Timmins, November 3, 2014—Ontarians should be very concerned about the province’s fiscal situation, according to a new report from the Ontario Chamber of Commerce and the Timmins Chamber of Commerce.
The report, How Bad Is It? What Do We Do About It?, finds that while Ontario's fiscal situation is better than that of many other regions and countries facing financial issues, the province is likely to reach a state of crisis unless it cuts spending and changes the ways it does business.
The report’s central finding is that Ontario’s history of spending is unsustainable: in only seven of the past 25 years has the government balanced its books or achieved a surplus. As a result, the province has been digging itself deeper and deeper into the red. By 2016-17, interest payments to service the provincial debt are projected to consume 10 cents of every dollar the government spends, the report contends.
"While we understand that Ontario has faced some unique financial challenges in recent years, this report clearly shows that the province must take measures to become financially sustainable,” says Al Thorne, president of the Timmins Chamber of Commerce.
“Last year’s elimination of the provincial Connecting Link funding, which helped to pay for highway maintenance in Timmins, is just one example of the cuts we face as Ontario struggles to pay off its debt. We need the provincial government to focus on its core business and help us to ensure that this remains an attractive place to do business."
Over the previous fiscal year, the Government of Ontario spent $10.5 billion more than it collected in revenue. This will increase to $12.5 billion in 2014-15. This will only complicate Ontario’s ability to reach its deficit-elimination goal of 2017-18, as it will require that the government reduce the deficit by over $4 billion per year for the next three years.
According to the report’s authors, a tipping point may be closer than Ontarians think. With a slower growth future projected for the province, combined with the growing demands of a rapidly aging population, the need to deal with the fiscal situation now becomes all the more urgent.
A sustained state of poor fiscal health can hurt business confidence and makes the province a less attractive place to invest. According to a recent Ontario Chamber of Commerce survey, 93 percent of businesses in the province believe that eliminating the deficit should be a top priority for government.
“Ontario's business community is concerned with where the province is heading,” says Allan O’Dette, President and CEO of the Ontario Chamber of Commerce. “There are a number of impending challenges, including an aging population, that will increase pressure on Ontario's budget. Unless we act now to get our debt and deficit under control, these challenges will become much more difficult to deal with.”
The report also offers six approaches that the government can take to reduce its spending and move along a more fiscally sustainable path. These approaches, which include adopting asset recycling and seeking alternative service delivery (ASD) opportunities, have been successful in reducing government spending while achieving key outcomes both abroad and in Ontario.
“By adopting models of success from other jurisdictions, we can move the province toward fiscal sustainability, while preserving valuable government programs and services,” adds O’Dette. “In doing so, we ensure that those critical institutions that we have benefitted from remain available for future generations.”
Read the full report: http://tinyurl.com/OntarioDebt2014
Over the previous fiscal year, the Government of Ontario spent $10.5 billion more than it collected in revenue. This will increase to $12.5 billion in 2014-15.
To attain its deficit-elimination goal of 2017-18, the government must reduce the deficit by over $4 billion per year for the next three years.
For 18 of the past 25 years, governments in Ontario have run a budget deficit.
Ninety-three percent of businesses in Ontario believe that eliminating the deficit is an important priority.
Ontario's net debt in 2013-14 was $267.2 billion. The cost of servicing this debt was $10.6 billion, or $29 million per day.
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About the Timmins Chamber of Commerce
With over 750 members, the Timmins Chamber of Commerce is one of the largest accredited chambers of commerce with distinction in northeastern Ontario. As the “Voice of Business in Timmins” since 1949, our advocacy and policy initiatives focus on ensuring a positive business climate in the City of Timmins.
Manager of Policy, Research and Communications
Timmins Chamber of Commerce