Investment in Post-Secondary Education Crucial to Economic Success
Ontario remains prosperous economically because of its high proportion of citizens willing and desiring to work. What Ontario severely lacks, is investment in post-secondary education. The United States has higher tuition, but also more scholarships and bursaries for underprivileged students. Despite the United States' higher tuition fees, more students are attending university. Ontario students, parents and government need to recognize that the freezing of university tuition will result only in a lesser education, not increase in access. Speech to the Canadian Club of Toronto, January 29, 2003.
At issue is the competitiveness and economic prosperity of our province. Let's start with the good news. Ontario is a terrifically prosperous place by global standards. If it were a country, it would rank second in the world in prosperity. And it is actually larger in population than all but the U.S. in the top 10 countries. So it is the richest consequential jurisdiction outside America.
This is very good news for Ontarians. However, there is more sobering news, which we need to take to heart and take action on. We have looked closely at Ontario versus our true peers -- which are not small countries, because we are considerably more prosperous than them. Instead, we compared Ontario to the 14 U.S. states larger than half our size -- from Indiana and Massachusetts on the small end and New York and California at the large end. Unfortunately, in this more elite group we rank 14th out of 15, ahead of only Florida. And worse still, our competitiveness and prosperity relative to this group are falling.
In 1980, we ranked 11th and were $850/capita behind the median; in 2000 we ranked 14th and were $5,900/capita behind. What does it mean to be $5,900 behind in GDP per capita? It translates almost exactly into $10,000 per Ontario household in after-tax disposable income. Think about it this way: $10,000 per Ontario household in after-tax income is slightly more than all the money spent in Ontario on mortgages, plus rent, plus new car purchases. Raising our performance by $5,900 would fill the government coffers as well. It would enable Ontario to double annual spending on all levels of education with its portion and the federal government to use its Ontario portion to fund the entire Romanow bill.
So the harsh truth is, we are not keeping pace with the finest economies in the world. The difference between the standard of living in Massachusetts and Ontario is exactly the same as the difference between Ontario and Slovenia. What explains the gap? At its simplest level, an economy generates prosperity when four factors are positive:
1) When a high proportion of its citizens are capable of working
2) When a high proportion of those capable of work bothwant to work and can find gainful employment
3) When those who do find employment, work hard
4) And when they work productively and effectively.
We can relate Ontario's $6,000/capita gap to these four areas as follows:
1) On the first factor, it turns out that Ontario has more working age citizens proportionately than our peer states--providing us with an advantage of $1,000/capita
2) On the second factor, more Ontarians seek to work than those in peer states, but our unemployment rate is higher--creating a net disadvantage of about $750/capita. The state numbers are unavailable for 2002, but when they come out, they will probably show what the U.S./Canada numbers show, which is that Canada is $250/capita ahead.
3) On the third factor, Ontarians work approximately as hard as those in peer states--as of 2000, the disadvantage was $400/capita. On the basis of the first three factors, Ontario is even with its peer states. Proportionately, it has as many people working as hard as the leading economies in the world. Nothing yet explains the $6,000/capita gap.
4) The fourth factor is the big challenge: productivity. …