May 05, 2008

What's With the Ontario Pile-On?

It is no secret that there are some serious concerns over the state of Ontario's economy. TD recently gave a report that argued Ontario is heading to a 'have-not' position under Canada's equalization program due to the high Canadian dollar, a turned-down American economy and rising energy costs. To bring the point home, GM announced laying off 900 employees shortly thereafter. And prior to that, one can't forget the battle-of-words between McGuinty and Flaherty that brought Ontario's apparent plight to the forefront.

For a couple weeks, the Globe and Mail has written and analyzed the Ontario situation in many different ways, from many different angles. Some of the positions have been depressing while others very positive. Yet, the most interesting part of G&M's articles, online at least, have been the readers' comments.

From the many comments there seems to be several common themes with the comments.

  1. Is the "The West is booming and Ontario should be more like us" statement.
  2. Is the "Ontario should cut all its taxes and stop spending" argument.
  3. Is the "Ontario doesn't deserve any help from equalization or another government" position.

The reality is is that none of these statements make much sense when facts and common sense are figured into the mix.

Looking at the first theme, it doesn't take a genious to know that natural resources are the real reason for the economic boom out West and in Newfoundland. Since 2003, the cost of oil has increased by almost five times, from $25/barrel to $120/barrel (as of this posting). This is in steep contrast to Ontario's economy that is based on manufacturing and product export. To say that Ontario should suddenly be more like Alberta doesn't make much sense. Ontario doesn't have the good fortune to be sitting on top giant oil reserves or have the vast fertile flatland to support natural resources in the same capacity. Ontario's economy is more market-based and it is through no fault of its own that its economy is much more effected. The same can essentially be said for the West and Newfoundland that it is sheer luck that they are sitting on top of huge amounts of oil.

The second theme is pretty similar to the argument Flaherty has been making - cut spending and taxes. One of the better points of interest is that in terms of spending, Ontario spends about 1/3 less per person on social programs than Alberta does while it offers more within its social programs. So Ontario spends less for more? Despite having a significant provincial debt versus Alberta being debt free, Ontario is still able to be more efficient with its money.

In regards to Ontario cutting business taxes (what Flaherty has been advocating), it should be noted that Ontario's business tax level is actually lower than the federal tax rate and that McGuinty has cut taxes for businesses, through property and capital tax decreases, to the tune of $3 billion. If Ontario were to make business taxes any lower it is likely that Ontario would then have to affect the efficiency level of its spending. Additionally, the other provinces' lower business tax levels are 'affordable' much due to the fact that, historically, they receive quite a bit of money from Ontario and Alberta through equalization.

Since we're on the topic of equalization, let's address the last theme, which is basically that Ontario should get lost. This theme has been expressed by calling Ontario a place of whiners and referring to it as a wasteland. Again, let's get one thing straight, the Ontario government did not cause the economic downturn and therefore cannot be blamed. Just as McGuinty cannot be blamed for wanting a better deal in equalization.

Ontario has faithfully paid out to the other provinces since the inception of equalization and in return it got less than those other provinces from the Federal government (including a reorganization of equalization in 1982 to exclude Ontario when it qualified for payments). For a kicker, even if Ontario qualified for payments it wouldn't even get enough out of the program to cover what they'd still be putting into it, with the current formula. It's justifiable that Ontario is looking for a fairer deal from the federal government at a time when it needs it most. However, the response has been nothing short of nasty brush-offs.

So when Ontario is looking for some short term help, and is justifiably doing so, until the economy turns itself around, why do non-Ontarians, other provinces and the federal government insist on kicking Ontario when it's down? Ontario has never really asked for much from the federal government or other provinces. It has only been a recent phenomenon that Ontario has started to make a point about the lack of federal funding it gets for certain programs versus the amount other provinces receive despite being the only full-time contributor.

This is the one area that seems to be most disturbing when it comes to regional differences in Canada and the comments being made. People are far too happy to be receiving money from Ontario, but as soon as Ontario is in need, those same people act completely... ungrateful. It's like a child that relies on his parents to support him through college and periods of unemployment until he got on his feet only to turn his back on them when they fall upon hard times and blames them in the process. While Ontario has always been there for other provinces, why is too much to ask for the same consideration in return?

No comments:

Quotes from people smarter than me...

"If a free society cannot help the many who are poor, it cannot save the few who are rich" ~ JFK

"Our lives begin to end the day we become silent about things that matter. " ~ Martin Luther King Jr.

"Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. " ~ Benjamin Franklin

"First it is necessary to stand on your own two feet. But the minute a man finds himself in that position, the next thing he should do is reach out his arms. " ~ Kristin Hunter

"When you're a mayor and you have a problem you blame the provincial government. If you are provincial government and you have a problem you blame the federal government. We don't blame the Queen any more, so once in a while we might blame the Americans." ~ Jean Chretien

"Which is ideology? Which not? You shall know them by their assertion of truth, their contempt for considered reflection, and their fear of debate." ~ John Ralston Saul

"It is undoubtedly easier to believe in absolutes, follow blindly, mouth received wisdom. But that is self-betrayal." ~ John Ralston Saul

"Everybody dies, Tracey. Someone's carrying a bullet for you right now, doesn't even know it. The trick is to die of old age before it finds you." ~ Cpt. Malcolm Reynolds (Firefly, Episode 12)