Ontario's deficit to rise to $12.3B this year, fiscal watchdog says

Ontario's deficit to rise to $12.3B this year, fiscal watchdog says

Policy decisions, a weaker economic forecast contributed to change, financial accountability officer predicts

The Canadian Press · Posted: Dec 10, 2018 5:38 AM ET | Last Updated: December 10

Ontario's financial watchdog says the province's deficit will rise to $12.3 billion this fiscal year, half a billion more than he predicted before the spring election.

Financial Accountability Officer Peter Weltman says policy decisions such as cancelling the cap-and-trade program and reversing several tax increases, combined with a weaker economic forecast, contributed to the change.

In his fall economic and budget outlook, Weltman says that without further policy changes, the deficit is expected to exceed $16 billion by 2022-23.

He says that while the government's fall economic statement did not include a budget forecast beyond this year, balancing the books in one mandate would require "significant changes" to policy that could have wide-ranging impacts on Ontario households and businesses.

The FAO's spring report, issued just weeks before the provincial election, said the province's deficit would jump to $11.8 billion in 2018 as a result of higher spending in the budget presented by the then-governing Liberals, as well as weak revenue gains.

The Liberals had projected a deficit of $6.7 billion, a figure that was also called into question by Ontario's auditor general.

The Tories have since accepted the auditor general's accounting but said a commission of inquiry and financial review convened to examine government spending found the province's deficit will grow to $15 billion this year.

They said this fall that various savings measures had brought that number down to $14.5 billion.

The FAO says its projections do not include any election promises that the government has yet to act on or announce.

https://www.cbc.ca/news/canada/toronto/ontario-financial-accountability-fall-economic-budget-outlook-1.4938987

Butler1000 said:

Wynne left us one hell of a going away present.

Click to expand...

And Ford keeps on giving to the gift that she left.

Doug Ford's 'efficiencies' seem to be costing taxpayers an awful lot of money

Doug Ford's 'efficiencies' seem to be costing taxpayers an awful lot of money: Robyn Urback

Penny-wise and pound foolish 'for the people'

Robyn Urback · CBC News · Posted: Dec 11, 2018 4:00 AM ET |

Looking back now, Doug Ford's campaign promise to conduct an independent audit of Ontario's finances — essentially duplicating the work of the already independent provincial auditor general — was a harbinger of how this government would go about finding its "efficiencies."

The new PC government would hire former B.C. premier Gordon Campbell to lead its commission of inquiry in Ontario's finances, as well as EY Canada to deliver a line-by-line "audit" (in practice, it would be more a review than an audit, since there wasn't time for a proper line-by-line audit) of the province's financial situation.

And — surprise! — the commission found that the previous Liberal government had hugely understated the deficit, which Auditor General Bonnie Lysyk had previously noted; and EY Canada reported that the province's operating expenses had ballooned under the Liberal government, which Lysyk had also documented in meticulous detail.

The exercise, then, was akin to purchasing a very expensive metal detector and swinging it over an already combed-over beach. There would be no way for the government to offset the cost of the equipment or the time wasted, but Ford would nevertheless hoist a piece of rusted metal over his head, look directly into the camera of his taxpayer-funded news station and declare: "For the People!"

We've seen this same routine a few times already from this six-month-old provincial government. Ford vowed to save taxpayers $25 million over four years by cutting Toronto City Council nearly in half, and went so far as threatening to use the notwithstanding clause to deliver on it.

But last week, Toronto councillors voted to nearly double their office and staffing budgets — from a combined $275,000 per office to $532,000 — to maintain the level of service for constituents as they adapt to the smaller council and new ward boundaries.

Had office budgets stayed the same, the city would have saved approximately $8.5 million per year ($2.5 million in 22 fewer councillor salaries and around $6 million in saved office expenses). But the budget increase means an extra $6.4 million in expenses, cutting the net savings down to $2.1 million.

It would be easy to blame Toronto councillors for vindictively sticking it to Ford by hiking their own budgets. But the same could no doubt be said of Ford singling out one city council among many to find efficiencies — especially considering it's the same city council that voted down his late brother's previous attempt to shrink its size. In any case, the Ontario government has expended an awful lot of grief, time, legal expenses and political capital for a measly couple million dollars in savings.

City council boosting councillors' staffing, office budgets in wake of province's cuts

The same goes for Ford's barnburner promise to fire the "six-million-dollar man," which, in turn, has cost the province millions more in penalties and — perhaps more importantly — has dealt a big blow to Ford's efforts to rebrand Ontario as "open for business."

The six-million-dollar-man — known as Mayo Schmidt outside of PC campaign literature — was the CEO of Hydro One, whom Ford targeted for his $6.2 million compensation package in 2017. Ford promised that Schmidt's ousting would be among the first things he did as Ontario premier, even though the corporation was partially privatized by the Wynne government, leaving the province with a minority 47 per cent share.

Political interference

Ford was nevertheless successful in pressuring Schmidt to leave his post, which the now-former CEO exited with a $400,000 lump sum and likely millions more in awards and benefits. His resignation catalyzed a mass resignation of the entire 14-member board, the effects of which weren't really felt until last week, when U.S. regulators denied Hydro One's proposed takeover of Spokane-based energy company Avista Corp., citing political interference.

"The agreement resulting in the resignation of the Hydro One board and CEO elevated the provincial government's political interests above the interests of other stakeholders, including investors that own 53 per cent of Hydro One's common stock," the Washington Utilities and Transportation Commission said. In other words, the commission was concerned about Ford sticking his nose in it.

The decision will see Hydro One pay a $103 million US (or $138 CAD) penalty for terminating the agreement, in addition to other sunk financing costs.

Essentially, the Ontario government will spend tens of millions of dollars to save $6 million.

Hydro One's share price did jump immediately after the Avista deal fell through, but in the long term this decision is hardly one to celebrate: it confines the growth of the utility both in terms of its own size and in terms of regional expansion. And if the government is seen to meddle in a company for which is it just a minority shareholder, what message does that send about doing business in Ontario — either with the government or with so-called private corporations? (I believe Tesla has an opinion on this.)

For a party that campaigned on cutting the waste, the PCs appear to be wasting a lot on hasty efforts to save a little. Penny-wise and pound foolish — for the people, I guess.

https://www.cbc.ca/news/opinion/ford-efficiencies-1.4940302