Another year has come and gone and Ontario's weak public finances remain largely unchanged. The provincial government did little to improve its fiscal position in 2013 and recently signalled it intends to continue with debt-financed spending into the New Year. But the status quo isnt serving Ontarians well. For 2014, the government should chart a new course that places provincial finances on a more sound footing. That would be a much-needed New Year's resolution for Canadas largest province.
For many years, Ontario has been the quiet enabler for the vast system of subsidies the federal government provides to Atlantic Canada, Quebec and Manitoba. With rare exceptions, it has stood by as equalization grew and as the federal government incorporated subsidies to regions in more and more of its regular programming.
In recent years, evidence has been accumulating that the regional subsidy system is much bigger than it appears on the surface, unsustainable for both Alberta and Ontario and entirely counterproductive because it discourages growth in all recipient provinces.
Ontario Finance Minister Charles Sousa called his updated financial plan a new direction but in truth it had a nostalgic feel. With his government facing considerable fiscal challenges including an $11.7 billion deficit and growing debt, Ontarians desperately needed a new direction. What they actually got was more of the same: increased spending and a government reluctant to deal with core problems.
With Labour Day fresh in our memory and Ontarios unemployment rate having recently increased to 7.6 per cent, the province would do well to follow Indiana and Michigans lead and adopt worker choice laws. Doing so would make Ontario a significantly more competitive jurisdiction for business investment and provide a much needed shot in the arm for the provinces struggling manufacturing sector.
In 2012, both Indiana and Michigan enacted worker choice laws and there is a reasonable likelihood that Ohio may soon do the same.
Kathleen Wynne, the new Premier of Ontario, recently stated her willingness to consider implementing new methods to raise revenue to help fund expansion of public transit. Furthermore, the 2013 Ontario Budget presented by Minister of Finance Charles Sousa Thursday, specifically indicates that the Province is committing to convert select high-occupancy vehicle (HOV) lanes in the Greater Toronto Hamilton Area (GTHA) into high-occupancy toll (HOT) lanes as a potential option in this regard. A plan on the conversion is to be brought forward by the end of the year.
The May 2 minority Liberal budget is a politically expedient document that likely avoids an election but unfortunately fails to tackle Ontario's looming fiscal crisis. The longer the province waits, the more difficult and painful the reforms will be when the inevitable day of reckoning arrives.
In 2009, under the Premiership of Dalton McGuinty, the Ontario legislature passed the Ontario Green Energy Act (GEA), an Act that aimed to increase Ontarios use of renewable energy such as wind power, solar power, biofuels, and small-scale hydropower. The centerpiece of the Act is a schedule of subsidized electricity purchase contracts called Feed-in-Tariffs that provide long-term guarantees of above-market rates for power generated by those renewables.
Earlier this month the Fraser Institute published a report sharply critical of one of the flagship policies of the Ontario government, namely the Ontario Green Energy Act (GEA). We found that the Act is costing Ontario over $5 billion annually but yields negligible environmental benefits, and that equivalent or greater benefits could have been achieved using conventional pollution control measures at less than one-tenth the cost.