Ontario’s deficit has ballooned to a “sobering” $15 billion this year because of expenses the defeated Liberal government “stashed” off the books before the June election, new Finance Minister Vic Fedeli said Friday.
He warned Ontarians will have to make “sacrifices” as Premier Doug Ford’s Progressive Conservatives take steps to balance the budget, but wouldn’t say how many years that will take or when promised income tax cuts are coming.
While the previous Kathleen Wynne administration pledged to run a deficit of $6.7 billion this year, the actual number is more than twice that in part because of the accounting improperly used to include teacher and civil service pension plan money — over which the province has no control — as assets, Fedeli told a breakfast meeting of the Economic Club of Canada at a downtown hotel.
That was against the recommendation of auditor general Bonnie Lysyk, who disagreed with bureaucrats and Wynne’s Liberals over whether $11 billion in the pension plans co-sponsored by the government can be counted toward the bottom line as they had been with auditor’s office approval until two years ago.
A panel of independent experts led by the chair of the Canadian Actuarial Standards Oversight Council concluded last year that Lysyk was wrong.
The auditor general released a statement Friday saying she has now issued a “clean” opinion on the province’s consolidated financial statements because of Fedeli’s actions.
Opposition parties have warned Ford’s government will use the larger deficit figure to justify deeper spending cuts than the $6 billion he promised in the spring election campaign.
“Nothing is safe in Ontario,” NDP Leader Andrea Horwath said Thursday.
But Treasury Board President Peter Bethlenfalvy said Friday the $6 billion figure will not change.
“We’re going to stand behind that,” he told reporters, noting the $6 billion amounts to four cents on every dollar of government spending.
“This is not about cuts. It’s about transforming the way the government runs its businesses, about modernizing government services…without threatening front-line workers.”
Aside from running a $3.7 billion deficit while publicly claiming the budget was balanced, the Liberals wrongly booked $1.4 billion in “efficiencies” not yet achieved and lowered the fiscal emergency reserve by $300 million, Fedeli said.
He singled out the Liberal government’s “fair hydro plan” to subsidize lower electricity bills for consumers for putting billions in liabilities onto the books of Crown-owned Ontario Power Generation.
“Only when the government of Ontario truly accounts for its real deficit position can we begin to put the province back on a path to fiscal sustainability,” Fedeli said, accusing the Liberal government of a “cover up” of its accounting practices.
Fedeli’s language is ridiculous because the accounting spat with Lysyk and the hydro plan accounting were well known and widely reported in the media before the election, said interim Liberal Leader John Fraser.
“Vic Fedeli this morning was pretending that he didn’t know something that he already knew.”
Fedeli told the breakfast audience “there are many more steps ahead” in getting the province’s finances under control and noted annual interest payments on Ontario’s debt are $11.9 billion a year — equal to half the education budget.
“Balancing the budget is not only a fiscal imperative, it’s a moral imperative.”
Fedeli warned “the task ahead is not an easy one. The hole is deep and it will require everyone to make sacrifices without exception.”
He did not specify a timeline for a return to a balanced budget but said it will be “reasonable, modest and pragmatic.”
Rob Ferguson is a Toronto-based reporter covering Ontario politics. Follow him on Twitter: @robferguson1