Flaherty says Ontario failing to adapt

TheStar.com – comment – Flaherty says Ontario failing to adapt
February 21, 2008

Excerpts from a speech given by federal Finance Minister Jim Flaherty in Toronto yesterday:

In these times of growing economic uncertainty, many Canadians are moving forward with a sense of purpose and determination.

But this thoughtful, “can do” approach is not consistently held across the country. Instead of seizing opportunities and taking steps to strengthen our economy, we are seeing a lack of leadership, a lack of vision and a lack of economic stewardship. And we are seeing it right here in the manufacturing heartland. …

As singer-songwriter Bob Dylan once wrote, “the times they are a changin.” And Ontario is failing to adapt. …

We are experiencing the second-longest period of economic expansion in Canadian history. Yet Ontario’s share of the national nominal GDP has gone from 41.4 per cent in 2002 to 38.6 per cent in 2006.

Business investment in Canada has expanded for a 12th consecutive year. Yet Ontario’s economic growth has been below the national average in recent years due to weaker growth in exports and business investment.

Our unemployment rate is at its lowest level in 33 years. Yet Ontario’s unemployment rate was above the national average for the first time in 2007. …

Dalton McGuinty likes to blame others for his problems. But I suggest the problems, in many cases, stem from a lack of innovation, a lack of foresight and a lack of leadership. For too long, Ontario failed to make the necessary investments in manufacturing plants, modern equipment and public infrastructure. This resulted in a growing productivity gap with the U.S.

Ontario’s business taxes are currently the highest in Canada. If this trend continues, Ontario’s marginal effective tax rate, the overall tax rate on new business investment, will be 30.7 per cent in 2012, compared to only 18.8 per cent in Quebec. …

The approach by the government of Canada is markedly different. We are creating an environment that rewards hard work, encourages economic growth and improves our quality of life. We are making broad based, long-term tax reductions. We are reducing record amounts of debt. We are spending responsibly and efficiently. And we are making the largest investment in public infrastructure since World War II. …

Ontario could focus on getting the economic fundamentals right. That would be a start.

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