Ontario government spending plans optimistic: auditor (Reuters)

TORONTO (Reuters) – Ontario's latest spending forecasts are optimistic and aggressive, the province's auditor general said on Tuesday, which may make it difficult for the government to meet its fiscal targets.

The auditor's report comes just three months ahead of an October election. The governing Liberals are trailing the main opposition Progressive Conservatives in recent polls.

Under legislation introduced in 2004, the Ontario government is required to release a pre-election report on the province's finances, including revenue and spending projections for three years. It also requires that the fiscal plan should be based on modest assumptions.

"It's going to be very challenging ... this is a fairly optimistic and aggressive set of assumptions. Really, things have to go right," Auditor General Jim McCarter told reporters.

"The risk would basically be you have a much higher risk of not meeting your fiscal targets if things that you hope are going to happen don't happen," he added.

McCarter pointed out that the government's plan is largely reliant on its ability to freeze public sector salaries, which make up half of government spending.

However, since the government's announcement to freeze salaries in 2010, he noted that about 60 percent of compensation agreements with the public sector have resulted in pay raises.

The forecasts were in line with the estimates made in the March budget, when the government projected it would take until 2017-18 to eliminate its C$16.3 billion ($16.6 billion) deficit.

McCarter concluded that estimates of revenues and of interest costs on the provincial debt were in fact "prudent and cautious."

Expenditures however -- the other half of the equation that the government actually has control over, versus economically driven revenues -- were viewed with more skepticism.

The auditor's report notes that the government says it will spend an average of just 1.8 percent more in each of the next three years, even though its annual spending growth over the past eight years, after adjusting for large one-time expenses, averaged almost 7 percent.

Ontario Finance Minister Dwight Duncan said in response to the report that he himself has characterized the expenditure assumptions as aggressive, adding the province's deficit targets are not at risk.

"In fact, we have overachieved and he doesn't say that. I think what he says is he talks about reserves, he talks about contingency. He talks about the conservative nature of our revenue projections," Duncan told reporters.

"On balance, I thought his report was fair ... I think we're on target moving forward."

($1=$0.98 Canadian)

(Reporting by Claire Sibonney; editing by Rob Wilson)

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Thai PM 'very optimistic' about winning election (AFP)

JAKARTA (AFP) – Thai Prime Minister Abhisit Vejjajiva said in Jakarta on Monday that he was "very optimistic" about winning next month's general election.

"We've had very good responses... and I think the Thai people want to move the country forward. They want to see stability and they want to see their problems addressed," he told a news conference at the World Economic Forum on East Asia in the Indonesian capital.

While the election campaign has not been smooth, it has been "orderly", Abhisit said.

"If you were in Thailand maybe a couple of months ago, there's so much speculation about whether elections could actually be held. But if you're in Thailand now, nobody is questioning that," he added.

Abhisit is in the midst of a tough electoral battle against former premier Thaksin Shinawatra's allies in the Puea Thai party, who want an amnesty for politicians who have been charged or convicted if they win the July 3 vote.

Thaksin's youngest sister, political newcomer Yingluck Shinawatra, is Puea Thai's candidate for prime minister, underscoring her brother's ongoing role in Thailand's fractured political landscape.

Her arrival on the scene has reinvigorated an opposition that just weeks ago appeared rudderless, with polls showing her party pulling ahead of Abhisit's establishment-backed Democrats.

A Puea Thai victory could pave the way for the return of Thaksin, who was ousted in a 2006 coup and lives abroad to avoid a jail term for corruption. He is also charged with terrorism in relation to unrest in Bangkok last year.

Abhisit warned that an amnesty would be a threat to Thailand stability.

"We don't believe that's the country's priority, we don't believe that's the people's priorities. It can only cause more trouble, controversy and instability," he said.

Oxford-educated Abhisit came to power at the end of 2008 in a parliamentary vote and is accused by critics of having no popular mandate.

Thaksin, a former telecoms tycoon, is hailed by many rural and working-class Thais for his populist policies but loathed by the Bangkok-based elite which sees him as corrupt, authoritarian and a threat to the monarchy.

Protests by his "Red Shirt" supporters led to Thailand's worst civil violence in decades last April and May, in which more than 90 people died in clashes between the opposition street movement and security forces.

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