Guest Blog Post by Victor Fedeli

The recent bankruptcy of Detroit is another warning sign to Ontario that without hitting the brakes, we too are headed for a fiscal cliff.

Detroit, once the very symbol of industrial might, filed what will be the largest municipal bankruptcy inU.S. history. Their budget deficit is more than $380 million and their long-term debt is estimated to be $20 billion.

The motor city’s population declined from a peak of 1.8 million in the 1950s to 700,000. There are 78,000 abandoned structures.  Police, fire, and ambulance services are unreliable – their fleets are in disrepair, and police response times average 58 minutes.

In a letter approving the move, Governor Rick Snyder wrote “The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep.  The only way to do those things is to radically restructure the city.” He added the decision follows decades of decline for Detroit, “a period in which reality was often ignored”.

In many ways, Detroit is a warning light to the rest of the global economy, and especially to Ontario. Their debt is $27,000 for each resident. In Ontario, we each owe $20,000. Detroit is estimated to owe $9 billion for pensions and benefits. Here, our unfunded pension liability is estimated at $100 billion; a problem that will only increase as Baby Boomers reach retirement.

But the Detroit bankruptcy is only the latest warning sign that Ontario is headed down the wrong road. Over the last year, several studies have been released making other comparisons.

Ontario is now where Greece was in the 1980s.  Their net debt-to-GDP ratio went from 37 percent to 66 percent.  Today Ontario’s is at 37 percent, and if we maintain the spending status quo, we too will reach 66 percent by 2019.

Ontario and California also face similar dismal financial situations. Both jurisdictions have crushing deficits of comparable size. Sadly for us, California is about three times our size, making it a fiscal darling compared to us.

The Drummond Report proved to us that the burden of eliminating our debt must fall on spending. It states, “To balance the budget, the province must target a spending level in 2017-18 that is 17 percent lower than the sum found in the Status Quo Scenario – a wrenching reduction from the path that spending is now on”.

Instead of taking necessary action, the Liberals have taken us farther down the road with the same failed approach of the last decade.

The solutions to Ontario’s problems aren’t hard to figure out – they’re just not easy to do.  Ontario needs a government that has a plan to reduce spending and create jobs, and the courage of their convictions to get the job done. Tim Hudak and the Ontario PCs have put forward bold ideas in a series of 14 white papers to date, and stand ready to lead Ontario back from the brink into prosperity.

Without structural changes, our economy will be running on fumes – and we all know what comes next.

Victor Fedeli is a former advertising executive, two-term Mayor of North Bay, and current MPP for Nipissing and PC Finance Critic.