Post by M.I.Wakefield
Credit-rating agencies warn Ontario about planned spending
On Thursday, both Moody’s Investor Service and DBRS said the fiscal plan
set out by the Liberal government in its 2018-19 budget, which includes
billions in new spending, would harm the province’s credit profile over
the long term.
“It demonstrates in the clearest terms that the province is not
committed to disciplined … fiscal policy,” DBRS analysts said in a report.
Both agencies stopped short of downgrading Ontario’s debt, but stressed
that the province’s creditworthiness could come under pressure as a
result of abandoning its commitment to balanced budgets.
This matters because a credit downgrade could result in the province
having to pay higher interest on its debt ... and Ontario has a lot of
How the debt is managed is also a major concern. In Manitoba we got a
new Conservative government and as a matter of policy they started
cutting and cancelling projects that were either in the works or
For example there was a $300 million Cancer Care Center being built
which had been in the works for years which was cancelled by the new
government after millions had been already spent on this project. They
cancelled schools, infrastructure projects and senior care centers that
were already planned. As a result the monies earlier spent on these
projects became dead debt. Many of these infrastructure projects were to
improve the Manitoba economy. The new government had only been in for
one year and because of this dead debt the credit rating of Manitoba had
been degraded twice without any further debt added to Manitoba. Of
course they blamed the previous government for these new downgrades.
The Pallister government also slashed the rail subsidy for Churchill.
Since Churchill does not have any roads the subsidy was in lieu of
infrastructure spending. That $1 million saving ended up shutting down
the port as well as causing the Tolko paper mill in The Pas to look at
closure. To date that line is still closed as it deteriorates and that
closure has cost Manitobans and the Manitoba government millions.
"Pallister said Greg Selinger's NDP government signed a one-year subsidy
deal in 2015 that saw OmniTrax receive $800,000 to $1 million that
Right now the Manitoba government is fighting with the Metis Federation
after it cancelled a settlement with that group. Now it looks like the
project may be stalled as it sorts this mess out which could cost the
Manitoba government millions in late fees.
Cutting programs and initiatives can cost more in the long run if they
are not done properly. Not every spending cut will cause these kinds of
problems but the government has to be careful with the axe.
What the Ontario government should focus on is bringing in quality jobs
and a decent wage for Ontarians. With more tax revenues coming in it
will be easier to balance the books.