Fiscal policy issues — issues related to the balance between government revenue and expenditure — have come to play a curious role in the electoral cycle in Ontario. In advance of an election, debates over fiscal issues play prominently in the political discourse. The opposition (particularly the Conservative Party) tends to highlight concerns over deficits and debt, trying to portray the government as fiscally irresponsible. The government, meanwhile, aims to manage both the economics and the politics of deficit reduction.
The fiscal stances of the election platforms of the three major parties in the current Ontario election reflect a curious consensus regarding the overall timetable for deficit reduction in the province. However, the real danger facing Ontarians is not that the economic forecasts built into the parties’ common fiscal projections may not turn out to be true. Economic forecasts are always wrong; and even an adverse shift in economic projections will only delay the improvement in fiscal health that always depends first and foremost on economic recovery.
The deeper risk is how the next government responds to the evolving fiscal outlook. Unjustified panic about the size of future deficits would do more harm than good — to both the economy, and to Ontario’s social well-being.
Also see report author Hugh Mackenzie's blog post on the Ontario Leadership debate "Tim Hudak’s Got a $10 Billion Hole and Nothing to Say"