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Ontario Economy

How to fix southwestern Ontario’s economy – by Mike Moffatt (Canadian Business Magazine – August 27, 2013)

http://www.canadianbusiness.com/

No silver bullet, but a salvo of ideas.

While the national unemployment rate currently stands at 7.2%, some regions are suffering more than others. Southwestern Ontario is one such place, with Windsor and London showing 9.2% and 8.6%, respectively. And so, as a business school economist in London, Ontario, it isn’t surprising that the question I’m most frequently asked by non-economists is some variant of “How can we grow southwestern Ontario’s economy?”

My first response is to point to some recommended reading on the topic, including several research papers by the Mowat Institute (see here, here and here). I’m also looking forward to coming recommendations from the Ivey School of Business’ Lawrence Centre which is working on a number of regional research projects. (On the other hand, if I’m at a cocktail party and feeling glib, my response is similar to that which I gave in the middle-class roundtable.)

But there is no silver bullet—it will take a suite of smart policies and a willingness to experiment. That’s the short answer. The longer answer is not policy prescriptions per se, but rather things we should be mindful of when developing and promoting policy ideas.

Support at the industry level should be general and based on real comparative advantages. Identifying the region’s well-positioned industries is an easier task than identifying companies, particularly when examined from the point of view of comparative advantage.

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Ontario’s power policies an example of what not to do – Gwyn Morgan (Globe and Mail – August 19, 2013)

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.

The political firestorm raging in Ontario about the cost of cancelling two natural-gas-fired power plants reminds me of a conversation I had with then-premier Dalton McGuinty in 2005. At the time, I was head of Encana Corp. and we were co-chairing a Public Policy Forum event.

As we chatted privately before the dinner, he said: “As a gas producer, you must be happy we’re going to close our coal-fired power plants.” I replied: “Well, it’s not a big deal in the context of our North American gas markets, but you’d better make sure those gas power plants are built before you shut the coal plants.”

Eight years later, Ontario power consumers are stuck paying $585-million for two gas-fired plants that were never built. That’s just the tip of the iceberg. Mr. McGuinty’s decision to shutter the coal-fired plants was followed in 2010 by his government’s Green Energy and Economy Act, aimed at replacing some of the coal-fired power with highly subsidized wind and solar energy while, supposedly, turning Ontario into the green power capital of North America.

Ontario offered so-called feed-in rates almost four times the existing system rates for wind, and more than 10 times for solar power. Like bees to honey, wind and solar companies rushed to sign 20-year, rate-guaranteed contracts. 

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Ontario: The ‘have not’ province – by Peter Andre Globensky (Wawatay News – August 8, 2013)

http://www.wawataynews.ca/

There is considerable evidence to indicate that the reckless and hell-bent-for-leather policy of developing the Alberta tar sands at all costs has been, in fact, quite costly. Not only to First Nations communities in northern Alberta who live “downstream” from the goo and the guck and the ravaged natural environment, but to the economy of the country – particularly to the economy of Ontario.

The rise in the value of the Canadian petro-dollar, fuelled by escalating oil prices, has made Canadian exports much more expensive for foreign buyers to purchase. The result: a too-rapid decline in Ontario’s manufacturing sector and an attendant decrease in commercial and industrial taxes have helped reduce Ontario to a “have not” province.

It is now a recipient of transfer payments from the federal government when once it was a contributor of those payments to other provinces. At one time not so long ago, Ontario had a well-earned reputation for playing a leadership role in the Canadian federation – being the mediator between the federal government and the other provinces who always seemed to have squabbling with each other and the feds as a favoured pastime. However, no longer can it claim that high ground.

What is even more disturbing, however, is how far Ontario has fallen behind other, more progressive Canadian jurisdictions in recognizing the need for and actively promoting a constructive dialogue around resource development and revenue sharing with First Nation communities. In that way as well, Ontario has become a “have not” province.

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Wynne’s green power blues – by Lorrie Goldstein (Toronto Sun – July 21, 2013)

 http://www.torontosun.com/

Liberals have gone too far to admit the obvious — their renewable energy program is a disaster

Considering the albatross it has become around their necks, Premier Kathleen Wynne and the Liberals must be wondering exactly when their green energy program turned into a political disaster.

No doubt they long for the good old days — specifically, Nov. 24, 2009 — when global warming guru Al Gore, speaking in Toronto at a gala dinner, bestowed his blessing on their former leader, Dalton McGuinty.

With McGuinty and his Canadian cheerleader, David Suzuki, looking on, Gore declared the premier’s Green Energy Act (GEA) was “widely recognized now as the single best green energy program on the North American continent.” But that was then and this is now. Today, McGuinty is long gone and the GEA sits like a dead weight on the Liberals.

Last week angry demonstrators — furious the GEA took away their right to any say in the location of huge, industrial wind turbines in their communities — showed up to protest while Wynne was trying to jump-start the by-election campaign of London West Liberal candidate Ken Coran.

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Detroit Slides From Industrial Might to Bankruptcy – by Steven Church, Dawn McCarty & Margaret Cronin Fisk (Bloomberg News – July 19, 2013)

 http://www.bloomberg.com/

Detroit, the cradle of the automobile assembly line and a symbol of industrial might, filed the biggest U.S. municipal bankruptcy after decades of decline left it too poor to pay billions of dollars owed bondholders, retired cops and current city workers.

“I know many will see this as a low point in the city’s history,” Michigan Governor Rick Snyder, a Republican, said in a letter yesterday authorizing the filing in U.S. Bankruptcy Court in Detroit. “Without this decision, the city’s condition would only worsen.”

Michigan’s largest city joins Jefferson County, Alabama, and the California cities of San Bernardino and Stockton in bankruptcy. The filing shattered the presumption of many bondholders that local governments, eager to continue borrowing at reasonable rates, would do whatever it took, including raise taxes, to come up with the money to meet bond obligations. Kevyn Orr, the city’s emergency manager, said the debt is $18 billion.

While under court protection, Detroit can stop paying some debts, is temporarily immune from most lawsuits and may be able to ask a judge to cancel contracts, including union agreements. Under Chapter 9 of the U.S. Bankruptcy Code, the first step is likely to be a court fight over whether the city was entitled to bankruptcy protection, a challenge that would ask if the city was truly insolvent and it had no alternative to filing.

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Manufacturing Is Knowledge Driven – Hudak – by James Murray (Netnewsledger.com – July 18, 2013)

http://www.netnewsledger.com/

QUEENS PARK – Ontario PC Leader Tim Hudak and PC Economic Development Critic Monte McNaughton hosted a conference call today following the release of Paths to Prosperity: Advanced Manufacturing for a Better Ontario, the thirteenth in a series of policy white papers. Ontario PC Leader.

“The big picture is our plan is big, bold, and optimistic, and came bring in 300,000 good high paying manufacturing jobs,” stated the PC Leader. Hudak says, “Some think Ontario can’t compete in the global economy, and I have one think to say, they are wrong”.

“Driving manufacturing drives the economy, international trade and research”. “If Ontario can capture six percent of the manufacturing jobs in North America, we will achieve our goal, it is realistic”.

There is a new availability of natural gas near Ontario that will lower costs for manufacturers. We need to move quickly to seize the opportunities. Ontario needs a government that believes in manufacturers. We can be the manufacturing heartland of North America,” states Hudak.

Monty McNaughton says, “ I have seen first hand what happens when government treats manufacturing as an afterthought. Instead of bold new ideas and action, we see studies and commissions, and a huge growth in the size of government”.

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Industrial policy is back — except in Ontario – by Eugene Lang (Toronto Star – July 14, 2013)

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.

Eugene Lang is BMO Visiting Fellow at the School of Public and International Affairs, Glendon College, York University.

Countries with robust industrial policies — especially in Asia and other emerging markets — have seen superior growth performance post-recession.

Industrial policy — government interventions to grow and improve the competitiveness of select industries — is back in fashion, according to a new paper by John M. Curtis and Dan Ciuriak published by the Institute for Research on Public Policy (IRPP).

In fact, industrial policies never really went out of style, except in the Anglo-American democracies. For the past three decades governments in the Anglosphere — regardless of the party in power — have shied away from industrial policies and embraced the notion that state interventions to promote specific economic sectors usually do more harm than good. This is allegedly because governments don’t have the necessary information to “pick winners.” The market, according to this view, is always far superior at allocating resources than any government ever could be.

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Ontario Power Trip: McGuinty’s bigger debacle – by Parker Gallant (National Post – June 27, 2013)

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

The cost of Ontario’s Green Energy Act, at $1,100 per year per household, dwarfs the cost of cancelled gas plants

Filled with umbrage that his record as steward of Ontario’s electricity market is under parliamentary review, former Liberal Premier Dalton McGuinty more or less passed the buck down to his staff. Appearing before a legislative committee on Tuesday, Mr. McGuinty became irritated and accusatory, saying the search for emails and other documents deleted by underlings is nothing more than a political witch hunt over his decision to cancel two gas-powered generating stations at a cost of at least $585-million.

Mr. McGuinty is actually getting off too easy. The gas plant cash drain is far outweighed by the burden on Ontarians of Mr. McGuinty’s sprawling green energy fiasco. I say we should forget about the gas plants and the $585-million in wasted money. It’s gone. Instead, let’s order up all the emails and documents — through maybe half a dozen energy ministers under the premier’s control — as they reached the policy and economic decisions that created the 2010 Green Energy and Economy Act (GEA). That act will cost Ontarians 10 to 20 cancelled gas plants.

Let us see the emails and communications and meeting notes between bureaucrats and ministers, between Ontario Power Authority and the government, between all of them and the NGOs and industry activists who lobbied, promoted and sold the GEA policy disaster. There’s the $7-billion deal with Samsung, the false data on carbon emissions, the job creation calculations, the colossal giveaways to wind and solar entrepreneurs who formed lobby groups. On it goes.

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McGuinty’s green-energy ‘vision’ begins to fade – by Konrad Yakabuski (Globe and Mail – June 27, 2013)

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.

Ontario Energy Minister Bob Chiarelli tried to put a happy face on last week’s rejigging of the province’s massive renewable energy contract with a Samsung-led Korean consortium. Scaling back the original $9.7-billion deal struck in 2010 to $6-billion was supposed to signal Premier Kathleen Wynne’s determination to inject a measure of sanity into the green energy policies she inherited from Dalton McGuinty and his overzealous electricity czar, George Smitherman.

“With this updated agreement, we’ll continue to create good jobs, while maintaining Ontario’s commitment to clean, renewable energy,” Mr. Chiarelli insisted.

He boasted that the downsized 20-year contract, under which Samsung will produce about 1,400 megawatts of wind and solar power instead of 2,500 MW, represents a $24 reduction on the average annual residential electricity bill. Considering that the average Ontario consumer paid more than $1,700 for electricity in 2012, this wouldn’t be much to get excited about, even if it actually resulted in a 1.4 per cent cut on their power bill.

But Ontarians have only begun to pay for the the green energy “vision” of Mr. McGuinty and Mr. Smitherman. Electricity rates are forecast to rise by nearly 50 per cent as the government moves toward its target of adding 10,700 MW of renewable power to the grid.

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Dalton McGuinty was egregious, outlandish, disingenuous and outrageous – by Christie Blatchford (National Post – June 26, 2013)

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

In the immortal phrase of the fictional lawyer Jackie Chiles of Seinfeld fame, Dalton McGuinty was egregious, outlandish, disingenuous and outrageous.

The former Ontario premier was appearing for a second star turn Tuesday before the all-party legislative committee probing the gas plants fiasco of his government.

(The controversial plants in Oakville and Mississauga were abruptly cancelled, the latter announced as a Liberal party campaign promise, and the costs — at least $585-million is the best estimate — consistently downplayed and lowballed by the government.)

If possible, McGuinty the private citizen is more arrogant, less forthcoming and more hypocritical than the politician McGuinty. He was asked back in the wake of a withering report earlier this month from the province’s Information and Privacy Commissioner, Ann Cavoukian.

Sparked by a complaint from New Democrat MPP Peter Tabuns, who is also the most effective questioner on the committee, the probe revealed that senior political staff in Mr. McGuinty’s office were routinely deleting all emails in what she found was likely an attempt to avoid scrutiny.

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Gas plants controversy: Dalton McGuinty says Liberals made right decision – by Richard J. Brennan (Toronto Star – June 26, 2013)

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.

Information and Privacy Commissioner Ann Cavoukian appeared before a legislative committee probing the government’s decision to cancel power plants in Oakville and Mississauga.

Former premier Dalton McGuinty is unrepentant about the controversial decision to cancel two gas plants, lashing out at his critics for being hyper-partisan and interested only in the demise of the Liberal party.

McGuinty, who appeared Tuesday before a legislative committee probing the cancellations, said he regretted “that it ended up costing as much as it does, but ultimately it is the right decision.”

Despite his sometimes combative defence of his political legacy, McGuinty admitted “we failed as a government” on document retention training. He was referring to Information and Privacy Commission Ann Cavoukian’s finding that top Liberal political staffers destroyed emails and documents contrary to the Archives and Recordkeeping Act.

“I’m calling it the way I see it . . . there is no genuine effort here on the part of the opposition committee members to seek out the truth,” he later told reporters, emphasizing that he’s “not sure Ontarians understand the real complexion” of a committee dominated by the opposition and focused on embarrassing the Liberals.

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Scientific curiosity fuels growth – by Carol Goar (Toronto Star – June 20, 2013)

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.

Peter Howitt, a transplanted Canadian at an Ivy League American university, proposes a sensible science policy for Ottawa.

Heartsick scientists have lobbied, pleaded and rallied Canadians, but the prime minister’s resolve is unshakable. The National Research Council (NRC), with its proud history of scientific breakthroughs — from canola to the electric wheelchair — must become a business-directed agency focusing on commercial innovation.

But basic science can still thrive Canada, says Peter Howitt, an expert on technological change, economic growth and national productivity. In fact, the professor emeritus at Brown University — a transplanted Canadian — regards Stephen Harper’s move as a step forward, one that could lead to a badly needed reorganization of the way Ottawa fosters and disseminates leading-edge research.

Howitt has just written a paper for the C.D. Howe Institute, From Curiosity to Wealth Creation, showing how Canada can use Harper’s decision as a jumping-off point to modernize its underperforming, resource-dominated, economy.

His plan may be too bold for the Harper government and Canada’s tight-fisted corporate leaders. But it is economically sensible and scientifically sound. It proposes a four-step transformation.

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Kathleen Wynne backing away from McGuinty’s Ontario Green Energy Act – (National Post – June 24, 2013)

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

It’s always instructive to see how a government frames an announcement that is backtracking on one of its own initiatives. Conveniently for the Ontario Liberals, they are amassing considerable experience in this regard.

So, when the government on Thursday dropped the news that it was restructuring its 2010 wind-power deal with Samsung, it presented it in terms of extended job commitments and savings to electricity ratepayers. Samsung was guaranteeing jobs until 2016, instead of 2015, and the government was now only committing to buy $6-billion of Samsung’s renewable power at well above market rates, down from $9.7-billion in the original contract. Hooray for savings!

Those extended job commitments, though, are a result of Samsung’s having missed targets in the original contract; it now has more time to meet them. And that reduction in spending? It comes as Samsung, which won the original contract absent a competition, agrees to drop its own investment in the province from $7-billion to $5-billion, with projects expected to generate 1,369 megawatts of energy, down steeply from 2,500 megawatts in the first deal.

Ontario will be paying less, and receiving less. This is probably not the result of a particularly hard-fought negotiation. What’s more notable are the things that the announcement from Energy Minister Bob Chiarelli did not mention, for example the 16,000 jobs that the original contract was said to create when it was announced in 2010.

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