The governing Federal Conservative party says it doesn’t want to get involved in the affairs of a provincial election. But on the week Ontarians go the polls, the Federal Finance Minister has stated Ontario is one of the biggest threats to Canada’s economic reputation.
One of the government’s main concerns is the overall credit rating of Canada, or any other province, being cut by one of the major agencies like Moody’s or S&P, as a result of Ontario’s fiscal situation. Should Canadians be concerned about their cost of borrowing – or are these reports part of a political play?
Pointing the Finger
Speaking at an international economic conference in Montreal, Finance Minister Joe Oliver stated his government is projecting a $6-billion dollar surplus by 2015-2016. However, he added, “Canada cannot achieve its potential if its biggest provinces are lagging economically.” He is referring to both Quebec and Ontario; both provinces have been pummelled by the slowdown in manufacturing and exports over the last five years.
He’s already praising Quebec’s newly elected Liberal government for showing budget restraint and urged the next party that rules Ontario to do the same. Oliver says, “Quebec has clearly objectively analysed their fiscal situation and has taken strong measures to deal with it.”
The ruling Liberal Party tabled its first budget in Quebec last week, since winning the election earlier this year. That budget, referred to as “serious and responsible,” hopes to deal with Quebec’s mounting debt. It aims to save Quebec $2.7 billion dollars in one year.
A Message to the Next Provincial Government
Oliver says he’s not playing party politics and wants to work with the party that Ontarians select – “No matter which party wins the election, I will encourage the new government to make a serious commitment to growth and a balanced budget,” he has stated. The party campaigning on the platform that it will take drastic measures to cut the budget is Ontario’s Provincial Conservatives. They, among other things, will cut 100,000 public sector jobs to save money.
Could a Credit Cut be In Store?
Oliver stresses, if put in place, fiscal restrains by these two provinces will not affect national recovery. He says “acting responsibly” should not drag the country or any other province’s economy. He remains more concerned that a cut in any province’s credit rating and the inevitable rise in interest rates will make current debt levels unsustainable for many Canadians, who are carrying more debt than ever before. Both a rating cut and rise in rates will make money more expensive to carry on a month-to-month basis.
Quebec vs. Ontario
Oliver’s statements may be true, but making them so clear on the week of a provincial election in Ontario gives the impression he is trying to shine light on the Ontario PCs. His praise for the Liberal government in Quebec is disingenuous, as they are already in power and will be for four years.
Ontario’s reputation is now that of a “have-not” province. But it still remains the most populous province, the financial hub and home to company headquarters of most major Canadian corporations. Ontario can’t do what Quebec did without risking the economic health of all of Canada – food for thought for voters as they make their final voting decisions.