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If Charles Sousa ever tires of being Ontario’s finance minister, he might find a second career as a corporate communications expert. Specialty: disaster management.
When Moody’s Investors Service reduced the province’s debt outlook from stable to negative a year ago, Sousa responded that it was no big deal. “The bankers aren’t freaking here.… What has happened is the degree of revenue has not met expectations,” Sousa said, as if a revenue shortfall in a chronically indebted economy wasn’t worth troubling himself with.
Similarly, when Standard & Poor’s downgraded Ontario’s long-term credit rating on Monday, Sousa managed once again to find the tiny ray of sunshine in the gathering gloom. “Part of the basis for S&P’s stable rating is that Ontario has a stable, majority government,” he beamed. “The report,” he added, “further notes that Ontario has ‘had some success in bending its cost curve over the past several years.”
The provincial debt is on track to reach $298 billion this year, almost half the size of the federal debt in an economy barely a third as large; servicing it costs $11 billion a year, the third-largest expense in the budget, even at today’s record-low interest rates; and the province’s productivity, according to a recent study by the Centre for the Study of Living Standards, is growing at the second-slowest rate in the country: just 0.5% a year between 2000 and 2012.
But hey, look at the bright side. The government has had “some success in bending its cost curve.”
For the less starry-eyed, here’s what S&P, in its polite and measured way, actually said: Though it remains a large and wealthy economy, Ontario’s risk level has deteriorated substantially “due to consistently very weak budgetary performance and very high debt levels.”
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