Don’t blame the economy for Ont.’s deficits and debt
Fraser Institute study cites government spending as the culprit.
TORONTO — Government spending – not a weak economy and slumping revenues – is responsible for Ontario’s chronic budget deficits and massive debt, according to a study by the Fraser Institute.
The think-tank’s report, Spending is the Source of Ontario’s Deficit and Debt Problem, offers an example: between 2003-04 and 2015-16, provincial program spending increased by 71.6% to $120.9 billion from $70.4 billion. That’s faster growth than the economy as well as inflation and population growth combined.
The study shows program spending, restrained to the same rate as economic growth since 2003-04, would have resulted in a $10.7 billion surplus this fiscal year rather than a $7.5 billion deficit. Had program spending simply kept pace with inflation and population growth, the surplus would be even larger.
The Fraser Institute points out Ontario has run 10 budget deficits in the past 13 years and the province’s net debt (projected to reach $298 billion in 2015-16) has more than doubled since 2003/04.
“As policymakers at Queen’s Park prepare to table this year’s provincial budget, they should recognize the source of today’s deficit and debt problem – government spending,” said Ben Eisen, associate director of the Ontario Prosperity Initiative at the Fraser Institute and a co-author of the report.
Click here for the report.