BOB Rae seems to rub business leaders the wrong way.They accuse the premier of Ontario, the leader of North America's only socialist government, of squandering that province's riches by pandering to labor unions and the left-of-center ideology of his New Democratic Party (NDP). "Ontario is under the hobnailed fiscal boot of Bob Rae," wrote Conrad Black, a Toronto businessman and chairman of Hollinger Inc., principally a newspaper conglomerate. He and Mr. Rae have been having a heated debate in Toronto newspapers. Rae says he is not antibusiness. "Attracting investment, rewarding innovation, encouraging markets to work, entrepreneurship, creating profits - these are things which have to happen in any society," he wrote in reply to Mr. Black's attack. With a population of 10 million, Ontario accounts for almost half of Canada's national output. This province's economy is larger than that of Australia, a country of 16.5 million people. The biggest complaints from business are the $9.7 billion (US$8.5 billion) deficit - which seems set to climb even higher - and the government's planned takeover of the automobile insurance business. Ontario was hit harder by the recession than any other region in Canada. Unemployment in the manufacturing sector rose dramatically over the past year. Vowing not to fight the deficit "on the back of the unemployed," the NDP government said it would spend its way out of the slump. But the deficit meant Ontario's credit rating dropped a notch and angry business people demonstrated outside the provincial legislature. "Sure, people, in the business community are making noises," said Rae. "I don't see them demonstrating when Brian Mulroney [the federal Conservative Prime Minister] has a C$30 billion deficit." Three provinces - British Columbia, Saskatchewan, and Manitoba - have government car insurance systems, all put in place by former NDP governments. Quebec has a mixture of a public and private system. There appears to be little difference in cost to the consumer. The Insurance Bureau of Canada shows that in Canada's three largest cities insuring a car costs about the same: Vancouver (government-run): C$932; Toronto (private): C$966; Montreal (private/public): C$950. The insurance industry and opposition politicians say the NDP wants to nationalize the car insurance business because it is party dogma. m afraid they're on an ideological course that doesn't really want to hear what the industry says," says Jack Lyndon, president of the Insurance Bureau. The NDP won a surprise election victory in Ontario last fall; it had never held power in Ontario before. The party is similar to the British Labour Party and receives the bulk of its financial support from labor unions. Bob Rae himself once worked for the steelworkers. Union leaders have positions of power within the government. Jeff Rose, head of the federal civil servants union, has just been named deputy minister (top civil servant in a department) of intergovernmental affairs, in charge of negotiating the future shape of the Canadian federation on behalf of the province. Union leaders now in the cabinet or advising the government have pushed pro-union legislation. One proposal - not yet law - would make it illegal for management to hire substitutes for workers on strike. In its spring budget the government did not lay off a single unionized government employee. Rather the government increased the deficit. The NDP increased taxes, making Ontario the highest taxed province in Canada, according to the Fraser Institute in Vancouver. Many business people say the government is driving money from the province. Derek Russell, a Toronto stockbroker, says his survey of the Toronto real estate market tells him rich people are moving out. "I visited a number of houses listed for more than a million dollars and in every case the reason for selling was that the owners were moving to the United States." Conrad Black predicted just such an exodus. He said the tax and labor policies of the Ontario government would "drive job-creating capital investment into neighboring jurisdictions, where a superior return on investment is attainable."