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Ontario Premier Dalton McGuinty speaks to the media after announcing his plans to resign from the leadership of the Ontario Liberal Party, at Queen's Park in Toronto, Oct.15, 2012. (MARK BLINCH/REUTERS)
Ontario Premier Dalton McGuinty speaks to the media after announcing his plans to resign from the leadership of the Ontario Liberal Party, at Queen's Park in Toronto, Oct.15, 2012. (MARK BLINCH/REUTERS)

J.C. Bourque

McGuinty’s strategic failures and successes Add to ...

Though it may have seemed sudden, the resignation of Dalton McGuinty should come not come as a surprise.

It has been clear for some time that the McGuinty government is well past its best-before date. At the very end of multi-term governments – accompanied by a lack of policy ideas, indecision and general aimlessness – comes the inevitable attempt to hold onto power. The government has been in this state since at least March 2011, when, instead of facing the tough economic decisions, they punted the ball down the field in the form of the Drummond report (the recommendations of which they have specifically ignored for more than eight months). And now we wait still – for yet another “blue ribbon” panel to come up with suggestions on what to do about the future of the Ontario economy.

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It was not always so. The McGuinty government came into power, with new ideas, a fresh approach, and real energy. They attacked a number of policy areas they perceived to have been neglected by the previous government. Nine years since their taking power, and at a leadership precipice, it is a good time to assess their major successes and failures.

Successes:

1) Elementary and Secondary Education

The McGuinty government set ambitious and long-term quantitative goals for two key educational metrics: provincial literacy and numeracy rates and high school graduation rates. While not quite achieving their targets, they have made progress in these two areas, leading to a tremendously positive effect on long-term student outcomes. The OECD has pointed to Ontario as a role model in these two areas.

2) The HST

By the early 2000’s, it was clear that a key barrier to Ontario’s competitiveness was the relative underinvestment by businesses in productivity-improving machinery and equipment. The cause: Our archaic sales tax system which piled taxes on top of taxes. Taking huge political risk, the McGuinty government harmonized the provincial and federal taxes and, unlike most other Canadian jurisdictions, did not do so with a rate cut funded by raising corporate taxes. The short term benefits are hard to gauge, but as a long-term initiative, the HST initiative is a model for smart tax policy.

3) Infrastructure Ontario

For years the Ontario government struggled to get capital projects done on-time and on-budget. The challenge created by irregular levels of ability with the government to manage complex projects and their sky-high costs became more acute when the public/private partnership trend revolutionized the delivery of infrastructure. By establishing Infrastructure Ontario, the government set up an agency that was sophisticated enough to manage these sometimes complex and first-of-a-kind partnerships. This innovation brings to Ontario the best expertise in lending and project delivery, saving the government billions and resulting in better public facilities.

Failures:

1) Fiscal Mismanagement

The scale of liberal spending and the resulting debt hangover is truly mindboggling. Under McGuinty, the provincial debt has more than doubled, while annual budgets have increased from $70-billion to over $120-billion. The majority of these increases have gone to endlessly increasing the ranks of the public service without any thought to productivity. The billions wasted on several projects (e-health, Ornge) are likely just the tip of the waste and mismanagement iceberg. Their profligacy is a double tragedy for the McGuinty Liberals: not only does the creation of a structural crisis threaten their legacy, but the missed opportunity during the huge revenue years of 2003-2008 to invest in long-term projects crucial to the province’s future may damn them as one of the most irresponsible of governments. To say nothing of the impact on this province’s future.

2) AECL and Ontario’s Nuclear Energy Sector

Few realize how damaging the demise of Atomic Energy Canada Ltd. will be to the province. AECL produced technologies that were world-renowned and it employed thousands of highly-trained people. Candu reactors provide 50 per cent of Ontario’s electricity and are operating in Brazil, India and China. Nuclear has its challenges, but with our existing nuclear reactors, Ontario will be using Candu technology for decades, and a long-term strategy would have seen Ontario not only preserve the technology but also develop it. Instead, the McGuinty government let it slip away. Sixty years of cutting-edge nuclear intellectual capital was sold to a Quebec-based engineering firm for a paltry $$15-million. The McGuinty government played a game of procurement chicken with the federal government and lost. The irony remains that at the very time the McGuinty government was letting an Ontario technology die, it was paying Samsung hundreds of millions to set up poorly conceived green energy projects.

3) The Green Energy Program and the Economy

It is now clear that McGuinty never had a vision for the Ontario economy. His only semi-coherent effort remains in the area of Green Energy, but this approach failed. By using artificially high, long-term purchasing agreements, he hoped to provide the catalyst for the creation of a green manufacturing and services hub. It was a faddish approach that bet the wrong way on U.S. energy policy. Moreover, McGuinty failed to understand that for every “green” job created, several more jobs were lost due to the escalating cost of energy. Power prices are set to rise a further 46 per cent by 2015, causing further harm to our economy – unless something is done.

4) Dithering

While the legacy of Dalton McGuinty will be debated for some time, it is truly unfortunate that his parting gift is to freeze the government in its current state of lethargy. The prorogation and leadership distraction means that the province will remain ungoverned for another year – with vital policy decisions continuing to be kicked down the field. The truth of the provincial fiscal situation has been known for some time, as important as Don Drummond’s work was, it merely listed what many had suspected and articulated. We should remember the drubbing Harper received for prorogation during a moment as serious as the one currently facing the province of Ontario. McGuinty must be criticized for failing to deal with the mess he in part created and for holding the province in a state of paralysis for what will become close to three years of policy inertia.

McGuinty leaves the provincial stage with a number of clear accomplishments and clear failures. It will be some time before the ledger of McGuinty’s record is truly accounted for and balanced. But what is certain is that the people of Ontario will face a series of difficult decisions without him.

J.C. Bourque is a business strategy consultant in Toronto. He has worked on several campaigns for the Progressive Conservative Party of Ontario.

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