Conclusion

This report presents an evaluation of Ontario’s future demographic, economic and fiscal environment. Each of the five chapters focuses 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 are presented, along with projected changes in Ontario’s population to 2046, which are in many ways different from those anticipated in most other economically developed jurisdictions around the world.

Over the long term, Ontario’s population is projected to continue growing rapidly, driven by immigrants and non-permanent residents. There will also be a further concentration of population growth in the metropolitan areas of the province, particularly the Greater Toronto Area.

The proportion of seniors in Ontario’s population is projected to continue increasing, but at a slower pace than in the recent past. However, significant aging will take place within the 65+ age group over the coming decades.

The wide-ranging implications of these demographic trends for Ontario’s economy and for the provision of public services were also discussed, along with alternative scenarios.

Chapter 2: Economic Trends and Projections presents a long-range outlook of Ontario’s economy. The economic projection is based on the demographic outlook and the evolving global economic environment, which will impact future economic growth in the province through trade and other important external factors.

Ontario’s economy is projected to grow at a slower pace over the long term when compared to its historical trend. This deceleration reflects an anticipated slowdown in labour force growth driven in part by an aging population. Immigration will continue to support increases in Ontario’s working-age population over the outlook and help offset some of this slowdown. Productivity growth is projected to be slightly slower over the outlook, a challenge which can be met by further enhancing the productive capacity of the labour force through innovation, skills training and increases in investment.

Past trends in Ontario government spending and revenue are presented in Chapter 3: Fiscal Trends and Projections, along with the potential impacts of demographic and economic trends on the public sector and Ontario’s fiscal policy.

Over the past four decades in Ontario, government spending on goods and services by all levels of government has grown faster than total population due to rising demand for public services and increasing service delivery costs. Over this timeframe, the province’s finances were in a fiscal deficit situation in most years, resulting in a rising net debt-to-GDP ratio. Since the 2008-09 recession, relative debt service costs in Ontario have been moderated by historically low interest rates. Consequently, despite rising net debt as a share of GDP, the ratio of interest on debt to total revenues has continued to trend downward.

Over the long term, demand for public services will be driven by underlying demographic demand reflecting population growth and aging, enhancements to programs, and cost inflation. Demand for public services is projected to rise at a faster pace than overall economic growth, mainly due to population aging driving the demand for health care, and price pressures on government services. At the same time, slower projected economic growth is expected to result in slower growth in government revenues. A long-term prudent approach to fiscal management will ensure that governments have the resources available to provide effective public services that residents can rely on both now and in the future.

Chapter 4: Delivering Infrastructure for the Long Term explains the importance of infrastructure to grow and sustain the province’s long-term growth, the role the government plays to drive future infrastructure investments, as well the challenges and opportunities that Ontario face to meet its infrastructure needs in the coming decades.

The province continually faces pressures to renew and extend the useful life of its infrastructure, as public assets such as buildings, roads, and bridges physically deteriorate or require modernization. Ontario’s public infrastructure also needs to expand significantly to meet the needs of Ontario’s growing population and ensure its public assets can effectively support the growing economy. Factors impacting the government’s delivery of infrastructure for long-term growth include considerations related to effective infrastructure planning and delivery, enhancing construction sector productivity, embracing technological change, addressing climate change, and opportunities through funding and financing infrastructure investments.

The government is continuing to explore strategies that optimize and deliver infrastructure investment. This ensures that Ontario is well-positioned to continue supporting communities, people and businesses and creating a strong foundation for Ontario’s long-term economic growth. Chapter 5: Harnessing Sector Strengths to Support Growth highlights how key sectors in Ontario’s economy are well positioned to contribute to long-term economic growth and help improve Ontario’s productivity performance. Insights on the strengths and opportunities as well as growth challenges and risks for specific industrial sectors, including manufacturing and industries along the automotive and EV supply chain, life sciences, ICT, financial services and agri-food were also detailed.

The high degree of diversity in Ontario’s economy creates opportunities for businesses within and across sectors to develop collaborative relationships that will help grow the industries of the future. The adoption of innovation and technology will also help sectors accelerate the development and commercialization of ideas to enhance long-term productivity and economic growth.

Ontario’s clean electricity grid will continue to be a competitive advantage in attracting investments to the province and supporting the continued growth of the province’s sectors.

The long-term perspectives presented in each of the five chapters of this report provide important context on Ontario’s future demographic, economic and fiscal situation, which will inform planning towards the opportunities and challenges likely to face the province in the coming decades.

Aerial view of Ontario landscape.