Sunday, May 25, 2014

Liberal Finance Minister Sousa Gets Hudak's Job Numbers 100% Wrong

 Well, we all knew it was coming. Desperate actions by a corrupt and fiscally incompetent government, headed by an unelected premier who is running her entire campaign on misrepresentations and outright lies. Newest, and most damning case in point, Liberal finance minister Charles Sousa stating Hudak's job creation numbers are 95% wrong. In my opinion, that would still make Hudak far more accurate, as Sousa, and by extension Wynne's credibility should take a substantial hit if anyone takes even a cursory look at Sousa's claims, and the references he uses to make his claim.

 Let's start with EXHIBIT A. That would be the Conference Board of Canada report Sousa says shows Hudak's numbers to be 95% wrong? Interesting. Sousa claims that CBoC report states only 35,000 jobs would be created. According to the report, which I've read several times, the number is actually 64,523. So in percentages, Sousa's way off. Not as far off as the $40 million gas plant costs becoming $1.1 billion, but off by nearly double his estimate and the actual CBoC report. Now what amazes me is Sousa actually brought up the fact the million jobs plan includes expected normal job growth of 523,000 jobs created. That's what Hudak stated from day 1. So already Hudak's ahead of the McGuinty/Wynne Liberals by 64,523 jobs. Pretty impressive in itself, no? In fact CBoC report actually states the reduction in corporate and personal income taxes would result in a -0.003 reduction in Ontario's unemployment rate, which at 7.4% is above the national average and  more than a full percentage point above Mike Harris last day in office. A FULL PERCENTAGE POINT!

 For me next point, let's look at another claim by Sousa, whose credibility already appears to be on shaky ground. Sousa claims Hudak's cuts amount to $8.7 billion and will result in another recession. There are two major problems with this claim. Hudak's platform calls for a reduction in spending and public sector job reductions via attrition and contracting to offset the cuts, which would balance the budget in two years. Sousa/Wynne have made no announcements of spending or public sector reductions, and in fact the budget with which Liberals are campaigning on actually increases the yearly deficit by $3.1 billion. Hudak's tax reductions are spread out over time. In fact, the personal income tax cuts do not cut in until the budget is balanced. Now here's the thing about Sousa, when you repeatedly cite a report to make your case, perhaps you might want to actually read it. And if you have, then don't lie! While the CBoC report does indeed say provincial revenues through corporate tax reductions will be decreased, it also states "if we add the boost to provincial indirect and personal income taxes, total revenues are up by a cumulative $574 million" . If cutting taxes leads to increased revenues sounds familiar, it might be because that's exactly what happened under Mike Harris, where tax reductions increased government revenues from $48 billion to $62 billion.

 So it's becoming clearer that Sousa really doesn't have a clue. Ontario's dire fiscal situation being glaring proof. Now I should point out Hudak has never claimed the corporate and personal income taxes will create 1 million jobs in and by themselves. In fact, what he has always maintained is those tax cuts would "help" create those jobs. Hudak has mentioned electricity costs as another way of creating jobs and investment. Just weeks ago, the head of Magna, one of the largest automotive parts manufacturers globally, which provides parts to every major auto manufacturer in the world publically stated there will be no more investment or new jobs in Ontario due to electricity costs. Other companies are now stating the same thing publically. Hudak's plan to put a moratorium on green energy and instead focus on making rates affordable for business will create jobs. To put it in an easy to see perspective, adding one shift at one of Ontario's auto assembly plants would create roughly 1000 jobs. The multiplier used in the auto sector is 7 more spin-off jobs for every job in the assembly plant. That's 8 thousand jobs by just adding one shift at one plant. Which again takes us back to that CBoC multiplier.

 Hudak has also mentioned cutting bureacracy and costs as another way that he will use to create jobs, things such as WSIB premiums. Will Hudak create one million jobs? I don't know. But using Sousa's own numbers and that Conference Board of Canada report it definitely looks possible over the 8 year period has mentioned. But there's another issue at play here, and it's Kathleen Wynne and Charles Sousa's own plan for the economy. That CBoC report? It mentions numerous times the multiplier effect of job creation, government revenues and GDP growth. And it's all positive! Putting more money into business and taxpayers hands is good for the economy. Growth in every sector of the economy. And the report also mentions growth unaccounted for, such as housing as the population increases by a strong job market, which would again result in further growth.

 And now for the most damning fact of Kathleen Wynne and Charles Sousa's attack on Tim Hudak's jobs platform throw aside the fact that CBoC study is actually quite favorable to Tim Hudak, and by extension the people of Ontario. That CBoC study is based on a 1% reduction in both corporate and personal income revenues. Sousa in his news conference called it a 1% corporate tax cut reduction. It's 1% of revenues, not 1% of the rate. And the most telling part of the Liberal party and what you can expect if Wynne is re-elected? That Ontario Retirement Pension Plan will take $2.8 billion OUT OF THE ECONOMY. Just as Hudak's tax reductions have a positive multiplier effect, confirmed by the Conference Board of Canada, so to will taking $2.8 billion out of the economy. Only rather than being a positive multiplier, it will in fact be a negative. It will actually cost jobs, reduce income and increase costs for business, most notably small business.

 Sorry for being long winded, but given the facts Hudak's economic platform far outpaces the Liberal plan. In fact the studies Liberals like Sousa refer to actually backs up the claim.

UPDATE:  Mike Moffat on twitter (thanks Mike) informed me the CBoC report is a little confusing. States study is based on 1% reduction in revenues but chart actually shows 1% reduction in rate. All in all study does show an increase of jobs directly resulting from tax reductions.


Ron said...

Paul...what you point out is true and would have an extremely positive effect on Ontario. The unfortunate part is the biased spin by the media on leaving out these positive net effects.
Bottom line is this, as you mentioned in your earlier posts...Hudak and team must tie Wynne and McGuinty together at every opportunity.
Show how the Libs have devastated Ontario then show how the Conservatives can repair the damage.

Unknown said...

Wynne = McGuinty
One and the same.
Every time there's an opportunity they need to do that.

Unknown said...

Wynne = McGuinty
One and the same.
Every time there's an opportunity they need to do that.

tao_taier said...

""Hudak and team must tie Wynne and McGuinty together at every opportunity. " ~Ron

Exactly right. Wynn gov and supporters keep trying to run away from it's own very recent record, but then go to great lengths to tie what happened at Walkerton to Hudak/Harris, which wasn't even tied to cuts of any kind.

I tie what the NDP did to Ontario to what they will do now given that they are in favor of many of the same policies that the Bob Rae government implemented/proposed. All socialist "government is the answer" parties are economically illiterate.

Duane Booth said...

What am I missing here. The Conference Board indicates the cumulative total of the "shock" minus the controls of a 1 per cent reduction in the tax rates. I assume they wouldn't give a cumulative number if it didn't actually accumulate. So here's my math based on that logic ...

A 1% reduction in the personal tax lists the cumulative number as 18370 (subtracting 2013 and 2014 which have largely sailed by already). Hudak is proposing a 10% reduction after the books are balanced, so maybe he went out a bit further than CBoC ... Let's say a person was paying 24%. A 10% reduction takes us to 21.5% or a 2.5% reduction in the rate.

18370 X 2.5 = 45925 (Hudak's been saying 46000)

For the corporate tax, the CBoC's cumulative total was 37941 (again, taking out 2013 and 2014). Reducing the rate by 30% takes it from 11.5 to 8.05.

37941 X 3.45 = 130896. That's even a bit better than the 120000 Hudak has been touting.

Again, it comes down to why the CBoC has a total cumulative number in the first place, as I read it the multiplier effect.

Also, is it not at all disturbing that the economists that are being trotted out like Jim Sanford (economist with Unifor), Paul Boothe (former deputy finance minister for the NDP gov't in Saskatchewan and a member of Paul Martin's finance team ... whose staff is running Wynne's campaign).

paulsstuff said...

That's the way Liberals do politics. Pathetic as it is.