An election about tariffs ignores Ontario’s deeper decline: Denley

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Campaigning party leaders have talked about a lot of things during Ontario’s snap election, but somehow, even as they focus on the American tariff threat, they’ve come up short on the province’s longer-term economic problem, the most important issue of all.

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All three parties are fixated on government spending plans, not the broader economy. Even PC leader Doug Ford, who is running to protect Ontario from tariffs, has little to offer but a weak and temporary economic fix.

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It’s clear that the threat posed by the Americans’ erratic president, Donald Trump, will be neither short-lived nor predictable. There is a growing national consensus that Canada needs a new economic approach, one that would make its economy less reliant on the Americans.

Instead, Ford’s “Protect Ontario” plan seeks to shelter the province’s economy from external threats. It offers a six-month repayable tax deferral for businesses and some additional tax relief for small business. There is some money for employment training and job supports. This is a short-term approach to a long-term problem.

Just how good is the provincial economy that Ford wants to protect? The PC leader is fond of saying that Ontario is “an economic powerhouse,” but key statistics tell a different story.

Let’s start with gross domestic product per capita. This is the best indicator of economic success as it calculates the level of economic production per person. By this measure, Ontario isn’t doing well versus other provinces and it’s doing quite badly when compared to American states.

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A February report from the Ontario Chamber of Commerce found that provincial GDP per capita “has fallen below pre-pandemic levels, and that downward trend is expected to continue into 2025.”

Ontario’s decline is not new, having started well before Ford’s election in 2018. A Fraser Institute study compared Ontario’s economic performance in this century to that of Quebec, which has traditionally lagged Ontario. This so-called “powerhouse” didn’t look too good. “Since 2000, Quebec’s real per-capita GDP has grown at an annual average of 1.2 per cent, while Ontario’s has grown at 0.7 percent — both below the Canadian average,” the report says.

Calgary economist Trevor Tombe did a study ranking GDP per capita for all Canadian provinces and American states. Ontario came 51st, about the same as Alabama and only fifth best in Canada.

But what about jobs? Ford likes to cite big job-creation figures, with 467,000 jobs created since his re-election in 2022. The problem is, Ontario’s economy hasn’t been growing as fast as its population, a fact acknowledged in the province’s most recent economic update.

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As a result, in January of this year, Ontario’s unemployment rate stood at 7.6 per cent, second highest of all provinces. The province’s chamber of commerce expects it to stay at about that number this year.

All this bad news was before the effect of any American tariffs. Ford has said tariffs could cost 500,000 jobs. Certainly Ontario’s economy is highly dependent on the U.S., with 81.4 per cent of our merchandise exports headed there, according to the government’s figures.

As Ford often says, Ontario is looking at four years of uncertainty because of Trump. That means the province must do everything it can to diversity its economy and enhance its economic self-sufficiency, and yet the parties offer little to address this pressing reality.

We hear a lot about buying Ontario goods but the first step is making them. Remember during the pandemic when the province was surprised to find it was reliant on foreign countries for basic medical protective items? Ontario even lacks sufficient capacity to process meat from its own farmers. Eastern Ontario hog farmers have to ship their hogs to other provinces or the U.S. for processing.

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The parties favour eliminating interprovincial trade barriers, the perennial low-hanging fruit that never seems to ripen. The emphasis should be on ending those trade barriers now, not at some unspecified future date.

The plans the parties talk about are something, but not enough. The province needs an architect for its future economy. Ford presents himself as more of a general contractor. His heavy focus on building public infrastructure is useful, but it is dependent on continuous public expenditure and debt.

But the Liberals’ and NDP’s real interests are in spending more, not private sector growth. The Liberal slogan “More For You” says it all.

Unfortunately, government won’t be able to do more for you without a dynamic and expanding private sector economy. The first step is admitting that we don’t have much of one now, rather than pretending that our lagging economy can provide still more government services.

Protecting Ontario’s weak economy is both difficult to achieve and not enough. Only a plan for diversification and private sector expansion can protect the province’s future.

National Post

randalldenley1@gmail.com

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