Summary

• In 2016/17, Ontario’s net debt reached $302 billion, or approximately $21, 500 per Ontarian. The province’s debt-to-GDP level stands at 38 percent, just below its all-time historic high.
• Ontario’s net debt has increased dramatically since 2003/04, with the province running budget deficits in 11 of the past 14 years. These annual deficits have ranged from $991 million to $19.3 billion and have averaged $8.6 billion over the whole period.
• The provincial government’s spending choices are a primary cause of Ontario’s persistent deficits. Between 2003/04 and 2016/17, provincial program spending increased at an average annual rate of 4.9 percent. This rate of growth greatly surpassed the province’s overall rate of economic growth (3.5 percent) and the rate that would have been required to offset the combined effects of inflation and population growth (2.8 percent).
• If the government had restrained program spending growth to the rate of nominal GDP growth since 2003/04, the province would have run budget surpluses every year since 2004/05; the large run-up in provincial debt since 2003/04 would not have occurred.
• Between 2003/04 and 2010/11, spending increased quickly, followed by a period of significantly slower spending growth between 2011/12 and 2016/17. This slowdown in spending growth, coupled with strong growth in revenues, contributed to deficit reduction in recent years.
• However, the government’s 2017/18 budget announced a substantial spending increase for the current fiscal year, suggesting that the short-lived era of comparative restraint may be ending. The Ontario government appears to be repeating the mistakes of the past and may once again be exposing the province to substantial risks including the re-emergence of large budget deficits should another fiscal shock occur.