In his new report, Ontario's Fiscal Reality: Glass Half Empty or Half Full?, economist Hugh Mackenzie takes a critical look at the assumptions that drive the Drummond report's claim that Ontario is in a fiscal crisis that can only be resolved through unprecedented austerity. He finds that the predicted fiscal crisis is driven not by lower-than-normal economic growth, as Drummond and the government assert, but by a series of unusual assumptions carefully selected to inflate the deficit, and that using more normal and reasonable assumptions, the deficit turns out to be a problem that can be resolved without austerity budget cuts. In his report, Mackenzie writes: "The province is recovering, more slowly than anyone would wish, from the worst recession to hit the world economy since the 1930s. It is coming to terms – along with much of the rest of the developed world – with the likelihood that in the future the economy will grow more slowly than it did in the past. It is finally having to deal with the cumulative impact on Ontario's fiscal capacity of nearly two decades of unaffordable tax cuts. But Ontario is not in a fiscal crisis." Read the full report here.
Economist Jim Stanford also recently presented his analysis of Ontario's fiscal reality. Watch a video of his presentation here.
The Ontario budget will be tabled on March 27, 2012.