Throne speech doesn’t provide the policy reset Ontario needs

On Monday, Kathleen Wynne’s government delivered its speech from the throne. The address was widely anticipated, with many observers describing it as an opportunity for the government to “reset” its policy agenda.

Ontarians therefore might have hoped the throne speech would outline significant changes in the government’s policy approach and new strategies for addressing the major economic and fiscal challenges facing the province.

Instead, they got a generally superficial address that essentially confirmed the government’s continued commitment to the same failed approach has helped reduce the province to have-not status in confederation and caused its public debt to balloon.

Let’s start with the signature policy commitment of the throne speech, which was a promise to remove the HST from skyrocketing hydro bills. Ratepayers will welcome this relief, but it would have been more encouraging to see the government recognize its own role in contributing to the big run-up in electricity costs in the province and signal a more fundamental change in course.

One key reason for the high electricity prices in Ontario is the 2009 Green Energy Act (GEA) and the creation of high-cost feed-in-tariffs, which ensure the government purchases renewable power (wind and solar) at guaranteed rates above the market price. The predictable result is that Ontarians pay more for electricity than they otherwise would.

A “reset” of Ontario’s approach to electricity policy therefore would have been welcome if it involved a promise of a wholly new policy approach focused primarily on affordability and reliability. The Throne Speech, however, signaled no such change in direction and instead simply put a Band-Aid on a costly economic wound that was largely self-inflicted.

Indeed, the government shows no sign of abandoning its commitment to costly and ineffective “green” programs and remains committed to marching forward with its poorly designed cap-and-trade scheme.  These facts make it hard to take the government’s profession of a newfound commitment to fighting high electricity prices seriously.

Energy is not the only file in desperate need of a reset but did not get one. The government’s approach to public finances also needs an overhaul. The province is set to run its ninth consecutive multi-billion dollar deficit this year and, as a result, the province’s net debt load has approximately doubled since 2007.

The government’s own Financial Accountability Office has pointed out that the government has provided no detailed plan for how the government will achieve its stated goal of returning to pre-recession levels (in comparison to the size of the economy). In fact, the government’s current fiscal plan calls for billions of dollars in new debt in the years ahead.

The anticipated “reset” seemed to afford a perfect opportunity to finally deliver a long overdue plan to reform and reduce provincial spending. Instead, the government announced substantial new spending on social programs. Clearly, the government remains committed to the tax-and-spend approach to public finances that have created the fiscal mess.

The sad reality is Ontario’s economy has underperformed relative to its potential for more than a decade thanks largely to misguided policies from Queen’s Park. The need for a genuine policy re-set was clear. Unfortunately, what we got instead was an implicit promise of much more of the same.