Wynne's unpopularity and the economy

A key feature of this campaign is the unpopularity of the Wynne Liberals; they have become the unacceptable alternative, making the effective choice between the Doug Ford PCs and Andrea Horwath's NDP. Why? A principal reason is that the Ontario Liberals have been in office a long time. It happens to all governments and the Liberals have been in office in Ontario for almost fifteen years. Grievances accumulate, sharpen and deepen even to the point of being exaggerated as I think now is the case. Most of the issue grievances had their origins in the McGuinty government (with the exception of the privatization of Hydro One, a key Wynne initiative) but she takes the blame. However, economic factors (as discussed below) have also contributed to Liberal woes.

A similar phenomenon happened in Alberta in 2015; a variation of it looks like it will happen to the Quebec Liberals this year.

In the case of  Ontario, underlying this malaise are economic conditions that, despite the strong performance of the last two years, have created discontent.

This chart, adapted from Statistics Canada data, tells a part of the story. It measures growth in median incomes from 2005 to 2015 among the provinces and Ontario finishes dead last. This chart was also discussed recently in the Globe and Mail in the context of the election.

There are a couple of reasons for this outcome. Ontario was extremely hard hit by the deep downturn in the U.S. economy in 2008. That was followed by a high exchange rate that did not drop consistently below 80 cents U.S. until July 2015. Weak overall growth was characteristic for much of the period post 2008. In addition, job growth has been very uneven, as the Globe article cited above noted:

Over the past decade, Ontario has created 580,000 new positions, as measured by the increase in employed people. Metro Toronto, which accounts for less than half of the province’s population, nabbed 80 per cent of those jobs. Ottawa accounts for another 10 per cent. The rest of Ontario, with millions of people from Cornwall to Thunder Bay, accounts for the remaining 10 per cent.

Not surprisingly the Liberals are taking it on the chin, particularly in non-metropolitan parts of the province.

This is not the only time that the economy, which is only partially influenced by Ontario government policy, but whose overall strength is strongly tied to the North American and international economies, has played a decisive role in provincial politics.

The Bob Rae NDP government did make some unwise decisions, but their political fate was sealed from day one because the economy had already started down the road to the deep recession that was to plague them throughout their term before they were even elected. By contrast the Mike Harris PC government was elected just as a strong recovery in North America was beginning to take hold led by the United States. Nobel prize-winning economist and advisor to Bill Clinton, Joseph Stiglitz wrote a compelling book about that decade's economic growth - its title, The Roaring Nineties. On top of the strong U.S. growth the Canadian dollar declined throughout the nineties adding to Ontario's competitive advantage. That did not stop the Harris Tories from thinking it was them. In effect they were born on third base, but thought they hit a triple.

So what should we expect going forward? In the U.S. the recovery from the 2008-2009 downturn is nearing record length and I think we may be seeing the first hints of a negative outlook.  From the Calculated Risk blog a quote from a Merrill Lynch economics research note:

If bad luck intersects with bad policy, a recession becomes a real risk. We would keep a particularly close eye on two traditional business-cycle killers-the Fed response to stronger-than-expected inflation in the US and a growing shortage of oil, pushing prices to new heights.

Perhaps the 2018 Ontario election is not one you want to win.

The most accurate poll was....

Mainstreet Research (a firm not around for the 2014 Ontario election) is beginning a daily tracking poll today, so with three weeks to go in the campaign we should expect to see this and the results of many other surveys.

There will be much said good and bad about individual polls in this campaign. However, one hard piece of information we do have is how the polling companies performed in 2014.

After it was over I compared the polls conducted in the last week of the 2014 campaign with the results on election day. I calculated the difference between each party's share of the vote and the final public polls, then added them up to get the big picture.

Here are the numbers as I first reported the them in 2014 ranked by total error, the top table looks at just the top three parties, the bottom table all parties:

In addition to the above there was a Nanos poll published about two and a half weeks before election day that ended up being the most accurate. It was excluded from this analysis because of its timing. You will note with all the red that the polls then mostly underestimated Liberal support. That kind of pattern could easily emerge this time, but with some other party's support being understated. The most accurate poll from the last election could change this year and the shift could be significant. To take another example from federal politics, between the 2011 and 2015 federal elections Angus Reid went from most accurate to least.

The 2014 polls were more or less accurate although you could not tell clearly from the closing polls that the Liberals were definitely headed for a majority.

When it comes to policies and complex matters requiring good judgement, polls can make large errors. A recent Ipsos poll makes the argument that Ontarians prefer spending cuts (71%) to running deficits (17%) or raising taxes (12%) as budget policy. Piffle.  For most voters the term "spending" is a difficult to understand abstraction. Substitute the words "less health care and education" for "spending" and see what you get.

Strategic voting in the 1999 Ontario election failed to defeat the PCs. Can it work in 2018?

Two Ontario Elections

The Mike Harris PC government went to the polls on June 3, 1999, having been elected to a majority government in June 1995.  One striking curiosity about the two election results is that the Tories won just as great a vote share in 1999 as in 1995 but their share of seats in the legislature was smaller. They garnered 63.1 percent of the legislative seats in 1995, 57.3 percent  in 1999 - a consequence of strategic voting. I drafted a 17-page paper on the topic after the election. I discuss some of my conclusions below.

Two Ontario Elections, 1999 & 1995 

	Ontario Election		June 3, 1999
	PC	L	NDP	Others	Total
Votes	1,978,059	1,751,472	550,807	109,869	4,390,207
Percent	45.1%	39.9%	12.5%	2.5%	100.0%
Seats	59	35	9		103
Seats - In %	57.3%	34.0%	8.7%	0.0%	100.0%
	Ontario Election		June 8, 1995
1995	PC	L	NDP	Others	Total
Votes	1,870,110	1,291,326	854,163	142,771	4,158,370
In %	44.97%	31.05%	20.54%	3.43%	100.0%
Seats	82	30	17	1	130
Seats - In %	63.1%	23.1%	13.1%	0.8%	100.0%

The PCs had made a lot of enemies by 1999 - teachers, nurses, trade unionists, residents of Toronto, etc. The issues made strategic voting a theme of the election even though it was largely avoided by the parties themselves. Several strategic voting organizations inserted themselves into the campaign regardless. I think their impact was minimal to non-existent, but their mere presence reflected the real grassroots consciousness of strategic voting that had developed. That consciousness did have an impact.

In eight ridings where PC candidates were defeated, strategic voting appears to be the key factor which accounts for the outcome.  Of the eight PC losses, one was to a New Democrat, the other seven to Liberals.

It was not enough to change government. Simply put, about 45 percent was too close to 50 for the combination of opposition votes to achieve the objective of preventing a PC majority. But there were also nine 'near misses' or outright strategic voting 'failures' that, if they had gone the other way, would have left the government holding less than half the legislature.

Strategic voting demonstrated real potential.

Can strategic voting play a significant role in the 2018 election?

I think the answer is yes. However, what will determine its success will be the level of support for the Conservatives.  As the 1999 outcome demonstrated if the Conservative vote is high enough strategic voting, which will inevitably be imperfect, won't succeed. The current PC average in the CBC poll tracker is 41.1 percent and they have a large lead over the NDP currently in second place. Even so, Doug Ford, like his brother before him, is a deeply divisive figure. If anything, he is even more likely than Mike Harris to trigger a coalescing of opposition forces into a strategic vote that could finally succeed this year. To me a strategic voting success in this context is one where a relatively high PC vote is overcome by strategic voting. If PC support collapses (as it did in the 2015 federal election) that is a different phenomenon.

In the eight ridings where strategic voting worked in 1999 the winning percentage ranged from a low of 44.4 percent to 50.6 percent.  The losing PC candidates in all but one case obtained more than 40 percent. That is what we should expect to see if strategic motivation brings opposition voters together around one candidate.

Recent polls suggest it may be the NDP this year that plays the role of appropriate strategic alternative overall. That would mean a dramatic departure from the voting patterns of 2014. NDP support then was uneven, very weak in some places, much stronger in others. To be successful the NDP vote would have rise dramatically in some regions where they were weak last time, taking over from the Liberals the role of principal opponent to the Conservatives. It would have to have a wave like character, certainly a possibility.

A shift of this magnitude would make it difficult to predict individual ridings. My seat forecasting model did not project the 1999 outcome accurately because the pattern of voting changed greatly from 1995. It would be the same this time compared to 2014, not just for my efforts but for others as well.

The turnout last time was low. It would not surprise me if Ford Nation motivated quite a few new voters to turn out for the first time to support them. Intense dislike of Ford could do the same on the other side of the equation.

I will have more on strategic voting in subsequent posts.

*As a footnote the term 'strategic' is not really the precise terminology, 'tactical' would be better but I use the more commonly employed language here and will continue to do so.

The upside down world of Ontario politics and economics 2018

Current polls suggest an easy victory for Doug Ford on June 7, although this is not yet certain. Assuming he wins, what should we expect that to mean?

To listen to his rhetoric it would mean tax cuts. He has suggested cutting the current corporate tax rate from 11.5% (already lowest in the country) to 10.5% and has even suggested a tax cut for those on the minimum wage (an alternative to actually raising the wage, an action that would leave those affected worse off).

To finance tax cuts would mean cutting spending, which Ford suggests can be achieved by finding efficiencies and not destroying jobs. In an interview with CBC radio morning host Robin Bresnahan he said, as Tabitha Southey put it in Maclean's:

...his “economic plan,” ... is to find close to $6-billion in “efficiencies.” Bresnahan enquired what exactly these efficiencies might be, a question that seemed to alarm the freshly minted PC leader, as if “efficiencies” were in fact small skittish creatures easily spooked by journalists asking questions about them.

Of course most of what government spends is on wages and salaries for teachers, fire fighters, paramedics, nurses, doctors, road maintenance crews, bus drivers etc. etc. Even if we make the unlikely assumption that Ford would find such "efficiencies", they would unequivocally cost jobs and wages.

Beyond that many of his supporters make the assumption that the Wynne government has been spending wildly and it is time to rein in the excess (to some extent Wynne wants to encourage a variation of this view). Some Conservatives probably think of this as similar to what the Harris government confronted when elected to office in 1995. In fact that is not the case. The Ontario government spends less on government programs relative to its population than any other province and that has been true for years. It ranks 10 out of 10. However, that was not true in 1995.

Using the federal fiscal reference tables made available annually by the federal Finance Department and Statistics Canada population numbers I have created several tables to make comparisons.  In one, I ranked all provinces and their program spending over time. The results can be seen in the table below:

If one looks at this chart one can see that Ontario, as recently as 1995-96 (a year that gave us three months of the NDP under Bob Rae and nine months of Mike Harris) ranked second in overall program spending per capita. This was mainly the consequence of the last budget of the Rae government, although Harris started cutting once he got into office. By the time that the PC Harris-Eves government left office they had dropped Ontario's ranking on program spending to 9th and within a few years under Dalton McGuinty the province dropped to 10th place, a rank it still occupied a year ago.

The reality is Ontario spends too little not too much. A couple of examples. There is a website dedicated to increasing spending on school upkeep and maintenance called Fix Our Schools that succeeded in getting an increase in funds for school maintenance last year in part due to its own commendable efforts, but also after a scathing report from the Auditor-General on  the deplorable condition of Ontario schools. There is still a deficit of unmet maintenance of $1.6 billion.

Another example is health care. A recent issue of Toronto Life did a reasonable job of documenting some highly negative consequences of cuts to health care:

Ontario’s hospital-bed heyday was in the 1980s. It’s been pretty much downhill since then. Premiers Davis, Peterson and Rae kicked off the cuts, in what was partly an ideological attempt to deinstitutionalize medical care in the province. The bulk of the rest was the work of Mike Harris, who shut down 39 hospitals and forced the amalgamation of dozens of others. In 1990, Ontario had 33,403 acute care beds, and, even as the population kept growing and aging, by 2014, we had only 18,588. 

Since 1997, a low point in spending, increases to hospital funding have been mostly very modest, and in recent years have often been eclipsed by inflation. The 2008 recession made that bleak scenario even bleaker: 2017 was the first year in five that hospital budgets weren’t outright frozen, even as patient volume, labour costs, energy costs and regulatory requirements all continued to go up. Out of necessity, our hospitals have become lean. Today, Ontario spends on average $389 per patient less than the other provinces. It shows.

Of course some of the reduction of hospital beds reflected things such as moving mental patients out of hospitals into the community. One long term consequence of this, a rise in homelessness, as this web site notes contributions to homelessness include: "... inadequate discharge planning for people leaving hospitals, corrections and mental health and addictions facilities."

Of course the spending inadequacies go way beyond these examples.

What underlies this situation is the other legacy of Mike Harris - taxes that are too low.  We can't afford realistic levels of spending for health care and education and many other needed public services. What Ontario needs are higher rates of taxation, including for the affluent readers of Toronto Life (a point noticeably absent from the article). Despite 15 years of Liberal government it is the ideology of Mike Harris that still dominates government spending overall in Ontario. In terms of total revenues per capita Ontario was 9th out of 10 in the latest data after a decade as 10th out of 10.

This needs to change. If Ford wins Ontario will get the opposite of what it needs.

Of the major parties only the NDP offers some modest tax increases, on corporations and the affluent mostly. However, those increases are largely to finance new spending rather than needed fixes to existing gaps. The NDP also offer a couple of tax cuts (including one that will benefit some upper income citizens).  More ideas to increase revenue are needed from all parties.

I would argue that there is also a major journalistic failure here. What I have described above does not reflect media coverage of Ontario politics and economics. Our major institutions such as the Globe and Mail instead amplify the prevailing mythology, saying such as things as: "This is a dire time for Ontario taxpayers."

This news story and the report from the Financial Accountability Officer, on which it is based, worry about future deficits but imply only spending cuts can close the gap. Neither points out what is obviously true: that if we are worried about deficits shouldn't the province with the lowest per capita revenues be thinking about at least some tax hikes. Deficits are not one-sided affairs.

But can Ford triumph? Can tactical (commonly called strategic voting) keep him from winning a majority?  I will address this in subsequent posts.