Ontario Tories Ahead in Latest Poll

There's a Forum Research poll out saying the Ontario Tories are at 41%, the Liberals at 33% and the NDP at 20%. Not really surprising that a long in the tooth government is losing in a poll (the last election notwithstanding). The problem for the Liberals is that implementing the cost cutting recommendations in the Drummond Report in the upcoming deficit isn't going to help their numbers. Various groups are going to be pissed when either their salaries, jobs or government funding is cut. Those previously predisposed to vote for the Liberals will either not vote or vote for the NDP, leaving Tory leader Tim Hudak advantaged.

Look for the next budget to have some tentative steps at cutting the $16 billion deficit and then Hudak looking for an appropriate issue to bring down the government. Watch Andrea Horwath trying to decided whether to prop up the Liberals (which will be harder to justify if the Liberals are cutting and implementing the Drummond report) or go for her own opportunity to grab as many inner city Liberal seats as possible.

Ontario Growth Predicted to be 1.8% in 2012, Uh-Oh!

There's an article in the National Post with some BMO Capital Markets predictions for provincial 2012 GDP growth. Unsurprisingly, the Western provinces lead with Alberta at 2.7%, Saskatchewan at 2.9% (too bad about the Riders this year) and BC at 2.2%. Where's Ontario under the leadership of the mighty Dalton McGuinty? Oh no, it's only 1.8%. Didn't I see a prediction from the Ontario Finance Ministry that growth would be over 3% for this year, the first time since 2000? I better screen cap that before it goes down the memory hole as it is becoming pretty clear growth this year will be weak and in 2012 it will be weak too for Ontario.

What about those contracts for the teachers and doctors that are still cranking up year after year despite weak GDP growth? Probably not good for the 2011-2012 fiscal year deficit, comically now predicted at $16 billion. Probably not good for the 2012-2013 deficit either. Uh-oh.

Hamilton Mountain Denies Liberal Majority

There's been articles written about support for wind turbines costing Dalton McGuinty rural seats and thus a majority. However with the Liberals only being one seat away from a majority, any seat lost denied them a majority. Hamilton Mountain had previously belonged to Liberal cabinet minister Sophia Aggelonitis before the election and was lost to NDPer Monique Taylor in the Ontario election. Taylor won with 20,558 votes versus 14,716 for Aggelonitis and 8,461 for Tory Geordie Elms.

This result should not have been particularly surprising, as Aggelonitis had 17,383 votes in the last election, while the NDP had 15,649 and the Tories 10,991 as the popular vote for the Liberals went down across the province, while the NDP went up. I'm wondering if there may have been a bit of strategic voting by Tories for the NDP to deny the Liberals a majority. Unlikely, but it looks like the Liberals are almost done in Hamilton federally and provincially which is a pretty big reversal of fortune.

Ontario's $16 Billion Deficit, Would Raising HST Help?

With the election one day away and all parties not really saying a lot on how to get rid of the estimated $16 billion deficit Ontario (for the current fiscal year), taxpayers don't really have a good idea how big it is. As an exercise, I thought I would look at how high the HST would have to be raised to get an extra $16 billion.

Looking at the GST wiki, there's an estimate that the federal government lost $6 billion in revenue for lowering the GST by 2%, so that's approximately $3 billion per percentage point for the entire country (those were 2008 numbers, but we will work with them). Given that Ontario's percentage of the population is 38.1% (13.2 million out of 34.6 million), we will make another estimate that a percentage of HST is worth around $1.14 billion (some things don't have provincial tax on them, do Ontario residient pay more than the average Canadian for GST?). So to close the $16 billion deficit would require raising the HST by approximately 14%, taking the rate to an astronomical 27% from the current 13%. That's nasty and let's be honest, raising the HST to 27% wouldn't actually result in that much more revenue. The economy would tank, people would buy goods outside Ontario, black markets would take off, etc. Raising the HST to 15% to take back the 2% the feds lowered the GST would help, but wouldn't come close to getting rid of the deficit.

That's how big a problem the Ontario deficit is. Raising taxes to cover it won't be easy at all. Unless people enjoy paying sales tax of 27%.

Overview of Ontario 2007 Provincial Election Results

With the 2011 provincial election fast approaching, I thought it would be good to give a quick rundown of the results from the previous election on October 10th 2007. The Liberals under Dalton McGuinty received 42.25% of the popular vote and 71 seats out of 107. The PCs under John Tory received 31.62% of the popular vote and 26 seats. The NDP under Howard Hampton received 16.76% of the popular vote and 10 seats. Interestingly the Greens under Frank de Jong received 8.02% of the popular vote and no seats.

If the NDP can get their vote up to mid twenties they'll certainly gain significant seats. For the Liberals, they will definitely lose seats but how many is still unclear. 54 seats are required for a majority and it is looking doubtful that either the Tories or the Liberals will gain that many. Although there is a seat projection from threehundredeight.com that has the Liberals with a majority of 55 seats despite the Tories having a very slight edge in the popular vote. However one has to take these seat numbers with a bit of a grain of salt, as for the greater Toronto area the seat projections are 2 PCs 15 Liberals and 1 NDP, which seems highly unlikely. The result rests on how many people are willing to come out for McGuinty.

Ontario Election, Minority Government, What Happens?

With polls having the Tories and Grits relatively close in the Ontario election and the NDP highest since Bob Rae's majority, the possibility of a minority goverment looms large. If Dalton McGuinty wins the most seats, I don't really see him forming a formal coalition with the NDP, but rather attempting to govern like Stephen Harper during his recent minority period. I don't think that's inherently stable, especially with weak second and third quarter GDP growth causing problems. Hudak and Horwath coming together as a coalition is obviously very unlikely in this scenario.

What's more interesting is if Tim Hudak wins the most seats, but not a majority. Do McGuinty and Horwath form a premptive coaltion and deny Hudak a turn as premier, or do they lie in wait to eventually usurp Huday like Stephen attempted to do a couple of years ago federally?

I think for McGuinty, coming off of eight years of majority government, allowing Hudak to even be premier for a little while is problematic. A minority premier isn't all powerful, but there's probably a lot of skeletons in the Liberal closet that come out if McGuinty is not premier so there's considerable incentive for McGuinty and Horwath to do a deal.

Vote splits versus seat counts could also factor. If Hudak is close to a majority and has a lot more seats than McGuinty, than a NDP Liberal coalition will be more difficult. If the Liberals win more seats than the Tories, but lose the popular vote than things get interesting.

Solar Panel Manufacturing, Ontario versus China

Ontario Premier Dalton McGuinty has been touting so called green jobs, especially solar, produced in Ontario due to high feed in tariffs and made in Ontario requirements. Here's a Star article with McGuinty on the campaign trail at a solar panel manufacturing plant.

With three US solar firms declaring bankruptcy recently, here's a good Guardian article on how China is basically taking over the solar industry, in part due to cheap government loans. My prediction for the solar manufacturing companies operating in Ontario? The vast majority gone in five years. Solar panel manufacturing is becoming a commodity where cheap labour is the ultimate cost driver. Subsidizing this industry in Ontario is a pointless social engineering endeavor.

For laughs, here's a complaint about where a neighbour placed their solar panels.

Ontario Election Rogue Poll, McGuinty Ahead?

There's a new Harris/Decima poll out with Dalton McGuinty's Liberals ahead by 11 points at 40%, far beyond anything that has been seen so far. The Tories are at 29 percent and the NDP at 24%. This seems pretty bizarre, especially with the NDP number so high, but maybe it is a sign of something new. One issue in this election will be vote turnout for the parties. I'm assuming those that loathe McGuinty will make an effort, as will teachers for McGuinty, but how many others will make the effort to get out for McGuinty? With Harris having a majority, perhaps those upset with him will turn out to vote against Hudak.