[gweed123]

Only if you shift the cost of those programs to the Federal level but not the income to support them? Yes, if Ontario could maintain the level of income (taxes, etc) they have now but not have to pay for things that they pay for now they would be in the black. I think, though, if the split in jurisdictional responsibility was different....so would the split in where the tax dollars come from and go to.

That's a good point. I wonder how much healthcare spending in each of the Provinces could be counted as "duplicate spending", i.e. spending that wouldn't be required multiple times if healthcare were a federal responsibility. I'm thinking specifically about overhead, bulk purchases (supplies, drugs, etc).

In all likelihood though, the savings would be pennies on the dollar in such a transfer. Any transfer from one level of government to another would probably result in an increases in taxes at one level, and a corresponding decrease at the other, so neither government would be "further ahead" at the end of the day.

 

[pstogios]

The forecast debt at the end of the 2015/16 and 2016/17 years is lower than was forecast in the budget last year.

Putting aside the obvious (which is that forecasts are notoriously inaccurate and governments' even more so, and the Ontario government's even more than that), if you think that the debt is not increasing from year-end 2015/16 to year-end 2016/17, you are off your rocker.

The rate of increase of the debt is slowing, and that's a really good thing, but the debt itself is absolutely still increasing.

We aren't even talking about lowering that debt and getting the bond payments off our backs, and that's really scary.

http://www.fin.gov.on.ca/en/budget/ontariobudgets/2016/ch3c.html
Total Debt ($ Millions)
Interim 2015–16 325,333
Plan 2016–17 331,148

 

[1overcosc]

Again, increasing debt isn't a problem if your GDP is also increasing. It's like people: getting a more expensive mortgage is totally okay if your income goes up by enough to afford the extra payments.

From 2015-16 to 2016-17 the debt-to-GDP ratio remains steady and it starts falling next year.

 

[crs1026]

Again, increasing debt isn't a problem if your GDP is also increasing. It's like people: getting a more expensive mortgage is totally okay if your income goes up by enough to afford the extra payments.

The loans officer at the bank kept feeding me a similar line whenever I paid down my mortgage. Oddly, my standard of living improved greatly once I paid it off altogether.

Ontario is not doing itself any favours by allowing itself to be the nation's queen of debt. It won't take much of an uptick in interest rates for the chickens to come home.

- Paul

 

[AlvinofDiaspar]

The loans officer at the bank kept feeding me a similar line whenever I paid down my mortgage. Oddly, my standard of living improved greatly once I paid it off altogether.

Ontario is not doing itself any favours by allowing itself to be the nation's queen of debt. It won't take much of an uptick in interest rates for the chickens to come home.

- Paul

The sad thing is the deficit could be slayed with a judicious level of spending restraint, particularly on wages and a modest increase in taxation, e.g. 1% increase in HST, as politically unpopular as it maybe. If one is so keen on the debt issue, one should consider the amount of tax reduction over the years instead of doing the doom and gloom but when push comes to shove, prioritizes additional tax cuts that would only shrink the pie further.

AoD

 

[Amare]

The problem with the budget, is that it is overestimating the growth of the economy and this government chooses to do this every single year. I really dont understand why they dont use a modest growth forecast so they wont be surprised with below forecasted numbers each and every single year, and then come out and say "oh we have to sell of our assets to help pay for transit investments"

 

[LNahid2000]

The loans officer at the bank kept feeding me a similar line whenever I paid down my mortgage. Oddly, my standard of living improved greatly once I paid it off altogether.

Ontario is not doing itself any favours by allowing itself to be the nation's queen of debt. It won't take much of an uptick in interest rates for the chickens to come home.

- Paul

Would your standard of living have been better if you never took on that mortgage at all? There are many good reasons to take on debt.

 

[TheTigerMaster]

The problem with the budget, is that it is overestimating the growth of the economy and this government chooses to do this every single year. I really dont understand why they dont use a modest growth forecast so they wont be surprised with below forecasted numbers each and every single year, and then come out and say "oh we have to sell of our assets to help pay for transit investments"

The deficit reduction has been consistently outperforming the government's expectations, if I'm reading this correctly.

 

[TheTigerMaster]

The sad thing is the deficit could be slayed with a judicious level of spending restraint, particularly on wages and a modest increase in taxation, e.g. 1% increase in HST, as politically unpopular as it maybe. If one is so keen on the debt issue, one should consider the amount of tax reduction over the years instead of doing the doom and gloom but when push comes to shove, prioritizes additional tax cuts that would only shrink the pie further.

AoD

And of course the sale of Hydro One is only a one time cash infusion. It just delays the inevitable (assuming we want to maintain balanced budgets)

 

[rbt]

And of course the sale of Hydro One is only a one time cash infusion. It just delays the inevitable (assuming we want to maintain balanced budgets)

Interestingly, this money did not appear in the budget as reducing the deficit that I can see; it was one of the first things I went hunting. That deficit is not really X-Billion larger than shown.

The old Ontario Hydro debt disappeared and the rest was put into the bank for future infrastructure spending (effectively the same as reducing Ontario debt).

 

[pstogios]

Interestingly, this money did not appear in the budget as reducing the deficit that I can see; it was one of the first things I went hunting. That deficit is not really X-Billion larger than shown.

The old Ontario Hydro debt disappeared and the rest was put into the bank for future infrastructure spending (effectively the same as reducing Ontario debt).

At least according to Vic Fideli on The Agenda last night, you are partially correct. The proceeds from the Hydro One IPO are indeed going to paying the deficit. So some measure of this was one-time money.

Having said that, further privatizations and divestments are on the horizon, such as the sale of the LCBO headquarters, which presumably would also be applied to future deficits.

 

[crs1026]

Would your standard of living have been better if you never took on that mortgage at all? There are many good reasons to take on debt.

My neighbour, same age as myself, borrowed to the max so he could blow out the back of his house and add another 1500 square feet. He figures he will be working an extra five years to pay it off. He got a great kitchen, but I got early retirement. Much better

- Paul

 

[TheTigerMaster]

My neighbour, same age as myself, borrowed to the max so he could blow out the back of his house and add another 1500 square feet. He figures he will be working an extra five years to pay it off. He got a great kitchen, but I got early retirement. Much better

- Paul

Your house isn't an economy. You'll die one day, states don't. That (among other things) changes everything regarding personal vs. government finances.

 

[pstogios]

Again, increasing debt isn't a problem if your GDP is also increasing. It's like people: getting a more expensive mortgage is totally okay if your income goes up by enough to afford the extra payments.

From 2015-16 to 2016-17 the debt-to-GDP ratio remains steady and it starts falling next year.

Yes a dropping debt-to-GDP ratio is excellent, but the analogy to mortgages and personal income doesn't apply.

By definition, mortgages are amortized over a period of time in which you are paying down the principal, such that your interest payments drop over time. This decreases your leverage and increases your fiscal flexibility and (if you have a line of credit, say) you can use that fiscal room to do other things in your life.

In contrast, the interest on the provincial debt is increasing, meaning that any paying down of the principal is being overwhelmed by adding new principal (i.e. new government bonds). This growing interest burden decreases the fiscal flexibility of the government, edging out other important government priorities like health care and education. That's the problem.

How is adding new debt at a faster rate than paying off old debt a good thing, in the long run?

 

[TheTigerMaster]

My neighbour, same age as myself, borrowed to the max so he could blow out the back of his house and add another 1500 square feet. He figures he will be working an extra five years to pay it off. He got a great kitchen, but I got early retirement. Much better

- Paul

States are eternal. Unlike you and the rest of us mortals, states never stop working (generating money), and because they don't die, there's never a point where states have to stop taking on debt or have $0 in debt. Comparing state debt to your own personal finances is nonsensical. States and individuals are fundamentally different.