Langdon had openly campaigned against Rae's austerity measures. Although he lost by 13, votes to the Liberal candidate, he received a higher percentage of votes than any other NDP candidate in the province. Notwithstanding its setbacks, the Rae government achieved some positive accomplishments during its time in office. It saved many jobs in northern Ontario through its bailout of Algoma Steel , and negotiated a similar contract for paper mill workers in Kapuskasing. Other popular initiatives included the TTC Eglinton West subway line in Toronto even though the official transit plan only recommended a busway for current needs , support for public housing, and the Jobs Ontario job creation program.
Rae's decision to approve casino gambling for the province was also opposed by many in the party but it provided a steady source of revenue. Ontario's economic forecast was bleak when Rae took office in October Finance Minister Floyd Laughren argued that Ontario made a decision to target the effects of the recession rather than the deficit, and said that the budget would create or protect 70, jobs.
It targeted more money to social assistance, social housing and child benefits, and raised taxes for high-income earners while lowering rates for , low-income Ontarians. In April , the government introduced a one-year program to protect the pay of workers whose firms had shut down due to the recession.
Labour Minister Bob Mackenzie estimated that the plan would help 56, workers. The government changed its economic focus after , and implemented budget cutbacks to control the province's mounting deficit. His government also brought in the Social Contract , austerity legislation which reopened collective bargaining agreements with the province's public sector unions. This legislation imposed a wage freeze and introduced what became known as " Rae days ", requiring civil servants to take up to twelve days off without pay per year.
This breach between the NDP and the labour movement struck at the party's foundations. Thousands of members resigned from the party, and several unions turned against the NDP and vowed to defeat the government in the next election. The Rae government later attempted to regain labour support by passing Bill 40, a measure which among other things introduced anti-scab provisions to the province. This was not enough to bridge the gap with organized labour, however, and the party was unable to regain significant union support. As Premier, Rae placed a cap on enrollment into medical schools.
The New Democratic Party campaigned on a promise to introduce public auto insurance in the and campaigns. After assuming office, Rae appointed Peter Kormos , one of the most vocal proponents of public insurance, as the minister responsible for bringing forward the policy. Kormos, who had already been dropped from cabinet, became Rae's most vocal critic in the NDP caucus. Rae's government attempted to introduce a variety of socially progressive measures during its time in office, though its success in this field was mixed.
In , the government introduced legislation, Bill , which would have provided for same-sex partnership benefits in the province. At the time, this legislation was seen as a revolutionary step forward for same-sex recognition. The Rae government established an employment equity commission in ,  and two years later introduced affirmative action to improve the numbers of women, non-whites, aboriginals and disabled persons working across the private and public sectors.
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In November , the Rae government announced that it would restrict most rent increases to 4. The provisions for were made retroactive.
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Tenants' groups supported these changes, while landlord representatives were generally opposed. When campaigning in , Rae promised that he would eliminate food banks through anti-poverty initiatives. After taking office, however, his government committed a significant sum of money to support Ontario's existing food banks. Gerard Kennedy , leader of the Daily Bread Food Bank in Toronto, criticized Rae for not targeting the money toward affordable housing and welfare reforms. Rae supports abortion rights, saying "The rights of women to choose, to have control over their own bodies, is not a right which is going to be taken away by the Parliament of Canada, and it is not a right which should be subject to some private member's bill which is going to affect the rights of women to have choice, to have genuine equality and to have full and complete access to the medicare and the health care that they need.
Soon after assuming office in , Rae announced his support for native Canadians' "inherent right to self-government".
In November , the Rae government announced an indefinite moratorium on the construction of new nuclear plants in Ontario. In March , Rae announced that he would support a new round of constitutional negotiations between the federal government and the provinces, which ultimately proved to be unsuccessful. He indicated that Ontario was willing to recognize Quebec as a distinct society, and called for aboriginal and women's rights to be entrenched in the Canadian Constitution.
Rae also supported the creation of a "social charter", to establish national standards for social programs such as medicare. Early in his term, Rae indicated that his government would continue a long-standing development freeze in Toronto's Harbourfront area, to ensure the survival of cultural programs in the area. During a meeting with Mexican President Carlos Salinas de Gortari in , he argued that any proposed North American free trade zone would have to incorporate common environmental and labour standards.
Rae endorsed Susan Eng 's successful bid to chair the Metro Toronto Police Services Board in early , over the opposition of several police officers. When Rae assumed office, the Retail Business Holidays Act of Ontario had recently been found unconstitutional by the Supreme Court of Ontario, meaning that many stores were allowed to open legally on Sundays for the first time. Rae announced that his government planned to introduce legislation for a "common pause day" across Ontario, "to help strengthen family and community life while protecting small business and the rights of workers".
In practice, this initiative would have required many retail establishments to close on Sundays, with exemptions for religious minority communities. However, many retail owners as well as members of the general public preferred Sunday shopping to be legal, and in the Rae government yielded to the pressure and reversed its position, amending the Retail Business Holidays Act so that only statutory holidays, and not Sundays, would be common pause days.
Among the reports' more prominent recommendations were:. Rae's popularity had recovered somewhat by , but by the time the writs were dropped for that year's provincial election it was obvious that the NDP would not be re-elected. The official opposition Liberals were expected to be the primary benefactors of the NDP's unpopularity, having recovered from their severe defeat of five years earlier, and leading in opinion polls since During the leaders' debates, while Rae and McLeod traded barbs, Harris used his camera time to speak directly to the camera about the PC's platform.
Several working-class ridings which had long voted NDP became disgruntled with the party due to the Social Contract and affirmative action, so they were attracted by Harris' populism and shifted to the Tories. While the NDP polled considerably better in northern Ontario than it did in , it lost much of its support in rest of the province, especially the region where they had won many seats five years earlier.
In the end the Tories shot from third place to a landslide majority government, sweeping the NDP from power. The Liberals lost six seats, but retained their status as the official opposition, while the NDP fell to only seventeen seats and third place in the Legislative Assembly. Rae himself was reelected in his own riding by over 3, votes.
He joined the law firm of Goodmans LLP. Rae was made an Officer of the Order of Canada in , and in he was appointed to the Order of Ontario. He was the national spokesperson for the Leukemia Research Foundation. Rae helped the Toronto Symphony Orchestra restructure following an extended strike by its musicians at the beginning of the — season.
Rae returned to active politics on April 16, , two days after Mike Harris announced his resignation as premier, with an opinion piece in the National Post newspaper. In an article entitled, "Parting Company with the NDP", Rae strongly criticized what he perceived as a bias against Israel in the federal party, and also criticized the NDP for rejecting Tony Blair 's Third Way concept and for refusing to accept globalization and open markets.
He suggested that the party's economic policies were insufficient for the 21st century, and that the party as a whole was no longer "worthy of support". During the provincial election , Hampton argued that Rae was wrong to reverse the NDP's commitment to public auto insurance.
The party's relations with the labour movement have not completely healed, although the situation has improved since Relations with the CAW remain especially fraught, and memories of the social contract have hurt the NDP's credibility with a new generation of public sector workers, despite the party's efforts to distance itself from the measure. Nonetheless, the Ontario NDP remained in third place in the Legislative Assembly, and would not win more than 20 seats in the legislature until under Hampton's successor, Andrea Horwath.
It would not come out of the political wilderness until , when it won 40 seats—its most since —and opposition status. Rae worked on the Red Cross tainted blood issue and also worked towards a resolution of the fishing conflict in Burnt Church, New Brunswick. In , Rae wrote a report for the Liberal government of Dalton McGuinty on post-secondary education, commonly referred to as the Rae Report. His report called for increased government funding to colleges and universities, and enhanced student aid especially for low-income students.
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The report also suggested that individual institutions ought to be able to determine what rate of tuition fees to charge, free from government controls, which generated controversy. Student groups including the Canadian Federation of Students have objected, noting the significant recent increases in tuition fees in Ontario under the government of Mike Harris, and the 57 per cent increase in tuition fees during Rae's own tenure as premier.
Rae has also become involved with international issues; in and , as chair of the Forum of Federations he helped oversee constitutional discussions between the government of Sri Lanka and Tamil Tiger rebels. On November 23, , Rae recommended further inquiry into the investigation and prosecution.
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In a July interview with Michael Valpy , Rae indicated that he was still committed to public life and public service. Valpy's feature on Rae included a comment by Arlene Perly Rae that he could return to politics if there was a national unity crisis. On November 23, , Rae presented his recommendations that there should be a formal but focused inquiry into the Air India disaster. Rae produced a comprehensive report outlining the key issues that could be addressed, leaving Air India Victims' families spokeswoman Lata Pada "encouraged that demands for answers will be addressed".
On August 24, , the Toronto Star reported that Rae was under "mounting pressure" to run for the federal Liberals in the general election. Though it was unclear how long the Air India inquiry was to last, Rae's appointment precluded any possibility of his running as a candidate in the January 23 election. McKenna decided afterwards not to contest the leadership. The new government of Stephen Harper appointed a judge to handle the Air India inquiry in March thus releasing Rae from his previous commitment and freeing him for a possible run for the Liberal Party leadership.
In a speech to the Canadian Club of Winnipeg on March 13, , Rae expressed his interest in uniting the "progressive" forces of Canada to regain a majority government in the House of Commons of Canada.
At his campaign launch he responded to his critics by saying, "I made mistakes before I was in politics, I made mistakes when I was in politics, I made mistakes as premier I can only tell you I have learned from those mistakes and I am the wiser for them. On the night of December 1 at the Convention, Rae spoke freely without notes rather than make a formal speech.
On the morning of December 2, after finishing second on the first ballot, rival candidate Scott Brison , moved to Rae and yet another rival candidate, Ken Dryden , moved to him after the second ballot.
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Rae then freed his delegates and did not indicate whom he supported on the final ballot; Dion won the leadership. Despite the loss of the Liberal leadership, Rae had indicated that he would like to run for a federal seat in the House of Commons in the next federal election. Several days following his defeat at the leadership convention it was reported that Rae's wife, Arlene Perly Rae was approached by a delegate who did not know who she was, and who told her that she should not vote for Rae because his wife is Jewish.
A flyer was also sent electronically to convention delegates, stating that Rae's wife was a vice-president of the Canadian Jewish Congress and that he was a supporter of Israeli apartheid.
Rae was named co-chair of the Liberals' platform development committee, with Scott Brison. In the by-election held on March 17, , Rae won handily. However, since , the Liberals have dominated the riding as has been the case with most Toronto ridings , carrying it by 10, votes or more. Rae kept this tradition going; he finished almost 11, votes ahead of his closest opponent and with more than 4, votes than his five opponents combined 14, to 9, Rae's candidacy was endorsed by the former Conservative candidate Mark Warner , who was dropped due to disagreements with the party on social and urban issues.
Rae had denounced the Tories' decision to drop Warner, calling it a "national disgrace.