Ontario’s finances—remembering the big picture
Last week, Ontario’s auditor general issued a scathing report about the Wynne government’s Fair Hydro Plan, which sought to lower electricity costs for consumers by pushing costs (and resulting interest payments) into the future.
The AG pulled no punches in her assessment, stating that “in essence, the government is making up its own accounting rules” surrounding the plan, to make the province’s finances look healthier than they are.
The Wynne government pushed back, stating it “does not agree” with the report’s conclusions. Energy Minister Glenn Thibeault said that no “fast ones” were being pulled.
It’s not the first time Premier Wynne’s government has tangled with the AG over the province’s books. Just last year, the government and the AG publicly disagreed over the appropriate way to treat assets held by public pension plans. The dispute had implications for the important question of whether the government would post a balanced operating budget or a deficit this year.
Indeed, Auditor General Bonnie Lysyk is keeping a close eye on government accounting methods and calling out mistakes and improprieties. However, because of the technical nature of the accounting disputes and the complexity of the issues, it’s easy to get bogged down in the details of the disagreement of the day and lose sight of the bigger picture, which is that even relying on the government’s preferred accounting methods, Ontarians are saddled with a large and growing public debt load that burdens taxpayers today and threatens the prosperity of future generations.
Consider that the government’s last budget shows that since 2008/09, Ontario has seen its net debt increase every year by an average of $15.5 billion. That’s more than $1,000 in new debt per Ontarian per year for more than a decade.
Setting aside disputes about whether the operating budget today can properly be described as balanced, it’s important to recognize that, by the Wynne government’s own accounting, the provincial debt burden will grow to the tune of $34.1 billion over the next three years. That’s roughly another $3,000 per person in new debt by the time the decade is up.
As a result, the government now spends about $1 billion per month on debt interest— money therefore unavailable for important priorities such as health care, education or tax relief.
None of this is to say that the ongoing disputes about the annual budget balance or precise size of the debt burden don’t matter—of course they do. But these disputes should be considered within the indisputable context that Ontario’s debt burden has approximately doubled over the past decade, with no end in sight.
Again, accounting disputes between the government and the auditor general are somewhat dry and technical, and it can be difficult for even engaged and informed citizens to determine who’s right. But regardless of how pension assets should be treated, or how new debt incurred from the Fair Hydro Plan should appear on the books, the stark reality is that Ontario taxpayers are carrying far more public debt than a decade ago and that burden is growing quickly every year. That’s why it’s important to step back and look at the bigger picture of Ontario finances. And it’s not a pretty one, no matter which accounting method you use.
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