Wednesday, June 4, 2014

Steve Paikin's Blog Post "Are The Liberals Really Promising No Layoffs?"

Steve Paikin of TVO's the Agenda made what I thought was a very good blog post about the Liberals and layoffs. Certainly they haven't been campaigning like they will be making layoffs although they've claimed that they will follow through on balancing the budget in the 2017-2018 fiscal year.

Paikin has does a good job of scoping out the financial realities of Ontario's fiscal situation:

"From the beginning of the Great Recession (2008-09) to the current fiscal year (2014-15), revenues into Ontario’s treasury have increased by more than $21 billion.

That sounds good if you're trying to pay for programs people want.
However, program spending has increased by $24 billion.

And our annual interest payments on the debt have increased by almost $2.5 billion.

That sounds bad. That sounds unsustainable.

Astonishingly, the net debt under the Liberals during that six-year period has increased from $170 billion to $290 billion. As a percentage of our economy, it’s gone from 28 per cent to 40 per cent. That’s not Greece (155 per cent), but clearly it’s alarming."

The one thing I would say about comparing to Greece in this manner is that we still have a quite sizable federal debt (albeit as a percentage of GDP we're close to an inflection point where it starts to decrease) that should be included in some manner when comparisons to Greece are made.

Paikin also lays out the Ontario deficits since the 2009-2010 fiscal year.

"The Liberals primed the pump to the tune of an all-time high $19 billion deficit in 2009-10, and then started to whittle that deficit down:
  • $14 billion in 2010-11
  •  $13 billion in 2011-12
  • $9.2 billion in 2012-13
However, the following year, the deficit went back up:
  • to $11.3 billion in 2013-14
  • to $12.5 billion in 2014-15 (in the second Wynne budget which didn’t pass)."
Personally I don't think enough has been made of the fact that the deficit has now risen (or would have) for two years in a row. Also I'm not sure I would agree with the phrase "primed the pump." The big 2009-2010 deficit was mainly due to revenues totally collapsing due to the recession. However this also leaves Ontario vulnerable if another recession were to occur in the next few years. Ontario's economic growth has been weak since basically since the Harris years, so pushing Ontario into the technical definition of a recession (two consecutive quarters of negative growth wouldn't take much).

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