A Brief Comment on Ontario’s Runaway Debt

A Brief Comment on Ontario’s Runaway Debt

by Frank Holmes, CEO, CIO, U.S. Global Investors

Net debt of my home province, Ontario, has been steadily expanding for years. In 2016, it actually crossed above $300 billion for the first time ever—and this is for a province of only around 14 million people, which is a little more than Pennsylvania.

Led by Premiere Kathleen Wynne of the socialist Liberal Party since 2013, Ontario is addicted to social spending, and its just-released 2017 budget is no exception. Free prescription drugs will now be provided for everyone aged 24 years and under. And for the first time, a guaranteed basic income, with no strings attached, will be handed out every month to people between 18 and 64 who earn less than a given amount. These programs are implemented with admirable motives, but they’re unsustainable.

To be fair, I should point out that Ontario’s 2017 budget is the first in 10 years to be “balanced.” But that doesn’t mean debt is going down any time soon. By the end of the decade, debt is projected to reach $335 billion, or about 40 percent of province GDP. Writing for the Toronto Sun, columnist James Wallace called Wynne’s undisciplined spending glut a “selfish burden on future generations.” I couldn’t agree more. As things stand now, each Ontarian owes more than $22,000 on principal alone, before interest.

We’ve seen it in Venezuela, Chicago and elsewhere—out-of-control socialism weakens economic growth and enslaves taxpayers. I’m sorry to see this happen to the great province I grew up in and still visit multiple times a year.

To show you the difference between that and a truly well-managed jurisdiction, I made the table below comparing Ontario to my present home state of Texas. It’s like night and day!

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