Canadian Manufacturing

Failed government policies have taken Ontario from powerhouse to laggard, study says

Fraser report finds policies that impede recovery and hinder competition are sinking Ontario



TORONTO—A decade of failed government policies are at the root of Ontario’s decline from economic powerhouse to economic laggard, a new Fraser Institute study says.

“For decades, Ontario was the economic engine of Canada with workers enjoying high incomes and low unemployment. But today, Ontario is less competitive, less prosperous and less attractive for both workers and business investment,” Philip Cross, former chief economic analyst for Statistics Canada and author of the report, said.

Starting in 2003, Ontario’s economic growth has lagged behind the national average every year, something that helped send the province’s unemployment rate above the Canadian average for the first time in its history, according to the study. Meanwhile, Ontario’s per capita income fell below the national average for the first time in 2012.

Yet, the study found the provincial government continues to implement policies that “impede economic recovery” and hinder competition. The Fraser Institute pointed to a 50 per cent minimum wage hike that added to the highest labour costs in Canada and an “ill-advised” energy policy that “skyrocketed” the cost of electricity for both Ontario households and businesses. Ontario’s energy costs are now the highest in the country.

“Meanwhile, successive Ontario governments continued spending beyond their means, doubling Ontario’s debt to $287.3 billion in 2014. Ontario now spends $11 billion per year on debt interest payments-almost 10 cents out of every revenue dollar,” the report says.

One of the results, the report found, is people leaving Ontario; since 2004, more people have left the province than have moved to it from other parts of the country.

“People, especially young people, are leaving Ontario for better opportunities elsewhere yet the government at Queen’s Park doubles-down on policies that are chasing people away,” Cross said.

In addition, the province’s public-sector payrolls have grown by nearly one third since 2002. The study noted that over that time, government investment in utilities and transportation has surpassed private-sector investment in manufacturing and finance as the leading source of investment in Ontario.

“Ontario’s government policies mistakenly signal that the public sector, not the private sector, is the engine of economic growth. Canada’s leading province has become a laggard-a fact that should concern all Canadians,” Cross said.

 

See also:Public payroll, not sluggish manufacturing sector, is the biggest drag on Ontario’s revenues

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