rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Ontario's stimulating election platforms

A common refrain among political pundits has been that all of Ontario's election platforms are unrealistic given a deteriorating economic outlook. Rather than bemoaning this alleged lack of realism, we should evaluate how each party's platform would fare in a downturn.

The NDP platform is built on the fiscal framework set out in the 2011 provincial budget. The Liberal and Conservative platforms are based on slightly more optimistic private-sector forecasts. However, such forecasts have been revised down since the platforms were formulated.

Elections should be about policy choices. If each party tried to develop its own fiscal framework from the ground up, voters would instead have to disentangle a convoluted debate about differing economic assumptions and forecasting methodologies. It is reasonable to construct platforms on the last budget so that voters can evaluate them against a common baseline.

Which policy choices are appropriate given the risk of an economic downtown? Fiscal conservatives argue that the government should budget prudently to avoid plunging the province too deep into debt. Many economists contend that the government should deploy fiscal stimulus to bolster the economy when private demand lags.

Budgetary commitments in 2012-13, the first fiscal year of each party's platform costing, total almost $2 billion for New Democrats, $2.3 billion for Liberals and $2.5 billion for Conservatives. The NDP platform is the most prudent in limiting new outlays to avoid excessive borrowing.

Of course, different budget measures have different economic effects. The NDP would provide $955 million of new provincial spending, $475 million of personal tax reductions (taking the HST off home heating and partially off gasoline), $90 million to lower the small-business tax rate, and $450 million of corporate tax credits for investment, employment and training.

The Liberals promise $838 million of new spending, $54 million of personal tax credits, $1,365 million to cut the general corporate tax rate and the $12-million corporate tax credit for hiring recent immigrants. The Conservatives offer $200 million of new spending, $900 million of personal tax cuts and the same $1,365-million corporate tax break.

Public spending is the strongest form of stimulus because it adds directly to demand for goods and services in the economy. Tax reductions provide less stimulus because much of the money is saved rather than spent. Corporate tax cuts are particularly ineffective because increased after-tax profits largely flow to corporate headquarters and shareholders outside Ontario.

Refundable tax credits are essentially expenditure delivered through the tax system. The NDP's proposed tax credits are designed to leverage larger amounts of private investment and are contingent upon such investment.

A multiplier is the amount by which a dollar of budgetary outlay increases Gross Domestic Product (GDP). The federal Department of Finance estimates multipliers of 1.3 for public expenditure, 0.9 for personal tax cuts and 0.2 for corporate tax cuts in the year after their enactment.

Applying these multipliers to Ontario's election platforms suggests a GDP boost of $1.3 billion from the Conservatives, $1.4 billion from the Liberals and $1.8 billion from the NDP if corporate tax credits are treated as corporate tax cuts. Counting these credits as public spending brings the NDP's stimulus to $2.3 billion.

Of course, all of the above multipliers would be lower in Ontario because it is smaller than the national economy. Proportionally more spending would flow outside the province than outside the country as a whole. The NDP's Buy Ontario policy would limit this outflow by keeping a larger share of procurement spending inside the province.

Given higher outflows and lower multipliers at the provincial level, the federal government should take primary responsibility for using fiscal policy to manage economic demand. However, to the extent that Ontario provincial platforms can be evaluated as stimulus packages, the NDP proposal is strongest.

New Democrats would deliver the most stimulus and job creation at the lowest fiscal cost by focussing on measures with the biggest bang per buck: direct public investment and targeted tax credits. By contrast, Liberals and Conservatives have prioritized slashing tax rates on corporate profits, the least effective way to stimulate the economy.

This article was first posted on The Progressive Economics Forum.

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.