Independent auditor’s report

To the Legislative Assembly of the Province of Ontario

I have audited the accompanying consolidated financial statements of the Province of Ontario, which comprise the consolidated statement of financial position as at March 31, 2017, and the consolidated statements of operations, change in net debt, change in accumulated deficit and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

The Government of Ontario (Government) is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as the Government determines is necessary to enable the preparation of consolidated financial

Auditor’s responsibility

My responsibility is to express an opinion on these consolidated financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Government, as well as evaluating the overall presentation of the consolidated financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualified audit opinion.

Basis for qualified opinion

Net pension asset overstated, annual deficit understated, net debt understated and accumulated deficit understated

As described in Note 16a to these consolidated financial statements, a net pension asset is recorded on the Consolidated Statement of Financial Position relating to the Ontario Teachers’ Pension Plan and the Ontario Public Service Employees’ Union Pension Plan. However, the Government does not have the unilateral legal right to use this asset because its ability to reduce future minimum contributions or withdraw any pension plan surplus is subject to agreement with the respective pension plans’ joint sponsors. Canadian public sector accounting standards require the Government to record a valuation allowance against this asset.

The Government did not record a valuation allowance for this net pension asset at March 31, 2017. The Government also retroactively restated the March 31, 2016 comparative figures to exclude the valuation allowance previously included in the prior year’s consolidated financial statements. This departure from Canadian public sector accounting standards has led me to express a qualified opinion on the consolidated financial statements for the year ended March 31, 2017 and on the March 31, 2016 comparative figures.

The recommendations of the Government’s appointed Pension Asset Advisory Panel are not an authoritative source on the application of Canadian public sector accounting standards as implied in Note 16a to these consolidated financial statements.

Effect on consolidated statement of operations

If the Government had correctly recorded the valuation allowance against the net pension asset for the Ontario Teachers’ Pension Plan and the Ontario Public Service Employees’ Union Pension Plan, the effect on the consolidated statement of operations for the years ended March 31, 2017 and 2016 would have been as follows:

Item

2017
($ million)

2016
($ million)

Annual deficit as presented

(991)

(3,515)

Effect of valuation allowance on:

  • Education expense

  • General Government and other expense

(1,364)
(80)

(1,480)
(351)

Annual deficit in accordance with Canadian public sector accounting standards

(2,435)

(5,346)

Effect on consolidated statement of financial position

If the Government had correctly recorded the valuation allowance against the net pension asset for the Ontario Teachers’ Pension Plan and the Ontario Public Service Employees’ Union Pension Plan, the effect on the consolidated statement of financial position as at March 31, 2017 and 2016 would have been as follows:

Item

2017
($ million)

2016
($ million)

Net pension asset as presented

11,033

9,312

Effect of valuation allowance

(12,429)

(10,985)

Net pension liability in accordance with Canadian public sector accounting standards

(1,396)

(1,673)

Item

2017
($ million)

2016
($ million)

Net debt as presented

(301,648)

(295,372)

Effect of valuation allowance

(12,429)

(10,985)

Net debt in accordance with Canadian public sector accounting standards

(314,077)

(306,357)

 

2017
($ million)

2016
($ million)

Accumulated deficit as presented

(193,510)

(192,029)

Effect of valuation allowance

(12,429)

(10,985)

Accumulated deficit in accordance with Canadian public sector accounting standards

(205,939)

(203,014)

Inappropriate consolidation of Independent Electricity System Operator (IESO) market accounts

As described in Note 16c to these consolidated financial statements, the IESO changed its accounting policy and applied it retroactively to recognize market account assets and liabilities. The market accounts track mainly buy and sell transactions between market participants (electricity power generators and power distributors). These market accounts, as recorded on the Province of Ontario’s consolidated financial statements are not assets and liabilities of the Province of Ontario. The Government has no access or discretion to use the market account assets for their own benefit, nor does the Government have an obligation to settle the market account liabilities in the event of default by market participants. As a result, Other Assets and Other Liabilities are both overstated by $1.652 billion (2016 – $1.443 billion). There is no effect on the Consolidated Statement of Operations.

Qualified opinion

In my opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraphs, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Province of Ontario as at March 31, 2017, and the consolidated results of its operations, change in its net debt, change in its accumulated deficit and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Other matters

Use of Rate-regulated Accounting May Cause a Material Misstatement on the Consolidated Financial Statements of the Province of Ontario

I draw attention to Note 16c to these consolidated financial statements, which describes the Independent Electricity System Operator’s retroactive adoption of rate-regulated accounting during the year. The recognition of rate regulated assets on the consolidated financial statements of the Province of Ontario is not permitted when applying Canadian public sector accounting standards. This departure does not have a material impact on the Province of Ontario’s consolidated financial statements for the year ended March 31, 2017 and my opinion is not modified in respect of this matter. However, the consolidated financial statements may become materially misstated in future periods, as a result of the legislated accounting prescribed under the Ontario Fair Hydro Plan Act, 2017 (Fair Hydro Plan) and its related regulations as it is not in accordance with Canadian public sector accounting standards.

Financial statement discussion and analysis

I draw attention to the Province of Ontario’s Financial Statement Discussion and Analysis that discusses the Province of Ontario’s financial results without properly reflecting the valuation allowance required in respect of the net pension asset and the recognition of market accounts, as discussed in the Basis for Qualified Opinion paragraphs above.

Toronto, Ontario   Bonnie Lysyk, MBA, CPA, CA, LPA
August 18, 2017   Auditor General

Province of Ontario Consolidated Statement of operations

($ Millions)

2016–17
Budgetfootnote 1
(see note 16)

2016–17
Actual

2015–16
Restatedfootnote 2
(see note 16)

Revenue (schedules 1 and 2)

Personal Income Tax

32,167

30,671

31,141

Sales Tax

23,976

24,750

23,455

Corporations Tax

12,050

14,872

11,428

Employer Health Tax

6,007

5,908

5,649

Education Property Tax

5,834

5,868

5,839

Ontario Health Premium

3,604

3,575

3,453

Gasoline and Fuel Taxes

3,312

3,368

3,210

Other taxes (note 11)

4,869

5,334

7,643

Total taxation

91,819

94,346

91,818

Transfers from Government of Canada

25,138

24,544

23,141

Fees, donations and other revenues from hospitals, school boards
and colleges (schedule 10)

7,404

7,957

7,493

Income from investment in Government business enterprises
(schedule 9 and note 11)

5,027

5,567

4,909

Other

9,094

8,320

8,787

 

138,482

140,734

136,148

Expense (schedules 3 and 4)

 

 

 

Health

55,786

56,025

55,001

Educationfootnote 3

26,093

26,204

26,077

Children’s and social services

15,816

16,006

15,537

Environment, resources and economic development

12,102

12,714

12,516

Interest on debt

12,412

11,709

11,589

Postsecondary and training

10,198

10,131

9,902

Justice

4,516

4,618

4,548

General Government and other

4,865

4,318

4,493

 

141,788

141,725

139,663

Reserve

1,000

Annual deficit

(4,306)

(991)

(3,515)

See accompanying notes and schedules to the Consolidated Financial Statements.

Province of Ontario Consolidated Statement of financial position

As at March 31
($ Millions)

2017

2016
(Restated –
see note 16)

Liabilities

   

Accounts payable and accrued liabilities (schedule 5)

20,248

19,361

Debt (note 2)

333,102

327,413

Other long-term financing (note 4)

13,697

14,145

Deferred revenue and capital contributions (note 5)

11,538

10,779

Other employee future benefits (note 6)

10,478

10,751

Other liabilities (note 7)

6,367

6,348

 

395,430

388,797

Financial assets

 

 

Cash and cash equivalents

16,401

13,600

Investments (note 8)

17,983

21,765

Accounts receivable (schedule 6)

11,192

11,059

Loans receivable (schedule 7)

11,868

11,545

Net pension asset (note 6)

11,033

9,312

Other assets

3,036

2,572

Investment in Government business enterprises (schedule 9)

22,269

23,572

 

93,782

93,425

Net debt

(301,648)

(295,372)

Non-financial assets

 

 

Tangible capital assets (note 9)

107,288

102,536

Prepaid expenses and other non-financial assets

850

807

 

108,138

103,343

Accumulated deficit

(193,510)

(192,029)

Contingent liabilities (note 13) and contractual Obligations (note 14).
See accompanying notes and schedules to the Consolidated Financial Statements.

Province of Ontario Consolidated Statement of change in net debt

For the year ended March 31
($ Millions)

2016–17
Budget

2016–17
Actual

2015–16
(Restated — see note 16)

Annual deficit

(4,306)

(991)

(3,515)

Acquisition of tangible capital assets (note 9)

(13,037)

(10,045)

(10,922)

Amortization of tangible capital assets (note 9)

5,137

5,215

4,913

Proceeds on sale of tangible capital assets

151

175

(Gain)/loss on sale of tangible capital assets

(73)

363

(Increase)/decrease in prepaid expenses and other non-financial assets

(43)

20

 

(7,900)

(4,795)

(5,451)

Decrease in accumulated other comprehensive loss (schedule 9)

114

Increase/(decrease) in fair value of Ontario Nuclear Funds (note 10)

1,094

(1,003)

Increase in net debt

(12,206)

(4,578)

(9,969)

Net debt at beginning of year

(296,109)

(295,372)

(293,730)

Reversal of pension asset valuation allowances (note 16)

9,154

IFRS transitional impact for Ontario Power Generation and Hydro One (note 16)

(683)

Pension adjustment (note 16)

(617)

Accumulated other comprehensive loss (note 16)

(480)

Other (note 16)

82

(827)

Restated net debt at beginning of year

(296,109)

(297,070)

(285,403)

Net debt at end of year

(308,315)

(301,648)

(295,372)

See accompanying notes and schedules to the Consolidated Financial Statements.

Province of Ontario Consolidated Statement of change in accumulated deficit

For the year ended March 31
($ Millions)

Amount

Accumulated deficit, March 31, 2015 as presented in the prior year

(196,665)

Reversal of pension asset valuation allowances (note 16)

9,154

Restated accumulated deficit, March 31, 2015

(187,511)

Annual deficit, restated

(3,515)

Decrease in fair value of Ontario Nuclear Funds (note 10)

(1,003)

Restated accumulated deficit, March 31, 2016

(192,029)

IFRS transitional impact for Ontario Power Generation and Hydro One (note 16)

(683)

Pension adjustment (note 16)

(617)

Accumulated other comprehensive loss (note 16)

(480)

Other (note 16)

82

Restated accumulated deficit, April 1, 2016

(193,727)

Annual deficit

(991)

Increase in fair value of Ontario Nuclear Funds (note 10)

1,094

Decrease in accumulated other comprehensive loss from GBEs (schedule 9)

114

Accumulated deficit, March 31, 2017

(193,510)

See accompanying notes and schedules to the Consolidated Financial Statements.

Province of Ontario Consolidated Statement of cash flow

For the year ended March 31
($ Millions)

2017

2016 (Restated
— see note 16)

Operating transactions

Annual deficit

(991)

(3,515)

Non-cash items:

   

Amortization of tangible capital assets (note 9)

5,215

4,913

(Gain)/loss on sale of tangible capital assets

(73)

363

Gain on sale of Brampton Distribution Holdco Inc. (note 12)

(109)

Gain on sale of shares of Hydro One Limited (note 11)

(538)

(783)

Income from investment in Government business enterprises (schedule 9)

(5,567)

(4,909)

Cash items:

   

(Increase) in accounts receivable (schedule 6)

(133)

(753)

Increase in loans receivable (schedule 7)

(323)

(420)

Increase/(decrease) in accounts payable and accrued liabilities (schedule 5)

887

(694)

Decrease in liability for other employee future benefits (note 6)

(273)

(79)

Increase in net pension assets (note 6)

(2,338)

(1,633)

Increase in other liabilities (note 7)

19

1,470

Increase in deferred revenue and capital contributions (note 5)

759

669

Remittances from investment in Government business enterprises (schedule 9)

5,105

5,365

(Increase)/decrease in prepaid expenses and other non-financial assets

(43)

20

Increase in other assets

(329)

(1,378)

Cash provided by/(applied to) operating transactions

1,268

(1,364)

Capital transactions

   

Acquisition of tangible capital assets (note 9)

(10,045)

(10,922)

Proceeds from sale of tangible capital assets

151

175

Cash applied to capital transactions

(9,894)

(10,747)

Investing transactions

   

Decrease/(increase) in investments (note 8)

3,782

(1,399)

Net proceeds from sale of Brampton Distribution Holdco Inc. (note 12)

545

Capital contribution to Hydro One Limited (schedule 9)

(2,600)

Net proceeds from sale of shares of Hydro One Limited (note 11)

1,859

1,854

Cash provided by/(applied to) investing transactions

6,186

(2,145)

Financing transactions

   

Long-term debt issued

26,591

34,362

Long-term debt retired

(21,484)

(21,882)

Net change in short-term Debt

582

(27)

(Decrease)/increase in other long-term financing (note 4)

(448)

210

Cash provided by financing transactions

5,241

12,663

Net increase/(decrease) in cash and cash equivalents

2,801

(1,593)

Cash and cash equivalents at beginning of year

13,600

15,193

Cash and cash equivalents at end of year

16,401

13,600

See accompanying notes and schedules to the Consolidated Financial Statements.

Notes to the Consolidated Financial Statements

1. Summary of significant accounting policies

a) Basis of accounting

The Consolidated Financial Statements are prepared by the Government of Ontario in accordance with the accounting standards for governments recommended by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada (CPA Canada).

b) Reporting entity

These financial statements report the activities of the Consolidated Revenue Fund combined with those organizations that are controlled by the Province.

Government business enterprises (GBEs), broader public sector (BPS) organizations (i.e., hospitals, school boards and colleges) and other government organizations controlled by the Province are included in these financial statements. Controlled organizations are consolidated if they meet one of the following criteria: i) their revenues, expenses, assets or liabilities are greater than $50 million; or ii) their outside sources of revenue, deficit or surplus are greater than $10 million. In accordance with PSAB, the Province also applies the “benefit versus cost constraint” in determining which organizations should be consolidated in the Province’s financial statements. A listing of consolidated government organizations is provided in Schedule 8. For those organizations that do not meet the PSAB benefit versus cost constraint standard, such as Children’s Aid Societies and Community Care Access Centres, government transfer payments to these organizations are included as expenses in these financial statements through the accounts of the ministries responsible for them.

Trusts administered by the Province on behalf of other parties are excluded from the reporting entity, but are disclosed in Note 15.

c) Principles of consolidation

Government business enterprises are defined as those government organizations that i) are separate legal entities with the power to contract in their own name and that can sue and be sued; ii) have the financial and operating authority to carry on a business; iii) have as their principal activity and source of revenue the selling of goods and services to individuals and non-government organizations; and iv) are able to maintain their operations and meet their obligations from revenues generated outside the government reporting entity. The activities of GBEs are recorded in the financial statements using the modified equity method, applying the basis of reporting as stipulated by Public Sector Accounting Standards for GBEs. Their combined net assets are included in the financial statements as Investment in Government Business Enterprises on the Consolidated Statement of Financial Position, and their net income is shown as a separate item, Income from Investment in Government Business Enterprises (GBEs), on the Consolidated Statement of Operations. Less than wholly owned GBEs (e.g., Hydro One Limited) are reflected using the modified equity method based on the percentage of ownership government held during the fiscal year.

The Province is accounting for the results for Hydro One Limited and Ontario Power Generation based on their results prepared using International Financial Reporting Standards (IFRS) basis (including IFRS14). See Note 16 for further details regarding change in accounting policy.

The assets, liabilities, revenues and expenses of the consolidated BPS organizations (hospitals, school boards and colleges) are consolidated with those of the Province on a line-by-line basis on the Consolidated Financial Statements. Total expenses (excluding net interest expense on BPS debt) of hospitals are included in Health expenses, school boards in Education expenses and colleges in Postsecondary and Training expenses on the Consolidated Statement of Operations. Third-party revenues of BPS organizations received directly from the Government of Canada and the public, such as tuition fees, patient fees, research grants and other recoveries, are included in the consolidated revenues of the Province. The reported net debt for the Province therefore includes net debt of hospitals, school boards and colleges. Where appropriate, adjustments are made to present the accounts of these organizations on a basis consistent with the accounting policies of the Province. See Note 16 for further details regarding the change in presentation of third-party revenues and interest on debt.

Other government organizations controlled by the Province are consolidated on a line-by-line basis with the assets, liabilities, revenues and expenses of the Province based on the percentage of ownership the government held during the fiscal year. Where appropriate, adjustments are also made to present the accounts of these organizations on a basis consistent with the accounting policies of the Province, and to eliminate significant inter-organizational accounts and transactions.

d) Measurement uncertainty

The preparation of financial statements requires the Province to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses during the reporting period. Uncertainty in the determination of the amounts at which an item is recognized or disclosed in the financial statements is known as measurement uncertainty.

Measurement uncertainty that is material to these financial statements exists in the valuation of pensions and other employee future benefits obligations; the value of tangible capital assets; the estimation of personal income tax, corporations tax and Harmonized Sales Tax revenue accruals; the valuation of the Canada Health Transfer; Canada Social Transfer Equalization Payment entitlements; and the estimation of liabilities for contaminated sites and other liabilities.

Net pension assets of $11.0 billion (2015–16, $9.3 billion) and other employee future benefits liability of $10.5 billion (2015–16, $10.8 billion), see Note 6, are subject to measurement uncertainty because actual results may differ significantly from the Province’s best long-term estimate of expected results (for example, the difference between actual results and actuarial assumptions regarding return on investment of pension fund assets and health care cost trend rates for retiree benefits may be significant).

The net book value of tangible capital assets of $107.3 billion (2015–16, $102.5 billion), see Note 9, is subject to uncertainty because of differences between estimated useful lives of the assets and their actual useful lives.

Personal income tax revenue estimate of $30.7 billion (2015–16, $31.1 billion), may be subject to subsequent revisions based on information available in the future related to past year tax return processing. Corporations tax revenues of $14.9 billion (2015–16, $11.4 billion), and Harmonized Sales Tax revenues of $24.8 billion (2015–16, $23.5 billion) are also subject to uncertainty for similar reasons.

The estimation of the Canada Health Transfer of $13.9 billion (2015–16, $13.1 billion) and Canada Social Transfer of $5.1 billion (2015–16, $5.0 billion), and Equalization Payments entitlements of $2.3 billion (2015–16, $2.4 billion), see Schedule 1, are subject to uncertainty because of variances between the estimated and actual Ontario share of the Canada-wide personal income and corporations tax base and population.

There is measurement uncertainty surrounding the estimation of liabilities for contaminated sites of $1.8 billion as at March 31, 2017 (2015–16, $1.8 billion), see Note 7. The Province may be responsible for cleanup costs that cannot be reasonably estimated due to several factors, including: insufficient information related to the nature and extent of contamination, timing of costs well into the future (e.g., unknown impacts of future technological advancements), the challenges of remote locations and unique contaminations.

The Province’s investment in Ontario Power Generation (OPG) includes asset retirement obligations for fixed asset removal and nuclear waste management, discounted for the time value of money. These obligations are estimated based on the expected amount and timing of future cash expenditures based on plans for fixed asset removal and nuclear waste management. Such estimates are subject to uncertainty in the nature and extent of cost estimates, the timing of costs being incurred, changes in the discount rate applied to the cash flow estimates, and other unanticipated changes in fixed asset removal and nuclear waste management techniques.

Estimates are based on the best information available at the time of preparation of the financial statements and are reviewed annually to reflect new information as it becomes available. By their very nature, estimates are subject to measurement uncertainty. Therefore, actual results may differ materially from the Province’s estimates.

e) Significant accounting policies

Revenue

Tax revenues are recognized in the period in which the taxable event occurs and when they are authorized by legislation, or the ability to assess and collect the tax has been provided through legislative convention. Reported tax revenues include estimated revenues for the current period, adjustments between the estimated revenues of previous years and actual amounts, and revenues from reassessments relating to prior years. Reported amounts do not include estimates of unreported taxes or the impact of future reassessments.

Personal income tax revenue for the period is accrued based on an estimate of current year tax assessments (plus late-arriving assessments/reassessments for prior years) prorated from the federal Department of Finance’s Tax Sharing Statements and an estimate for the following tax year based on the First Estimate of Payments.

The Harmonized Sales Tax component of sales tax revenue is collected by the Government of Canada under a Comprehensive Integrated Tax Coordination Agreement and is remitted to the Province net of credits. The remittances are based on the federal Department of Finance’s best estimates, which are subject to periodic updates. The Province recognizes Harmonized Sales Tax revenues based on these federal estimates.

Accrued corporate income tax revenue for the period is based on estimated corporate taxpayers’ taxable income for the year. The estimate is based on an Ontario Ministry of Finance economic model projection, which leverages the historical relationship between aggregate taxable income and corporate profits.

PSAB 3510 distinguishes between tax concessions (relief of taxes paid), which are accounted for as revenue offsets, and transfers made through the tax system (financial benefits independent of taxes paid), which are reported as expenses.

Refundable personal and corporate income tax credits constitute transfers made through the tax system that are reclassified as expenses to conform to the PSAB standard. To ensure that the reclassification is fiscally neutral, a corresponding increase is made to personal income tax revenue and corporations tax revenue. Non-refundable personal and corporate income tax credits constitute tax concessions (relief of taxes paid), which are accounted for as revenue offsets by crediting the related tax revenue.

Transfers from the Government of Canada are recognized as revenues in the period during which the transfer is authorized by the federal government and all eligibility criteria are met, except if the stipulations related to federal government funding creates an obligation that meets the definition of a liability. Once a liability is recognized, the transfer is recorded in revenue as the obligations related to these stipulations are met.

Other revenues are recognized in the fiscal year that the events giving rise to the revenues occur and they are earned. Amounts received prior to the end of the year that will be earned in a subsequent fiscal year are deferred and reported as liabilities (see “Liabilities”).

Expense

Expenses are recognized in the fiscal year that the events giving rise to the expenses occur and resources are consumed.

Transfer payments are recognized in the year that the transfer is authorized and all eligibility criteria have been met by the recipient. Any transfers paid in advance are deemed to have met all eligibility criteria.

Interest on debt includes: i) interest on outstanding debt (including BPS debt) net of interest income on investments and loans; ii) amortization of foreign exchange gains or losses; iii) amortization of debt discounts, premiums and commissions; iv) amortization of deferred hedging gains and losses; and v) debt servicing costs and other costs.

Employee future benefits, such as pensions, other retirement benefits and entitlements upon termination, are recognized as expenses over the years in which the benefits are earned by employees. These expenses are the government’s share of the current year’s cost of benefits earned in the period, interest on the net benefits’ liability or asset, amortization of actuarial gains or losses, gain/loss on plan amendments and other adjustments. A valuation allowance is recorded to write down the Province’s share of net pension assets when the government assesses it is not entitled to fully benefit from the net pension asset.

Other employee future benefits are recognized in the period in which the event that obligates the government occurs or in the period in which the benefits are earned by employees.

The costs of buildings, transportation infrastructure, vehicles, aircraft, leased capital assets, machinery, equipment and information technology infrastructure and systems owned by the Province and its consolidated organizations are amortized and recognized as expenses over their estimated useful lives on a straight-line basis.

Liabilities

Liabilities are recorded to the extent that they represent present obligations of the government to outside parties as a result of events and transactions occurring prior to the end of the fiscal year. The settlement of liabilities will result in the sacrifice of economic benefits in the future.

Liabilities include obligations to make transfer payments to organizations and individuals, present obligations for environmental costs, probable losses on loan guarantees issued by the government and contingencies when it is likely that a loss will be realized and the amount can be reasonably determined.

Liabilities also include obligations to GBEs.

Deferred revenue represents unspent externally restricted receipts from the Federal Government or other third parties. Deferred revenues are recorded into revenue in the period in which the amounts received are used for the purposes specified or all external restrictions are satisfied. Deferred capital contributions represent the unamortized amount of contributions received from the federal government and other third parties to construct or acquire tangible capital assets. These contributions are recognized as deferred capital contributions and recorded into revenue over the useful life of the tangible capital assets based on the relevant stipulations of the contributions taken together with the actions and communications of the Province.

Alternative Financing and Procurement (AFP) refers to the Province using private-sector partners to procure and finance infrastructure assets. Assets procured via AFP are recognized as tangible capital assets and the related obligations are recognized as other long-term financing liabilities in these financial statements as the assets are constructed.

Debt

Debt consists of treasury bills, commercial paper, medium- and long-term notes, savings bonds, debentures and loans.

Debt denominated in foreign currencies that has been hedged is recorded at the Canadian dollar equivalent using the rates of exchange established by the terms of the hedge agreements. Other foreign currency-denominated debt is translated to Canadian dollars at year-end rates of exchange and any exchange gains or losses are amortized over the remaining term to maturity.

Derivatives are financial contracts, the value of which is derived from underlying instruments. The Province uses derivatives for the purpose of managing risk associated with interest cost. The Province does not use derivatives for speculative purposes. Gains or losses arising from derivative transactions are deferred and amortized over the remaining life of the related debt issue.

Pensions and other employee future benefits

The liabilities (net assets) for pensions and other employee future benefits are calculated on an actuarial basis using the government’s best estimates of future inflation rates, investment returns, employee salary levels and other underlying assumptions, and, where applicable, the government’s borrowing rate. When actual plan experience of pensions, other retirement benefits and termination pay differs from that expected, or when assumptions are revised, actuarial gains and losses arise. These gains and losses are amortized over the expected average remaining service life of plan members for each respective plan.

Liabilities (net assets) for selected employee future benefits (such as pensions, other retirement benefits and termination pay) represent the government’s share of the actuarial present values of benefits attributed to services rendered by employees and former employees, less its share of the market-related value of plan assets. The market-related values are determined in a rational and systematic manner so as to recognize market value asset gains and losses over a period of up to five years. In addition, the liability includes the Province’s share of the unamortized balance of actuarial gains or losses.

Assets

Assets are resources controlled by the government from which it has reasonable expectation of deriving future benefit. Assets are recognized in the year the transaction or event gives rise to the government’s control of the benefit.

Financial assets

Financial assets are resources that can be used to discharge existing liabilities or finance future operations. They include cash and cash equivalents, investments, accounts receivable, loans receivable, net pension assets, advances and investments in GBEs.

Cash and cash equivalents include cash or other short-term, liquid, low-risk instruments that are readily convertible to cash, typically within three months or less.

Investments include temporary investments and portfolio investments. Temporary investments are recorded at the lower of cost or market value. Portfolio investments are recorded at the lower of cost or their estimated net realizable value.

Accounts receivables are recorded at cost. A valuation allowance is recorded when collection of the receivable is considered doubtful.

Loans receivable are initially recorded at cost. A valuation allowance is recorded when collection of the loan receivable, or any part thereof, is considered doubtful.

Loans receivable include loans to GBEs and loans under the student loans program and advanced manufacturing investment program. Loans receivable with significant concessionary terms are considered in part to be grants and are recorded on the date of issuance at face value discounted by the amount of the grant portion. The grant portion is recognized as an expense at the date of issuance of the loan or when the concession is provided. The amount of the loan discount is amortized to revenue over the term of the loan.

Investment in GBEs represents the net assets of GBEs recorded on the modified equity basis as described under Principles of Consolidation.

Tangible capital assets and non-financial assets

Tangible capital assets are recorded at historical cost less accumulated amortization. Historical cost includes the costs directly related to the acquisition, design, construction, development, improvement or betterment of tangible capital assets. Cost includes overheads directly attributable to construction and development, as well as interest related to financing during construction. Tangible capital assets, except land, are amortized over the estimated useful lives of the assets on a straight-line basis.

Maintenance and repair costs are recognized as an expense when incurred. Betterments or improvements that significantly increase or prolong the service life or capacity of a tangible capital asset are capitalized.

Non-financial assets also include prepaid expenses and inventory of supplies.

2. Debt

The Province borrows in both domestic and international markets. Debt of $333.1 billion, as at March 31, 2017 (2015–16, $327.4 billion), is composed mainly of bonds and debentures issued in the short- and long-term domestic- and international-public capital markets and non-public debt held by certain federal and provincial public sector pension funds. Debt presented in this note comprises Debt Issued for Provincial Purposes of $312.7 billion (2015–16, $303.1 billion) and Ontario Electricity Financial Corporation (OEFC) Debt of $20.4 billion (2015–16, $24.4 billion). The following table presents the maturity schedule of the Province’s outstanding debt, by currency of repayment, expressed in Canadian dollars, and reflects the effects of related derivative contracts. See Note 4 for debt of BPS organizations that are controlled and consolidated on a line-by-line basis.

Debt
As at March 31
($ Millions)

2017

2016

Currency

Canadian
Dollar

U.S.
Dollar

Euro

Other currenciesfootnote 4

Total

Total

Maturing in:

 

 

 

 

 

 

2017

$42,752

2018

28,393

10,462

385

$39,240

17,795

2019

12,141

9,186

654

21,981

22,352

2020

16,058

6,149

4,764

532

27,503

24,401

2021

14,124

4,596

1,652

1,476

21,848

21,922

2022

14,452

5,971

20,423

1–5 years

85,168

36,364

6,801

2,662

130,995

129,222

6–10 years

70,997

3,742

5,009

900

80,648

82,338

11–15 years

15,947

15,947

14,598

16–20 years

17,911

17,911

17,732

21–25 years

37,192

80

37,272

27,879

26–50footnote 5 years

50,329

50,329

55,644

Totalfootnote 6footnote 7

277,544

40,106

11,890

3,562

$333,102

$327,413

Debt issued for Provincial
Purposesfootnote 8

257,826

39,737

11,711

3,406

312,680

303,055

OEFC debt

19,718

369

179

156

20,422

24,358

Total

277,544

40,106

11,890

3,562

$333,102

$327,413

Effective interest rates (weighted average)

2017

3.79%

1.84%

3.48%

3.15%

3.54%

2016

3.92%

1.98%

3.37%

3.49%

3.62%

Debt as at March 31
($ Millions)

2017

2016

Debt payable to/of:

   

Public investors

$321,442

$315,443

Canada Pension Plan Investment Board

10,233

10,233

Ontario Immigrant Investor Corporation

492

709

School Board Trust debt

652

674

Canada Mortgage and Housing Corporation

283

354

Total

$333,102

$327,413

Fair value of debt outstanding approximates the amounts at which debt instruments could be exchanged in a current transaction between willing parties. In valuing the Province’s debt, fair value is estimated using discounted cash flows and other valuation techniques and is compared to public market quotations where available. These estimates are affected by the assumptions made concerning discount rates and the amount and timing of future cash flows.

The estimated fair value of debt as at March 31, 2017, was $373.3 billion (2015–16, $375.6 billion). This is higher than the book value of $333.1 billion (2015–16, $327.4 billion) because current interest rates are generally lower than the interest rates at which some of the debt was issued. The fair value of debt does not reflect the effect of related derivative contracts.

School Board Trust debt

A School Board Trust was created in June 2003 to permanently refinance debt incurred by 55 school boards. The Trust issued 30-year sinking fund debentures amounting to $891 million, and provided $882 million of the proceeds to the 55 school boards in exchange for the irrevocable right to receive future transfer payments from the Province related to this debt. An annual transfer payment is made by the Ministry of Education to the Trust’s sinking fund under the School Board Operating Grant program to retire the debt over 30 years. This debt, recorded net of the sinking fund of $239 million (2015–16, $217 million), is reflected in the Province’s debt.

3. Risk management and derivative financial instruments

The Province employs various risk management strategies and operates within strict risk exposure limits to ensure that exposure to financial risk is managed in a prudent and cost-effective manner. A variety of strategies are used, including the use of derivative financial instruments (“derivatives”).

Derivatives are financial contracts, the value of which is derived from underlying instruments. The Province uses derivatives to hedge interest rate risk and currency risk.

Hedges are created primarily through swaps, which are legal contracts under which the Province agrees with another party to exchange cash flows based on one or more notional amounts using stipulated reference interest rates for a specified period. Swaps allow the Province to offset its existing obligations and thereby effectively convert them into obligations with more cost-effective characteristics. Other derivative instruments used by the Province include forward foreign exchange contracts, forward rate agreements, futures and options.

Foreign currency risk

Foreign exchange or currency risk is the risk that foreign currency debt principal and interest payments and foreign currency transactions will vary in Canadian dollar terms due to fluctuations in foreign exchange rates. To manage currency risk, the Province uses derivative contracts including forward foreign exchange contracts, futures, options and swaps to convert foreign currency cash flows into Canadian dollar cash flows. Most of the derivative contracts hedge the underlying debt by matching all the critical terms to achieve effectiveness. The term of forward foreign exchange contracts used for hedging is usually shorter than the term of the underlying debt, however hedge effectiveness is maintained by continuously rolling the forward foreign exchange contract over the remaining term of the underlying debt, or until replaced with a long-term derivative contract.

The current market risk policy allows the amount of unhedged foreign currency debt principal net of foreign currency holdings to reach a maximum of 5 per cent of Total Debt Issued for Provincial Purposes and OEFC. At March 31, 2017, the respective unhedged levels were 0.2 and nil per cent (2015–16, 0.3 and nil per cent). As of March 31, 2017, unhedged debt was limited to debt issued in Japanese yen and Swiss francs. A one-Japanese yen appreciation of the Japanese currency, relative to the Canadian dollar, would result in unhedged debt denominated in Japanese yen increasing by $2.9 million (2015–16, $5.0 million) and a corresponding increase in interest on debt of $1.0 million (2015–16, $1.3 million). A one-Swiss rappen appreciation of the Swiss currency, relative to the Canadian dollar, would result in unhedged debt denominated in Swiss francs increasing by $7.1 million (2015–16, $7.4 million) and a corresponding increase in interest on debt of $2.5 million (2015–16, $2.1 million). Total foreign exchange losses recognized in the Statement of Operations for 2016–17 were $23.2 million (2015–16, losses of $5.1 million).

Interest rate risk

Interest on debt expense may also vary as a result of changes in interest rates. In respect of Debt Issued for Provincial Purposes and OEFC debt, the risk is measured as interest rate resetting risk, which is the floating rate exposure plus fixed rate debt maturing within the next 12-month period net of liquid reserves as a percentage of Debt Issued for Provincial Purposes and OEFC debt, respectively.

The current market risk policy limits net interest rate resetting risk for Debt Issued for Provincial Purposes and OEFC debt to a maximum of 35 per cent. At March 31, 2017, the net interest rate resetting risk for Debt Issued for Provincial Purposes and OEFC debt was 11.2 per cent and -3.1 per cent, respectively (2015–16, 10.9 per cent and 7.6 per cent). Based on net floating rate exposure at March 31, 2017, plus planned refinancing of maturing fixed rate debt to March 31, 2018, a one per cent (100 basis point) increase in interest rates would result in an increase in interest on debt of approximately $300 million (2015–16, $350 million).

Liquidity risk

Liquidity risk is the risk that the Province will not be able to meet its current short-term financial obligations. To reduce liquidity risk, the Province maintains liquid reserves: that is, cash and temporary investments (note 8), adjusted for collateral (note 13), at levels that are expected to meet future cash requirements and give the Province flexibility in the timing of issuing debt. Pledged assets are considered encumbered for liquidity purposes while collateral held that can be sold or repledged is a source of liquidity. In addition, the Province has short-term note programs as alternative sources of liquidity.

Credit risk

The use of derivatives introduces credit risk, which is the risk of a counterparty defaulting on contractual derivative obligations in which the Province has an unrealized gain. The table below presents the credit risk associated with the derivative financial instrument portfolio, measured through the replacement value of derivative contracts, as at March 31, 2017.

Credit risk exposure
as at March 31
($ Millions)

2017

2016

Gross credit risk exposure

$7,248

$9,774

Less: netting

(4,981)

(7,252)

Net credit risk exposure

2,267

2,522

Less: collateral received (note 13)

(2,124)

(1,712)

Net credit risk exposure (net of collateral)

$143

$810

The Province manages its credit risk exposure from derivatives by, among other things, dealing only with high-credit-quality counterparties and regularly monitoring compliance to credit limits. In addition, the Province enters into contractual agreements (“master agreements”) that provide for termination netting and, if applicable, payment netting with most of its counterparties. Gross Credit Risk Exposure represents the loss that the Province would incur if every counterparty to which the Province had credit risk exposure were to default at the same time, and the contracted netting provisions were not exercised or could not be enforced. Net Credit Risk Exposure is the loss including the mitigating impact of these netting provisions. Net Credit Risk Exposure (Net of Collateral) is the potential loss to the Province further mitigated by the collateral received from counterparties.

Derivative portfolio notional value

The table below presents a maturity schedule of the Province’s derivatives, by type, outstanding as at March 31, 2017, based on the notional amounts of the contracts. Notional amounts represent the volume of outstanding derivative contracts and are not indicative of credit risk, market risk or actual cash flows.

Derivative portfolio notional value and fair value of derivatives
as at March 31
($ Millions)

Notional value

Fair value

Maturity in
fiscal year

2018

2019

2020

2021

2022

6–10 Years

Over 10 Years

2017
Total

2016
Total

2017
Total

2016
Total

Swaps:

Interest rate footnote 9

12,828

16,706

15,696

10,456

10,137

12,477

6,885

85,185

100,799

(2,334)

(2,589)

Cross currency

4,577

4,543

12,138

8,166

655

10,612

80

40,771

47,625

3,686

6,366

Forward foreign exchange contracts

30,644

30,644

31,027

107

(1,776)

Swaptionsfootnote 10

500

Total

$48,049

$21,249

$27,834

$18,622

$10,792

$23,089

$6,965

$156,600

$179,951

$1,459

$2,001

4. Other long-term financing

Other long-term financing comprises the total debt of the BPS organizations and obligations under AFP arrangements.

Other Long-Term Financing of $13.7 billion, as at March 31, 2017 (2015–16, $14.1 billion), includes BPS debt of $5.0 billion (2015–16, $5.0 billion), BPS AFP obligations of $5.6 billion (2015–16, $5.4 billion) and direct provincial AFP obligations of $3.1 billion (2015–16, $3.7 billion).

5. Deferred revenue and capital contributions

In 2010–11, the Province renewed its long-standing business partnership with Teranet Inc. by extending Teranet’s exclusive licences to provide electronic land registration and writs services in Ontario for an additional 50 years. The Province received approximately a $1.0 billion upfront payment for the transaction, which is amortized into revenue over the life of the contract.

The Province provides a two-year vehicle licence plate renewal option and multi-year driver licence renewals (two years for seniors and five years for all others). Amounts received under these multi-year renewals are recognized as revenue over the periods covered by the licences.

Deferred capital contributions represent the unamortized portion of tangible capital assets or liabilities to construct or acquire tangible capital assets from specific-purpose funding received from the Government of Canada, municipalities or third parties. Deferred capital contributions are recorded in revenue over the estimated useful life of the underlying tangible capital asset when the tangible capital asset is placed in service.

Deferred revenue and capital contributions
as at March 31
($ Millions)

2017

2016

Deferred revenue:

   

Teranet

$890

$923

Vehicle and driver licences

1,073

972

Other

2,321

1,973

Total deferred revenue

4,284

3,868

Deferred capital contributions

7,254

6,911

Total

$11,538

$10,779

6. Pensions and other employee future benefits

Pensions and other employee future benefits liability (asset)

As at March 31
($ Millions)

2017

2016

2017

2016

 Item

Pensions

Pensions (restated —
see note 16)

Other employee future benefits

Other employee future benefits

Obligation for benefits

$124,700

$118,448

$10,915

$10,999

Less: plan fund assets

(149,851)

(140,834)

(562)

(562)

(Excess)/deficiency of assets over obligations footnote 11footnote 12

(25,151)

(22,386)

10,353

10,437

Unamortized actuarial gains

14,104

13,074

125

314

Accrued liability (asset)

(11,047)

(9,312)

10,478

10,751

Valuation allowancefootnote 13

14

Total liability (net asset)

($11,033)

($9,312)

$10,478

$10,751

 

Pensions and other employee future benefits expense

For the year ended March 31
($ Millions)

2017

2017

2017

2016

 Item

Pensions

Other employee future benefits

Total

Total —
(see note 16)

Cost of benefits

$3,555

$784

$4,339

$4,220

Amortization of actuarial gains

(849)

(30)

(879)

(452)

Employee and other employers’ contributions

(325)

(325)

(318)

Cost (Gain) on plan amendment or curtailment

51

(3)

48

(43)

Recognition of unamortized experience gains

(51)

(51)

(77)

Interest (income) expense

(1,317)

207

(1,110)

(731)

Valuation allowancefootnote 14

14

14

Totalfootnote 15

$1,078

$958

$2,036

$2,599

 

Pensions

The Province sponsors several pension plans. It is the sole sponsor of the Public Service Pension Plan (PSPP) and a joint sponsor of the Ontario Public Service Employees Union Pension Plan (OPSEUPP) and the Ontario Teachers’ Pension Plan (OTPP). These three plans are contributory defined benefit plans that provide Ontario government employees and elementary and secondary school teachers and administrators with a guaranteed amount of retirement income. Benefits are based primarily on the best five-year average salary of members and their length of service, and are indexed to changes in the Consumer Price Index to provide protection against inflation. Plan members normally contribute 7 to 11 per cent of their salaries to these plans. The Province matches these contributions. The obligations for benefits and plan fund assets for OTPP and OPSEUPP exclude those employers not consolidated by the Province.

The Province changed its accounting for the net assets of jointly sponsored pension plans as described in Note 16.

The Province is also responsible for sponsoring the Public Service Supplementary Benefits Plan and the Ontario Teachers’ Retirement Compensation Arrangement. Expenses and liabilities of these plans are included in the Pensions Expense and Pensions Liability reported in the above tables.

In addition to the Provincially sponsored plans, pension benefits for employees in the hospital and colleges sectors are provided by the Healthcare of Ontario Pension Plan (HOOPP) and the Colleges of Applied Arts and Technology Pension Plan (CAATPP) respectively, and are included in these financial statements.

HOOPP is a multi-employer pension plan covering employees of Ontario’s health care community. CAATPP is a multi-employer pension plan covering employees of the Colleges of Applied Arts and Technology in Ontario, the Ontario College Application Services and the Ontario College Library Services. Both of these plans are accounted for as multi-employer defined benefit plans that provide eligible members with a retirement income based on a formula that takes into account a member’s earnings history and length of service in the plan. The plans are financed by contributions from participating members and employers, and by investment earnings.

The obligation for benefits and plan fund assets of the above plans is based on actuarial accounting valuations that are performed annually. Funding of these plans is based on statutory actuarial funding valuations undertaken at least once every three years.

The Province records a percentage of the net obligation of HOOPP and net asset of CAATPP, based on the ratio of employer to employee contributions and excludes those employers not consolidated by the Province.

The Province does not have control or joint control over the decisions regarding contribution levels or benefit changes for either the HOOPP or CAATPP multi-employer plans, as the Province is not a member of the committees responsible for these decisions. Therefore, a valuation allowance will be recorded to write down the net asset position in these plans, if any, until the net pension assets are used to reduce future contributions.

Item

OTPP

PSPP

OPSEU

HOOPP

CAATPP

Government’s best estimates as of December 31, 2016

Inflation rate

2.00%

2.00%

2.00%

2.00%

2.00%

Salary escalation rate

2.75%

2.75%

2.75%

4.00%

3.25%

Discount rate and expected rate of return on pension assets

6.00%

5.75%

5.90%

5.75%

5.75%

Actual return on pension assets

4.20%

8.10%

5.43%

10.35%

8.00%

Accounting actuarial valuation as of December 31, 2016

Market value of pension fund assetsfootnote 16 ($ millions)

85,245

24,381

9,024

33,294

4,691

Market-related value of assetsfootnote 16 ($ millions)

81,582

23,675

8,781

31,339

4,474

Employer contributionsfootnote 17 ($ millions)

1,643

406

237

962

210

Employee contributionsfootnote 18 ($ millions)

1,630

339

245

820

216

Benefit paymentsfootnote 16 (including transfers to other plans) ($ millions)

2,810

1,245

426

1,006

220

Number of active members (approximately)

182,000

42,000

44,000

206,000

28,000

Average age of active members

42.6

45.6

45.1

44.8

47.9

Expected remaining service life of the employees (years)

15.2

10.8

12.5

12.8

12.9

Number of pensioners including survivors (approximately)

136,000

38,000

36,000

95,000

15,000

Government’s best estimates as of December 31, 2015

Inflation rate

2.00%

2.00%

2.00%

2.00%

2.00%

Salary escalation rate

3.00%

3.00%

3.00%

4.25%

3.00%

Discount rate and expected rate of return on pension assets

6.25%

6.00%

6.25%

5.75%

6.00%

Actual return on pension assets

13.00%

6.14%

8.00%

5.12%

8.10%

Accounting actuarial valuation as of December 31, 2015

Market value of pension fund assets ($ millions)

83,229

23,075

8,717

30,498

4,301

Market-related value of assets ($ millions)

77,597

21,886

8,690

28,628

4,033

Employer contributionsfootnote 17 ($ millions)

1,600

400

232

930

202

Employee contributionsfootnote 18 ($ millions)

1,588

318

228

776

207

Benefit payments (including transfers to other plans) ($ millions)

2,719

1,176

425

918

205

Information on contributory defined benefit plans is as follows:

Other employee future benefits

Other Employee Future Benefits are non-pension retirement benefits, post-employment benefits, compensated absences and termination benefits.

Non-pension retirement benefits

The Province provides dental, basic life insurance, supplementary health and hospital benefits to eligible retired employees through a group insured benefit plan. Certain Public Service Pension Plan members, and OPSEU Pension Plan members who had not accrued the minimum eligibility requirement of ten years of pension service before January 1, 2017, are now required to have 20 years of pension service and retire to an immediate unreduced pension to be eligible to receive the post-retirement insured benefits. Further, such eligible members who commenced receipt of a pension on or after January 1, 2017, have the option to either participate in the current legacy post-retirement insured benefits plan and pay 50 per cent of the premium costs, or to participate in the new retiree-focused post-retirement benefits plan, at no cost to the member.

Optional enrolment in the retiree focused plan, at full cost to the retiree, is also available to employees hired before January 1, 2017, and who later retire to an immediate unreduced pension based on a minimum ten years of pension service, and employees hired on and after January 1, 2017, who later retire to an immediate unreduced pension based on a minimum 20 years of pension service.

The liability for non-pension retirement benefits of $8.1 billion as at March 31, 2017 (2015–16, $8.3 billion), is included in the Other Employee Future Benefits Liability. The expense for 2016–17 of $279 million (2015–16, $422 million) is included in the Other Employee Future Benefits Expense.

The discount rate used in the non-pension retirement benefits calculation for 2016–17 is 3.25 per cent (2015–16, 3.40 per cent). The discount rate used by BPS organizations in the non-pension retirement benefits calculation for 2016–17 ranges from 2.00 per cent to 6.00 per cent (2015–16, 2.35 per cent to 5.75 per cent).

Post-employment benefits, compensated absences and termination benefits

The Province provides, on a self-insured basis, workers’ compensation benefits, long-term disability benefits and regular benefits to employees who are on long-term disability.

For all other employees subject to terms set out in collective agreements, and in the Management Board of Cabinet Compensation Directive as applicable, the Province provides termination pay equal to one week’s salary for each year of service up to a maximum of 50 per cent of their annual salary. Employees who have completed one year of service but less than five years are also entitled to termination pay in the event of death, retirement or release from employment. All employees who resign are not eligible for any severance pay in respect to service after December 2011.

During the previous year, the Province eliminated termination pay entitlement upon retirement for Ontario Public Service Employee Union (OPSEU) employees hired on or after January 1, 2013. For OPSEU employees who retired after December 31, 2016, service accrued was capped at December 31, 2016, and any termination payments on retirement after January 1, 2016, will be paid based on salary in effect on December 31, 2016. A plan-curtailment gain of $128 million and recognition of net unamortized gains of $22 million was included in the fiscal year 2015–16 Other Employee Future Benefits.

The total post-employment benefits liability of $2.4 billion as at March 31, 2017

(2015–16, $2.5 billion), is included in the Other Employee Future Benefits Liability. The total post-employment benefits expense of $679 million in 2016–17 (2015–16, $434 million post-employment benefit expense) is included in the Other Employee Future Benefits Expense.

The discount rate used in the post-employment benefits, compensated absences and termination benefits calculations for 2016–17 is 2.55 per cent (2015–16, 2.70 per cent). The discount rate used by BPS organizations for the post-employment benefits in 2016–17 ranges from 2.00 per cent to 6.50 per cent (2015–16, 2.35 per cent to 6.75 per cent).

7. Other liabilities

Other liabilities
as at March 31
($ Millions)

2017

2016

Power purchase contracts

$178

$307

Liabilities for contaminated sites

1,812

1,751

Other funds and liabilities

4,377

4,290

Total

$6,367

$6,348

Power purchase contracts

Power purchase contracts and related loan agreements were entered into by the former Ontario Hydro with non-utility generators (NUGs) located in Ontario. The contracts provided for the purchase of power at prices that were expected to be in excess of the future market price. Accordingly, the Ontario Electricity Financial Corporation (OEFC), as the legal continuation of Ontario Hydro, recorded a liability of $4.3 billion on a discounted cash-flow basis when Ontario Hydro was continued as OEFC on April 1, 1999. OEFC began receiving actual contract prices for power from ratepayers effective January 1, 2005, and therefore OEFC is amortizing this liability to revenue on annual basis. The decrease in the liability for power purchase contracts was $129 million (2015–16, $172 million), recorded to revenue, decreasing the outstanding power purchase contract liability as at March 31, 2017, to $178 million (2015–16, $307 million).

During the year ended March 31, 2017, OEFC’s cost under power supply contracts totaled $838 million (2015–16, $875 million). These costs were recovered from electricity ratepayers (as shown in Schedules 1, 3 and 4).

Liabilities for contaminated sites

The Province reports environmental liabilities related to the management and remediation of contaminated sites where the Province is obligated or likely obligated to incur such costs. A contaminated sites liability of $1,812 million (2015–16, $1,751 million) has been recorded based on environmental assessments or estimations for those sites where an assessment has not been conducted.

The Province’s ongoing efforts to assess contaminated sites may result in additional environmental remediation liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites, including mine sites. Any changes to the Province’s liabilities for contaminated sites will be accrued in the year in which they are assessed as likely and reasonably estimable.

Other funds and liabilities

Other funds and liabilities include pension and benefit funds related to the Provincial Judges’ Pension Fund, the Public Service, the Justice of the Peace, the Deputy Ministers’ and the Case Management Masters Supplementary Benefit Accounts, externally restricted funds and other long-term liabilities.

8. Investments

Investments
as at March 31
($ Millions)

2017

2016

Temporary investments

$12,307

$16,112

Add: assets purchased under resale agreements

6,364

4,657

Less: assets sold under repurchase agreements

(2,753)

(1,008)

Total temporary investments

$15,918

$19,761

Other investments

2,065

2,004

Total investments

$17,983

$21,765

Temporary investments

Temporary investments primarily consist of investments in government bonds, including $8.8 billion (2015–16, $7.6 billion) of bonds and treasury bills issued by the Province of Ontario. These bonds and treasury bills are included in total debt outstanding in the schedule in Note 2. The fair value of temporary investments, including assets purchased and sold under resale and repurchase agreements at March 31, 2017, is $15.9 billion (2015–16, $19.8 billion). Fair value is determined using quoted market prices.

A resale agreement is an agreement between two parties where the Province purchases and subsequently resells a security at a specified price on a specified date. A repurchase agreement is an agreement between two parties where the Province sells and subsequently repurchases a security at a specified price on a specified date.

Other investments

Other investments represent the investments held by BPS organizations. These investments primarily consist of fixed-income securities. The fair value of these investments approximates book value.

9. Tangible capital assets

Tangible capital assets
as at March 31
($ Millions)

Land

Buildings

Transportation infrastructure

Machinery and equipment

Information technology

Other

2017

2016

Cost

Opening balance

14,651

76,914

32,769

12,164

6,097

6,747

149,342

141,056

Additions

701

3,038

3,659

695

860

1,092

10,045

10,922

Disposals

13

125

549

229

139

51

1,106

2,636

Closing balance

15,339

79,827

35,879

12,630

6,818

7,788

158,281

149,342

Accumulated amortization

Opening balance

23,484

8,907

9,171

3,392

1,852

46,806

43,991

Additions

2,304

1,321

711

638

241

5,215

4,913

Disposals

79

545

224

137

43

1,028

2,098

Closing balance

25,709

9,683

9,658

3,893

2,050

50,993

46,806

Net book value

2017

15,339

54,118

26,196

2,972

2,925

5,738

107,288

2016

14,651

53,430

23,862

2,993

2,705

4,895

102,536

Land includes land acquired for transportation infrastructure, parks, buildings and other program use, and land improvements that have an indefinite life and are not being amortized. Land excludes Crown lands acquired by right.

Buildings include administrative and service structures, and dams and engineering structures.

Transportation Infrastructure includes provincial highways, railways, bridges and related structures and facilities, but excludes land and buildings.

Machinery and Equipment consists mainly of hospital equipment.

Information Technology consists of computer hardware and software.

Other includes leased assets, vehicles, aircraft and other miscellaneous tangible capital assets owned by the government and its consolidated organizations.

Works of art and historical treasures are excluded from tangible capital assets.

Assets under construction have been included within the various asset categories presented above. The total value of assets under construction as at March 31, 2017, is $12.2 billion (2015–16, $11.8 billion). Capitalized interest for the fiscal year 2016–17 is $158 million (2015–16, $165 million).

All tangible capital assets, except assets under construction, land and land improvements with an indefinite life, are being amortized on a straight-line basis over their estimated useful lives. Amortization expense for the fiscal year 2016–17 totaled $5.2 billion (2015–16, $4.9 billion). The useful lives of the Province’s tangible capital assets have been estimated as:

Item Amount
Buildings 20 to 40 years
Dams and Engineering Structures 20 to 80 years
Transportation Infrastructure 10 to 75 years
Machinery and Equipment 3 to 20 years
Information Technology 3 to 15 years
Other 3 to 30 years

10. Changes in the fair value of Ontario Nuclear Funds

The Ontario Nuclear Funds Agreement (ONFA) Funds were established by Ontario Power Generation Inc. (OPG) and the Province to ensure that sufficient funds will be available to pay for the costs of nuclear station decommissioning and nuclear used fuel waste management.
Since April 1, 2007, the fair value of ONFA Funds has been reflected in the Province’s Consolidated Financial Statements. Unrealized gains and losses of ONFA Funds are included in Investment in Government Business Enterprises and recorded as an Increase (Decrease) in Fair Value of Ontario Nuclear Funds in the Consolidated Statement of Change in Net Debt and the Consolidated Statement of Change in Accumulated Deficit. Realized gains and losses of ONFA Funds are included in Income from Investment in Government Business Enterprises. Inter-organizational balances related to ONFA Funds are eliminated.

ONFA Funds incurred unrealized gains in 2016–17 of $1,094 million (2015–16, unrealized losses of $1,003 million) that resulted in an increase in Investment in Government Business Enterprises and a corresponding decrease in Net Debt and Accumulated Deficit.

11. Sale of Hydro One common shares (secondary offering)

In April 2016, the Province sold 14 per cent of Hydro One’s common shares at a price of $23.65 per common share, through a secondary offering generating gross proceeds of approximately $2 billion. As of March 31, 2017, the Province owned approximately 70 per cent of Hydro One’s common shares. An accounting gain of $538 million was recognized in the 2016–17 financial results in connection with the sale of Hydro One common shares. (See Note 18 for information on additional sale of shares in May 2017).

An additional gain of $70 million was deferred in connection with a purchase by Ontario Power Generation (OPG) of 9 million common shares of Hydro One through the secondary offering. OPG purchased these shares to distribute to eligible OPG employees represented by the Power Workers’ Union and The Society of Energy Professionals as part of future share-delivery obligations under the collective agreements. This deferred gain will be recognized as revenue as the Hydro One common shares are distributed to qualifying OPG employees for up to a 15-year period starting in 2018. There is no agreement between OPG and the Province with respect to Hydro One common shares or the voting of those shares. Although the Province is the sole shareholder of OPG, it does not intend to influence OPG as it pertains to its voting rights of these shares.

A summary of key direct components of the secondary offering of Hydro One shares include:

Secondary offering of Hydro One shares ($ Millions)

Amount

Total proceeds from the sale of shares

$1,970

Deferred gain on sale of shares to OPG

(70)

Transaction costs

(41)

Net proceeds from sale of Hydro One shares (net of transaction cost and gain on sale of shares to OPG)

1,859

Book value of shares sold (schedule 9)

(1,321)

Gain on sale of shares recognized in 2016–17

$538

In the 2015–16 fiscal year the Province sold approximately 16 per cent of Hydro One’s common shares at a price of $20.50 per common share, through a public offering and through related share sales. As of March 31, 2016, the Province owned approximately 84 per cent of Hydro One’s common shares.

An accounting gain of $783 million was recognized in the 2015–16 financial results in connection with the sale of Hydro One shares. An additional gain of $48 million was deferred in connection with a sale of shares to electricity sector union trusts during the year and will be recognized as revenue as the loans provided to the trusts to purchase the shares are repaid ($1.5 million of this deferred gain was recognized as revenue in 2016–17).

In conjunction with the disposition of Hydro One shares in fiscal 2015–16, Hydro One exited the Province’s payments in lieu of corporate income tax regime (corporate PILs regime) and became subject to federal and provincial corporate income taxes. Immediately before exiting the corporate PILs regime, Hydro One was deemed to have disposed of its assets for proceeds equal to the assets’ fair market value. As a result of this deemed disposition, before exiting the corporate PILs regime Hydro One had to make a payment under the Electricity Act, 1998, related to the income and capital gains arising from the difference between the assets’ fair value and tax value. This one-time payment to the Province, referred to as the “departure tax,” was $2.6 billion. Hydro One also paid the Province $191 million in additional corporate PILs in connection with leaving the corporate PILs regime. These one-time payments did not affect the Province’s annual deficit, as the additional revenue recognized by the Province was offset by an equal reduction in Hydro One’s net income, which was consolidated in the Province’s financial statements.

The transition into the federal and provincial corporate income tax regime also resulted in Hydro One eliminating a deferred tax liability and recognizing a deferred tax asset in 2015–16, which reflects reduced cash taxes payable by Hydro One for some period in the future. The Province’s proportionate share of the deferred tax benefit increased the Province’s revenues by $2.4 billion, and was reflected in Income from Government Business Enterprises.

A summary of key direct components of the Hydro One initial public offering transactions, reflected in the 2015–16 financial results, include:

Hydro One initial public offering ($ Millions)

Amount

Total proceeds from the sale of shares

$1,945

Deferred gain on sale of shares to electricity union trusts

(48)

Transaction costs

(43)

Net proceeds from sale of Hydro One shares (net of transaction cost and gain on sale of shares to electricity union trusts)

1,854

Book value of shares sold

(1,071)

Gain on sale of shares recognized in 201516

783

Electricity PILs revenue (schedule 1)

2,791

Hydro One departure tax expense and one-time PILs payment (offset to PILs revenue) reflected in income from GBEs

(2,791)

Portion of Hydro One deferred tax benefit recorded by the Province through HOL consolidation, reflected in income from GBEs

2,392

Net impact on annual deficit in 201516

$3,175

12. Sale of Hydro One Brampton Networks Inc

In August 2015, Hydro One transferred all of the issued and outstanding shares of Hydro One Brampton to the Province as a dividend-in-kind. Hydro One also transferred to the Province all of the long-term intercompany debt plus accrued interest owed by Hydro One Brampton to Hydro One as a return of stated capital. The transfers were made to the newly formed Brampton Distribution Holdco Inc., creating a new government business enterprise for the Province. On February 28th, 2017, the Province, through Brampton Distribution Holdco Inc., sold its entire interest in Hydro One Brampton through a sale of shares to Alectra Utilities Corporation (Alectra). As a result, the Province recognized an accounting gain of $109 million in its Consolidated Financial Statements. A summary of key direct components of the sale of Hydro One Brampton Networks includes:

Sale of Hydro One Brampton Networks ($ Millions)

Amount

Total proceeds from the sale (excluding PILs)

$545.2

Transaction costs

(0.2)

Net proceeds from sale of Hydro One Brampton Networks

545.0

Book value of Hydro One Brampton Networks (schedule 9)

(436)

Gain on sale recognized in 201617

$109

Subsequent to the sale of Hydro One Brampton Network, Brampton Distribution Holdco Inc. is no longer a government business enterprise and is classified as an Other Government Organization and consolidated on a line-by-line basis.

13. Contingent liabilities

Obligations Guaranteed by the Province

The authorized limit for loans guaranteed by the Province as at March 31, 2017, was $1.4 billion (2015–16, $1.4 billion). The outstanding loans guaranteed and other contingencies amounted to $0.9 billion as at March 31, 2017 (2015–16, $1.0 billion). A provision of $1.8 million (2015–16, $3.4 million), based on an estimate of the likely loss arising from guarantees under the Student Support Programs, has been reflected in these financial statements.

Ontario Nuclear Funds Agreement

Under ONFA, the Province is liable to make payments should the cost estimate for nuclear used fuel waste management rise above specified thresholds, for a fixed volume of used fuel. The likelihood and amount by which the cost estimate could rise above these thresholds cannot be determined at this time. The cost estimate will be updated periodically to reflect new developments in the management of nuclear used fuel waste.

As well, under ONFA, the Province guarantees a return of 3.25 per cent over the Ontario Consumer Price Index for the portion of the nuclear used fuel waste management segregated fund related to the fixed volume of used fuel. If the earnings on assets in that fund related to the fixed volume exceed the guaranteed rate, the Province is entitled to the excess.

Two agreements are in place to satisfy the Canadian Nuclear Safety Commission (CNSC) licensing requirements for financial guarantees in respect of OPG’s nuclear station decommissioning and nuclear waste management obligations. One agreement gives the CNSC access (in prescribed circumstances) to the segregated funds established under ONFA. The other agreement between the Province and the CNSC provides a direct provincial guarantee to the CNSC on behalf of OPG. This guarantee relates to the portion of the decommissioning and waste management obligations not funded by the estimated value of ONFA funds as at January 1, 2013. In return, the Province receives from OPG an annual fee equal to 0.5 per cent of the value of the guarantee. The provincial guarantee, for up to $1,551 million, is in effect from January 1, 2013, through the end of 2017, when the next reference plan for the CNSC is planned to be approved. In each of January 2016 and 2017, OPG paid a guarantee fee of $8 million to the Province based on the guarantee amount of $1,551 million.

Social housing — Loan Insurance Agreements

For all non-profit housing projects in the provincial portfolio, the Province is liable to indemnify and reimburse the Canada Mortgage and Housing Corporation (CMHC) for any net costs, including any environmental liabilities, incurred as a result of project defaults through the Ministry of Municipal Affairs and Housing or the Ontario Mortgage and Housing Corporation.

At March 31, 2017, there were $4.2 billion (2015–16, $5.0 billion) of mortgage loans outstanding. As operating subsidies provided by the Province are sufficient to ensure that all mortgage payments can be made when due, default is unlikely. To date, there have been no claims for defaults on insured mortgage loans.

Claims against the Crown

There are claims outstanding against the Crown, of which 59 (2015–16, 70) are for amounts over $50 million. These claims arise from legal action, either in progress or threatened, in respect of Aboriginal land claims, breach of contract, damages to persons and property, and like items. The cost to the Province, if any, cannot be determined because the financial outcome of these actions is uncertain. For a detailed listing of claims against the ministries, refer to Volume 1, “Claims Against the Crown.”

On April 20, 2016, the Ontario Superior Court determined that Bill 115, the Putting Students First Act, 2012, was in contravention of the unions’ right to collective bargaining under the Charter of Rights and Freedoms. The Court did not impose a penalty on the Province, and directed that the parties attempt to negotiate a remedy. The impact on the 2015–16 Consolidated Financial Statements of the related accrual was based on the Province’s best estimation of the remedy amount on information available, the extent of which was not disclosed given that agreements had not been reached with all applicant parties. At March 31, 2017, not all of the applicant parties have reached an agreement with the Crown. One of the applicant parties has subsequently returned to court to decide on the remedy amount.

Canadian Blood Services

The provincial and territorial governments of Canada have entered into a Canadian Blood Services Excess Insurance Captive Support Agreement (the “Captive Support Agreement”) with Canadian Blood Services (CBS) and Canadian Blood Services Captive Insurance Company Limited (CBSI), a wholly owned subsidiary of CBS. Under the Captive Support Agreement, each government indemnifies CBSI for its pro-rata share of any payments that CBSI becomes obliged to make under a comprehensive blood risks insurance policy it provides to CBS. The policy has an overall limit of $750 million, which may cover settlements, judgments and defence costs. The policy is in excess of, and secondary to, a $250 million comprehensive insurance policy underwritten by CBS Insurance Company Limited, a subsidiary of CBS. Given current populations, Ontario’s maximum potential liability under the Captive Support Agreement is approximately $376 million. The Province is not aware of any proceedings that could lead to a claim against it under the Captive Support Agreement.

Legal Aid Ontario — certificates

Legal Aid Ontario (LAO) issues certificates to individuals seeking legal aid assistance. Each certificate issued authorizes legal services to be performed within the tariff guidelines. At March 31, 2017, a potential $58.3 million (2015–16, $51.9 million) could still be incurred on certificates issued on or before March 31, 2017, over and above the billings received to date.

Contaminated sites

The Province has identified contingent liabilities related to 125 sites (2015–16, 125 sites) that may have potential liabilities of $365 million (2015–16, $365 million). A liability has not been recorded for these sites at the financial reporting date because either the likelihood of the government becoming responsible for the site is not determinable, the amount of the liability cannot be estimated, or both.

General Real Estate Portfolio — lease obligation

Prior to the amalgamation of Stadium Corporation of Ontario Limited (STADCO) with Infrastructure Ontario and the Ontario Realty Corporation on June 6, 2011, all assets, liabilities and operations of STADCO were transferred to the General Real Estate Portfolio (GREP), including ground leases dated June 3, 1989, with Canada Lands Company (CLC) for the SkyDome Lands and the sublease to Rogers Stadium Limited Partnership (sub-tenant). Under the terms of the ground lease, GREP is responsible for base rent, realty taxes, utilities and certain operating costs, which are assumed by the sub-tenant under the terms of the sub-lease. In the event of a default by the sub-tenant, the potential financial impact to GREP is estimated to be the base rent, in the range of $300 thousand to $400 thousand annually, plus realty taxes, utilities and certain operating costs.

Collateral

The Province has entered into securities repurchase agreements and collateralized swap agreements with certain counterparties. Under the terms of those agreements, the Province may be required to pledge and/or receive assets relating to obligations to the counterparties. In the normal course of business, these pledged securities will be returned to the pledgor when there are no longer any outstanding obligations.

As at March 31, 2017, the Province pledged assets in the carrying amount of $105 million (2015–16, $33 million), which are included in Investments and/or Cash and Cash Equivalents.

14. Contractual obligations

Contractual obligations
as at March 31
($ Millions)

 

Minimum payments to be made in:

2017

2016

2018

2019

2020

2021

2022

2023 and
thereafter

Transfer payments

$9,191

$10,965

$5,903

$2,061

$459

$366

$107

$295

Alternative financing and procurement contracts

27,517

27,528

10,989

1,251

1,399

1,587

659

11,632

Ontario Power Generation

2,831

6,499

1,600

323

212

183

119

394

Leases

5,581

4,391

770

681

614

534

431

2,551

Construction contracts

5,079

4,980

1,992

800

407

296

254

1,330

Other

13,127

8,987

6,809

1,116

897

765

758

2,782

Total contractual obligations

$63,326

$63,350

$28,063

$6,232

$3,988

$3,731

$2,328

$18,984

The Province has entered into a number of multiple-year alternative financing and procurement contracts for the construction of assets and delivery of services. The contractual obligations represent the unperformed capital and operating portion of the contracts and will become liabilities in the future when the terms of the contracts are met.

15. Trust funds under administration

The following trust funds under administration are not included in the Consolidated Financial Statements of the Province.

The Workplace Safety and Insurance Board (WSIB) is responsible for administering the Workplace Safety and Insurance Act, 1997, which establishes a no-fault insurance scheme that provides benefits to workers who experience workplace injuries or illnesses.

The Public Guardian and Trustee for the Province of Ontario delivers a unique and diverse range of services that safeguard the legal, personal and financial interests of certain private individuals and estates. It also plays an important role in helping to protect charitable property in Ontario.

The Motor Vehicle Accident Claims Fund operates under the authority of the Motor Vehicle Accident Claims Act. The Act responds to claims that meet certain criteria. Currently, the fund provides two types of coverage: third-party bodily injury and property damage liability, and statutory accident benefits in accordance with legislated requirements.

The Pension Benefits Guarantee Fund (PBGF) provides protection, subject to specific maximums and specific exclusions, to Ontario members and beneficiaries of privately sponsored single-employer defined benefit pension plans in the event of plan sponsor insolvency. The PBGF is governed by the Pension Benefits Act and its Regulations, and is administered by the Superintendent of the Financial Services Commission of Ontario.

The Deposit Insurance Corporation of Ontario (DICO) was established under the Credit Unions and Caisses Populaires Act, 1994. DICO’s role is to protect depositors of Ontario credit unions and caisses populaires from the loss of their deposits. Deposit insurance is part of a comprehensive depositor-protection program for all Ontario credit unions, which is backed by the Credit Unions and Caisses Populaires Act, 1994.

Summary financial information from the most recent financial statements of trust funds under administration is provided below. The financial statements of the WSIB, the Public Guardian and Trustee for the Province of Ontario and DICO have been prepared in accordance with IFRS (see Volume 2 for additional detailed financial statements).

Workplace Safety and Insurance Board (WSIB)
as at December 31
($ Millions)

2016

2015

Assets

$31,491

$28,305

Liabilities

32,487

32,102

Deficiency of assets

(996)

(3,797)

Unfunded liability attributable to WSIB stakeholders

($3,925)

($6,599)

Other Trust Funds
as at March 31
($ Millions)

2017

 2016

Item

Assets

Liabilities

Fund balance
(Unfunded Liability)

Fund balance
(Unfunded Liability)

The Public Guardian and
Trustee for the Province of Ontario

$1,891

$65

$1,826

$1,680

Motor Vehicle Accident Claims Fund

61

228

(167)

(166)

Pension Benefits Guarantee Fund

876

135

741

441

As at December 31

Assets

Liabilities

2016
Fund balance

2015
Fund balance

Deposit Insurance Corporation of Ontario

$238

$12

$226

$206

Unfunded liabilities of trusts under administration are not included in the Province’s Consolidated Financial Statements as it is intended that they will be discharged by external parties. The most recent financial statements of these trusts are reproduced in Volume 2.

16. Changes in accounting policy and reclassifications

A. Pension assets of jointly sponsored pension plans

The 2016–17 Consolidated Financial Statements reflect a change in accounting for net pension assets of the Province’s jointly sponsored pension plans, as compared to the 2015–16 Consolidated Financial Statements. The change affects the Province’s accounting for both the Ontario Teachers’ Pension Plan (OTPP) and the Ontario Public Service Employees’ Union Pension Plan (OPSEUPP).

As described in Public Sector Accounting Standards, a net pension asset arises when the government’s total contributions to a plan, including income earned thereon, are greater than the cumulative retirement benefit expense recognized since the start of the plan. Contributions reflect the funding objectives of the plan. The benefit expense reflects the estimated cost of the pensions earned during the year that will be paid out to retirees in the future. Public Sector Accounting Standards requires the write-down of a net pension asset through recording a valuation allowance when the government is not entitled to fully benefit from the net pension asset.

Prior to 2015–16 the Province recorded pension assets to the extent that the government expected to benefit from the asset through future reductions in contributions to the plan.

In the 2015–16 Consolidated Financial Statements, the Province legislated the accounting treatment for pension assets of OTPP and OPSEUPP in order to reflect the Auditor General of Ontario’s view that a full valuation allowance was required based on the view that the government does not have a legally enforceable right to unilaterally access the assets of the jointly sponsored pension plans, or, in the absence of that right, an irrevocable agreement in place at year-end with the joint sponsors of the plans to reduce contributions. The legislation required that a full valuation allowance be recorded against the pension assets of OTPP and OPSEUPP, therefore writing down the value of the assets as at March 31, 2016, to nil.

After significant consultation, including consideration of the recommendations of the Pension Asset Expert Advisory Panel, the Province has confirmed that the accounting for its jointly sponsored pension plans prior to 2015–16 was appropriate and in accordance with Public Sector Accounting Standards. The 2016–17 Consolidated Financial Statements reflect the confirmed accounting treatment and record pension assets on the same basis as used by the Province in preparing its Consolidated Financial Statements prior to 2015–16.

For comparative purposes, the results for 2015–16 have been restated on a basis consistent with the 2016–17 financial statements. Therefore, the accounting for the OTPP and OPSEUPP is consistent for all periods presented, providing users of the financial statements comparable information for assessing the government’s financial performance.

The effect of the accounting change on the 2015–16 comparative financial statements is a reduction of $10.7 billion in the Province’s reported net debt and accumulated deficit as of March 31, 2016, and a decrease in the reported 2015–16 annual deficit by $1.5 billion.

An additional adjustment was also made this year to eliminate timing differences in amounts reported by pension plans with a calendar year-end and amounts payable by the Province that were previously reflected as contributions in the pension plan assets.

B. Presentation of revenues and expenses for hospitals, school boards and colleges

Effective April 1, 2016, the revenues and expenses of the hospitals, school boards and colleges are being consolidated in the Province’s Consolidated Statement of Operations on a line-by-line basis.

With this change in presentation, third-party revenues of hospitals, school boards and colleges totalled $8.2 billion (2015–16, $7.8 billion) and are no longer netted against the respective sector’s expenses for reporting purposes. In addition, net interest on debt of $591 million (2015–16, $622 million) that was previously included in the respective sector’s expenses is reported as interest on debt expense. This presentation change does not affect the Province’s annual deficit or accumulated deficit. Comparative actual results for 2015–16 and the 2016–17 Budget have been reclassified to reflect the revised line-by-line presentation on the Consolidated Statement of Operations in order to fully comply with PSAB standards.

C. Other items

Other changes reflected in the 2016–17 Consolidated Financial Statements include an accounting policy change for the Independent Electricity System Operator (IESO), as well as reclassification of specified non-financial assets, including prepaid expenses and inventory supplies. In 2016, IESO changed its accounting policy regarding the recognition of market accounts assets and liabilities on its financial statements, and adopted rate-regulated accounting. The change was made to better reflect the assets and liabilities and amounts due to and from market participants held by IESO on behalf of IESO-administered markets at year-end. As this change was applied retroactively, IESO’s 2015–16 comparative financial statements were also restated for comparative purposes. Recognition of the market accounts increases both other assets and other liabilities at March 31, 2017, by $1,652 million. There is no impact on the accumulated deficit, net debt or revenue and expense as a result of recognizing the market accounts. IESO’s adoption of rate-regulated accounting resulted in a decrease of $82 million in the 2016–17 opening accumulated deficit, and an increase in the 2016–17 annual deficit by $24 million.

Net pension assets and employee future benefits are separately presented in the 2016–17 Consolidated Statement of Financial Position. 2015–16 comparatives have been reclassified to conform with the 2017 presentation.

Prepaid expenses and inventory supplies classified as financial assets in prior years have been reclassified as non-financial assets.

Expenses are reclassified due to program transfers between ministries.

A summary of the restatements to the reported 2015–16 annual results is provided below.

Province of Ontario Consolidated Statement of operations

($ Millions)

2015–16
Reported

A

B

C

2015–16 Restated

Revenue

         

Personal Income Tax

31,141

31,141

Sales Tax

23,455

23,455

Corporations Tax

11,428

11,428

Education Property Tax

5,839

5,839

Employer Health Tax

5,649

5,649

Ontario Health Premium

3,453

3,453

Gasoline and Fuel Taxes

3,210

3,210

Other taxes

7,643

7,643

Total taxation

91,818

91,818

Transfers from Government of Canada

22,857

284

23,141

Fees, donations and other revenues from hospitals, school boards and colleges

-

7,493

7,493

Income from investment in Government business enterprises

4,909

4,909

Other

8,793

(6)

8,787

 

128,377

7,771

136,148

Expense

         

Health

51,067

3,934

55,001

Education

26,588

(1,480)

969

26,077

Children’s and Social Services

15,555

(18)

15,537

Environment, resources and economic development

12,612

(96)

12,516

Interest on debt

10,967

622

11,589

Postsecondary and training

7,634

2,246

22

9,902

Justice

4,549

(1)

4,548

General Government and other

4,434

(34)

93

4,493

 

133,406

(1,514)

7,771

139,663

Annual Deficit

(5,029)

1,514

(3,515)

Province of Ontario Consolidated Statement of financial position

As at March 31
($ Millions)

2015–16 Reported

A

C

2015–16 Restated

Liabilities

 

 

   

Accounts payable and accrued liabilities

19,361

19,361

Debt

327,413

327,413

Other long-term financing

14,145

14,145

Deferred revenue and capital contributions

10,779

10,779

Pension and other employee future benefits

12,107

(10,668)

(1,439)

Other employee future benefits

10,751

10,751

Other liabilities

4,905

1,443

6,348

 

388,710

(10,668)

10,755

388,797

Financial assets

       

Cash and cash equivalents

13,600

13,600

Investments

21,765

21,765

Accounts receivable

11,059

11,059

Loans receivable

11,545

11,545

Net pension asset

9,312

9,312

Other assets

1,936

636

2,572

Investment in Government business enterprises

23,572

23,572

 

83,477

9,948

93,425

Net debt

(305,233)

10,668

(807)

(295,372)

Non-financial assets

       

Tangible capital assets

102,536

102,536

Prepaid expenses and other non-financial assets

807

807

 

102,536

807

103,343

Accumulated deficit

(202,697)

10,668

(192,029)

A summary of the reclassifications to the approved 2016–17 Budget for comparative purposes is provided below.

($ Millions)

Original 2016–17 Budget

B

C

Reclassified 2016–17 Budget

Revenue

       

Personal Income Tax

32,167

32,167

Sales Tax

23,976

23,976

Corporations Tax

12,050

12,050

Employer Health Tax

6,007

6,007

Education Property Tax

5,834

5,834

Ontario Health Premium

3,604

3,604

Gasoline and Fuel Taxes

3,312

3,312

Other taxes

4,869

4,869

Total taxation

91,819

91,819

Transfers from Government of Canada

24,644

494

25,138

Fees, donations and other revenues from hospitals, school boards and colleges

7,404

7,404

Income from investment in Government business enterprises

5,027

5,027

Other

9,099

(5)

9,094

 

130,589

7,893

138,482

Expense

       

Health

51,785

4,007

(6)

55,786

Education

25,184

909

26,093

Children’s and social services

15,814

2

15,816

Environment, resources and economic development

12,104

(2)

12,102

Interest on debt

11,756

656

12,412

Postsecondary and training

7,877

2,321

10,198

Justice

4,517

(1)

4,516

General Government and other

4,858

7

4,865

 

133,895

7,893

141,788

Reserve

1,000

1,000

Annual deficit

(4,306)

(4,306)

D. Accounting for OPG and Hydro One

Commencing April 1, 2016, the Province is accounting for the results for Hydro One Limited and Ontario Power Generation using the modified equity basis and IFRS (including IFRS 14). Previously, the Province had used Generally Accepted Accounting Principles in the United States (US GAAP), the accounting standards used by these entities in preparing their stand-alone financial statements, in applying the modified equity basis. Historically, the difference between IFRS and US GAAP with respect to the annual deficit of the Province was not material.

This change has resulted in an adjustment to the opening accumulated deficit and net debt of $1,163 million (IFRS transitional impact $683 million and Accumulated Other Comprehensive Loss $480 million). The transitional adjustment is predominantly related to the difference in accounting for Asset Retirement Obligation and pension and other post-employment benefits.

17. Future changes in accounting standards

(a) Recently developed standards

PSAB 3450 — Financial Instruments and PSAB 2601 — Foreign Currency Translation

PSAB has introduced new sections on Financial Instruments and Foreign Currency Translation that categorize items to be accounted for at either fair value, cost or amortized cost. Fair value measurement applies to derivatives and portfolio investments in equity instruments that are quoted in an active market. Other financial assets and financial liabilities will generally be measured at cost or amortized cost. Until an item is derecognized (for example, through disposition), any gains and losses arising due to changes in fair value (remeasurements) will be reported in the Statement of Remeasurement Gains and Losses. PSAB has agreed to further explore the views of stakeholders in the areas of hedge accounting. PSAB has extended the effective date of these standards until fiscal year 2019–20.

PSAB 2200 — Related Party Disclosures

PSAB has issued a new standard on Related Party Disclosures. This standard requires disclosure of related party transactions if they have a material financial effect on the Consolidated Financial Statements and only if those transactions occur at a value different from what would have been arrived at if the parties were unrelated. Transactions involving key management personnel and their close family members may be required to be disclosed if they meet certain criteria. The standard will be effective in the 2017–18 fiscal year. The Province is currently assessing the impact of this standard on its Consolidated Financial Statements.

PSAB 3420 — Inter-Entity Transactions

PSAB has issued a new standard on Inter-Entity Transactions. It establishes standards on how to account for and report transactions between public sector entities that comprise a government’s reporting entity from both a provider and recipient perspective. This standard covers recognition and measurement and references disclosure of information about Inter-Entity Transactions, in accordance with the Related Party Disclosure — PSAB 2200. The standard will be effective for the 2017–18 fiscal year. The Province is currently assessing the impact of this standard on its Consolidated Financial Statements.

PSAB 3210 — Assets, PSAB 3320 — Contingent Assets and PSAB 3380 —Contractual Rights

PSAB has issued three new standards: Assets — PSAB 3210, Contingent Assets — PSAB 3320 and Contractual Rights — PSAB 3380. They address the application of the definition and essential characteristics of assets and provide guidance on reporting contingent assets and contractual rights. These standards are effective in the 2017–18 fiscal year. The Province is currently assessing the impact of these standards on its Consolidated Financial Statements.

PSAB 3430 — Restructuring Transactions

PSAB has issued a new standard on restructuring transactions. It provides guidance on accounting for and reporting assets and liabilities transferred in restructuring transactions by both transferors and recipients. This standard is effective in fiscal year 2018–19 or earlier. The Province is currently assessing the impact of this standard on its Consolidated Financial Statements.

(b) Standards under development

Concepts underlying financial performance

PSAB is currently in the process of revisiting its conceptual framework, which establishes principles for the development of standards used for financial reporting by the public sector entities in Canada. The conceptual framework is important to ensure that public sector standards appropriately reflect the economic substance of government transactions and to support transparency and accountability in public sector reporting. PSAB continues with stakeholder communication activities and is currently deliberating on comments received on its latest consultation paper. It is also developing a statement of principles focusing on measuring the financial performance of public sector entities, which will be approved in the fourth quarter of 2017.

Asset retirement obligations

On March 9, 2017, PSAB issued an Exposure Draft that proposes a new standard on asset retirement obligations. The Province is currently assessing the impact this proposed standard would have on its Consolidated Financial Statements.

Revenue

On May 1, 2017, PSAB issued an Exposure Draft that proposes a framework describing two categories of revenue: exchange and unilateral. The Province is currently assessing the impact this proposed standard would have on its Consolidated Financial Statements.

Public–private partnerships

On July 20, 2017, PSAB issued a statement of principles that addresses public–private partnerships, or alternative financing arrangements.

Employment benefits: deferral provisions in sections PSAB 3250 and PSAB 3255

PSAB is developing a new, comprehensive section for the employment benefits handbook, which will replace existing sections PSAB 3250 and PSAB 3255. PSAB has issued the first of a series of invitations to comment.

18. Subsequent events

Sale of Hydro One shares

Subsequent to the Province’s fiscal year-end, on May 17, 2017, the Province sold 120,000,000 common shares of Hydro One Limited at $23.25 per share through a final Hydro One public share offering, generating approximately $2.8 billion in gross proceeds.

Subsequent to this sale, the Province owns 49.9 per cent of the outstanding common shares of Hydro One Limited.

Sale of 700 University Avenue

In April 2017, Ontario Power Generation sold its head office premises and associated parking facility located at 700 University Avenue and 40 Murray Street in Toronto, Ontario, respectively, resulting in an estimated after payments-in-lieu of tax gain of approximately $280 million.

Hydro One Limited to acquire Avista Corporation (Avista)

On July 19, 2017, Hydro One Limited announced an offer to acquire Avista, an electricity and gas utility based in Spokane, Washington, for $6.7 billion Canadian (USD $5.3 billion).

Hydro One Limited also announced a $1.54 billion Canadian, bought deal of contingent convertible debentures, including an over-allotment amount to support the equity component of financing the acquisition, as well as USD $2.6 billion in debt to buy Avista for $67 Canadian (USD $53) in cash per common share, a 24 per cent premium from the previous day’s market close (Tuesday July 18, 2017). The deal is expected to close in the second half of 2018, subject to Avista common shareholder approval and certain U.S. state and federal regulatory and government approvals and clearances. The potential acquisition would dilute the Province’s ownership by approximately 5 per cent.

19. Comparative figures

The comparative figures have been reclassified as necessary to conform to the 2017 presentation.

Schedules to the Consolidated Financial Statements

Province of Ontario schedule 1: revenue by source

($ Millions)

2016–17
Budgetfootnote 19
(see note 16)

2016–17
Actual

2015–16
Restated (see note 16)

Taxation

 

 

 

Personal Income Tax

32,167

30,671

31,141

Sales Tax

23,976

24,750

23,455

Corporations Tax

12,050

14,872

11,428

Employer Health Tax

6,007

5,908

5,649

Education Property Tax

5,834

5,868

5,839

Ontario Health Premium

3,604

3,575

3,453

Land Transfer Tax

2,051

2,728

2,118

Gasoline Tax

2,522

2,626

2,459

Tobacco Tax

1,221

1,230

1,226

Fuel Tax

790

742

751

Beer and Wine Tax

611

589

582

Electricity payments-in-lieu of taxes (note 11)

515

334

3,247

Other taxes

471

453

470

 

91,819

94,346

91,818

Transfers from Government of Canada

 

 

 

Canada health transfer

13,858

13,910

13,089

Canada social transfer

5,128

5,146

4,984

Equalization payments

2,304

2,304

2,363

Infrastructure programs

1,017

732

146

Labour Market Development Agreement

636

678

632

Social housing

434

441

455

Direct transfers to hospitals, school boards and colleges

494

285

284

Indian Welfare Services Agreement

246

277

259

Job Fund Agreement

192

211

205

Bilingualism development

83

88

85

Labour Market Agreement for persons with disabilities

76

76

76

Legal Aid criminal

51

59

51

Youth criminal justice

52

52

52

Other

567

285

460

 

25,138

24,544

23,141

Fees, donations and other revenues from hospitals, school boards and colleges (schedule 10)

7,404

7,957

7,493

Income from investment in Government business
enterprises (schedule 9)

5,027

5,567

4,909

Other

     

Sales and rentals

2,421

1,999

2,102

Vehicle and driver registration fees

1,751

1,727

1,565

Power supply contract recoveries (note 7)

643

838

875

Other fees and licences

768

763

743

Electricity debt retirement charge

625

621

859

Royalties

287

272

274

Independent electricity system operation revenue

219

211

221

Local services realignment

117

135

125

Net reduction of power purchase contracts (note 7)

129

129

172

Miscellaneous

2,134

1,625

1,851

 

9,094

8,320

8,787

Total revenue

138,482

140,734

136,148

Province of Ontario schedule 2: revenue by sector

Sectors

Healthfootnote 20
(Restated — see note 16)

Educationfootnote 21
(Restated — see note 16)

Children’s and Social Servicesfootnote 22

Environment, Resources and Economic Developmentfootnote 23

Postsecondary and Trainingfootnote 24
(Restated — see note 16)

Justicefootnote 25

General Government and Otherfootnote 26

Total

For the year ended March 31
($ Millions)

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Revenue

                               

Taxation (schedule 1)

2

1

94,344

91,817

94,346

91,818

Transfers from Government of Canada (schedule 1)

264

291

95

93

400

360

1,124

883

1,186

937

103

103

21,372

20,474

24,544

23,141

Fees, donations and other revenues from hospitals, school boards and colleges (schedule 10)

4,071

3,914

1,389

1,341

2,497

2,238

7,957

7,493

Income from investment in Government business enterprises (schedule 9)

860

719

4,707

4,190

5,567

4,909

Other (schedule 1)

203

232

38

32

56

88

4,628

4,020

60

49

791

735

2,544

3,631

8,320

8,787

Total

4,538

4,437

1,522

1,466

456

448

6,614

5,623

3,743

3,224

894

838

122,967

120,112

140,734

136,148

Province of Ontario schedule 3: expense by sectorfootnote 27

Sectors

Healthfootnote 28

Educationfootnote 29

Children’s and Social Servicesfootnote 30

Environment, Resources and Economic Developmentfootnote 31

Postsecondary and Trainingfootnote 32

Justicefootnote 33

General Government and Otherfootnote 34

Interest on Debtfootnote 35

Total

For the year ended March 31
($ Millions)

2017

2016
(Restated — see note 16)

2017

2016
(Restated — see note 16)

2017

2016

2017

2016

2017

2016
(Restated — see note 16)

2017

2016

2017

2016
(Restated — see note 16)

2017

2016

2017

2016
(Restated — see note 16)

Expense

               

 

   

 

 

 

 

 

 

 

Transfer payments footnote 36footnote 37

25,724

25,215

1,643

1,404

15,182

14,674

6,243

5,949

5,787

5,747

439

446

810

813

55,828

54,248

Salaries and wages

15,072

14,864

17,316

16,760

442

444

1,826

1,820

2,205

2,128

2,330

2,321

954

948

40,145

39,285

Interest on debt

11,370

11,217

11,370

11,217

Services

4,414

4,169

1,589

1,536

200

230

1,397

1,499

747

678

967

977

375

380

9,689

9,469

Supplies and equipment

4,967

4,862

2,122

2,068

8

9

203

228

274

253

166

165

39

38

7,779

7,623

Employee benefits

2,612

2,574

2,497

2,411

70

69

342

346

260

256

318

306

145

122

6,244

6,084

Amortization of tangible capital assets

1,672

1,594

1,132

1,063

36

36

2,011

1,868

281

277

16

15

67

61

5,215

4,914

Pensions and employee future benefits (note 6)

1,036

1,161

(257)

201

7

6

24

9

196

190

26

20

1,004

1,012

2,036

2,599

Power supply contract costs

838

875

838

875

Transportation and communication

197

198

14

14

20

19

111

130

68

65

121

96

39

43

570

565

Interest on debt of hospitals, school boards and colleges

339

372

339

372

Other

331

364

148

620

41

50

557

667

313

308

235

202

47

201

1,672

2,412

Totalfootnote 38

56,025

55,001

26,204

26,077

16,006

15,537

12,714

12,516

10,131

9,902

4,618

4,548

4,318

4,493

11,709

11,589

141,725

139,663

Province of Ontario schedule 4: expense by ministry

($ Millions)

2016–17
Budgetfootnote 39
(see note 16)

2016–17
Actual

2015–16
Restated
(see note 16)

Aboriginal Affairs

77

128

79

Agriculture, Food and Rural Affairs

916

1,031

930

Attorney General

1,868

1,937

1,859

Board of Internal Economy

220

219

205

Children and Youth Services

4,346

4,379

4,242

Citizenship, Immigration and International Trade

221

176

169

Community and Social Services

11,470

11,627

11,295

Community Safety and Correctional Services

2,648

2,681

2,689

Economic Development, Employment and Infrastructure/Research and Innovation

1,796

1,234

1,134

Education

26,545

26,581

25,967

Teachers’ Pension (note 6)

(452)

(377)

110

Energy

393

920

1,232

Environment and Climate Change

531

523

503

Executive offices

44

47

37

Finance

966

841

1,044

Interest on debt

12,412

11,709

11,589

Municipal Partnership Fund

505

526

513

Power supply contract costs

643

838

875

Government and Consumer Services

607

600

608

Health and Long-Term Care

55,786

56,025

55,001

Labour

309

308

304

Municipal Affairs and Housing

1,060

1,544

1,088

Natural Resources and Forestry

819

859

819

Northern Development and Mines

791

814

701

Office of Francophone Affairs

6

5

8

Tourism, Culture and Sport

1,339

1,540

2,270

Training, Colleges and Universities

10,198

10,131

9,902

Transportation

3,850

3,637

3,287

Treasury Board Secretariat

322

240

216

Contingency Fundfootnote 40

1,200

Employee and Pensioner Benefits

1,152

1,002

987

Year-end savings footnote 41

(800)

Total expense

141,788

141,725

139,663

Province of Ontario schedule 5: accounts payable and accrued liabilities

As at March 31
($ Millions)

2017

2016

Transfer payments

5,299

4,825

Interest on debt

3,424

3,610

Salaries, wages and benefits

3,024

2,917

Other

8,501

8,009

Total accounts payable and accrued liabilities

20,248

19,361

Province of Ontario schedule 6: accounts receivable

As at March 31
($ Millions)

2017

2016

Taxes

5,881

6,579

Transfer payments footnote 42

605

597

Other accounts receivable footnote 43

5,018

4,337

 

11,504

11,513

Less: allowance for doubtful accountsfootnote 44

(1,209)

(1,226)

 

10,295

10,287

Government of Canada

897

772

Total accounts receivable

11,192

11,059

Province of Ontario schedule 7: loans receivable

As at March 31
($ Millions)

2017

2016

Government business enterprises footnote 45

3,479

3,499

Municipalitiesfootnote 46

5,749

5,407

Studentsfootnote 47

2,820

2,655

Industrial and commercialfootnote 48

510

554

Pension Benefit Guarantee Fundfootnote 49

187

198

Universitiesfootnote 50

8

14

Otherfootnote 51

286

508

 

13,039

12,835

Unamortized concession discountsfootnote 52

(224)

(262)

Allowance for doubtful accountsfootnote 53

(947)

(1,028)

Total loans receivable

11,868

11,545

Repayment terms as at March 31
($ Millions)

Principal repayment

Years to Maturity

2017

2016

1 year

2,321

1,511

2 years

966

1,639

3 years

1,217

820

4 years

1,060

1,211

5 years

785

915

1–5 years

6,349

6,096

6–10 years

2,977

2,542

11–15 years

1,086

1,512

16–20 years

642

585

21–25 years

381

352

Over 25 years

1,370

1,591

Subtotal

12,805

12,678

No fixed maturity

234

157

Total

13,039

12,835

Province of Ontario schedule 8: Government organizationsfootnote 54

Government Business Enterprisesfootnote 55

Responsible Ministry

Hydro One Limited

Energy

Liquor Control Board of Ontario

Finance

Ontario Lottery and Gaming Corporation

Finance

Ontario Power Generation Inc.

Energy

Other Government Organizationsfootnote 55

Responsible Ministry

Agricorp

Agriculture, Food and Rural Affairs

Agricultural Research Institute of Ontario

Agriculture, Food and Rural Affairs

Algonquin Forestry Authority

Natural Resources and Forestry

Brampton Distribution Holdco Inc.

Energy

Cancer Care Ontario

Health and Long-Term Care

Education Quality and Accountability Office

Education

eHealth Ontario

Health and Long-Term Care

Forest Renewal Trust

Natural Resources and Forestry

General Real Estate Portfolio

Economic Development, Employment and Infrastructure/Research and Innovation

Independent Electricity System Operator

Energy

Legal Aid Ontario

Attorney General

Local Health Integration Networks

 

Central East Local Health Integration Network

Health and Long-Term Care

Central Local Health Integration Network

Health and Long-Term Care

Central West Local Health Integration Network

Health and Long-Term Care

Champlain Local Health Integration Network

Health and Long-Term Care

Erie St. Clair Local Health Integration Network

Health and Long-Term Care

Hamilton Niagara Haldimand Brant Local Health Integration Network

Health and Long-Term Care

Mississauga Halton Local Health Integration Network

Health and Long-Term Care

North East Local Health Integration Network

Health and Long-Term Care

North Simcoe Muskoka Local Health Integration Network

Health and Long-Term Care

North West Local Health Integration Network

Health and Long-Term Care

South East Local Health Integration Network

Health and Long-Term Care

South West Local Health Integration Network

Health and Long-Term Care

Toronto Central Local Health Integration Network

Health and Long-Term Care

Waterloo Wellington Local Health Integration Network

Health and Long-Term Care

Metrolinx

Transportation

Metropolitan Toronto Convention Centre Corporation

Tourism, Culture and Sport

Niagara Parks Commission

Tourism, Culture and Sport

Northern Ontario Heritage Fund Corporation

Northern Development and Mines

Ontario Agency for Health Protection and Promotion (Public Health Ontario)

Health and Long-Term Care

Ontario Capital Growth Corporation

Economic Development, Employment and Infrastructure/Research and Innovation

Ontario Clean Water Agency

Environment and Climate Change

Ontario Educational Communications Authority (TVO)

Education

Ontario Electricity Financial Corporation

Finance

Ontario Energy Board

Energy

Ontario Financing Authority

Finance

Ontario French-Language Educational Communications Authority (TFO)

Education

Ontario Immigrant Investor Corporation

Economic Development, Employment and Infrastructure/Research and Innovation

Ontario Infrastructure and Lands Corporation (Infrastructure Ontario)

Economic Development, Employment and Infrastructure/Research and Innovation

Ontario Mortgage and Housing Corporation

Municipal Affairs and Housing

Ontario Northland Transportation Commission

Northern Development and Mines

Ontario Place Corporation

Tourism, Culture and Sport

Ontario Securities Commission

Finance

Ontario Tourism Marketing Partnership Corporation

Tourism, Culture and Sport

Ontario Trillium Foundation

Tourism, Culture and Sport

Ornge

Health and Long-Term Care

Ottawa Convention Centre Corporation

Tourism, Culture and Sport

Province of Ontario Council for the Arts (Ontario Arts Council)

Tourism, Culture and Sport

The Centennial Centre of Science and Technology (Ontario Science Centre)

Tourism, Culture and Sport

The Royal Ontario Museum

Tourism, Culture and Sport

Toronto Organizing Committee for the 2015 Pan American and Parapan American Games (Toronto 2015)

Tourism, Culture and Sport

Toronto Waterfront Revitalization Corporation (Waterfront Toronto)footnote 56

Economic Development, Employment and Infrastructure/Research and Innovation

Transmission Corridor Program

Economic Development, Employment and Infrastructure/Research and Innovation

Broader Public Sector organizations

Public Hospitals — Ministry of Health and Long-Term Care

Alexandra Hospital Ingersoll
Alexandra Marine & General Hospital
Almonte General Hospital
Anson General Hospital
Arnprior Regional Health
Atikokan General Hospital
Baycrest Centre for Geriatric Care
Bingham Memorial Hospital
Bluewater Health
Brant Community Healthcare System
Brockville General Hospital
Bruyère Continuing Care Inc.
Cambridge Memorial Hospital
Campbellford Memorial Hospital
Carleton Place and District Memorial Hospital
Casey House Hospice
Chatham-Kent Health Alliance
Children’s Hospital of Eastern Ontario
Clinton Public Hospital
Collingwood General and Marine Hospital
Cornwall Community Hospital
Deep River and District Hospital Corporation
Dryden Regional Health Centre
Englehart and District Hospital Inc.
Espanola General Hospital
Four Counties Health Services
Georgian Bay General Hospital
Geraldton District Hospital
Grand River Hospital
Grey Bruce Health Services
Groves Memorial Community Hospital
Guelph General Hospital
Haldimand War Memorial Hospital
Haliburton Highlands Health Services Corporation
Halton Healthcare Services Corporation
Hamilton Health Sciences Corporation
Hanover & District Hospital
Headwaters Health Care Centre
Health Sciences North
Holland Bloorview Kids Rehabilitation Hospital
Hôpital Général de Hawkesbury and District General Hospital Inc.
Hôpital Glengarry Memorial Hospital
Hôpital Montfort
Hôpital Notre Dame Hospital (Hearst)
Hornepayne Community Hospital
Hospital for Sick Children
Hôtel-Dieu Grace Healthcare
Hôtel-Dieu Hospital, Cornwall
Humber River Regional Hospital
Joseph Brant Hospital
Kemptville District Hospital
Kingston General Hospital
Kirkland and District Hospital
Lady Dunn Health Centre
Lady Minto Hospital at Cochrane
Lake of the Woods District Hospital
Lakeridge Health
Leamington District Memorial Hospital
Lennox and Addington County General Hospital
Listowel Memorial Hospital
London Health Sciences Centre
Mackenzie Health
Manitoulin Health Centre
Manitouwadge General Hospital
Markham Stouffville Hospital
Mattawa General Hospital
Muskoka Algonquin Healthcare
Niagara Health System
Nipigon District Memorial Hospital
Norfolk General Hospital
North Bay Regional Health Centre
North Shore Health Network

North of Superior Healthcare Group
North Wellington Health Care Corporation
North York General Hospital
Northumberland Hills Hospital
Orillia Soldiers’ Memorial Hospital
Ottawa Hospital
Pembroke Regional Hospital Inc.
Perth and Smiths Falls District Hospital
Peterborough Regional Health Centre
Providence Care Centre (Kingston)
Providence Healthcare
Queensway-Carleton Hospital
Quinte Healthcare Corporation
Red Lake Margaret Cochenour Memorial Hospital Corporation
Religious Hospitallers of St. Joseph of the Hôtel Dieu of Kingston
Religious Hospitallers of St. Joseph of the Hotel Dieu of St. Catharines
Renfrew Victoria Hospital
Riverside Health Care Facilities Inc.
Ross Memorial Hospital
Rouge Valley Health System
Royal Victoria Regional Health Centre
Runnymede Healthcare Centre
Salvation Army Toronto Grace Health Centre
Sault Area Hospital
Scarborough Hospital
Seaforth Community Hospital
Sensenbrenner Hospital
Services de santé de Chapleau Health Services
Sinai Health System
Sioux Lookout Meno-Ya-Win Health Centre
Smooth Rock Falls Hospital
South Bruce Grey Health Centre
South Huron Hospital Association
Southlake Regional Health Centre
St. Francis Memorial Hospital
St. Joseph’s Care Group
St. Joseph’s Continuing Care Centre of Sudbury
St. Joseph’s General Hospital, Elliot Lake
St. Joseph’s Health Care, London
St. Joseph’s Health Centre (Guelph)
St. Joseph’s Health Centre (Toronto)
St. Joseph’s Healthcare Hamilton
St. Mary’s General Hospital
St. Mary’s Memorial Hospital
St. Michael’s Hospital
St. Thomas-Elgin General Hospital
Stevenson Memorial Hospital
Stratford General Hospital
Strathroy Middlesex General Hospital
Sunnybrook Health Sciences Centre
Temiskaming Hospital
Thunder Bay Regional Health Sciences Centre
Tillsonburg District Memorial Hospital
Timmins and District Hospital
Toronto East Health Network
Trillium Health Partners
University Health Network
University of Ottawa Heart Institute
Weeneebayko Area Health Authority
West Haldimand General Hospital
West Nipissing General Hospital
West Park Healthcare Centre
West Parry Sound Health Centre
William Osler Health System
Winchester District Memorial Hospital
Windsor Regional Hospital
Wingham and District Hospital
Women’s College Hospital
Woodstock General Hospital Trust

Specialty Psychiatric Hospitals — Ministry of Health and Long-Term Care

Centre for Addiction and Mental Health
Ontario Shores Centre for Mental Health Sciences

Royal Ottawa Health Care Group
Waypoint Centre for Mental Health Care

School Boards — Ministry of Education

Algoma District School Board
Algonquin and Lakeshore Catholic District School Board
Avon Maitland District School Board
Bloorview MacMillan School Authority
Bluewater District School Board
Brant Haldimand Norfolk Catholic District School Board
Bruce-Grey Catholic District School Board
Campbell Children’s School Authority
Catholic District School Board of Eastern Ontario
Conseil des écoles publiques de l’Est de l’Ontario
Conseil scolaire catholique Providence
Conseil scolaire de district catholique Centre-Sud
Conseil scolaire de district catholique de l’Est ontarien
Conseil scolaire de district catholique des Aurores boréales
Conseil scolaire de district catholique des Grandes Rivières
Conseil scolaire de district catholique du Centre-Est de l’Ontario
Conseil scolaire de district catholique du Nouvel-Ontario
Conseil scolaire de district catholique Franco-Nord
Conseil scolaire de district du Grand Nord de l’Ontario
Conseil scolaire de district du Nord-Est de l’Ontario
Conseil scolaire Viamonde
District School Board of Niagara
District School Board Ontario North East
Dufferin-Peel Catholic District School Board
Durham Catholic District School Board
Durham District School Board
Grand Erie District School Board
Greater Essex County District School Board
Halton Catholic District School Board
Halton District School Board
Hamilton-Wentworth Catholic District School Board
Hamilton-Wentworth District School Board
Hastings and Prince Edward District School Board
Huron-Perth Catholic District School Board
Huron-Superior Catholic District School Board
James Bay Lowlands Secondary School Board
John McGivney Children’s Centre School Authority
Kawartha Pine Ridge District School Board
Keewatin-Patricia District School Board
Kenora Catholic District School Board
KidsAbility School Authority
Lakehead District School Board

Lambton Kent District School Board
Limestone District School Board
London District Catholic School Board
Moose Factory Island District School Area Board
Moosonee District School Area Board
Near North District School Board
Niagara Catholic District School Board
Niagara Peninsula Children’s Centre School Authority
Nipissing-Parry Sound Catholic District School Board
Northeastern Catholic District School Board
Northwest Catholic District School Board
Ottawa Catholic District School Board
Ottawa Children’s Treatment Centre School Authority
Ottawa-Carleton District School Board
Peel District School Board
Penetanguishene Protestant Separate School Board
Peterborough Victoria Northumberland and
Clarington Catholic District School Board
Rainbow District School Board
Rainy River District School Board
Renfrew County Catholic District School Board
Renfrew County District School Board
Simcoe County District School Board
Simcoe Muskoka Catholic District School Board
St. Clair Catholic District School Board
Sudbury Catholic District School Board
Superior North Catholic District School Board
Superior-Greenstone District School Board
Thames Valley District School Board
Thunder Bay Catholic District School Board
Toronto Catholic District School Board
Toronto District School Board
Trillium Lakelands District School Board
Upper Canada District School Board
Upper Grand District School Board
Waterloo Catholic District School Board
Waterloo Region District School Board
Wellington Catholic District School Board
Windsor-Essex Catholic District School Board
York Catholic District School Board
York Region District School Board

Colleges — Ministry of Training Colleges and Universities

Algonquin College of Applied Arts and Technology
Cambrian College of Applied Arts and Technology
Canadore College of Applied Arts and Technology
Centennial College of Applied Arts and Technology
Collège Boréal d’arts appliqués et de technologie
Collège d’arts appliqués et de technologie La Cité collégiale
Conestoga College Institute of Technology and Advanced Learning
Confederation College of Applied Arts and Technology
Durham College of Applied Arts and Technology
Fanshawe College of Applied Arts and Technology
George Brown College of Applied Arts and Technology
Georgian College of Applied Arts and Technology

Humber College Institute of Technology and Advanced Learning
Lambton College of Applied Arts and Technology
Loyalist College of Applied Arts and Technology
Mohawk College of Applied Arts and Technology
Niagara College of Applied Arts and Technology
Northern College of Applied Arts and Technology
Sault College of Applied Arts and Technology
Seneca College of Applied Arts and Technology
Sheridan College Institute of Technology and Advanced Learning
Sir Sandford Fleming College of Applied Arts and Technology
St. Clair College of Applied Arts and Technology
St. Lawrence College of Applied Arts and Technology

Province of Ontario schedule 9: Government business enterprisesfootnote 57

Summary financial information of Government Business Enterprises is provided below.

For the year ended
March 31, 2017
($ Millions)

Hydro One Limitedfootnote 58

Brampton Distribution Holdco Inc.

Liquor Control Board of Ontario

Ontario Lottery and Gaming Corporation

Ontario Power Generation Inc.

Total

Assets

Cash and temporary investments

23

325

475

220

1,043

Accounts receivable

943

76

151

802

1,972

Inventories

477

30

731

1,238

Prepaid expenses

28

48

76

Long-term investments

112

112

Fixed assets

18,820

397

1,103

19,807

40,127

Other assets

5,943

2

21,203

27,148

Total assets

25,729

1,303

1,921

42,763

71,716

Liabilities

Accounts payable

1,092

715

335

1,223

3,365

Notes payable

451

451

Deferred revenue

11

323

334

Long-term debt

10,682

108

61

5,805

16,656

Other liabilities

3,363

275

21,884

25,522

Total liabilities

15,588

823

682

29,235

46,328

Net assets before non-controlling interest

10,141

480

1,239

13,528

25,388

Non-controlling interest

(2,976)

(143)

(3,119)

Net assets after non-controlling interest

7,165

480

1,239

13,385

22,269

Revenue

4,570

553

5,967

7,484

5,343

23,917

Expenses

4,070

535

3,618

5,126

5,001

18,350

Net income

500

18

2,349

2,358

342

5,567

Net assets at beginning of year

8,347

471

437

1,312

13,005

23,572

IFRS transitional impact

87

(770)

(683)

Book value of Brampton Networks sold
(note 12)

(436)

(436)

Book value of Brampton Holdco Inc. transferred

(53)

(53)

Increase in fair value of Ontario Nuclear
Funds (note 10)

1,094

1,094

Book value of Hydro One shares sold (note 11)

(1,321)

(1,321)

Remittances to Consolidated Revenue Fund

(368)

(2,306)

(2,431)

(5,105)

Net assets before Accumulated Other Comprehensive Loss (AOCI)

7,245

480

1,239

13,671

22,635

AOCI at beginning of year

(89)

(391)

(480)

Other comprehensive income (loss)

9

105

114

AOCI at year end

(80)

(286)

(366)

Net assets

7,165

480

1,239

13,385

22,269

Province of Ontario Schedule 9: Government Business Enterprisesfootnote 57 (cont’d)

Material balances with entities included in the Government’s reporting entity reported in the Consolidated Statement of Financial Position

As at March 31
($ Millions)

2017

2016

Financial assets

567

712

Debts

3,445

3,465

Other liabilities

212

239

Repayment schedule for long-term debts contracted with third parties

Payments to be made in:

As at March 31
($ Millions)

2017

2016

2018

2019

2020

2021

2022

2023 and
thereafter

Hydro One Limited

10,671

10,671

602

981

503

1,153

603

6,829

Ontario Power Generation Inc.

2,021

2,224

3

3

3

228

3

1,781

Total

12,692

12,895

605

984

506

1,381

606

8,610

Brampton Distribution Holdco Inc

The principal business of Brampton Distribution Holdco Inc. was the ownership, operation and management of electricity distribution systems and facilities.

On February 28, 2017, the Province, through Brampton Distribution Holdco Inc., sold its entire interest in Hydro One Brampton, through a sale of shares, to a merged entity, Alectra Utilities Corporation (Alectra). Subsequent to the sale of Hydro One Brampton Network, Brampton Distribution Holdco Inc., is no longer a Government Business Enterprise (GBE) and is classified as an Other Government Organization and consolidated on a line-by-line basis.

Hydro One Limited

The principal business of Hydro One Limited is the transmission and distribution of electricity to customers within Ontario. It is regulated by the Ontario Energy Board.

Liquor Control Board of Ontario

The Liquor Control Board of Ontario regulates the purchase, sale and distribution of liquor for home consumption and liquor sales to licensed establishments through Liquor Control Board stores, Brewers Retail stores and winery retail stores throughout Ontario. The Board buys wine and liquor products for resale to the public, tests all products sold and establishes prices for beer, wine and spirits.

Ontario Lottery and Gaming Corporation

The Corporation conducts lottery games and operates commercial casinos, charity casinos and slot machines at Ontario racetracks.

Ontario Power Generation Inc

The principal business of Ontario Power Generation Inc. is the generation and sale of electricity in the Ontario wholesale market and in the interconnected markets of Quebec, Manitoba and the northeast and midwest United States.

Province of Ontario schedule 10: Fees, Donations and Other Revenues from Hospitals, School Boards and Colleges

Sectors

Hospitals

School Boards

Colleges

Total

For the year ended March 31
($ Millions)

2017

2016

2017

2016

2017

2016

2017

2016

Fees

1,621

1,390

259

230

1,935

1,715

3,815

3,335

Ancillary services

466

440

547

556

299

294

1,312

1,290

Grants and donations for research and other purposes

819

1,002

18

21

51

16

888

1,039

Sales and rentals

365

327

107

118

64

43

536

 488

Recognition of deferred capital contributions

404

383

6

5

43

44

453

 432

Miscellaneous

396

372

452

411

105

126

953

909

Total

4,071

3,914

1,389

1,341

2,497

2,238

7,957

7,493

Glossary

Note: The descriptions of the terms in the glossary are provided for the purpose of assisting readers of the 2016–17 Annual Report. The descriptions do not affect or alter the meaning of any term under law. The glossary does not form part of the audited Consolidated Financial Statements.

Accumulated Amortization:
the total amortization that has been recorded over the life of an asset to date. The asset’s total cost less the accumulated amortization gives the asset’s net book value.
Accumulated Deficit:
the difference between liabilities and assets. It represents the total of all past annual deficits minus all past annual surpluses, including prior-period adjustments.
Amortization:
expensing a portion of an asset’s cost in an accounting period by allocating its cost over its estimated useful life. This is applicable to tangible capital assets and items such as expenses relating to a debt issue.
Appropriation:
an authority of the Legislative Assembly to pay money out of the Consolidated Revenue Fund or to incur a non-cash expense.
Annual Report:
the Consolidated Financial Statements of the Province along with supporting statements and schedules.
Broader Public Sector (BPS):
public hospitals, specialty psychiatric hospitals, school boards and colleges. For financial statement purposes, universities and other organizations such as municipalities are excluded because they do not meet the criteria of government organizations as recommended by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada.
Canada Health Transfer (CHT):
a federal transfer provided to each province and territory in support of health care.
Canada Social Transfer (CST):
a federal transfer provided to each province and territory in support of post-secondary education, social assistance and social services, including early childhood development, early learning and child care.
Capital Gain:
the profit arising from the sale or transfer of capital assets or investments. For accounting purposes, it is the proceeds or market value received less the net book value of the capital asset or investment.
Capital Lease:
a lease that, from the point of view of the lessee, transfers substantially all the benefits and risks incident to ownership of property to the lessee.
Consolidated Revenue Fund (CRF):
the aggregate of all public monies on deposit to the credit of the Minister of Finance or in the name of any agency of the Crown approved by the Lieutenant Governor in Council. Payments made from the CRF must be appropriated by a statute. See Appropriation.
Consolidation:
the inclusion of the financial results of government-controlled organizations in the Province’s Consolidated Financial Statements.
Consumer Price Index (CPI):
a broad measure of the cost of living. Through the monthly CPI, Statistics Canada tracks the retail price of a representative shopping basket of goods and services from an average household’s expenditure: food, housing, transportation, furniture, clothing and recreation. The percentage of the total basket that any item occupies is termed the “weight” and reflects typical consumer spending patterns. Since people tend to spend more on food than clothing, changes in the price of food have a bigger impact on the index than, for example, changes in the price of clothing and footwear.
Contingency Fund:
an amount of expense that is approved by the Legislative Assembly at the beginning of the year to cover higher spending due to unforeseen events. This approved spending limit is allocated during the year to ministries for their programs and activities. The actual costs incurred are charged to the respective programs and activities and not to the contingency fund. Therefore, the contingency fund as at the end of the Province’s fiscal year is nil. See Reserve.
Contingent Liabilities:
possible obligations that may result in the future sacrifice of economic benefits arising from existing conditions or situations involving uncertainty, which will ultimately be resolved when one or more future events not wholly within the government’s control occur or fail to occur. Resolution of the uncertainty will confirm the incurrence or non-incurrence of a liability.
Contractual Obligations:
obligations of a government to others that will become liabilities when the terms of any contract or agreement, which the government had entered into, are met.
Debenture:
a debt instrument where the issuer promises to pay interest and repay the principal by the maturity date. It is unsecured, meaning there is no lien on any specific asset.
Debt:
an obligation resulting from the borrowing of money.
Deferred Capital Contribution:
the unamortized portion of tangible capital assets or liabilities to construct or acquire tangible capital assets from specific funding received from other levels of government or third parties. Deferred capital contribution is recorded in revenue over the estimated useful life of the underlying tangible capital assets once constructed or acquired by the Province.
Deferred Revenue:
unspent externally restricted grants from other levels of government and third parties for operating activities. Deferred revenues are recorded into revenue in the period in which the amount received is used for the purposes specified.
Deficit:
the amount by which government expenses exceed revenues in any given year. On a forecast basis, a reserve may be included.
Derivatives:
financial contracts that derive their value from other underlying instruments. The Province uses derivatives including swaps, forward foreign exchange contracts, forward rate agreements, futures and options to hedge and minimize interest costs.
Expected Average Remaining Service Life:
total number of years of future services expected to be rendered by that group of employees divided by the number of employees in the group.
Fair Value:
the price that would be agreed upon in an arm’s-length transaction and in an open market between knowledgeable, willing parties who are under no compulsion to act. It is not the effect of a forced or liquidation sale.
Financial Assets:
assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations. Financial assets include cash; an asset that is convertible to cash; a contractual right to receive cash or another financial asset from another party; a temporary or portfolio investment; a financial claim on an outside organization or individual; and inventory.
Financial Instrument:
liquid asset, equity security in an entity or a contract that gives rise to a financial asset of one contracting party and a financial liability or equity instrument of the other contracting party.
Fiscal Plan:
an outline of the government’s consolidated revenue and expense plan for the upcoming fiscal year and the medium term, including information on the projected surplus/deficit. The plan is formally presented in the Budget, which the government presents in the spring of each year and is updated, as required, during the year. The fiscal plan numbers can be different from the expenditures outlined in the Printed Estimates.
Fiscal Year:
the Province of Ontario’s fiscal year runs from April 1 of a year to March 31 of the following year.
Floating Rate Notes (FRNs):
debt instruments that bear a variable rate of interest.
Forgivable Loan:
advances where the terms and conditions of the loan agreement allow for the non-repayment of the principal or accrued interest when certain conditions are met.
Forward Contract:
a contract that obligates one party to buy, and another party to sell, a specified amount of a particular asset at a specified price, on a given date in the future.
Forward Rate Agreement:
a forward contract that specifies the rate of interest, usually short term, to be paid or received on an obligation beginning at a future start date.
Fund:
fiscal and accounting entity segregated for the purpose of carrying on specific activities, or attaining certain objectives in accordance with special regulations, restrictions or limitations.
Futures:
an exchange-traded contract that confers an obligation to buy or sell a physical or financial commodity at a specified price and amount on a future date.
Gross Domestic Product (GDP):
the total unduplicated value of the goods and services produced in the economy of a country or region during a given period, such as a quarter or a year. Gross domestic product can be measured three ways: as total income earned in current production, as total final expenditures or as total net value added in current production.
Hedging:
a strategy to minimize the risk of loss on an asset (or a liability) from market fluctuations such as interest rate or foreign exchange rate changes. This is accomplished by entering into offsetting commitments with the expectation that a future change in the value of the hedging instrument will offset the change in the value of the asset (or the liability).
Indemnity:
an agreement whereby one party agrees to compensate another party for any loss suffered by that party. The Province can either seek or provide indemnification.
Infrastructure:
the facilities, systems and equipment required to provide public services and support private-sector economic activity including network infrastructure (e.g., roads, bridges, water and wastewater systems, large information technology systems), buildings (e.g., hospitals, schools, courts) and machinery and equipment (e.g., medical equipment, research equipment).
Liquid Reserve:
comprises cash and short-term investments managed before consolidation with other government entities. It includes cash in the Province’s bank accounts, money market securities and long-term bonds which have not been lent out through a sale and re-purchase agreement, adjusted for net pledged collateral.
Loan Guarantee:
an agreement to pay all or part of the amount due on a debt obligation in the event of default by the borrower.
Net Book Value of Tangible Capital Assets:
historical cost of tangible capital assets less both the accumulated amortization and the amount of any write-downs.
Net Debt:
the difference between the Province’s total liabilities and financial assets. It represents the Province’s future revenue requirements to pay for past transactions and events.
Nominal:
an amount expressed in dollar terms without adjusting for changes in prices due to inflation or deflation. It is not a good basis for comparing values of GDP in different years, for which a “real” value expressed in constant dollars (i.e., adjusted for price changes) is needed. See Real GDP.
Non-Financial Assets:
assets that normally do not generate cash capable of being used to repay existing debts. The non-financial assets of the Province are tangible capital assets, prepaid expenses and inventories of supplies.
Non-Tax Revenue:
revenue received by the government from external sources. This also includes revenues from the sale of goods and services, fines and penalties associated with the enforcement of government regulations and laws; fees and licences; royalties; profits from a self-sustaining Crown agency; and asset sales.
Ontario Disability Support Program (ODSP):
a program designed to meet the unique needs of people with disabilities who are in financial need, or who want and are able to work and need support. Ontarians aged 65 years or older who are ineligible for Old Age Security may also qualify for ODSP supports if they are in financial need.
Option:
a contract that confers the right, but not the obligation, to buy or sell a specific amount of a commodity, currency or security at a specific price, on a certain future date.
Pension Actuarial Accounting Valuation:
a valuation performed by an actuary to measure the pension benefit obligations at the end of the period or a point in time. The valuation attributes the cost of the pension benefit obligations to the period the related services are rendered by the members.
Pension Statutory Actuarial Funding Valuation:
a valuation performed by an actuary to determine whether a pension plan has sufficient money to pay for its obligations when they become due. The valuation determines the contributions required to meet the pension benefit obligations.
Present Value:
the current worth of one or more future cash payments, determined by discounting the payments using a given rate of interest.
Program Expense:
total expense excluding interest on debt.
Public Accounts:
the Consolidated Financial Statements of the Province along with supporting statements and schedules as required by the Financial Administration Act.
Real GDP:
gross domestic product measured to exclude the impact of changing prices.
Recognition:
the process of including an item in the financial statements of an entity.
Reserve:
an amount included in the fiscal plan to protect the plan against unforeseen adverse changes in the economic outlook, or in the Provincial revenue and expense. Actual costs incurred by the ministry, which pertain to the reserve, are recorded as expenses of that ministry. See Contingency Fund.
Segment:
a distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to help users of the financial statements identify the resources allocated to support the major activities of the government.
Sinking Fund Debenture:
a debenture that is secured by periodic payments into a fund established to retire long-term debt.
Straight-Line Basis of Amortization:
a method whereby the annual amortization expense is computed by dividing i) the historical cost of the asset by ii) the number of years the asset is expected to be used.
Surplus:
the amount by which revenues exceed government expenses in any given year. On a forecast basis, a reserve may be included.
Swaption:
an option granting its owner the right but not the obligation to enter into an underlying swap. Although options can be traded on a variety of swaps, the term swaption typically refers to options on interest rate swaps.
Tangible Capital Assets:
physical assets including land, buildings, transportation infrastructure, vehicles, leased assets, machinery, furniture, equipment and information technology infrastructure and systems, and construction in progress.
Temporary Investments:
investments that are transitional or current in nature and generally capable of reasonably prompt liquidation.
Total Debt:
the Province’s total borrowings outstanding.
Total Expense:
sum of program expense and interest on debt expense.
Transfer Payments:
grants to individuals, organizations or other levels of government for which the government making the transfer does not:
  • receive any goods or services directly in return, as would occur in a purchase or sale transaction;
  • expect to be repaid, as would be expected in a loan; or
  • expect a financial return, as would be expected in an investment.
Treasury Bills:
short-term debt instrument issued by governments on a discount basis.
Unrealized Gain or Loss:
an increase or decrease in the fair value of an asset accruing to the holder. Once the asset is disposed of or written off, the gain or loss is realized.

Sources of additional information

The Ontario Budget

The Ontario government presents a Budget each year, usually in the early spring. This document outlines expected expense and revenue for the upcoming fiscal year. For an electronic copy of the Ontario Budget, visit the Ministry of Finance website at www.fin.gov.on.ca.

The estimates of the Province of Ontario

The government’s spending Estimates for the fiscal year commencing April 1 are presented to members of the Legislative Assembly following the presentation of the Ontario Budget by the Minister of Finance. The Estimates outline the spending plans of each ministry and are submitted for approval to the Legislative Assembly according to the Supply Act. For electronic access, go to: www.fin.gov.on.ca.

Ontario finances

This is a quarterly report on the performance of the government’s Budget for the fiscal year. It covers developments during a quarter and provides a revised outlook for the remainder of the year. For electronic access, go to: www.fin.gov.on.ca.

Ontario Economic accounts

This quarterly report contains data on Ontario’s economic activity. For electronic access, go to: www.fin.gov.on.ca.