Politics
DEBT SHOWDOWN - McGuinty Liberals not acting on crushing deficit: Report

Ontario Premier Dalton McGuinty

Credits: REUTERS/KENNETH ARMSTRONG

REBECCA THOMPSON | QMI AGENCY

TORONTO - A new report that compares Ontario's crushing deficit to California's paints a bleak picture for the economic future of the province.

Both jurisdictions face deficits of about $16 billion, but when you compare population and economic output, Ontario's fiscal mess is worse, says the report by Fair Pensions for All, a citizens' group that studied the issue.

Ontario has approximately a third of California's population of nearly 38 million people and a third ($638 million) of its GDP, and that means the per capita debt is far higher: $16,638 per Ontarian versus $10,463 for Golden State residents.

California's problems have been grabbing headlines, including this week when the city of San Bernardino filed for bankruptcy.

But the state government is at least moving to control spending and tackle the deficit while Ontario is pretending that nothing is wrong, said Bill Tufts, executive director of Fair Pensions for All.

"Basically, in our opinion, not near enough has been done to deal with the realities that are out there," he said.

Dalton's Ontario


One of the biggest differences is how each jurisdiction is taking on public-sector costs. While California Governor Jerry Brown is seeking cuts to public-sector wages, Ontario Premier Dalton McGuinty is reluctant to chop.

"McGuinty is really trapped because he has been so heavily supported by the public sector unions," Tufts said. "To avoid a fiscal train wreck or bankruptcy in Ontario, we're going to have to deal with the public-sector unions and the Ontario government seems reluctant to do that."

In a report released this year, former TD Bank chief economist Don Drummond made 362 recommendations to balance the books by 2017-18 and avoid what he calls "a wrenching reduction from the path that spending is now on."

Following the release of the Drummond report, McGuinty said, "As a government, we will not make thoughtless, reckless, across-the-board cuts. We will continue to make thoughtful choices."

Lisa McLeod, a Conservative at the Ontario legislature, said her party has been waiting nine years for the government to rein in spending.

"I can just see that the debt and deficit is going to increase.  He's not been a responsible manager of our economy, and now we're paying for it," she said.

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