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).