Clinton News Record, 2015-07-15, Page 44 News Record • Wednesday, July 15, 2015
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editorial
Ontario deserves lowered credit rating
It's no surprise a credit rat-
ing agency has down-
graded Ontario's long-term
debt. The provincial govern-
ment hasn't posted a balanced
budget in years and continues
to spend money it doesn't
have. Standard & Poor's Finan-
cial Services LLC's assessment
on Monday — lowering Ontar-
io's credit rating from AA- to A
— confirms what many have
been saying for some time.
The downgrade will make it
more expensive for the prov-
ince to borrow money in the
future. Standard & Poor's has
assigned more risk to Ontario's
debt and future debt. Earlier
this year, another agency, Fitch
Ratings Inc., declared the same
downgraded rating for Ontario.
Standard & Poor's said it is
particularly wary of Ontario's
plans to spend $130 billion dur-
ing the next 10 years on infra-
structure programs. With debt of
approximately $284 billion, and
a 2014-15 budget deficit of
$8.6 billion, the province is in no
position to take on more spend-
ing that can't be covered with
existing revenues.
That said, the government has
promised a balanced budget for
2017-18, and even S&P acknowl-
edges Ontario is on track, but
there are numerous obstacles to
that achievement. For now, the
government seems to believe it
can meet its target by squeezing
education and health spending.
It also wants to sell off some
public assets, such as Hydro
One.
One thing the government
can't avoid is its borrowing costs.
An estimated $11.4 billion is
spent annually to service Ontar-
io's debt. Even if the government
offered balanced budgets for the
next 15 years, the cost of carrying
almost $300 billion in debt
remains an onerous and una-
voidable burden. And with a
$130 -billion commitment to
infrastructure, through to 2025
or 2026, it's not likely its debt will
remain under $300 billion.
Ontario is not the only prov-
ince in trouble. Indeed, the
federal government's projected
debt this year is $628 billion.
Ottawa in April declared a bal-
anced budget, but it was the
first in years, and it's not likely
to happen again. In the lead -up
to the federal election cam-
paign, all three major federal
party leaders are promising
more spending on behalf of
Canadians. It used to be said
politicians bribed Canadians
with their own money, but
today Canadians are bribed
with money their governments
must borrow.
Postmedia Network
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