Cyberwanderer’s Blog

February 20, 2008

Flaherty war of words with Ontario

Filed under: Canada,Politics — cyberwanderer @ 11:56 am
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jimflaherty_gm188.jpgFor a finance minister who left Ontario in deficit and even try to hide it (this should be made a criminal offense btw), and someone who awarded bidless contract, Mr. Jim “I swear there is no deficit” Flaherty should be the last person to criticize Ontario. He wants Ontario to cut business taxes and blame it for woes in Ontario’s manufacturing sector. Harris and Flaherty was proud of their “6 years of cutting taxes for Ontario’s businesses” which left Ontario in poor financial health. And despite cutting the social services, education and health, along with selling government assets, they were not able to make up for the shortfall. This lead to deficit which they tried to hide. Now, because of vote buying policies like the GST cut that economist opposed, they have quickly eroded the large surplus Canada have. A surplus that could have been used for much needed funding of crumbling infrastructure throughout the country. Flaherty declaration of war with Ontario’s government is just adopting their commonly used strategy which is the best defense is offense. There is a possibility that their government will fall on the budget next week and they might be held accountable for refusing to help municipalities and manufaturing sectors. Meanwhile, Dion announces a well received infrastructure plan. So it is better for Harper to be on the offense than to have to answer to why they have nothing else to offer. Why they have nothing to show for shrinking the Canada’s surplus they inherited from the previous government.

Ontario’s Minister of Economic Development and Trade Sandra Pupatello, who attended the speech, reacted angrily afterwards, telling reporters that Mr. Flaherty’s comments consisted of “an appalling string of bald-faced lies.”….Ontario has been very successful in attractive investment in the automotive sector, she said. “[We’re] the only jurisdiction to bring in $7-billion of auto investment in these so-called lost years,” she said.
closequote.jpgFlaherty lashes Ontario for ‘lack of vision’ (G&M)

McGuinty also shot back at Harper’s conservative:

the federal Conservative government has to send a clear signal that it recognizes “that there is more to the economy than oil and gas.” …Ontario workers are cheated of Employment Insurance benefits and that Ottawa is handicapping the province by refusing to invest in infrastructure. …..As well, he decried the Conservatives’ “ideological aversion” to working with business to help deal with the rising Canadian dollar and global competition. ….the 2003 Ontario election during which Mr. McGuinty argued that Ontario couldn’t afford any more tax cuts. He won that vote and he’s not changing his tune. Mind you, neither is the pugnacious Mr. Flaherty……”They’re not looking for partners to work with, they’re looking for villains to blame,” said one official.

closequote.jpgOntario Premier isn’t sitting still for Flaherty (G&M)

Before Flaherty’s speech, McGuinty already fired a pre-emptive strike, knowing Flaherty is going on the offensive against his government. McGuinty said:

“There are actually not many people left who hold the view of Mr. Flaherty, which says just cut taxes, back away and let the economic forces play themselves out,” Mr. McGuinty said. “I think the progressive modern view on growing your economy is one where you come to the table.”…..Mr. McGuinty called on the Harper government to match a $1.15-billion provincial fund aimed at creating jobs in the auto sector……”When I go to China, I need to be able to say, ‘by the way, I’m working with the federal government here,’ ” he said.

Federal Liberal leader Stephane Dion join in saying:

“After only two years of Conservative government, the cupboard is bare, manufacturing sales have plummeted to a three-year low, and Canada’s trade surplus has shrunk to its lowest levels in nearly a decade,” Mr. Dion told a gathering of Quebec manufacturers and exporters in Montreal.
closequote.jpg– source: Globe and Mail

Update: February 21, 2008
Flaherty strikes back at McGuinty lecturing him about cutting corporate taxes. This guy have no shame. They govern Ontario during good economic times, cut all sorts of services left and right and sell government assets and still end up with deficit. He has the nerve to lecture a government Ontarian chose to replace him with. Economist is not buying Flaherty’s pre-election gimmick.

Lower taxes can be helpful, but aren’t a guaranteed fix for Ontario’s economic troubles, said Craig Alexander, TD Bank’s deputy chief economist.

“The reality is that this is a very difficult environment,” he said, referring to the U.S. slump and the impact of the higher loonie on Canadian manufacturers trying to sell to American customers.

“Tax cuts can improve productivity but that doesn’t mean that they can’t be part of a broader policy approach” that would include targeted support for certain industrial sectors.

But the economist noted that spending increases and tax cuts in Flaherty’s previous budgets have left the federal Conservatives with very few financial resources to fund economic stop-gap measures.

Update: February 23, 2008

When I first read about McGuinty’s claim of being cheated on EI, I was not sure what he was referring to. Today’s Toronto Star use an actual case to demonstrate the bias against Ontario’s workers. A guy who work in a manufacturing company in Ontario that close down has EI that would run out in Spring. But if he lived in Atlantic province then he would be eligible for EI until next fall “giving him more time to brush up on his skills”.

In the employment section of the same paper, they featured an article called “Ontarians hope budget will spark EI reform” and claim that “despite pressure from McGuinty, Flaherty unlikely to act on uneven benefit payments”. An economist have this to say:

“It almost looks like equalization by stealth,” says Doug Porter, deputy chief economist at BMO Capital Markets, alluding to the federal program meant to distribute tax revenues from richer provinces to needy provinces.

“That’s because, relative to the rest of the country, so few Ontario workers seem to be eligible for EI,” he explained.

Despite calls for EI reform as job losses mount in central Canada, there is no indication Flaherty will address the issue in Tuesday’s budget, which is expected to offer few new programs or policies.

Porter went on to say:

If there was ever a time for one-off aid packages for industry, this appears to be it. “Normally I wouldn’t be a big proponent of that sort of thing,” says Porter of BMO Capital Markets.

“But the reality is that the global economic backdrop has distributed the gains and losses so unevenly across the country that, really, it does, to some extent, fall to fiscal policy to try to smooth out some of those big differences and try to level the playing field a bit.”

So why is it such an aberration for Jim Flaherty, who is from Ontario himself, to fix an obvious flaw in the EI? I guess Whitby-Oshawa knows come election time that they can’t rely on one of their own to stand up for them. Just as he was party to adding more seats to commons that would shortchanged Ontario in favor of Alberta and BC.

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