The fiscal disaster of Ontario

A guard walks into a prisoner’s cell and says, “Good news we are only going to whip you 20 times today.”

That is the sort of good news that Ontarians received when they learned that the budget deficit is $18.7 billion and not $19.7 billion. Yes it is better but it is not really a good thing. A study recently done by the Fraser Institute shows that Ontario has the worst fiscal policy of any other provincial government. In that context a billion dollars up or down is not really worth anything. The problems of Ontario are much more fundamental than that.

This is demonstrated by the reaction of the Dalton McGuinty government to the reduced deficit: they immediately found a way to spend a billion extra dollars. For this government being less in the hole means that there is more money to spend. Instead of breathing a sigh of relief that the fiscal situation is slightly less of a disaster, the Ontario Liberals have pledged to ensure that the budget deficit is maintained at a stable level.

This is even more galling when you consider the program that the billion dollars is going to be spent on. The Government of Ontario has announced that hydro fees will be reduced by 10%.

This sounds good but it is annoying because electricity bills have been increasing lately due to government policy. McGuinty’s environmental plan and regulations have been the root cause in the upsurge of electricity costs in Ontario. The costs, as always, are being passed on to consumers; this has created a political problem for the government. But instead of reducing the regulation the government has decided to spend more money to try and lessen the impact.

To add another layer of annoyance, the decreased deficit is not due to any government policy. It came about because of a surprising upsurge of business profits.

So because of the hard work of individuals in the market place, the government now feels free to spend more money to try to fix a problem that the government caused in the first place.

In the end, the fiscal problems of Ontario will only be solved if the government changes its attitude towards taxpayer’s money and stop trying to spend its way to utopia.