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TORONTO—Ontario’s finances are in much better shape than Finance Minister Greg Sorbara claims, says an Ontario Alternative Budget (OAB) Technical Paper released today by the Canadian Centre for Policy Alternatives.
According to the report A spinner of tales: Ontario’s Minister of Finance prepares for his (re-)election budget, authored by OAB Co-chair and CCPA Research Associate Hugh Mackenzie, it is well within the government’s capacity to balance its budget in each of the next three years—contrary to the government’s 2006 Fall Update, which projected deficits through 2008-9.
The report points out that this year’s deficit is entirely attributable to reserves and contingency funds that, half way through the fiscal year, have not yet been spent. Contingencies and reserves included in the deficit calculation total $2.5 billion, well in excess of the forecast $1.9 billion deficit.
“Without reserves and contingency allocations, the Budget is in surplus in each of the three forecast years,” Mackenzie explains. “In addition, the government has continued its practice of underestimating revenue and overestimating expenditures and debt service costs in its budget forecasts.”
In both of the Budget years for which the Liberal government was fully responsible and for which final numbers are in, the final Budget balance was substantially better than the position forecast at budget time.
Mackenzie suggests the government is trying to keep the deficit story alive for the next 10 months in order to generate a “surprise” balanced Budget on the eve of the 2007 election campaign.
While Mackenzie asserts that a surplus is likely in each of the next three years, those surpluses will not be substantial. “They are unlikely to approach the $2.4 billion cost of repealing the Health Premium, for example,” he says.
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