On March 26, 2024, Ontario’s Finance Minister presented the 2024 Budget entitled Building a Better Ontario. This Budget mainly focuses on infrastructure, employment, training in the skilled trades, and building the province’s healthcare workforce. This memo will highlight items that may be of interest to pension and group benefit plan Trustees, sponsors, and administrators.

Click here to download it in PDF format:

2024 Ontario Budget Highlights

Pensions

Building Ontario Fund

The government has allocated an initial investment of $3 billion in the new infrastructure bank, the Building Ontario Fund. This fund was created to attract capital to support the needs of Ontario’s growing infrastructures. This fund also creates opportunities for pension funds to invest members’ asset in Ontario specific projects.

Institutional investor participation will help the government expedite the construction of more infrastructures. Part of the mandate is to receive, assess ideas and proposals for infrastructure projects that come from qualified institutional investors, public sector entities, governments, or Indigenous communities.

Implementing a Target Benefit Framework

The Budget provides timing on the long-awaited regulations for target benefit pension plans in Ontario. The government is now drafting the proposed regulations, which will be made available for review by affected stakeholders in summer 2024. As such, once available, we expect to provide our remarks on the draft framework. Lastly, the government intends for the permanent target benefit framework to take effect on January 1, 2025.

During this process, PBI will continue working alongside the Ministry of Finance and Financial Service Regulatory Authority of Ontario to comment on the suggested changes of the expected framework.

Training and Education

The Skills Development Fund

Ontario is providing an additional $100 million to the program in 2024–25 to help workers, apprentices, and job seekers to develop the skills needed for in-demand jobs in critical sectors. Through the Skills Development Fund Capital Stream, Ontario is investing $224 million to expand brick-and-mortar training centres, which include union training halls.

Skilled Trades Strategy

Ontario is investing an additional $16.5 million annually over the next three years in its Skilled Trades Strategy to break the stigma associated with the skilled trades, attract young workers, simplify the system, and encourage employer participation.

Young Workers in Skilled Trade

Ontario is investing over $62.9 million for skills development and training programs to help more than 18,000 young people explore career opportunities in skilled trades.

Infrastructure

Ontario’s Plan to Build

Ontario is investing $190 billion over the next 10 years to build and expand highways, transit, homes, high-speed internet, and other critical infrastructure to support economic growth.

Debt Management

Borrowing and Interest Cost

Ongoing deficit and capital spending will increase Ontario’s net debt-to-GDP to 39.2%, which is just shy of Ontario’s target of 40%. Long-term borrowing is forecast to be $38.2 billion for 2024-25, below the $41.8 billion completed in the last fiscal year. The province is forecast to pay $12.8 billion in interest costs (6.3% of revenue) in 2023-24, $13.9 billion (6.8% of revenue) in 2024-25 and $14.7 billion (6.8% of revenue) in 2025-26, down from the 2023 Budget forecasts of $14.1 billion, $14.4 billion, and $15.1 billion, respectively, as a result of lower actual and projected cost of borrowing.

Green Bond Issuance

Ontario remains the largest issuer of Canadian dollar Green Bonds. The province released its new Ontario Sustainable Bond Framework that will allow for a broader range of potential bond offerings in the future, including emissions-free nuclear power.

Health Care

Hospitals

The government plans to invest close to $50 billion over the next 10 years in health infrastructure related to hospital expansions. In addition, it is committing $620 million over 10 years to address urgent infrastructure renewal needs to extend the life of existing hospital and community infrastructure. Ontario is also investing $965 million in 2024–25 to ensure public hospitals are able to meet patients’ needs and to increase access to high-quality care.

Long-Term Care

Ontario is investing $155 million in 2024–25 to fast-track construction of the next tranche of long-term care homes by November 30, 2024.

Indigenous and Northern Communities

The government is investing $94 million over three years to provide culturally responsive care such as public health, chronic disease prevention and maternal care aimed at enhancing the health and well-being of the Northern and Indigenous communities.

Medical School for Family Doctors

Ontario will support York University in establishing the first medical school in Canada that is primarily focused on training family doctors to address the need for family physicians and improving the province’s primary care capacity.

Interprofessional Primary Care Teams

Starting in 2024-25, the government will provide a total investment of $546 million over three years with the mission of connecting approximately 600,000 more people to primary health care through new and expanded interprofessional primary care teams.

Home and Community Care

This Budget includes an additional $2 billion over three years to support expansion and stabilization of the home and community care workforce by increasing compensation for frontline workers such as personal support workers, nurses, etc., and transforming the home care system with the aim to keep people healthy and in the comfort of their homes.

Mental Health Funding

Ontario will add an investment of $396 million over three years to improve mental health and addiction services. These investments will support the stabilization, improved access and expansion of existing services and programs.

Gas Costs

Gasoline Tax Act and Fuel Tax Act

The government is introducing an amendment to the Gasoline Tax Act and the Fuel Tax Act to extend the rate cuts of 5.7 center per litre for gas and 5.3 cents per litre for fuel so that the rate of tax on gas and fuel would remain at 9 cents per litre until December 31, 2024. This relief is especially important as the federal carbon tax is set to increase on April 1, 2024.