McGuinty’s Ontario is a have not Ontario: Provincial economy shrinks last quarter

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Ontario Premier Dalton McGuinty isn’t starring in a cheesy new flick titled: Honey, I Shrunk the Economy. But he very well could.

According to the Ontario Economic Accounts report issued in late October, much that was already known has been disappointingly confirmed: Ontario’s economic feasibility has taken another hit.

From April through June, the second quarter in the province’s fiscal calendar, Ontario reported a consecutive quarter of negative growth, approaching the slippery recessionary slope.

It paints the perfect picture for Ontario Finance Minister, and newly chosen Deputy Premier, Dwight Duncan to alter some campaign promises that played a part in the Liberals’ three-peat re-election in early October. Promises made by the Ontario Liberals during the campaign will not be lived up to until the economy has strengthened.

Besides, it was only last week when the Liberals finally followed through with its campaign promise to discontinue production at a Mississauga gas power plant, a facility much undesired by local residents. Of course, the project continued more than a month following the election results, and has since racked up as much as $1 billion in cancellation fees—to be covered by the Ontario taxpayers (as “user fees”). It is believed the entire project was valued at $400 million. One has to wonder if the various Mississauga ridings wouldn’t be as Red-painted if the election were to be held today.

Spending restraint?

Minister of Finance since 2007, Duncan has not once presented a balanced budget. And really, shouldn’t legislation state that a back-to-the-chopping-block stance is mandatory when an unbalanced budget is presented?

“The work we have ahead of us may be the most important work of all,” McGuinty said during his speech following electoral victory. “It is time to move forward the Ontario way, which is not about cutting people loose at difficult times or dividing our province by where we came from. It is about working and building together. The Ontario way is not about wishing the world was the way it used to be, or throwing up barriers that can’t possibly stand up to the wave of change that is sweeping the world.”

Ontario is home to some of Canada’s largest manufacturing arms and its capital is the heart of Canadian business. There should be no reason why, since 2008, the province has received equalization payments and is now considered a ‘have not’. This is equivalent to the once-rich applying for welfare status. It takes a great deal of error to drive Canada’s strongest province to its now weakest, aside from Quebec, in only eight years. Yet the Liberals have successfully accomplished this feat and quite handsomely as well. In 2011, Ontario received more than $2.2 billion in equalization payments.

It’s as if the Liberal Party states one position, but does the opposite. Said McGuinty following his October victory, “We move forward together to keep Ontario on a positive track and growing stronger. We are Ontario and we lead. We move forward together to build a strong economy that attracts the investment we need because that generates the ideas and makes the products the world is clamoring to buy, and that delivers the high quality, high paying jobs that our families so rightly deserve.”

What growth? In the same week that McGuinty and his follower Duncan preach further fiscal belt tightening, this difficult-to-digest report was released by union representation CUPE, regarding McGuinty’s new hand-picked, all-Liberal 22 Cabinet members: “The 29 parliamentary assistants will receive an additional $16,667 on top of an MPP’s salary of $116,000.” And for the mathematically disadvantaged, that works out to more than one assistant per Cabinet member.

The CUPE report continues, “The whip will receive an additional $21,000 and cabinet members an additional $49,000, also on a base salary of $116,000. Only one of 53 Liberal MPPs will not receive a substantial increase, making this an unprecedented announcement in its scope. Effectively, 98 per cent of the Liberal caucus has been reclassified and given a pay raise.”

Duncan added, “There will be difficult decisions, difficult choices. I think everybody’s going to have to put a little water in their wine to deal with realities that have changed in the last several months.”

The only reality is that the private sector worker—the majority of earning Ontarians—affording the salaries of the public purse is not sustainable. Ontario families are struggling to make ends meet. So are four more years of McGuinty truly beneficial for Ontario? These same taxpaying Ontarians are responsible for the bill for this bureaucratic shell game, which seemingly has no true intention for a freeze in hiring or wages. To reiterate as mentioned in this corner last month: Ontario public sector workers on The Sunshine List—those receiving more than $100,000 annually—has grown a staggering 350 per cent since 2007, with more than 70,000 public workers now making six figures or more.

“We have difficulty believing the government will stick to its commitment to balance the books by 2017-18,” said Frank Klees, the Newmarket-Aurora MPP who earlier in the month made headlines with his since-withdrawn bid for Speaker. “It’s not in [Liberal] DNA to be prudent. Only if they commit to the wage freeze will they be able to achieve this.”

Added PC leader Tim Hudak, “I just worry [McGuinty] doesn’t get it…Dalton McGuinty’s voluntary wage freeze has been an absolute failure, has not done the job. Multi-year raises, secret deals, merit pay for eHealth bureaucrats, and arbitrators who simply thumb their noses at hard-pressed taxpayers.”

Meanwhile, private sector jobs in the province, something that the PC opposition has vowed to create by freeing up bureaucratic red tape, are down 75,000 full-time positions in October alone. This marks the 58th consecutive month that Ontario’s jobless—including the unemployed who took up a month-long camping vacation in Toronto’s St. James Park—has been above the national average.

Hudak pushes for economic overhaul, job creation

Ontario’s deficit is twice that of every other Canadian province—combined. A report in late November indicated that Ontario’s deficit has now reached $16 billion.
“We have a serious jobs crisis in Ontario and we have a serious spending crisis in Ontario,” Hudak said. “Dalton McGuinty’s [Throne Speech] failed to address either of those big problems. There are no new ideas. I’m deeply disappointed.”

Most pundits agree that while the Liberals have spouted much talk about consensus and working with others now that the party no longer has a majority, the Liberals’ report at the Throne Speech is forging the same ill-fiscal path. In fact, McGuinty went as far as calling PC and NDP proposals—even modest proposals, like removing the HST tax from home heating—as “outrageous proposals for new spending and reckless tax giveaways.”

According to the latest economic statement released by Duncan, the provincial government plans to spend more than $124 billion this year, while only bringing in $108 billion.

“Four years ago [the Liberals] were able to deliver a surplus with $3 billion. And this year they’re projecting a massive deficit with the highest revenues that Ontario has ever taken in,” said Gregory Thomas, Director with the Canadian Taxpayers Federation of Ontario.

According to the Ontario PC, “A two-year wage freeze alone would save up to $2 billion and help reduce the size and cost of government. Despite this debt crisis, [Dalton] McGuinty has not brought forward a single new idea to rein in his unsustainable spending.

“At a time when the private sector is losing 100 full-time jobs every hour, and businesses are being forced to cut back, it’s not unreasonable to expect government employees to forego getting another raise. A wage freeze will hold the line on pay increases and help reverse Ontario’s debt crisis.”

Said Hudak, “Small business owners understand there’s a difference between ‘must have’ and ‘nice to have’—that you don’t increase costs without the revenue coming in to pay for it. They’re not easy choices, but that’s how you run a business. That’s how you should run a government.”

According to the Canadian Federation of Independent Business, “Ontario government employees already earn 27 per cent more than their private sector counterparts for doing the same job.” Clearly, the Ontario PC strives to better align public sector compensation with private sector pay.

“It’s time Dalton McGuinty and his Finance Minister admitted the situation they created is beyond their control. If they are not prepared to confront the crisis now, Tim Hudak and the Ontario PC Caucus will,” said Jim Wilson, Ontario PC House Leader.

Our fingers are crossed that a non-confidence vote will cast Ontario’s next election sooner rather than later. 

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