Ontario Government Overly Optimisticpar Andrew Rickard | November 06 2015 09:55AM
Will the Ontario government be able to balance its budget over the next two years? It's unlikely, says the province's Financial Accountability Officer (FAO).
Ontario created the FAO position in 2013. Appointed by a panel that is made up of one member from each recognized party and chaired by the Speaker of the Assembly, the FAO provides independent analysis on the state of the province's finances.
In a report released on Nov. 4, Ontario's current FAO, Stephen LeClair,warns that there has been a significant economic slowdown since Ontario's Minister of Finance Charles Sousa tabled his 2015 Budget.
LeClair argues that, because it has been unable to limit spending and relied on overly-optimistic assumptions about revenue growth, the provincial government will not be able to balance the budget by 2017-18. Instead of the projected 4.2% nominal growth in GDP which was originally projected, the FAO argues that a lower rate of growth is to be expected, perhaps as low as 3%.
"The government's 2015 Budget includes ambitious plans to limit increases in program spending to 0.5% for the next three years. The government's spending plans will not keep pace with population growth and inflation, and are roughly one-third the pace of spending growth over the past four years," says LeClair. "If the government maintains the average growth in program spending at 1.4%, as it has for the last four years, and revenue grows by 3.3%, which is less than the Budget projection, but stronger than the past four years, it can expect a budget deficit of $5.2 billion next year, and $3.5 billion in 2017-18.