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At Issue

With Philip Shaw

Tories Looking to Change Image With Latest Budget

Monday, July 15, 2002

It's like back to the future. This time with gusto. After sixteen years writing and broadcasting agricultural economic commentary, across North America, I'm back where I started, working for John Gardiner at www.cktimes.ca. But this time, its nothing about agriculture. I've gone mainstream. Drop agriculture from the economic. Add politics into the mix and you'll get my economic and political commentary each week. I'm ready to go.

And ready to go last week, was Janet Ecker, Ontario's Finance minister. She delivered her first budget as finance minister under Premier Ernie Eves. And if there was any ever any doubt about the death of the common sense revolution, Ecker's budget was it. Gone was the stampede to cut taxes and reduce services which had become so characteristic of the Mike Harris government. Ecker delayed some tax cuts and raised the sin taxes on alcohol and tobacco. The Harrisites within the Tory caucus will surely howl over that one.

Its' obvious what's going on. The Tories are about ten points behind the Liberals in opinion polls and the Ontario populace has lost its appetite for the old line Harris policies. Add Walkerton into the mix along with Hydro rates and you get a couple of things which gets the attention of voters. Everybody can understand getting sick from bad water and the threat of ever higher hydro bills. It surely is not lost on the Ontario Tories. Ecker's budget was an attempt to soften the Eves image and further distance him from the hard line policies of the past.

Health care spending in the new budget goes up 7.3% to $25.5 billion. There is $500 million over two year for safe drinking water initiatives. There is more money for education and universities and colleges. There is even new money for something called "Biodiesal" which is a diesel fuel made from soybeans. Whoops!, I'm sorry, I stumbled into agriculture. Regardless of that, Janet Ecker if you try hard could be mistaken for former treasurer and local MPP Darcy McKeough. OK, maybe that's a stretch.

Ecker's budget also included a delay of personal and corporate tax cuts. This will save the government $325 million in revenues. It will take an amendment on previous Tory legislation to get this done. Ecker and Eves are calling it the "September 11th" amendment. The argument is nobody could predict the economic catastrophe which was September 11th. So Ecker is using it as an excuse to back peddle on the tax cuts. We will see if the "delay' turns into something more permanent.

I was surprised by this because from a truly economic point of view, September 11th didn't send us into recession. Economic growth numbers are positive, even healthy for the Ontario economy. Real growth for the Canadian economy in the first quarter is expected to be 4.5 to 6%. And much of this will take place in Ontario. So in fact, I think Ecker is being extremely cautious with the tax cuts and the spending. If the economic growth in Ontario continues, government revenues can only grow giving Ecker all kinds of wiggle room. We will see.

At the local level, its hard to mix the political with the economic. The high economic growth numbers consistently released by Statistics Canada don't necessarily reflect what's' going on in the local economy. The Navastar truck plant is one of the biggest employers outside of agriculture in Chatham-Kent. At the present time, workers are striking at the plant and some production has moved to Mexico. The resultant rumours and innuendo have turned into a cottage industry. The best case scenario for this problem will be continued growth. The worst case will be closure. Surely, if the worst comes the political and economic rhetoric will be deafening.

Whatever happens it won't stall a provincial election within a year. I think it will be in the spring of 2003. This will give Eves and Ecker time to soften their government's image and tread water through the Hydro One fiasco. If its a burning hot summer, Ontarions will likely blame the government for expensive hydro consumption. If its not, the government will buy themselves some time to catch up to the Liberals. And when the countryside tuns green next spring, I expect election signs all over the place. Then we'll see if the best laid plans of Premier Eves and Finance Minster Janet Ecker come to fruition.



Philip Shaw, farms 830 acres near Dresden, Ontario. He holds a Masters of Agricultural Economics and Business Degree from the University of Guelph and is a well-known commentator on agricultural issues in print, on radio and over satellite in Canada and the United States. In the Chatham-Kent Times, Phil will use his frank and forthright writing style to address political and economic issues from the local to the international stage. He is a keen observer of political life at all levels, reads widely and has travelled the world to gather fodder for his column. See what's At Issue this week.