Ontario Economy Adrift

Danger! Danger!

by Livio Di Matteo   Winnipeg Free Press

While global economic circumstances have played a part in Ontario’s predicament, Ontario’s regulatory and interventionist government policy culture has not helped much. Witness the initiatives of recent years: the messianic closing of cost-effective coal plants and implementing higher cost wind and solar energy initiatives in the name of the environment.

Those whose television memories stretch back to the 1960s may well remember the robot from Lost in Space who whenever faced with a threat to his unaware young charge would immediately intone “Danger, Will Robinson.” Ontario’s premier, who has been seemingly unaware of the impact of his energy and economic policies on the province’s economy, would do well to take heed from the danger signs provided by the recent update to provincial GDP numbers.

The new numbers from Statistics Canada show that as a result of the recession, real gross domestic product in 2009 fell in every province except Manitoba. Moreover, the declines were steepest in Newfoundland and Labrador, Saskatchewan, Alberta and Ontario.

Being in the company of so many poor performers will not be a suitable defence for Ontario’s economic record for two main reasons. First, while Ontario’s decline was smaller than Newfoundland, Alberta and Saskatchewan — those provinces can blame their drop primarily on the fall in natural resource commodity prices — namely oil. Ontario’s key natural resource sector — forestry — while hit hard over the last decade, is not as important a sector to Ontario as oil and gas is in these other provinces and their economies will see growth as oil and gas prices recover.

Second, Ontario’s dismal performance is on top of a decade of dismal performance when it comes to per capita output growth. Ontario has become a laggard in per capita GDP, which was highlighted when it entered the ranks of the “have-not” provinces and began to collect equalization. A survey of statistics for the last two decades show that Ontario’s share of total provincial GDP has declined from 42 per cent in 1990 to 37 per cent in 2010. More ominous, the bulk of that decline has occurred since 2000 — largely coinciding with Dalton McGuinty’s decade of political power. Whereas in 1990, productive Ontario’s share of national output exceeded its population share, we now are witnessing the sorry spectacle of the reverse.

When Ontario’s economic productivity performance is examined in terms of real per capita GDP, it emerges that Ontario’s output has stagnated for an entire decade. Between 2000 and 2010, real per capita GDP in Ontario actually declined by eight per cent. While one may wish to ascribe this to the impact of the recession and the global financial crisis since 2008, the fact remains that Ontario’s performance was the worst of all 10 provinces. Indeed, over the first decade of the 21st century, eight out of 10 provinces experienced an increase in their real per capita output while only Ontario and New Brunswick saw declines. Even Quebec, which has been the historical poor economic sibling to Ontario, saw its real per capita GDP grow six per cent during the decade. Since 2000, Ontario’s real per capita has gone from being 25 per cent above the provincial average to barely at the provincial average. From having the second highest real per capita GDP in the country (second only to oil rich Alberta) it is now the fourth highest. It is no wonder that Ontario is now receiving equalization payments.

Ontario’s economy appears to be adrift in economic space with its government oblivious to the real state of its economy and seemingly unable to get a grip on economic and fiscal policy. While global economic circumstances have played a part in Ontario’s predicament, Ontario’s regulatory and interventionist government policy culture has not helped much. Witness the initiatives of recent years: the messianic closing of cost-effective coal plants and implementing higher cost wind and solar energy initiatives in the name of the environment, raising minimum wages, implementing and then rescinding eco-taxes, timing the arrival of the HST with a recession, sequestering large land areas of the province’s north from economic development.

In the midst of all the economic carnage, the Ontario government is presiding over a massive hike in electricity costs — an energy source that used to be the foundation of Ontario’s economic advantage. Add to this the fiscal deficit and a net debt that is expected to reach $240 billion by 2011, and one has an economy that is on the verge of being unable to deliver the standard of living that its citizens have come to expect. That Ontario’s future economic welfare is in a clear and present danger is a sad understatement.

Livio Di Matteo is professor of economics at Lakehead University.

18 thoughts on “Ontario Economy Adrift

  1. On the news this morning….

    -US debt 14 trillion and growing by 6 billion a day.
    -Board members on the US Federal Reserve are
    not impressed with chairman Bernanke’s
    second round of stimulus to the tune of an
    additional 600 billion.
    -Obama is no longer popular.
    -Ireland is on the verge of collapse, buried by
    both government and private debt as people
    default on mortgages in droves.
    -General strikes in France.
    -Greece, Spain, Portugal (among others) drowning
    in government debt.
    -Canadians now hold over one trillion dollars in
    mortgage debt.
    -Gold at record highs, oil approaching $90 a barrel.
    -The “C” note is at par with the US greenback.

    These financial woes especially in most of the EU and in Ontario are exacerbated by absolutely
    senseless, horrendously expensive, environmentally and economically damaging, absolutely ineffective green energy polices. What makes this worse here in Ontario is the fact that this was widely known BEFORE Dalton and his gang of carpetbaggers enacted the Green Energy Act.

    I told my wife this morning upon hearing some of this; “Troubled times ahead. More troubled then anything our parents experienced since the end of WWII.”

    I can’t see how any of this ends well for anyone.
    Not even the greedy, selfish small minded individuals and NGOs that are pushing us down that they might climb.

    I fear for my two young children.

    One very worried…

    Sean Holt.

  2. Something worth doing…


    Follow some of the stories…

    Read on the Ontario Sites how we are removing barriers to foreign engineers — while our own graduates can’t find work…

    From the Ontario Economic page — Follow the Link to the Home Depot “Sustainably Site” that promotes Home Depot — all the while, Canadian Corporations get the short end of the stick.

    Read the Royal Bank report that tells us how good 2010 will be — then read the later report with all the reasons their predictions were wrong…

    Read about why the HST is “Good For YOU”!

    and much, much more!



    (BTW, I didn’t go to the link… Don’t want to choke on my oat bran!)

    Sean Holt.

  4. We tend to blame McGuinty for all of this mess we are in yet one HAS TO go back to Harris and even farther than him to get the whole picture here on how Our Onatrio Energy sector has been literally sold out to the highest bidder!

    Harris set McGuinty up to finish off the “Have Province” and reduce it to an “investment for greedy money makers”

    All the while Ontarians work harder and longer than most work forces on the planet just to stay “even” with their humongous tax loads and cost of living expenses.

    No wonder Ontarians never complained..they were too tired!

    Ontario is basically “cooked” like an overdone Turkey!……….Thanks a lot Great Leaders!

  5. Interesting comments.

    I read this story earlier today, and my thought when finishing it was how sad a commentary it was that an intelligent opinion from an economics professor at Lakehead only gets printed in Winnipeg.
    It is very simply stuff really – bloating government expenditure at twice the rate of growth of the economy over 7 years isn’t going to work well.
    But it’s interesting this simply opinion won’t be written in the Globe or the Star.

    I am a proponent of public power. I am also a fan of competitive markets though, so I’d be happy with either.

    Mike Harris certainly broke up Ontario Hydro and wanted to move to a competitive market for electricity supply.
    I think that was naive.

    But the worst I could accuse him of is being a simpleton.
    That’s hardly on the scale of being a fascist. And that is what our current premier is. I don’t mean that in a particularly nasty way, but simply as a truth that there is no attempt at having a functioning competitive market, all the energies of government are focused on picking winners and rewarding the righteous amongst private companies – or maybe they are focused on picking losers (in which case I’ve underestimated them).

    Fascism also explains why a professor from Lakehead needs to go out of province to get this article published, while our main national newspaper’s top Queen’s Park journalists writes pap claiming unattributed sources find the premier handsome and charismatic.
    Here’s another story out on the web today regarding government policy and the economy: http://www.newswire.ca/en/releases/archive/November2010/09/c2332.html

  6. Just to emphasize the disaster now unfolding in our Energy Sector, Wilkinson has embraced the failed Cap and Trade agenda which has just been rejected in the USA.


    This Government has to be stopped from making any further decisions that will affect our Children’s future in such a negative way that it won’t be fit to live in!

  7. The situation we find ourselves in is working just as planned.

    Inorder to make planet earth sustainable CO2 emitting jobs/manufacturing jobs have to be eliminated. So this part of the plan is working exceedingly well. Chase manufacturers out of Ontario.

    Second, energy supply has to be reduced so planet earth can survive. We are well on the way to this goal

    This what the global warming crowd planned and this is what is going to be imposed on us. Our standards of living must be reduced to save planet earth.

    Our auto manufactures and workers have been forced to produce the vehicles the governments imposed on them.

    This in turn favored foreign auto companies and the result was to force our domestic companies into bankruptcy resulting in high unemployment.

    Of course high gasoline prices along with the credit crunch produced the perfect storm for our auto sector in 2008.

    Thanks to the Global Warming movement this why we are where we are today.

  8. But Barbara, according to a UK Daily Mail article, Phil Jones, at the center of the Climategate scandle and IPCC scientist said there’s been no significant warming for 15 years.

    I guess that’s why the new mantra is “Climate Change”. Nice eh?

    People better wake up to this very simple fact and then ask themselves if this whole “catastrophic man-made global warming” crap was just a massive deception to begin with.

    The information and motive is out there. Research it, then draw your own conclusions.


  9. Climate change indeed!

    I would be more worried if it WASN’T changing!

    Scam, upon scam, upon scam, upon scam!

    Judge not lest ye be judged…


    Of this I have no fear.

    For the elitists that feel they are entitled to their entitlements…

    Be afraid, be very afraid for ye are about to be judged!

    Sean Holt.

  10. Yes,but the damage was done under the mantra of Global Warming. Since this dosen’t work anymore they went to Climate Change and now what next?

    But the heart of the matter is that CO2 producing jobs have to be eliminated so planet earth can be saved.

    It does not matter how much hardship this will bring to the people.

  11. The Economy is adrift?

    I used to be a boater. This looks more like a ship of fools and a captain that steers relentlessly for the nearest reef all the while running the engines at full power — just so he can here a satisfying crunch as he grounds the hull.

    …and I think his just released strategy proves it…

  12. And we have an industry hoarding all the life boats and playing a game of “hold ’em” on the deck. The captain is pretending to guard the bank of chips while steering with one hand, ignoring any “buy in” rules, turning a blind eye to the stash, while they skim what they can as if Halloween candy or Monopoly money.

  13. Tom:

    Next time… don’t hold back — tell us what you really think. 🙁 lol

  14. The elites created a crisis called ‘global warming’.

    They then proposed a solution to the frightened masses – carbon trading and green energy would stop the planet from warming.

    The payoff would be unlimited riches for the elitists in on the carbon emissions scheme and control of energy.

    Unfortunately for the elites, people with honour and integrity stood up and pointed out the faulty data and fallacious arguments. Dalton still thinks we haven’t figured it out yet.

  15. “Dalton still thinks we haven’t figured it out yet.”

    Not quite…

    We figured it out a long time ago, it is Dalton that is more then a tad shy in the figuring department.

    the moniker “Dummy McGoofy” has been around for quite awhile now. Google it, it’s hilarious!

    Fits him like a glove!

    Sean Holt.

  16. Barbara, you’ve asked that aftter “Climate Change”, what;s next?……..the nest big Scam that will be flogged on the World is “Biodiversity”!

    These eco-religious whackos have to find another cause for all the Greenies to “belive in” and genrate more funds so that the elites don’t go bankruot.

    The threat of the “loss of Biodiversity” is their last gasp at keeping this UN sponsored fake scheme alive!

  17. Barbara, you’ve asked that after “Climate Change”, what’s next?……..the next big Scam that will be flogged on the World is “Biodiversity”!

    These eco-religious whackos have to find another cause for all the Greenies to “belive in” and genrate more funds so that the elites don’t go bankrupt.

    The threat of the “loss of Biodiversity” is their last gasp at keeping this UN sponsored fake scheme alive!

Comments are closed.