DETOUR

McGuinty's road already in detour
Get ready for the taste of waffle
Terence Corcoran
National Post
Friday, October 03, 2003

The first thing Dalton McGuinty should do this morning is rehire his forensic accountant. Get that man out there to track down all copies of the Liberal election platform document, confiscate every one and run them all through a shredder. Extreme action, to be sure, but somebody's got to remove the evidence from the scene of the crime. In the event voters try to have the Liberals recalled from office for electoral fraud and failure to fulfill their promises, at least the most incriminating material will have been destroyed.

The Liberals have already warned that their well-intentioned road to hell is in detour. There may not be enough money around to give people all the programs, policies and spending promised, they say. You may have to wait, maybe three or four years, possibly forever, for that 20-student classroom. Are you looking forward to 8,000 more nurses and an electric power building boom? Join the line over there that's still counting the days since the federal Liberals were elected to kill the GST and free trade (3,627).

With Ontario's new Liberal government, Canada's largest province is heading into four years of classical leftist policy turmoil, if not chaos. Four years of high taxes, rising spending, probable debt and interventionist initiatives surrounded by bales of insufferably self-righteous leadership from Mr. McGuinty.

For voters who were looking for a change from the Harris/Eves Conservatives, a waffling crew of extreme pragmatists who thought they could snooker voters by running from the left, maybe the McGuinty Liberals will seem like relief. If voters don't like waffle, however, the Liberals could become a little hard to take very fast. Like maybe tomorrow.

One of the first major items on the agenda will be auto insurance. Mr. McGuinty promised to roll back insurance rates as his first priority. He can do one of two things to bring auto insurance rates down: introduce a meaningful reform plan that includes ending big payments to people with imaginary whiplash, or impose price cuts that punish insurers.

Which way will this wishy-washy Liberal, who sees business as just another special interest group, turn? Prediction: a year of policy dithering and uncertainty, with deteriorating insurance products.

Before insurance is resolved, the Liberals will come face to face with Ontario's fiscal mess. Within a month or two we'll get the news: "We've looked at the books and they're worse than we thought. There's no money to do anything." The party's fiscal plan, with billions in new spending approved by two economists and a forensic accountant, will be thrown out as unworkable.

Having promised to increase spending by up to $6-billion a year on top of the naturally accelerating rate of spending increases, the Liberals will have to decide which promise to break: the no-new-debt promise, the no-tax-increase promise or the $5-billion new spending promise. To guide them through this decision, Ontarians can be confident that the government will have the advice of all the union leaders -- teachers, doctors, nurses -- who backed their anti-Tory campaign. Then there's the wagonload of special interest groups -- the business leaders, municipal affairs lobbyists, farm groups and civil servant activists who all feel the Liberals owe them.

Fulfilling some promises might be easy, especially the woollier ideas stuffed into the program. Maybe they can pull off a province-wide anti-bullying program, but they'll never get near some of the big issues. In many places, the McGuinty program is a masterpiece of irrationality. It promises to freeze tuition fees while raising the amount of money universities spend on faculty and expansion programs. But the two biggest headaches will be electricity and corporate taxation, two areas Mr. McGuinty has demonstrated a determined lack of insight and consistency.

A year ago, he called for breaking up Ontario's big power generating monopoly, a Crown corporation, into competing companies. Two days before the election he reversed his power plan and announced the government will keep control over the whole system and will use its own money to bring in new generating capacity. If that's the plan, then Ontario's power system is heading back to state-controlled monopoly status, open to major debt run-up, regulatory chaos and decline.

Most famous among policy plans is McGuinty's tax promise. "I will not raise your taxes, but I won't cut them either." The tax area is full of misrepresentation. The plan specifically promises to raise tobacco taxes by $700-million. Apparently smokers don't count.

The corporate tax rates will also increase by $550-million, the rate rising to 14% from 12.5%. Mr. McGuinty claimed this will leave Ontario competitive with its provincial and U.S. neighbours.

That's not quite true, as Mr. McGuinty would know. A C.D. Howe Institute study earlier this year showed that -- even with the Tory corporate tax cuts -- Ontario would have an uncompetitive tax regime. "By 2006," the study found, "Ontario non-resource large corporations face an effective tax rate on capital that is almost 50% higher than that in the United States, and higher than those in Quebec, British Columbia and Alberta."

So that's the starting point for the new Liberal road to hell for Ontario.

The province has an uncompetitive corporate tax regime wrapped in promises to keep tax rates high, increase spending and add to existing program and regulatory burdens in a system already overloaded with debt and a looming deficit. Something's got to give.