This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, April 5, 2024
With Manitoba presenting this fiscal season’s last provincial budget on Tuesday, we now see that most premiers, whatever their political stripe, are squanderers at heart: doling out more than they can afford even in the absence of recession. They obviously either haven’t heard or are choosing to ignore former United States Federal Reserve Board chairman Alan Greenspan’s view that “deficit spending is simply a scheme for the hidden confiscation of wealth.”
Except for Alberta and New Brunswick, which are running small surpluses, the provinces show little interest in controlling their deficits, never mind balancing their books. The three largest — Ontario, Quebec and British Columbia — expect their deficits to total $26.5 billion next year, up sharply from $10.4 billion this year. For the provinces as a group, deficits are expected to total $43 billion, an added debt burden of $1,050 per capita or $4,200 per family of four.
For the 2024-25 fiscal year, the 10 provinces’ net financial debt will rise to $946 billion, a mortgage equal to $93,000 per family of four. Capital budgeting makes it easier politically for governments to take on capital spending. Why? Even though infrastructure spending is amortized as an expense in later years, it’s not an expense in the current budget, which most voters don’t realize. It’s an appropriate accounting practice, but it lets government look more fiscally prudent in a year of massive capital spending. Ontario’s current capital spend is adding $24 billion to its debt. If that were expensed in the current year, it would have resulted in a reported deficit of $34 billion, not $10 billion.
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