No On­tario party has cred­i­ble spend­ing plan

The Sun Times (Owen Sound) - - OPINION - RAN­DALL DENLEY

Voter alert: All three ma­jor po­lit­i­cal par­ties are try­ing to sell On­tar­i­ans a vi­sion of the future that is so dis­con­nected from the prov­ince’s scary fis­cal sit­u­a­tion that it would be laugh­able if we weren’t the ones fac­ing the con­se­quences.

De­tailed, au­thor­i­ta­tive analy­ses from On­tario’s two lead­ing pub­lic spend­ing ex­perts, the au­di­tor gen­eral and the fi­nan­cial ac­count­abil­ity of­fice, show On­tario is on the brink of sink­ing into a quag­mire of debt and over­spend­ing that will lead in­evitably to higher taxes, higher debt in­ter­est pay­ments and lower ser­vice lev­els.

And yet, you’d never know that from the care­less aban­don with which all the par­ties are promis­ing bil­lions of dol­lars in new spend­ing. The Lib­er­als and the NDP want to ex­pand the scope of gov­ern­ment with bor­rowed money, adding to an ex­ist­ing $5-bil­lion deficit iden­ti­fied by the two ex­perts agen­cies, a deficit the Lib­er­als dis­miss as an ac­count­ing dis­agree­ment and the other par­ties don’t want to talk about.

The Doug Ford Pro­gres­sive Con­ser­va­tives are also promis­ing new spend­ing and tax cuts, al­though they will at least partly off­set that with un­spec­i­fied “ef­fi­cien­cies.”

The Lib­er­als and NDP de­cry those cuts, said to be about $6 bil­lion over four years. Thank good­ness some­one is talk­ing about cut­ting some­thing, but at best, the PC pro­gram is likely to elim­i­nate some ex­pen­di­tures and re­place them with oth­ers of equal or greater cost.

As the fi­nan­cial ac­count­abil­ity of­fice de­tails, the Lib­eral plan would pro­duce $12-bil­lion an­nual deficits, dou­ble what they are let­ting on.

That’s only part of the prob­lem.

Those big new deficits come at a time when gov­ern­ment rev­enue growth is start­ing to weaken and ex­pen­di­ture pres­sures are go­ing up.

Economists an­tic­i­pate slower eco­nomic growth for On­tario in the next few years. Re­duced spend­ing by heav­ily in­debted con­sumers is a key fac­tor. The prob­lem is com­pounded by a lower rate of in­crease in trans­fers from the fed­eral gov­ern­ment and run­ning out of one-time things to sell, like that big chunk of Hy­dro One.

Slower growth means less new money for gov­ern­ment. Last year, rev­enue grew 6.7 per cent. For the next sev­eral years, it is ex­pected to go up only 2.7 per cent.

In­fla­tion, pop­u­la­tion in­creases and in­creased de­mand for health care will drive gov­ern­ment ex­pen­di­tures higher each year, no mat­ter who is in power. Add to that im­pend­ing labour con­tracts, an ex­pen­sive re­pair back­log for schools and hos­pi­tals and a short­age of money to meet cur­rent health-care needs.

Run­ning deficits only makes the prob­lem worse. If the Lib­eral pro­gram were en­acted, $70 bil­lion would be added to the debt, and in­ter­est pay­ments would in­crease by $1.7 bil­lion over the next three years, reach­ing $13.6 bil­lion. That would chew up 8.4 per cent of to­tal rev­enue.

The Lib­eral plan to get out of the deficit hole is not cred­i­ble. It of­fers three years of mega-spend­ing, fol­lowed by five years of slowly cut­ting back. The ac­count­abil­ity of­fice says bal­anc­ing the bud­get by 2025 at the ex­pen­di­ture lev­els the Lib­er­als pro­pose would mean

$15 bil­lion in per­ma­nent cuts. Can you see any party do­ing that?

Or how about this? A 10 per cent in­crease in per­sonal in­come tax rates, com­bined with a one per­cent­age point in­crease in the HST could elim­i­nate the planned Lib­eral deficit by 2025, if the tax in­creases were en­acted right away.

A cred­i­ble po­lit­i­cal party would prom­ise nei­ther tax cuts nor new pro­grams. It would fo­cus on dif­fi­cult spend­ing re­duc­tion choices, so that we could elim­i­nate the deficit, start to pare back the debt and meet future health care needs.

But then, who’d vote for that, when two par­ties are of­fer­ing ev­ery new pro­gram you can imag­ine, and the other one says the gov­ern­ment needs less money than it has now?

Wel­come to the fools’ par­adise. Ran­dall Denley is an Ot­tawa com­men­ta­tor, nov­el­ist and for­mer On­tario PC can­di­date. ran­dallden­

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