The pandemic, understandably, has forced us to focus on the immediate and short term. But we should not lose sight of the long-term either, especially as the world begins to open back up, writes Livio Di Matteo for the Fraser Institute.
Focusing particularly on Ontario, he notes that even before COVID threw a wrench into things, Ontario has seen weak employment and income growth for much of the 21st century with the decline in growth rates settling in after 2005.
What is the cause of this slowdown?
Several factors clearly outside of the province’s control have contributed, including the Great Recession following 2008 and the coronavirus pandemic. But there has also been, Di Matteo outlines, important self-induced components.
Growth-reducing government policies have transitioned Ontario from enjoying a productive and growth-oriented economy to one merely driven by real estate wealth effects, he writes.
The most restrictive examples include the Greenbelt Act 2005 and the Far North Act 2010 which hampered growth by effectively restricting the supply of land available to be used for economic development. The overall regulatory burden on business, both provincially and municipally, have risen meaningfully in the 21st century, including new employment standards, zoning regulations, fees, and development charges.
Di Matteo highlights that as of 2017, Ontario had the highest total cost of government regulation (per business by province) at an estimated $15 billion.
These were all problems that existed prior to the pandemic. And, unfortunately, in imposing the longest shutdown measures in Canada and undoubtedly some of the longest in the world, the province’s competitiveness and growth trends have been severely undermined even further, he concludes.
Overall, the Ontario government managed to make an already bad situation even worse, and recovery will be all the tougher for it.
