We’ve seen this script before. Higher spending. Tax increases. Persistent deficits. Growing debt. Warnings from credit rating agencies. A government unwilling to make the tough choices to turn things around.
A new report on provincial debts and deficits by Moody's, the international credit rating agency, is another piercing reminder of Ontario's serious fiscal challenges.
Ontario Finance Minister Charles Sousa called his updated financial plan a new direction but in truth it had a nostalgic feel. With his government facing considerable fiscal challenges including an $11.7 billion deficit and growing debt, Ontarians desperately needed a new direction. What they actually got was more of the same: increased spending and a government reluctant to deal with core problems.
The May 2 minority Liberal budget is a politically expedient document that likely avoids an election but unfortunately fails to tackle Ontario's looming fiscal crisis. The longer the province waits, the more difficult and painful the reforms will be when the inevitable day of reckoning arrives.
The recent federal and Ontario budgets produced a plethora of headlines about how the public sector should brace for changes to its costly pension deals. The dramatic language was in part provoked by lines like this from the Ontario budget: Pension costs are one of the fastest-growing line items and the status quo is not an option.
On Tuesday, Ontario Finance Minister Dwight Duncan had one of those rare opportunities of which politicians can only dream. With his province heading toward a fiscal crisis caused by mounting debt and out-of-control spending, an opposition sympathetic to dealing with the problem, a public that clearly wants his government to address the debt, and news outlets that understand the need for significant fiscal restraint, everything lined up for Duncan.