Social Policy in Ontario

McGuinty’s economic activism faces off against pocketbook relief

Posted on September 22, 2011 in Governance Debates

Source: Globe & Mail — Authors: Karim Bardeesy

TheGlobeandMail.com – news/politics/ontario-election – Analysis
Published Wednesday, Sep. 21, 2011.    Karim Bardeesy

What’s your vision for the economy? Given Ontario’s economic uncertainty, it’s a question a lot of voters will mull, or put directly in front of politicians, in the run up to Oct. 6.

There are some themes common to all parties: helping small business; keeping life affordable for the growing number of families on a tight budget; protecting local economies in the north; establishing a safety net for farmers.

But scratch beneath the surface, and some strikingly different visions emerge, with the Liberals presenting perhaps the most activist vision – though it’s not the kind of interventionist vision that’s easily recognized.

The Liberals, like many incumbent parties, stress their managerial competence. That would ordinarily suggest limited ambition. And yet in their platform, they list 22 commitments under the theme “Make Ontario the most attractive place in the world for job creators.”

The much-discussed, but largely inconsequential ($12-million a year) immigrant training tax credit is in there. But so are much bigger plans, many of which have as of yet escaped notice, such as new incentives that the Liberals say would triple the number of successful start-up companies in the next five years ($140-million).

The Liberals’ green energy plans qualify as activist economic policy too – if you listen carefully, they amount to an attempt to substantially re-orient the manufacturing base of the province, given the ongoing struggles of the auto industry. (But there, too, the Liberals show their activism, this time with a promise to invest in electric car infrastructure.) And the Liberals position their promises to reduce tuition, introduce full-day kindergarten, and build three new universities campuses as economic commitment.

A lot of this can be attributed to the character of Liberal Leader Dalton McGuinty, a bit of a policy wonk who has shown a growing appetite with every year in office for more ambitious and experimental economic policy, and for creating links between disparate policy areas and the overall economy.

And not all of these are guaranteed. Many governments, for instance, have tried to use the policy levers at their disposal to encourage innovation and help enterprising start-ups grow, but the formula for success may be elusive. The Liberals have offered up no less than three economic development plans for the north, but unemployment there is still high.

We know that higher educational outcomes are correlated with economic success, and that Mr. McGuinty is singularly enthused with education, but we can’t be sure that his specific educational priorities will lead to that economic success. And while renewable energy can be used as a tool for economic growth, there’s no guarantee that Mr. McGuinty’s gamble – early investments in wind and solar manufacturing, which aren’t cheap – will give the result that he wants, with Ontario selling into U.S. markets.

Activist is not socialist or even leftist, though. The Liberals are not proposing to buy any companies, or increase any taxes (in fact, they have a new commitment to lower small business taxes ($100-million).

The economic visions of the Progressive Conservatives and NDP, by contrast, are more firmly dug into the ideological backgrounds of the two parties, and are more simple in conception and execution.

That, indeed, is part of their criticism of the Liberals, whom they variously accuse of having gotten too wrapped up in “schemes” (on smart meters, or Eco-fees, as PC Leader Tim Hudak puts it), or too enamoured with the powerful (as NDP Leader Andrea Horwath suggests).

It’s worth quoting the Tories in full on one point to give context to their economic positioning. “From reducing taxes on families and workers, to more affordable energy prices, to expanding college and university places … these are all critical aspects of a climate that creates good jobs. A Tim Hudak government will focus on letting the job creators – not the government – drive new job growth.”

So for the Tories, pocketbook relief predominates as the main way to grow the economy. It’s an increasingly familiar refrain, and a welcome one for many whose standard of living is declining. But whether pocketbook relief will actually create jobs the way the Tories say is an open question.

There are hints of greater ambition in the Tories’ plan to increase the number of apprenticeships, a significant need in a province that has both unemployment and skills shortages. For long-term economic development, the Tories talk $35-billion in infrastructure spending. The promise to “invest in an affordable clean energy supply mix” is more vague – it’s not clear how, or if, they’ll do long-term energy policy and infrastructure planning, especially given their promise to scrap the agency currently responsible for doing much of that work, the Ontario Power Authority.

The NDP, who have yet to roll out their entire platform, promise a significant tax increase on corporations ($1.85-billion), and will use that revenue to pay almost entirely for pocketbook relief and health-care investments. There is an investment and a training tax credit, valued at $350-million, but the party has not provided much detail on this. To the extent that there is any economic activism, it seems focused on creating new “Buy Ontario” provisions for public procurement (which may well invite litigation).

How the Liberals and the opposition parties have positioned themselves is a bit of a strange inversion. Until Mike Harris, it was the Tories who embraced the more activist, centrally planned model for much of the economy. Under Bill Davis, they created the community college system out of whole cloth, they touted massive infrastructure plans (like BILD, the Board of Industrial Leadership and Development), and they even bought a 25 per cent share of the Suncor Oil Company.

Today, the Liberals have the activist mantle. Voters will have to decide whether activism from government, even under a different guise and party, is what they want to help them navigate an uncertain economic future.

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Tags: budget, economy, featured, ideology

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