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article imageAuditor General: Ontario Gov't spending forecast too 'optimistic'

By Andrew Moran     Jun 28, 2011 in Politics
Toronto - With the provincial election only a few months away, the government of Ontario must release its report on the province's finances. The Auditor General said the government's was cautious in its revenues, but "optimistic" in its spending forecast.
Since Premier Dalton McGuinty and the Liberal Party took control of Queen’s Park in 2003, the Ontario government has increased spending by seven percent each year. Ontario Finance Minister Dwight Duncan has said the government plans to slash spending by 400 percent.
Under the Fiscal Transparency and Accountability Act of 2004, the Ontario government must release a pre-election report on the province’s finances. Part of the report includes projections on Ontario’s revenue and spending projections for the next three years.
Auditor General Jim McCarter has been required to read the 37-page report in which he commended the province on being cautious in its revenue estimation, but labelled the forecast spending as “optimistic assumptions.”
“We concluded that the government's estimates of revenues and of interest costs on the provincial debt were prudent and cautious,” said McCarter. “However, its expense estimates were often based on optimistic assumptions, whereas the Act says that Ontario's fiscal plan should be based on cautious assumptions.”
The Auditor General added that it was especially true among its spending projections of public sector salaries and healthcare, “which together account for a major portion of total government expenses.”
Although McCarter said a projection is exactly that, a projection, he urged the government to be more cautious and prudent because there will be less risk involved because “unforeseeable factors will result in larger deficits than planned.”
For the next three years, the McGuinty government will increase spending by just 1.8 percent each year and will do so by revising its healthcare spending (42 percent of total annual spending). The government is projecting an average increase in healthcare spending by 3.6 percent, which is half than what was spent in the last eight years.
“In light of Ontario's growing and aging population, we considered this to be an aggressive rather than a cautious outlook,” said the Auditor General.
More about Auditor General Jim McCarter, Ontario government, Dalton McGuinty, Tim hudak, Andrea Horwath
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