Ontario must get past the “d” word and deliver on investments to boost economy

December 1, 2008

TORONTO—During this economic downturn, Ontario could tolerate a deficit in its normal operations of up to $3 billion and provide temporary economic stimulus and support without falling into structural deficit, says an Ontario Alternative Budget report released today by the Canadian Centre for Policy Alternatives (CCPA).

The report, by CCPA economist Hugh Mackenzie, recommends that the government use this fiscal room to make investments in infrastructure and public spending and to make significant down payments on key commitments.

“A spending envelope of this size would enable the government to avoid making the economic circumstances of the province worse and provide needed temporary stimulus” says Mackenzie. “It would also permit the government to make a down payment on its key election campaign commitments for new investments in early childhood education and in poverty reduction.”

The report states that spending cuts would act as a drag on the economy at precisely the wrong time and, in the long run, they would delay the kinds of high-return public investments that have been neglected and which will be critical to the province’s economic future.

“Retrenchment makes no sense in both the short- and long-term,” Mackenzie says. “Forging new initiatives in early childhood education and poverty reduction is the best tool the government has at its disposal to stimulate the economy.”

Early childhood education creates jobs and frees up family caregivers to rejoin the workforce, contribute to economic activity, and boost government revenue. Investments in poverty reduction may deliver their major benefits to society in the long-term, but in the short-term increased support for the working poor and other low-income households will provide the most powerful economic stimulus to Ontario.


Getting Past The Dreaded “D” Word: How Ontario Should Deal With Deficits is available on the CCPA web site: http://www.policyalternatives.ca

For more information contact Kerri-Anne Finn, CCPA Communications Officer, at 613-563-1341 x306.

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