B.C. Finance Minister Michael de Jong is in Toronto to speak to the Toronto Board of Trade Thursday about opportunities for economic growth in both B.C. and Ontario.
Ontario taxpayers should hope and pray that their finance minister, Charles Sousa, will be in the front row, taking copious notes. Given the provinces’ vastly different fiscal track records, it’s hard to believe both these governments call themselves Liberal.
No doubt, de Jong will use the opportunity to tout B.C.’s solid AAA credit rating and their four consecutive balanced operating budgets — a stark contrast to Ontario’s unbroken string of nine deficits and two credit downgrades.
How did B.C. do it? Sousa’s ears should especially burn as de Jong lays out how the B.C. Liberals have saved taxpayers billions of dollars through tough, but fair, deals with public sector unions. After the 2008 economic downturn, the B.C. government got every public employee to sign a net zero contract, freezing pay for two years. That was followed by two years of co-operative gains contracts – where every raise had to be funded through corresponding savings in the same contract.
As times got better, government workers signed five-year deals with modest raises and the opportunity to earn economic growth dividends. If B.C.’s economy grows faster than predicted, employees get a raise. That’s right: government employees now have a tangible, financial stake in B.C.’s growth. Last year, that meant an extra 0.45 per cent.
BC is by no means perfect. In order to truly improve “opportunities for economic growth” in BC, as de Jong has titled his Board of Trade talk, he needs to address BC capital debt, which is growing at about half a billion dollars every quarter. The BC Liberals also collect a health care head tax through an inefficient, antiquated, expensive system separate from income taxes. They’ve hiked that tax nearly 40 per cent over the past five years.
This is relatively little compared to what Sousa needs to do to improve the train wreck of Ontario’s finances.
Indeed, there isn’t much B..C can learn from Ontario, unless the lessons are about what not to do.
In nine years, the current Ontario government has more than doubled the debt. For the first time, a Canadian province has $296 billion in debt, and will surpass $300 billion this July. This has made Ontario the largest sub national borrower in the world.
At $11.7 billion per year, interest payments to cover this massive debt are the third largest expense in the budget, and are the province’s fastest growing expense. Ontarians’ hard-earned tax dollars are being spent at a rate of nearly a billion dollars a month just to pay the interest on the Kathleen Wynne/Sousa credit card.
In his Feb. 25 budget, Sousa pledged that Ontario would return to balance by 2018, but somehow the minister expects this feat to be achieved without fiscal restraint. Instead of holding program spending at 1.4 per cent growth as recommended in the Drummond Report, or by following the Canadian Taxpayers Federation’s recommendation to freeze program spending, it will grow by 2.3 per cent.
Instead of restraint, Sousa’s plan involves squeezing more money out of Ontarians by hiking taxes on everything from wine to natural gas. His plan involves selling government assets like Hydro One and then counting that revenue twice, by applying it both towards both deficit reduction and new spending. And his plan involves fantastical revenue projections at a rate of 5 per cent growth – double the average four-year revenue growth rate.
Sousa should pay careful attention during de Jong’s visit, but it’s unlikely he will. This Ontario government rarely looks west for anything. Except equalization cheques, of late.
Christine Van Geyn is Ontario director of the Canadian Taxpayers Federation. Jordan Bateman is the organization’s B.C. director.
The editorial pages editor is Gordon Clark, who can be reached at gclark@theprovince.com. Letters to the editor can be sent to provletters@theprovince.com.
