The Niagara Falls Review

Ontario’s budget claims called into question again

Financial Accountabi­lity Office says deficit close to $12 billion in 2018

- SHAWN JEFFORDS

TORONTO — For the second time in a week, Ontario’s Liberals were dealt a blow by a legislativ­e watchdog, this time with the Financial Accountabi­lity Office saying the government’s deficit projection­s are inaccurate.

Just weeks before Ontario’s provincial election, the FAO said Wednesday the province’s deficit will jump to almost $12 billion this year as a result of higher spending in the Liberal government’s 2018 budget and weak revenue gains.

Those figures — released in the FAO’s Spring 2018 Economic Outlook — stand in stark contrast to the $6.7 billion deficit projected by the Liberals in their spring budget and already called into question last week by Ontario Auditor General Bonnie Lysyk.

FAO chief economist David West said at a basic level the government’s current spending levels are unsustaina­ble.

“We use the word structural deficit,” he said. “There is a fundamenta­l imbalance between revenues and spending. The 2018 budget just added to that imbalance. The conclusion of that ... is that economic growth alone will not be sufficient to allow the government to eliminate the deficit.”

The Liberal government’s spring budget has projected six consecutiv­e deficits to fund billions in new spending on child care and health care.

The FAO report said the government’s spending plan will add about $70 billion to the province’s net debt, increasing it to almost $400 billion in 2020-21.

It also warns that the Liberal government’s plan to balance the books by 2024 involves a dramatic cut in spending growth, and said the government has provided few specifics about those spending cuts.

It would need to find $15 billion in reductions by 2025, or the equivalent of an eight per cent drop in program spending, to achieve its goal, the report notes.

J. David Wake, the Temporary Financial Accountabi­lity Officer, said the government’s plan “shifts the burden of stabilizin­g Ontario’s public finances from current taxpayers to younger Ontarians and leaves the province with less flexibilit­y to respond to future crises, including recessions.”

The report echoes some of the findings from the auditor general who said that the government had understate­d its deficit numbers in the 2018 budget, saying they were off by 75 per cent for 2018-2019, with that jumping to 92 per cent for 2020-2021.

Lysyk said the government has not accurately reflected the true cost of its borrowing plan to cut hydro rates by 25 per cent, and also raised questions about how the province accounts for revenues related to two teacher pension plans it includes on the books as assets.

Finance Minister Charles Sousa said his financial projection­s incorporat­e restrained estimates, and he isn’t concerned the FAO’s warnings will come to pass. “We’ve always beaten those expectatio­ns,” he said. “We will do so again because I’ve been taking very cautious measures and I have put in contingenc­ies and reserves to ensure that we track back.”

Progressiv­e Conservati­ve Parliament­ary Leader Vic Fedeli called the FAO’s findings another “damning” report about the state of the province’s finances. The watchdog’s findings confirm again that the government’s projection­s aren’t accurate, he said.

“They did not slay the deficit, as they said, they did not balance,” he said. “You cannot trust anything that Kathleen Wynne says ever again.”

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