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Ontario Liberal leader and Premier Dalton McGuinty met with The Globe and Mail editorial board on Thursday, Sept. 29, in advance of the Oct. 6 provincial election. Here is an edited transcript of that conversation:

Q: Can you start with an overview of your plan for Ontario's economy?

We can no longer rely on traditional drivers of growth in Ontario: the low dollar; strong US trading partner and strong EU trading bloc to drive growth. We have been doing a number of things to help our province grow. We are educating our population: 64 per cent of Ontarians achieved post-secondary education. This is the highest rate among 34 OECD countries. It's twice as high as in the UK.

Ontario families have been heroic in efforts to move children thru post-secondary education. There has been a 26 per cent rate of growth in post-secondary since 2003 (double the rest of the country).

We have also worked hard to create more competitive tax environment. The recession has hit the manufacturing sector hard. We have had to respond. So we introduced tax reforms, the most dramatic of their kind. The cost of new business investment reduced by half. We adopted the HST, which was not easy but was essential. We have caught up to 140 other jurisdictions. We are reducing tax for families; $355 income tax cut on average for families.

We are investing in infrastructure. We are re-building 80 per cent of our electricity system over the next 20 years.

We have an extensive capital plan: $35-billion over the next 3 years we will invest. On an annual basis, that is four times as much as previous PC government every year, on schools, roads, hospitals, all-day GO train throughout the GTA and Hamilton.

We are also investing in innovation: clean energy. We have created some 20,000 jobs; and our plan is to create 50,000 by the year's end. We want to become number one in North American for clean energy technologies (we are number one already in producing cars).

Globally last year, more money was invested in renewable technologies than in fossil fuels.

We are bringing responsible management government finances and the deficit is 43 per cent below what it was in the depths of the recession. We have a solid, serious responsible plan to get us rest of our way

The PC plan is twice as expensive as ours is. They have refused to have it independently verified by an economist.

Q: A question on the economy: the situation is worse than you anticipated 4 weeks ago or six months ago. What should a new government do immediately to address a worsening economic environment?

We have to acknowledge the reality. Job creation has stalled in the U.S. We have witnessed volatility in the markets. That is not that unusual. But we are concerned about the EU and the inability to come to grips with fiscal challenges among member countries.

It's not a loss of confidence in financial institutions that is driver of global economic challenge; but a loss of confidence in the ability of governments to manage fiscal challenges.

In Canada, we have done well. In Ontario, we have done even better. Since January, we have created more jobs here than the rest of the country combined. After California, we are world's most favourite place to invest in North America. We have the most reliable banks in North America, and they are headquartered here in Ontario.

It is darker out there, yes.

Q: Is the forecast more conservative, limited, than it would have been 6 months ago?

A: We have to take a look at private sector forecasts. We come in below those. And we plan to over-achieve our deficit reduction targets.

A good predictor of what we would do is what we have done. We have managed the recession well. We have been prudent, pragmatic, worked in concert with the federal government to provide stimulus and to create jobs. We came to the support of auto sector. We have provided second-career training: 47,000 Ontarians who had lost jobs. We have built $1.7-billion of prudence into every year of our four-year plan. It's a serious plan because these are serious times.

Q: One of question in leadership debate that didn't get an adequate answer from any of you is: what would you do to cut in spending?

A: I thought I was direct on that one but I will take another shot at it. The first thing I talked about is: reducing size of the Ontario Public Service by 7per cent. That's about 5,000 positions. We are halfway there. That's half-a-billion dollars. We are committed to finding $200-million more inside agencies.

Health care is major expense. We will sit down with doctors. Our position in next negotiating round is zero-zero [per cent fee increases]. We negotiated responsible settlements with doctors over the past 8 years. In return, we have secured good improvements in health care. Of late, we want to drive harder on clinical practise guidelines. I want to ensure you get all the health care you need and no more. We don't fund vitamin D testing. But if you have diabetes can come in to doctor more regularly so we ensure we are managing the disease and preventing complications.

We are working with the Ontario Medical Association. We reduced costs by $200-million. We took on the pharmacies and reduced generic drug costs by $500-million.

I am the chief driver among 13 provinces and territories to collaborate further with other provinces on purchasing drugs and medical equipment and approving drugs. It is not sensible for all 13 provinces to have own drug approval agency.

With 34 million people negotiating, we can secure even better deals.

Mt last point: our reform represented in our platform – ensuring that seniors can have a more realistic option of living in homes. It so much less expensive for taxpayers to provide that modest support in the home – house calls; home care; home renovation tax credit – than it is to have my mum go into long-term care home or hospital bed.

Health care is filled with challenges and overflowing with opportunities.

We have only touched tip of ice berg when it comes to innovations in health care.

Q: Innovation is essential: how long before we have competition in service provision?

We have done some of that already. We started with hips and knees. When you're running a hospital, we see specializing in public-sector entrepreneurialism. A long time ago we had an embarrassing problem: length of time to issue birth certificates. I spoke with ministry: and said let's privatize service

I want to provide money-back guarantee. You order on line and get money back if you don't get your birth certificate in time. Now we have a 99.9 per cent success rate. The ministry said, we'll develop it; don't privatize it.

Q: How does the cancellation of a gas fire plant in Mississauga fit with the vision of energy innovation?

We have 2,000 large and medium energy projects in the works; 30,000 microFIT projects.

We have built 7 gas plants. We try to estimate how much electricity you'll need, and how much conservation people will adopt. Since the project was first presented 6 yrs ago, a lot has happened. In that location we couldn't install one emission-free wind turbine. As well, there are two condo towers that are up and a third on the way. So we listened to the community; we have to await outcome of the election and then we will sit down with developer to re-locate that plant.

There will be some cost; we will try to minimize it.

We will take advantage of the opportunity to come up with rules to locate gas plants in keeping with where we are today. If I can't put a wind turbine next to your house but a gas plant, something is out of whack.

Q: You mentioned talks with OMA asking for zero-zero. Mixed results in past. Hudak is promising arbitration reform. Why not look at that?

Our commitment was zero-zero. If you negotiate more than that with nurses, you will have to find that from within. On arbitration, the PCs say they want to ensure that the arbitrator takes into account the ability to pay. It is already in the legislation. If you compare private-sector negotiated settlements with arbitrated settlements specific to employees who don't have right to strike, it has been the same: a 2.1 per cent increase.

If I'm a taxpayer, Hudak has made a commitment to impose $500-million on property taxes which otherwise would have been lifted under our government.

We have uploaded $2.7 billion, in social services, Ontario Works, court security. We are taking that back. We have removed $2.7 billion. We have an agreement to assume responsibility for another $500- million. Councillors are concerned about pressure on property taxes. We will honour our commitment. You're a firefighter/police officer, I have removed from you the right to strike. But you are going to have a fair system right? That's the system we have – third-party arbitration. I am confident in this system.

Q: Why would doctors take zero-zero when other health care workers get 2 per cent pay raises?

I am convinced they understand where we find ourselves at this point in time. There have been significant increase to date. We have also developed a much better health care system and workplace environment within which they now work. We have family health teams (200) and they are caring for 3 million Ontario patients. We used to have a big challenge getting medical school graduates into family practise but that's no longer true. Now you're working with other doctors, nurse practitioners, social workers, dieticians. Money is important, but the quality of your work place is too. We have come a long way, given the times. Now there is an accounting.

Q: How much do you save with zero and zero on doctors?

I don't know. But it is very significant. We did something last year which was remarkable. We held the rate of growth for health care in Ontario at 3.2 per cent. How much gnashing of the teeth did we experience as a result of that? Pretty quiet out there. So we know we can do that.

I think some of low-hanging fruit is to be found in prevention. Diet, activity, and smoking. We reduced the rate of smoking in Ontario by 25per cent. We will strike a council on childhood obesity: 30 specific parts in that plan. That's a growing challenge for all of us.

Once full-day kindergarten is fully integrated we will create new option for parents. Now, kids go home and go to the xBox, the computer, the flat-screen TV. We will create new options for them to stay at school and be involved in active activities. That will be an option available to parents. I have made physical activity mandatory. We will bring in healthy snacks to elementary schools. We will also introduce a new curriculum focused on nutrition. For example, my wife Terri is a full-day kindergarten teacher. She gives you a sticky if you bring in a healthy snack. Not unlike introducing environmental consciousness through the kids, we can introduce health through schools. We can begin to develop a sense of what is good for us and enable Ontarians to make good choices.

Q: You say you will triple the amount of start-up companies in Ontario. But governments have tried to kick-start venture capital companies in the past and it has been difficult. What will you do differently?

We have developed funds-to-funds. I phoned the banks, formed the big pension services, let's put some money in this fund. I won't determine the rules, when we'll support an enterprise, we'll do that in a private-sector way. But not enough of that money has gotten out the door and gone to work. So we will sit down with savvy people in the sector and ensure we're doing enough to help our innovative start-ups. We hear that these small businesses, after they squeeze their families and friends for start-up dollars, they encounter a valley of deficit. If I've been sent up here from California to scout, the idea gets bought and jobs are created down there. Greatest investment we make is in young people, second greatest is in young, innovative start-ups. We need to sit down with the appropriate people and design the tax incentives to support them.

Q: How can Green energy be economy of the future? There is no evidence that governments of the world will introduce regulatory regime? In absence of compulsion and desire, why is this the future?

Fossil fuels are going to quickly become the past, and clean energy technologies will become the future. It costs $70 to fill up car with gas; $7 to fill it up with electricity. We know where the world is going.. more money was put into renewables last year than fossil fuels. We can lead or we can follow. At some point, people are going to say, we've got to stop burning fossil fuels.

We need a strong foundation of research and manufacturing. I see an opening and opportunity and I want to drive hard on this. Ontarians get to make a choice. You can passively preside over the evolution of globalization or you can develop a strategy and kick start an industry. Our feed-in tariff will be reviewed every year and the price of solar panels and wind turbines will come down.

There is an opportunity before us. This is ours to pursue. I am proud of that.

You won't buy an electric car right away. It won't happen right away. But we know the world is going there.

Q: What lessons do you take from collapse of Solyndra in the U.S.?

They made some mistakes. We are providing a feed-in tariff which is attracting all kinds of investment. The world craves stability and predictability because there is so much uncertainty out there.

The best place to go is California for investors, and then Ontario. We have predictability and long-term contracts. We have to move ahead with corporate tax reductions, investments in human capital, investments in GO Transit expansion.

Q: Who should get the right to form a government if no-one wins a majority?

I won't speculate on the outcome. As leader of my party, I'm reminded of Toe Blake once said, when presented with statistics, we don't play on paper, we play on ice. There is lots of ice time left between now and election day and I will work as hard as I can to secure a strong, stable government for Ontarians. Need to move in nimble but sure-footed way to pursue challenges in the global economy.

Q: Why single source contracts to Samsung?

We were very determined to ensure that we had a large investor, a large global investor, they are getting the same price as everyone else. It's a feed-in tariff. We gave them a little bit more if they'd build four manufacturing plants and create 16,000 jobs over 6 years. Since then, we have re-negotiated contract and reduced price of contract by 75 per cent.

Q: You say green energy is a job creator. But are they long or short-term jobs?

I'm not looking for the whole pie, but a significant slice of the pie. We have some domestic content rules in Ontario. I've had the opportunity to lead trade missions to Japan, Middle East, China. I'm no longer a boy scout. We need to apply our collective muscle to build up this industry.

We are going to develop a supply chain here and our capacity to build parts. The world is welcome to provide 50 per cent of wind turbines and solar panels.

Q: There are lots of unemployed students on Twitter complaining about their high debt levels and youth unemployment. What is your message to them?

I am very optimistic. I hope young people are as optimistic. When we build 500 more bi-level cars, it's great news. I ran into someone who just returned from Alberta to get a job at Bombardier. We are continuing to work hard to turn this around as quickly as we can. Ninety-five per cent of university grads were getting jobs within 6 months. I don't know how up-to-date the data is. There is not a lot of guarantees in life. When it comes to the pace of growth of the economy and capacity to generate jobs, the single most important thing is to invest in our youths. We made 200,000 more spaces in post-secondary sector. We have the lowest rates of student loan defaults. We have lowered tuition for families making $160,000 a year, or less. We have provisions to help with loan re-payment.

Q: One of clear choices for government is to be a primary actor in economy or not be a primary player in economy. Do you foresee the need for greater government involvement in economy, the same or less?

I want to give people all the government they need and no more than the government they need. I think we've got to be strategic, practical and pragmatic. The other guy said we should not participate in a support package for the auto sector in Ontario. Well, there are 400,000 jobs there. Because we worked together with Prime Minister Harper and President Obama, we have turned that sector around. We are the number one producer of cars in North America. That's great news for families. Production is up.

You've got to pick your spots. You cannot simply allow the world to unfold as it otherwise might on its own. You have to pick your spots. We will support our young, innovative start-ups and kick-start our clean energy sector and we will be prudent and pragmatic if another sector is vulnerable.

Q: What if the auto industry goes down again, do you bail them out again?

We will talk with the Prime Minister and the U.S. and consider the needs of our families and what it means to our economy and decide.

Q: Would you accept a higher than forecast deficit to maintain growth?

A: I don't see that happening. We have built prudence into our plan. We have given ourselves until 2017-18 to beat the deficit. We will act responsibly as we have in the past.

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