This report presented an evaluation of Ontario’s future demographic, economic and fiscal environment. Each of the three chapters focussed on a specific aspect of this long-term assessment.

In Chapter 1: Demographic Trends and Projections, demographic trends observed in the province during the past 50 years were presented, along with anticipated changes in Ontario’s population to 2046.

Over the long term, Ontario’s population is projected to continue growing, driven by immigration. There will also be a further concentration of population growth in the largest urban areas of the province, particularly the Greater Toronto Area (GTA).

Population aging is projected to continue as fertility rates remain low, life expectancy continues to increase, and more baby boomers become seniors. Both the number and the proportion of seniors in Ontario’s population are projected to rise significantly. As the largest cohorts of baby boomers turn age 65 during the 2020s, a period of slower growth in the core-age population is also projected. In addition to presenting key implications of the demographic outlook, alternative scenarios as well as a discussion of the potential impact of COVID‑19 on Ontario’s population growth were also discussed.

Chapter 2: Economic Trends and Projections presented analysis about how Ontario’s future growth in potential real GDP will be slower than the pace observed over the past 25 years.

Ontario’s future economic performance will be driven by the demographic outlook and labour force participation trends. Over the long term, a gradual decline in the labour force participation rate combined with moderating growth in the core working-age population will result in slower labour force growth. Labour productivity, a key determinant of potential economic growth over the long term, is expected to continue growing at its historical average.

The evolving global economic environment will also impact future economic growth in the province through trade and other important external factors such as the Canada/U.S. dollar exchange rate, the price of oil and interest rates. It is assumed that over the long term, after the global economy recovers from the impacts of COVID‑19, the external environment evolves in a manner consistent with the trends leading up to the outbreak.

Chapter 3: Implications of Demographic and Economic Trends for the Public Sector and Fiscal Policy described the past progression of demand for government services and highlighted the potential impact of demographic and economic trends on the public sector and on Ontario’s fiscal policy.

Spending by all levels of government in Ontario has been growing at a faster pace than the province’s population due to factors such as the rising demand for public services and the aging population. Ontario has typically been in a fiscal deficit situation since 1981. This has resulted in a rising provincial net debt-to-GDP, which now stands as one of the highest among the Canadian provinces. Despite the increase in the province’s debt burden, reflected by the increase in net debt-to-GDP, provincial debt service costs as a proportion of revenues have remained relatively low as a result of historically low interest rates over the last decade.

In the future, demand for public services will be influenced by underlying demographic growth; demands related to an older population; continuation of past trends to enhance programs; and inflation. However, slower projected economic growth is expected to result in a slower pace of increase in government revenues. These projected trends imply the need for continued government measures in order to support fiscal sustainability.

The long-term perspectives presented in each of the three chapters of this report provided important context for planning towards the opportunities and challenges likely to face the province in the coming decades.

These challenges are being exacerbated by the current COVID‑19 pandemic, resulting in increased demand for government action to support health care, people and jobs. This will contribute to a higher government debt burden resulting in increased debt servicing costs that could consume a higher share of the province’s revenues.