‘Ontario really has had a lost decade’

The comments come after the minister outlined a plan last year to spend $190 billion over 13 years on infrastructure development.

“The economy is strong, but just not strong enough,” said Jessica Martin, a spokeswoman for Sousa.

But Ontario’s swelling fiscal stimulus plans could threaten to over-expose the province once it settles into lower growth levels in coming years, says RBC.

“They should prepare and build up their fiscal reserves,” said Walsh.

Newly-minted PC Leader Ford has said Ontario’s debt troubles present a major challenge to the province. During his campaign he talked about cutting spending by four per cent of the provincial budget, or roughly $5.6 billion, by finding “efficiencies” in the system.

“Our finances are in a terrible mess in this province,” Ford said in a March 13 interview with CBC News. “We’re paying $12 billion a year in servicing that debt.”

Ford, similar to other Conservative leadership candidates, has also threatened to scrap a carbon tax that was proposed under former PC leader Patrick Brown.

But a Forum Research poll in February shows that 46 per cent of Ontarians supported a carbon pricing even if it made some things more expensive.

Scrapping the carbon tax would also deprive the province of at least $4 billion in tax revenues, but Ford has said he would like to save at least four cents of every government dollar spent to make up the shortfall. Ford’s campaign did not respond to a request for comment about its fiscal plans for the province.

Ontario’s current ballooning debt comes after a decade of sluggish economic performance. “When you take a step back and look at the medium term, you realize that it’s been a very weak performance for Ontario as a whole,” said Ben Eisen, a researcher at Fraser Institute.

The think tank released a report on Thursday that found the province trailing its peers in private sector job creation, GDP growth per person and median household income growth. The report said the tepid performance over the past 10 years could weigh on the province as it looks to balance its budget. “Ontario really has had a lost decade,” Eisen said.

Concerns over Ontario’s debt profile come amid intensified worries around NAFTA, which has already crimped Canadian business investment levels. Ontario automotive, metal and plastic manufacturers, among other sectors with highly integrated supply chains with the U.S., have shrunk their spending plans as they wait for NAFTA negotiations to close.

“If we get a U.S. withdrawal or something worse we may get a long-term drag on investment,” Walsh said.

However, warnings that Ontario’s economy is poised for a downward spiral are blown out of proportion, said Stephen Gordon, an economics professor at Laval University. “The Ontario economy is nowhere near recession,” Gordon said.