With the Ontario Provincial election just a couple of months away, the ruling Liberal Party is dishing out promises these days to keep their diminishing chances for governing alive.
Smart voters and even the Liberal leaning media have to tally these new expenditures as they will add to the total debt carried by the province. Ontario carries a total debt of $312 billion this year, or roughly $22,000 for every Ontarian. It is projected to grow to $336 billion in 2019-2020. This debt was about $110 billion when they took power from the Progressive Conservatives in 2003. In 15 short years, they managed to create “additional debts” doubling the figures accumulated over a decade ago.
为此，安省的信用评级因借债无度而被降级，结果导致安省需要付更高的借债利息。 2012年，穆迪将安省的信用评级从AA1级降至至AA2。穆迪特别提到“安省不停的借债”是降级的主要原因。如果利率上升或经济状况恶化，安省不能及时还债的可能性非常大。根据2012年省级偿付能力和联邦债务研究署的报告，安省非常有可能“在10 - 20年内”无法按时偿付债务。
Ontario's credit rating has been downgraded due to its debt, thus increasing the borrowing costs even further. In 2012, Moody's Investors Service downgraded Ontario from AA1 to AA2. It specifically stated the "growing debt burden" as a major concern. If interest rate increases or economic conditions worsens the province risks defaulting on the debt. According to the 2012 Provincial Solvency and Federal Obligations study Ontario is "the most vulnerable in the 10-20-year window" for defaulting on its debt obligations.
Many argued that it is not always bad for governments to run a deficit from time to time in order to stimulate the economy or build infrastructures as a long term investment for economy growth. However, these deficits will become part of the total debt and interests will have to be paid. The government borrows the majority of this money through the issuance of bonds with attractive rates (about 4%). The interests on the debt is over $10 billion and above 8% of the total yearly budgetary expenses.
The money required to service the debt is taking away resources that can be applied to improvement on existing programs such as health, education, social assistance, and any proposed new programs. New programs will almost always add to deficits which accumulate under the total debt in a vicious and never-ending cycle. If your family is in debt and you have to service that with a good portion of your income, would you not do something about that? Would you not try to pay off some part, if not all of your debt since it will affect your ability to borrow money? Apparently, the provincial and federal governments don't think like us since they have more borrowing power and they are emotionally removed from the feelings of the voters except when it comes to election times.
To cover up their inadequacies and capture votes from citizens concerned with the debt, governments will resort to fudging the accounting system to show a “balanced budget” during the election year. The auditor general of Ontario recently announced that the Ontario Government financial statements are “unreliable,” concealing a deficit of up to $4.5 billion.
Ontario’s 2018 budget focused on Premier Kathleen Wynne’s so-called “free” child care plan and other big-spending items. The budget also excluded any credible plans to enhance Ontario’s economic competitiveness and prospects for future growth. Ontario will run budget deficits of nearly $7 billion in each of the next three fiscal years. Given the auditor general’s past critiques of the Wynne government’s accounting methods, the true operating deficits may be much larger.
The Liberal government is choosing not to spend within its means and to simply pass the cost of current day-to-day spending onto future Ontarians. While this year’s budget promises to eliminate these deficits seven years from now in 2024/25, last year’s budget promised balanced budgets every year after 2017/18. Is there any fiscal credibility left in this government?
The voters will make up their minds in two short months. To the low-wage earners and the very young, the recent minimum wage increases, offering of dental and pharmaceutical care and coverage can be attractive. They must remember that “Wool comes from the sheep”. Sooner or later, the repayment for these programs will come either from themselves directly or from their children.
我们鼓励所有读者在我们的文章和博客上分享意见。We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. Visit the FAQ page for more information.