Economists poke holes in Hudak’s job-creation plan

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A growing chorus of economists says Tim Hudak vastly inflated the number of jobs his signature Million Jobs Plan would create, largely because the Ontario Progressive Conservative Leader made a basic arithmetic mistake with his own data.

The economists, including three former federal finance department officials, say some of Mr. Hudak's policies would actually create just one-fifth the number of jobs he claims. His central error, they said, was conflating person years of employment – how many people would have work for a single year – with permanent jobs.

On Wednesday, the Tory Leader said the economists were wrong.

"We strongly disagree with that interpretation," Mr. Hudak, who has a master's degree in economics, said while touring a factory on the outskirts of Niagara Falls. "I stand behind our numbers."

But a PC source with knowledge of how the numbers were calculated confirmed the party had indeed treated person years of employment and permanent jobs as the same.

Economists identified several holes in Mr. Hudak's "million jobs" claim, the centrepiece of his platform for the June 12 election. For instance, Mr. Hudak's plan to cut 100,000 public sector jobs, which would take money out of the economy, is not factored into the economic modelling. And they contend no provincial government is powerful enough to guarantee such a specific level of job creation, given the many other factors – from the strength of the U.S. economy to the value of the dollar – that influence the province's economy.

But they said all these concerns were dwarfed by Mr. Hudak's mathematical mistake.

McMaster University economist Michael Veall, who reviewed the PC numbers at The Globe and Mail's request, said Mr. Hudak counted many projected jobs multiple times as a result of the error.

For instance, a Tory-commissioned Conference Board of Canada report on the effect of corporate tax cuts should be read to project 20,500 new jobs under Mr. Hudak's proposed 3.5-per-cent corporate tax cut, he said – far fewer than the 119,808 claimed in the Million Jobs Plan. It appears Mr. Hudak arrived at the 119,808 figure by instead looking at person years of employment.

Conference Board economist Pedro Antunes confirmed Prof. Veall's reading of the data. In an e-mail to The Globe, he said employment figures in each year of the projection are person years.

Scott Clark and Peter DeVries, former top civil servants in the federal finance department, reached a similar conclusion.

"The million-job claim is quite bogus," they wrote in an op-ed on the iPolitics website, calling the size of the Tories' claimed new jobs from the tax cut "utter nonsense."

Paul Boothe, a University of Western Ontario professor and former federal finance official, wrote in Maclean's magazine that the Tories' mistake "led them to vastly overestimate the effect of their proposed job-creating measures."

In an interview, he said the public-sector job cuts, which the Tories did not factor into their economic model, could take more money out of the economy than the corporate income-tax cut puts in.

"At the maximum, it's twice the size of the corporate income-tax cut," he said in an interview. "It strikes me that certainly you would want to model that."

The various economic measures were all calculated separately by different economists who did not look at Mr. Hudak's entire plan. Then, they were rolled together and added up until they reached one million. Mr. Hudak could have avoided arithmetic mistakes by having one economist look at the entire plan, Mr. Boothe said.

There was, however, one piece of good news for the Tories: Prof. Veall said Ontario will very likely create a million new jobs in eight years – but Mr. Hudak may have nothing to do with it.

"I would hope that whoever is in charge, whoever wins the election, that eight years from now we would have a million more jobs," he said in an interview. "I would expect the employment rate to continue to bounce back from the recession. That alone, probably, would get us to a million."