TORONTO - Tough times are coming to the country's most populous province because of growing economic uncertainty despite a slight bounce in the economy for the second quarter, Ontario's finance minister said Monday.
Dwight Duncan said Ontario's gross domestic product grew by 0.3 per cent in the second quarter, up from a 0.4 per cent decline in the first quarter on an increase in business inventories.
But while the boost meant the province skirted a technical recession, Duncan said he isn't breathing a sigh of relief.
"There's more uncertainty than I would like as finance minister, and we have to manage our affairs in a way that recognizes that uncertainty," Duncan said.
"I take my cues from the people of Ontario, and the people I've talked to are nervous. We're experiencing things that we have not experienced."
Ontario's economy is struggling amid weakness in the U.S., a high loonie, rising oil prices and increasing turmoil in financial markets -- exacerbated Monday when the U.S. House of Representatives rejected a US$700-billion bailout plan for that country's banking sector.
While Duncan said he won't reveal how the government plans to address the challenges until he delivers the fall economic statement on Oct. 22, he said it will make the necessary adjustments to achieve a balanced budget.
"The kinds of restraint that we would look at would be the sorts of things that people may not feel directly out in the public," he said.
"It's not the sort of thing people would feel in terms of day-to-day government services that are offered."
The rebound in GDP for the quarter ended June 30 was largely due to an increase in business inventories and gains in household and business spending. Those were offset by lower exports and the embattled manufacturing sector.
NDP Leader Howard Hampton called Duncan's claims that Ontario residents won't feel the impact of any adjustments "complete nonsense."
"People are already hurting, people are already desperate," Hampton said.
"Hydro rates go up, but the pay goes down. Rent goes up, but the pay goes down. Fruit prices go up, but the pay goes down. People are already in desperate straits."
Ted Chudleigh, Progressive Conservative critic for economic development and trade, said Ontario isn't in a good enough spot to weather a "very difficult storm."
"I would hope that (Duncan) is feeling nervous," Chudleigh said. "I would hope that he is at least, at last, seeing some of the light -- that we are in desperate times.
"The economy is still not performing well, and this government hasn't done anything to enhance the abilities of people to make money in this economy."
Earlier Monday, Premier Dalton McGuinty dismissed criticism over comments by Saskatchewan Premier Brad Wall, who was in Toronto along with 50 companies that hope to fill some of his province's 10,000 vacant skilled jobs.
"I'm not about to say to Ontarians that they can't travel elsewhere to find employment, just as I wouldn't say to the folks of Saskatchewan that they can't travel elsewhere to find employment," McGuinty said in the legislature.
"One of the things that I would remind Ontarians to do is to keep in mind that we've got 100,000 jobs in Ontario that we can't fill. That's why we've been putting such a strong emphasis on retraining opportunities for Ontarians who have lost their jobs."
Several financial institutions and experts have forecast slow growth for Ontario into next year, and some have even downgraded their forecasts.
TD Bank economists Don Drummond and Derek Burleton said in a report Monday that Ontario should eliminate its annual contingency reserve in favour of tax cuts targeted at improving the province's competitiveness, which the bank says would be "a better use of resources at this time."
They also suggested the government consider introducing a new revenue source, such as a carbon tax, that would clear the deck for significant reductions in higher-priority corporate and personal income taxes.
Without speaking directly about federal Liberal Leader's Stephane Dion's Green Shift plan, Duncan said the Ontario Liberals have focused on cap and trade.
That's different from Dion's complicated proposal to raise about $15 billion from taxing carbon emissions while providing corresponding tax cuts on income, savings and other investment vehicles.
"One of the things that I think would be a mistake right now is massive shifts in tax burden at a time when there's uncertainty," Duncan said.
