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Ford Government Fiscal Policy Approach Mirrors that of McGuinty and Wynne

Ford Government Fiscal Policy Approach Mirrors that of McGuinty and Wynne

follows same failed deficit-reduction strategy of its predecessor

NORTHERN, ONTARIO ~~~~~~  June 8, 2021  (LSN)  —The current Ontario government is continuing its immediate predecessors’ failed approach of slowing spending growth as a means towards a balanced budget, finds a new study released today by the Fraser Institute, an independent, non-partisan, Canadian public policy think-tank

“Despite criticisms of past governments, the Ford government has generally continued the fiscal policies of the McGuinty and Wynne governments with respect to spending and debt,” said Ben Eisen, senior fellow at the Fraser Institute and author of Ford Government Fiscal Policy Approach Mirrors that of McGuinty and Wynne

Specifically, like its’ predecessors, the Ford government has reduced the growth in government spending but not actually cut spending (before adjustments for inflation).

The aim is to slow the growth in spending and allow time for revenues to catch up to spending levels in order to balance the budget. This is the same deficit-reduction strategy employed by previous governments that produced a run-up in debt in the 2010s.

The analysis excludes COVID-related spending measures

In fact, according to 2021 budget forecasts, over the next three years government spending (minus interest costs) will increase by a cumulative total of 8.5 per cent compared to 6.6 per cent from 2010 to 2012 (under the McGuinty government).

Furthermore, once COVID spending and emergency transfers from the federal government are excluded, the Ford government’s forecasted pace of deficit reduction is actually slower than that achieved under Premier McGuinty in the early 2010s.

“Sometimes changes in government produce major policy changes, other times continuity prevails,” Eisen said.

“When it comes to spending, deficits, and debt, the evidence clearly shows there’s been no significant policy shift accompanying the change in government in Ontario.

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Summary

  • This bulletin analyzes the recent 2021 budget that Doug Ford’s Progressive Conservative government tabled in order to assess the extent to which it continues or changes the general fiscal policy approach of the Liberal governments of Premiers McGuinty and Wynne during the 2010s.
  • The Ford government plan presented in Budget 2021/22 represents fiscal policy continuity rather than change, particularly with regard to program spending growth, deficit reduction, and debt accumulation.
  • Excluding emergency COVID spending, the 2021 budget forecasts that nominal program spending will grow by a cumulative total of 8.5 percent over three years. By comparison, in the three years immediately following the 2008/09 recession, Premier McGuinty’s government increased spending by a total of 6.6 percent.
  • The rate of nominal spending growth planned in the 2021 budget is therefore slightly higher than that which occurred under Premier McGuinty in the wake of the 2008/09 recession.
  • The pace of deficit reduction forecasted in Budget 2021/22 is also similar to the rate of deficit reduction in the early 2010s. After adjusting for COVID spending and federal emergency aid, the Ford government’s fiscal plan projects average nominal deficit reduction of $2.41 billion per year over five years. By comparison, from 2010/11 to 2015/16, the McGuinty and Wynne governments achieved a nearly identical annual average deficit reduction of $2.38 billion over the five years.

Author:

Ben Eisen

Senior Fellow, Fraser Institute

 

 

Northwestern Ontario 
Kenora, Atikokan, Dryden, Ear Falls, Emo, Machin, Fort Frances, Rainy River, Red Lake, Sioux Lookout,Sioux Narrows-Nestor Falls, Thunder Bay, Ontario 

#LSN_Econ 

 

    The Fraser Institute is an independent, non-partisan research and educational organization based in Canada. We have offices in Calgary, Montreal, Toronto, and Vancouver. Visit our Website 

Categories: Economy
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