This is the third in a series of posts in
which I am presenting evidence evaluating the Growth Plan for Northern Ontario,
which was released on March 4, 2011. The
25-year plan was to guide provincial decision-making and investment in northern
Ontario with the aim of strengthening the regional economy. The goal was strengthening
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.
While the provincial government did commit itself to the
development of performance measures for ministry specific initiatives that
supported the implementation of the plan, I will be using a broader set of
indicators of overall economic performance that are supported by the
availability of readily accessible public data.
My
first post was an overview of the series while my
second post looked at employment.
In this third post, I will be looking at new investment spending as measured by
building permits.
New investment activity is captured by building permits. Municipalities
issue building permits for new construction and alterations that fall into the
categories of residential, industrial, commercial and institutional/governmental
construction. Building permits are of
value as a historical data series because they are a key indicator of past
levels and trends of economic activity via their documentation of capital
formation. Moreover, they are an
indicator of future activity because planned investment in new capital stock
lays the foundations for future productive activity.
Figure 1 to 5 provide evidence on the annual value of
building permits for total investment activity, as well as the separate
categories of residential, industrial, commercial and institutional/governmental. The data was available monthly from
Statistics Canada (Table 260007) for both northeastern and northwestern Ontario
and was aggregated into total annual amounts for northern Ontario.
Figure 1 shows the total value of building permits in northern
Ontario from 2011 to 2016 and reveals a steady decline from 1099 million
dollars to 813 million dollars – a decrease of 26 percent.
Residential permits in Figure 2 parallel this
steady overall decline going from 528 million in 2011 to 409 million in 2016
for a decline of 23 percent.
Residential
permits drive much of the overall decline as they account for about half of the
value of building permits.
Indeed, the
number of dwelling units also fall going from 2,200 dwelling unit permits in
2011 to 1352 dwelling unit permits by 2016.
Figures 3 and 4 show that industrial and commercial permits
exhibit somewhat more variation in their performance over time.
Industrial permits rise from 2011 to 2012 and
then fall steeply before resuming a gradual increase from 2013 to 2015 and then
fall again.
Overall, the value of
industrial permits falls from 117 million dollars in 2011 to 66 million in 2016
for a percent decline of 44 percent.
Commercial permits peak in 2013 with the overall performance from 2011
to 2016 also being one of decline from 257 to 198 million dollars – a drop of 23
percent. As for institutional and governmental permit values, in Figure
5 they too show a period of initial increase and then decline with the overall
period from 2011 to 2016 showing a drop of 28 percent.
In terms of new investment, the period from 2011 to 2016
appears to be one of overall decline driven largely by the fall in residential
investment. During the period from 2011
to 2013, there does appear to be some increase in industrial, commercial and
institutional investment activity but a decline sets in after 2013 making the
overall period from 2011 to 2016 in these categories also one of reduced new investment
activity as measured by building permits.
More to come in the next post.
