We won't know the Ontario numbers for 2015-2016 until the budget is released, but I wanted to note that Quebec has plans to balance their budget in 2015-2016. Ontario's certainly won't be balanced, although the Liberals have been planning for many years to do it in 2017-2018.
Quebec's 2014-2015 deficit was only $2.35 billion, way less than Ontario's $10.9 billion deficit adjusting for population and GDP. Ontario's 2014-2015 is also significantly higher than the federal deficit.
Obviously Quebec has controlled expenses to a much greater extent over the past few years (Ontario's 2014-2015 is actually bigger than the 2013-2014 deficit which in turn was bigger than the 2012-2013 deficit).
Quebec's debt to GDP ratio will peak at 54.9% this March and start to decline with this budget. Ontario's will continue to rise although I'm skeptical it will ever match Quebec's. According to Wikipedia, Ontario's debt to GDP ratio was 37.4% in 2013, although that's obviously higher now.
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Wednesday, April 22, 2015
Sunday, February 8, 2015
Livio di Matteo: "Ontario Can't Balance Its Budget"
Lakehead University's Livio di Matteo has a great article on the Ontario deficit which is well worth reading. Considering the claim by the Liberal Ontario government that the provincial budge will be balanced by 2017-2018, Matteo goes through what the latest Ontario budget numbers are:
"According to the review, between 2013-14 and 2017-18, total expenditures (including the reserve) are expected to rise from $126.4 to $134.5 billion - an increase of 6.4 per cent. Meanwhile, revenues are expected to rise from $115.9 to $134.5 billion - an increase of 16 per cent.
For Ontario, the heavy lifting needed to balance the budget was obviously expected to come from the revenue side, with expenditure restraint playing a minor role. Over a four-year period, this translates into average annual expenditure and revenue growth of about 1.6 and 4 per cent respectively. These figures can also help us assess the performance to date. Between the actual results for 2013-14 and the current outlook for 2014-15, are expenditures up by 1.6 per cent or less? Are revenues up by 4 per cent or more?"
Those are some interesting numbers and considering recent government actions and economic numbers it is good that someone has taken the trouble to look at the up to date numbers:
"Let’s look at the spending picture first. Despite some savings that have apparently been found in terms of program review and year-end savings totalling about $1.3 billion, total expenditures are still up by 3 per cent - rising from $126.4 to $130.2 billion. If spending continues to grow at 3 per cent, it will reach $142 billion dollars by 2017-18, substantially above the current budget plan.
Spending has grown at about double the rate needed for Ontario to be on track to meet its deficit target. Across the vast pantheon of ministry expenditure categories, only three have seen a decline - Tourism, Culture and Sport (-7.6 per cent), Natural Resources (-0.9 per cent) and the Attorney General (-2.1 per cent). The remainder all grew, with rates ranging from a low of 0.6 per cent for Citizenship and Immigration to a high of 83.9 per cent for Infrastructure. Even the Ministry of Government Services will see an increase from $728 million to just over $1 billion in spending — an increase of 31 per cent!
Of course, the key categories are the big-ticket items of Health, Education and Social Services, which together account for two-thirds of provincial government spending. Over the course of a year, Health grew at 2.3 per cent, Education at 5.1 per cent and Social Services at 7.9 per cent. On the expenditure side, it would appear the first year of moving towards a balanced budget by 2017-18 has missed the expenditure growth target by a fair amount."
I think the most salient information here is that the big ticket Health and Education budgets have increased a lot compared to what is required to balance the budget. Although I am impressed that Health only increased by 2.3%. I think it is a little odd that Education increased by so much. Perhaps that has something to do with the rollout of full day junior kindergarten. On the revenue side things aren't looking great either:
"How about revenues? Between 2013-14 and 2014-15, total revenues rose from $115.9 billion to $118.4 billion - an increase of only 2.1 per cent. Overall, revenues have grown at about half the average rate Ontario needs to meets its goal of a balanced budget by 2017-18."
I'll be curious to see what the final numbers are on the 2014-2015 deficit. The province has a pretty big reserve baked in, so perhaps they can claim that they made their numbers, but with these big spending increases things aren't looking good. Maybe they will include the recent GM share sale proceeds into the budget as revenue.
The 2015-2016 budget isn't looking great either. Don't expect the Toronto Star or Martin Regg Cohn to point out these numbers
"According to the review, between 2013-14 and 2017-18, total expenditures (including the reserve) are expected to rise from $126.4 to $134.5 billion - an increase of 6.4 per cent. Meanwhile, revenues are expected to rise from $115.9 to $134.5 billion - an increase of 16 per cent.
For Ontario, the heavy lifting needed to balance the budget was obviously expected to come from the revenue side, with expenditure restraint playing a minor role. Over a four-year period, this translates into average annual expenditure and revenue growth of about 1.6 and 4 per cent respectively. These figures can also help us assess the performance to date. Between the actual results for 2013-14 and the current outlook for 2014-15, are expenditures up by 1.6 per cent or less? Are revenues up by 4 per cent or more?"
Those are some interesting numbers and considering recent government actions and economic numbers it is good that someone has taken the trouble to look at the up to date numbers:
"Let’s look at the spending picture first. Despite some savings that have apparently been found in terms of program review and year-end savings totalling about $1.3 billion, total expenditures are still up by 3 per cent - rising from $126.4 to $130.2 billion. If spending continues to grow at 3 per cent, it will reach $142 billion dollars by 2017-18, substantially above the current budget plan.
Spending has grown at about double the rate needed for Ontario to be on track to meet its deficit target. Across the vast pantheon of ministry expenditure categories, only three have seen a decline - Tourism, Culture and Sport (-7.6 per cent), Natural Resources (-0.9 per cent) and the Attorney General (-2.1 per cent). The remainder all grew, with rates ranging from a low of 0.6 per cent for Citizenship and Immigration to a high of 83.9 per cent for Infrastructure. Even the Ministry of Government Services will see an increase from $728 million to just over $1 billion in spending — an increase of 31 per cent!
Of course, the key categories are the big-ticket items of Health, Education and Social Services, which together account for two-thirds of provincial government spending. Over the course of a year, Health grew at 2.3 per cent, Education at 5.1 per cent and Social Services at 7.9 per cent. On the expenditure side, it would appear the first year of moving towards a balanced budget by 2017-18 has missed the expenditure growth target by a fair amount."
I think the most salient information here is that the big ticket Health and Education budgets have increased a lot compared to what is required to balance the budget. Although I am impressed that Health only increased by 2.3%. I think it is a little odd that Education increased by so much. Perhaps that has something to do with the rollout of full day junior kindergarten. On the revenue side things aren't looking great either:
"How about revenues? Between 2013-14 and 2014-15, total revenues rose from $115.9 billion to $118.4 billion - an increase of only 2.1 per cent. Overall, revenues have grown at about half the average rate Ontario needs to meets its goal of a balanced budget by 2017-18."
I'll be curious to see what the final numbers are on the 2014-2015 deficit. The province has a pretty big reserve baked in, so perhaps they can claim that they made their numbers, but with these big spending increases things aren't looking good. Maybe they will include the recent GM share sale proceeds into the budget as revenue.
The 2015-2016 budget isn't looking great either. Don't expect the Toronto Star or Martin Regg Cohn to point out these numbers
Saturday, December 6, 2014
Quebec's 2014 Deficit Versus Ontario's, Ontario's Much Higher
The National Post had a good article about Quebec's current finances here. Surly Hamiltonian is generally interested in all the provinces deficits, however especially Quebec's because of its relationship to Ontario. Some noteworthy numbers from the article:
"Total debt is forecast to hit 55.1% of GDP next year, and interest payments alone cost $30-million a day, he said."
"Mr. Leitao announced additional measures Tuesday to ensure Quebec meets its target of a balanced budget for 2015-16"
"Economic growth has been more sluggish than forecast in last June’s budget, sitting at just 1.6% for 2014. Tuesday’s update projects an increase to 1.9% growth next year, thanks to increased exports brought on by a rebounding U.S. economy and a lower Canadian dollar. The province is on track to post a $2.4-billion deficit this fiscal year, as forecast in the budget, Mr. Leitao said."
First I think Ontario's debt is arount 40% of GDP, so Quebec's is obviously considerably worse (although what's counted in those numbers could be different). Second, Ontario is hoping to balance their budget by 2017-2018 which seems unlikely, however in any case over the next couple of years Ontario's debt will be rising considerably faster than Quebec's.
Third, the fact that Quebec's GDP growth is only going to come in at 1.6% means it will probably be slightly worse than Ontario's, and is also a little weird considering their first quarter growth was pretty high at 2.4%, so either that was overestimated or the last three quarters were terrible.
Fourth and finally, if Quebec's deficit this fiscal year is $2.4 billion that's considerably lower than the $12.5 billion deficit that Ontario is predicting. Ontario's is likely slightly overestimating their's, and the population is bigger but that's still way higher per capita and as a percentage of GDP.
"Total debt is forecast to hit 55.1% of GDP next year, and interest payments alone cost $30-million a day, he said."
"Mr. Leitao announced additional measures Tuesday to ensure Quebec meets its target of a balanced budget for 2015-16"
"Economic growth has been more sluggish than forecast in last June’s budget, sitting at just 1.6% for 2014. Tuesday’s update projects an increase to 1.9% growth next year, thanks to increased exports brought on by a rebounding U.S. economy and a lower Canadian dollar. The province is on track to post a $2.4-billion deficit this fiscal year, as forecast in the budget, Mr. Leitao said."
First I think Ontario's debt is arount 40% of GDP, so Quebec's is obviously considerably worse (although what's counted in those numbers could be different). Second, Ontario is hoping to balance their budget by 2017-2018 which seems unlikely, however in any case over the next couple of years Ontario's debt will be rising considerably faster than Quebec's.
Third, the fact that Quebec's GDP growth is only going to come in at 1.6% means it will probably be slightly worse than Ontario's, and is also a little weird considering their first quarter growth was pretty high at 2.4%, so either that was overestimated or the last three quarters were terrible.
Fourth and finally, if Quebec's deficit this fiscal year is $2.4 billion that's considerably lower than the $12.5 billion deficit that Ontario is predicting. Ontario's is likely slightly overestimating their's, and the population is bigger but that's still way higher per capita and as a percentage of GDP.
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:
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
- to $11.3 billion in 2013-14
- to $12.5 billion in 2014-15 (in the second Wynne budget which didn’t pass)."
Wednesday, April 2, 2014
Ontario Finance Minister Sousa: Ontario's GDP Growth Next 20 Years Sucky, Deficit Slightly Down?
Ontario Finance minsiter Charles Sousa (any relation to John Philip?) spoke today about Ontario's finances. The Star has a recount of the event here. Noteworthy was this:
"It cites an aging population and slower expansion of the workforce, which “may restrain future economic growth in the absence of significant productivity improvements.”
“The report indicates the need for consistency, predictability and steady hands,” said Sousa, who is to table a budget in May that could trigger a June election.
The economic outlook calls for an average of 2.1 per cent annual growth in real GDP through 2035."
As I've previously posted, I'm shocked that anyone is shocked that Ontario is going to have low GDP growth in the future. Historically, Ontario hasn't had good GDP growth since the Harris years and this prediction is more of the same. I was a little surprised by this quote:
"Despite a growth prediction that barely exceeds inflation, Sousa maintained that the provincial budget will be balanced by 2017-18.
He is to deliver a revised deficit figure on Thursday that will be slightly lower than the $11.7 billion forecast."
Getting to zero deficit by 2017-2018 to me seems very difficult at this point in time, with stagnant GDP growth and rising health costs. Sousa most likely isn't going to be around for that budget so I guess he can say what he wants. I'm assuming that the $11.7 deficit figure refers to the fiscal year that just finished a couple of days ago. I'm a little surprised it doesn't come in higher than predicted, although lately the provincial government has been giving worse predictions for the budget and then beating them slightly, which would appear to be the case here.
This finance ministry document has some relevant data which shouldn't disappear into the memory hole. The 2012-2013 interim deficit was 9.8 billion, with the 2013-2014 deficit estimated at 11.7 billion, with further predictions of 10.1 for the 2014-1015 fiscal year and then predicted deficits of7.2, 3.5 in future years and a surplus of 0.5 billion in the 2017-2018 fiscal year.
One interesting thing about those deficit predictions is that a reserve was introduced in the 2013-2014 fiscal year prediction. For 2013-2014 year the reserve was 1.0 billion with reserves of 1.2, 1.2, 1.5, and 1.5 in future years. So in actuality the predicted deficit for 2013-2014 is really 10.7 billion. So if the 2013-2014 deficit is announced at more than 10.7 billion it is actually worse than predicted. For 2014-2015 the actual predicted deficit is 8.9 billion, followed by 6.0 billion, 2.0 billion and then a surplus of 2 billion in 2017-2018.
Other data is provided in the finance ministry document. Program spending interim for 2012-2013 is 113 billion, and estimated at 117.0 billion for 2013-2014. Future years have program spending estimates of 118.3, 118.8, 118.8 and 118 billion in 2017-2018. You'll notice that for four years in a row spending is predicted to be flat. That seems incredibly unlikely, especially considering recent spending increases like the OPP's 8.5% pay increase effective January 1st 2014.
Income information is also specified. For 2012-2013 the income was 114.2 billion and then estimated at 116.8 billion for 2013-2014. For following years the income estimates are 120.5, 124.9, 130.1 and 134.4 billion in 2017-2018. It should be interesting to see what program spending ends up coming in at for 2013-2014 and what the prediction is for 2014-2015.
Sunday, November 25, 2012
Good National Post Info Graphic on Federal and Provincial Debt
The National Post often has good info graphics and this one, detailing Canada's federal and provincial debts is another good one. Quebec, has the most debt per capita ($21,420) followed by Ontario ($17,626). However Quebec looks to be on track to eliminating its deficit in the next couple of years, whereas Ontario is nowhere near eliminating its deficit. Could Ontario pass Quebec soon as the most indebted per capita? It is entirely possible considering the province is adding around $1,000 in debt per capita per year.
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