“When I say we need to stay on government’s fiscal plan of balancing the budget by 2017-18, I mean it.” – Kathleen Wynne, 2012
Just before she became Liberal leader in 2012, Kathleen Wynne made a commitment to eliminate Ontario’s deficit by fiscal year 2017-18 – a promise she continues to reiterate.
But we have no indication from this government of how that promise will be kept.
My question, to you the reader, is how would you help Ms. Wynne pull Ontario out of the red? Would you hike taxes, sell assets, cut spending, hope the economy gets better, or other?
Dunnville’s John Lupson writes, “My personal estimates are we have about three to four years to show we can reduce expenditures in the province or the premier, whoever it is at that time, will be told to go ahead with mass layoffs in the public sector – as well as roll back wages for all civil servants in Ontario. That will occur on top of the increase in debt charges to Ontario.”
Waterford’s Ron Sadler had this to say in a brief to Ontario and national party leaders, “It is personal – you were not elected a politician to give away our paycheques or to mortgage our children’s future, so manage our future while there still is the opportunity.”
The deficit is pegged this year to be at least $12.5 billion. And the budget, to be debated in July, does not balance the books any time in the near future.
The Minister of Finance is expecting revenue shortfalls in the coming years. The government has promised billions in new spending, and has refused to implement the Dalton McGuinty-Dwight Duncan wage-restraint legislation. As well, the recommendations for savings in the Don Drummond report have been shelved.
So what are some of the options? It appears to many that Kathleen Wynne will either:
- break her promise to balance the budget by 2017-18;
- break her promise to not raise taxes on the middle class;
- deliver on her promised $3 billion in cuts to programs by significantly cutting government jobs;
- start selling off assets of Ontario Power Generation, Hydro One, the LCBO …;
- implement a combination of all of the above.
With a possible credit rating downgrade imminent, take heed of government-appointed economist Don Drummond’s words: “In a world already awash with government debt, Ontarians should not assume that investors will always stand ready to buy the provincial bonds needed to finance new debt without asking for higher interest rates to compensate them for the accompanying risks.”
Interest rates are at a 20-year low but any percentage point increase will add about $400 million a year. Ontario already pays $11 billion annually to service this debt.
Following the 2012 budget, credit rating agencies expressed concerns. Dominion Bond Rating Services confirmed Ontario’s credit rating at AA (low), Moody’s downgraded the credit rating to AA2 and Standard and Poor’s placed Ontario’s AA- rating on negative outlook. S & P will usually act on a negative outlook within two years, meaning they will either return the outlook to stable or downgrade Ontario further.
Again what are your ideas on options to tame Ontario’s budget shortfall?
Toby Barrett is the Ontario Member of Provincial Parliament representing the riding of Haldimand—Norfolk. Mr. Barrett can be reached at firstname.lastname@example.org or you can follow him on twitter: @TobyBarrettMPP.