Northern Economist 2.0

Tuesday, 16 May 2017

The Northern Ontario Growth Plan: A Summary Evaluation


The Ontario government released the Growth Plan for Northern Ontario on March 4, 2011 in response to years of slow growth and economic stagnation in northern Ontario. In an effort to improve the economy of northern Ontario, 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.
After five years, it was worth examining key economic indicators to see what if any improvements have occurred with respect to the economy of northern Ontario.  After a series of posts examining employment, new investment spending, consumer and business bankruptcies and employment composition, what conclusions can be drawn?



The indicators to date are not pretty.  To start, between 2011 and 2016, the population aged 15 years of age and over in northern Ontario has declined from 637,642 to 627,792 for a drop of 1.5 percent.  Full-time employment in northern Ontario declined from 284,083 jobs in 2011 to 278,717 jobs by 2016 for a percent drop of 1.9 percent.  Part-time employment fell over the same period from 75,433 jobs to 68,883 jobs or a drop of 8.7 percent.  Meanwhile, the labor force fell from 390,133 to 374,450 for a drop of 4 percent.  Total employment fell from 359,517 to 347,600 for a drop of 3.31 percent while the labor force shrank by 4 percent.  The labor force shrinking faster than employment helps explain why despite the downward trend in job creation, the unemployment rate actually falls from 7.8 percent to 7.2 percent between 2011 and 2016.

With respect to investment spending, the total value of building permits in northern Ontario from 2011 to 2016 declined from 1099 million dollars to 813 million dollars – a decrease of 26 percent.  Residential permits parallel this decline going from 528 million in 2011 to 409 million in 2016 for a decline of 23 percent. 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 from 2011 to 2016 fall from 257 to 198 million dollars – a drop of 23 percent.  Moreover, institutional and governmental permit values over the same period also drop of 28 percent.

The picture is somewhat brighter when one looks at consumer and business insolvencies. Total consumer insolvencies declined from 3,659 insolvencies in 2010 to 3,397 in 2016 –a decline of 7 percent.  Over the same period, the annual number of business insolvencies in northern Ontario dropped from 89 to 31 – a decline of 65 percent.

As for employment composition, in 2011, average monthly employment in northern Ontario was 86,746 in goods production and 272,431 in services.  By 2016, goods employment had declined by 11.2 percent to reach 77,062 while services employment fared better declining by only 0.9 percent to reach 269,923. Of 16 specific employment sectors, 5 registered an increase between 2011 and 2016 while the remaining 11 saw a decrease. The increases ranged from a high of 11.9 percent for Accommodation and Food Services to 0.6 percent for Transportation and Warehousing.  As for the declines, they ranged from -14.1 percent for Finance, Insurance and Real Estate Services (FIRE) and -13 percent for Manufacturing to -0.3 percent for Wholesale and Retail Trade.  As a share of total employment some sectors saw a small increase while others saw a small decline, but the overall distribution of employment across sectors did not undergo a major shift.

To date, the presence of a Growth Plan for Northern Ontario appears to have done little to reverse the long-term decline of the northern Ontario economy as measured by generating increases in either employment or investment.  Indeed, it is difficult to even ascertain what the specific initiatives of the plan have been.  The purpose of the plan appears to largely be a marketing framework within the north which to announce the usual infrastructure and government funding projects that the province does around the province.

Based on the first five years of evidence, it would appear that the economic decline of the north has continued.  Population is not growing, employment is shrinking and new investment spending has also shrunk.  While business and consumer insolvencies appear to have declined, one could argue that there has been a winnowing of more economically fragile entities and what is now left is able to better survive in the reduced economic circumstance.

Of course one could counter this evidence in two ways.  One could argue that the Growth Plan did have a 25-year time horizon and it is still early days for its positive effects to be felt.  Of course, saying we need to wait another 20 years to definitely reach a conclusion merely postpones any accountability on the part of the government.  Indeed, at current rates of decline in employment and investment, by the time the plan winds up in 2036, one might see total employment nearly 10 percent lower than at the start and new investment at a virtual standstill. 

Another counter to this evidence might be that times are indeed still tough in northern Ontario and despite the poor performance, in the absence of the presence of the Growth Plan, things might have been even worse.  This requires acceptance of the counterfactual that in the absence of the plan, the performance of the economic indicators would indeed be worse. However, this makes the Growth Plan more a form of palliative care than an initiative for economic growth.

To date, the Growth Plan for Northern Ontario does not appear to be a success.  It is not even clear what the activities and actions of the plan are supposed to be given it seems to have become simply a backdrop framework within which to announce the usual dispensation of infrastructure and spending pronouncements.  People in northern Ontario  should probably be asking more questions.