Technical Backgrounder -- Million Jobs Plan (13 May 2014)

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  • TECHNICAL BACKGROUNDER

    When it comes to jobs, big achievements start with bold goals. Thats why we are proposing a plan that will help create one million jobs over eight years.

    Its an ambitious target, but Ontario has done it before. We believe that Ontarians drive, hard work and skills will enable us to meet this goal again.

    Our platform, Million Jobs Plan, is a comprehensive plan to address Ontarios most urgent need: more and better jobs. You can read a copy of the plan by visiting www.ontariopc.com/millionjobsplan

    The table and chart below put one million new jobs over eight years into historical perspective by comparing the job creation records of Ontarios three main political parties to the long-term provincial average.

    -40,000

    -20,000

    0

    20,000

    40,000

    60,000

    80,000

    100,000

    120,000

    140,000

    160,000

    Long-termtrend

    (1976-2014)

    NDP(1990-1995)

    PC(1995-2003)

    Liberal(2003-2014)

    Million JobsPlan

    (2014-2022)

    Average yearly job creation records

    Job Creation Recordi Yearly Average

    Cumulative Totalii

    Ontario's long-term record (1976-2014)iii 83,527 3,194,900

    Under Ontario NDP (1990 to 1995) -13,435 -62,700

    Under Ontario PCs (1995 to 2003) 137,382 1,133,400

    Under Ontario Liberals (2003 to 2014) 65,400 686,700

    Under Million Jobs Plan (2014 to 2022) 128,836 1,030,688

    http://www.ontariopc.com/millionjobsplan

  • Ontarios comparative performance

    A common measure of well-being is the number of people with a paycheque compared to the overall working-age population. This is known as the employment-to-population ratio.

    Consider how Ontario stacks up to other provinces and our own pre-recession record:

    o If the same share of Ontario adults were working as in Alberta, there would be 931,950 more jobs in Ontario today.iv

    o Compared to Saskatchewan, Ontario would have an additional 637,785 jobs.

    o In fact, if even the same share of Ontario adults were working today as there were prior to the recession, there would be 287,050 more jobs in Ontario.

    While Ontario once led the nation and for a time North America in job creation and economic growth, our unemployment rate has been above the national average for 88 straight months over 7 years.

    In April 2014, the Ontario PC Caucus made public internal government documents marked Confidential Advice to Cabinet that revealed Premier Wynne and her Ontario Liberal government had been warned by the Ministry of Finance that our economy had not recovered and was not operating at full potential.

    Specifically these documents advised the Premier:

    o The economy has not yet regained the strength of pre-2008. [There are] fewer jobs relative to the population and more unemployed. Per capita output of the economy remains below its pre-recession benchmark. (February 13, 2013)v

    A Better Economy

    Ontario has a fundamental need for more jobs with higher pay. Steady stable jobs create the revenues government needs to provide the hospitals, schools, highways and subways we all rely on.

    Ontario can be a jobs powerhouse again, because we have a lot of natural advantages.

    Our workforce is skilled and highly educated. We have significant natural resources and direct proximity to the enormous U.S. market. We are leaders in financial, health and educational services. And our province is full of creative people and risk-takers who will help lead the way as we expand our economic horizons and compete with the world.

    We dont believe that government can create or save jobs, but there are important things it can do to encourage those who can.

    A necessary condition will be to balance the governments books. People simply wont invest in a province that hasnt got its own act together, and right now, Ontario does not.

  • Million Jobs Plan

    This action plan was informed by the extensive Ontario PC Caucus policy white paper process that took place between May 2012 and December 2013, as well as the Ontario PC Partys extensive grassroots policy development process, which culminated in a policy conference in London, Ontario, between September 20 and 22, 2013.

    In addition to numerous studies of Canadian and Ontario public policy, we commissioned two original pieces of econometric data analysis by the Conference Board of Canada and Benjamin Zycher Economics Associates, Inc., based in Washington, D.C.

    The Ontario PC Caucus had previously commissioned analysis of the Green Energy and Green Economy Act, 2009 by London Economics International, LLC.vi

    Broader stakeholder consultations were extensively used to inform necessary assumptions and to confirm the soundness of our methodology.

    Job growth in Million Jobs Plan based on econometric analysis

    Source of job creation Average Yearly

    Cumulative Total

    Baseline growth (yearly average of previous 10-years) 65,400 523,200

    Lower tax rate on employers from 11.5% to 8%vii 14,976 119,808

    Ending wind and solar subsidiesviii 5,048 40,384

    Reduce the regulatory burdenix 10,600 84,800

    Develop the Ring of Firex 550 4,400

    Participate in New West Partnership Trade Agreementxi 199 1,592

    Apprenticeship reform (calculation shows net baseline)xii 21,280 170,240

    Breaking traffic gridlock in Toronto and the GTAxiii 12,000 96,000

    Reduce personal income tax burden following a balanced budget (over second 4 years)xiv 5,885 47,080

    100,000 fewer positions in government workforce (over first 4 years) (12,500) (100,000)

    Restrain public sector in line with population growth and a focus on frontline professionals (over second 4 years) 5,398 43,184

    TOTAL 128,836 1,030,688

    Baseline growth assumption

    This model starts from a conservative baseline assumption about employment growth over the next 8 years using the long-term average of the past 10 years. This is a particularly conservative assumption because it uses a period that includes a major recession as well as McGuinty-Wynne Liberal policies that devastated manufacturing and resource development (e.g., inflated electricity costs, several major tax increases and artificial restrictions on the number of youth able to enter the skilled trades).

  • This baseline builds in a level of prudence more stringent than current consensus forecasts of economic growth or the performance of the Canadian average. It is also well-below the provincial long-term average of 83,527 jobs per year since 1976.

    Achieving this baseline level of growth further requires that government do no further harm. Liberal economic policies that are anti-jobs (e.g., permanent deficits and substantial new payroll taxes) would mean that, without change, Ontarios job performance would continue to deteriorate.

    Public policy changes included in Million Jobs Plan

    The first public policy change to spur private-sector job creation is the reduction of the provincial business tax rate from 11.5% to 8%, which would make Ontarios combined federal-provincial income tax rate on job creators the lowest in North America.

    The second public policy change would be to replace rich subsidies for wind and solar power with a competitive process to get the best price for new sources of electricity.

    The third public policy change would be a reduction in the regulatory burden by at least a third over three years, which would match regulatory levels of leaders in Canada.

    The fourth public policy change would be to encourage job creation and development of the Ring of Fire mineral deposit. This area in the James Bay lowlands has an estimated $30-billion to $50-billion worth of minerals, particularly chromite one of the most important commodities on the planet.

    The fifth public policy change would be to work with the governments of Saskatchewan, Alberta and British Columbia to expand the New West Partnership Trade Agreement to include Ontario, creating a free-trade area within Canada with a population of 20 million and a GDP of $1 trillion.

    The sixth public policy change would be to reduce the journeyman-to-apprentice ratio to one-to-one across all trades, as seven other provinces have done. This would double the number of new apprentices within four years.

    The seventh public policy change would be to put the province in charge of all rail-based transit and major highways in Toronto and the GTA to create for the first time a system where all the pieces fit together. A priority would be placed on building underground, expanding highways and fixing bottlenecks throughout the region.

    The eighth public policy change would be to phase-in a personal income tax reduction after the budget is balanced, boosting the economy by increasing real household after-tax income, lifting demand.

    The ninth public policy change, and a central pillar in our jobs plan, is to balance the budget quickly. Over the first four years of our fiscal plan, which will be detailed in a separate document, we estimate that reducing spending across government will reduce the governments payrolls by 100,000 positions. Once the province has returned to fiscal balance, we would only allow government payrolls to increase at the rate of population growth over the next four years.

  • Conclusion

    All of the changes we propose for Ontario have a single goal. We want a province where there is greater prosperity, and that prosperity is shared by all.

    Ontario can once again be the province that others look to when they want to understand what makes an economy grow, and what a focused and affordable government looks like.

    Our platform, Million Jobs Plan, is a comprehensive plan to address Ontarios most urgent need: more and better jobs.

    Sources i Statistics Canada, Labour force survey estimates, by sex and age group, seasonally adjusted and unadjusted, monthly (persons unless otherwise noted), CANSIM (database), Table 282-0087. ii Note: Numbers may not sum due to rounding. iii This time period has been chosen because it is the longest period of Ontario employment data available. iv Statistics Canada defines this term as the employment rate. Statistics Canada, Labour Force Survey, April 2014. v Ontario Ministry of Finance, Confidential Advice to Cabinet, Fiscal Plan Information, February 13, 2013. vi London Economics International LLC, Examining the potential cost of the Ontario Green Energy Act, 2009, April 30, 2009. vii Estimate based on multipliers from Conference Board of Canada, The Impact of Tax Measures on Ontarios Economy, Briefing, Prepared for the Progressive Conservative Caucus of Ontario, March 2013; and Benjamin Zycher Economics Associates, Inc., Economic Growth and Employment Effects of Public Policy Reforms in Ontario, March 2014. viii Zycher 2014. ix Zycher 2014. x Ontario Chamber of Commerce, Beneath the Surface: Uncovering the Economic Potential of Ontarios Ring of Fire, February 20, 2014. xi Zycher 2014. xii Projection does not include the current rate of apprenticeship registrations according to Ontario Ministry of Training, Colleges and Universities, Results-Based Plan Briefing Book 2013-14, page 4; and, Statistics Canada, Registered apprenticeship training, registrations, by age groups, sex and major trade groups, CANSIM (database), Table 477-0053. Figures in this line item stated as net. xiii Analysis based on several econometric and economic studies, including HDR Decision Economics, Costs of Road Congestion in the Greater Toronto and Hamilton Area: Impact and Cost Benefit Analysis of the Metrolinx Draft Regional Transportation Plan, Final Report for Metrolinx, December 1, 2008; and, Benjamin Dachis, C.D. Howe Institute, Cars, Congestion and Costs: A New Approach to Evaluating Government Infrastructure Investment, July 11, 2013. xiv Conference Board of Canada 2013.