The Ontario government says without any action its deficit for fiscal 2004 could reach $7.8 billion when all liabilities are accounted for.

The Liberal government of Dalton McGunity released its first economic statement since taking office in October, projecting a $5.6 billion deficit for 2003-04 while identifying “other potential liabilities that could add up to $2.2 billion to the final year-end deficit.” The statement also notes that Ontario faces a structural deficit “of at least $4.5 billion from next year onward in the absence of action.”

The October 2003 report by former provincial auditor Erik Peters confirmed that Ontario faced a potential deficit of $5.6 billion for 2003-04. Peters also listed risks to the fiscal outlook of up to $1 billion. “Many of the factors that produced this $5.6-billion deficit are structural, or permanent in nature, and, unless action is taken, will affect the Province for years to come,” the statement noted.

“We have a serious long term problem. It is a problem rooted in a chronic mismatch of revenues and expenditure that has been growing over the past several years,” Finance Minister Greg Sorbara told the legislature.

Tax increases passed this week by the legislature will help keep the deficit down, but other measnures, including spending restraint , will be required to counter projections of a growing deficit, the fiscal update says.

Sorbara promised to consult Ontario residents on the measures to balance the budget while restoring public services in Ontario. He announced a four-part “work plan” to transform government and eliminate the structural deficit. The plan involves:

  • comprehensive consultations with Ontarians leading up to the 2004 budget;
  • acting with restraint;
  • building on greater co-operation among all levels of government; and
  • redesigning government to deliver better public services.



The economic statement says Ontario gross domestic product is on track to grow 1.7% in real terms for the current year, despite a series of one-time shocks, including SARS, restricted border crossings, mad cow disease and the August blackout. “Furthermore, economic forecasters agree that the Ontario economy will rebound strongly, with economic growth accelerating to 3.1% next year, and 3.6% the year after,” the statement says.

“We will repair the balance sheet. We will strengthen our financial position so we can deliver the finest schools, the best health care, the cleanest environment and the strongest communities,” Sorbara said.