A horror story
I’ve just been reading a horror story and it’s not by Stephen King. The title is “The State of Ontario’s Indebtedness: Warning Signs to Act.” Published by the Fraser Institute, you can read it here.
Let me summarize it for you. Every year Ontario runs a deficit and that loss does not go away. It gets added to the debt. No surprise there, but no one seems to be paying attention. Certainly Ontario Minister of Finance Charles Sousa seems content with the way things are. But compared to California, which is supposedly a basket case, we’re far worse off. Ontario’s debt is 64 per cent higher than California – even though that state’s economy and population are three times larger than Ontario’s. And at the rate we’re going, net public debt in Ontario will grow to $400 billion by 2017-18 and will be the equivalent of half our GDP.
To carry all this debt, we have to pay interest. This year, those payments run to about $11 billion. That means about 10 per cent of all revenue received by the province is going to pay the interest on a debt that continues to grow. Could you run your household like this? Not for long. The bank would halt your credit card charges, foreclose on your mortgage and seize your car.
Something similar will happen in Ontario when the ratings agencies downgrade the province so that borrowing costs even more. Unless this issue becomes a prime topic in the coming election, we’re all headed for the poorhouse. Like Greece without the good weather.