By Graeme MacKay, The Hamilton Spectator – Saturday, May 31, 2014
Parties float different fixes for ailing Ontario economy
Like medical students huddled over a patient, the leaders of Ontario’s three major political parties are diagnosing different diseases and prescribing wildly different treatments for the province’s ailing economy.
At the heart of each prescription is the belief Ontario’s economy is in trouble because of a lack of decent jobs — full-time positions with a living wage and benefits — the kind of jobs that support families and build communities.
If the plans agree on the problem and the needed solution, they differ wildly of how to get the economy back into shape.
Liberal Leader Kathleen Wynne, for example, calls for a $2.5-billion Jobs and Prosperity Fund to be used to entice business investment in the province.
Conservative challenger Tim Hudak has his Million Jobs Plan — creating an average of 125,000 jobs a year for eight years, starting with the firing of 100,000 civil servants and cutting corporate taxes by 30 per cent.
Then there’s NDP Leader Andrea Horwath’s Job Creator’s Tax Credit and small business tax rate cut.
In its package of election priorities, the Ontario Chamber of Commerce lays out the broad outlines of the province’s economic malaise. The business lobby group points to soaring government debt, sluggish economic growth, persistently high unemployment, a perceived need for public sector wage restraint while maintaining vital public services, a perceived need to let the private sector fulfil more public needs, and a need to both control energy prices and to press the federal government to close the estimated $11-billion gap between what Ontarians pay in federal taxes and what they receive in federal spending and transfers.
McMaster University economist Peter Graefe finds “a lot of wishful thinking” in each of the three proposals.
He said the planks calling for lower electricity rates and less regulation might help economic development by drawing investment from firms for which those factors are important. However, he cautions, “Experience shows that lower taxes and looser regulation by themselves don’t necessarily lead to jobs. Significant investment isn’t going to be heavily swayed by this.”
Jobs could just as easily be attracted by showing a commitment to public services and infrastructure.
The real issue for Ontario’s economy, he says, is low productivity.
“There’s really nothing in any of these plans that will push us in the direction we need to go,” he said. “The real weaknesses in the Ontario economy haven’t been addressed. There isn’t much imagination in these platforms, just a lot of motherhood and apple pie statements.”
Bill Scarth, also of McMaster’s economics department, knocks the Liberal platform for its proposal to slow the rate at which the provincial deficit is to be eliminated and questions the assumed rate of growth that supports the Liberal and NDP packages.
“Postponing deficit reduction is a very dangerous plan,” he said, warning that many in the business community will see the delay as a warning sign of future tax hikes.
“To meet the Liberal targets for deficit reduction is going to require some pretty draconian cuts.”
At the same time, he worries the Hudak plan is too severe and could push the economy back into a recession.
“Hudak goes too far the other way,” he said. “We’re still in a very fragile part of the recovery.” (Source: Hamilton Spectator)