pman
Senior Member
The funding piece is missing from this discussion. Ontario has a significant deficit and high debt relative to the size of our economy. Contrary to the Wynne Liberals’ assertions, the size of the deficit isn’t a politically driven number open to different interpretations. It’s a hard number based on generally accepted accounting principles, and the non-partisan provincial auditor has been making the point for years. We know interest rates are going to rise. We can be reasonably sure of a US - and therefore probably global - recession in 2020/2021 as temporary US stimulus comes to an end. We know Ontario consumers are heavily indebted by historical standards. And we know that the last time the federal government raised the top marginal personal income tax rate, they collected far less money than they anticipated as people in that bracket adjusted their incomes. For that matter, provincial income tax revenues from the top bracket actually declined on the federal increase (reduced revenue base and no increase in provincial rates).
So...really no possibility of raising revenue from tax increases (because it’s politically unacceptable to raise taxes on anyone but “the rich”), a likely increase in interest costs from the $12 billion or so currently (and Ontario is going to roll $35 to $40 billion a year over the next few years so rate increases will bite), and a likely decline in revenue over the lifetime of the Ford government. In other words, we’re fucked. We blew it when times were good and now we’re paying the price. Literally, because deficit spending just shifts the time pattern of economic activity from the future to the present, at least in a small, open economy like Ontario’s. In other words, we’re now paying for all of Wynne’s good works in the past, and we’re going to be paying for them for a long time to come.
I don’t doubt the new campuses would be a nice to have. We sunk money into planning them, sure, but if that’s an argument for staying the course I’ve got a nice Vietnam War you might want to buy. And by the standards of pretty much any other country, we’re already rather oversupplied with underemployed university grads, so the investment in human capital argument is somewhat less than compelling.
Given all that, the provincial government made the right call. It’s going to have to make a lot more decisions like that over the life of its mandate. Cue the hysteria...
So...really no possibility of raising revenue from tax increases (because it’s politically unacceptable to raise taxes on anyone but “the rich”), a likely increase in interest costs from the $12 billion or so currently (and Ontario is going to roll $35 to $40 billion a year over the next few years so rate increases will bite), and a likely decline in revenue over the lifetime of the Ford government. In other words, we’re fucked. We blew it when times were good and now we’re paying the price. Literally, because deficit spending just shifts the time pattern of economic activity from the future to the present, at least in a small, open economy like Ontario’s. In other words, we’re now paying for all of Wynne’s good works in the past, and we’re going to be paying for them for a long time to come.
I don’t doubt the new campuses would be a nice to have. We sunk money into planning them, sure, but if that’s an argument for staying the course I’ve got a nice Vietnam War you might want to buy. And by the standards of pretty much any other country, we’re already rather oversupplied with underemployed university grads, so the investment in human capital argument is somewhat less than compelling.
Given all that, the provincial government made the right call. It’s going to have to make a lot more decisions like that over the life of its mandate. Cue the hysteria...
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