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Once considered the engine of the Canadian economy, Ontario’s economic performance over the last two decades has been among the weakest in the country, according to a new study by the Fraser Institute.
“The decline of Ontario’s manufacturing sector in the 2000s, the 2008/09 recession and a tepid recovery have combined to create an extended period of economic weakness for the province,” said Ben Eisen, co-author of An assessment of Recent Economic Performance and Business Investment Growth in Ontario.
“Ontario’s position near the bottom of the Canadian provinces doesn’t bode well for the province’s future prospects.”
Covering the period from 2000 to 2019 (excluding 2020 due to the COVID-19 pandemic), the report found Ontario performed well below its own historic economic norms, most other provinces, and neighbouring U.S. states.
In the key metric of per-person business investment which, Eisen said, “lies at the heart of improving our standard of living and job creation,” Ontario recorded the third-lowest average annual growth rate of just 0.3% when adjusted for inflation and population.
Only New Brunswick and Nova Scotia had lower growth rates and Ontario lagged far behind B.C., the top-performing province, where the average growth rate was 2.7%.
Ontario was the worst performer in real per-capita aggregate economic growth of 9.1% from 2000-19, compared to an average of 26.1% for all provinces, excluding Ontario.
The Ontario economy also underperformed compared to previous decades.
From 1982-90, Ontario’s average annual real per capita GDP growth rate was 1.5% and 1.4% from 1991-2000, before plummeting to 0.1% from 2001-10 and only partly recovering to 0.9% from 2011-19.
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Private-sector job growth in Ontario only increased by 23.2% from 2000-19, compared to an average of 31.7% for all other provinces, ahead of only New Brunswick (10.0%) and Nova Scotia (14.2%) and on par with Newfoundland & Labrador (23.1%) and Manitoba (23.1%).
Ontario’s nominal net debt per capita from 2000-19, increased more than in any other province — by $12,952 — and its debt-to-GDP ratio — the lower the better — went from sixth-highest among the provinces in 2000 to second highest in 2019.
“In more recent years (prior to the COVID pandemic), weak economic performance in several jurisdictions, particularly Canada’s oil-producing regions, have led to a slight improvement in Ontario’s relative performance within Canada on economic growth,” the study concludes.
“However, Ontario should take no comfort in this development. The reversal is the result of weakness in other jurisdictions, not improvement in Ontario per se … Ontario has stopped being the economic growth laggard in Canada, but that is primarily because of more economic weakness elsewhere in the country … not because of improvements in Ontario.”
The Fraser study doesn’t go into the reasons for Ontario’s economic decline from 2000-19 and, to be clear, provincial economies are impacted by both national and global events in addition to policies by provincial governments.
That said, for the vast majority of the time covered by this study, the big-spending, high-deficit Liberal governments of Dalton McGuinty and Kathleen Wynne were in charge of the province — from 2003-18.
Their policies turned Ontario into one of the world’s most indebted sub-sovereign borrowers and, among other things, dramatically increased electricity prices, causing significant job losses in Ontario’s manufacturing sector.
More proof, if any was needed, that government policies have a direct impact on economic growth, jobs, and our standard of living.
GOLDSTEIN: Ontario's economy crashed from 2000 to 2019, report says - Toronto Sun
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