McGuinty Government Releases Economic Statement
Reveals Province Carrying a Historic $24.7 Billion Deficit
Oct 26, 2009
Former New Democratic Party (NDP) Premier Bob Rae governed the province amidst the recession of the early 1990’s. He had a deficit approximately half as a much as the current premier, and implemented strict measures including unpaid days off dubbed: “Rae Days.” Rumours have circulated of the possibility of Dalton Days, but the McGuinty government has so far refused to confirm it.
$24.7 Billion Deficit Only A Prediction, Blame Falls On Decreased Revenues
Ontario Finance Minister Dwight Duncan is blaming reduced corporate tax revenue for the huge deficit. The province lost an estimated $5.8 billion in revenue, working out to a 48.1% reduction. Government expenses have increased $4.8 billion over those forecast in the March to $113.7 billion. This is due to increased investments in skills training, the auto sector, and health care. Personal income tax revenues are down by $2.43 billion.
According to the McGuinty government, the $24.7 billion figure is only a prediction. The true figure could end up being higher. In comments published by CBC.CA Premier McGuinty said the deficit figure was based on the best information his government had: “You rely on the best estimates that are available out there.”
The deficit has triggered a need to cut costs. Before cutting costs, the provincial government will undertake a strategic review of expenses on everything from education and health care, to civil service pay and benefits. In an article published by the Canadian Press, Duncan asked public sector partners to help them out: “We will call on our partners in the public and the broader public sector to help us sustain public services in the long term.” Special interest groups such as Registered Nurses Association of Ontario (RNAO) are already pressing the government not to cut health care.
The deficit is the highest it’s been since former Premier Bob Rae was in office. Rae’s New Democratic Party (NDP) government ran up an approximately $9 billion deficit.
Opposition Parties Reaction to Ontario Deficit, Dalton Days Possible
The Opposition parties at Queen’s Park reacted with anger and incredulity. The Progressive Conservatives criticized McGuinty for what they termed an addiction to consultants and spending. In an article published on CBC.CA their leader Tim Hudak said the Premier was: “hard-wired to increase your taxes, and increase spending.”
Later in the same article, NDP Finance Critic Michael Prue suggested a place where McGuinty should start: “The McGuinty government should be looking at his own spending and cut off this government’s use of consultants immediately.”
The Toronto Star reports the use of Dalton Days is possible. Patterned after “Rae Days”, it would mean the civil service taking unpaid days off. It could result in an additional savings of $2.55 billion. The McGuinty government has so far denied this is being considered. The Premier admitted in the same Toronto Star article the province is facing a battle: “Yes we have a significant challenge, there is no denying that.”
TheHarmonized Sales Tax (HST) is expected to increase revenues when it becomes law on July 1st, 2010. Aside from the deficit announcement, the economic update also included new spending. $4.8 billion was announced to support skills training, and health care.
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