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Tim Hudak, Leader of the Ontario Progressive Conservative Party (The Canadian Press)
Tim Hudak, Leader of the Ontario Progressive Conservative Party (The Canadian Press)

TIM HUDAK

The budget Ontario needs Add to ...

With eight provinces and the federal government in deficit, political leaders across the country are faced with a similar challenge: How do we encourage job creation while regaining control of spending? The responses vary. Some have taken immediate action, while others, like Ontario, have moved at a glacial pace.

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In the province that has long been an economic leader, 600,000 men and women are now unemployed. Yet, this week’s provincial budget will neither stimulate the economy nor aggressively attack the deficit. In the next year, the deficit will remain constant, leaving a staggering $15.2-billion gap between revenue and spending. Job creation is forecast to decline.

In New York this month, I met financial experts to discuss Ontario’s debt. Their advice is consistent with the way I would have approached the problem. For starters, I would not have accepted anemic private-sector growth or a slow response to a looming $30-billion deficit.

Businesses can invest anywhere in the world. If they’re going to come to Canada, they’ll look for a few basic things. They want a credible plan to eliminate deficits and get debt under control, and they want a competitive tax environment. Businesses realize that governments burdened with debt won’t be able to create a competitive tax climate and build and sustain infrastructure – two key things that attract investment, expansion and new jobs.

They need low tax rates, so they can retain more of their earnings to expand and hire. They want certainty about government tax policy, too, so the rules don’t change partway through the game. In Ontario, for example, this week’s budget would abandon a promised business tax cut. That’s not how you build an economy. A recent estimate by a leading economist said this measure alone could result in a loss of 30,000 jobs over 10 years. A higher tax burden than businesses had planned for amounts to a tax increase.

Affordable energy is another cornerstone of growth. The provinces that have taken steps to assure a steady supply of power at fair rates are well positioned for growth. Those like Ontario, where power rates are being driven up by subsidies that pay wind and solar producers between two and 10 times the going rate for energy from conventional sources, are not.

We need to pay attention to what’s happening in the world. One of the key factors in Germany’s success, for example, has been a strong apprenticeship system. I have advocated an aggressive apprenticeship plan for Ontario. The failure to act on this has left good skilled trades jobs unfilled.

Growth won’t happen unless government gets the fundamentals right. Our priority must be policies that create the conditions for growth, and that has to be accomplished while making significant structural changes. We can’t cut our way to prosperity; we need to grow our economy, too.

Every day that government puts off difficult decisions adds to debt and narrows our room to manoeuvre in the event of a sudden economic shock. This has been Greece’s sad experience.

The challenges facing Canadian governments may vary, but the underlying principles are the same. When governments control spending, ensure responsive regulation and keep business taxes low, labour markets flexible and energy affordable, jobs and growth will follow. Some provinces realize this, and will pull out of deficit sooner than Ontario. Their next challenge will be to tackle accumulated debt.

As Canadians, we need to reframe the deficit and debt issue. This is not just about government. It’s about the economy, jobs and prosperity.

Tim Hudak is the leader of Ontario’s Progressive Conservative Party.

 

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