Charles Sousa to post province's 9th straight deficit and that red ink matters

The last time an Ontario finance minister balanced the budget,George W. Bush was still in the White House and theiPhonewasn't yet available in Canada.

It was the fiscal year 2007-08. Mats Sundinwas still captain of the Maple Leafs, people were still renting DVDs from Blockbuster and Justin Bieber was still performing in talent shows in Stratford.

This comingThursday afternoon,when Finance Minister CharlesSousadelivers hisbudget, he will not break Ontario's streak of deficits. Sousasays he won't get tobalance the budgetuntil2017, and thatmeans this week he'lldeliver theninth straight deficit under successive Liberal governments.

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Thisprovince has been in the red for so long, it got me wondering: does it actually matter how long it takes to get rid of adeficit?

Ontario's successive deficits, plus borrowing to pay for building projects, havepushed the province's debt loadto $298.9 billion.

That's certainly an eye-popping figure. It's nearly double what it wasbefore this string of deficits ($153 billion in 2007-08).

The biggest consequence of that ballooning debt is how much it costs in interest.

'Ministry of Interest Payments'

Taxpayers are shelling out$11.4 billion in interest on thedebtthis year. That's more than the government is spending on either community and social services ($11.1 billion)or colleges and universities ($7.8 billion).

If there were a Ministry of Interest Payments, only the Ministry of Health and Ministry of Educationwould absorb more tax dollars.

Sousadidn't mention that whenI asked him during a news conference Friday if the length of time it's taking to get rid of the deficit matters.

"What matters is that we continue to invest and stimulate economic growth," Sousa replied. "What matters is thatwe stay on plan, what matters is that we take a balanced approach to achieve what's necessary,"

The Liberals' plan has long been not to getout of the red until2017."We haven't wavered from that plan," said Sousa.

"Well,that certainly doesn't wave away the seriousness of the problems that have accumulated as a result of all of these deficits," responded Ben Eisen, associate director of the Ontario Prosperity Initiative at the Fraser Institutethink-tank.

"That doesn't change the fact that we've accumulated so much debt over a relatively brief period of time and Ontarians are having to pay for that every year," Eisen said in an interview.

Record debt burden

Nine cents out of every government dollar now goes to service the debt. Eisen points out that's money that can't be spent on other programs.

Economists measure the burden of debtbycomparingit withthe size of the overall economy, in a measure calleddebt-to-GDP ratio. Ontario's current ratio(40.2 per cent) has never been higher, evenin theprolongedrecession of theearly1990s.

"It matters that we control our level of debt to our GDP," Sousa acknowledged."It matters that we are able to afford the things that matter to people, which is social programs, health care and education."

When the debt-to-GDP ratio gets too high, the government runs the risk of a credit downgrade, potentially forcing it to pay a higher interest rate on new borrowing.

It all shows that repeated deficits are not without consequences, even if the governments who run them or parties whocampaign on a promise to run themkeep winning elections.