Ontario’s net debt expected to exceed $300 billion in budget
TORONTO – Ontario’s Liberal government will outline a plan to eliminate its deficit and stem the growth of its massive debt in today’s provincial budget, the ninth in a row to be awash in red ink.
Low oil prices and a weaker loonie have helped Ontario lead the country in economic growth, but the province has the largest debt of any sub-national government in the world.
Premier Kathleen Wynne insists the $7.5-billion deficit will be eliminated by 2017-18 as promised, something credit rating agencies will be watching very closely.
Mike Moffatt of the Ivey Business School expects the 2016-17 deficit will be slightly lower than last year’s budget forecast of $4.8 billion, and says it’s important for the government to show bond markets it has a credible plan to get to balance.
Moffatt predicts Ontario’s debt-to-GDP ratio of almost 40 per cent will likely stay relatively flat, and he expects the net debt will crash through the psychological $300-billion mark in today’s budget.
Progressive Conservative Leader Patrick Brown says interest payments on Ontario’s debt are over $11 billion a year, and wants to see “immediate action” in the budget to reduce the debt.
“Will the government include in their budget a credible plan – not a stretch goal – for a balanced budget and take immediate action to pay down the $300-billion Liberal debt,” Brown asked in Wednesday’s question period.
The Tories also asked for improvements in health care and more affordable hydro rates, priorities Wynne called inconsistent.
“You cannot increase health care beyond what we are already doing and lower electricity prices, either through a subsidy or going back to coal, and at the same time speed up the elimination (of the deficit),” she said.
Wynne already disclosed that the cap-and-trade plan to fight climate change will add 4.3 cents to the price of a litre of gasoline and about $5 a month to natural gas bills, but the budget could detail other impacts from the scheme.
NDP Leader Andrea Horwath said she’s really concerned about the state of Ontario’s health care and education systems, and wants to see the freeze on hospital budgets lifted and more money for schools.
“Will this premier come clean and tell the people of this province and tell the students of this province if she, in fact, will be cutting another $250 million or more, in Thursday’s budget, out of the education file,” asked Horwath.
The budget will also detail already announced plans to let some grocery stores sell wine, which will get a new minimum price in the budget and could also be hit with a new tax.
There will also be more details on the government’s strategy to combat violence against indigenous women, which Wynne announced Monday would get $100 million in funding over three years.