Ontario’s Debt Mounts Alarmingly

J. M. ELSON April 15 1924

Ontario’s Debt Mounts Alarmingly

J. M. ELSON April 15 1924

Ontario’s Debt Mounts Alarmingly

J. M. ELSON

AS THE penetrating searchlight is turned upon the extravagance of Dominion administrations, the excesses of some of the provinces are at the same time thrown into bold relief. Like father and son, Ontario with its Federal parent has been having a long and expensive “night out.” It has been spending money and accumulating obligations with almost a wanton hand.

The result is the inevitable, of course. A huge debt has been contracted. Heavy demands have to be made, directly and indirectly, upon the earnings of citizens to carry it. The cost of government is constantly increasing.

Enormous sums have to be extracted annually from the pockets of the masses even to pay interest on loans, to say nothing of principal retirement.

This article has no motive except to present facts in an unbiased, illuminating way, that they may carry their own conviction. The fortunes of parties are not its concern. There is no desire to adversely affect public credit. This

province in the eyes of the money lords, stands^ with a balance sheet in its hand which assures sound financial rating. Its assets are large and its wealth is steadily growing. Nevertheless in its expenditures there has been, of late years, a veritable saturnalia. Thoughtful tax payers are growing critical of this riotousness and its attendant evils.

A Nightmare of Figures

THE figures, assembled for MacLean’s, after careful study, seem almost prodigious enough to have been juggled into position by some artful magician. The total liabilities of Ontario at the end of the fiscal year, October 31st, 1923, were $303,391,291.66.

Twenty years before they were

$5,884,946.18. The jump looks to ____

be incredible but the figures are from the government records. The auditor of public accounts is a responsible official. He does not put his signature to the vanities of necromancers. More than this, every person within the province’s, borders, while he does not see all the devious routes of indirect taxation through which his dollars roll away from him into the yawning maw of the Treasury, has to pay nevertheless. He has to keep separating himself from his earnings, no matter which way he turns, to help satiate, every twelve months, a voracious governmental appetite.

Here are the comparative figures of Ontario’s increase in population from 1902 to 1922 and its increase in liabilities during the same period:

Population

1922 .................2,846,557

1902.................2,037,267

Increase................809,290

Total Liabilities

1922 ...........$287,681,569.22

1902 ............ 5,884,946.18

Increase........$281,796,623.04

Take the situation another way.

Two decades ago the people of this province were journeying along easily with a debt sinker in their pockets of only $2.88 per capita. Records of debates indicate that they thought themselves bowed down under a load. But they were in Elysian gardens compared with the work-a-day crowds of the present. Now, in 1924, as in 1922,every man, woman and child sweats under a burden of no less than $101.07, or almost forty times what it was twenty years previously.

But this is not all. The microbe

of public extravagance has been working in the blood of every kind of council—federal, provincial and municipal. It has permeated he air like an intoxicating odor. It has expressed itself on every hand. The results of its efforts are an unparalleled achievement in monetary

Twenty years ago in Ontario our liabilities were $5,884,946.18.

1922 they were $287,681,569.22, and they are still growing.

Twenty years ago there was a per capita debt of $2.88. Now it amounts to $101.07. And that is not all. There is in addition the municipal debts. These have grown in similar proportions. , .

Combine these with the federal debt and you have a total capital commitment of $576. No one party is responsible, no one community. It has been a general hysteria of spending.

It is your business, Mr. Taxpayer! If you have a family of five the total charged against your home is $2,880. It is a mortgage on your future. You can’t evade it, you can’t pass it on to anyone else. Isn’t it about time that all of us joined together to say that this thing must stop?

gymnastics. The plain man must have long ago become dizzy in the reckoning. This is what the blue books and public accounts show:

Per capita debt accumulated by the Dominion . .$366.00

Per capita debt accumulated by Ontario....... 101.07

Per capita debt of Ontario municipalities....... 109.00

Load of debt, federal, provincial and municipal carried by every man, woman and child in Ontario to-day.....................................$576.00

This means that for a family of five there is a mill stone hung around the domestic neck amounting, in 1922, to no

less than $2,880. It is not easy to run smiling when your feet are shackled and your back is bent to such a burden, even though part of it has an earning capacity.

Let us look more closely into what has been transpiring on the administrative stage, through these years, despite the fact that the roaring old farce, ECONOMY, has been presented from time to time by politicians before the curtain. Viewed from any angle the figures are startling except to the callous and smug.

At the end of

A Fabulously Increased Load

Ontario’s

N TWENTY years

population has increased 809,290 or considerably less than a million. It’s total liabilities in the same period (taking the records only up to the end of 1922) have in-, creased by over two hundred and eighty one millions and by 1923, or twenty-one years, to over two hundred and ninety seven millions.

At the same time, while this has been going on in the provincial field, the municipal load of debenture debt and taxes has been enlarged at a staggering rate. In 1902, for instance, the total assessment of the province on which local taxes were levied was $859,943,263 and the debenture debt for all purposes was just $61,179,468. By 1912, the assessment had been boosted to $1,525,858,478 with a corresponding advance in debt. By nine years more, or in 1921 (later returns in this respect are not complete) this amount had been still further swollen to the huge total of $2,410,723,053 with a total debenture debt of $307,107,315. The returns so far made to the Bureau of Municipal Affairs, a department of the Provincial government, indicate a continued upward tendency.

In three years alone this is what happened in a leaping assessment, taxation and debenture debt:

Assessment

1921 ............$2,410,723,053

1919 ............ 2,131,666,300

Increase..........$ 279,056,753

Debenture Debt

1921..............$307,107,315

1919 .............. 236,494,009

Increase...........$ 70,613,306

Taxes Levied

1921...............$55,765,105

1919 ............... 43,607,652

Increase............$12,157,453

These figures are quoted because they have an important and inseparable relation to provincial finance. They are not only regarded as necessary when the monèy markets have to be entered for provincial loans, but they prove beyond doubt that the municipalities as a whole, like their next of kin—the Province and the Dominion—have been enjoying themselves at the Carnival of Expenditures.

The serious consequence of this spendermania, if such it might be called, this Derby of gold and silver out-pouring, is felt by rural communities in particular. Any one at all conversant with farming conditions is aware that in every county there are thousands of acres of tilled land that would bring little more, if anything, in the open market to-day than they could have been sold for twenty or twenty-five years ago. Yet these areas are like a modern Atlas sustaining a weight on their shoulders of millions of dollars more' in assessment, debenture debt and taxes than they bore before the spending epidemic began.

The evil has grown rampantly because councils have been bor-

Continued on page 59

IT IS idle to expect that the member of parliament will be more careful of the public funds than you would be. There is no justice in asking him to have a deeper interest in your political welfare than you have yourself. If you show but a half hearted interest, then he will show a half hearted interest. The whole vicious system of extravagance has been built up, not about the members of parliament, but about a half hearted, scarcely interested public. Don’t blame the man who represents you, but make it plain to him that you are interested, vitally interested; that you are watching to see that all unnecessary extravagance stops. Write your representative, Parliament Buildings, Toronto. Tell him you are expecting him to

CONSTITUENCY YOUR MEMBER Addington..............Wm. D. Black Algoma.................Arthur W. Gladstone Brant North............HarryNixon Corwin Brant South............M. M. MacBride Brockville..............Hezekiah A. Clark Bruce North............Wm. Henry Fenton Bruce South............Mal. MacCullum Bruce West.............Alex. O. Mewhinney Carleton................Adam Holland Acres Cochrane...............Malcolm Lang Dufferin................Chas. R. McKeown Dundas................Aaron Sweet Durham East...........Albert Jas. Fallis Durham West...........Wm. John Bragg . Elgin East..............Michael McKnight Elgin West.............F. G. MacDiarmid Essex North............Edw. Philip Tellier Essex South............Adolphus Armstrong Fort William............Frank Spence Frontenac..............Anthony M. Rankin Glengarry..............Jas. Alex Sangster Grenville...............Geo. H. Ferguson Grey Centre............Dougall Carmichael

Continued from vage 22

rowing against the future on long term debentures. The interest on these debentures runs into millions annually. Less than a quarter of a century ago there were scores of municipalities that had little or no debenture debt. They raised in taxes each year whatever they needed for local improvements. In this way they kept down not only their capital expenditures but their carrying charges. Now these municipalities appear in the loan columns. The people of Ontario are pouring in millions yearly, through county and township treasurers, to fill up the hole which the interest shovel digs.

It is this policy of borrowing on long term notes (under the more exalted names of bonds and debentures, but which are in effect the same as notes) it is this policy of borrowing on credit and putting a mortgage against the future for John and Mary to pay that has led the province and the municipalities into reckless habits. They have been like a man with too easy credit at his bank.

In the case of Ontario it is obviously true that many splendid improvements have been secured. They are enjoyed by the people who now live. Likewise, it may be said, as is generally said by all who excuse intemperance in public expenditure that in most instances full value has been received for the money spent. Too much weight should not be given to this latter argument. A private individual may mortgage his home for a long term and use the money received to buy luxuries beyond his station. He may easily get one hundred cents value in the transaction and yet he may be unpardonably foolish to go into debt. Ontario has exceeded the happy medium in its borrowings against the future.

Were some one with a yearning for arithmetic to sit down, on an off day, and figure out from official reports how many millions of dollars are taken from taxpayers annually, simply to pay interest alone on borrowings of the Ontario government and of the municipalities, the total reached would make the public shudder. His accomplishment would be in the nature of a public benefaction for it would show people what huge sums they are paying.

. Supposing, on the other hand, the citizens of Ontario demanded that a policy of “pay as you go” be given more respect for a few years? Supposing they refused to be carried deeper and deeper into debt? Would not the millions going out annually for interest payments buy a lot of improvements?

However divergent opinions may be on this point, there can surely be no question as to where the “open vault” practice has led Ontario in the last twenty-odd years. It was shortly after the birth of the present century that rapid increases in debts and taxes began to be striking.

Here is a table taken out of the report issued by the Dominion Bureau of Statistics, at Ottawa. It shows the per capita

receipts and expenditures of Ontario for the years 1906, 1916, and 1921 together with the increase per capita of 1921 over 1906.

Increase

Receipts Over

1906 1916 1921 1906

3.04... . .15.08.....10.37_____ .7.33

Expenditures

2.86. .. ..4.67..... 9.74......6.88

It will be seen from the above that the receipts of the province rapidly increased. This, of course, was only a natural and obligatory result of the quick march in taxation following immediately on the heels of sharp advances in expenditure.

Capital Expenditures Double in Six Years

TAKE another page from the Bureau’s report. Its statistics show that the per capita expenditure by Ontario for the fiscal years 1916 to 1921 inclusive, doubled.

The per capita expenditure was as follows:

Year 1916 1917 1918 1919 1920 1921

Total expen. 4.67 5.97 6.23 7.54 8.96 9,74

The point arises .now as to how the money has been and still is being spent; how much of the capital outlay is an earning investment; has the cost of civil government and of general administration gone up out of proportion to the increase in population and, in what departments have the greatest increases taken place.

A good portion of Ontario's large debt has been contracted for various Hydro development purposes. These have an earning capacity, though not always a capacity great enough to meet their cost, but as earners they cannot be regarded as in the same class as non-earning commitments. Expenditures for the buildingof the Temiskaming and Northern Ontario Railway are also in this revenue-producing category. Within the last two or three years many millions have been spent on good roads which may be said to work for themselves since motor license fees are put on to equal interest and sinking fund.

Rather than consider the finances from this angle and open side doors, the province’s standing is dealt with here just as it is given in the public accounts returned to the Legislature. It will be seen, however, frorn these that after deducting the indirect liabilities, the increase in the load of direct liabilities has been astoundingly rapid. While the total debt as at the end of the fiscal year in October 1923 was over $300,000,000, only the returns as available at the Parliament, buildings are used in this table up to the end of 1922, to conform with the twenty-year period from 1902 in population increase, as given above. The table at the bottom of this page shows what they set forth in fast climbing.

This establishes that the direct liabil-

Total direct liabilities . .. .$7l5,6i45,917 1918 $ 97,572,781 1919 $128,191,754 1920 1921 1922 Total indirect liabilities ... 19,120,269 19,205,142 31,560,299 $204,959,690 $240,923,995 36,882,468 46,757,574 $94,766,186 $116,777,923 $159,752,053 $241,842,158 $287,681,569

ities have jumped from between $75,000,. 000 and $76,000,000 in 1918 to nearly $241,000,000 in 1922. This is over forty times the total liabilities, direct and indirect as in 1902.

Were the increases mostly accounted for through war obligations or through capital expenditures for earning works, the situation would be quite different. These cannot be offered as an excuse. During the war the province levied a one mill direct tax on all rateable property in Ontario to meet war outlays. This brought in large sums. As the result of public pressure this was removed in 1919 and while there have been some small carry-over expenses they have little if anything to do with the debt except as represented in the increased cost of public works and hydro enterprises in that period. The province is not in the same position as the Dominion with regard to war obligations. The Federal government, not those of the provinces, financed Canada’s part in the war. Neither do the outlays for public improvements explain away the huge increases.

Cost in Government Increases Faster than Population

THERE has been, however, a steady and surprising rise in the cost of civil government and in administrative branches. Several new sources of revenue have been devised, such as the Land Transfer tax, motor licenses, law enforcei ment as represented in the Liquor License Commission and the Provincial Police, highways and road construction, superannuation fund, etc., bringing in many millions of dollars. Some of this, of course, is ear-marked such as the superannuation fund, and is only handled in an administrative way, but after deducting these there still has been an increase of several millions from new sources, all of which has been promptly spent. ..The cost of civil government and general administration has indeed grown faster than the number of people in the province who have to carry the load.

For example, in 1902, when the population was 2,037,267jthe cost^of civil government was $281,13*5.68. In 1922, with a population of 2,846,557 the cost of civil government had gone up^to $1,883,821.52. Staffs at that time were comparatively small. No such extensive administrative machinery was necessary then, as now, to collect revenue or look after it. Here are some of the increases in expenditure in a few of the’larger departments :[ /' gj

Expenditures in 1912

Civil government. .$ 680,451.95 Administration of

Justice..... 674,390.79

Education.....1,963,251.64

Public Institutions .1,313,569.48 Agriculture .... 687,503.04 Department of Labor

and) Health . . 64,014.07

Expenditures in 1922 $1,883,821.52

1,516,460.80 7,651,448.22`

3.640.282.89 1,482,563.14

1.946.908.89

The various figures quoted in all of these references tell only one story. Expenditures have been so enormous and borrowings so great that a burdensome levy has to be made upon citizens of the province to meet the annual budget. That there are no direct provincial taxes except in two or three cases such as amusements, race tracks, land transfer, etc., makes no difference. The toll law works out just the same in the numerous departments through which revenue is collected as agriculture, game and fisheries, lands forests and mines, Provincial Secretary’s department, insurance, law stamps, succession duties, corporations tax, motor licenses, law enforcement and others. These can be sub-divided again into scores of charges affecting the everyday transactions of people.

The time has come when the public consciousness should be alive to the facts.