Pulling Ontario Apart

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Given the amount of heat the Eves government has taken over its botched Hydro privatization plan, given the rancour raised over its Jerry Springer Budget Show, given its simply foul treatment of the City of Toronto, etc, etc, you would think that the Conservatives are toast. You could look at the latest opinion polls, which show the Liberals at 48-51% support versus the Conservatives 31-33% (the NDP trail at 16%) and think the Conservatives don't have a hope. You can look at Eves delaying the election, call him chicken, and look back on the performance of other governing parties clinging to power at the end of their term (not good) and say that Eves is done like dinner.

You would, I think, be betting unwisely.

The Conservatives of Ontario are far better campaigners than they are governors. You can see it in the way Eves has tried to keep the legislature at arms length and the way some policy announcements are made twice (the second months after the first) in order to maximize photo opportunities. At 31%, the Eves Tories are still well placed to make a run for power; Bob Rae took the NDP into the government side of the house with just over 37% of the popular vote -- a resurging NDP and a lackluster Liberal campaign could spell similar trouble for McGuinty. McGuinty himself, like Lyn McLeod before him, hasn't the charisma required to put him over the top. You'll notice in recent polls that he is neck and neck with Eves in terms of peoples' opinions of his leadership calibre. Moreover, McGuinty lost the 1999 election that was his to win. And we went into the 1995 election with Lyn McLeod's Liberals at 51% popularity, and came out with the Common (non)Sense Revolution in charge.

The most disturbing thing about the upcoming election, however, is the presence of wedge issues, that could make things heated and volatile, doing permanent damage to the political fabric of the province. Chief among these issues is the suggestion that mortgage payments be made tax deductible. This is to say, either the interest or the principle (or both) that you pay on a mortgage over a year isn't considered when you calculate how much you owe in taxes. Andrew Spicer has already talked about this.

On the face of it, making mortgages tax deductible would seem a good idea. The United States does this, after all, and it would be a boon for struggling middle-class homeowners like myself. The taxable portion of my income would be reduced by over $5000 per year if just the interest payments were made tax deductible. But I never asked for such a change, and I would not want to be such a burden on the rest of the province.

There would be as many losers as there would be winners if such a proposal were implemented, and the losers are concentrated in key sectors of society, both economic and geographical. The benefit would acrue far more to the rich than to the poor, for one thing, and renters would be left out in the cold, as would homeowners without a mortgage. In order to pay for the revenues lost to the government by such a scheme, these segments of the population would have to make do with higher taxes, poorer services or both. This is, essentially, a transfer of wealth from the poor and the middle-class to the investing.

In Ontario, regions are split on the parties they support. Northern Ontario is a three-way race, while the Conservatives can count on rural southwestern and eastern Ontario to keep them in the game. The excessive Toronto-bashing that has occurred over the past eight years should turn the City of Toronto solidly Liberal (with possibly three NDP enclaves), which leaves the suburban region of the Greater Toronto Area (contained within the 905 area code) the task of selecting the next government of Ontario.

It was the 905 region that decided the Conservative Party would govern back in 1995. They swung solidly behind the Common Sense Revolution because it addressed the concerns that were high on their mind at the time. They rewarded the Conservatives in 1999 for basically keeping their promises. But it is in the 905 region that the Liberal Party is looking for its breakthrough, for it is the 905 region that has started to see some of the negative results of their decisions. They have started to ask themselves, given how economically interdependent the Greater Toronto Area is, is it wise to attack the central core with unfair fiscal policies. As development starts to threaten the Oak Ridges Moraine, they are starting to ask themselves whether suburban sprawl is really desirable. They're starting to wonder if their tax cut was worth it.

Four by-elections were held in the 905 region since 1999, all previously held by Conservatives and all won handily by them back in 1999. The Liberals stole two, including one (Vaughan-Aurora-King) which the Conservatives unwisely turned into a mini-referendum about Mike Harris' premiership in the leadup to the vote. The 905 region's ambivalence towards the Conservatives could be reduced if the Eves government made tax deductible mortgages a significant policy plank. 905 Region voters tend to be homeowners with mortgages. They tend to be well-to-do. Those that live in Toronto city proper tend to be renters and tend to have lower incomes. The policy favours 905 voters far more than an across-the-board tax cut ever did, to such a degree that I'd almost call it vote buying.

Worst of all, this has the potential to increase the divisions between Toronto and its suburbs. The City and its suburbs have always had a tense relationship, but they have fortunately understood that American-style city-suburb competition is bad for the region as a whole. Given the makeup of the two regions, this potential election plank risks a political split between city and suburb. Moreover, given that suburban residents tend to be homeowners and city residents tend to be renters, given that suburban residents tend to be more well-to-do than city residents, this mortgage policy would represent yet another transfer of wealth from the city to the suburbs, further damaging Toronto's quality of life, and harming the economic viability of the Greater Toronto Area as a whole.

All for a bunch of suburban votes.

There is no guarantee that the Conservatives will take up this plank during the next election. Likewise, there is no guarantee, given a frank debate on the merits and drawbacks of such a proposal, that homeowners will embrace it wholeheartedly. But it still has the potential to turn the election nasty. Liberals expecting this election to be a cakewalk should remember not to underestimate their opponent, or the political minefield they themselves are standing in.

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