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Ontario Throne Speech and Economic Statement: Good News for Green Energy; Bad News for the Environment

Last week's Speech from the Throne and Fall Economic Statement from Dalton McGuinty's minority government contained a mix of good and bad news for those concerned about green energy and environmental sustainability.

The Throne Speech re-iterated the government's commitment to the Green Energy Act, noting that "Your government remains fully committed to clean energy and the 50,000 new, good jobs in one of the world's fastest-growing economic sectors. These jobs are being created by its Green Energy Act in communities across Ontario." That said, the review of the Green Energy Act FIT program launched on October 31st will almost certainly result in significant reductions to the FIT rates for solar projects, particularly the popular micofit program, where 99 per cent of the approved projects have been solar. The directions of other changes to the program remain to be seen. The energy sector does enjoy the advantage of being relatively insulated from the province's overall fiscal situation, being funding through the electricity rate base rather than general revenues, but serious challenges continue. Among other things there is an ongoing debate within the government about whether the Green Energy Act helped or hurt the government's electoral fortunes, attracting younger urban voters on one hand, or cost older rural voters upset about renewable energy projects.

The Throne Speech also made reference to the introduction of a "Great Lakes Protection Act" although what such legislation would add existing legislative authority and mandates is unclear. The Environmental Commissioner, delivering his report a week later, highlighted the government's failures to complete negotiations with the federal government on the next Canada-Ontario Agreement on the Great Lakes Basin. The Canada-Ontario Agreements, which have been in place since 1972, provide the framework for cooperation between the federal government and the province in fulfilling Canada's obligations under the Great Lakes Water Quality Agreement. On a more ominous note, the Speech continued to present mining development, specifically the 'ring of fire' in the fragile boreal region of the province's far north, as the centrepiece of its northern economic development strategy.

The fall economic statement provided even more cause for concern, as the government re-emphasized its intention to protect heath care and education expenditures while reducing its $16 billion deficit, with the implication of major reductions to government spending outside of those fields. In fact, Finance Minister Dwight Duncan has been repeatedly quoted projecting “real cuts of upwards of 33 per cent in some ministries.” If implemented these would be reductions on the scale of those seen during the Harris era "common sense revolution" of the 1990s.

As I have noted before the Ministries of the Environment and Natural Resources seem likely to be in the front line for budget cuts, given their substantial operational staffs. This point was implicitly highlighted by the Environmental Commissioner in his report, who noted that despite expanding mandates, compared to budgets in the early 1990s, MNR has suffered a 22 per cent decline in its operating budget after accounting for inflation, while MOE’s operating budget has fallen by 45 per cent.

Indeed the whole situation with respect to the province's core environmental protection and natural resource management functions is starting to bear an eerie resemblance to the events of Harris era, although with a kinder, gentler face. The Ministry of the Environment implemented the first phase of its approvals "reform" process on October 31st, effectively carrying through on the "standardized" approval process first proposed as the core of the ministry’s "regulatory reform" process of the Harris revolution in 1996. The only thing that seems to be missing is the "who does what" exercise of downloading provincial responsibilities onto municipalities - although as I have noted before, given the centrality of cities and larger towns to the Liberal government's survival in the October election, a repeat of that exercise seems unlikely. Unfortunately, absent additional revenues the effect will be to further increase the pressures on the budgets of operational agencies of the provincial government.

The consequences of cuts to ministry operating budgets on the scale apparently being contemplated by finance minister Duncan were well documented by the Walkerton Inquiry and others. The province needs to consider other options that avoid serious long-term risks to the health, safety and environment of Ontarians in exchange for short-term fiscal gains. Forgoing the next round of corporate tax cuts, estimated to be likely to cost the province $2.4 billion per year in revenues and whose economic benefits are subject to serious question, would be a good place to start.

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