stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
Without tax hikes, Ford's only way to keep his deficit promise is through steep spending cuts
space
space
By DAVID PARKINSON
  
  

Email this article Print this article
Tuesday, December 11, 2018 – Page B1

In its five months in office, the Ontario government of Doug Ford has talked a good game about balancing budgets, while setting a course for deepening deficits. If Mr.

Ford is going to keep his promise of eliminating the red ink, Ontarians will pay a steep price.

Don't take my word for it: That's the assessment of the government's own official fiscal watchdog. In a report Monday, the Financial Accountability Office of Ontario (FAO) projected that as a result of the tax cuts and spending plans announced by Mr. Ford's Progressive Conservatives since they took office at the end of June, the province is headed for a $12.3-billion deficit in the current fiscal year ending March 31, 2019.

That's more than triple last year's $3.7-billion shortfall.

The good news is that the estimate is actually slightly better than the $13.5-billion (excluding a contingency reserve) that the government itself projected last month, in its annual fall economic statement. After that, it all pretty much goes downhill.

You may recall, in that fall update, the government left out any projections on the budget balance beyond the current year - a conspicuous break from usual practice. The FAO helpfully made its own calculations, based on the government's current policies.

The result: It projected that the deficit would increase to $15.1-billion in 2019-20, and reach $16.4-billion in 2022-23 - the year of the next election.

And that's based on achieving pretty much a steady-as-she-goes Ontario economy. The FAO has assumed nominal GDP growth of 3.9 per cent in each of the next four years, little changed from this year's pace. That's actually rosier than the government itself forecast in the fall update. Given that the current economic expansion may already be getting a little long in the tooth, the risks to the FAO projections are definitely tilted to the downside.

"In the absence of policy changes from the government, the budget deficit would continue to deteriorate over the outlook," the report said.

The cause of this deterioration is pretty straightforward.

The government has forgone nearly $4-billion a year of revenues through various tax cuts it has instituted since taking office (the biggest being the cancellation of the capand-trade program for carbon taxation), without sufficient offsetting spending reductions.

Decidedly not the recipe for eliminating deficits; quite the opposite, in fact.

Yet the government, despite the evidence to the contrary, keeps insisting it is a deeply committed deficit-fighting machine.

"Above all, our government believes that balancing the budget and reducing Ontario's debt burden is not only a fiscal imperative, it is a moral imperative," it said in the fall economic statement.

The government hasn't said when it will do this, or how, exactly - other than a pledge that it won't raise taxes. So, again, the FAO went with what it had, to assess how deep Mr. Ford would have to cut to eliminate the deficit by the most logical time frame for someone who campaigned on a promise of fiscal responsibility: the next election year.

The FAO calculated that to wipe out those deficits through spending cuts alone, the province would have to limit program spending growth to 1.2 per cent a year over the next four years.

That would be the slowest fouryear spending growth since Mike Harris's cost-slashing first term as premier in the mid-1990s.

Indeed, that rate of spending not only trails inflation, it's also less than the province's average annual population growth.

Which means that it would result in an actual cut in per capita spending of 8 per cent in inflation-adjusted terms, the FAO said. That works out to $850 for every person in the province.

Anyone who is old enough to remember the Mike Harris era will tell you that this magnitude of spending constraint is painful.

It is not achieved by nibbling around the budgetary edges, but requires that the budget core absorb hits. Anyone who thinks this government can reduce real per capita program spending by 8 per cent without touching education and health care - which make up more than half of the province's spending - are fooling themselves.

Meanwhile, as the report points out, deep spending cuts "would place a drag on economic and employment growth." That, in turn, would hurt government tax revenues - making the quest for balance even harder.

"Balancing the budget will require significant policy changes that could have wide-ranging impacts on Ontario households and businesses as well as the overall economy," the FAO concluded.

The Ford government has, in five short months, made quite a mess for itself, and for its citizens. It might have to break some promises to clean it up.


Huh? How did I get here?
Return to Main Rob_Carrick Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page