Leone Introduces Balanced Budget and Debt Limit Legislation
QUEEN’S PARK Yesterday MPP Rob Leoneintroduced his Private Member’s Bill that he says "will stop the spending crisis that plagues Ontario, as a result of the McGuinty Government."
“With the recent credit downgrade from Moody’s, never has there been a more urgent need to ensure that budgets in the province are balanced,” said Cambridge PC MPP Rob Leone. “Any further downgrades will drive up interest rates and increase the cost of servicing our ballooning debt.”
Beginning with the 2018-2019 fiscal year, the Cabinet must plan for a balanced budget and the Minister of Finance must present a balanced budget to the Assembly for fiscal year 2018-2019. Leone’s bill includes a 25% salary reduction if the Government fails to balance the budget. For each following year that the Cabinet fails to balance the budget, they will be required to take a 50% salary reduction.
Under this bill, Cabinet will not be authorized to raise money by way of loan or to receive money through the issue and sale of securities at any time if the effect of doing so at that time would cause Ontario’s net debt to exceed 50 per cent of the province’s GDP.
“I along with my Ontario PC caucus colleagues are willing to take the necessary action to fix the economy, while the McGuinty Liberals continue to prove that they are not strong fiscal managers and not willing to make the tough decisions,” added Leone.
“It is time to set up consequences for governments who fail to meet their fiscal projections. Ontario families are forced to balance their budget, why does the Government feel that they do not apply?”
· In the 2011-12 fiscal year, the interim revenue for Ontario was $109.277 Billion and the deficit was $15.283 Billion. If this bill had remained enacted, Cabinet would be facing an immediate salary reduction of 50%, due to the fact that the deficit is 13.99% of the revenues for the past fiscal year.
· In fact, had the Balanced Budget Act, 1999 not been repealed by Premier McGuinty, the McGuinty Government would have faced an initial 25% salary reduction for the 2008-2009 fiscal year, for having a deficit that was 7.08% of the revenues. They would currently be facing a 50% reduction for having a deficit that exceeds the revenues of the province in the 2009-2010 (20.11%), 2010-2011 (13.14%) and 2011-2012 (13.99%) fiscal years.
· As of the 2011-12 fiscal year, Ontario’s debt was $257.5 Billion. Ontario’s GDP in the final quarter for 2011-2012 was $648.2 Billion. If this legislation was already enacted, the Debt Limit would be set at $324.1 Billion (50% of GDP). As of March 31st, 2012, the province has a mere $66.6 Billion left to accumulate before the provision is incorporated.
· The Balanced Budget Act was originally introduced by the PC Government in 1999, and was subsequently repealed on December 16th, 2004 by the McGuinty Liberals.
· The Bill enacts the Balanced Budget Act, 2012 and amends the Financial Administration Act.
· Beginning with the 2018-2019 fiscal year, Cabinet must plan for a balanced budget and the Minister of Finance must present a balanced budget to the Assembly.
· Special provision is made with respect to expenditures arising from such extraordinary circumstances as a natural disaster or the declaration of war.
· If there is a deficit, the salary payable to members of the Executive Council under the Executive Council Act is reduced. For an initial deficit, the salary reduction for the members of the Executive Council is 25 per cent of the salary payable under the Executive Council Act, and lasts for one year. If there is a deficit in the following year, the reduction is increased to 50 per cent, and lasts a full year for each consecutive year in which there is a deficit.
· The Financial Administration Act is amended to provide that the Crown is not authorized to raise money by way of loan or to receive money through the issue and sale of securities if the effect of doing so would cause Ontario’s net debt to exceed 50 per cent of its gross domestic product.
· Section 4 of the Fiscal Transparency and Accountability Act, 2004, which currently requires the Executive Council to plan for a balanced budget and specifies when a deficit is permitted, is repealed. A consequential amendment is made to subsection 5 (3) of that Act.