Addicted to debt

Candidates offer their prescription for Ontario’s economic recovery

We begin our extensive coverage of the provincial election this week by examining the candidates’ views on how to best navigate the difficult choices ahead for our economy.

The province’s debt has risen sharply over the last four years. It now stands at $245 billion. It has never been higher. When we look at debt compared to how much the province brings in (debt relative to gross domestic product) our debt load has never been higher. Indeed for the first time the province’s debt load relative to GDP is greater than the federal government. Both levels of government have invested heavily stimulus spending since 2008 to kickstart a stalled economy but the numbers show the provincial government has dug a deeper hole—a hole that will have to be filled.

We also ask the candidates about their plan for jobs (page 4) what is the right mix needed to encourage business development and prepare workers for the jobs being created in the marketplace?

Finally we ask each candidate why the new six floor, 173,000 square foot courthouse being built in Belleville will end up costing taxpayers $270 million (page 10) and what it says about current controls on government spending.

A MOUNTAIN OF DEBT
The province’s debt is the hole we are digging—the deficit is a measure of how fast we continue to dig it. Both the Liberals and Conservatives say they will try and slow down the pace of digging—but at the end of the next term, the hole will be deeper.

Treat Hull, candidate for the Green Party, illustrates the problem by imagining that provincial debt were personal credit card debt.

“When Dalton McGuinty came into office in 2003 the average working-age Ontarian owed $22,000 on that credit card debt,” said Hull. “Now it is $36,000—that is a 63 per cent increase in eight years. Imagine receiving a letter from Dalton McGuinty saying you owe $36,000 and it’s climbing.”

He suggests it is a problem made worse by the fact that neither the Liberals nor Conservatives have a plan to staunch the bleeding in the next term of government.

“Both are on the record as saying they will not balance the budget on our watch,” said Hull. “It is the problem for the government after us, they say. From my standpoint I would call it passing the billions of bucks.”

Leona Dombrowsky, Liberal candidate, says it is important to ask how our debt has grown to such proportions, to ask “why are we here?” “We have just been through the most significant economic event since the Great Depression,” explained Dombrowsky. “Governments at all levels had to act. The recession threw people out of work and we took the steps necessary to keep our economy going. Three levels of government concluded the best way to do that was to invest in communities and our people through this difficult time.”

Dombrowsky says her government took “extraordinary action” to solve an extraordinary problem. But by focusing on infrastructure investment her government not only put folks back to work but also improved local facilities to provide a platform for further growth in communities.

Dombrowsky points to the new Wellington and District Community Centre—a facility she suggests likely wouldn’t have been built were it not for stimulus spending.

But all three levels of government helped finance this new facility—yet the provincial government debt has surpassed the federal government on relative basis—using GDP as the benchmark.

This is because Ontario has the largest population and therefore the greatest demand for investment, said Dombrowsky.

“It also means we have more people to pay the debt back.”

Todd Smith, PC Candidate, says a Conservative government will begin to tackle the mountain of debt by putting an immediate a brake on spending.

“The way we are going to do that is to find two cents out of every dollar spent in every ministry except health and education to start with,” said Smith. “The LHINs (Local Health Integration Networks) will be gone—this will also deliver additional savings.”

He says tough measures will be needed.

We have never seen a debt as bad as that left by Dalton McGuinty,” said Smith. “The previous 23 premiers combined had a $150 billion in debt—Dalton McGuinty was able to accumulate this in eight years. Spending has increased on average eight per cent per year under the Dalton McGuinty government. We have to put the brakes on this government.”

Sherry Hayes, NDP candidate, says it is plain to see that we have to live within our means.

“There has been a lot of talk in recent years about rising consumer debt,” said Hayes, “and we’ve been encouraging individuals and families to live within their means. Governments need to do this as well. This is something the NDP are committed to doing.”

Hayes offered a pair of initiatives to begin rolling back spending.

“We will end the millions of dollars a day that is being spent on consultants by the Liberal government,” said Hayes. “We will cap government CEO salaries at three times the premier’s salary—still quite a lucrative wage. That will save about $80 million a year.”