Ontario’s Deficit Quandary

When Politics Trump Economics
January 31, 2011
246.47 KB10 pages

As it prepares its budget for 2011 — an election year — the Ontario government faces a strategic choice between two general paths.

One path would be responsive to the government’s apparent short-term election year political needs. The other would be consistent with the economic health of the province, both short- and long-term.

Some might argue the path of least resistance politically would be to focus on deficit reduction, to follow the federal government in withdrawing economic stimulus, to abandon plans to rebuild public services on which it campaigned in 2007 and to unleash a wave of service-cutting austerity measures.

Given the size of the provincial deficit and growing public concern about both public and private indebtedness, the pressure on the government to hunker down and retrench in an effort to protect itself from conservative critics is real. To bend to that pressure, however, would be a mistake — with significant negative implications for Ontario long into the future.