Any comments on this? http://www.thestar.com/news/canada/...s-soaring-and-province-is-falling-behind?bn=1 Cohn: Ontario's debt is soaring, and province is falling behind In his PowerPoint speeches, Premier Dalton McGuinty shows off a chart downplaying Ontarioâ€™s deficit troubles compared to other countries. Itâ€™s in the nature of politicians to paint a rosy picture for public consumption. Behind closed doors, however, the provinceâ€™s financial brain trust has been shown a different slide show â€” one that casts the rapidly rising debt in a darker light: As the debt burden has soared, Ontario has fallen embarrassingly behind most other provinces in recent years. The premierâ€™s smooth messaging and selective PowerPointing canâ€™t sugarcoat the grim data that the provinceâ€™s number crunchers are sharing among themselves. Digging itself out of debt wonâ€™t be nearly as easy for Ontario as McGuinty makes out in public. The bearer of this bad news is the little-known Ontario Financing Authority, whose mission is to keep the province solvent by ensuring a constant cash flow. It avoids the limelight while shining a light on Ontarioâ€™s high-stakes deficit dance. Itâ€™s not easy keeping the cash flowing when youâ€™re rolling over $40 billion in annual borrowing to finance an unprecedented debt of $236 billion (including old Hydro debt). The net debt (after accounting for assets) comes to $220 billion â€” or about $17,000 for every man, woman and child. An influential credit rating agency, Standard & Poors, has put the province on notice that its credibility is in question. S&P has â€œprivately voiced skepticism over the ability to meet expenditure and wage constraint targets,â€ according to an internal OFA document circulated last month, as next weekâ€™s budget was being prepared. â€œUnprecedented increase in new debt and refinancing leading to a substantial increase in both financing and interest rate risks in future,â€ the OFAâ€™s audit service team noted tersely. When youâ€™re borrowing so many billions, you need to diversify your lenders â€” which leads to â€œincreasing funding cost and exposures to foreign exchange risk.â€ Another costly challenge when rolling over so much debt is staying liquid. To avoid running out of money if the markets freeze up, Ontario has been keeping about $20 billion on hand for the provinceâ€™s â€œliquid reserve.â€ If record-low interest rates go up, the province will pay the price. Interest paid on Ontarioâ€™s debt for the 2010-11 fiscal year ending this month will be nearly $10 billion â€” exceeding provincial spending on post-secondary education and training. Thatâ€™s 8 per cent of total government expenditures. In his upbeat speeches, the premier often uses a chart to show our deficit is comparatively lower than most industrialized countries and will end by 2017-18. But the governmentâ€™s internal charts are more sobering: Ontarioâ€™s net debt as a percentage of GDP (the size of its economy) was 33.5 per cent for 2009-10 â€” not far behind Ireland (now a fiscal basket case), and much higher than Mexico (24 per cent). Ontarioâ€™s debt-to-revenue ratio exceeded 200 per cent, compared to a mere 47 per cent in New York. The most daunting numbers compare Ontarioâ€™s finances in 2003-04, when the McGuinty government took power, to the present day. Back then, Ontarioâ€™s debt was a healthier 28 per cent of GDP â€” with only the western provinces doing better. In 2010-11 the roles are reversed, with Ontario saddled by debt that has reached 36 per cent of GDP â€” higher than any province except Nova Scotia and Quebec. On a per capita basis, Ontario is borrowing more debt than any province except New Brunswick â€” $2,100 in 2010-11. The numbers are depressing but not surprising. Ontario didnâ€™t boost the debt on a whim. It deliberately primed the pump during a brutal recession to keep the auto industry afloat and the economy on life support, just as the federal government did (though Ottawa boasts a higher credit rating and vows to end its deficit sooner). Big business is pressuring Ontario to take action in next Tuesdayâ€™s provincial budget. And Finance Minister Dwight Duncan will try to reassure Bay St. at a lunch speech Thursday, making the case that all political parties â€” Liberal, Tory and New Democrat â€” have piled on debt in the past and share ownership of the problem today. Now, he will argue, time has run out â€” because the money has run out. Time, perhaps, to give the full slide show.