So How Much Do We Owe?

The Ontario Government recently released its annual mid-term economic report 2014 Ontario Economic Outlook and Fiscal Review. We review the provincial debt situation in light of this report.

One might think that given the high level of Provincial debt, the government would report on it in Chapter III: Fiscal Outlook and particularly in Chapter III: Section D: Details of Ontario’s Finances. Looking through these sections we find only references to net debt. As we have argued in the past (see references at the end of this note), net debt understates total debt by a considerable amount: $23.3 B (billion) this year.

In the 2014 Ontario Budget, Chapter VI: Borrowing and Debt Management we find TABLE 6.3 Net Debt and Accumulated Deficit (cont’d). The first line of this table reproduced in Table 1 below gives the total debt the province owes to lenders. This is the only chapter in which we found total debt mentioned.

Table 1. Total debt for current (planned) and past five fiscal years ($ Millions).

2009–10 2010–11 2011–12 2012–13 Interim
Total Debt 212,122 236,629 257,278 281,065 295,770 310,549

Source: TABLE 6.3 Net Debt and Accumulated Deficit (cont’d), 2014 Ontario Budge, Chapter VI: Borrowing and Debt Management.

This is a 46% increase in five years.

We expected to find an update in the 2014 Ontario Economic Outlook and Fiscal Review Chapter VI: Borrowing and Debt Management. Tables 6.1 and 6.2 were present but Table 6.3 was absent. The only reference to total debt was a pie chart, Total Debt Composition as at September 30, 2014.

The other source where we can find the total debt or consolidated debt is on the website of the Ontario Financing Authority. The total or consolidated debt breakdown as of Sept. 30, 2014, is shown in Figure 1 below. It is the same figure as the chart in the fall review.

Figure 1. Province’s Consolidated Debt Portfolio, $304.4 Billion Outstanding.

Source: The Ontario Financing Authority.

If we take the actual debt after two quarters and compare it to a debt figure halfway between last years ending amount and this years projected amount we get $303.16 B. In fact, at the halfway mark, the actual amount is $304.4 B. Thus we are about 16.7% over a linear debt acquisition projection. There is no basis however, for assuming such a linear projection. We would also note that the planned and final debt figures for last fiscal year were the same, independent of where the debt stood at the midpoint.

In summary, Ontarians owed $304.4 B at September 30, 2014. It will be interesting to see if the government can maintain its debt projection in light of the recently announced 0.5 B revenue shortfall (read: Ontario short $509M in revenue).

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