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Ontario Finance Minister Charles Sousa delivers the government's Fall Economic Statement in the Ontario Legislature on Nov. 7, 2013. (Moe Doiron/The Globe and Mail)
Ontario Finance Minister Charles Sousa delivers the government's Fall Economic Statement in the Ontario Legislature on Nov. 7, 2013. (Moe Doiron/The Globe and Mail)

Globe editorial

Ontario’s growing problem Add to ...

What to say about Ontario’s just released economic outlook and fiscal review? The province’s finances aren’t as dramatically off-track as the opposition Progressive Conservatives would have you believe. But neither are they where they could be, and should be.

The budget deficit is expected to be $11.7-billion in 2013-14. Relative to a nearly $700-billion provincial economy, that’s hardly unmanageable. But each year’s deficit is piling up into a growing debt. The province’s debt ratio – that’s debt relative to gross domestic product – has been marching steadily upward, from 26.2 per cent before the recession to an expected 39.3 per cent this year. Unless the province is saved by a rebound in the global economy, translating into faster economic growth and higher government revenues, Queen’s Park will have to make hard choices: new spending cuts, tax increases or a mix of both. In Thursday’s economic update, a minority Liberal government chose “none of the above.”

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Two years ago, economist Don Drummond’s report on Ontario’s finances put forward a plan for getting them back into order. One challenge is that Ontario is already the country’s lowest-spending province. Gas-plant cancellation fiascos aside, the government appears to be less wasteful and more efficient than its provincial counterparts – but that only means that it’s more difficult to bring the budget back into balance.

But Ontario does have room to cut. For example, Mr. Drummond recommended against full-day kindergarten, the cost of which he pegged at $1.5-billion. There’s the so-called 30 Per Cent Off Ontario Tuition grant, which partially rebates the fees of 200,000 university and college students. Cost: nearly half a billion dollars a year. Mr. Drummond didn’t recommend cutting it – because it was created after his report, as a vote-buying measure. There’s also the Ontario Clean Energy Benefit. Cost: $1-billion a year, and rising. The government, again as a vote-buying measure, is borrowing money to subsidize millions of electricity bills. It’s crazy. Mr. Drummond, of course, recommended killing the program.

The scale of Ontario’s problem is not yet in credit alert territory – yet. A few judicious choices could fix it. Staying the course is unlikely to be enough.

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