Ontario Finance Minister Charles Sousa said manufacturers in Canada’s most-populous province are adapting to a currency that has strengthened to parity with the U.S. dollar.
“They have been transitioning and recalibrating themselves with the reality of a dollar at parity,” Sousa, 54, said in an interview today at Bloomberg’s New York headquarters. “That is only going to help them going forward.”
Canada’s dollar has appreciated by 20 percent against the U.S. dollar since March 2009. The Bank of Canada has cited the persistent strength of the currency as a factor that’s been restraining exports from the world’s 11th-largest economy.
Sousa also reiterated his pledge to eliminate the province’s budget deficit by the fiscal year starting April 2017. Standard & Poor’s yesterday maintained a negative rating outlook for Ontario debt, citing the pressures of making “aggressive” cost cuts while having a minority of seats in the province’s legislature. Sousa’s Liberal Party needs some support from opposition lawmakers to pass budgets and remain in power.
Rating companies have recognized the government’s efforts to close the budget gap and the results already achieved, Sousa said. The government has “buffers” against setbacks to the economy and is “not blind to what might happen.”
The May 2 budget said the deficit will rise this year to C$11.7 billion ($11.3 billion) from C$9.8 billion last year, which was C$5 billion under the original projection. The plan includes several measures proposed by the opposition New Democratic Party such as a youth employment program.
“We’re not selling LCBO” as a way to boost revenue, Sousa said, referring to the Liquor Control Board of Ontario, the government-controlled agency that runs the province’s liquor stores. Instead the LCBO is being expanded to enhance revenue for the government with pilot projects under way to test liquor outlets inside grocery stores.
Sousa became finance minister of the country’s most populous province in February after Kathleen Wynne replaced Dalton McGuinty as premier and leader of the Liberal Party.
Toronto’s building boom “has come up quite a bit in the last day or two I’ve been here,” Sousa said, referring to discussions he’s held while in New York. He said he was not worried about a crash because of government measures to cool the market and strong immigration to the city.
Sousa said he is not “not averse” to private-sector involvement in funding transit construction. The government is studying recommendations made by the regional transit authority to boost taxes to pay for expanded service, he said.
Toronto’s traffic congestion cost commuters C$3.3 billion and imposed direct economic costs of C$2.7 billion in 2006, according to a 2009 OECD study.
Regarding the controversy surrounding Toronto Mayor Rob Ford, Sousa said the city has a “huge” council, and “we are going to let them do their job.” The Toronto Star reported on May 16 two of its reporters viewed a mobile-phone video which allegedly showed Ford smoking drugs from a pipe. Earlier this week, Wynne said the provincial government was closely watching the situation in Toronto and was concerned that the controversy could keep the city government from doing its job.