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Ontario to run $18B in deficits over two years
Finance Minister Dwight Duncan says Ontario's budget deficit will be in the $18-billion range over the next two years.
"We'll report our best estimates in the budget, but I can tell you now that the combined Ontario deficit over this year and next, over the next two years, be around that $18-billion figure," Duncan said Tuesday in a lunch-hour speech to a Toronto business audience.
"A deficit is not something that we take lightly. It is however, a necessity in these challenging times."
Earlier on Tuesday, Premier Dalton McGuinty hinted such an announcement would be coming ahead of the provincial budget, due on March 26.
"We want to do more than just manage our way through this immediate crisis," McGuinty said.
"We also want to begin to build a foundation for a stronger future ... and that necessarily calls for maybe more investments and more expenditures than we otherwise would have wanted to take on."
Last week, Don Drummond, the TD Bank's chief economist, predicted that Ontario will have a $5-billion deficit in the current fiscal year, which ends on March 31, with a $13-billion deficit in the coming year.
The main pressures on Ontario's finances are plunging tax revenues and the wish to spend on infrastructure projects to avoid the worst effects of the recession currently battering the provincial economy, economists say.
Duncan told reporters after his speech that the government would be looking at "short-term stimulus."
The provincial Progressive Conservatives say fiscal mismanagement by the McGuinty Liberals would be the main reason for any deficit.
Tory MPP Tim Hudak said provincial government revenues have risen by $27 billion since 2003, when the Liberals won power; however, McGuinty has blown it all.
"Now we're in a big deficit that would make (former NDP premier) Bob Rae look like a piker," he said.
The Liberals inherited a $5-billion deficit from the former Progressive Conservative government.
Duncan said revenues went up by 33 per cent in the government's first mandate, while expenses went up 24 per cent.
"We have in fact paid down $3.2 billion in debt ... our debt-to-GDP ratio is lower than when we came to office; it's lower than it was under the previous (Tory) government," he said.
"We made investments in the things we thought were important, and we were given a mandate to make investments."
NDP critic Peter Kormos said Ontarians are worried about their jobs, not the deficit.
"These families are thrust into states of despair," he said.
"There is nothing about Premier McGuinty's comments today that give them any assurance that they're going to restore any of those lost jobs or that they're going to save any of those lost jobs."
Ontario isn't the only government wrestling with a deteriorating fiscal situation.
Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador and Alberta are saying they will likely table deficit budgets this spring.
Although the federal Conservatives insisted during last fall's election campaign they would go into deficit, they have tabled a budget that will overspend by $30 billion in order to provide economic stimulus.
With files from The Canadian Press