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The Good, the Bad and the Costly: Evaluating the McGuinty Legacy

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After serving nine years as Premier of Ontario, Dalton McGuinty has stunned the country by announcing his intention to step down as Liberal leader, and to prorogue the legislature.

Regardless of one's opinion of the man, he has arguably had a bigger impact on the province than any of his predecessors since Bill Davis. There may be much to criticize in his record, but there is also much to laud. While it would be difficult to adequately weigh the costs and benefits of his decisions -- and doing so would be rather trivial, given his departure -- now is a good time to evaluate some of his bigger legislative initiatives. The next Premier (or two) will still be dealing with the fallout from these decisions, so it is important to appreciate why some should be upheld, and others revisited.

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First, let's start with his best decisions:

Implementing the Harmonized Sales Tax (HST): Harmonization of the PST and GST was undertaken to reduce the cost of tax collection. It was controversial because it reduced a number of sales tax exemptions (which is a feature, not a bug). The policy case for the HST is beyond dispute. But politics being what it is, and the benefits being complicated to explain, his opponents did their best to turn this decision against him. Fortunately, he didn't cave in. This was by far McGuinty's most courageous act as premier.

City of Toronto Act: The archaic rules that govern Ontario municipalities need to be revisited. Ontario cities need more fiscal capacity to meet their needs, and politicized transfers from the province are not the answer. The City of Toronto Act (2006) gave Toronto's municipal government additional taxing powers to help meet the city's financial needs. While the additional taxing powers granted through the Act were insufficient, it was a good start.

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Equalization: While little has changed on the equalization file under McGuinty, he has been pushing for changes to the country's equalization system. Ontario has long been a net-loser from the equalization formula, which actually hurts recipient provinces by rewarding inefficient government policies.

He argued in 2008 that the program has outlived its usefulness, and should be eliminated. This advice is timely now that Ontario is a have-not province. The formula as constituted will be undermined by the fact that such a large province will require net equalization transfers. The options are to increase equalization payments, or eliminate the system. The federal government should act on McGuinty's advice.

And now for the worst:

Green Energy Act: There have been many costly programs implemented, but the Green Energy Act (2009) is unique in that it created a labyrinth of new regulations for one of the provinces most important sectors. Though the Green Energy Act was intended as a means for small producers to sell electricity back to the grid, it has simply lead to massive subsidies to large corporations for very little return.

Small producers looking to take advantage of massive subsidies can take years to have their projects approved, while the provincial government has made lucrative deals with large players such as the $7-billion Samsung deal. If the McGuinty government wanted to reduce emissions, it should have moved aggressively to increase the provinces natural gas generation -- the driver behind diminishing emissions in North America.

Smart Growth: The McGuinty government aggressively sought to curb urban sprawl in the province. This led to two major pieces of legislation. The first is the Places to Grow Act (2005), which has given immense powers over land use planning to the province. The provincial government can now overturn any bylaw in any city in Ontario, regardless of local decisions. The second is the creation of the Greenbelt, which has taken 1.8 million acres of southern Ontario farmland off limits to development. This seems like a logical way to reduce urban sprawl, though it has also driven "leap-frog" development into communities adjacent to Toronto beyond the belt, contributing to greater traffic congestion.

Moreover, restrictive land use policies undermine housing affordability. Toronto now has a ratio of median housing prices to median incomes that is nearly double what is considered affordable. Moreover, no compensation was given to landowners whose land has been deemed off limits to development, despite the fact that this significantly decreased the value of their properties. While there are legitimate concerns about paying the costs of urban sprawl, this heavy handed approach has created a great deal of harm without any noticeable benefits. The Places to Grow Act and the Greenbelt are the worst things to happen to the GTA since amalgamation.

Failure to live up to de-amalgamation commitment: Speaking of amalgamation, Dalton McGuinty pledged while opposition leader that as premier he would abide by any municipal de-amalgamation vote. After he came to power, Kawartha Lakes voted in favour of de-amalgamation. The premier did not follow through on his commitment. Given how big of a disaster municipal amalgamations have been, it was a bad precedent. Lingering de-amalgamation sentiment pervades the newly amalgamated municipalities, but his reversal put a damper on any future de-amalgamation efforts.

While pundits will argue over the merits of McGuinty's legacy for a long time, he was undoubtedly a transformative premier. His successor will have much to learn from his mistakes, and from his successes.

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