Ontario Budget and Election 2011 Thread – Premier Dad – Feb 11

Executive Summary
The Province of Ontario, Canada (population: 13 million) is having an election on October 6th, 2011. This will be preceded by a provincial budget that will come out within the next few months. Incumbent Premier Dalton McGuinty of the Ontario Liberal Party (“Grits”) is running for a third term. He is a centrist. He is being challenged from the Right by Progressive Conservative (“Tories”) leader Tim Hudak. From the Left, the challenge is primarily from New Democratic Party (social-democratic) leader Andrea Horwath. There is also a Green Party led by Mike Schreiner of some popularity (about 8% province-wide) but they are unlikely to win many seats. Current projections suggest it will be a difficult race between McGuinty and Hudak.

Major issues include the fallout from a controversial tax reform package, Ontario’s sluggish economy and related unemployment, large deficits and austerity measures, a planned sharp rise in energy costs, McGuinty’s handling of the G20 in Toronto, persistent poverty, environmental issues and the election of a Right-wing mayor in Toronto.

A Little Back Story
Ontario is the most populated province of Canada. The Progressive Conservatives, a party traditionally linked to Ontario’s protestant majority, governed the province uninterrupted from 1943 until 1985. The Tories governed in a fairly moderate manner and worked with the federal government to implement the post-war social-democratic consensus. This included a large general rise in taxes paired with moves towards increasingly universal and public health care, among other social programs. The PC Party’s defeat in 1985 started a fractious period in Ontario politics.

In 1990, the first nominally socialist NDP government in Ontario was formed with a surprise majority under Bob Rae. Unfortunately, this coincided with a major recession, which Rae responded to with a mix of unpopular austerity measures which many social-democrats believed would save jobs. This led to an $11 billion deficit in 1995 which was considered far too large by most Ontarians. From third place, Mike Harris of the Progressive Conservatives launched a dramatic campaign called the Common Sense Revolution based on tough neoconservative (neoliberal) principles.

In 1995, Harris won the provincial election. The province immediately gutted social programs and took aggressive stances against public unions. This led to major labour unrest. The new government ended up cutting personal income taxes in the province by 40%. It also cut welfare payments by 20%, ended social housing projects and froze the minimum wage. There was a general push towards more privatization and liberalization. Huge cuts to public services eventually gave way to large sustained increases in spending as the budget conditions eased, but these were only partially undoing the large cuts made in the mid-1990s. Harris stepped down in 2002, with his former Finance Minister Ernie Eves returning to politics. Eves was unable to win re-election, in part due to being disliked by his party’s Right while having nothing much to offer the political center.

Dalton McGuinty, the current Premier of Ontario, won a large Liberal majority against Eves in the 2003 election. His major promises were to end fighting with public servants and to freeze taxes. In 2004, he introduced a new health tax to make a small dent in rising health costs and his popularity fell to 9%. However, during the 2007 campaign, PC leader John Tory was perceived to have bungled his efforts by sticking to an unpopular policy that would have subsidized private schools, and McGuinty won a comfortable re-election. Soon after, the global recession hit and Ontario responded with large deficits and a controversial tax reform package. McGuinty’s popularity once again sagged and it appeared like the new PC leader, Tim Hudak, might be able to defeat him in the upcoming election.