The Ontario government has pledged to eliminate its budget deficit by 2017/18. However, the government’s recent record on fiscal issues casts doubt on whether it will meet this target.
Ontario needs to speed up its deficit reduction: Government should look at compensation for government employees
Last week, Standard and Poor’s announced a downgrade to Ontario’s long-term credit rating, pointing to the province’s “very weak budgetary performance.”
According to the Globe and Mail, Ontario Premier Kathleen Wynne has a new advisor, former TD Bank chief executive officer, Ed Clark. Mr. Clark will apparently advise the government on a host of issues including finding new sources of revenue to help balance the provincial budget.
Despite the talk of painful austerity, Ontario’s recent budget continues to bleed red ink. Finance Minister Charles Sousa projects a deficit this year of $8.5 billion, and doesn’t predict an actual balancing of the books until 2017-18 fiscal year.
How governments manage their finances matters a great deal. Spend and borrow too much and the result is a spiral of increasing deficits that create ever higher debt. Then, ever-more tax dollars end up spent on debt interest—not on education, health care, administering provincial courts, or other areas in which provincial governments are involved.
We’ve seen this script before. Higher spending. Tax increases. Persistent deficits. Growing debt. Warnings from credit rating agencies. A government unwilling to make the tough choices to turn things around.
The other day former Ontario Premier Bob Rae, fumed at a column by economist Jack Mintz who noted the similarities between the current Kathleen Wynne government and Rae’s reign as premier of Ontario, specifically the “high deficits, debt and taxes.”
A new report on provincial debts and deficits by Moody's, the international credit rating agency, is another piercing reminder of Ontario's serious fiscal challenges.
It has been more than two years since an independent commission submitted its report to the Ontario government on the provinces poor public finances and high government debt.
Ontario Finance Minister Charles Sousa called his updated financial plan a new direction but in truth it had a nostalgic feel. With his government facing considerable fiscal challenges including an $11.7 billion deficit and growing debt, Ontarians desperately needed a new direction. What they actually got was more of the same: increased spending and a government reluctant to deal with core problems.