The Star: Cohn: Ontario's debt is soaring, and province is falling behind

[doady]

With this soaring debt, it seems like the perfect time for NDP and PC to band to together to force the governemny to get rid of HST on hydroand heating.

The Ontario NDP is like the Tea Party in the US: dupe the poor into voting against their own interests.

 

[jje1000]

A bump to this thread, but another article detailing Ontario's manufacturing decline.

The long, slow decline of the nation's industrial heartland
Adam Radwanski
The Globe and Mail
Published Friday, May. 30 2014, 4:10 PM EDT

With a pivotal election fast approaching, The Globe and Mail’s Adam Radwanski travels to the Achilles’ heel of Ontario, the southwest. Once the nation’s industrial heartland, it is in an economic tailspin and battling to find a new game plan that will keep its children at home – and reinvent a vital region.

http://www.theglobeandmail.com/news/politics/after-the-gold-rush/article18923563/

 

[TOareaFan]

Over 3 years ago, this thread started over a report in the Toronto Star (hardly the Liberal's harshest critics traditionally) about how troublesome having $220B of net debt was to Ontario......in 2011 that figure represented 32.5% of Ontario's GDP.

Today, the net debt stands at $290B and represents 38.9% of GDP.

Yet the party in power that seemed to ignore the warnings of 2011 and oversaw continued growth in, both, the net debt and ratio of debt to GDP is proposing to actually increase the deficit in their budget for the next fiscal year from $11.3B to $12.5B and, remarkably, is leading in the polls and the Toronto Star is writing editorials supporting this party.

Do these facts indicate that Ontarians do not understand the danger of the debt or do they indicate they do not care?

 

[nfitz]

Over 3 years ago, this thread started over a report in the Toronto Star (hardly the Liberal's harshest critics traditionally) about how troublesome having $220B of net debt was to Ontario......in 2011 that figure represented 32.5% of Ontario's GDP.

Today, the net debt stands at $290B and represents 38.9% of GDP.

Yet the party in power that seemed to ignore the warnings of 2011 and oversaw continued growth in, both, the net debt and ratio of debt to GDP is proposing to actually increase the deficit in their budget for the next fiscal year from $11.3B to $12.5B and, remarkably, is leading in the polls and the Toronto Star is writing editorials supporting this party.

Do these facts indicate that Ontarians do not understand the danger of the debt or do they indicate they do not care?

Perhaps because the deficit has significantly dropped. Back when the thread started it was $24.5 billion. Now we're talking about it increasing to $12.5 billion. A good amount of the increase is to build infrastructure now, rather than deferring it to later. Surely in the long term, that's a benefit. Meanwhile the deficit is still forecast to continue to drop.

 

[TOareaFan]

Perhaps because the deficit has significantly dropped. Back when the thread started it was $24.5 billion. Now we're talking about it increasing to $12.5 billion. A good amount of the increase is to build infrastructure now, rather than deferring it to later. Surely in the long term, that's a benefit. Meanwhile the deficit is still forecast to continue to drop.

The story is not about deficits per se....when the article was written the debt was much lower than today (in absolute terms and as a % of GDP) and it was a concern. 3 years later what is clear is that our debt is rising fast and rising faster than the economy.....yet we seem less concerned.

 

[nfitz]

The story is not about deficits per se....when the article was written the debt was much lower than today (in absolute terms and as a % of GDP) and it was a concern. 3 years later what is clear is that our debt is rising fast and rising faster than the economy.....yet we seem less concerned.

We knew 3 years ago that the deficit would drop, and the debt would rise. 3 years later that has happened. Debt hasn't increased as much as some forecasts back then, so the worst has been avoided. And all parties have a plan to reduce and then eliminated the deficit.

At the same time, our fiscal ratings have held up; there's no dire warnings from the ratings agencies. And our taxation rate remains almost the lowest in Canada. If we'd simply not have reduced taxes quite as much during the Harris years, we'd have been laughing.

The worst thing we can do for the deficit in the long-term is to elect Hudak and have him significantly decrease taxes, which will only set us up for more debt in the future. Particularly given that economists say that he's overestimated the amount of job creation massively, which surely must impact his revenue projections!

 

[TOareaFan]

We knew 3 years ago that the deficit would drop, and the debt would rise. 3 years later that has happened. Debt hasn't increased as much as some forecasts back then, so the worst has been avoided. And all parties have a plan to reduce and then eliminated the deficit.

We did not know that the deficit would drop for two years then, inexplicably, increase in the third year. All parties say they will balance the budget....as discussed in the other thread only 1 seems to have a plan.

 

[nfitz]

We did not know that the deficit would drop for two years then, inexplicably, increase in the third year.

No we didn't. Wynne has been quite transparent that they are increasing infrastructure spending now, rather than waiting. Hence the bump.

All parties say they will balance the budget....as discussed in the other thread only 1 seems to have a plan.

Right. Only the Liberals have a plan (assuming there isn't a magical færie out there to create Hudak's 1-trillion jobs ...)

 

[TOareaFan]

No we didn't. Wynne has been quite transparent that they are increasing infrastructure spending now, rather than waiting. Hence the bump.

Your comment was we knew that 3 years ago.....did we? We lived through about 3 years of Metrolinx and Golden telling how to pay for the Big Move transit improvements then a couple of weeks before the budget we learn the only tax increase is on people earning over $150k and that other items would be re-allocated....and we then saw a $12.5B deficit. Not sure where we see a projection of two years of declining deficit followed by a 1 year (if it is that) bump.

 

[nfitz]

Your comment was we knew that 3 years ago.....did we?

I think you are missing my point, or I wasn't clear. We knew the deficit was in the $25 billion range, and we knew it wouldn't vanish in 2 years, therefore we knew the debt was going to get bigger. That's my point. Now the deficit is much more under control, there's less uncertainty.

 

[TOareaFan]

I think you are missing my point, or I wasn't clear. We knew the deficit was in the $25 billion range, and we knew it wouldn't vanish in 2 years, therefore we knew the debt was going to get bigger. That's my point. Now the deficit is much more under control, there's less uncertainty.

Even people like me understood the deficits of 2008/2009/2010......what we don't/can't understand is why Ontario is still increasing deficits......all of NA went into deficit financing mode during/after the recession.....how many provinces or states are proposing higher deficits this year than last?

Ontario's proposed deficit this year (the $12.5B one) is larger than all the other provinces and the federal government.....combined!

 

[nfitz]

Ontario's proposed deficit this year (the $12.5B one) is larger than all the other provinces and the federal government.....combined!

Where did you get that one? It's not even as big as the last federal deficit, which was planned to be over $18 billion for the 2013-14! It's come in closer to $12.1 billion through some luck, but your telling me that rest of the country is less than $1 billion?

 

[TOareaFan]

Where did you get that one? It's not even as big as the last federal deficit, which was planned to be over $18 billion for the 2013-14! It's come in closer to $12.1 billion through some luck, but your telling me that rest of the country is less than $1 billion?

the budget just presented by Flaherty for the coming (2014/2015) year (the same basis as the $12.5B Ontario deficit) is $2.9B (it actually balances if they don't use their contingency).

here it is graphically:

 

[nfitz]

the budget just presented by Flaherty for the coming (2014/2015) year (the same basis as the $12.5B Ontario deficit) is $2.9B (it actually balances if they don't use their contingency).

Flaherty blew the deficit projection last year by $6 billion.

 

[TrickyRicky]

TOareaFan, your point is well taken but I think you might as well give up it is falling on deaf ears. How can you convince a population that thinks that taking on 600,000 mortgage debt in your 30's based on two middle-class incomes is normal, that a 12.5 billion dollar deficit matters?

I feel really really sad about this for the people of Ontario. But more importantly I feel really sad for the lesson it has taught me. The lesson it has taught me is that you have to protect yourself. For the first time I have had to consider shifting my business and investment strategy to be more flexible. I have always been all in with Toronto and Ontario at the centre of my thinking. Now, I realize I need to be more flexible and liquid in this regard because the future here is much less certain.