June 13 (Bloomberg) -- Ontario voters re-elected Premier Kathleen Wynne’s Liberal Party, upgrading her government to a majority mandate and rejecting the main opposition Conservative Party’s call for budget austerity.
The Liberals were elected in 59 of 107 districts, according to unofficial results compiled by the Canadian Broadcasting Corporation, taking 38.7 percent of the vote. The Conservatives were reduced to 27 seats and 31.3 percent of the vote. The New Democratic Party took 21 seats and 23.8 percent of the vote.
The victory marks the first time in more than a century that the Liberals have won four consecutive Ontario elections, even as they were hurt by scandal in recent years. The results reflect Conservative leader Tim Hudak’s failure to win broad public support for his budget restraint plan, which included a pledge to cut 100,000 government jobs. Conservative support fell more than 4 percentage points from the 2011 election.
“It’s a Conservative debacle,” Nelson Wiseman, a University of Toronto political scientist, said in a telephone interview. “His whole campaign was pitched to his base.”
The Liberals went into the elections holding 48 seats, with the Conservatives 37 and the NDP 21, with one district vacant.
With Ontario’s economy struggling to gain momentum, Wynne promised to boost spending in the short-term in a bid to stoke growth, place more focus on government investment and put off budget curbs into the future.
Hudak, 46, wagered that a mix of government job cuts, spending freezes and corporate tax reductions would resonate with voters, as Ontario struggles with mounting debt fueled by the 2008-2009 recession and an underperforming economy.
Ontario’s C$250 billion ($230 billion) of bonds rated by Moody’s Investors Service is the most of any sub-sovereign borrower in the world tracked by the New York-based ratings company. Its debt-to-revenue ratio, which measures its ability to pay back the bonds, is at 237.7 percent, among the worst of the sub-sovereigns, according to Moody’s.
The majority mandate “may pave the way for a more clear-cut path and how these will be addressed,” Brian Calder, senior trader at Franklin Bissett Investment Management, said by phone from Calgary before the results were known. “These issues are material but manageable -- they do have to continue on the path to come up with solutions.”
“No end to Ontario bonds” after Wynne’s election victory, John Braive, vice chairman at Canadian Imperial Bank of Commerce’s CIBC Global Asset Management unit, said late yesterday by e-mail from Toronto.
The extra yield investors demand to hold Ontario’s latest 10-year bond over a Canadian government benchmark note spiked the most in six months. The spread between Ontario’s 3.5 percent bond maturing in June 2024 and the equivalent maturity Canada bond widened 2 basis points at 8:43 a.m. in Toronto.
Ontario’s borrowing-cost advantage over lower-rated Quebec also shrunk two basis points, the least all year.
Hudak’s strategy to focus on government cuts allowed Wynne, 61, to characterize his plan as a “shock to the system” that a fragile Ontario economy could ill afford. Ontario’s economy has stagnated at 1.3 percent growth in each of the past two years and is forecast by the government to grow 2.1 percent this year.
Hudak stuck to his platform until the very end.
“I am immensely and will forever be proud of the campaign we ran and the clear vision of hope that we put before the people of the great province of Ontario,” Hudak said in his concession speech. He said he will step down as leader.
Wynne took the opposite tack, seeking to stoke economic growth with stimulus. Her agenda, based on an April fiscal plan, accelerated spending, financed by increased borrowing and higher taxes even as credit rating companies warn of possible downgrades for provincial debt. After loosening her government’s restraint efforts over the last year, Wynne pledged to return the government to balance by 2017 by essentially putting a freeze on expenditures starting in 2015.
The Ontario legislature will get back to work within 20 days to implement her budget, Wynne said in her victory speech last night.
“Thank you so much for this strong mandate, you have put your trust in us and we will not let you down,” Wynne told supports in Toronto.
While Conservatives lost support, the Liberals kept their share of the vote little changed from 37.7 percent in 2011 even with polls showing that a majority of voters wanted change.
“The provincial Liberals with about the same support as the last election were able to move from a minority to a majority government,” said Nik Nanos, president of Nanos Research Group, an Ottawa-based polling company. “The election was a rejection of the Progressive Conservatives.”
Wynne was chosen as leader of the Liberals early last year, succeeding Dalton McGuinty, who had stepped down as premier amid controversy over canceled power plants and an inability to implement budget cuts in his minority government. She becomes the first woman ever to be elected premier and is the country’s first openly gay provincial leader.
Wynne, a Toronto resident, was first elected to Ontario’s provincial parliament in 2003.
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