The Wynne government should stop inventing new ways to borrow, and start paying off the mountain of debt it has already built.
(This column originally appeared in the Toronto Sun)
By: Candice Malcolm
Premier Kathleen Wynne’s government recently elaborated on its plan to issue “green bonds” to pay for the latest transit pet project in Toronto — a light rail train across Eglinton Avenue. Finance Minister Charles Sousa also touted the strategy as an innovative and progressive funding model to pay the tab for the government’s ambitious plan for subways in Toronto. This plan includes borrowing an additional $500 million on top of the current $12.5 billion projected deficit.
But just how innovative are these bonds? Regardless of what the spin doctors at Queen’s Park may say, “green bonds” are nothing but slapping a new coat of paint on an old way of taking on debt. “Green” debt is like all other debt, with the slight difference being that the money is earmarked for “green” projects.
Does the government need to colour coordinate its debt to keep track of it all?
Governments borrow money by issuing bonds. Banks and investors buy these bonds as an investment (they get paid back with interest), thereby giving government the cash it needs. Taxpayers pay annual interest on this debt — to the tune of $11 billion a year in Ontario — and will eventually have to pay back the loans in full. Bonds are nothing but IOUs — debt to be paid back by future taxpayers at a future time.
Ontario already has a massive stack of outstanding IOUs.
The province’s net debt recently hit the $275.5 billion mark, or about $20,260 for every woman, man and child in Ontario. And that tally is climbing steadily. Ontario’s debt rises by $396 every second, or what a typical Ontario family might spend in a year enrolling their kids in sports and recreational activities. Our province’s debt increases by $23,782 each minute, and another $1.4 million every hour. Every single day, this government piles on another $34 million in provincial debt. It is kicking the can down the road for our children and grandchildren to deal with. Young Ontarians will inherit the debt, and be forced to pay the tab for the mistakes made today by the Wynne government.
Sousa claims his government is taking advantage of historically low interest rates. It is cheap to borrow these days, so the government is taking on more and more debt. But these artificially low rates will not stay low much longer. When interest rates go up — and they will go up sooner or later — our province’s interest payments will go through the roof.
This is the ticking time bomb in Ontario’s finances.
Ontario is in no position to borrow more or take on additional debt, regardless of the colour it paints it. We are drowning in debt and mortgaging the future of this province. A province that has been relegated to have-not status under this government. A province that lives beyond its means and doesn’t pay its bills. Ontario has become a basket case economy on the brink of a debt crisis.
Meanwhile, the Wynne government has decided now is a good time to make up for a generation of neglected infrastructure spending? Now would be a good time to cut up those credit cards and figure out a way to balance Ontario’s books. The Wynne government should stop inventing new ways to borrow, and start paying off the mountain of debt it has already built.