Is Ontario’s debt spiraling out of control?
The provinces debt has recently come under fire from watchdogs tasked with keeping the Wynne governments administration under the microscope and in the public eye. The Financial Accountability Office has recently suggested that the debt is completely out of control and warns that the spending if left unchecked could lead the province down a road that it can ill afford to take. Stephen LeClair has suggested that the provinces debt could balloon to an unprecedented $350 billion by the year 2020 if the Wynne administration keeps spending the way they have been and plan to continue doing for the foreseeable future.
The vast majority of the increased debt load will be realized from the massive infrastructure spending that has been on the agenda for some time. The 12 year plan to invest in capital spending calls for $160 billion to be invested over the course of those 12 years. The fear is that this spending will increase the debt to unmanageable levels. Especially frustrating for Mr. Leclair is the fact that much of the provinces debt load reaches maturity in 2020, over 38% to be exact and the fear is that even a small increase in interest rates before that date will result in the province having an exceptionally difficult time in servicing that debt. In absolute terms the province leads the way in debt load across the country with a staggering debt load of $296.1 billion as of March 2016.
The debt if broken down per person is a whopping $20,806 for every man, women and child in the province. By contrast the debt in Alberta is a mere $3,168.00 and in B.C a slightly higher $8,837.00. Only Quebec is ahead of Ontario with $22,591 per person but this relative amount is still lower than the absolute overall debt in Ontario. Finance Minister Charles Sousa has defended the spending indicating that it is necessary to spur economic growth across the province and result in a debt to GDP ratio that is improved over the time frame of the spending.
The opposition however, sees the additional $50 billion in debt over just 4 year as prove positive that the Liberals have no business controlling the purse strings of the province and that we are surely headed for economic disaster. The FAO also noted that the debt to revenue ratio in the province was the highest in the country and that in order to repay our debt we would need to greatly increase those revenues. Can anyone guess what tools governments usually use to increase revenues? If you said taxes, you would win the big stuffed dog! Speaking of taxes don’t forget that we are here to help you with yours.