now have upgraded Ontario, noting that the return to a balanced budget is on the horizon.

Growing spending pressures: The FAO sees growing spending in the longer term, as spending pressures rise from population growth, population aging and  higher costs of services:

For program spending, the FAO outlook adopts the 2016 budget projection, which assumes average annual spending growth of 1.9 per cent over the 2014-15 to 2018-19 period. Beyond the budget outlook, the FAO projects program spending to increase by 3.4 per cent in 2019-20 and 2020-21, reflecting rising spending pressures from underlying demographics and higher costs of services.

Going back into deficit:  In the longer term, with increased spending pressures, the FAO believe deficits will re-appear (absent new policies):

Beyond 2017-18, as revenue growth remains moderate, but spending pressures build, the FAO projects a gradual deterioration in the Province’s budget balance, with a deficit of $1.7 billion by 2020-21.

Debt: Accordingly, the FAO suggests that the debt will continue to increase but the (arguably more important) debt to GDP ratio has already begun to “modestly” decline,  with a prediction that it will move from 39.6% in 2015-16 to 38.4% in 2020-21.

Finally, the FAO also notes that there are risks to the government’s austerity plan to keep spending below demographic and cost pressures:

There are a number of significant risks for the Province’s fiscal outlook. From 2014-15 to 2018-19, the government plans to restrain spending growth to well below the growth of underlying demographic and cost pressures. It is unclear to what extent the government will achieve this level of spending restraint or what the implications are for public services.

The take-away? For what it is worth, this representative of mainstream opinion believes we are more or less on track for a balanced budget in 2017/18, that government funding for public programs is falling behind real cost pressures, that health care is being hit hardest of all, that it is unclear how government can achieve such low level funding increases for health care, that funding for public programs and especially health care will have to increase in the medium term, and that, absent new policies, we will go back into modest deficit after 2017/18.


Cuts drive crisis for unpaid women caregivers

Cascading health care cuts are resulting in significant problems for home care patients and their families, seriously undermining the main defense the government makes for its policy of hospital and long-term care cutbacks. 

With hospital cutbacks and a virtual freeze on long-term care beds, home care and unpaid caregivers must now take care of sicker and sicker patients. This change in home care has been sudden and dramatic, as demonstrated in the graph below from the the Ontario Association of Community Care Access Centres (the OACCAC represents the public sector organizations which manage home care for the government).  
Increasing problems for unpaid home care care-givers

The OACCAC suggests this shift means home care now replaces 150 long-term care homes, each with a capacity of 130 residents. 

The OACCAC estimates cost pressures of about 5% per year to offset demographic changes and for the absorption of patients that would otherwise have been treated in hospitals or long-term care.  The OACCAC adds that funding has fallen short of that level in recent years, reducing care.

But what does increasing the level of illness in the home care sector mean for patients and the family members and friends who must take care of them? 

A recent study suggests  "Ontario’s home care system may be facing a perfect storm as home care patients become more elderly, ill and impaired, and the family members and other unpaid caregivers who help care for them are increasingly affected by stress and burnout."

The Reality of Caring focuses on "long-stay home care patients" -- a group of about 200,000 patients -- one-third of all home care patients whose care accounts for about 60% of the contracted funding for home care. 

The study (comparing 2013-14 with 2009-10) finds that this group of patients are becoming older and are more affected by "cognitive impairment, functional disability and frail health." More of them have dementia, more have difficulty with basic activities (such as washing themselves or eating), and more are in declining health.

The overwhelmingly majority of this group receives assistance from unpaid caregivers: fully 97%. Of this group, one-third had caregivers who experienced distress, anger or depression in relation to their caregiving role, or were unable to continue in that role. That rate of distress, at 33.3%, had more than doubled by 2013-14 compared with 2009/10. Over the same period, the proportion of patients with caregivers who were not able to continue looking after them also more than doubled, to 13.8%.

Not surprisingly, more problems are experienced by caregivers when the patient is sicker:
  • Among patients with moderately severe to very severe impairment in cognitive abilities, 54.5% had caregivers who were distressed. 
  • When patients needed extensive assistance with or were dependent in some activities of daily living, 48.7% had distressed caregivers. 
  • When patients were at the two most severe levels of health instability, 56.1% had caregivers who were distressed. 
This is significant as these long stay patients became more cognitively impaired, more functionally disabled and sicker between 2009/10 and 2013/14:
  • Those who had Alzheimer’s or other forms of dementia increased to 28.6% from 19.5%
  • Those with mild to very severe cognitive impairment increased to 62.2% from 38.1%
  • Those experiencing moderate to very severe impairment in ability to perform activities of daily living such as washing their face or eating increased to 44.5% from 27.6%
  • Those with slightly to highly unstable health conditions associated with greater risk of hospitalization or death increased to 43.2% from 27.3%
  • The patients averaged a year and a half older than in 2009/10, increasing from 77.4 years to 78.9 years. 
Those caregivers who experienced distress provided more care.
  • On average, patients whose caregivers experienced distress received 31.5 hours per week of care from those caregivers, compared to the 17.1 hours per week received by patients whose caregivers were not distressed.
The unpaid care is a huge amount of work.  Yet the study also notes that "families and the pool of potential caregivers they provide are getting smaller, and the women who have historically done much of the most intense caregiving are increasingly employed in the workplace instead of available at home to look after ailing or frail family members."

Requiring women to provide 17 (never mind 31) hours of unpaid care per week is obviously a significant burden. With more cuts to hospitals and long-term care coming, the burden of care for unpaid caregivers will, however, increase.  This may backfire -- as the study notes, if unpaid caregivers are unable to provide care that will drive extra costs for long-term care and hospital care.   

The home care patients are much sicker than they were only a few years ago, increasing the burden for the unpaid caregivers.  The result for the unpaid caregivers -- usually women -- is increasing distress, anger and depression, with a significant portion unable to continue. More paid hours for PSWs and other home care workers is obviously part of the solution.

The study -- released by the government sponsored organization Health Quality Ontario -- does not specifically connect this "perfect storm" to the ongoing health care cuts. But it is clear those cuts are driving sicker patients to home care and unpaid caregivers -- and now we know those women caregivers are basically being thrown under the bus.  

The main government response to the cuts in hospital and long-term care is to suggest  that they are doing more in home and community care.  This study suggests this response has big problems

Update May 16, 2017: A new study published by the New England Journal of Medicine and funded by the Canadian Institute of Health Research, the Ontario Academic Health Science Centre, the Ministry of Health, and the University of Toronto also shows major problems for caregivers.  Specifically, in this case, very high levels of depression among caregivers (who were mostly women) of patients who survived a critical illness. 

The authors note: "Few resources are available to support caregivers of patients who have survived critical illness; consequently, the caregivers’ own health may suffer. The caregivers’ mean age was 53 years, 70% were women, and 61% were caring for a spouse. A large percentage of caregivers (67% initially and 43% at 1 year) reported high levels of depressive symptoms."


Ontario to cut funding for hospital infrastructure in half. Austerity bites

The Ontario government recently put out a release bragging that they will fund $50 million per year to renew existing hospital facilities. 
old Ontario hospital x-ray

However, in her September report the Auditor General reported that Ontario hospital funding is less than the renewal needs for existing hospitals. "The assessments of hospital facilities identified $2.7 billion dollars of renewal needs, requiring annual funding of $392 million to bring assets to what is considered good condition. However, since 2014/15 actual annual provincial funding has been $125 million..." 

In other words, the government has put out a release announcing that they are reducing hospital capital renewal funding -- from a level that was already only a fraction of what is needed to bring hospitals to good condition.

The release also brags that they will provide $12 billion over ten years for new hospital facilities (as distinct from funding to renew existing hospital facilities discussed above). That works out to about $1.2 billion a year -- but even this aspect of the announcement is also much less than it appears.

Over the previous five years (2011/12-2015/16) the government spent $14.8 billion in hospital infrastructure (as reported on an interim basis in the Budgets). That is very close to $3 billion a year.

So, in other words, the government is reporting that it will cut spending on hospital infrastructure by over 50% - or by about $1.7 billion per year.

It takes some chutzpah to put out a release bragging about your funding when you are actually cutting funding. 
Ten year plan for Ontario hospital facility funding

Source: Ontario Budget Papers (interim estimate from following year's Budget)

But it's even worse.  The Auditor General also noted: "Existing funding does not address significant pressures faced by ministries for new projects... the Ministry of Health and Long-Term Care has received submissions for 37 major hospital projects totalling $11.9 billion dating back to 2005/06. These submissions were endorsed by Local Health Integration Networks as needed projects requiring funding. However, the Ministry did not put forward these projects for approval to Treasury Board as these initiatives could not be managed from within their existing budget allocation."

So even with much higher funding than they now propose, $11.9 billion in needed hospital infrastructure projects could not be done.  

Notably, even with the much higher infrastructure funding, hospitals raided operating funds for capital projects. The Auditor reports that in "the last five years, hospitals spent on average $45 million a year of operating funds on capital and other funding needs." 

Given this announcement, this transfer of funds from hospital services to hospital facilities looks set to intensify.  That's especially bad news when hospitals have seen their real funding for services cut for many years.

Ironically, this announcement comes just after an infrastructure obsessed Budget.  The 2016 Budget increased funding for infrastructure projects by over $3.3 billion compared to the previous year. 

Provincial funding of infrastructure 2016

Pictures: epicmoments Inside an abandoned hospital in Ontario. TGH Wikipedia. 


Ontario hospital length of stay in rapid decline, Canadian average now 21% longer

New hospital inpatient length of stay data published by the Canadian Institute for Health Information (CIHI) indicates [1] Ontario lengths of stay continue to decline, but the pace of decline has picked up, and [2] the gap between the Ontario and Canadian average length of stay is growing and has now hit startling levels.
  • Since 2007/8, Ontario inpatients have 0.6 fewer days in hospital. This is a decline in length of stay of 8.7%. The Canadian average declined only 0.1 day (1.3%). The Ontario decline corresponds with the real funding cuts for Ontario hospitals in recent years.
  • Much of this occurred in the last year -- Ontario inpatients had 0.3 fewer days in 2014-15, a decline of 4.6%.
  • The Canadian average is now 1.2 days longer – or, put another way, Canadian patients stay 19% longer. This corresponds with the extra funding Canadian hospitals get compared to Ontario hospitals. 

Canadian hosptial length of stay 21% longer  than in Ontario

The trend is even more apparent if we look at “age standardized average length of stays” (which standardizes the age of patients for all jurisdictions and time periods and so is probably a more accurate measure).
  • Since 2007/8 length of stay has declined 1 full day in Ontario – a 14.9% decline. 
  • In the last single year reported (2014/15) the age standardized lengths of stay declined half a day in Ontario – or by 8.1%.
  • The gap with the Canadian average has grown from 0.6 fewer days in Ontario in 2007/8 to 1.2 fewer days in Ontario. 

In other words, in 2007/8 the Canadian average stay for an age standardized patient was 8.9% longer, but in 2014/15 that had grown to 21% longer. Quite incredible.

Ontario age standardized length of inpatient stay declining -- and far shorter than Canadian LOS

The government has focused on removing less sick patients from hospitals and treating them at home.  So the decline in length of stay has occurred while the patients in the hospital are relatively sicker.

The more rapid decline in length of stay fits directly with the harsh funding restraint imposed on Ontario hospitals in the last few years and the increasing re-admission of patients to hospitals in Ontario.  This CIHI chart shows the number of patients per 100 patients who must be readmitted within 30 days, a major increase in a few short years.  This means that means about 9,000 more patients must now be re-admitted to Ontario hospitals every year.

Canadian hospital inpatient re-admissions increasing

In just four years between 2009/10 and 2013/14 Ontario saw a 13.6% decline in the age standardized length of stay and a 9.6% increase in re-admissions.


Ontario loses 19,000 public sector workers while rest of Canada gains 73,000

Ontario loses 19,000 pubic sector jobs in two yearsThere has been a general trend downwards in public sector employment in Ontario according to Statistics Canada.

In the last two years, Ontario has lost 19,000 public sector workers, with most of the loss occurring in the last year.
Ontario falling behind Canada in terms of public sector jobs
The downwards trend in Ontario contrasts with the upward trend across the rest of Canada. 
73,000 new public sector jobs
While Ontario lost over the last two years, the rest of Canada gained 73,400. Over the last year the rest of Canada gained 65,300 public sector jobs, while Ontario lost 12,700 public sector jobs.

This may understate the cuts in the Ontario broader provincial public sector (i.e. public sector workers, like health care workers, that are primarily funded by the province, excluding federal and municipal employees). Austerity has been much harsher for the Ontario government than the federal and Ontario municipal governments. So the Ontario broader provincial cuts may be softened by modest growth in the federal and municipal sectors.

The level of public sector employment was already much lower in Ontario than in the rest of Canada -- and with austerity in Ontario that gap is growing rapidly.

Ontario public sector jobs decline as percentage of population

If Ontario had the same level of public sector employment as the rest of Canada in 2015, there would be an additional 1.06% of the total population working in the public sector.  Ontario is missing 146,196 public sector workers compared to the rest of Canada on per-capita basis. 

Two years earlier the gap was only 0.63% -- or 85,371 fewer public sector workers. On a per-capita basis, Ontario has fallen 60,825 public sector jobs further behind the rest of Canada in one year. 

Worse to come?  The decline in Ontario public sector workers has been driven by provincial public sector austerity in the last few years.   Program spending (which pays for broader provincial public sector jobs among other items) saw increases decline to 2.9%, 2.1% and 2.2% over the last three years (2012/13 through 2015/16), well below government cost pressures of inflation, population growth and aging.  

But now the new Ontario Budget indicates the real public sector cuts will get worse. For this coming year, 2016/17, they propose to cut that increase to less than 1%, less than half the increase in 2015/16.  

Ontario is the lowest spending, lowest revenue provincial government -- but this comes with far fewer public sector workers. And with the new Budget, this is set to get worse.  

When you need a health care worker, this reality will come home to roost.

Public sector jobs in Canada and Ontario
Sources: Statistics Canada,  Labour Force Survey 282--0089 and Population by year and by province and territory


Health Care and the Budget: Not Much

Health care and hospital funding: Despite significant new revenue and lower than expected debt costs, health care spending is almost exactly identical to the amounts planned in last year’s Budget for 2015-2018. 

The total health budget for 2015/16 came in (on an “interim” basis) basically the same as planned in the 2015 Budget (that is unusual, more often they under-spend the health budget).   

For 2016/17 and 2017/18, they plan to keep basically to the targets set out in the 2015 budget (plus a small increase of $100 million in each of those two years -- an extra 0.2%). 

Overall, health is planned to increase 1.97% in 2016/17 and 1.93% in 2017/18. That will see health expenditures fall again as a percentage of the economy but is a little bit higher than the planned all-program expense increase (of 1% in 2016/17 and 1.7% in 2017/18).  That is far short of costs pressure due to increased utilization, aging, population growth, and inflation. 

Hospitals are budgeted to receive $345 million more in 2016/17 than in 2015/16. Based on CIHI estimates of provincial hospital spending in 2015/16 ($19.4187 billion) that is an increase of 1.78%.   

If actually realized that is a bigger increase than CIHI reports for provincial spending on hospitals in recent years:

While a little better than what we have seen, this will fall far short of cost pressures, with the result that hospital cuts and layoffs will continue. 

The government claims a 1% increase in base (or global) hospital funding -- but given that they have shrunk the role of global funding that only amounts to $60 million (0.31% of total hospital funding).  

Combined with $100 million new money for activity based funding (based on fee for service payments) and "HBAM" funding (based on population and demographic factors), total regular hospital funding is going up $160 million – or an increase of about 0.82% of total provincial hospital funding.  

Another $175 million increase for hospital funding is coming through “provincial programs” funding. On February 29th, the government claimed that this was for "access to more services in new and redeveloped hospitals" (post construction operating funding) "and for targeted priority services such as organ and tissue transplants."  The remainder of the $345 million is being set aside for small, rural, and northern hospitals (reportedly $7.5 million) and mental health hospitals.

Bottom line – we have been successful in moving them off the freeze to base (global) funding, but only in a very, very modest way.  Real hospital funding (and real health care funding) is still in steep decline.

Hospice Care: The government is investing an extra $75 million over the next three years to increase funding for hospices to almost $55 million per year in the third year.  The government sees hospices as more 'cost-effective' than hospital palliative care beds. 

Long Term Care – 2% increase for the nursing and personal care envelope. No word on the other funding envelopes

Home and Community Care: $250 million increase -- they put this at “about” a 5% increase and increases at this level will continue through 2017/18.   Community Care Access Centre (CCAC) funding is roughly half the total home and community care funding, but there's no word, yet, on the portion of the increase CCACs will get.

Family Health Teams, Community Health Centres and Nurse Practitioner-Led Clinics: To "ensure" these primary care clinics can effectively recruit and retain qualified (non-physician) staff, Ontario will invest an additional $85 million over three years. Compensation for workers in the largely non-union community health sector generally lags, and this may be a real attempt by the government to help with catch-up for at least one group of workers who have been negatively affected by that trend. But there's an awful lot of other community health workers that need this sort of help just as much.   

Deficit: No surprise -- for the seventh year in a row the government beat their deficit forecast.  Indeed, for 2015/16 they beat their 2015 Budget estimate by $2.8 billion by lowering the deficit to $5.7 billion. They even beat their forecast for the deficit in their fall economic statement of just a few months ago by $1.8 billion.  Notably, they reduced the deficit by $4.6 billion compared to the previous year (2014/15).  With another $150 million still being held by the government in reserve, the 2015/16 deficit may fall further still by the time they close the books on this fiscal year with the Public Accounts in the fall. 

Their new (and lowered) estimate for 2016/17 is $4.3 billion, ½ a billion less than the estimate in the 2015 Budget. As this is only $1.4 billion less than 2015/16 and they lowered the deficit by more than three times that amount between 2014/15 and 2015/16, this deficit estimate may also prove high, as has been the case so often in the past.   Barring changing economic circumstances, they are well placed to hit their zero deficit target for 2017/18 (despite all the naysayers). 

Notably, net debt as a percentage of the economy (GDP) is expected to stop increasing this year and then start to decline, a key positive development. 

Ontario's debt situation is improving
Total Program Expense: They have budgeted significantly more for 2016/17 than in the 2015 Budget.  While the 2015 Budget planned increased program expenditure of a modest $100 million in 2016/17 and a cut of $600 million in 2017/18, they are now planning significant increases:

2015 Budget:
2015/16 -- $120.5 billion
2016/17-- $120.6 billion
2017/18--$120.0 billion

2016 Budget:
2015/16 -- $120.9 billion
2016/17-- $122.1 billion
2017/18--$124.2 billion

So the “good” news is program expense is up $1.5 billion for 2016/17 and $4.2 billion for 2017/18 compared to the plan in the 2015 Budget.

But the much more telling bad news is that this is mainly going to men and the private sector

As noted, health care did not get any significant boost.  Of the $4.2 billion in new spending planned for 2017/18, health care will get 1/42nd of that. For 2015/16, health care got 1/15th of the new spending.  Apparently, if there was anyone fighting for more health care dollars in the Liberal cabinet, they lost. 

What did get a significant boost is “other programs”.  Under the previous Budget this item was supposed to decline at a very rapid pace – 5.5% per year. Now they are going to increase 3.2% on average.  As a result “other programs” are slated to be 7.14% higher than budgeted in the 2015 Budget for 2016/17 and a whopping 22.9% higher in 2017/18.  Quite a change. 

The cuts in spending for “other programs” forecast in the 2015 Budget  were put down to efficiencies (e.g. cuts) found in various programs and cuts to the teachers’ pension expense.  While those reductions, I will wager, remain, other expenses are going up.  The 2016 Budget papers explains the increase by reference to “investments in transit, transportation , and community infrastructure, enhancement of GO Transit, the Long-Term Affordable Housing Strategy and initiatives to support Ontario’s Climate Change Strategy."

Infrastructure expenditures are planned to increase 25.5% in 2016/17 to $16.24 billion.

Capital spending increases in Ontario

In contrast, public sector (often female) jobs have fallen for the last two years in Ontario (click here for more on this). With the real cuts in this Budget, this trend will continue. 

Bottom line: While there is precious little new for female dominant, public sector health care services, male dominant, private sector construction industries are getting a windfall boost.  So much for gender equity.

Economics: Real growth in Ontario is forecast to slow from 2.5% in 2015 to 2.2% in 2016 and 2.4% in 2017.  But even on this basis, Ontario will beat Canada for the third year in a row in 2016, and by quite a ways. Unemployment levels are also now better than the Canadian average (6.7% versus 7.2%).  

Other good news is that nominal growth (growth plus inflation) will pick up from 3.6% in 2015 to 4.0% in 2016 and 4.6% in 2017.  Nominal growth is the key driver of revenue growth, so this would drive up revenue. 

Update: On March 3, the chief economist of the Financial Accountability Office of Ontario noted that "the budget assumes nominal GDP growth slightly above that of private sector economists."  So there is some question about the government's nominal GDP and, therefore, its revenue forecast.  Tracking nominal GDP will be key. 

Inflation is forecast in the 1.8-2.0% range.  Program spending continues its rapid decline as a percentage of the Ontario economy (down 2.2% compared to 2009/10). 

Although interest on debt continues to increase (with the deficits), it is now estimated at significantly less than in last year’s budget ($600 million less for 2016/17 and $700 less for 2017/18).  Rock bottom interest rates are opening up a bit more space for program spending than expected.

Bargaining - They continue to boast about how much lower settlements in the broader provincial public sector are compared to settlements in the municipal, federal, and private sectors.  The reported gap is significant. 

In the government's view, major broader provincial public sector settlements have a "net-zero" cost for the government.  They also flag the consolidation of school board health, life, and dental benefit plans. They expect improved cost efficiency, long term savings, and believe this will be one of the biggest consolidations and rationalizations of benefits in Canada.   A key goal is harmonization of benefits as over 1,000 plans will be consolidated into a handful of trusts. 

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