Ontario’s ugly truth
The Ontario Liberals must surely be j oking. Kathleen Wynne, for example, wrote last week in the Huffington Post that by “every measure, our economy is outperforming the competition.” A day earlier, her finance minister, Charles Sousa, said much the same in his budget speech. He concluded by saying that it was “time to look back on what we have achieved together. We have so much to be proud of.”
Since he insists, let us look back on the Ontario Liberals’ economic achievements, of which they are so proud. Wynne and Sousa point to Ontario’s 2.7- per- cent GDP growth last year as proof that Ontario’s economy is “growing and leading.” But was that growth driven by smart economic policy, or by other factors like Toronto’s hot housing market?
Here’s a clue. If Liberal central planning is the recipe for prosperity, perhaps Wynne should explain why inflation- adjusted GDP per capita growth in Ontario from when the Liberals were elected in 2003 to 2015 was a paltry 6.9 per cent (or 0.56 per cent a year, on average). That’s barely half the rate of growth of 13.0 per cent that was seen in the rest of Canada.
Over the same 12 years of Liberal rule, household disposable income growth was by far lower in Ontario, at a mere 13.1 per cent after accounting for changes in the CPI and population, than in any other province. Manitoba ( 24.4 per cent), Saskatchewan ( 42.7 per cent), Alberta ( 31.9 per cent), and British Columbia ( 34.2 per cent) all did far better; and even neighbouring Quebec (16.4 per cent) outperformed Ontario by a wide margin.
What about jobs? Charles Sousa insisted in his budget speech that his government’s “priority is all about jobs, created by thriving businesses.” By this measure too, the Ontario Liberals have been a miserable failure. Every year since 2008, Ontario’s employment rate has been below the national average, a trend that continued t hrough t he first t hree months of 2017.
The picture is particularly bad for youth. Every year since 2002, Ontario’s youth employment rate has been below the national average, often by a significant margin. In March 2017, youth employment in Ontario fell to 51.6 per cent, more than four percentage points below the national average.
Nor was the employment growth that did take place in Ontario fuelled by “thriving businesses.” Private sector employment in Ontario has grown a measly 8.4 per cent since 2003. That’s slightly less than half the rate of private sector employment growth in the rest of Canada. Meanwhile employment in Ontario’s public sector expanded by 23.9 per cent.
Just as businesses are slow to hire, business investment i n Ontario has also lagged. Philip Cross, formerly the chief economic analyst at Statistics Canada, noted in a 2015 study that business investment “is no longer the driving force of capital formation in Ontario. In its place, investment by the public sector in Ontario has nearly doubled …” ( The title of Cross’s scathing analysis, published by the Fraser Institute, is aptly named “Ontario – No Longer a Place to Prosper.”)
But at least the budget has finally been balanced, after nine consecutive deficits, right? After all, Sousa proclaimed that the “government promised to balance the budget… I am proud to announce… We did it!” Not quite. As Rosalie Wyonch of the C. D. Howe Institute noted, the balanced budget projections “rest on doubtful pension accounting and extra- buoyant tax revenue, against a backdrop of a rising debt-service burden and accelerating program spending.”
So the balanced budget, it seems, is not really balanced after all. Not that even one properly balanced budget would be enough undo over a decade of massive debt accumulation and woefully poor economic growth. Yet t he Liberal government looks back on its trail of destruction and sees a rosy picture of prosperity. Ontarians should be worried. If the Liberals really think their policies have been working, they’re only bound to keep doing more of the same.