NEW YORK — Much has been made of Canada’s superlative fiscal shape in a world in which countries are borrowing themselves toward bankruptcy.
But as Finance Minister Dwight Duncan swoops into New York on Wednesday to crow about Ontario’s excellent business profile, the province has been earning comparisons to California’s fiscal mess.
While beleaguered California is paroling prisoners early and mulling making marijuana legal to close a more than US$20-billion deficit, Ontario is taking eight years to balance its $21-billion budget shortfall. Comparing specific numbers between provinces and states is like apples and oranges, but Ontario is in rough shape with a record load of debt.
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“The province’s net debt, currently at around $212-billion, is set to balloon toward 40% of the province’s economic output, up from 25% a few years ago before the recession.”
The problem is that the Feds are heading toward 35% before they go down. So why aren’t we seeing more articles adding them to come up with 75%?
Now that is a heck of a lot better than the Obama regime which is heading toward 100%. Moreover that 100% doesn’t include the $107 trillion of liabilities contained in the unfunded:
- Social Security
- Medicare
- Medicaid
The costs of ObamaCare? No one knows, it is 1/6th of the economy and the most reckless social reengineering experiment the world has ever seen. The USA has become one big unfunded Enron and so what does Obama do? Why add more entitlements of course.
At least Canada has its liabilities (pensions etc) more or less under control. Furthermore, as Ontario‘s Finance Minister Duncan will brag about today at the Yale Club in Manhattan, our Advantage Canada corporate tax regime strategy aims for 25% compared to the USA corporate tax of 40% … a job killer which along with ObamaCare will cause outsourcing and Duncan’s implicit message is : Ontario will welcome the new plant that Caterpillar and John Deere can’t justify building in the USA.
Not mutually exclusive from all this is that we have a strengthening Lonnie which will give investors even more confidence that Canada’s Loonie is becoming a dependable store of value.
In short, Canada is the lesser of evils in terms of the Global fiscal PIIGS it competes with.
Corcoran’s above report goes in depth on our vast mineral wealth resources up north slated for development, based on increasing worldwide market demand. The days of citizens mostly hugging the rail lines will likely come to a needed end. It means getting back to traditional industries (exploration and mining). Now if a revived agricultural sector goes along with that, Ontario can and will rise again.
There was an article in Ottawa Citizen a few days ago where reportedly McGuinty indicated the gov’t salaries at the top echelon are legislated and can’t be revoked. Now he’s indicating salary freezes, so they are amenable. Interesting is the fact that the noted loopholes can be altered at will.
The salary restructuring is markedly different from what happened in the 30s Depression where all execs took a fifty percent paycut and considered themselves far better off than the personnel who suffered job cuts.
Many are calling on the bad management policies that contributed to the downturn. The billions of wasted dollars is not referred to by pols covering their tracks. Instead the HST/VAT in the States is the steamroller that is intended to cover for a multitude of incompetencies attributed to boards/management across every sector out there.
Look at Nova Scotia now looking at 15 percent, while BCers are signing the petition to get the hated/middle class destroying tax revoked.
The economy is the centre focus or should be. Canadian Tire is among the first to restructure with what looks like a smart plan. So there are models out there to be emulated.
Those promoting the “flat tax” say at a rate of initially 12.5 percent are on the right track. If implemented, the economy kick starts. It could happen if the smart money managers — any out there at all, will look at its possibilities.