Last Monday Chatham-Kent received the Premier of Ontario. Among other things, he visited a Prairie Siding farm mixing with farmers and taking their concerns. With an election set for October of 2007, McGuinty is commencing what should be Ontario’s longest election campaign.
The question is will he win? He’s the guy who said he wouldn’t cut your taxes, but he wouldn’t raise them either. What happened? He not only raised taxes, he cut services and downloaded others to the municipalities. Yes, he made peace with the teachers unions, capitulation really, but three years after he got elected he’s looking better. People have a short memory. The devil they know is sometimes better than what they don’t know.
When he was elected he had a $5 billion dollar deficit to handle. However, the Liberals claimed they didn’t have any idea it was so big. That might explain why he decided to raise taxes. The deficit now has been slashed partly on the back of taxpayers and partly on the back of municipalities. As he heads toward an election next year, I’m sure provincial finance minister Greg Sobara will announce a surplus. He could have done it this year. With the 2007 election on the horizon, he left it for next year.
There will be much time ahead to judge him. Clearly his visit to a Prairie Siding farm was an indication that he has totally flubbed up rural support for his party. He’ll need to put together a solid farm policy to patch over mind-boggling mistakes of the past. If he doesn’t he can surely kiss rural seats in Southwestern Ontario goodbye.
We shall see. The time until October 2007 is an eternity in politics. In the meantime McGuinty has been chiding Prime Minister Harper over the fiscal imbalance. He has been looking for a deal for Ontario which has been flummoxed with a tax imbalance every since the days of Bob Rae. At the recent Premier’s meeting in St. John’s Newfoundland he even got to question our old friend, Bank of Canada governor David Dodge. Dodge made a surprise appearance on behalf of Newfoundland Premier Danny Williams.
In his July 28th column Toronto Star columnist Ian Urquhart outlined two messages Bank of Canada governor David Dodge gave the Premiers. The following is a direct quote from Urquhart’s column.
“He told them to be careful with their discretionary spending and not to invest too heavily right now in infrastructure (roads, transit, bridges, sewers and the like) because that sector is overheated and inflationary pressures would rise as a result.
Instead, he suggested they spend more on skills training and post-secondary education to develop human capital.
He warned them to expect a correction in the American economy, possibly after the fall elections in the United States.
This second message was reportedly directed particularly to Ontario’s Dalton McGuinty, with good reason. One quarter of Ontario’s gross domestic product is dependent on exports to the U.S.” Unquote.
As you all know Dodge holds the hammer of interest rates over our economy. He has the power to raise or lower those rates effectively having a big stick over the dollar. Ontario Premier Dalton McGuinty had strongly suggested earlier his year that Dodge’s monetary policy was bad for Ontario because of the high dollar effectively shutting down manufacturing jobs.
McGuinty seemed less phased by this at the Newfoundland meeting because even though this has caused the loss of 100,000 jobs over the past year, there has been a net gain of 300,000 jobs in other sectors during the McGuinty years.
Dodge’s predisposition regarding large infrastructure spending by government surely means he’s still worried about inflation. Road construction and asphalt is very expensive and you can surely see how inflationary it can be especially considering oil prices. Putting more money into skills training is clearly Dodge’s choice.
How McGuinty will act is anybody’s guess. Political choices and priorities are always much different than economic choices in times of surplus. NDP leader Howard Hampton and Progressive Conservative leader John Tory will certainly challenge him.
Hampton is a ten-year veteran as provincial NDP leader. He has never caught fire in the province leading a party, which has the minimum number of seats to form a party in the legislature. Tory on the other hand has shown some traction, even showing up in rural areas at events, which are uncharacteristic for a very urban politician.
It is a big job to be Premier of Canada’s biggest province. David Dodge has certainly thrown down the gauntlet with his economic challenge. We’ll see how Premier Dalton McGuinty steers the ship. Ontario’s economy still is the economic engine of Canada despite the rapidly increasing role of Alberta’s oil country. With the political realities of October 2007 quickly approaching, it should be interesting which economic choices he makes.