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TORONTO — The Ontario budget lands Thursday but a new report warns that the $315-billion provincial debt could derail the finance minister’s best fiscal plans.

Ontario spends $11.4 billion a year just to service its debt — more than it spends on all social services for adults or to run its universities and colleges. It’s the third largest single item in the budget after health care and public education, and that’s in a historically low-interest-rate environment. So what happens when interest rates rise?

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The government’s debt payments go up.

If you think of the province’s $315-billion debt as several massive public mortgages, then it mostly holds fixed-term debt. That means, just like a mortgage, payments are set for a number of years before a term comes up and, depending on what interest rates are, they are then renegotiated.

Finance Minister Charles Sousa and the teams of bureaucrats who work away in the Frost Building at Queen’s Park have taken advantage of historically low interest rates. They’ve locked in much of the province’s debt at current rates, however 40 per cent of it will come due within the next five years. Although the fiscal plan accounts for some modest interest rate hikes, a new study from the Fraser Institute finds that, by 2020, Ontario could be paying $1.2 billion more than expected just to maintain its debt if drastic increases occur.