Hamilton's future stalled by unfilled promises
March 23, 2009
Joan Walters
The Hamilton Spectator
(Mar 23, 2009)
It was only 16 months ago that cabinet ministers criss-crossed Ontario doling out billions of dollars in pre-election goodies to fuel what Liberals promised would be a period of renewed prosperity.
In a campaign stop in Steeltown, then finance minister Greg Sorbara pledged that "this decade belongs to Hamilton." He promised four years of balanced budgets, and innovative spending to capture the opportunities of a new century.
This Thursday's budget will report a deficit of $18 billion the next two years, a record sum that shows the scope of Ontario's excruciating reversal of fortune. The spiral began just as the Liberals won their second majority in the fall of 2007. That's when the global economy first started showing cracks.
Critics say that since he re-took office, Premier Dalton McGuinty has flailed without purpose in the wake of layoffs, shutdowns and other carnage from the worst recession since at least the 1990s.
"Despite all the warning signs from experts and economists, the McGuinty Liberals chose to spend recklessly in times of prosperity and made no preparations for the coming economic storm," said Tory Tim Hudak, MPP for Niagara West-Glanbrook.
"Once it hit, the Liberals did little to soften the blow to Ontario's families and business," said Hudak.
Sorbara -- party godfather, election architect, and one of the Liberals' few deeply experienced financial hands -- shocked caucus when he declined to stay in cabinet after the election, to have more family time. He's still an MPP.
The resulting cabinet capability gap opens McGuinty to criticism he has no one experienced enough to handle a recession of this scope.
Finance Minister Dwight Duncan -- who presents the budget on Thursday -- is the former administrator of a large drug and alcohol recovery centre, and a former Windsor councillor. Supporters say his MBA, an economics degree and cabinet posts in finance and the management board prepare him as well as anyone for all this.
Many problems are not in Ontario's direct control and Duncan says "the perfect storm we are living today has been brewing for some time." Experts say governments should deal with wreckage from the recession as it occurs.
"You have to think about what's happened in the last three or four months almost as a natural disaster," says Marvin Ryder of the DeGroote School of Business at McMaster University. "What are we going to do for the people affected by this ... job retraining, planning for what the social costs will be through welfare, unemployment, those sorts of things. And then steps to turn back the disaster ... to improve the state of the economy."
Duncan's budget will unquestionably contain stimulus funds, through infrastructure and other projects, along with programs to boost consumer confidence. One possibility is a widely discussed scrappage fee of $3,500, to spur owners of old cars to buy new ones.
But in Ontario -- as in many North American jurisdictions with an industrial base -- there is a more insidious, general destabilization, which is difficult to address: rampant unemployment, sliding wealth and the immobilization of whole industries at a time. U.S. Steel's indefinite shutdown of Hamilton operations is the result of worldwide contraction in demand.
Adding to Ontario's woes are its reliance on the collapsing auto industry and a corporate sector threatened by backlash from the ongoing U.S. financial meltdown.
The January federal budget set out a $40-billion stimulus plan. But Prime Minister Stephen Harper says Canada will not emerge from the recession until the U.S. financial system is fixed.
To Ontario NDP Leader Andrea Horwath, the greatest need is to start transforming Ontario's hemorrhaging industrial base.
"The reality is we have a great industrial infrastructure in this province and I fear the government doesn't see the value of that," says Horwath, Hamilton Centre MPP.
Horwath wants the budget to address "how do we transition our economy into the products of the future." Industries unable to stay afloat with traditional lines of business should get aid to make other wanted goods, she says.
"We might not be building the same products, but we would be using that infrastructure to build new ones, whether it's solar panels or the components for light rail."
Industrial job losses are staggering. In Hamilton they rose to 33,000 in February, up about 2,000 from January. The city's jobless rate is 8.4 per cent. The St. Catharines-Niagara region has one the highest rates in Canada, at 9.5 per cent.
Harper says Canada's jobless rate -- now 7.7 per cent -- will rise in the next few months. The Liberals will be expected to address general joblessness in their budget as well.
But there is no answer yet on whether Ontario will address its own employee ranks. In contrast to the tens of thousands affected in the private sector, there has been no significant retrenchment in the Ontario Public Service -- a massive group that works for the province.
Duncan has said labour stability is important and that " having public servants still being adequately paid ... will yield benefits."
"Those folks, they will go shopping, they will spend their money, they will invest it," he says.
The only model for public sector cuts is from the 1990s, when the Bob Rae government asked for $2 billion in wage cuts from public sector unions. The move by the NDP so enraged employees that they refused to co-operate and boycotted all talks.
In the end, so-called "Rae Days," days without pay, were implemented unilaterally.
jwalters@thespec.com
905-526-3302
http://www.thespec.com/News/Local/article/535142