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California dreaming, Ontario's nightmare

By Victor Fedeli
web posted November 26, 2012

"I do not want Ontario to become like California" -- Ontario Finance Minister Dwight Duncan, Sept. 20, 2012

The dismal financial situations facing Ontario and California are clearly compared in a recently-released study. Both jurisdictions have crushing deficits of about $16-billion. Sadly for us, California is about three times our size, making it a fiscal darling compared to us.

After reading many similar articles, I headed to California to see firsthand what Ontario might look like in the near future.

My wife Patty and I have many fond memories of our trips through California.  You can imagine our surprise at the sight of garbage piling up along the highway between San Francisco and Stockton, which joined San Bernardino and Vallejo in declaring bankruptcy.  This is the tip of the iceberg – many more cities are teetering on the edge.

Assigning blame for California's problems depends on which side of the political spectrum you fall.  The right points the finger at high public-sector wages and generous pensions and benefits.  The left blames the bursting of the real estate bubble.  What cannot be disputed is the fact that the cities in bankruptcy overspent. When assessments fell, revenues fell – and they couldn't pay their bills.

According to Michael Lewis, in his gripping book Boomerang, Vallejo is the city to pity most.  "The lobby of City Hall is completely empty.  It's just a collection of empty cubicles.  Eighty per cent of the city's budget – and the lion's share of the claims that had thrown it into bankruptcy – were wrapped up in the pay and benefits."

Now, the City Manager runs the entire city of 116,000 with a staff of one.  "When she goes out to the bathroom she has to lock the door."

On our trip, we passed hundreds of wind turbines as we drove to the historic community of Sonora.  This is in the heart of gold country, as it has been since the original gold rush of 1849.  Today, thanks to expensive energy, the mines are closed and logging operations are silent.  Museums were closed because of staffing cuts.  The streets were empty.  But what we did see was a lot of casinos!

Does this sound like Ontario?  Mine processors here have closed – Xstrata Copper in Timmins shed 670 employees and moved to Quebec for cheaper power.  We were the number one mining jurisdiction in the world; today we've fallen to 13th.  The forestry sector is devastated – there are 60 closed mills today.  The Far North Act has banned logging and mining exploration from another 225,000 square kilometres of land.

As in California, wind turbines are popping up in rural Ontario. But our turbines are offered some of the highest subsidies in the world. This has caused energy rates in Ontario to rise to the second highest in North America behind P.E.I.

The Liberals have cancelled the slots-at-racetrack program, where they earned $1.2 billion annually, to replace that with 29 casinos sprinkled throughout Ontario.

I ask this simple question: Is that the best we can do?

We have 600,000 unemployed in Ontario today.  There are 300,000 fewer manufacturing jobs.  These people need hope, not another short-term money grab by a government unable to control its tax-and-spend ways.

California used to be the ultimate realization of the American dream.  Similarly, Ontario was once the engine of Confederation.  Both have fallen on hard times, but as usual California is leading the way.  If we heed the warning of Stockton, San Bernardino, Vallejo, and many other cities on the verge of bankruptcy, Ontario can lead again.

And we can avoid turning the nightmare into reality. ESR

Victor Fedeli is a former advertising executive, two-term Mayor of North Bay, and current MPP for Nipissing and PC Energy Critic.

 

 

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