Ontario’s Debt Nightmare has Surpassed Even America’s Most Indebted State
(February 11, 2013) There was some alarming news out of the Fraser Institute last month. The leading Canadian public policy think-tank released a report that pegs Ontario’s financial situation as somewhere in between California and Greece—America’s most indebted state and Europe’s most indebted country. The report pronounces the genuine need for immediate reforms in Ontario to slow the rate of spending and reduce our deficit.
This is not good news for Ontarians, but it is not unexpected news either. The Liberal record of spending, taxes and waste speaks for itself. And, coupled with unaffordable and completely reckless policies it’s really no surprise that our fiscal situation is the way it is.
Compared to California—well known for garnering headlines for being a fiscal train wreck—Ontario is in a worse position on every fiscal measure of indebtedness. In fact, the report shows that our debt ($236.6 billion) is almost twice as high as California’s ($143.9 billion) despite the relatively small size of our economy and population.
And, not only are we in worse shape than America’s most indebted state, the report reveals that if things don’t dramatically change our economy is on its way to becoming the next Greece. In fact, Ontario’s net debt-to-GDP ratio is 37 percent, the same ratio Greece had in 1984.
Year after year, the McGuinty-Wynne government has ignored warnings and expert advice all the while continuing down a path of out-of-control spending with no plan or forethought into the future for how to pay for it, but now the spending has caught up to us.
The Fraser Institute cites that the motivation behind their report as the government’s complete “lack of genuine response” to the Drummond report, a 2012 report the Liberals paid hundreds of thousands of dollars to have done and then ignored after it revealed the cost-cutting measures necessary to reverse the debt that they created.
This government just doesn’t get it.
More debt means less money for things we care about most. Every additional dollar that casually gets doled out by this government means another dollar we borrow from foreign lenders and another dollar we must pay interest on.
Last year alone Ontario added $12 billion to the provincial debt that we pay $11 billion in interest payments to service each year. Interest payments have become our third largest expenditure next to health and education.
Tens of billions of provincial taxpayer dollars are consistently being given to foreign lenders, and instead of making the necessary reforms to reduce our deficit and get Ontario back on a sustainable track the Liberal government continues to dig the hole deeper.
Not dealing with the fiscal realities in front of us is merely delaying the inevitable. And, as debt and interest continue to compound it’s clear that this government is not up to the job.
Incoming Premier Kathleen Wynne has proudly vowed to “build on the legacy of Dalton McGuinty,” a legacy that includes more spending and more debt. Ontario cannot afford this fate.
It’s time for a new government and a new approach: A government that is focused on Ontario and is capable of doing what they were put there do to and that’s managing the public purse.