Watch­dog warns On­tario’s debt will hit $350 bil­lion by 2020

The Hamilton Spectator - - CANADA & WORLD - KEITH LES­LIE

On­tario’s fi­nan­cial watch­dog warns the prov­ince’s net debt will grow by another $50 bil­lion to $350 bil­lion in the next four years, and pre­dicts a re­turn to deficit bud­gets even if the books are bal­anced next year.

The Fi­nan­cial Ac­count­abil­ity Of­fice said Tues­day that the net debt will keep grow­ing largely be­cause of the Lib­eral govern­ment’s $160-bil­lion, 12-year plan to in­vest in in­fra­struc­ture and pub­lic tran­sit projects.

The FAO said the debt will also grow be­cause it pre­dicts a re­turn to an­nual bud­get deficits in 2018-19, even though the Lib­er­als prom­ise to elim­i­nate a $5.7-bil­lion short­fall next year.

This year’s pro­vin­cial bud­get fore­cast On­tario’s net debt would hit $326.8 bil­lion in 2018-19, which was as far out as its pro­jec­tions went, so the FAO’s pre­dic­tion of a $350 bil­lion debt by 2020-21 is not a big stretch.

The Op­po­si­tion said the FAO’s re­port is proof that “the Lib­er­als’ mis­man­age­ment and reck­less spend­ing” is caus­ing On­tario’s debt to spi­ral out of con­trol.

“This morn­ing, the Fi­nan­cial Ac­count­abil­ity Of­fi­cer con­firmed ... that On­tario will con­tinue to be the largest sub­na­tional bor­rower in the world,” said Pro­gres­sive Con­ser­va­tive fi­nance critic Vic Fedeli.

“He also con­firmed what we’ve been say­ing for months, that the govern­ment is us­ing one­time money from as­set sales, con­tin­gency funds and tax in­creases to ar­ti­fi­cially bal­ance the bud­get in an elec­tion year.”

The New Democrats said the rea­son On­tario’s net debt is in­creas­ing is be­cause Premier Kath­leen Wynne’s choices are more about pol­i­tics than about what’s best for On­tar­i­ans.

“The FAO re­ported that Kath­leen Wynne’s de­ci­sion to sell Hy­dro One doesn’t pay for in­fra­struc­ture, but will ac­tu­ally in­crease the debt,” said NDP fi­nance critic Cather­ine Fife.

“In­stead of ask­ing prof­itable busi­nesses to pay their fair share, the Lib­er­als have cut On­tario’s cor­po­rate tax rate so it’s lower than Alabama’s.”

The FAO re­port said On­tario’s net debt “in­creased sig­nif­i­cantly” dur­ing the 2008-09 re­ces­sion, and grew by $139 bil­lion be­tween then and 2015-16.

Fi­nance Min­is­ter Charles Sousa said the Lib­er­als made a de­ci­sion dur­ing the re­ces­sion to stim­u­late eco­nomic growth, which he in­sists meant the down­turn was not as deep or as long as it might oth­er­wise have been.

“We know that in­vest­ing in in­fra­struc­ture spurs eco­nomic growth and in­creases GDP, which is why we’ve de­cided to make a his­toric $160-bil­lion in­vest­ment in roads, bridges, schools and hospi­tals across On­tario,” Sousa said in a state­ment.

“Through pru­dent debt man­age­ment, we have con­sis­tently kept in­ter­est on debt costs below bud­get pro­jec­tions.”

In­ter­est on On­tario’s debt is ex­pected to be $11.75 bil­lion this year and $12.45 bil­lion in 2017-18, both lower than fore­cast in the 2015 bud­get.

On Monday, On­tario an­nounced first quar­ter re­sults show­ing 0.8 per cent growth, or three per cent on an an­nu­al­ized ba­sis, the strong­est among all G7 coun­tries.

“On­tario re­mains firmly com­mit­ted to elim­i­nat­ing the deficit by 2017-18, and will do so in a way that is fair, eq­ui­table and pro­tects the valu­able pro­grams and ser­vices that On­tar­i­ans rely on,” Sousa said.

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