Jun 7, 2018
What Bay Street views as worst-case scenario in Ontario's election
There are three words that, when put together, strike fear into the hearts of Ontario’s top money managers and economic minds: Premier Andrea Horwath. Asked to describe the worst possible outcome in Thursday’s provincial election from a markets and economic perspective, every financial expert contacted by BNN Bloomberg pointed to the possibility of Andrea Horwath’s New Democrats winning a majority government at Queen’s Park. Below, those fears are expressed in their own words.
BARRY SCHWARTZ – CHIEF INVESTMENT OFFICER, BASKIN WEALTH MANAGEMENT
“A NDP majority would be the worst outcome for our clients and the markets. Higher taxes for high net worth individuals adds to the pain already inflicted by [Prime Minister Justin] Trudeau’s government. As well, higher taxes on corporations is asinine given Canada’s weakening position in the global markets.”
NORMAN LEVINE – MANAGING DIRECTOR, PORTFOLIO MANAGEMENT CORPORATION
“The U.S. has become, under Trump, very pro-business and low tax. The Canadian federal government has become anti-business and high tax. Therefore, the worst case scenario for Ontario would be another anti-business and high tax government. Either an NDP majority or an NDP minority with the Liberals holding the balance of power would be anti-business and high tax so either of those would be worst case as it would mean even more investment money would flow out of Ontario/Canada and high earning Ontarians would look for ways to reduce their taxable income, and that would be bad for growth and productivity in Ontario.”
DAVID ROSENBERG – CHIEF ECONOMIST AND STRATEGIST, GLUSKIN SHEFF + ASSOCIATES
“If you want to use the value of the Canadian dollar as some type of benchmark, it sagged 15 per cent the last time the NDP ran the province with a majority. Sample size of one, perhaps, but I’m pretty sure that says it all nonetheless.”
PATRICK HORAN – PORTFOLIO MANAGER AND PRINCIPAL, AGILITH CAPITAL
“Worst scenario would be an NDP majority. Corporate taxes will go up dramatically, much higher government debt and spending deficit.”
CRAIG ALEXANDER – CHIEF ECONOMIST, CONFERENCE BOARD OF CANADA
“Financial markets will keenly await guidance from whichever party wins the Ontario election regarding future fiscal plans. Parties make many promises during election, but some are not fulfilled and others take place years after the election. So, there will be an initial market reaction on the announcement, but the real and more lasting financial implications occur once the government outlines its budgetary plans. Regardless of who is elected, markets will be sensitive to commitments to run lasting deficits. Ontario's debt has risen considerably in recent years. Any signals of running significant deficits in coming years will likely be viewed negatively by credit rating agencies and investors.”
