No sooner had I lamented the woeful administration of Ontario than the culprit in chief, Dalton McGuinty read his political tea leaves and made a hasty exit. He has made things extremely difficult for his successor to hold on to power, what with the proroguing of the Provincial Assembly only minutes after, in classic McGuinty style swindling the leaders of the opposition in to believing he wished to negotiate an amicable end to the labour strife he himself had created. In the intervening months the various Liberal claimants to the thrown will have to distance themselves from McGuinty and navigate through a minefield of simmering scandals, from canceled power plants, to the Orange helicopter fiasco.
It is likely that the new Liberal leader will tack to the left in a quixotic attempt to recapture the support of the public service unions, left shredded by McGuinty. Lacking the proverbial white knight, and with a decade of lackluster governing history it is likely that the provincial party will suffer a fate much like its federal cousin. That leaves things to either Tim Hudak’s Progressive Conservatives or Andrea Horwath’s NDP. Many seasoned political pundits believe that given the ability to marshal the forces of the left, that is unions and the perpetually aggrieved students that NDP will break out of their traditional base of a few Toronto and Hamilton ridings and gain further ground with urban voters. The projection is for a NDP minority government.
Mr. Hudak, if he stays on message and does not try to portray the PCs as a shadow of the Liberal party, and does not deny the party’s proud past of ideological commitment under Mike Harris may convince enough suburban and rural voters to give him a try. Given the debacle of the last campaign, I remain dubious. The result of a PC failure at the polls would be another leadership campaign giving the NDP at least two years to govern as they wish.
How should small business owners and incorporated professionals prepare for another round of NDP over governance; with prudence and planning? They must first accept that any NDP governance will be temporary, and unless Horwath governs from the middle it is unlikely that minority would translate into majority. Ontario has endured an industrial slow down and policies that reward union cronies rather than improve productivity and competitiveness will have inevitable results.
It is likely that one of the first acts of a NDP government will be to increase taxation on businesses and the so called rich (remember rich in this province is anyone earning north of 133k). Financial planners and tax specialists alike will likely find the advantages of using the corporation to save severely curtailed. Perhaps a return to other forms of savings may provide the temporary safe harbour? The Retirement Compensation Arrangement, or RCA, which routinely allows for corporately deductible contributions well in excess of RRSP limits may make sense.
The RCA is not subject to provincial regulation and allows for considerable flexibility both in terms of funding and withdrawal. In the terrifying event that the NDP maintains control of the government the RCA member could chose a more attractive province in which to retire. Other than Quebec and Nova Scotia every province in Canada has lower rates of taxation than Ontario. The business owner or incorporated professional could potentially shield their savings from the ravenous intentions of the socialists and access the money at much later date.
Fear not business owners. Though the voter may act out of a misplaced sense of wishing to hand out comeuppance, capital and prosperity can be protected from this mob mentality. Wealth can be protected, taxation delayed and retirement can be enjoyed once the voter has regained their senses in Ontario, or if they do not from a chalet in beautiful Banff.