Ontario Finance Minister Peter Bethlenfalvy announced this week that the provincial budget will be read on May 15. The government has already begun to announce measures that will be included in the budget, such as an increase in the tax credit for Ontario manufacturers, which will amount to an additional $1.3 billion over three years. The pretext used by the finance minister for this change is the Trump tariffs and the economic uncertainty caused by Trump’s erratic announcements.
Although Trump has certainly created chaos for many Canadian businesses, the reality is that this Ontario Progressive Conservative government is largely responsible for the vulnerability of the province’s business sector, which has faced an uncompetitive environment for a number of years before Trump came along because of bad Ford government policies. Instead of heaping blame on the convenient scapegoat Trump, the government should be looking in the mirror and making significant changes in the direction they have followed for the past seven years.
Analysts have been calling Ontario the “sick man of North America” from an economic perspective lately, and for good reason. The Ontario Liberals did a lot of damage to the provincial economy with their lavish spending and Green Energy Act, and the Ford government has deviated very little from the Liberals’ playbook. There was a time when Ontario, the largest Canadian province, was viewed as the engine of the national economy and the second richest of all the provinces. That is now history, and Ontario currently ranks fifth in terms of wealth and is a have-not province. Provincial GDP per capita in recent years has been the weakest of all Canadian provinces and is comparable to many of the poorest U.S. states.
The Ford government has now been in power for seven years and has yet to fulfill the election promises it made when first elected in 2018. At that time, the main issues were to fix energy prices which had doubled under the McGuinty/Wynne Liberals because of so-called green policies, to revamp the education system so that the curriculum got back to the basics of STEM subjects and literacy, reduce red tape on business, lower taxes and cut government deficits and debt. Apart from a few one-offs such as eliminating license plate sticker fees, gas tax cuts and $200 cheques in advance of an election, very little has been accomplished.
During the Ford years to date, no meaningful tax reductions have been made. At the end of the McGuinty/Wynne years in power, taxes as a proportion of GDP were 12.1 per cent. Despite Ford’s promises to reduce taxes, the opposite has happened as taxes now represent 13.4 per cent of GDP. The top two personal income tax brackets in Ontario, which are $150,000 and $220,000, are still not indexed to inflation, which is downright theft as people in these tax brackets end up paying more tax just because inflation has increased, not because they have any higher real income. This is a ridiculous policy for a province that pretends to want to attract and keep its entrepreneurs, professionals, engineers, doctors and other high earners, who now pay more than half of their marginal income in tax.
On other issues, Ford has continued the big-spending ways of his Liberal predecessors, such that interest payments on the debt alone exceed $1 billion per month. Our public education system is more “woke” than ever, with some school boards so out-of-control that they have taken children on field trips to participate in anti-Israel demonstrations without parents’ knowledge. Zero progress has been made on our energy system, where now over $6 billion annually is spent to subsidize hydro bills instead of fixing the fundamental problems. Originally a critic of the green energy policies of the Liberals, the Ford government dove head-first into subsidizing electric vehicle battery plants with a multi-billion-dollar expenditure that is now looking like one of the biggest boondoggles in Canadian history as consumers reject EVs and battery manufacturers backtrack on their original plans. As for red tape, ask any business and you’ll get an earful about how it is now worse than ever in Ontario.
All of this took place before Trump. Now that Trump is threatening a range of tariffs, Ontario’s vulnerability to these threats is magnified. So don’t be conned when the upcoming Ontario budget blames Trump for virtually all of the province’s economic problems. The province’s economic issues have been building for years under both Liberal and Progressive Conservative governments. Let’s hope the Trump threats will be the catalyst to start to repair the accumulated damage.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
