And we thought we had problems back in 1995

I was first elected in 1995, on the heels of what became known as the ‘lost decade’ of government economic policy in Ontario.

Prior to 1985, Ontario was doing fairly well. But then came five years of taxing and spending by the Liberal government of the day, followed by five years of taxing and spending by the NDP during the recession of the late ‘90’s. Ontario saw 65 tax hikes over those 10 lost years.

Those 10 years taught us two things. There is no economy so strong that it can’t be destroyed by policies that take it for granted. And there is no recession so bad that it can’t be made even worse

Sure – then, as now, things seemed good at first under the Liberals. And you have to admit they did have the budget balanced for about 10 minutes back in 1990. But they saw no harm in raising taxes – after all we could afford it. And they saw no harm in increasing the size of government – we could afford it.

Then the NDP got elected – and got stuck with the tab. So, on top of the Liberal’s 33 tax hikes, they added 32 of their own. And sealed our fate with their indifference to business and private sector job creation.

Today, we have a government that commenced power by overthrowing the Taxpayer Protection Act – legislation that prevented increased taxes without a province-wide vote. They went on to implement the largest personal income tax hike in the history of Ontario, and now the largest sales tax hike in the history of the province.

In the Spring of 1995, Ontario’s budget reported a ‘crushing deficit’ of $11.3 billion. The projected deficit for this Spring more than doubles that crush to $24.7 billion.

We thought we had problems in 1995, and most assuredly we did. But today, Ontario has taken deficit spending to a whole other level.

The first step to recovery is admitting you have a problem. Admitting a $24.7 billion dollar shortfall - with subsequent deficits of $21.1-billion and $19.4-billion forecast for the next two fiscal years – reveals we are far from mending Ontario’s problems. Until government is able to recognize and break its’ addiction to taxing and spending, and government waste, we are doomed to repeat the mistakes of the past. 

According to Niels Veldhuis of the National Post, had government shown some restraint and increased spending in a prudent manner, say by the level of population and inflation growth, Ontario would have had cumulative budget surpluses of $25-billion during Mr. McGuinty’s first term.

That said, this government became more entrenched and hard-wired to the tax and spend process that has brought us to a point where government is now spending $2.8 million an hour more than it takes in.

Given the similarities between now and 1995, I believe the current government would do well to learn from what turned Ontario around after 1995 – cutting taxes, and cutting government waste.

When a government cuts taxes, it allows people to keep more of their own money – a simple clear incentive for hard work, expansion and growth. For example, between 1995 and 1998, we cut taxes 69 times fuelling the creation of 540,000 new jobs.

Tax cuts create jobs. The evidence speaks for itself.