Wednesday, April 30, 2008

Ontario's Real "Have Not" Status: We "Have Not" A Plan For Economic Success

I'm not that worried about my home province of Ontario being on track for receiving equalization payments in the next two to three years. As I understand the changes to the formula last year and again a few years before that, the "have/have not" status means less than it did a decade ago.

What truly bothers me is the lack of a economic road map to get Ontario back a sure footing.

My big problem is that while the Ontario economy continues to weather serious challenges, the McGuinty government is spending time banning pesticides and implementing smoking bans in cars. In the lead-up to the last provincial election, when people asked me who would win, without hesitation I said McGuinty would win a second term. This was long before the poison pill of faith based funding. I knew the Liberals would win because they hadn't really taken any bold steps and hadn't really done anything to piss people off. They threw money at the unions to buy labour peace, they halted development in the greenbelt around the GTA and they spent more money on health care by raising taxes through a premium.

But that lack of strong action is a double edged sword. They have done very little on the economic front, besides cancelling Conservative business tax cuts and we are now seeing the harsh, depressing results. Other provinces, most notably Newfoundland and Labrador, have been net beneficiaries of skyrocketing oil prices. Ontario has no oil patches to speak of. Instead, Ontario continues to weather the perfect storm of a high dollar, a slow US economy and an over reliance on manufacturing jobs such as auto production.

Many if not all of those factors are really beyond the control of the current provincial government - I don't dispute that. However, this is when true leadership is so crucial and the absence of which right now in Ontario is so stark. Anyone, and I mean anyone, can govern in good economic times. When you are looking at a GDP growth of 2-3% annually, its pretty darn easy to float along, passing legislation that is largely symbolic in nature, but amounts to very little in real terms. When the money is coming in, its easy to spend your four years in power cutting cheques and draping yourself in token gestures.

But as the months pass and the economy continues to weaken, then we will really see what this McGuinty fellow and his team are made of. Given their (in) action thus far, I would suggest they have no clue of how to actually manage the affairs of Canada's most populous province. I suspect their PR flak Warren Kinsella and other hangers on are giving them advice to govern in the Chretien mold: say lots, do little of consequence. These guys are great (apparently) at the spin, the campaigning and the photo ops, not so much on the business of actually being in power. Chretien also governed with a positive economy, a weak opposition, and a largely indifferent public. A charmed life these folks lead.

But, these things change quickly. An economy is a fragile thing, and if weakness is not addressed quickly and firmly, it can often spiral off in unexpected ways. It takes real and competent management to ensure the province continues forward. I believe that when push comes to shove, this Ontario emperor will have no clothes.

Ontario thinks that expanding the civil service is the answer. You cannot create wealth by dividing it.
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