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.

Ontario Budget Deficit for 2012-2013 Down to $11.9 Billion

Amazing. Details in this Spec article. Interesting to me were the reasons. From the article:

Finance Minister Dwight Duncan says the nearly $3-billion drop from last spring's budget projection is due to higher than expected revenues and lower expenses.

Corporate taxes were more than $1 billion above the budget forecast, while revenues were also up from the sales tax and the land transfer tax.

The government expects to spend $1.2 billion less than budgeted mainly because of lower interest on debt, and savings from reducing the ability of teachers to bank sick days and cash them out at retirement.

Interesting that from my post yesterday about the feds having difficulties balancing their budget going forward, Ontario's deficit lowered significantly. The extra billion from corporate taxes is curious, considering there is no mention of increases from income taxes, however that seems to fit into the North American overall narrative where companies are reporting good profits while wages have stagnated. Sales tax being up is also interesting and perhaps fallout from the decision to go to the HST and apply it to things like gas and electricity where it wasn't being applied before. Increased land transfer taxes aren't a big surprise considering Ontario is in somewhat of a real estate bubble. Lower debt costs are interesting. One would think that they couldn't get much lower due to interest rates, but with the other options out there for government debt (i.e. Europe) and the deficit much improved compared to the worst fiscal years maybe it can.

I'm still really curious as to what Ontario's GDP growth will be in the third quarter. Maybe better than the federal number considering the increased corporate taxes.

Federal Budget $5 Billion Higher Than Prediction

See this Star article for the specifics, but slower growth is to blame. This isn't something to be super concerned about considering the trend is down, at least federally. I do wonder what this means for Ontario though. Is the slower growth causing this due to slower growth out West and lower commodity prices reducing revenue? Or is this all over the country and there's slower growth in Ontario too which will lead to incorrect revenue projections and consequently higher budget deficits. Who knows? Just don't be surprised. Although with the current chaos in the Ontario government, don't expect any information any time soon.

Canada Jobs Up, Ontario Jobs Down, Ontario Wages Stagnant

Good news, that Canada gained 58,200 jobs in April. Not so good news for Ontario as 9,300 jobs were lost. Maybe even more importantly, news that average hourly wages only increased by 0.7% year over year, way less than inflation. That's problematic considering provincial tax brackets are recalculated each year based on inflation.

This isn't going to be good at all for provincial revenues. Obviously provincial income tax will suffer, as will consumption taxes. I'm going to try to remember to keep track of these numbers over the next couple of years. Especially since the province is counting on increasing revenues and frozen spending to bring down the deficit. If revenues are not increasing that's bad news.

 Finally how are increasing house prices and stagnant wages reconciled?