THUNDER BAY, ON ---- April 13, 2013 ----- Today, servicing the debt is the third largest expenditure of the Ontario government. About one in every ten dollars taken from Ontario taxpayers goes to pay interest on the debt, over $10.4 billion last year – and this in a low-interest rate climate. Our debt-to-GDP ratio is hovering just below 40 per cent, exactly where Greece’s stood less than three decades ago.
Unless the Wynne government makes serious structural spending changes, young citizens of Ontario are going to inherit a bankrupt province, similar to the likes of Greece and Cyprus.
Our provincial government has gone on a reckless spending spree, and used a credit card to finance it all. There have been countless pet projects, from stimulus bailouts to green energy to big public sector salaries, all expensed without regard for whom will ultimately pay the bill. But everyone knows that when you run up your credit card, you eventually have to pay it back, with interest.
The Canadian Taxpayers Federation has proposed three achievable goals for the Minister of Finance to include in the upcoming budget, in order to restore fiscal sanity and move towards a balanced budget, as soon as possible.
TD Bank’s former chief economist Don Drummond was commissioned by the Liberal government to issue a report on Ontario’s debt and spending. He provided an excellent road map to restore a balanced budget in Ontario, but his proposals seem to have fallen on deaf ears.
CTF’s first recommendation is simple; Don Drummond issued a great report, the government must stop ignoring him and start implementing his major recommendations. His plan consists of some tough but necessary medicine.
This segues to the second recommendation. Premier Wynne committed to the CTF that she will eliminate the deficit by 2017-18, and will then restrict spending increases to 1 per cent below GDP growth until Ontario’s debt-to-GDP ratio returns to 27 per cent.
Why wait until 2017-18 to cap spending? This government needs to rein in spending now, and restrict growth in spending across the board. Otherwise, they will not achieve that balanced budget by 2017-18, but instead, as Mr. Drummond forecasts, see the deficit balloon to $30 billion.
The final recommendation to this government is to implement a legislated debt-reduction plan and repayment schedule to start chipping away at the province’s $255 billion debt. That debt, broken down per capita, equates to $18,889 for every man, woman and child in Ontario. It is wrong to dump that debt onto future taxpayers and young Ontario citizens.
It’s time for a debt-reduction payment schedule to be cemented by law. This government has proven that it will not pay the debt down on its own, and debt-reduction legislation has worked in provinces across Canada to get public accounts out of the red.
Ontario is in a bad situation. But we’re not Greece, not yet anyway. If the government acts now, the looming catastrophe can be avoided.
Our government simply needs to exercise the same fiscal responsibility that Ontario families demonstrate every day. Families who struggle to pay their bills and stay out of debt; folks who balance their checkbooks every month, who say no to frivolous spending and live within their means.
Instead, we have a government that adds $32.5 million to the debt every day. That is $22,625 borrowed every minute; in the time it took you to read this article, the government added a decent down payment for a starter home to the provincial debt. That is debt that you and your children will be forced to pay down in future taxes.
Candice Malcolm, Ontario Director
Canadian Taxpayers Federation