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Doug Ford and the Ontario Progressive Conservatives swept into power on Thursday night with an overwhelming victory. The last time they held that position was back in 2003.
Ford faced much criticism during the campaign for a platform that was light on details about how his promises to cut taxes, lower hydro rates and find “efficiencies” in the government will be paid for.
Now that he’s won, businesses and investors will be seeking answers about how it’s all going to play out.
We reached out to some of Ontario’s leading economic organizations, experts and individuals and asked them to answer one (not so) simple question: What impact will Doug Ford’s win have on Ontario’s economy?
Here’s what they told us:
Sal Guatieri, Director and Senior Economist, BMO Capital Markets:
Ford’s pledge to cut the Ontario corporate income tax rate by one percentage point to 10.5 per cent would give the province’s businesses the lowest taxes in the country, and largely neutralize the tax advantage that had recently favoured U.S. companies. This will come in handy if Trump lays a tariff on the auto industry. If Canada’s economy is to break free from its current sub-two per cent growth track, lowering business taxes and incenting investment are good places to start, and doing so in a province that accounts for about 40 per cent of national GDP will help. Ford also aims to reduce personal income taxes, eliminate the cap-and-trade policy, reduce regulations, and lower gasoline taxes, though at the risk of running budget deficits.
Camilla Sutton, President & CEO, Women in Capital Markets:
The Doug Ford majority victory and the stunning Liberal loss certainly highlights a desire for change in Ontario. For those of us who work in Women’s Advocacy there is a lot of concern as to what this might mean to the progress we have made and were on the path to making. Especially when it comes to women’s health and sex education in the school system. However, we have seen encouraging progress at both the federal and global level, like the G7 meetings in Charlevoix, where one of the five themes is advancing gender equality and women’s empowerment.
Craig Alexander, Senior Vice-President and Chief Economist, Conference Board of Canada:
Doug Ford’s majority victory gives him the authority to execute on his platform themes. During the election, many promises were made, including: lowering personal and business taxes, ending carbon pricing through the cap-and-trade program, lowering gasoline taxes and addressing high electricity prices. The challenge is that the cost of the platform was not laid out, so it is hard to judge at the moment how the promises will be paid for. I expect tax revenue growth to be modest as economic growth slows. If the incoming government does not want to run deficits, an approach that many conservative supporters would likely favor, the Ford government will likely have to prioritize its commitments and introduce them in a gradual and staggered way.
Naureen Rizvi, Unifor Ontario Regional Director:
There is a lot of uncertainty for workers in Ontario about how Ford’s plans will affect the economy and labour market, because those plans were never fully revealed. As government revenue could decrease, we are prepared to defend against resulting cuts in public services that we all rely on. What we do know is that 1.5 million people in this province who were scheduled to receive a raise to $15 per hour next January could end up having less money in their pocket, losing out on a projected $800 per year, even taking into account his proposed tax cut. Workers in this province want an economy that works for them, and one that is more fair and equal. The $15 an hour minimum wage helps Ontario move along that path.
Rishi Sondhi, Economist, TD Bank:
One of the first orders of business by the Ford government will likely be an audit of Ontario’s books. We urge the government to move promptly on this plan. If history is any guide, this process could reveal a significantly higher deficit (and debt) than previously reported, increasing the fiscal challenges faced by the new government while also potentially providing ammunition to justify future spending cuts. The government should also focus on delivering a budget as soon as possible. The plan should outline a path towards easing Ontario’s debt burden while setting a vision for where the government wants to take the province.
Ontario’s economic environment has become more challenging, with a housing slowdown, uncertain NAFTA negotiations and rising protectionism muddying the outlook. Given these risks, the Tories will have their work cut out for them. However, key elements of the platform could be viewed as growth positive, including cuts to corporate and personal income taxes.
While we are not inclined to change our economic outlook based on this outcome, it does raise risks around the forecast. A choice to run deficits over the next few years would provide a near-term stimulus to growth. However, this path would also lead to higher debt and medium term fiscal vulnerability while lessening the government’s ability to respond to an economic downturn, should one arise in the future.
Mary Webb, Director, Economic & Fiscal Policy, Scotiabank Capital Markets:
Out of power for 15 years, the anticipated Budget this fall will likely represent a
first step towards a fuller roll-out of the new administration’s plans in its Budget
next spring for FY20. In addition, Ontario, like the other Provinces, will be
responding over the next couple of years to major federal policy initiatives such as
national pharmacare. U.S. trade actions and negotiations are presently top of mind,
but in the wings are other issues such as Ontario’s mid-term competitiveness.
Uncertainty still remains significant for Ontario.
Plamen Petkov, CFIB Vice-President, Ontario:
We are optimistic that some of the measures announced by the incoming government will help, including reducing the small business and general corporate tax rates. However, the fact remains that the province is projected to run significant deficits for the foreseeable future, building on an already monumental debt load. When combined with the unpredictable nature of the NAFTA negotiations, this has created a lot of uncertainty for Ontario’s small business owners. We will watch the new government very closely in the coming weeks to make sure this uncertainty is addressed, and look forward to meeting with Premier-designate Ford and members of his team very soon.