already with the Greek comparisons
By Fred Sherwin
don't know about you, but I'm starting to get a little
sick of hearing politicians, political pundits, radio
talk show hosts, office cooler economists and the guy
at the end of the bar trying to compare Ontario, or Canada,
these people can't even find Greece on a globe, let alone
profess to have any real knowledge of the Mediterranean
country's economic meltdown.
know, the self-professed experts who during the last six
months and especially following the release of the Drummond
Report.earlier this week, who are warning that if Ontario
doesn't make drastic spending cuts and soon we're going
to end up like Greece.
as much I would hate to let a poor attempt at hyperbole
get in the way of a good story, lets take a look at a
# 1 Ontario's current debt is $220 billion and our deficit
is $16 billion
# 2 Canada's current debt is $581 billlion and the deficit
is $30 billion
# 3 At the height of Greece's economic crisis it's national
debt was 125% of its GDP and the deficit was 12.5%
estimated GDP is $1.574 trillion, meaning our net federal
debt to GDP ratio is 37%. Ontario's GDP is approx. $640
billion, meaning the province's net debt to GDP ratio
is 34%. Both are a far cry from 125%.
when you take into account Canada's total net debt, combining
all three levels of government, the ratio is still only
put the provincial figure into perspective, in order for
Ontario to have the same realtive net debt to GDP ratio
as Greece, we would have to have a total net debt of $800
billion, and in order to have the same net deficit to
GDP ratio, our deficit would have to be $80 million. It's
currently $16 million.
his report, Drummond warns the deficit could rise to $30
million by 2017. That's still a fraction of what Greece
faced, and only if our GDP remained stagnate for the next
it is, Ontario's GDP has increased an average of two per
cent a year over the past 10 years. If it were to continue
to grow at the same rate over the next five years it would
reach $706 billion. Going by that figure, the provincial
deficit would have to hit $88 billion to place it in the
same ballpark as Greece. That just isn't going to happen.
being grossly in debt, Greece's economy was also plagued
with corruption at all levels, and tax evasion was rampant.
flash: Canada isn't Greece and neither is Ontario, and
they never will be. They're not even close. So enough
already with the headline-grabbing comparisons.
is in the mess it's in for three reasons:
the global recession combined with the high Canadian dollar
wreaked havoc on the manufacturing sector;
the recession led to a sharp decrease in reveune which
made increases in spending in areas such as education,
infrastructure and health care stand out that much more;
decisions made by the former Conservative government pre-2003
to cut taxes and reduce spending forced the Liberal government
to restore spending in areas such as health care and education
during a temporarily robust economy that came to a screeching
halt in 2008.
provincial deficit is no more Dalton McGuinty's deficit
than the federal deficit is Stephen Harper's.
being said, Ontario's economy in 2012 is vastly different
than it was in 2011. The manufacturing jobs that were
lost in 2008 and 2009, may be gone forever. We have to
somehow reinvent ourselves and we have to tighten our
belts, which is what the Drummond Report is all about.
will be made and spending will be curtailed, but I'm not
as pessimistic as Mr. Drummond when it comes to forcasting
our future economic growth. If it rebounds even incrementally
higher that what is predicted in his report, thaen the
deficit won't be as severe and a balanced budget will
be easier to attain.
1:00 a.m., Feb. 18)
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