Has the 2014-2015 Ontario Deficit Increased from the Previous Year? Media Silent

The 2014-2015 Ontario fiscal year ends tonight. The deficit was originally sort of predicted at $12.5 billion. What I mean by sort of is that the province makes a prediction for revenues and expenses and now tacks a couple of billion on to the expenses as a contingency fund. To be fair the feds have being doing that since the Chretien days so it isn't too weird.

However what it often allows the province to do is as the numbers firm up and the deficit is closer to their original prediction rather than the original prediction plus the extra couple of billion, is say the province beat their prediction. Which obviously really isn't the case.

Now the Sousaphone, minister of finance Charles Sousa has said that the deficit is more likely to be $10.9 billion as quoted in this Toronto Star article. So fantastic, they beat their watered down prediction. Makes for good news.

But hold on. Anyone can make a prediction they know they will likely beat. What about say, how the deficit for fiscal 2014-2015 compares to the previous year? That's not mentioned anywhere in the article. Thanks Robert Benzie, Queen's Park Bureau chief for the Star.

I'm going to a more careful search of what exactly the 2013-2014 number was, but this Studio 2 article mentions that it was only $10.5 billion:

"For the most recently concluded fiscal year, 2013-2014, the province got the deficit down to $10.5 billon, but it's projected to go back up to $12.5 billion this year." 

So it was commonly known that the deficit would probably increase, but nobody would mention in the articles about this year's deficit that it increased. Considering that the Liberal government is claiming that the deficit will be eliminated by the 2017-2018 budget, one would think the trend is important. What about the 2012-2013 number? That might be interesting too.

When the more up to date numbers come out it will be interesting to see how the expenses and revenues differed from the previous fiscal year.

 

April 2014 Canadian GDP Disappoints, What About Ontario and Martin Regg Cohn Says Don't Worry, Wynne Will Balance 2017-2018 Budget

A bit of a long blog post title, but I'm going somewhere with it. Plus there's something I want to record for posterity.

I'm not certainly not the first prognosticator in North America to say that GDP growth in the next few years is going to be disappointing. However I'm one of the rare few that focuses on Ontario's GDP growth, which unfortunately for Ontarians doesn't often get a lot of focus. Not even in the most recent election campaign.

We have already covered here the fact that Canada had 1.2% GDP growth in the first quarter of 2014 and that combined with US GDP growth of -2.9%, that can't be good for Ontario. Canada's GDP growth for the fourth quarter of 2014 was 2.9% while Ontario's was 1.9%. Ontario also suffered the same bad winter as the rest of the US. That's however in the past, although we won't know Ontario's first quarter number until August.

On both sides of the border, some have been predicting a rapid snap back in the second quarter of 2014. Estimates are now out for Canada's April GDP numbers and they are disappointing:

"Statistics Canada said Monday the economy grew by 0.1 per cent in April, the same pace as in March.

Economists had expected a gain of 0.2 per cent, according to Thomson Reuters."

“Even if some of April’s weakness should prove temporary, and thus likely to influence the next month’s readings positively, the disappointment means that growth is likely to come in closer to two per cent than 2.5 per cent (the Bank of Canada’s prior forecast) in the second quarter,” Exarhos wrote in a note to clients."

So no snap back and a reduction of an estimate for Canadian GDP growth to 2%. Considering the recent relationship between Canadian and Ontario GDP growth, the 2014 full year GDP growth for Ontario will probably be less than 2%. Which isn't good coming off two years in a row of 1.2% GDP growth. Plus considering the recent ratcheting up of oil prices due to the murk that is Iraq, June probably isn't going to be a great month for GDP in Ontario and if the relatively high prices continue into the third quarter, Ontario's third quarter GDP probably won't be any great shakes either.

Now on to Toronto Star columnist Martin Regg Cohn and the Ontario Liberals and posterity. Cohn has recently wrote two columns, one where he tells the Ontario PCs that come around the next election that the budget will be not just be balanced, but in surplus:

"By the 2018 campaign, the budget will be mostly likely in surplus (see: Paul Martin)."

Wow. The Liberals have been saying for quite some time that the 2017-2018 will be balanced, and Cohn here is likely referring to the 2018-2019 budget. Still that's astonishing and that assertion needs to be preserved and remembered and referenced when that time finally rolls around. Cohn as a backup for that refers to another column, entitled "Kathleen Wynne won't back down on activist plan", which has the text "And she stands by her promise to wipe out Ontario's deficit within three years."

Well that settles it. Wynne says she will balance the budget in fiscal year 2017-2018 and Cohn assumes that will happen and it apparently has something to do with Paul Martin.

The thing is, Ontario's GDP growth has been woeful for some time and all indications are it will continue to be woeful in the future. Balancing the Ontario budget in 2017-2018 requires some assumptions of decent growth that just aren't going to happen. There may not be new money for public sector unions, but in reality there will be less money.

Surly Hamiltonian will be continuing to follow Ontario's GDP growth and deficits and will also periodically check in on Cohn's assertion that by the 2018 the budget will most likely be in surplus.