Ontario To Post Largest-Ever Deficit This Year
Posted October 22, 2009 2:15 pm.
This article is more than 5 years old.
Ontario’s financial woes are much worse than once thought.
Finance Minister Dwight Duncan confirmed Thursday in his fall economic update the province’s deficit is predicted to swell to a higher-than-expected $24.7 billion for 2009-10.
Earlier this week there was speculation the number would fall between $18 billion and $22 billion and that red ink would result in public service cuts. Duncan won’t divulge which programs may be scrapped in an effort to save money until he delivers the annual provincial budget next spring.
“We will call on our partners in the public and the broader public sector to help us sustain public services in the long term,” Duncan said in his economic address.
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“It is incumbent upon all of us to participate in this vital conversation – to help us build consensus on how to manage through this challenge.”
The province’s plan to fund full-day junior and senior kindergarten programs is still expected to still go ahead. The government has also set aside $650 million to help combat the H1N1 flu and remains committed to funding health care and job creation initiatives, Duncan said.
“Our task in these times is clear: create jobs, help families and establish the conditions for future economic growth,” he explained.
The government won’t say which options it will or won’t rule out in order to deal with the crippling deficit – including another appearance of the notorious “Rae Days.” When asked if he’d introduce measures similar to those imposed by former Ontario premier Bob Rae, Dalton McGuinty said Wednesday he wants to keep his options open.
Rae Days were part of a so-called Social Contract in the early 1990s, which included wage freezes and mandatory unpaid days of leave for civil servants.
The government blames the record deficit on a 48.1 per cent reduction in corporate tax revenues, which resulted in a loss of $6 billion for Ontario. Higher-than expected demands for health care, job retraining and welfare services are also being blamed for so much of the red ink.
The global recession also took a heavy toll and resulted in a near-12 per cent contraction in world trade this year. Duncan said the international economic situation caused the province’s economy to shrink to the size it was in 2005.
Duncan also believes the province’s gross domestic product will drop by 3.5 per cent this year, but added modest gains of two and three per cent, respectively, for the following two years are expected.
The huge amount of red ink drew ire from members in the opposition parties, who accused the Liberals of playing fast and loose with taxpayers’ money.
“This government has taken a path of unsustainable spending based on phoney expectations of the economy and nobody should be surprised that Dalton McGuinty’s house of cards has finally come tumbling down,” Progressive Conservative Leader Tim Hudak said.
The PC leader said this latest financial statement only furthers the hardships of Ontarians trying to weather the economic storm.
“Working families across Ontario are paying more in taxes, auto insurance is going up, hydro rates have gone up, tuition is going up, and what do they get in return? $13,500 in additional debt for every household in Ontario.”
With files from the Canadian Press
