Politics

The Sky is Not Falling Over Ontario's Debt

When you plot Ontario's debt on an inflation-adjusted, per-capita basis, the picture is not nearly as stark as you might expect.

By Ryan McGreal
Published May 29, 2019

What if the Liberals weren't nearly as disastrous for Ontario's deficits and debt as everyone seems to think?

Please bear with me for a few moments. I know we hear a lot about how much the debt grew under the Liberals' long 15-year government. Here's a chart of Ontario's nominal debt from 1995 to 2019:

Chart: Ontario Nominal Debt, 1995-2019 (Not Inflation Adjusted)
Chart: Ontario Nominal Debt, 1995-2019 (Not Inflation Adjusted)

The green line is the debt by year, and the vertical lines represent provincial elections. The blue lines represent elections won by the Progressive Conservative Party and the red lines represent elections won by the Liberal Party.

But we need to make sure we're comparing apples to apples. As I've argued in the past, we need to put the debt in context by looking at it on a per-capita basis.

After all, Ontario has big numbers in part because we're a big province, with 15 million residents making up 40 percent of the total population of Canada.

If we take the same Ontario debt numbers by year and plot them on a per-capita basis, the chart starts to look less frightening.

Chart: Ontario Nominal Per Capita Debt, 1995-2019 (Not Inflation Adjusted)
Chart: Ontario Nominal Per Capita Debt, 1995-2019 (Not Inflation Adjusted)

But we're looking at a period of 15 years, and a 1995 dollar is not worth the same as a 2019 dollar. So we also need to adjust the debt for inflation. Here is the same chart, inflation-adjusted so every amount is expressed in 2019 dollars:

Chart: Onario Real Per Capita Debt, 1995-2019 (Inflation-Adjusted to 2019 Dollars)
Chart: Onario Real Per Capita Debt, 1995-2019 (Inflation-Adjusted to 2019 Dollars)

It turns out that when you plot Ontario's debt on an inflation-adjusted, per-capita basis, the picture is not nearly as stark as you might expect.

Some observations:

Wait, what? That can't possibly be correct! All we've heard over the past five years was about Wynne's "out of control spending". But it is correct. The Liberals spent the last three years of their long run bringing the real per-capita debt down.

I don't know why the Liberals didn't do a better job of highlighting this fact. Perhaps there was no point rowing against the prevailing narrative, or perhaps they thought it undercut Wynne's positioning as a compassionate left-wing Liberal.

Nevertheless, a reasonable person looking clearly at the facts can conclude that the Liberals ran up the debt when they had to - during the worst recession in almost a century - and began the hard job of bringing it down in the recovery.

At the same time, the Wynne Government finally began nudging OW/ODSP rates back toward a living minimum after two decades of cuts and stagnation. They also raised the minimum wage, launched a Basic Income pilot, established a carbon pricing cap and trade market, established universal pharmacare coverage for children up to age 24, provided free postsecondary tuition for low-income students, and invested heavily in the first new rapid transit expansion in a generation.

And remember: they did this while collecting the lowest per capita public revenue among Canadian provinces, leaving them very little room to maneouvre. So much for the right-wing narrative that Liberals aren't good with money.

Chart: Provincial Per-Capita Revenues, FY 2017-18
Chart: Provincial Per-Capita Revenues, FY 2017-18

Meanwhile, the new Ford government has just managed the curious feat of significantly increasing the total budget while simultaneously imposing a broad swath of savage cuts to education, health care, housing and support for the most vulnerable residents.

Take another look at the chart of real, per-capita debt from 1995 to 2019.

Chart: Onario Real Per Capita Debt, 1995-2019 (Inflation-Adjusted to 2019 Dollars)
Chart: Onario Real Per Capita Debt, 1995-2019 (Inflation-Adjusted to 2019 Dollars)

Observe how the line moves over that course of years. Ask yourself if this is the trend of a government stuck in out-of-control spending and on the verge of bankruptcy.

Say what you want about the Liberals, but notwithstanding some high-profile gaffes and scandals, they traced a pathway through an eventful 15 years of global economics that a reasonable person should be able to understand, whether or not you agree with everything they did.

So the next time a Conservative runs around screaming that the sky is falling, remember that you are being lied to and don't believe the scaremongering.

Table: Ontario Debt, Population and Inflation by Year, 1995-2019
Fiscal Year Nominal Debt Population Nominal Per Capita Debt Inflation Rate Real Debt Real Per Capita Debt
1995-1996 $101,900,000,000 11,080,000 $9,197 54.61% $157,547,590,000 $14,219
1996-1997 $108,800,000,000 11,230,000 $9,688 52.15% $165,539,200,000 $14,741
1997-1998 $112,700,000,000 11,370,000 $9,912 49.44% $168,418,880,000 $14,813
1998-1999 $114,700,000,000 11,500,000 $9,974 48.12% $169,893,640,000 $14,773
1999-2000 $134,400,000,000 11,680,000 $11,507 45.24% $195,202,560,000 $16,713
2000-2001 $132,500,000,000 11,900,000 $11,134 41.11% $186,970,750,000 $15,712
2001-2002 $132,100,000,000 12,090,000 $10,926 36.94% $180,897,740,000 $14,963
2002-2003 $132,600,000,000 12,250,000 $10,824 34.20% $177,949,200,000 $14,526
2003-2004 $138,800,000,000 12,390,000 $11,203 30.67% $181,369,960,000 $14,638
2004-2005 $140,900,000,000 12,530,000 $11,245 28.30% $180,774,700,000 $14,427
2005-2006 $152,700,000,000 12,660,000 $12,062 25.54% $191,699,580,000 $15,142
2006-2007 $153,700,000,000 12,760,000 $12,045 23.35% $189,588,950,000 $14,858
2007-2008 $156,600,000,000 12,880,000 $12,158 21.12% $189,673,920,000 $14,726
2008-2009 $169,600,000,000 13,000,000 $13,046 18.45% $200,891,200,000 $15,453
2009-2010 $193,600,000,000 13,140,000 $14,734 18.03% $228,506,080,000 $17,390
2010-2011 $214,500,000,000 12,850,000 $16,693 15.19% $247,082,550,000 $19,228
2011-2012 $236,200,000,000 13,390,000 $17,640 11.74% $263,929,880,000 $19,711
2012-2013 $252,800,000,000 13,510,000 $18,712 10.18% $278,535,040,000 $20,617
2013-2014 $268,000,000,000 13,620,000 $19,677 9.11% $292,414,800,000 $21,470
2014-2015 $285,400,000,000 13,710,000 $20,817 6.59% $304,207,860,000 $22,189
2015-2016 $295,400,000,000 13,450,000 $21,963 5.34% $311,174,360,000 $23,136
2016-2017 $301,600,000,000 14,070,000 $21,436 4.84% $316,197,440,000 $22,473
2017-2018 $308,200,000,000 14,320,000 $21,522 2.60% $316,213,200,000 $22,082
2018-2019 $325,000,000,000 15,088,000 $21,540 0.00% $325,000,000,000 $21,540

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.

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By mdrejhon (registered) - website | Posted May 30, 2019 at 13:55:36

For people who are too rushed, here's some helpful info:

TL;DR: Ontario's debt fell over the last few years, on a per-capita basis.

Now go read the article above!

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