Ontario cuts growth targets, says budget on track

Wed Nov 23, 2011 6:49pm EST
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By Claire Sibonney

TORONTO (Reuters) - The Ontario government cut its growth, revenue and reserve targets on Wednesday, but said it was still on track to balance the budget in six years, without lowering total program spending or raising taxes.

In its fall economic statement, the government of Canada's most populous province said the timetable for eliminating its 2011-12 deficit of C$16 billion ($15.2 billion) by 2017-18 remains intact, as do medium-term targets, despite pressures from economic turmoil in the United States and Europe.

It said its net debt-to-GDP ratios will be higher than previously forecast, peaking at 41.3 percent in 2014-15.

The Liberal government insisted it will not introduce sweeping austerity measures, and will go ahead with planned spending in healthcare and education, as well as its ambitious green energy program and promised tax cuts.

It said it would balance those expenditures through savings in other areas, and promised more detail would be revealed in the full budget next spring.

"We're looking at an extended period of restraint in Ontario and it's not all going to be done in one budget," Finance Minister Dwight Duncan told reporters.

He said the government will be listening closely to the cost-cutting recommendations of Don Drummond, a former Toronto-Dominion Bank chief economist, now advising Ontario and due to present his findings in January in time for the spring budget.

Drummond has already said the province will not meet its deficit targets unless it curbs program expense growth to just 1 percent a year for the next six years, and Duncan on Wednesday said it might be even lower than that.   Continued...