Watchdog warns of big jump in deficit

Ontario’s financial accountability office is warning that the province’s deficit will triple to $12 billion this year due to the Liberal government’s spending promises in its most recent budget and without new money to pay for them.

The Financial Accountability Office (FAO) says promised services such as free child care for preschoolers, more pharmacare and dental care will account for an extra $4 billion alone.

It says over the next three years, deficits will run about $12 billion annually — numbers similar to those the auditor general reported last week — creating a “fundamental imbalance.”

“The 2018 budget introduced significant new spending without adequate new revenues to pay for them,” said J. David Wake, the province’s temporary financial accountability officer.

However, Finance Minister Charles Sousa said the government has “built in lots of prudence. We have reserves. We have contingencies.”

The FAO report notes that the government’s own plan to get out of the red will see spending growth cut from 4.2 per cent in 2017-18 to 2.1 per cent from 2020 through to 2026.

Such “severe spending restraint” could lead to balanced books by 2025, the FAO says.

But the province’s net debt will be $400 billion by 2020-21, and “even with the significant spending restraint planned by the government, Ontario’s debt burden would remain elevated,” Wake said. Wake cautioned of shifting “the burden of stabilizing Ontario’s public finances from current taxpayers to young Ontarians.”