Bridging prosperity gap

TheStar.com – Opinion/editorial – Bridging prosperity gap
Published On Wed Nov 25 2009

Ontario’s economy may still be mired in a recession, or it may be rebounding. As a third option, there may be a W-shaped recovery underway, with a rebound followed by another fall back into recession. It all depends on which economist one asks.

Regardless, it is not too early to begin a debate over what policies will best serve the province on the other side of the recession. Welcome, then, is a report this week from the province’s Task Force on Competitiveness, Productivity, and Economic Progress, entitled Navigating through the Recovery.

“Our challenge is to navigate through this recovery and ensure that the damage the recession has caused is short-lived,” writes Roger Martin, chair of the task force and dean of U of T’s Rotman School of Management.

The task force was created back in 2001 by then premier Mike Harris, but Dalton McGuinty decided to keep it when he took office in 2003. It remains one of few Harris legacies to survive the change in government.

In its latest report, the task force cautions the provincial government against cutting back spending on education – the second biggest item (after health care) in the provincial budget – as it seeks to reduce the deficit post-recession. Noting that the Harris government made that mistake in the late 1990s, the task force says that Ontario fell way behind the competition in the U.S. as a result. “Against our North American peers, Ontario has a wide and growing prosperity gap,” says the task force, attributing this in part to underfunding of education.

While crediting McGuinty for his investments in education, the task force notes that spending on health care is still rising faster and suggests that the provincial government needs to rearrange its priorities. It cites a recent study showing 69 per cent of new jobs will require some post-secondary education, whereas only 40 per cent of 20-to-24- year-olds in Ontario are enrolled in college or university. “If we are to develop the knowledge and skills necessary for advantage in the creative age, we will need to step up our participation rates in post-secondary education,” says the task force.

The task force also gives a ringing endorsement to the proposed harmonization of the GST and the provincial sales tax and urges the McGuinty government to stay the course on the tax shift, while acknowledging that it is “a tough sell politically.” It says that is largely because the opposition has spun so many “myths” about harmonization, including the argument that the move should be delayed until the economic recovery is underway.

“If we want to encourage business investment for job creation, now is the best time for the harmonized sales tax,” counters the task force.

This is sound advice, well worth heeding by the government.

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