Hello Tim Hudak!
If Ontarians hadn’t noticed you yet, they’ll know you soon enough.
Give the Tory leader credit for laying his job on the line: not many politicians go into an election campaign telling voters they’d ditch 100,000 jobs from the provincial government, schools and municipalities.
That’s a lot of public servants — and plenty of public services. Depending on the June 12 election results, all those people will lose their positions, or Hudak will.
Beyond the explosive job cuts, he’d also cut corporate taxes by a stunning 30 per cent. The Tory leader announced Saturday he’d make Ontario the lowest-tax jurisdiction for business in North America.
Why keep cutting government and taxes?
Corporate rates in Ontario are already far lower than in neighbouring U.S. states that compete for the same investments. You may remember Republican Mitt Romney pointing enviously to Ontario’s low taxes in the last U.S. presidential election.
Ontario’s public service is already smaller and more efficient, per capita, than in any other Canadian province. You may remember former bank economist Don Drummond underscoring that fact in a landmark report two years ago.
Yet Hudak argues that both are closely tied to the major issue in this election — namely job creation, and more specifically his shiny new One Million Jobs plan.
He believes the biggest barrier to economic growth is Ontario’s chronic deficit and growing debt. Hudak makes a perfectly reasonable point about the deficit problem. Ontario is certainly living beyond its means, with a $12.5-billion deficit this year and a ballooning public debt approaching $300 billion.
But his double-barrelled remedy of job cuts and corporate tax cuts spells double jeopardy for Ontario. Let’s look at his game plan:
• At all his photo-ops Hudak vows to root out corporate welfare — those job-creation grants from governments at all levels (including the federal Tories). Yet he’d simultaneously reduce their tax rates — which add up to corporate welfare for all, including wildly profitable banks and multinationals that outsource jobs. If Ontario’s already low rates haven’t unlocked corporate cash reserves — so-called “dead capital” — why would no-strings-attached tax cuts create jobs?
• Hudak cites the deficit as a major obstacle to job creation. It’s a novel analysis. Ontario’s deficit is certainly problematic but far from catastrophic. Debt-servicing costs are nowhere near the federal levels of the mid-1980s, when one-third of revenues went to interest payments (now roughly 10 per cent of the provincial budget). There are good reasons to reduce the deficit, but job creation isn’t one of them — there’s simply no credible economic correlation.
And how would lowering corporate tax revenues help lower that deficit? Echoing his inner Mike Harris, Hudak is counterintuitively counting on discredited trickle-down economics and unproven shock treatment to attract fresh investment and ultimately boost tax revenues. You know, the way Ronald Reagan’s tax cuts pushed the U.S. deficit to unforeseen levels.
• Hudak’s fixation on the deficit leads to his most controversial proposal: slash 100,000 government jobs to make way for his Million Jobs Plan. Cutting jobs to create them brings to mind the Vietnam War-era aphorism that suggested a Communist-held village must be destroyed in order to save it.
Hudak’s proposed 10-per-cent cut would (literally) decimate the public service. But there aren’t actually one million workers in the broader public sector — municipalities, universities, schools and hospitals — directly controlled by the premier. The best estimates from labour economists suggest closer to 800,000 provincial employees, as of 2012 Statistics Canada data. Hudak says he would exempt nurses and police from his cutbacks but not teachers, which suggests disproportionate cuts in education and all other services.
It’s a provocative proposal, not one likely to go down well in smaller communities, where the public payroll plays a larger role in the local economy and job creation prospects remain slim. It’s also a reminder of more Tory-style labour strife ahead, especially with teachers’ contracts expiring before the next school year.
People who were clamouring for an election now have one. Just one week into the campaign, two clear choices are emerging for voters:
Tory retrenching, under Hudak.
Or Liberal spending, under Kathleen Wynne’s spring budget.
(Oh, and a third option, albeit an unclear one: The NDP’s Andrea Horwath, showing no sign of Hudak’s bold plan or Wynne’s recent budget plan, still lacks a discernible platform.)
Will voters buy Hudak’s shock therapy? Will they worry about public sector pushback, or do they want the Tories to cut big labour down to size?
Right or wrong, Hudak isn’t just giving voters bland talking points. He’s giving them something to talk about. And think over carefully.