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87% of Ontario’s net public debt was accumulated in the years since 1990

Ontario’s net public debt is estimated at $287.3 billion and will hit nearly $320 billion by 2017. The evolution of this daunting number is an interesting story as the spring budget approaches. Much like Rome, Ontario’s debt was not built in a day but comes from decades of profligacy. Ontario has run a deficit nearly 80% of the time since 1965.

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In 1965, John Robarts was premier and the net debt a mere $1.6 billion. As a share of GDP, it was only 6.9%. By the time Robarts passed on the political torch to William Davis in 1971, Ontario’s public debt had grown to $2.2 billion but the robust economic growth of the era reduced the net debt to GDP ratio to 5.2%. In terms of Ontario’s debt to GDP ratio, the Robarts era is as good as it gets.

The period 1971 to 1985 was the William Davis era with an appearance by Frank Miller at the tail end. The 1973 oil price shock and stagflation marked the end of the economic golden age. The result was slower growth, higher interest rates and the start of deficits that continued practically unabated until the late 1990s. Debt mounted and between 1971 and 1985 Ontario’s net public debt grew to $28.9 billion from $2.2 billion. The Davis-Miller era averaged an addition of about $2-billion a year to Ontario’s debt and the net debt-to-GDP ratio grew to 15% from 5.2%.