The Ontario Budget

Geoffrey Mitchinson, Vice-President, Public Affairs, GIaxoSmithKline Inc.; Pat J. O'Brien, President, Ajax Pickering Board of Trade; Libby Burnham, QC, Morrison Brown Sosnovitch and Past President, The Canadian Club of Toronto; Ann Curran, President, Curran Corporate Advisors Inc. and President, The Empire Club of Canada; David Cameron, Executive Director, Canadian Diabetes Association-Ontario; Nancy L. Maxwell, Chair, Rouge Valley Health System Foundation; George Russell, President and Editor TIME Canada; Mike A. Wilson, Vice-President, Ontario PC Youth Association; Lieutenant Colonel Hugh Tilley, Ontario Government Relations Liaison Officer, The Salvation Army; and Duncan N.R. Jackman, Chairman and CEO, United Corporation and Director, The Empire Club of Canada.

Introduction by Gordon Mclvor

I think it's only fitting in introducing Janet Ecker to begin with some numbers.

She is Ontario's 35th Minister of Finance.

June 18, 2002

A joint meeting of The Empire Club of Canada and The Canadian Club of Toronto

The first, The Hon. Edmund B. Wood, who served from 1867 to 1871, was also able at the same time to hold a seat in the federal House of Commons in Ottawa. Nice work if you can get it!

Janet Ecker is also the province's second female Finance minister, following Bette Stephenson who held the finance portfolio during the Frank Miller era in 1985. But Ms. Ecker is the first to actually deliver a budget. Today, five of Canada's 10 provincial finance ministers are women, up from zero a decade ago.

Janet Ecker has held more portfolios-Education, Community and Social Services and Government House Leader-than 90 per cent of her cabinet colleagues. And you'll notice that all of these positions put her squarely on the firing line, a line that became increasingly militant during the late '90s, and that today's speaker walked with considerable dexterity and calm.

She has learned to do this during her 20-year involvement with politics. In the '70s, following her journalism degree from the University of Western Ontario, she served as assistant press secretary to Premier Davis. She then became Policy Director for the Ontario College of Physicians and Surgeons, and worked as a communications consultant for a number of years.

Then in 1995, Ontario underwent a revolution. Its theme was common sense. Its leader was Mike Harris, and one of its most articulate advocates was the newly elected MPP for the riding of Pickering-Ajax-Uxbridge, who was re-elected in 1999.

Today, Janet Ecker holds the second most powerful financial and business portfolio in the land. Something tells me, she won't be making a run for the first! In her current role, she is of course responsible for developing and allocating the provincial budget. But she is also in charge of regulating Ontario's financial institutions, its SuperBuild investments, as well as the Ontario Electricity Financial Corporation.

During the past weeks, Ontario's Finance Minister has sent repeated signals that this would not be a good-times budget. As the Toronto Star noted:°Ecker was handed the unsavoury job of balancing the province's budget of $65 billion in the months after an economic downturn gripped the provincial economy for the first time since the Tories took office under former premier Mike Harris in 1995."

And as we saw yesterday in her first budget to the people of Ontario, she has managed to turn the unsavoury into the possible. We are honoured that the Minister has chosen this joint meeting of The Canadian Club of Toronto and The Empire Club of Canada to comment on her first budget.

Please join me in welcoming The Hon. Janet Ecker.

Janet Ecker

Thank you very much for that warm welcome and Cord for your kind introduction. Just so the media don't think they have a new headline today, I am not running for any leaderships, any other seats, any other levels of govern-ment. I have my hands full with the current job that I have today. 1'd like to provide a special welcome (I know Gord mentioned them) to the grade eight students from St. Gabriel's Catholic School in Toronto. I think it is one of the wonderful things the clubs do-to have young people come and listen to so many interesting people at this podium-so I give them a special welcome.

I would also like to thank Lieutenant Colonel Hugh Tilley for the words of prayer. I don't know how much interest the dear Lord takes in finance ministers or in their preparations for their budgets, but I do know as I was contemplating the economic circumstances of the province, the miracle of Christ and the loaves and fishes did come to mind. For those of you who know your bible stories you will know what I mean.

Yesterday, I had the privilege of delivering my first bud-get as Ontario's Finance Minister and since we are here with clubs that represent such history I will, and I did yes-terday in the House, go back a few years to the first Ontario treasurer who came from Exeter-The Hon. Charles McNaughton-who 35 years ago described the challenge that faces all of us who occupy this position. In preparing a budget, he said: "We tread the slender tightrope between the reasonable expectations of our people for government services and a constant aware-ness of the burdens on the taxpayer." And after 65 days on the job, the second provincial treasurer to come from Exeter has gained the keen appreciation for the meaning of those words.

Now we all know that a lot has changed in Ontario since 1967, but the essential task of preparing a budget

remains very much the same. It requires a very delicate ability to create a balance between the needs of our peo-pie, the services they want, the costs that have to be covered, the ability of our economy and our taxpayers to pay for those costs, and the steps that government can take to invest in growth and prosperity. That is a very del-icate balance indeed, more so this year.

But budgets are also about values and choices. And, as I learned growing up in Exeter, values come from families and communities, from the people who live those values with quiet strength and perseverance. Values such as set-ting personal goals and working hard to achieve them. Pursuing education as the key to opportunity. Respecting the rights of others while accepting our own responsibili-ties. Valuing and protecting our natural heritage and our environments. And standing up for what is right. Answering the call of your community through public ser-vice, volunteerism, personal commitment and sharing the fruits of your own success with those who need help. These are the values that built this province. These are the values that made this province strong and these are the same values that motivated our government when we promised to return Ontario to prosperity in 1995. Those are the same values that motivate us still.

While our predecessors preferred to carve up a shrink-ing pie into ever smaller pieces the Common Sense Revolution chose to make the pie bigger by placing this province on the path to increased growth. We've kept that promise by cutting taxes to create jobs (893,000 jobs in the past seven years; 200 tax cuts-$11 billion of tax relief to our hard-working citizens), removing barriers to growth by balancing the budget and paying down debt, now up to $4.2 billion. We are paying down debt in this province, the first government to be able to do so, by helping 600,000 people exchange a welfare cheque for a pay cheque. We are strengthening our universally accessi-ble health-care system, making significant infrastructure investments for the future, and for me, most importantly, setting higher standards in education to equip our stu-dents with the knowledge and the skills that they need for success in a global economy.

After seven years, I believe that the evidence is clear. Because we put the right fundamentals in place, our plan for prosperity is working. The numbers that chart our progress I think are impressive, but probably what are more important are the real improvements in people's everyday lives. The young family buying its first home. The recent graduate getting a great job. Businesses expanding, creating new jobs at home and competing suc-cessfully in foreign markets. The opportunities that people have today that didn't exist in 1995. That was the vision of the Common Sense Revolution, that Ontario could become the best place to live, to work, and to raise a family. And while we've accomplished much, there is clearly much more we need to do. And that's why we're sticking with the fundamentals of the plan that we've laid out. And yesterday's budget talked about how we pro-pose to do that under the leadership of Premier Eves.

First of all, we did face some very, very difficult choices this year. Based on the situation we had and based on our principles, we made what I believe are some prudent and pragmatic choices. A balanced budget for this year, the fourth in a row. New investments where people wanted to see investments-health care, education, environment, and infrastructure for the future-and we are continuing with a tax-cut agenda.

I'd like to just say a few words about the economic challenge that faced us, because, as many of you may know who are in business or in the export-import busi-ness, our economy is open and trade-oriented. The global economy and what happened in 2001 has to be our start-ing point because we are so trade-oriented. The economic slow-down in the United States, which was significantly compounded by the effects of the unanticipated events of

September 11, cut Ontario's exports and corporate profits significantly last year. The result was that after four con-secutive years of annual real growth exceeding 5 per cent Ontario grew by just 1 per cent in 2001.

For the current year the effects of last year's slow-down are still with us and, while all the economic signs are pointing in the right direction, our corporation tax revenues are still down and personal income tax revenues are forecast to decline slightly this year. So our challenge was to develop a balanced fiscal plan in the face of little revenue growth and growing program needs.

There were several steps that we took.

First was a continued commitment to tax cuts as the principal driver of growth and prosperity. While we will delay some of our tax cuts for one year, we will continue the ones that were scheduled for this fiscal year, we will continue the reduction for small business, the best job generator in our economy, and also expand tax relief for our modest-income Ontarians. And tax reductions will continue in the future.

Secondly we took steps towards more efficient, effec-tive, and affordable government. They are not the kinds of steps that often make the headlines, but things such as zero-based budgeting and having our ministries plan to review every program on a four-year cycle, to do value for money audits, to have the accrual basis of accounting so that we actually start to account for government rev-enues and expenditures much like you in business do are long overdue steps. We plan to move towards more multi-year budgeting and funding for our partners so that they can have a little more stability and the ability to plan for the future. These steps are not the stuff of headlines, but they do represent our government's profound respect for transparency and taxpayers' dollars.

We are also taking action to get better results for tax-payers from our major public assets. After recent consultations, the control, as the premier announced earlier, of Hydro One will remain in public hands while we seek the best way to bring in much-needed private-sector discipline and new investment to upgrade our electricity distribution and transmission infrastructure.

And fourth we will continue to invest in those priorities that respond to people's needs and encourage growth, jobs, prosperity, beginning with health care.

Ontarians, like all Canadians, believe that a universally accessible health-care system is central to our quality of life. It is a key part of why people like to live and work and raise a family here. Health-care operating spending this year will increase by an additional $1.7 billion-up 7 per cent over last year-and this responds directly to what people told us needed to be done in the system. That's why the new investments will go to better access to diag-nostic services like MRI machines and CT scanners, improved cardiac and dialysis services, expanded and upgraded emergency rooms, long-term care beds, dou-bling the number of nurse-practitioners and expanding the number of spots in medical school for doctors. In the coming year, hospital funding will rise by 7 per cent to $9.4 billion and health-capital investments will increase by almost 70 per cent over last year. We're also making major new investments in cancer care-in research, new therapies, treatment techniques and the modernization and upgrading of cancer radiation equipment.

But we know and we've said many times publicly that this kind of increased investment, those steps that all of the provinces are taking to try and strengthen, improve and sustain our important health-care system, cannot happen without increased support from the federal gov-ernment. And so we continue to ask Ottawa to pay its fair share of our growing health costs.

For those of you again who are students of history, when our health-care system began with the medicare program in our country, it was a 50-50 partnership. And today, the federal contribution is 14 per cent, not 50. If

we're going to continue to move forward with sustaining our health-care programs, we need Ottawa at the side of the provinces, with the provinces, not only financially, but also in terms of the need for reform. As the social service minister, I had the privilege of co-chairing the federal-provincial table with Pierre Pettigrew who was my federal counterpart. When federal and provincial governments got together and decided that the priority of the country was to put money in the hands of low-income families with children to keep them off welfare, we created a new social program called the National Child Benefit. If all of those governments, with all of those different interests and all of those different political stripes could sit down at a table and do that, this country can fix our health-care system in the future. So our government remains commit-ted to working with the federal government, other provinces and our health partners to meet that challenge because you deserve nothing less.

The second key priority is education. Excellence in education is the key to ensuring that every young person in Ontario has an equal opportunity, equal access to opportunity to succeed. A quality education and life-long learning are the most fundamental building blocks, not only for our future quality of life as we teach our young people how to be successful citizens, but also for our future economic prosperity as we teach our young people how to succeed in a challenging global economy. We made significant changes in education because we heard the message that we needed to do better. We brought in a new more rigorous curriculum, province-wide tests to make sure that our students were learning that curricu-lum, and improvement strategies that actually respond to those test results such as the early reading strategy which raises the literacy skills of our students in those crucial early grades. We also required our elementary schools to start setting improvement targets, to sit down with their teachers and the parents and the community to work together to improve the student achievement in their schools. They're starting to set those targets. We also set comprehensive standards for teachers' ongoing professional development and performance appraisal in the classroom. This plan is working because with student achievement we are starting to see real tangible improve-ments and how well our students are doing both nationally and internationally. And so we need to con-tinue to build on those successes.

Yesterday, I announced several initiatives and the pre-mier and my colleague, Minister Witmer, have announced some previously, but all of those investments add up to $500 million for our schools. We chose to invest those monies in programs to improve student learning, in pro-grams that will help make our students safer in bus transportation and in older schools. Many of you may know that we have some very, very old schools across the province that are in serious need of repair.

In addition to the increase of $350 million in student-focused funding recently announced by my colleague, Elizabeth Witmer, I'll just go through the highlights of the budget yesterday.

It was the creation of a $20-million student achieve-ment fund, which will recognize those schools that are achieving the improvement targets they are setting in grade-three reading, by providing to every elementary principal whose school meets or exceeds its student liter-acy goals in grade three, $5,000 that they and the student council can continue to invest in improved learning in their school. While we know that we have many excellent teachers in our province, and one of the things I miss about being Finance Minister as opposed to Education Minister is that I don't get to meet on a daily basis so many committed and dedicated professionals working for our kids, we also recognize that higher standards and continued investments in teacher training also improves student learning so this budget puts forward resources to

do that. Learning resources for teachers and principals, resources to help teachers develop new strategies for early reading and early math, more money for the renewal of school facilities and for bus transportation for safety. We've also invested in helping get special-needs students off the assessment waiting lists and to upgrade our provincial schools for those students with disabilities.

Those are important priorities at the elementary and secondary levels but we can't forget post-secondary edu-cation because if we want to compete in the knowledge-based economy post-secondary education is central to doing that successfully. Because of the double cohort of two graduating high school classes and the increased participation generally as more people recog-nize the need for lifelong learning, we've seen a significant increase in enrolment and we have started to respond to that with an investment of over a billion dollars to create 73,000 new student spaces in our colleges and universi-ties. And they promise to create another 36,000 through operating improvements.

But we knew we needed to do more to make sure that there was a spot for every willing and qualified Ontario student here in one of our excellent colleges or universi-ties. And so the budget increased the previous multi-year commitment that we had made to colleges and universi-ties. We were trying to give them a three-year commitment so that they could plan a little better for the future. Through SuperBuild we are going to be having new proposals, accepting new proposals for further expan-sions and we also targeted additional resources for the North and rural colleges and universities.

The third investment priority is the environment, more specifically safe drinking water. We're committed to ensuring that no Ontario community ever has to face what Walkerton faced, by bringing in the toughest policies we can for safe clean drinking water and spending what it takes to make sure that every time you and I turn on a tap we can have confidence that it is safe. We did take imme-diate steps after Walkerton to improve water safety but Justice Dennis O'Connors in the two reports he has just released, provides a very clear road map to safety and we've pledged to follow it. We've also increased the num-ber of inspectors who can go out and make sure that the tough new rules are being followed. Justice O'Connor said that his recommendations might cost up to about $280 million with ongoing costs of about $50 million. And yes-terday's budget committed us to an investment over the next two years of half a billion dollars to start this process by investing to help municipalities upgrade their water systems to meet the tough new standards and to make improvements in their waste-water systems. We also have, as you know, legislation to make sure we are pro-tecting the sources of our water system such as the Oak Ridges Morrain. We want to take, and will continue to take, more steps to do that.

The fourth investment priority in this budget had to do with infrastructure because that is very important not only for the economy but for quality of life, whether it is highways, transit, water systems or community facilities. That's why we created SuperBuild in the first place. With our partners-our federal partner, municipal partners and private-sector partners-we will be investing at least $20 billion over the next five years. Actually it started a few years ago and will be done by the year 2004 to make sure that we can have that infrastructure in place. We are on target to meet that. And that includes the billion-dollar investment on highways and the 10-year $9-billion transit investment plan and those are important supports for our economic infrastructure.

Part of infrastructure is also helping our economy in research and innovation. That's why we have chosen to expand the Research and Development Challenge Fund and support its work of promoting research excellence and partnership between industry and Ontario's research

economy. We've expanded funding for the Ontario Innovation Trust to help our universities, community col-leges, hospitals and research institutions develop the infrastructure needed for good scientific research and technology development. We've renewed our commit-ment to the Ontario Centres of Excellence program. All of these things help the private sector, our academic com-munity and the scientific research community to do a better job at research.

We also recognize that our municipal partners are very much part of our economic growth and we have taken a number of steps to support them through a new munici-pal act and investments as I mentioned to help meet new standards for the new drinking water protection regula-tions. I look forward to continuing to work with our municipal partners as we move forward.

As we look ahead it is clear that Ontario will continue to be Canada's engine of prosperity and virtually all the economic indicators are improving. As a result, private-sector forecasters expect real economic growth to exceed 3 per cent this year and to be more than 4 per cent next year. As it did over the 1996-2000 period, Ontario's dynamic economy will once again register growth exceed-ing that of the G-7 nations over the next two years.

The challenges we successfully faced over the past year would have been much worse without the earlier growth in jobs and prosperity resulting from the steps that our government had taken, and without that stimulus to consumers and investors we provided through pru-dent management, balanced budgets, tax cuts, and support for innovation and excellence. I know that there are some who are arguing that there is little we can do to influence the global economic forces that buffet our province but I disagree.

The plan we laid out in 1995 has helped Ontario weather this challenging economic storm and all we have to do is compare it with the last recession of the early '90s. Ontario was the first into that economic hole. We went down the deepest and we were the last out with an $11-billion deficit. We were spending a million dollars more an hour back then than we were taking in adding that debt to our children's future.

Coming out of this downturn our citizens are benefiting from $11 billion in tax relief--ongoing tax relief that is in the economy improving their take-home pay. Our prudent fiscal management has kept the budget balanced and our resources are focused on the priorities of our peoples--health care, education and a clean safe environment.

I believe our government is putting in place the right fundamentals for growth and prosperity as we promised we would and I'm confident that the skills, the creativity, the courage and the hard work of Ontarians will do the rest.

Thank you very much for the opportunity to share that with you today.

The appreciation of the meeting was expressed by Ann Curran, President, Curran Corporate Advisors Inc. and President, The Empire Club of Canada.

Distinguished head table guests, ladies and gentlemen. Over the years it has become a tradition for Ontario finance ministers to make their first post-budget speech at a combined luncheon of the Canadian and Empire Clubs. Today is a wonderful turning point as it is the first time the minister's "new shoes" have heels!

Minister Ecker, thank you for taking the time to walk us through the budget and discuss various aspects of it.

As our economy and that of our largest trading partner recovers from a rough and uncertain year, you have managed to deliver Ontario's fourth consecutive balanced budget.

You have had to make some tough decisions but by focusing on the priorities of health care, education and a clean and safe environment, your government has listened to the people of Ontario and are striving to provide the services that are most important to them.

Minister Ecker, every year the Empire Club Foundation publishes a book of that year's speeches. We would like to present you with a copy of last year's book as a token of our appreciation, noting that your address will be in this year's edition.

Thankyou