TORONTO (Reuters) - Ontario, Canada’s most populous province, may be able to eliminate its budget deficit before its 2017-18 target given economic growth prospects, Finance Minister Dwight Duncan said on Thursday.
“There is more likelihood right now but again I did not amend the plan or the times around the plan because of uncertainty, particularly in the U.S.,” he told Reuters in a phone interview from New York.
“We’ve laid out what we think is a very reasonable plan and my hope is that we will continue to exceed our deficit reduction targets on an annual basis.”
The province last month maintained near-term deficit targets but lowered its 2010-11 deficit forecast by C$1 billion ($990 million) to C$18.7 billion.
Duncan, in New York to tout the province’s merits to international investors, said the city of Toronto would be on the hook for financial penalties if new mayor Rob Ford breaks contracts by scrapping a multibillion dollar public transit plan.
“That would be the responsibility of Toronto. But hopefully the mayor seems confident that those penalties can be dealt with in the context of investments in subway versus the LRT (light rail transit),” Duncan said.
“We’ll continue to work with the municipality as we move forward.”
But he rejected the idea that the city would have to repay investments already made by the province toward the plan.
On the issue of a public sector wage freeze proposed in the March budget, Duncan said he was pleased with progress on collective agreements, even though recent arbitration decisions awarded increases to thousands of unionized nurses and hospital workers.
He noted of the 40 collective agreements since March, four of them were arbitrated and of the balance more than half contained no increases for two years.
“Our target is zero and zero and we’ve had some success and some setbacks but overall we’re seeing some meaningful progress,” he said.
He dismissed the idea that Ontario would enforce a pay freeze though legislation and said the government will work with the public sector to manage salary increases.
The province is set to borrow C$38.4 billion in 2010-11, of which roughly 60 percent will be issued to the domestic market versus 40 percent internationally. That compares to a near 50/50 split last year, with the bias toward global investors.
He said selling bonds domestically allows the province to avoid the issues that arise when borrowing in other currencies.
“Last year because of the stimulus package we borrowed … very large sums. And as we move forward we can expect more of that can be taken up domestically and we’ll get back to a more normal ratio and we’re starting to see that this year,” he said.
Editing by Jeffrey Hodgson