Ontario’s Fiscal Outlook Improves. And also the prospects for public services?

The provincial government weathered this recession better than the previous recession in 1990-91. At the earlier recession the deficit topped out in 1992-93 at 4.4% of the GDP (and 22.9% of government spending and 29.7% of government revenue). In contrast, the provincial deficit topped out in 2009-10 at 3.3% of the GDP (and 16.7% of government spending and 20.1% of revenue).

It is perhaps also worth noting that Ontario debt interest payments have remained constant as a percentage of GDP since the early 1980s, and have declined as a percentage of revenue.

Moreover, the Ontario government has consistently revised its deficit projections downwards since the fall 2009 statement. Indeed, the government has removed well over $5 billion from its estimate of the 2009-10 deficit.

Deficits are falling at the federal level.  In the fall 2010 quarterly update, Finance Minister Flaherty said the country's books will continue to improve, with a small deficit of $1.7 billion now forecast by 2014–15 and a surplus of $2.6 billion for the following year. Flaherty says Canada will be the first of the G7 nations to balance its books.


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