Bad mistakes—the Ontario government has made a few
Recently, Premier Kathleen Wynne admitted her government is partly to blame for skyrocketing electricity prices in Ontario, nothing that her government’s policies have contributed to an “unacceptable” situation with some Ontarians having to choose between paying electricity bills and buying nutritious food.
And she’s right. For example, the government entered into long-term contracts at above-market rates to providers of wind and solar power that are contributing to the increased cost of electricity in the province. These policies were initiated by Premier McGuinty and continued by Premier Wynne.
While it’s refreshing to hear a politician accept responsibility for well-intentioned but ultimately mistaken policy decisions, it’s important to recognize that energy policy is not the only area where the government has made decisions that hurt Ontarians.
Hopefully last week’s “mea culpa” is the beginning of a trend, and Premier Wynne’s government will soon take responsibility for other policy failures and begin taking corrective action.
The most obvious policy failure is the government’s approach to managing public finances since the 2008/09 recession.
While the recession put the government in a tough fiscal spot, the government’s failure to take decisive action to reform and reduce spending to help repair provincial finances has had serious consequences. Instead, the government delayed the tough choices and merely slowed the rate of spending growth while hoping for revenue gains to close the deficit gap.
In its 2009 budget, the McGuinty government stated this approach would balance the budget “no later than” 2015/16. But here we are today, in the midst of our ninth straight year with a multi-billion dollar deficit. These deficits have contributed to a marked run up in provincial debt, which has approximately doubled since 2007.
All of this debt will be passed on to burden future generations of Ontarians—a generational mistake the government has yet to take responsibility for and redress in a meaningful way.
Another mistake Premier Wynne should acknowledge and reverse relates to personal tax rate increases. Consider that between 2011 and 2014, Ontario increased its top marginal personal income tax rate (including surtaxes) from 17.41 to 20.53 per cent—an increase of about 17 per cent. These higher rates fall on engineers, entrepreneurs and other highly skilled professionals.
The harsh reality is that high and increasing personal income tax rates discourage work, saving, investment and entrepreneurship—all things Ontario needs more of, not less. So the decision to raise personal income tax rates in Ontario, along with federal increases, means that Ontario’s top combined rate is now among the highest in the developed world. Again, this represents another policy failure that has negatively affected economic growth, and for which the government should take responsibility.
It’s rare for a politician to admit fault for a policy mistake, so Premier Wynne deserves credit for owning up to her government’s role in driving up energy prices. Now the premier and her government should take stock of how other policy choices have made have hurt Ontarians and the economy and begin taking action to reverse those decisions.
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