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Ontario Economy

Ontario’s Power Trip: Irrational energy planning has tripled power rates under the Liberals’ direction – by Parker Gallant (National Post – June 3, 2014)

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

Ontario Hydro may well have been a mess. But it was a mess that produced less expensive electricity

In the summer of 2003, just before Dalton McGuinty’s Liberals gained power in Ontario, 50 million people in the U.S. Eastern Seaboard and Ontario suffered an electricity blackout caused “when a tree branch in Ohio started an outage that cascaded across a broad swath from Michigan to New England and Canada.”

Back in 2003 Ontario’s electricity prices were 4.3 cents a kilowatt hour (kWh) and delivery costs added 1.5 cents per kWh. An additional charge of 0.7 cents — known as the debt retirement charge to pay back Ontario Hydro’s legacy debt of $7.8-billion — brought all-in costs to the average consumer to 6.5 cents per kWh.

The McGuinty Liberals claimed the province’s electricity sector was in a mess when they took over in 2003. The Liberals’ first Energy minister, Dwight Duncan, said then that he rejected the old Ontario Hydro model. “It didn’t work. We’re fixing it. We’re cleaning up the mess.”

Fast forward 11 years. Today, Ontario electricity costs average over 9 cents per kWh, delivery costs 3 cents per kWh or more, the 0.7-cent debt retirement charge is still being charged, plus a new 8% provincial sales tax. Additional regulatory charges take all-in costs to well over 15 cents per kWh.. The increase in the past 10 years averaged over 11% annually. Recently, the Energy Minister forecast the final consumer electricity bill will jump another 33% over the next three years and 42% in the next 5 years.

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The long, slow decline of the nation’s industrial heartland [southwestern Ontario] – by Adam Radwanski (Globe and Mail – May 31, 2014)

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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Boost Quebec-Ontario hydro trade, experts urge – by John Spears (Toronto Star – May 24, 2014)

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.

Ontario and Quebec have a chance to forge stronger energy links, a panel of experts told a York University forum

It doesn’t make sense to sell gasoline for twice as much in some provinces as others, and it doesn’t make sense to do it for electricity, a Quebec business professor says.

Electricity costs less than 5 cents in Quebec, and more than 10 cents in Ontario, Pierre-Olivier Pineau told a forum organized by York University’s Sustainable Energy Initiative on Friday.

“That wouldn’t be accepted for gasoline,” he said. But Canadian provinces act like energy separatists when it comes to electricity, he said. Pineau said there’s an opportunity today to forge some sensible national policies over energy.

That’s something has hasn’t happened since the early 1980s, when the federal Liberals’ ill-fated National Energy Policy outraged western Canada. But Pineau said many regions of the country now have something to gain from greater energy co-operation:

• Alberta and Saskatchewan want to pipe oil to the east coast through Ontario, Quebec and New Brunswick (and expand pipelines through B.C.);

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Moody’s warns Canadian provinces on debt and credit ratings (You listening, Ontario?) – by Michael Babad (Globe and Mail – May 22, 2014)

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.

Debt and taxes

Moody’s Investors Service is warning some of Canada’s provinces to get their act in gear lest their credit ratings face further pressure.

Moody’s, one of the world’s major agencies, didn’t single out any province in a new report released yesterday, pointing out that seven are in deficit. But its debt-to-revenue measure puts Ontario at the top of the naughty list.

Ontario, of course, is in the midst of an election campaign that pits the Liberals against the Conservatives as to who forms the next government.

The governing Liberals have presented a credible budget for these uncertain times, though it misses their original short-term target, forecasting a $12.5-billion shortfall, while still pledging to balance the books in line with the longer-term plan.

They also plan a jobs fund, billions in infrastructure spending and a focus on social services. The Tories, on the other hand, promise to balance the books far earlier, slash public sector positions and create a million jobs over an eight-year period, the latter being a wonderful catch-phrase but about as unrealistic as election promises come.

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Wynne, Hudak at odds over how to help Ontario auto industry (CBC News Canada – May 21, 2014)

http://www.cbc.ca/news/canada

Liberals want to ‘partner’ with business, PCs want to lower taxes, hydro rates

Ontario Liberal Leader Kathleen Wynne and Progressive Conservative Leader Tim Hudak are offering contrasting views on how best to help the auto industry prosper in the province.

Wynne was in Windsor on Wednesday, touting the importance of Ontario’s auto sector. She promised her party would to continue to work with and invest in auto manufacturers and suppliers should it form the next government. Ontarians head to the polls June 12.

“The auto sector is fundamental to this region but it’s also fundamental to Ontario,” Wynne said, speaking at Omega Tool, an auto parts supplier. Omega was previously a recipient of $440,000 in provincial money. The grant was part of a $4.5-million expansion. Dave Cecchin, president of Omega, said the grant helped create 10 “highly skilled jobs.”

“There is a direct connection between government and business … and the creation of jobs,” Wynne said. Wynne claimed that the Liberal government’s $4.8-billion investment in GM and Chrysler during the 2008 recession saved 95,000 jobs.

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Liberals are idiots on green energy – Editorial (Toronto Sun – May 20, 2014)

http://www.torontosun.com/home

Liberal MPP and former energy minister Brad Duguid says Tory Leader Tim Hudak is “completely irresponsible and out of his mind” for trying to extricate taxpayers and hydro consumers from the Liberals’ green energy disaster.

In fact, the only people who were completely out of their minds on the green energy file were Dalton McGuinty, Kathleen Wynne, Duguid and the entire Liberal cabinet and caucus.

First, their criticism of Hudak is a straw man. They charge Hudak would be irresponsible to tear up absurdly generous, 20-year contracts the Liberals signed with wind and solar power developers for expensive and unreliable electricity.

Except Hudak didn’t say that. He said he won’t cancel approved projects that are already supplying power to the electricity grid because it would cost even more to walk away from them.

He did say he won’t approve new contracts and will review on a case by case basis contracts awaiting final approval from the energy minister.

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Ontario election: On jobs, leaders offer some good, some bad, but little revolutionary – by David Olive (Toronto Star – May 17, 2014)

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. 

The province that pioneered innovations from insulin to smartphones is falling behind.

In recent years, Nortel Networks Corp., BlackBerry Ltd., the U.S. Steel-owned Stelco Inc., the Caterpillar Inc.-owned Electro-Motive Diesel, Kellogg Co. and H.J. Heinz Co. have laid off more than 100,000 Ontario workers. That’s the short list. No sooner had the current Ontario election campaign begun than Unilever PLC said it would shut down its Brampton plant, maker of Knorr and Lipton foods, at a cost of more than 450 jobs.

Unfortunately, the job-creation centrepieces of the three major parties contesting the June 12 Ontario election would not curb that misery or do much if anything to recapture lost jobs.

Oddly, Hudak’s plan for creating jobs starts with destroying 100,000 of them, held by public servants. That’s 100,000 additional EI recipients draining the federal treasury. (There is only one taxpayer, as Tories like to point out.) Hudak, not gifted with a sense of irony, acknowledges that his own parents and his sister have been employed by government, as indeed Hudak himself has been for the past 19 years.

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Why Ontario is the Silicon Valley of the North– by Mark J. Barrenechea (Globe and Mail – May 16, 2014)

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.

Mark J. Barrenechea is President and CEO of OpenText Corporation.

California’s Highway 101 stretches 95 kilometres between San Francisco and San Jose, connecting small and large technology companies, students, innovators and venture capitalists. Nestled around Highway 101 is the largest innovation corridor in the world – Silicon Valley.

Similarly, Ontario’s tree-lined Highway 401 stretches 115 kilometres between Toronto and Waterloo, also connecting small and large technology companies, students, innovators and venture capitalists. Last year, this Ontario corridor surpassed all other cities and regions and became the world’s second largest innovation corridor. It is the Silicon Valley of the North.

In my 25 years in technology, I have traveled both valleys end-to-end and the similarities between the two corridors are more striking than their differences.

Silicon Valley employs approximately 380,000 tech workers; the Toronto-Waterloo corridor has nearly 280,000. The Waterloo Region boasts nearly 1,000 companies, contributing more than $30-billion annually to the global economy. In 2013, Startup Genome ranked Waterloo as 16th among the world’s 20 global startup hubs.

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Ontario Votes 2014 [Ring of Fire policies] (Manitoulin Expositor – May 14, 2014)

http://www.manitoulin.ca/

Every week until the election, The Expositor will be posing a question to each candidate in the Algoma-Manitoulin riding and publishing their responses in our newspaper. We have asked that the candidates restrict their answer to a 600-word limit. Otherwise, they are free to answer in any way they choose.

Many of Northern Ontario’s higher-paying jobs in rural communities are related to resource industries so the proposed Ring of Fire chromium ore extraction development, and the interest by one of the principal investors in locating its smelter in the regional community of Capreol, is potentially important for Algoma-Manitoulin.

The provincial Liberals have promised a $1 billion investment towards infrastructure to assist in the Ring of Fire development but with the proviso that the federal government must match this amount. In the event that the government of Canada chooses not to participate and with the understanding that this development represents an enormous number of jobs for Northern Ontario over a long time, is your party prepared for Ontario to “get it done and go it alone” in order to facilitate this development? What would be its approach?

Richard Hadidian, Libertarian

The Ring of Fire is a promising project that could bring prosperity to Northern Ontario, but we should be careful on how we spend the taxpayer’s hard earned money. Given the importance and the amount of revenue that this could bring to the province (revenue that not only will benefit people in Northern Ontario but will help balance the budget) we will support infrastructure projects only if the lack of government action will stop this development from moving forward.

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Lots of fat to cut in Ontario’s civil service – by Christina Blizzard (Toronto Sun – May 12, 2014)

http://www.torontosun.com/home

Tim Hudak promises to cut broader civil service jobs by 100,000 positions. Is that all? It’s interesting to note that these are positions — not jobs. There may not actually be people in those positions. This, he says, will simply take the size of the civil service back to 2009 levels.

You only have to look at the size of the Sunshine list — the annual salary disclosure document that lists all public sector workers making more than $100,000 — to see some fat-trimming is long overdue.

Hudak says the public sector has grown by 300,000 over the past decade — just as the manufacturing sector has shrunk by that amount. Where to start? The bloated energy sector is a good place. Remember the old Ontario Hydro? In 1995, it operated power plants, transmission lines — and operated the system.

That was broken down into Hydro One, which operates the wires and Ontario Power Generation — the entity charged with looking after generating plants. The Independent Electricity System Operator runs the system.

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Tim Hudak sets election agenda with explosive pledges – by Martin Regg Cohn (Toronto Star – May 10, 2014)

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.

Give the Tory leader credit for laying his job on the line by promising to lay off 100,000 public servants.

Hello Tim Hudak! If Ontarians hadn’t noticed you yet, they’ll know you soon enough. Give the Tory leader credit for laying his job on the line: not many politicians go into an election campaign telling voters they’d ditch 100,000 jobs from the provincial government, schools and municipalities.

That’s a lot of public servants — and plenty of public services. Depending on the June 12 election results, all those people will lose their positions, or Hudak will. Beyond the explosive job cuts, he’d also cut corporate taxes by a stunning 30 per cent. The Tory leader announced Saturday he’d make Ontario the lowest-tax jurisdiction for business in North America.

Why keep cutting government and taxes?

Corporate rates in Ontario are already far lower than in neighbouring U.S. states that compete for the same investments. You may remember Republican Mitt Romney pointing enviously to Ontario’s low taxes in the last U.S. presidential election.

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Kathleen Wynne gets good value in her fight with Stephen Harper: Editorial (Toronto Star – May 9, 2014)

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.

“… the $11 billion that Ontario sends to Ottawa each year and doesn’t
get back in federal transfer payments, and his government’s lack of investment
in northern Ontario’s massive resource opportunity, the Ring of Fire….
To be fair, Wynne’s promise to invest $1 billion in the Ring of Fire
relies on matching funds from the feds, so it’s essentially meaningless.”

Liberal Kathleen Wynne says she’s the only Ontario leader who will fight the stingy federal government on behalf of Ontario. Who is Kathleen Wynne campaigning against, anyway?

The premier and Liberal leader has spent the past few days attacking Prime Minister Stephen Harper with such glee that you’d think he was her chief competitor in the provincial election.

The best part, for Wynne, is Harper’s response. Instead of ignoring her, as the nation’s leader should do with a pesky provincial politician, Harper and his staff keep firing back, which only fuels awareness of the big Liberal ideas that the federal Conservatives oppose.

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Matt Gurney: Wynne does her best to out gas plants McGuinty – by Matt Gurney (National Post – May 7, 2014)

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

There’s an election underway in Ontario, with the Liberals, led by Kathleen Wynne, trying to hold onto power against the Tim Hudak-led Progressive Conservatives and Andrea Horwath’s New Democrats.

Ms. Wynne is in a tricky position. Though long a senior Liberal, she only took over as leader of the party — and by extension, Ontario premier — 15 months ago, after the former premier, Dalton McGuinty, resigned. Mr. McGuinty took his ball and went home in the face of mounting evidence that the Liberals had blown a billion dollars of borrowed money to cancel two controversial gas-fired power plants, long championed by his government, in order to shore up his party’s prospects in several hotly contested ridings.

It worked. The Liberals held the seats. But the crass opportunism of the move, combined with the eye-popping price tag and efforts to whitewash the entire affair, destroyed Mr. McGuinty’s credibility. So he left. That’s where Ms. Wynne came in, and she’s been been trying to disassociate herself from Mr. McGuinty and the gas plants ever since.

In theory, at any rate. She apologized for the scandal. She insists she’s running as her own woman, on her record, not that of Mr. McGuinty — though her government has seemed a bit unclear on that, claiming the victories while denying the failures.

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[Ontario] Wynne’s scary ‘safe hands’ – by Margaret Wente (Globe and Mail – May 6, 2014)

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.

What does Kathleen Wynne have against hairstylists? The nice young woman who snips my bangs would like to know. To her surprise, she is now being regulated by a new body called the Ontario College of Trades. It wants her to fork over $120 every year (plus tax) for a piece of paper saying she’s qualified to do her job.

In order to get a licence, hairstylists already log 1,500 hours of school, write exams and serve apprenticeships. Now they must also have a Grade 12 diploma and pass a written government test. But hey! When it comes to protecting the public from rogue snippers, you can never be too careful.

The hairdresser tax is a small but potent example of what’s gone wrong in Ontario over the past decade. As manufacturing evaporated and jobs dried up, the Liberal government threw sand in the gears. All its instincts are regulatory and interventionist. At a time when we desperately need smaller businesses to create jobs, it has ratcheted up the cost of doing business and smothered them in red tape.

Meanwhile, it’s kept spending as if the good times never stopped. Prudent Ontarians used to deplore Quebec – those profligate French! – as the free-spending wastrel of Confederation. But now, we’re the wastrel. Our dour Scottish accountant forebears must be spinning in their graves.

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Can Canada Prosper without a Prosperous Ontario? – by Livio Di Matteo, Jason Clemens, and Milagros Palacios (Fraser Institute – April 2014)

Click here for the entire report: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/can-canada-prosper-without-a-prosperous-ontario-rev.pdf

Summary

Ontario’s economic struggles, which are most dramatically illustrated by its transition to a “have-not” province, have implications far beyond the borders of the province. For the better part of a decade, and particularly since the recession of 2008/09, Ontario’s economic performance has dragged down that of the national economy. Due to both the sheer size of Ontario’s economy and its population, as well as the fact that the Canadian economy is highly integrated, what happens in Ontario influences our national economy.

The important influence of Ontario on the national economy is borne out by statistics. For example, if we compare the variation in per-capita GDP growth for Canada (without Ontario) against the variation in Ontario for the period from 1982 to 2012, we find that the variation in Ontario explains roughly three quarters of the variation in the rest of the national economy. Simply put, for the better part of three decades, the success of Canada’s economy was inextricably linked with the success and failure of Ontario’s economy.

Ontario’s influence is also seen in employment statistics. About two thirds of the variation in employment growth in the rest of Canada between 1982 and 2012 is explained by the variation in employment growth in Ontario. In other words, Canada experienced strong employment growth when Ontario experienced strong employment growth, and vice versa.

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