Time and Chance: How Political Meddling Can Twist The Ontario Economy
Former Prime Minister Kim Campbell wrote a political memoir once she had completed her journey as Canadian Prime Minister. It was called “Time and Chance.” I thought it very appropriate for her meteoric rise and fall to the top job in Canadian government.
It is so true. In politics anyway, so much is left up to timing and dumb luck chance. When you put economics into the mix you can get a toxic soup bereft of political reality. Consider the New Democrats when they won power in Ontario in 1990. Finally snagging the brass ring, they were faced with some of the worst economic timing in Ontario history. Opposition grew quickly and vehemently. Winning their chance at power at any other time would have been much better for the NDP.
Fast forward 12 years and the same type of clouds might be forming in Ontario. No, we don’t have the recession, which that former NDP government had, but provincial leaders are starting to muse nervously in public. It would seem the idea of fixed election dates aren’t necessarily synching with economic good times. With the October 4th, 2007 provincial election looming in our future, last week Ontario treasurer Greg Sorbara chimed in.
He said in his annual fall economic outlook and fiscal review that the growth in the Ontario economy was shrinking. The slowing US economy, the high Canadian dollar and high-energy prices have stretched the Ontario economy. Yes, some economists are predicting a recession for Ontario. However, that surely is being too hasty. For Sorbara, this economic news isn’t cooperating with his political reality. If the Ontario economy tanks, his date with the electorate next October has the makings of a disaster.
So what should Sorbara do? Bank of Canada Governor David Dodge chimed in last week and said, “Hang fire”, meaning don’t do anything drastic. In this column last week, I mused that he thought our slowdown would be temporary. That doesn’t help Sorbara. Politically, what does he do if this Ontario slowdown last a little bit too long? Politicians when backed into this corner often turn to “voodoo economics.”
Treasurer Sorbara says he is not going to wait to find out. This is what he said taken from the October 26th Toronto Star.
“By 2008, we expect a return to growth of 3 per cent – just up from the 2.9 per cent projected earlier this year,” he said.
To help Ontario residents through any possible turbulence, Sorbara said the province would be “fast-tracking a number of infrastructure projects to generate immediate economic activity and job creation.”
Short translation—get the voodoo economics going as soon as we can. Speed up paving the 401. Build a few bridges. Heck, how about twinning 40 highway through Chatham-Kent! The bottom line is Treasurer Sorbara wants to create some economic stimulus to help foster jobs and economic growth into 2007—just in time for that October 4th, 2007 election.
We’ll see what happens. In many ways much of this doesn’t make a lot of sense especially when you look at Ontario’s fiscal numbers. Ontario had an accounting aided surplus of $300 million in 2005-06. However there is a projected deficit of $1.9 billion in 2006-07 and a $2.2 billion deficit in 2007-08 followed by a $1 billion deficit in 2008-09. Meanwhile Sorbara’s federal government colleagues are running surpluses and cutting taxes at the same time!
So what’s up with that? It doesn’t make a lot of sense. Across Canada some provinces and many municipalities are running deficits. Ditto for many hospitals and other agencies of the public good. When it comes to the “fiscal imbalance”, every provincial politician in the land has a point. It didn’t matter if it was Paul Martin or Stephen Harper. The federal government is a tax hog. Quenching that fiscal imbalance with federal dollars would help all Canadians, especially the little people fighting to make a living.
To make things even a bit more complicated along with that election next October 4th, we might also be voting in a referendum on a change in our electoral system. A citizen’s assembly made up of one person from each of the province’s 103 ridings will issue its recommendations for electoral reform by May 15 after hearing from the public. If a referendum is required, it will be held at the time of the next provincial election on Oct. 4, 2007. At least 60 per cent support will be required for any new system to be set up. To make sure there is general approval for the change in different regions of the province, it must also be supported by more than 50 per cent of ballots cast in at least 64 electoral districts.
Does it make you shudder? Will that complicate the “time and chance” needed between our political world and our economic reality? Or is it the political answer to take the economic levers out of the hands of somebody like Treasurer Sorbara at a time when political meddling can spin an economy out of control? We shall see. Deciphering the politics and the economics within Ontario within the next 11 months will surely challenge our collective common sense.