Ontario cuts 2012-13 budget deficit target

Tue Jan 22, 2013 4:42pm EST
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By Claire Sibonney

TORONTO (Reuters) - Ontario's minority Liberal government said on Tuesday the province's budget deficit has fallen more quickly than projected, helped by higher corporate tax revenues and one-time savings from the elimination of banked sick days for teachers.

The Canadian province's 2012-13 deficit is now expected to be C$11.9 billion ($11.98 billion), down from C$14.4 billion seen in the fall economic update.

The government credited a one-off C$1.1 billion jump in corporate tax revenues related to tax assessments. It also booked savings of C$1.1 billion by eliminating bankable sick-day payouts to the province's teachers.

The Liberals have been locked in battle with unions representing most of the province's teachers over controversial legislation that ended the practice of banking unused sick days for payouts at retirement. It also cut sick days, limited teachers' right to strike and imposed a two-year wage freeze.

"We have taken the difficult decisions that we had to take," Finance Minister Dwight Duncan told a business audience in Toronto, where he announced he will step down as finance minister following the election of a new Liberal leader this weekend.

"Beating fiscal targets is a direct result of managing spending prudently and steady but modest growth in the economy,"

Duncan predicted that the deficit could come in even lower than the revised target.

The 2012-13 deficit could fall to C$11.4 billion "barring any catastrophe" by using C$500 million of a C$1 billion reserve built into budget, he said.   Continued...