The strange, sad spectacle of Canada’s largest economy struggling to meet its own basic needs continues apace. The Ontario economy represents about 40% of Canada’s total gross domestic product of about $1.5 trillion. Despite recent, disheartening levels of unemployment — the latest figures put Ontario at the front of that pack, with the loss of 75,400 full-time jobs in one month — Ontario (and, in particular, Toronto) remains the preferred destination for immigrants, head offices and entrepreneurs.
But, despite a large and diverse tax base, Ontario comes off like an underfed family member, struggling to pay the rent and keep groceries in the fridge. The disconnect in Toronto is one of the most obvious examples. Last year, voters elected a new mayor, whose simplistic campaign literature claimed that the city had a “spending problem, not a revenue problem.” But after almost a year of aggressive and divisive attempts to trim the city’s budget of about $10 billion, Mayor Rob Ford has succeeded in saving only about $22 million — an irrelevant amount overall.
But what isn’t often talked about in the endless wrangling between right and left at city hall is the structural nature of Toronto’s debt. The roots of the current problem remain buried in the late 1990s, when Conservative then-premier Mike Harris forced amalgamation of the city and its suburban boroughs, and then downloaded a series of crushing financial bur-dens from the province to the city.
With none of the vaunted savings from merger showing up, and without the power to impose income taxes, Toronto had to pick up the tab for a whole new range of costs, including its expensive social services: all big cities have lots of needy people, and Toronto’s come from all over. Unsung city bureaucrats have been trying to dig the city out ever since and, over the past decade, have made steady headway, but not without putting the choke on a wide range of programs and services.
Key infrastructure projects have been neglected. Everything from roads and public transit to the renovation of nursing homes is in need of large infusions of cash.
What the provincial and federal governments continue to do, however, is to use Toronto’s hefty tax revenue to fund the rest of the province — and the country. Ontario’s Liberal Premier Dalton McGuinty spends a lot of time hammering Ottawa, asking that Ontario be allowed to keep more of the money it generates. Former Toronto Mayor David Miller did the same when it came to getting back Toronto’s own money from the province.
Now, the federal government wants Ontario to help fund the feds’ bloated plans to bring law and order to Canada — clearly, a disorderly place — by doubling the cost of the penal system at a time when crime is falling.
Sound economies depend on sound tax systems which in turn depend on equity. The current economic chaos taking place around the world as a result of politically motivated and unwise decisions about public money is making this point painfully clear. The health of Canada depends on the health of its largest province and city. Ontario needs a new deal from Canada. IE
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