Ontario Economy

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Bob Rae was premier of Ontario from 1990 to 1995

Critics on the right are now claiming that Kathleen Wynne’s Ontario government is on the road to fiscal rack and ruin – that it could, in one commentator’s words, push Ontario “back to the Bob Rae years.” That provokes these comments.

One would have thought that the experience of the last few years would have made the right wing narrative look pretty goofy but, no, these guys just can’t help themselves. In 1990, interest rates were kept deliberately high, the dollar rose predictably, U.S. companies shut factories in Canada as the newly minted free-trade agreement encouraged rationalization, and a bloated real estate market plummeted. All in one go, all at one time.

The shock to the Ontario economy was sharper and more severe than in 2009, and, as a direct result, public spending increased and revenues fell. This is what happened to Prime Minister Stephen Harper and Ontario premier Dalton McGuinty in 2009. It would have happened in Ontario even if Mike Harris had been elected in 1990. Remember that Tory premiers Bill Davis and Frank Miller ran deficits after the 1980 recession as well.

So, to compare 1990-91 with 2014-15 is to ignore where we were in the cycle, and what governments since the 1930’s have done when faced with such a drastic drop in prosperity.

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The National Post is Canada’s second largest national paper.

Canadian Press – TORONTO — Moody’s credit rating agency changed the outlook on Ontario’s debt rating Wednesday to negative from stable, citing concerns about the province’s ability to eliminate a $12.5 billion deficit by 2017-18 as scheduled.

“After several years of weak to moderate economic growth, and higher than previously anticipated deficits projected for the next two years, the province is facing a greater challenge to return to balanced outcomes than previously anticipated,” Moody’s Investors Service said in a statement.

The change in outlook affects approximately $250 billion in debt securities, Moody’s said as it reaffirmed Ontario’s Aa2 ratings.

The ratings agency didn’t wait for the Liberals to introduce their budget July 14 before lowering the outlook to negative, but Premier Kathleen Wynne has said it will be identical to the May 1 fiscal plan that was rejected by the opposition parties, triggering the June 12 election.

“Although the province has not yet tabled a new budget following its June election, indications are that it will be little changed from the May budget, which Moody’s indicated was credit negative for the province,” said Moody’s vice president Michael Yake.

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The National Post is Canada’s second largest national paper.

When the late Jim Flaherty was finance minister, he got a certain joy from taking pot shots at Ontario’s economy, which he felt was badly managed under a series of Liberal governments.

In a 2012 speech he said the province had “no one to blame but themselves” for their troubles, and complained that “Ontario’s spending mismanagement is a problem for the entire country.”

“I would hope that they’re able to manage their spending better than they have been able to do over the past eight or nine years of government.”

He had plenty of justification for his taunts. Under his direction, the federal budget was well on the way to being balanced, while Ontario couldn’t seem to get a handle on its much-smaller shortfall, for all the bold talk from Queen’s Park. At the time of Flaherty’s address, Ontario expected a deficit of more than $12 billion, but was promising to bring it down. Two years later, it is still expecting a deficit of more than $12 billion and is still promising to bring it down.

It was reported that the Prime Minister’s Office eventually intervened and suggested Mr. Flaherty put a sock in it. His successor, Joe Oliver, lacks Mr. Flaherty’s brashness, but also seems to have been freed of the sock. In an article in the Financial Post Thursday, Mr. Oliver suggests, in the politest of terms, that the new government of Kathleen Wynne has no one but itself to blame for the mess it’s made of its economy, and should stop bleating at Ottawa to come to its rescue.

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The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Now that Ontario’s government is decided, it’s time to address a series of economic challenges that we ignore at our peril.

With Ontario’s government now decided, the governing begins. And it will be a challenging task. Ontario faces economic challenges that we ignore at our peril. The pace of growth has declined, and it is permanent, not temporary. The government debt of Ontario is high, and still rising. The productivity of Ontario business is low, and barely increasing, while its innovation performance is poor and shows only isolated pockets of improvement. The Ontario cost base, from electricity to regulations to congestion is relatively high, and shows few signs of becoming more competitive. As the Jobs and Prosperity Council bluntly observed, the status quo is not an option for Ontario.

Growth in Ontario, long the stalwart of the Canadian economy, averaged roughly three per cent annually from 1980 to just before the global recession, but is now heading downwards to a long term growth path of only 2.1 per cent per year according to the government’s Long-Term Report on the Economy, or even lower by other estimates.

This massive decline in Ontario’s potential growth is the result of a variety of interconnected factors: aging demographics, weak productivity growth, structural shifts in manufacturing competitiveness and sustained weakness in our traditional trading partners. What is clear is that a failure to rebuild Ontario’s growth capacity will affect everything from the affordability of public services to the number and quality of jobs to living standards.

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The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Kathleen Wynne has achieved what even many of her fellow Liberals doubted was possible.

A year-and-a-half after inheriting from Dalton McGuinty what seemed to be the flaming wreckage of a decade-old government, Ms. Wynne’s party entered this campaign just hoping to cling to power. Instead, their rookie leader won them back a majority.

Now, having proved herself a remarkably successful campaigner, Ms. Wynne will have to demonstrate what kind of premier she really is. And the big catch is that the way she won back office, by rallying the centre-left (and a whole lot of unions) behind her in opposition to Tim Hudak’s Progressive Conservatives, has set up expectations she is going to have a hard time meeting as she returns to the cold realities of a government deep in deficit.

It may take a little while, for both her and her supporters, for those realities to sink in. Ms. Wynne has vowed to reintroduce promptly the budget the Tories and NDP rejected to kick-start the election, which means she will get to make good on her promises to launch a new provincial pension plan, increase spending on social programs, invest in infrastructure, and try to stimulate economic growth through direct business investment.

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The National Post is Canada’s second largest national paper.

Now that voters have returned Kathleen Wynne to power, the premier will need to find a way to manage a debt load that is larger than California’s while continuing to keep the credit rating agencies mollified long enough to avoid a dreaded downgrade.

With a net debt of $267.5-billion that is growing at a faster rate than the economy, the challenge is just beginning for the party that emerged victorious from the provincial election. “They are still going to be facing pressures from the credit agencies to get the province’s fiscal finances in order,” said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto. “There’s no way to avoid it. The reality is there and it can’t be wished away.”

Put simply, Ontario is increasingly dependent on tapping lines of credit because it spends more than it collects. Currently, the province pays $11-billion annually in interest payments to finance its debt — money that is not going toward paving roads, building public transit, hiring more teachers and shortening wait times in hospitals.

During the 40-day election campaign, which focused predominantly on the economy, the three main parties offered a stark choice: Conservative leader Tim Hudak vowed to cut 100,000 public-sector jobs over four years and lower corporate taxes to kick-start the creation of one million jobs in eight years while balancing the budget in two.

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The National Post is Canada’s second largest national paper.

No matter who wins the Ontario election, the newly elected government will be faced with a fiscal hole that gets only wider and deeper. If the province is to gets its fiscal situation under control, either revenues need to increase or spending restrained by billions. There are no quick and easy solutions.

Let me detail Ontario’s house of debt to understand the gravity of the situation. The 2014 Liberal budget projected gross debt is expected to increase from $296-billion in 2013-14 to $311-billion by 2014-15. After subtracting financial assets, net debt will rise from $269-billion in 2013-14 to $289-billion in 2014-15.

Ontario’s net financial liabilities will be $20,500 per person or $82,000 for a family of four. This mortgage is in addition to federal, local and household debt liabilities borne by Ontario residents. It does not include other unfunded liabilities such as health care and elderly benefits that will increase sharply as baby boomers retire.

The $20-billion increase in net debt this coming year is a good measure of the real Ontario deficit. The debt problem is a bigger issue than suggested by a recent “educational” analysis provided in the Globe and Mail, which focused on the $12.5-billion operational deficit of the province, ignoring net liabilities to finance broader government operations, including $10-billion in capital spending.

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A Place To Stand: The 1967 centennial theme for Ontario, Canada. A time when the mining sector was booming, well respected and an integral part of a booming economy, once of the most successful in the world. How did we let it slip away? – Stan Sudol

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Something happened to Canada’s largest province well before this June 12th election was even called.

Ontario lost its swagger.

One former provincial cabinet minister likens the mood to what Keith Spicer found more than 20 years ago when his Citizens’ Forum on Canada’s Future took the pulse of the nation and found it very weak indeed.

But this is no case – as was clearly the situation in Ontario back in 1990 – of taking such delight in kicking David Peterson’s Liberals out of office that no one considered that Bob Rae’s NDP government would thereby win a majority by default. Remember Mr. Rae’s line to the CBC when it was apparent he had won? “I’m having difficulty getting used to it.”

So, too, did those who kicked him into office, a sentiment repeated after they voted Mr. Rae out in 1995 and replaced him with the ideologically opposite Mike Harris. That may well explain why there seems such reticence among Ontario voters to act in any direction.

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The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

‘My dad worked at Chrysler, and he made a call to get me into Chrysler,” Ken Lewenza says, recalling his introduction to the auto industry at the age of 18. “I did the same for my son, and now that’s it.”No one can make that call for his granddaughter, even if, until a few months ago, Mr. Lewenza was president of the Canadian Auto Workers, because she is at the end of the line.

Not so long ago, the Big Three auto companies were the relatively stable backbone of Windsor’s economy. Now even Chrysler, the last to maintain any significant local presence, is down to a work force of about 4,600 – and nobody is especially confident about how long those jobs will be around.

I was raised in Kitchener and spent summers playing in vacant lots, balancing on rusted railway tracks and throwing rocks at abandoned factories. The three days I spent photographing the ghosts of Ontario’s manufacturing heyday gave me a chance to reflect on my hometown. I shot in black and white to express the nostalgia that came to me when I saw places like the shuttered GM plant in Windsor and the streets of London and Kitchener.

I wanted to offer the viewer a small part of the emotions felt by someone who grew up in these places. I also worked to make a connection with the next generation growing up in struggling industry towns. These are the kids who were raised on blue-collar incomes but will likely never experience a day of work on an assembly line.

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