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Ontario's 'Economic Statement'
30/03/2003
James Bow has a good article about the Ontario government's economic statement this week. About the only thing he's really happy about is that Ontario has managed to stay out of a deficit situation. He feels that this level of fiscal discipline (on the federal and provincial levels) is what is helping to sustain the Canadian economy. I agree that it is a good thing that Ontario balance its budget. With these Conservatives in power, I always worry that their tax cuts may get out of control before the books are balanced. Certainly, there's not much hope of significantly paying down the accumulated debt. For 2002-03, Ontario has announced a $524-million surplus. Unfortunately, this success has much more to do with Ottawa's support, than it has to do with good planning at Queen's Park. In fact, as the Globe reports:
The provincial government's big break came just last month when the federal government agreed to provide $2.5-billion in extra health-care funds to all the provinces. Ontario's economic statement cheerfully records a $967-million gain from that program, squeezing the revenue in under the wire of the March 31 fiscal year end.
If you remember those important federal-provincial negotiations on health care recently, you'll know how important this extra money was supposed to be in saving our health care system. If it wasn't for this extra money, Ontario would have run a deficit in 2002-03. And, "thankfully", because this new money prevented a deficit, Queen's Park feels free to announce another 20% tax cut in time for the election. I wonder how much new money health will actually get? Queen's Park also relied on a $1B contingency fund to balance this budget while ignoring the costs incurred by the hydro rate cap. For next year, the Tories are counting on strong economic growth and an undetermined asset sale of $2.2B to balance the budget and pay for the tax cut. Whichever party gets elected this year may actually find itself it a tough situation if the economy sours a bit or political difficulties prevent a fire sale. Sounds like a nice surprise for a new government.
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