By MPP Toby Barrett
Cyprus has been in the news of late – on the path to join other fiscal and economic basket-cases like Spain and Greece. The island nation has launched an ill-advised ‘tax-the-rich’ scheme potentially subtracting up to 30 per cent of the money in people’s bank accounts over $125,000.
In 2001, Spain had a debt level of just over 25 per cent. They did nothing. Today Spain has a debt level of 56 per cent.
Not too long ago Greece was just like Ontario – with a debt level of 40 per cent. Before long, it reached 100 per cent. And today it’s at a whopping 153 per cent. That could be us someday!
These countries slipped from comfortable complacency about their debt levels, to crisis, in the blink of an eye. They knew what was coming, but chose to kick the can down the road. Ontario can’t afford to follow this path to financial ruin. Not only are we about to run out of money, we’re also about to run out of time.
Ontario’s debt level of 40 per cent is second only to Quebec at 50 per cent. Saskatchewan comes in at just five per cent, and Alberta has no debt.
So, why is our debt growing so quickly? The answer – too much spending.
By the time the 2008 recession hit, the government had recklessly overspent Ontario to a record deficit of $20 billion. So by the time the global economy tanked, Ontario was already spending $20 billion more than it took in.
And we’re now swamped with debt – $260 billion of it.
Ontario was always the first province to get back on its feet and pull up the rest of Canada. But not this time – in fact we’re at the back of the pack.
Rather than meeting the challenge from a position of strength, we’re meeting it from one of weakness. Low taxes have been replaced by high taxes. Low energy rates have been replaced by high energy rates to subsidize wind and solar. A competitive workforce has been paralyzed as more power is handed to union bosses, limiting the flexibility employers need in a rapidly changing economy. A welcoming business environment has been shackled with more red tape that tells entrepreneurs and investors: “Why bother”?
Unfortunately, instead of implementing hundreds of ideas that could release Ontario from debt, Ontario launched a string of unaffordable commitments. Last year alone spending increased in 16 of 24 government ministries. And on top of that, we’re burdened by that mountain of debt. In nine years that debt doubled and it’s projected to climb to $411.4 billion in the next four years.
So what do we do when the money runs out?
Urgent action is required, we cannot run from tough decisions. Ontario has gone through huge economic changes – the money is running out – so merely tinkering around the margins will not get us out of this mess. We will have to cut spending – not just slow it down – to tackle our debt. Government must focus on core services that matter most to taxpayers. We need a leaner public service that can do more with less.
We need a government committed to tackle our downward slide before we see a crisis of Spanish, Greek – and now – Cyprus-like proportions.