ONTARIO’S $15-BILLION DEFICIT BAD, BUT NO ONE SHOULD BE SHOCKED
The Ontario government now has a more honest take on its financial situation than it did under the Liberals, though Tories professing shock at what their summer investigation found are overselling it pretty hard.
This year’s deficit is $15 billion, Finance Minister Vic Fedeli announced Friday morning in a speech to Toronto’s Economic Club, not the $6.6 billion the Liberals claimed in their last budget in the spring. He has the results of an inquiry led by former B.C. premier Gordon Campbell to prove it.
“We had reason not to trust the budget numbers that the previous Liberal government had introduced prior to the last election,” Fedeli said. This happens practically every time a new party comes in, he conceded. But “what happened under the previous government’s watch is very different.”
The Liberals spent like mad and hid it with accounting tricks, he said.
“We now know that the Liberals stashed billions of dollars in additional deficits off the government’s books,” he said, in the tone of a dad presenting a startling cellphone bill to a teenager. “They deliberately hid the evidence of this fiscal hole.”
Fedeli suggested his majority government will keep at the Liberal rump about this. Losing June’s election wasn’t when the Liberals paid the price, Fedeli said — it was when they started to be held accountable.
The Liberals did indeed do everything they could to make the province’s books look better, quite a bit of it underhanded.
Auditor general Bonnie Lysyk called them out in 2016 on how they booked assets in a couple of public-pension funds, saying she couldn’t sign off on the public accounts for the previous fiscal year. She repeated herself in 2017. The legislature’s independent financial accountability officers backed her up, but the Liberals dug in.
Similar reports scolded the Liberals for the gymnastics they did when they borrowed billions of dollars to lower Ontarians’ hydro bills for a few years. They kept that debt off the province’s books by tucking it onto the ledgers of Ontario Power Generation, which is publicly owned but accounts for its money differently. This was a desperate move but everybody saw them do it.
Those two things account for $5.1 billion of the difference between the Liberals’ numbers and the Tories’ new ones.
Another $1.5 billion is from using updated numbers on tax revenues and economic growth between April and now. Growth has been a bit slower than the Liberals projected, which isn’t great, though the commission members acknowledge that the Liberals used a conservative forecast. Sometimes governments miss high, sometimes they miss low, and this isn’t extraordinary.
And $1.4 billion comes from writing off efficiencies in government operations the Liberals promised to find when they wrote their 2018 budget. Those trims weren’t specified, which is always suspicious, but the Liberals did a pretty good job of hitting targets like those every year. (Dismissing them is bold for the Tories, whose whole fiscal plan in the spring election campaign amounted to “Trust us.”)
A further $300 million comes from booking a bigger “reserve” — money the government doesn’t intend to spend but builds into the budget to be cautious, in case it doesn’t nail its revenue forecasts or find all of its planned spending cuts. The Liberals used $700 million; the Tories will use $1 billion.
The bigger number reflects more caution but it’s arbitrary either way. Sometimes governments put overly large reserves into their budgets, successfully don’t spend the money, and then order in bugles for their management whizzery when the numbers just worked out the way they planned.
That $300 million gets us to $14.9 billion, a little light rounding away from Fedeli’s $15 billion.
Here’s the thing: Nobody — nobody — was fooled by the Liberals’ manoeuvres. Lysyk beat former finance minister Charles Sousa about the head regularly. So did three different financial accountability officers. What they were doing was obvious.
In his job as the Tory finance critic when they were in opposition, Fedeli published his own regular takes on the provincial books, called “Fedeli on Finance.”
His last one, after the Liberals’ last budget in April but before the election in June, crunched these very public numbers and concluded that the province had a deficit that was $7 billion to $10 billion deeper than the Liberals were claiming. Turns out it’s $8.4 billion.
That the Liberals were really bad at deceiving people about Ontario’s fiscal condition does not excuse them for having tried. They actually seem to think it does: “Mr. Fedeli made all the same points today that were made before the election. There’s nothing new here,” interim leader John Fraser and finance critic Mitzie Hunter complained in a joint statement.
Please. “You can’t fault us for BSing because everyone knew we were BSing ” is not a thing adults say.
It is not, however, incorrect only because Fraser and Hunter have zero moral standing to say it. Fedeli took over exactly the treasury he was expecting, and if he pretends otherwise he’ll damage his own credibility right when he needs it.
That the Liberals were really bad at deceiving people about Ontario’s fiscal condition does not excuse them for having tried.