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Showing posts from August, 2014

Ontario's answer to the deficit: 35 years of revenue cuts

In a recent long-term report on the economy, the Ontario government recognized that own-source Ontario government revenue as a percentage of gross domestic product (GDP) has declined over the last fifteen years.  

The decline is equal to 2 percentage points of the province's GDP. That means the Ontario government is currently losing $14 billion annually.  With that revenue, the deficit (which was $11.3 billion last year) would be gone and we would have cash to spare.

But the government also forecasts that own-source revenue  as a percentage of GDP will continue to decline over the next twenty years as well.

The plan is to cut Ontario government revenue by another 1.2% of GDP.  In today's economy that would add $8.6 billion to the deficit, increasing the deficit by about 70%.    

In total, over 35 years, the plan is to cut government revenue by 3.2% of GDP.  That is equal to an annual cut in government revenue of $22.6 billion in today's economy.

As noted in a previous post,…

Ontario falls 40% short of jobs target -- but deficit target may be met

Revenue prospects for this year:  An earlier post looked at poor job creation in Ontario and the impact that might have on obtaining the revenue goals the government has set for this year. 

Last week's jobs report for July was  dreadful on a Canada-wide basis.  But the report noted Ontario saw some pick up in July, with 15,100 new jobs overall. 

However, the job growth in July was all part-time; Ontario actually lost 29,300 full time jobs.  That is consistent with the pattern since July 2013: all the new jobs in Ontario have been part-time, while the number of full time jobs has shrunk 0.4%.  

Moreover, the first seven months of 2014 still average only 43,000 more jobs than the first seven months of 2013, less than half the Ontario government's goal of 100,000 new jobs in 2014.

Update: As widely reported, the Stats Can Labour Force Survey for July got it wrong.  The corrected report for Ontario provides some better news.  Instead of a 15,100 new jobs in Ontario, the  corrected rel…