Nipissing MPP Vic Fedeli says talk of interest rates rising in the near future means bad news for the Ontario government on two fronts. Fedeli says the first problem involves the amount of interest we pay on our current debt of more than $300-billion. Fedeli says right now the province spends about $1-billion a month on interest to cover the debt. Even the slightest rise in rates, like a quarter of a percentage point, will force that figure above $1-billion monthly. Fedeli says the more interest we pay on the debt, the less money we have for other services like health and education. The second problem is a collapse in the housing market because of rising rates. Fedeli says the province collects an extra $1 billion a year in land transfer taxes from the sale of homes. But he cautions that money could dry up if a housing bust causes a severe slowdown in sales. The Tory finance critic points out that the Finance Accountability Officer has talked about the housing boom posing a risk to Ontario’s economy because if the market goes bust, then there’s less land transfer tax money coming in to fill the province’s coffers.
