The Conference Board of Canada has chimed in on what ails
Ontario and how to get it moving in a recently released report titled Needed: A Comprehensive Growth Strategy for
Ontario. The report argues that after rebounding from the 2008-09 recession,
Ontario has slipped into tepid growth of around 2 percent annually and needs a
comprehensive economic growth strategy to improve its long-term growth
potential. What is to be done?
Well the comprehensive strategy is supposed to address three
things: capital investment, productivity and the labour force – while ensuring
that its public services and fiscal path can sustain this growth. While some steps have been taken with
tax measures such as the HST and reducing corporate income taxes to create a
stronger private sector investment climate, additional action requires Ontario
do more to reduce trade and investment barriers both within Canada and
internationally and allow Ontario firms to take more advantage of international
trade opportunities. In addition,
Ontario needs to improve workforce skills and demand high performance standards
of its schools, colleges and universities. If Ontario is
unable to improve its long-term growth potential then the Conference Board
states that: “Ontario taxpayers can expect to pay higher taxes to support their
desired levels of public services-…”
What can I say?
I’m disappointed. It seems
like a rehash of the blatantly obvious.
We need more private capital investment, more international trade, and
more public sector human capital investment. Isn’t this what we have been doing for the last decade? More distressing, there is also the
message that if growth rates are not improved, taxes will need to go up. Really? Might raising taxes not slow down growth even more? What exactly are these desired
levels of public services?
Here is some interesting information. From 2001 to 2011,
public sector employment in Ontario grew by 39 percent. During the same period, private sector
employment only grew by 11 percent.
As a result the private sector share of total employment in Ontario
declined from 83.5 percent to 80 percent over this period. This cannot all be blamed on the
2008-09 recession – the trend was well underway before the recession. A strong private sector generates the
wealth and activity needed to support the public sector activities that
Ontarians want. A strong public
sector can provide the support and services private sector activity needs to
earn profits. However, expanding
public sector employment faster than private sector employment and then implicitly
threatening tax increases to pay for it if productivity does not go up seems to
not be an optimal growth strategy.
We’ve been investing in infrastructure and human capital for
some time in Ontario and yet Ontario still faces tepid growth. Have we been investing too much? Maybe we need to reduce public
spending. Have we been investing
insufficient amounts? Then we might need to spend more. Have we been investing in the wrong
things? Are we spending too much
on health and education and not enough on transportation? Who knows? Maybe 2 percent growth is the best we can expect in light of
Robert Gordon’s views on the future of the US economy? These are questions that
need to be asked. These are
questions the Conference Board among others could help answer. Ontario could indeed use an economic strategy. I’m not sure the Conference Board has
provided one in this report.
Worthwhile Canadian Initiative 
“…Ontario needs to improve workforce skills and demand high performance standards of its schools, colleges and universities.”
It would help untold numbers of Ontarians that are in school, or trying to choose career paths, or even trying to gain new skills if employers would simply offer some guidance about the kinds of skills they would most like to see. As it stands most people are forced to guess. Why the secrecy?
Bill Bell is basically right here, although it’s sort of anecdotal my experience as a university graduate looking for a job in Ontario vs. looking for a job in the USA has left me with the opinion that Ontario companies (even big ones) are very VERY poorly managed at least with respect to the hiring of new workers. The vast majority of people from my school who got anywhere went to the US (even during the recession). You can strengthen Ontario schools and universities but Ontario employers have absolutely zero interest in hiring the graduates of these institutions and offer little to no training even for talented prospects.
The phrase “desired level of public services” is a real winner. What is this level? Are voters/taxpayers monitoring a set of dials? I suspect the 39-versus-11 percent growth stories would surprise most people.
People don’t vote for a level of public services. If quality of government is a variable, people respond to political scandals (or not, depending on partisanship), personal experience of the health care system, and a small menu of services that vary from person to person (schools, roads, daycare, arts funding). And the economy probably mediates those responses significantly. Assuming there is some policy move to be made based on responses to anecdotal events is not the basis for a “comprehensive strategy”.
One vote each for Bill, CBBB, Shangwen. Really, I’ve never thought that the government provides services. I thought it it collects taxes and distributes to a set of monopolistic sectors. Each sector’s share seems to be decided by a political calculation or arbitrary growth path that is now the status quo.
Between the extremes of government providing defence and law or the government providing everything from cradle to grave I’m not sure how each nation decides on the level of service, like Shangwen says, there are no dials.
At the extreme case its looks like I would be working to support other people’s habits, if those habits are rich and taxation needs to increase to fund them, why not drop out and become a net consumer of those government services.
Almost seems like a threat, if you don’t work hard enough we are going to raise your taxes …until you do? Spending cuts seem taboo but the thing is they aren’t spending cuts, they are spending brakes to slow spending to a sustainable growth rate. 39% vs 11% OMG!
” However, expanding public sector employment faster than private sector employment and then implicitly threatening tax increases to pay for it if productivity does not go up seems to not be an optimal growth strategy. ”
Interesting times for the university sector…
“… companies (even big ones) are very VERY poorly managed”
On the contrary, they are doing a great job dumping human capital development costs on the taxpayer. Great for the bonuses. Not so good for the firm in the long run. And given that taxing corporations is easier said than done, I don’t see an obvious fix. We either pay the ransom or risk the well-being of the hostages.
“Interesting times for the university sector”
Seems the machine is only going to get bigger. But all the pissing and moaning and the refusal to hire new grads by so many firms (at least the ones I’ve worked for) raises the question: why bother? They don’t like the armies of graduates as it is, and they want everyone to pay for MORE? It’s mental. At least among tech firms. they individually believe that they can and will only hire the most productive workers. The plan is to let the cream rise to the top and skim it off. Of course, they’ve forgotten to feed the cow.
At this point I’m tempted to rant more than I have already, but I’ll spare everyone and just shut-up instead.
It would be nice if Ontario had some representation. I wonder what the crown is up to? Imo 20% may be a bit too high, to avoid conflict of interest in a 3 party fptp, system.
Patrick and CBBB are right on the money. As a person who wants to stay near his family, it is very hard to find work in Ontario.
The dishonesty that employers use in hiring is staggering. It plays into the lack of investment that Carney and Flaherty have bemoaned. And while I’m on it, Stephen Gordon was flat wrong in his arguments that corporate savings were rational and good. Keynes demolished that argument back in his General Theory; Stephen unfortunately put forth a zombie argument.
On dishonesty, I have personally experienced not-so-hidden racism at one interview (directed at me, and I’m a snowflake for clarity) and another company who cancelled the job right at the interview, I don’t know why I even bothered nor why I wasn’t called that morning.
Add to this our dysfunctional immigration system. It is dysfunctional because it chronically cannot match immigrants to available positions and makes promises about opportunity it cannot deliver to those immigrants. Engineering is a poster-child for this nonsense It is a cruel joke to immigrants and exacerbates a poor job market. It has caused Engineering in particular to develop an unhealthy rivalry between immigrants and domestic entrants which leads to racism and discrimination in the workplace by dividing Engineering into cliques. Nobody is gaining from this, it has to stop. I do not want to promise gratuitous lies to prospective Canadian citizens, it is just wrong.
Government need to stop listening to corporate cries for talent, that’s a false siren. What seems lost to me is the admission that it is the job of the company to train its employees in the specifics of its business. You cannot take anyone off the street and expect them to know your systems perfectly, if they can then you don’t have any actual comparative advantage in methods or technology. If it’s specific to you then you have to train people to use it. But that’s lost on management.
What can I say except that it turned me from a person who voted Tory in 2008 into a paid-up NDP member in 2012.
Livio:”A strong private sector generates the wealth and activity needed to support the public sector activities that Ontarians want.”
An effective public education system generates wealth as much as an effective private one and an ineffective private education destroys wealth as fast as a public one. An effecetive health system does the maintenance job on the human capital. What matters is efficiency and whether public or private does it best. It is not a matter of bankers produce wealth,teachers consume it. A teacher, whether private or public, produces far more than an Assassin’s credd programmer…
We’re bizarelly threading into Mitt Romney territory…