Ontario’s massive revenue surge should not be squandered
Ontario Premier Doug Ford is approaching a proverbial fork in the road. If Ford takes the first path, he will plunge the province back into deficit and cement Ontario’s status as the most indebted sub-national government in the world. But if Ford takes the second path, he can begin to dig Ontario out from an avalanche of debt.
Last year, Ontario posted a $2.1 billion surplus. This was Ontario’s first balanced budget in more than a decade. But it wasn’t due to Ford’s prudence: tax revenue came in at $20.2 billion more than expected. The fact that Ford only managed to run a $2.1 billion surplus shows just how much the government has allowed Ontario’s spending to get out of control.
Last week, two of Canada’s largest provinces tabled their budgets for this year. British Columbia chose to drown its budget in red ink, while Alberta balanced the books and introduced a wave of new policies designed to keep the province’s finances in check.
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British Columbia Premier David Eby proved himself to the quite the magician. He managed to take B.C. from a $3.6 billion surplus to a $4.2 billion deficit in a blink of an eye. And the province doesn’t expect to balance the budget for years to come.
Alberta Premier Danielle Smith, on the other hand, chose to be prudent rather than embark on a spending binge. Her government posted a $2.4 billion surplus, paid off $13 billion of debt and indefinitely suspended the province’s gas tax.
Smith also plans to pass legislation that requires half of all future surpluses to go toward debt repayment, and mandates balanced budgets with a small subset of exceptions and limits spending increases to the rate of inflation and population growth.
B.C. offers Ontario an example of how to go down the wrong path while Alberta is heading on the right one.
Ford once ran for office as a fiscal hawk. When he was at Toronto City Hall, Ford stood up against waste and advocated for lower taxes. His party’s 2018 election platform called for fiscal prudence, lower income taxes and balanced budgets. With very limited exceptions, Ford hasn’t lived up to any of those commitments.
Since Ford became premier five years ago, Ontario’s net debt has risen by nearly $57 billion. While some of that can be blamed on the pandemic, Ford increased Ontario’s debt by nearly $20 billion before the height of the pandemic had even arrived.
Ford has blown taxpayer dollars before, during and after the pandemic. He’s handed out corporate welfare like candy, such as his $300 million gift to the Ford Motor Company, a Fortune 500 company that doesn’t need taxpayer help.
It’s time for Ford to right his wrongs. With a $2.1 billion surplus last year, Ford has no excuse for presenting a deficit budget later this month. With the books balanced, now is also the time for Ford to follow Smith’s lead on balanced budget legislation and debt repayment.
Ontario is poised to spend $13.5 billion on debt interest payments this year. That could otherwise have paid to build 10 brand new hospitals or a reduction in the provincial portion of the HST from eight8 per cent to six per cent. Instead, it’s going to bondholders on Bay Street.
Ontario’s massive revenue surge should not be squandered. After all, new revenue comes straight out of taxpayers’ wallets. When Ford presents his budget later this month, he should use the extra funds to keep the books balanced, pay down the debt and send some of the money back where it belongs – in the hands of taxpayers.
Ford is facing a fork in the road. He’d better drive the province in the right direction.
Jay Goldberg is the Ontario & Interim Atlantic Director for the Canadian Taxpayers Federation.
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