Ontario had the lowest per capita GDP growth out of all provinces since 2000

By Clayton DeMaine

A new study paints a grim economic picture for Canada’s most populated province.

According to a recent Fraser Institute study, Ontario recorded the lowest inflation-adjusted per-person GDP growth of all the provinces from 2000-2022, with 0.7% per capita GDP growth. In contrast, Newfoundland recorded the highest growth of the provinces, 3.6% per capita growth.

Since 2000, Ontario has been lagging behind Quebec in several economic indicators, including growth and public financing, a province it has historically been ahead of. 

“While Quebec at the start of the 21st century had some of the worst economic results and poor public finances in the country, that distinction now belongs to Ontario,” said Livio Di Matteo, a senior fellow at the Fraser Institute and author of the study said in a news release.

The study compared Ontario and Quebec, Canada’s largest populations and economies.

While Ontario’s “weak” GDP growth ranked it the lowest among provinces, Quebec’s average growth rose by 1.2% over the same period. In 2000, Quebec’s per-person GDP was 80.4% of Ontario’s, but by 2022, it was 90.6%.

Over the past 24 years, Ontario ran deficits 19 out of 24 times, almost 80% of the time, while Quebec ran 14 deficits, under 60% of the time.

In 2000, Ontario had the second highest GDP per person, a key measure of living standards, but as of 2022, it’s fallen to the fifth highest. Quebec’s GDP per person remained mid-ranked among the provinces over the same period.

Ontario’s net debt-to-GDP ratio increased from 25.6% in 2005 to 36.5% in 2022, ranking higher than Quebec, which had a net debt of 51.5 % of its economy in 2005 and is now 35.2% in 2022.

Ontario’s net public debt rose nearly threefold from $134.4 billion to $400.5 billion from 2000 to 2003, while Quebec’s went from $89.2 billion to $206.8 billion in the same period, an increase of 111%.

“Quebec’s economic growth has closed much of the historic income gap with Ontario, but mainly because Ontario has been a laggard with respect to economic growth for most of the 21st century,” the study said. “Ontario and Quebec lag behind the rest of Canada in productivity and growth-enhancing business investment, particularly non-residential investment.”

Jay Goldberg, the Ontario director of the Canadian Taxpayers Federation, says “the proof is in the pudding” that Ontario’s massive corporate welfare program is not working to stimulate economic growth.

According to another Fraser study, the last recorded data for corporate subsidies from the province shows that the Ontario government spent $22 billion on corporate welfare programs.

“We are giving money from the pockets of taxpayers and putting it into the pockets of wealthy corporations,” Goldberg told True North in an interview. “What could you be doing with $22 billion a year? If you eliminated corporate welfare, you could cut the sales tax by three percentage points. We could get it down from 8% to 5%, the lowest in the country, other than Alberta, which has no provincial sales tax.”

He said that rather than injecting billions of dollars into billionaire companies, the provincial government could lower taxes on small businesses, balancing the budget and stimulating economic growth.

Goldberg also pointed to Ontario’s high small business tax rate, which is the highest in the country. He argues the tax rate is a negative factor in attracting small businesses to the province. Lowering taxes for small businesses and corporations would be an alternative to corporate welfare.

“That would impact the budget a lot less than $22 billion. Your high tax rates mean that small or medium-sized businesses not getting special handouts from the government are not opening their doors in Ontario,” Goldberg said.

Goldberg also advocated for Ontario to cut deficit spending and stimulate the economy by ending the pay gap between public workers and the private sector.

“Those in government are making 10% more on average than those in the private sector. That needs to stop,” he said. “That would save several billions of dollars.”

Author