The Power of Comprehensive Policy Reform: Lessons for Ontario from Michigan

Summary

• In recent years, Ontario has experienced weak overall economic performance and rising public debt. Further, the province has seen its manufacturing sector—once a primary driver of growth in the province—decline substantially.
• By comparison, the American state of Michigan—which has historically underperformed Ontario economically, has experienced a surge of economic and employment growth.
• This study compares the economic performance of Ontario and Michigan in recent years, examining a broad range of indicators including aggregate economic growth per person, private sector job creation, and fiscal outcomes (specifically the growth in public debt). On each of these indicators, Michigan has outperformed Ontario in recent years.
• The start of Michigan’s recent economic turnaround was contemporaneous with the implementation of a robust and comprehensive pro-growth policy reform agenda which included both tax relief and spending reductions.
• In contrast to Michigan, during this period Ontario’s provincial government implemented several significant policy changes that undermined the province’s growth prospects.
• Given the state’s strong economic performance, Michigan’s reform package and economic turnaround deserve careful attention from Ontario’s policymakers. Specifically, provincial policymakers should consider the example of how a new government in a neighbouring state implemented a comprehensive policy reform package that preceded a strong period of economic growth and positive fiscal outcomes.