The Canadian Press
Allison Jones
TORONTO—Ontario’s Liberal government yesterday trumpeted a lower deficit projection as evidence it is reining in spending.
In reality, though, much of the drop was due to a temporary accounting measure.
The new 2015-16 deficit projection of $7.5 billion—$1 billion lower than was forecast in the spring budget—mainly is the result of the recent initial public offering of Hydro One, which increases revenue on the books by $1.1 billion, the government said in its fall economic update.
The government is on track to eliminate the deficit by 2017-18, said Finance minister Charles Sousa.
“For the last six years running, we’ve managed our program spending to offset softer revenues,” Sousa told the legislature.
“We know with those challenges before us [that] we need to address them and we are,” he stressed.
“We’re overcoming those challenges by controlling our spending, going over our underground economy issues, and going line by line to find the appropriate savings.”
The Liberal government has promised to dedicate the proceeds of asset sales, such as the Hydro One IPO, to the Trillium Trust infrastructure fund.
It’s a promise both opposition parties doubt but Sousa said it’s all going to infrastructure, which the Liberals have pledged to spend $134 billion on over 10 years.
But that money first must be on the books as a non-tax revenue item, he noted.
Progressive Conservative critic Vic Fedeli suggested that once the Hydro One revenue is moved into the Trillium Trust, the deficit goes right back up.
“The only explanation is the fact that it’s artificially there,” he charged.
“You can’t spend it twice,” Fedeli said. “You’re either going to put it against the deficit, as they did here, or you’re going to put it in the other column.
“They’re attempting to spend the same dollars two times.”
The NDP, meanwhile, is concerned a mention in the economic update that the government “will need to consider other tools” to get to balance by its self-imposed target of 2017-18 if revenue growth falls short is a signal it is planning on selling off more assets.
Sousa would not rule out new or higher taxes as those “other tools.”
