"Jobs, jobs, jobs" was a catchy refrain during the federal election of 1984. Nearly twenty-five years later the slogan may be making a comeback in Ontario. Yet, this time, thanks to Premier McGuinty, it is the public sector rather than the private sector leading job growth. This approach cannot succeed because it does not add up.
During Premier McGuinty's tenure, Statistics Canada reports that private sector job creation has grown by 2.1%; whereas, the public sector has grown by 15.5%. There are now 101,882 more people employed by the provincial government than when Mr. McGuinty took power. That is triple the provincial population growth rate, which only grew by 5.3%. Over a similar time frame, the private sector only generated 108,000 net new jobs.
Notwithstanding the different economic challenges each faced, it is interesting to compare Mr. McGuinty's performance on the job front to some of his predecessors. Mr. McGuinty has grown the public sector more than Bob Rae, Mike Harris and Ernie Eves - combined! Over five years, Bob Rae shrank the public sector by 21,673 jobs and his high taxing and high spending policies drove net private sector job growth of a meager 12,500. His successor, Mike Harris (and Ernie Eves), grew the public sector by 47,235. Of note is that the Harris growth came outside the main departmental bureaucracy which declined by almost 10,000 during his tenure.
Premier McGuinty may defend his record of public sector growth saying he promised more nurse, more teachers, and more doctors. While this is true, the data reveals that departmental staff has also ballooned - up by 8.8% to 102,180. Health care, social services, universities, colleges, training, teachers, hospitals, and all other provincial government employment (excluding government businesses) grew by 16.6%. Increasing the size of government like this, of course, increases the cost of government and the burden on taxpayers. Importantly, this increased burden on taxpayers comes at a time when the economy is facing trouble.
Private sector economists are predicting a rough ride for Ontario's economy. One doesn't have to be a Nobel laureate to identify some of the challenges. The price of oil is at an all-time high, the Canadian dollar is at par with the American dollar for the first time in decades, a US slowdown is reducing demand for higher-priced Ontario products, and international markets are increasingly competitive for manufacturers. There is little politicians can do to affect these macro-economic forces. Unfortunately for taxpayers, however, politicians at all levels of government like to be seen to be doing things to reassure voters that they are in charge. Too frequently this reassurance comes in the form of increasing the size and intervention of government.
Government, along with its ability to raise revenues and provide services is a function of the economy it oversees. A healthy private sector that creates wealth and a tax base is what provides for jobs in the public sector, not the other way around. A simple rule of economics: you cannot multiply wealth by dividing it. At some point Mr. McGuinty will have to realize that the price of constantly expanding government does not add up.
