How Compensation Spending Consumes Provincial Government Resources in Ontario

This report measures the growth in provincial government compensation spending in Ontario and how such spending has consumed government resources from 2005/06 to 2013/14 (latest year of available data).

Over the period, increases in compensation spending (47.1% growth) have, by a wide margin, outpaced the combined rate of inflation (15.1%) and growth in the number of provincial government jobs (10.9%), resulting in higher compensation spending per job after accounting for inflation. While the government has restrained the growth rate in compensation spending since 2009/10 (relative to five years prior), compensation spending has not been restrained to the same extent as other areas of program spending. As a result, compensation spending has consumed a greater share of total program spending (52.0% in 2013/14, up from 50.1% in 2009/10). In fact, compensation spending on provincial government workers is responsible for nearly three-quarters (73.5%) of the new program spending from 2009/10 to 2013/14.

Had the government kept the ratio of compensation spending to total program spending in 2009/10 constant at 50.1%, it would have spent a cumulative $14.7 billion less on compensation from 2009/10 to 2013/14 and acquired less debt. In 2013/14 alone, the deficit would have been $4.4 billion, or 42.4% smaller than the actual deficit ($10.5 billion).