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Every winter, the Ontario Standing Committee on Finance invites groups to make submissions about what they would like to see in the spring budget. Every year, the Canadian Taxpayers Federation does what no other group in Ontario does: they ask the government to spend less money, not more.
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He's set to unveil fresh numbers Monday.
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Leaving aside the fact that getting Ottawa out of the red required Finance Minister Joe Oliver to deploy some skillful manoeuvers, not to mention seek a little help from contingency funds, the budget delivered this week clearly demonstrated spending restraint that is not as common as one might expect in today's economic environment.
While the government has talked the talk on taxes, it has yet to walk the walk. In fact, the fiscal update announced additional tax increases including plans to levy a temporary (until 2017) increase to payroll taxes on financial institutions such as banks and credit unions. Quebec's fiscal problems run deep so small fixes won't cut it. More fundamental reform is needed to put Quebec on the right fiscal track.
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Nine-million baby boomers will retire from the workforce over the next two decades, and when they do, they will start to consume the most expensive forms of government programs. This is great news for seniors, but terrible news for our public finances and for young Canadians forced to foot the bill. Generation Y has been dubbed the "Millennial" generation because we came of age at the turn of the new millennium. A more fitting name for this cohort is Generation Screwed.
Governments must make interest payments on their debt similar to families who pay interest on borrowing for mortgages, vehicles, or credit card spending. These interest payments leave fewer resources available for important priorities such as tax relief and spending on public programs such as health care, education, and social services.
A sign of the seriousness of Ontario's debt problem is evidenced by comparisons with California, which for more than a decade has been the butt of jokes of comedians, political commentators, the media, and politicians themselves for its inability to solve its perennial financial problems. This dubious distinction ought to be a wake-up call for Ontario's policymakers and citizens alike.
With the holiday season now behind us, the oncoming flood of credit statements to Canadian households is a powerful reminder that there are no free lunches. Borrowing to pay for current consumption brings interest payments, and ultimately, the need to pay off principal balances. But this same reality also applies to governments.
Under Stephen Harper, household debt has exploded. The average household debt-to-income ratio (the amount of debt the average Canadian household owes for every dollar of their annual disposable income) has risen from $1.31 to $1.64 -- which is where the United States was before the housing market crashed.
Prime Minister Stephen Harper and Finance Minister Jim Flaherty went to Russia for the G20 conference this week, and decided that this would be a good time to pressure the world into cutting government spending and implementing austerity measures. Unfortunately, to the leaders at the G20 -- stuck as they are between deficits and sinking economies, between the option of printing money and doing nothing -- Harper and Flaherty are just as likely to come off as a bunch of self-righteous jerks.
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