Northern Economist 2.0

Friday, 6 April 2018

Lakehead Faculty of Science & Environmental Studies Celebrates Service!

Well, today was the last day of classes at Lakehead and there was an impromptu gathering at the end of the day at the Lakehead Outpost of faculty from Economics, Chemistry and Physics to celebrate the end of term.  As well as celebrating the end of this term's classroom service, there was also  recognition of the long time service of three faculty members - two who are are the table in the accompanying photos.  Dr. Steve Kinrade from Chemistry and Dr. Bakhtiar Moazzami from Economics have reached the 30 year service milestone - I'll let you guess who they are.  A third member of our faculty - Dr. Scott Hamilton from Anthropology - also is celebrating 30 years and was even seen at the outpost but did not make the photo.  Congratulations to all our colleagues on the completion of another teaching year!

Thursday, 5 April 2018

Yet Another Growth Plan for Northern Ontario

Most of us are familiar with the Northern Ontario Growth Plan which is a 25-year plan that was released on March 4, 2011 by the Ontario government that aimed to strengthen the economy of the North by:
  • Diversifying the region's traditional resource-based industries
  • Stimulating new investment and entrepreneurship
  • Nurturing new and emerging sectors with high growth potential. 

The Plan's policies were built upon six themes that each was to  contribute to the region’s long-term sustainability and prosperity: Economy, People, Communities, Aboriginal Peoples, Infrastructure and Environment.  I have discussed this plan in several posts on this blog.

Well, it turns out that the federal government also has a growth plan for northern Ontario though I must admit that it has flown under my radar.  I guess, when one works in an ivory tower, one sometimes loses sight of activity on the ground though how I never got wind of the extensive range of consultations escapes me. I am obviously moving in the wrong social circles.  As part of the follow up to the 2017 budget, FEDNOR began to put together a Prosperity and Growth Strategy for Northern Ontario (PGSNO) as a “roadmap to economic development and success” for the region.

FEDNOR undertook a series of engagement activities from June to November 2017 which included round tables, meetings and online tools aimed at reaching stakeholders across the region. According to FEDNOR, there was an online questionnaire with over 600 respondents, 33 round tables and 12 presentations with over 400 participants.  The result was a report with 12 common areas/themes of action (see the report for details):

1.    Infrastructure (broadband; transportation; and, energy)
2.    Diversification and self-sufficiency
3.     Northern image
4.     Rural and remote communities
5.    Timely and effective support
6.     Shortage of human resources
7.     Indigenous participation
8.     Building on regional strengths
9.     Business supports
10.   Indigenous enterprises
11.   Technology adoption
12.   Access to support for innovation

There was an item by MP Bob Nault in February 2018 discussing the report and its availability online but there seems to be little else until now.  Apparently, on Monday April 9th there will be an announcement by federal ministers Navdeep Bains and Patty Hajdu with respect to the PGSNO.  One imagines that there will be an announcement of federal development money to implement or address some aspect of the PGSNO.  Or perhaps there will be an announcement of further study and consultation.  Maybe both? Nevertheless, given that the federal report had twelve themes as opposed to six for the provincial growth plan, I would imagine that it will be twice the fun.

Tuesday, 3 April 2018

Banking at the Post Office

This morning's Chronicle-Journal had a story on a call for post offices to provide banking services in small northern Ontario towns that had lost their major financial institution. As the story notes:

"Northern towns with reduced banking options, or those with no bank outlet at all, would benefit from a plan to offer regular financial services at local Canada Post outlets, says the federal NDP.
“Now is the opportune time for Canada Post to explore alternative revenue streams such as postal banking,” NDP MP Carol Hughes (Algoma-Manitoulin-Kapuskasing) said last week in a news release."

The concept was being "revived" according to the story but the precedent was countries like France, Italy and Japan which continue to offer banking services in their postal outlets.

This was an interesting story given that there appeared to be no realization that Canada once did have banking functions in post offices.  Along with Federal Government Savings Banks which assumed the responsibilities of government savings banks in the Atlantic region upon Confederation, there were post office savings banks started in 1868 in Ontario and Quebec modelled in part on the success of British Post Office Savings Banks.  The size limit on a personal deposit that could be held was limited to a maximum of $1,000 in order - so it would seem according to financial historian E.P. Neufeld* - to protect the deposit business of private banks. (See: E.P. Neufeld (1972) The Financial System of Canada, Its Growth and Development, MacMillan).

There was rapid growth in government savings banks as well as the post office savings banks until the 1890s and indeed, in 1888 the savings deposits of government and post office savings banks were over two-thirds the size of savings deposits of the chartered banks.  However, this growth was due to the competitive rate the federal government offered that was in excess of private rates.  The federal government lowered their interest rate in 1889 and after that the relative importance of government savings banks - and post office savings banks -began to decline.  Post office savings banks absorbed the activities of government savings banks in 1929 and continued to chug along in an ever diminishing role until 1968 when they were finally abolished.  They took a long time to disappear.

Could post office savings banks make a comeback?  It seems like an attractive option for small towns in rural remote regions that still have a post office but it remains that the prospect faces obstacles in the internet age.   Banking consolidation has been underway in larger cities as well as in smaller towns as a result of electronic banking services and a post office savings bank would have to offer banking services competitive with any private banking sector's e-banking services.  Besides, they have also been closing post offices in rural remote areas and consolidating services across the country.  For the concept to work, Canada Post would have to demonstrate that it offered a unique product that filled a need and could actually generate revenues in excess of the costs of operation.  It might be useful to see what the ingredients of success are in for postal banking outlets in countries that still have them.