Northern Economist 2.0

Sunday, 21 October 2018

Pictures of a Presentation

I did my Lakehead University In Conversation presentation in the Fireside Room at the Brodie Library yesterday.  My talk was titled "Going from Chicago to Duluth of the North: Thunder Bay’s Economy in the Past, Present, and Future," and was quite well attended with about 30-35 members of the community present including old friends, new friends and even several candidates for municipal office.  Lakehead's In Conversation series is a very important venue for sharing university research and expertise with the broader community and an important form of engagement. A couple of pictures below including some shots of your Northern Economist in action.  Thanks to Peter Boyle for passing on some of the shots.



And of course, a photo with Peng You.





I will be posting the slides sometime later this week here on my LU Department web page.

Wednesday, 17 October 2018

Thunder Bay's Economic Evolution: A Brief History


From its origins as a fur trade company headquartered at Fort William, to the development of the grain and forest sectors, Thunder Bay’s economy has seen ebbs and flows over the course its history.  Key to its modern economic development was the federal government decision to route the Canadian Pacific Railway through the Lakehead and the arrival of the transcontinental railway in the 1880s.  Indeed, without this explicit government intervention it is unlikely Thunder Bay would have developed into a city as large as it is today.  Government action in assorted forms has been one of the pillars of Thunder Bay’s economy. 

Transportation is another pillar of Thunder Bay’s economy.  During the first decade of the twentieth century, there was a massive boom rooted in infrastructure building for the transport needs of the western Canadian grain economy that saw the twin Lakehead cities of Port Arthur and Fort William become the largest grain port in the world.  At its peak, over 30 grain terminals lined the waterfront.  Indeed, growth was so rapid that many believed the Lakehead would become the Chicago of the North.  Population quadrupled between 1901 and 1911 and the real per capita value of new construction was never higher than during this period.

Yet, as the twentieth century wore on, there was growing realization that as well as Thunder Bay was doing, it was not going to be the Chicago of the North.  The remainder of the twentieth century saw continued but slower growth and Thunder Bay’s ultimate evolution was more akin to Duluth Minnesota – the American Lakehead – rather than Chicago.  Thunder Bay’s economic growth slowed in the wake of World War I and the Great Depression and resumed during the resource boom of the 1950s and 1960s.  Indeed, natural resource extraction and processing whether forestry or mining have always been another pillar of Thunder Bay’s economy.

Port Arthur and Fort William amalgamated to form Thunder Bay in 1970 ending the urban competition that in retrospect appears correlated with better economic performance given the economic slowdown that ensured.  After 1970, labor saving technological change, aging capital stock, a shift in world grain markets and increasing international competition also eroded the competitiveness of Thunder Bay’s grain transport and forestry sectors culminating in the forest sector crisis, which saw substantial job losses in Thunder Bay and the surrounding region.  These job losses were aggravated by high energy costs with respect to electricity which were especially damaging to the energy intensive pulp and paper sector.  Total employment in Thunder Bay has never recovered from the peaks reached in the first years of the twenty first century.

In the wake of the forest sector crisis, recent years have seen a stabilization of the Thunder Bay economy and a shift in its composition towards employment in research, regional health and social services, and higher education.   This base continues to support a growing range of retail and service activities particularly in hospitality and accommodation oriented around a growing tourism scene that has drawn some international attention.  Nevertheless, economic growth has been slower compared to the rest of Canada and Ontario. While the unemployment rate in Thunder Bay is low, it is because the labor force has shrunk faster than employment as a result of an aging population and youth out-migration.  Population in Thunder Bay peaked in the 1990s and has declined slightly since.   While the First Nation’s population has been expanding, its future economic engagement hinges on the long-term success of initiatives to expand human capital via education and training.

 

As for the future, tomorrow is yesterday as Thunder Bay’s economic future will still rely on its traditional three pillars – government, transportation and natural resources.  These pillars will of course make use of new knowledge and technology and will require innovative entrepreneurial vision to recognize and implement new opportunities. Thunder Bay’s transportation infrastructure and its pivotal location on the east west transport corridor, the role of regional government services and the ongoing potential of the mining sector combined with information technology and the knowledge economy will be the economic forces propelling its future.

A version of this article was originally composed for Lake Superior News appearing there October 16th in advance of the October 20th Lakehead University In Conversation Talk at Brodie Library titled Going from Chicago to Duluth of the North: Thunder Bay’s Economy in the Past, Present, and Future.  

Friday, 12 October 2018

Municipal Spending Ranges by Key Categories in Northern Ontario Cities


Given the ongoing municipal election campaigns in Ontario, I have been focusing a fair amount of my blogging activity on municipal public finance issues.  In a recent post, I looked at the Net Municipal Levy Per Capita (NMLPC ) for the five major northern Ontario cities for the years 2007 and 2017. In 2007, the NMLPC was highest in Thunder Bay at $1,216 and lowest in Sudbury at $1,041.  By 2017, spending was highest in Timmins at $1,651 (with Thunder Bay second at $1,641) and lowest in Sault Ste. Marie at $1,434.  If one compares the growth rates in the per capita levy, they were actually highest in Timmins at an average of 4.6 percent annually and lowest in Thunder Bay at 3.5 percent annually.  I also compared the growth of the NMLPC to household income growth and showed that per capita municipal spending has been rising faster than average household income raising the question of sustainability.

In this post, I want to drill down a bit in the total expenditure numbers and compare spending for these five major northern Ontario cities in a number of key municipal expenditure categories.  The data is from the 2017 BMA Consulting Municipal Report and was available for key expenditure categories in terms of the levy for the category per $100,000 of municipal tax assessment.  In order to standardize comparison, I have reproduced the net levy graph (Fig 1) but per $100,000 of assessment rather than per capita as in the last post.  To this I have added graphs comparing general government (Fig 2), fire (Fig 3), police (Fig 4), paved roadway spending (Fig 5) and winter control (Fig 6).  Keep in mind that this is data for only one year and there are differences in population size and geographic spread across these five cities as well as any unique local circumstances that may affect spending.

 

 

 
Nevertheless, the results are illuminating in that there is no one size fits all pattern of spending across these five communities when it comes to these key municipal expenditure categories.  The net levy per $100,000 of assessment ranges from a high of $2,136 in Timmins to a low of $1,482 in Sudbury.  Thunder Bay spends the most on general government (i.e. administration) at $257 per $100,000 of assessment and Timmins the least at $65.  North Bay spends the most on fire services at $283 per $100,000 of assessment and Sudbury the least at $160.  In terms of policing, Thunder Bay spends the most at $503 per $100,000 of assessment and Sudbury the least at $320. 

 

 

 
When it comes to paved roadway expenditure, Sudbury spends the most at $258 per $100,000 of assessment and Sault Ste Marie the least at $101.  Finally, all five of these cities experience harsh winters and the need to plow roads and when you look at winter control spending, Timmins spends the most at $237 per $100,00 of assessment and Thunder Bay the least at $48 per $100,000 of assessment.  This last category however is the most likely to be the subject of large fluctuations from year to year given local weather conditions.  My guess is the winter of 2017 was pretty bad in Timmins. 

Overall, there are large differences in spending across these categories across these five cities.  The spending in these categories on average across these five cities in 2017 accounted for about two-thirds of the net levy – a significant proportion.  It would be interesting to know what the incidence of fires is in North Bay and Thunder Bay given the size of the expenditure in these communities compared to the others.  Given high homicide rates in Thunder Bay, it is understandable perhaps why it spends the most of police of these five cities.  Yet, given that the average proportion spent on governance in these five cities is about 8 percent of the net levy, one wonders why Thunder Bay spends 14 percent and the Sault is at 11 percent compared to say 3 percent in Timmins or 9 percent in Sudbury. 

Ratepayers in each community should be asking themselves how their community compares to the others and what may be driving the differences.  Is the best value for money being provided?

Tuesday, 9 October 2018

Trying to Understand Thunder Bay's 2018 Municipal Election Campaign


It is perhaps a sign of advancing age that I am finding it increasingly difficult to understand what Thunder Bay’s municipal election campaign is actually about.  I found the 2014 municipal election to simply be a wasted election as despite issues like municipal fiscal sustainability, the Kam River Bridge, and the sale of public assets, the entire election was simply fixated on the events centre.  This time around, the long-term fiscal sustainability of municipal finances is still an issue as is the Kam River Bridge to which can be added the city’s social fabric as well as Thunder Bay’s economic development and yet to date it appears to have become – and here I suppose I am dating myself again - a Seinfeld Election.  That is, despite what are acknowledged by many to be a host of issues, it appears to be an election about nothing in particular.

Aside from campaign signs dotting the landscape at strategic street corners, I have met only one candidate on my doorstep and only two have left literature.  I have yet to become aware of any scheduled public debates.  This is during the course of a campaign with a record number of candidates – 11 for the position of Mayor alone with another 26 vying for the At-Large councilor positions – which no doubt complicates the traditional debate framework.  Indeed, how can we have a meaningful discussion in which 11 candidates for Mayor can outline how they see the state of the city and offer analysis and solution?  Incumbents for the At-Large positions must be silently laughing all the way to the proverbial bank given the difficulty of numerous candidates swimming like so many salmon upstream to stake out a position and gain visibility.   

With traditional election campaigns difficult to conduct, this appears to have become Thunder Bay’s truly first complete social media election campaign which complements the debut of internet voting nicely  Many of the candidates – but not all - appear to have developed extensive web presences and have Facebook profiles full of photos and videos showing smiling candidates in assorted municipal action poses.  There are catchy slogans and mission statements that describe themselves as accountable community activists, serious leadership, concerned with the social fabric, and even showing transformative leadership.  

There are candidates claiming to be working for you, others putting Thunder Bay first or working together for a Thunder Bay that works, some posing with old family friends and seniors, and many updated profile photos showing youthful smiling vigour.  If they have received endorsements, they are highlighted along with any favorable media coverage. Indeed, if one were to judge Thunder Bay by the Facebook profiles of its municipal candidates one could only conclude that our community is definitely one big happy place full of wonderful smiling people whose major source of gainful employment is posing for pictures. 

There are even some alliances being formed between candidates as they campaign together.  There is one slate of five councilor At- Large candidates that aims to put people and the planet first under a time for change slogan.  Then there is another alliance between one incumbent and one new entry in the At-Large race that is marketing itself as political twins working for you.  I suppose this is a political variant of a two for the price of one marketing ploy.  Or perhaps, vote for one, get one free.

In the end, all of this seems to me to be mainly style over substance.  Needless to say, election campaigns have always been dominated by style over substance with serious policy discussion seen as a dangerous luxury – especially for incumbents.  In the end, polite conversation at least in the social circles I move in appear to have narrowed down the issues in this election to three: a need for major change in representation given that many on council are long in the tooth, taxation rates and cost-effective municipal services, and social issues with an emphasis on crime and public safety.  If this is not be another wasted election, we need candidates to address how they would reduce crime and improve the social fabric and how they would pay for it given what has been a steadily rising municipal tax burden that has shifted largely to the residential ratepayer. We cannot afford to waste another election.

Thursday, 4 October 2018

Thunder Bay's Tax Levy Debate

It would appear that the municipal election campaign is starting to heat up with the outgoing Mayor taking issue with the Thunder Bay Chamber of Commerce's recent election policy document which among things argues that the City of Thunder Bay's tax levies have increased by an annual average of 3.36 percent over the last decade.  Their graph is for the period 2012 to 2022 which includes projections for the 2018 to 2022 period which is not exactly the last decade. The Mayor maintains that the average tax levy change over the past eight years is only 2.4 percent - after new growth in the tax base was factored in.

This is all really quite entertaining because what matters is the increase in the total tax levy - that is what is being drawn from the tax base and used to fund spending.  The tax levy is essentially an expenditure estimate for taxpayer assisted spending and in the end what matters is the total amount of the revenue taken in and its growth and not whether some of it comes from the existing base and some of it is coming from new assessment growth.  The latter argument is really only being advanced to deflect attention from the overall increases.


So, what are the numbers?  Well, here is my two cents worth.  The accompanying figure plots the annual tax levy increase for the period 2008 to 2018 based on total tax revenue numbers from the Financial Information Returns from the Ministry of Municipal Affairs and Housing (with the exception of the last couple of years which come from City of Thunder Bay budget documents).  If you take the average, it comes out to comes out to 3.3 percent which is pretty close to the Chamber estimate.  If you take the average for only the 2011 to 2018 period, you get an average of 3.4 percent.  The last four years average out to 3.7 percent which is a rate well in excess of the rates of inflation and income growth in this city but the number is skewed by the 5.7 increase in 2015 - the year right after the last election. In the end, the tax levy in Thunder Bay has increased at an average of over 3 percent annually for the last decade and based on the chamber numbers is projected to continue doing so.

Monday, 1 October 2018

Municipal Election 2018: Spending in Northern Ontario Cities

We are about three weeks out from the municipal election and across northern Ontario, voters will be looking for information on which to base their decisions.  Inevitably, some of that decision making will be based on comparisons of how municipal ratepayers feel they fare relative to other similarly sized cities.  Taxes are often the basis of such comparisons, but municipal property taxes are a function of what municipalities spend so another basis for comparison is expenditure.

Among the many municipal statistics provided in the annual BMA Municipal Study is fairly detailed comparisons of spending on municipal services.  The aggregate number on which any comparison can begin is what is known as the net municipal levy per capita (NMLPC).  This is an estimate of what the spending need for a municipality is to provide its services – as determined by the city administration and elected council – and ultimately is what feeds into required tax revenues.

Now the BMA reports are quite explicit in qualifying what a NMLPC measure can and cannot do and what its limitations are.  Spending per capita can vary as a result of different service levels as well as type of service.  There are also demographic and socio-economic reasons why spending may vary across cities and per capita spending is simply an aggregate and not an indicator of value for money.  However, the BMA maintains that changes in per capita spending reflects changes in total spending relative to population and “Increasing per capita expenditures may indicate that the cost of providing services is outstripping the community’s ability to pay, especially if spending is increasing faster than the resident’s collective personal income.”

So, the accompanying figure 1 shows the NMLPC for the five major northern Ontario cities for the years 2007 and 2017. In 2007, the NMLPC was highest in Thunder Bay at $1,216 and lowest in Sudbury at $1,041.  By 2017, spending was highest in Timmins at $1,651 (with Thunder Bay second at $1,641) and lowest in Sault Ste. Marie at $1,434.  If one compares the growth rates in the per levy, they were actually highest in Timmins at an average of 4.6 percent annually and lowest in Thunder Bay at 3.5 percent annually.
 

However, in all of these cities, per capita spending grew faster than population suggesting that there was a deepening of per capita spending.  That could be the result of a desire to improve services or it can reflect a weakening economic base and the spreading of costs across fewer people.  Over the last ten years, population actually shrank in four out of five of these cities – the exception being Sudbury which saw its population rise 2.3 percent over the last ten years.  Yet even in Sudbury, spending rose faster than population given t per capita expenditure is growing.
 

More interesting, is figure 2 which plots the average annual growth rates of the net municipal levy per capita (from 2007 to 2017) and average household income (2010 to 2017). In all of these cities, per capita municipal spending has been rising faster than average household income.  So, it would appear that in all of these cities, municipal spending has generally risen faster than both population and income.  This suggests that recent years have seen municipal spending outstrip the resource base in these communities as measured by population and income.  Indeed, sustainability for sub-national governments has been outlined as a key concern in a recent federal PBO reportMunicipal ratepayers in all five of these cities should be asking how candidates for their ideas on how they plan to address the fiscal sustainability of their cities?

Sunday, 23 September 2018

Thunder Bay Municipal Election Issues: Crime


The October 22nd municipal election in Thunder Bay should start heating up as we move into the final four weeks of the campaign.  There are indeed quite a few campaign signs sprouting up and in a sign that the race has intensified there is even some campaign sign vandalism.  On the one hand, having a large number of candidates should make for an interesting race but on the other hand with so many candidates, any real debate is going to be unwieldy to manage and I expect the final outcomes will largely favour incumbents with name recognition.  This means that despite what seems to be an enormous appetite for change, there will be very little come the day after October 22nd.  Still, one would be remiss on not trying to highlight some of the issues.

In my August 8th post, I did a brief summary of what the main issue categories  in the coming election should be and today I want to focus on one specific issue in particular – crime in Thunder Bay.  There is a lot of social media discussion as well as media reporting on crime in Thunder Bay and also a lot of informal chatting among people and concerns have been expressed about what seems to be substantial drug driven gang activity.  There are also statistics that measure crime and Statistics Canada has reported recently that Thunder Bay in 2017 leads Canadian cities in their murder rate for a second year in a row.

The police response to this news by the Acting Police Chief acknowledged the high homicide rate but the media report also noted that “Despite having the highest murder rate per capita for Canadian metropolitan areas and the second highest in terms of severe crimes, the overall crime rate in the city of Thunder Bay is down.”  The response of the Acting Chief accentuated the positive with the comment that “"Those numbers are great to see," Hauth said. "I think it’s continued work internally and working with outside agencies. We’ve made great strides in terms of doing things in the community."”

So what do the numbers look like?  Well, there are specific traditional crime rates for assorted offenses and incidents with the overall crime rate in terms of incidents per 100,000 of population actually down in 2017.  There is also what is known as the crime severity index which uses a weighting method to account for both the number of crimes and their severity.  There sometimes is confusion in media reports between the crime rate and the crime severity index and the confusion mounts if one goes up while another goes down.  However, if one looks at longer term trends, both sets of number tell a similar story.  Crime overall has come down in Thunder Bay over the last 15 years, but certain types of crime have actually gone up.  In particular, violent crime and homicides in particular.

In the case of Thunder Bay, the overall crime rate in 2017 declined from 6,771 incidents per 100,000 in 2016 to 6,576 incidents per 100,000 – a drop of 2.9 percent.  Since 1998, the overall crime rate in Thunder Bay has declined from 10,911 incidents per 100,000 to the current 6,576.  However, the homicide rate has exhibited an opposite trend going from 2.6 homicides per 100,000 in 1998 to 6.04 per 100,000 in 2017.  When it comes to crime severity, the accompany figure sums it all up quite nicely. 

 
The overall crime severity rate (with everything relative to a base of 100) was quite stable from 1998 to about 2010 and then fell and has stabilized since 2012.  For 2017, the crime severity index is up from 87.48 to 88.25- an increase of about 1 percent.  The decline in the crime rate however is being driven by the fall in the rates of non-violent crime.  What is more alarming is the increase in violent crime which in 2017 is the highest it has been since 1998. 

We can argue that crime rates are down overall, but the concern of the public is that violent incidents – homicides, assaults, etc… seem to be on the way up.  Drug possession or a vehicle theft is a problem, but the public is more perturbed by gang and drug related violence and homicides. The issue facing municipal candidates is what solutions can be offered to deal with the rising rates of violent crime in Thunder Bay?  And to help frame the discussion in a simple manner amenable to most municipal candidates, should solutions involve more resources to police or more effective use of existing resources and what should those solutions be?

Tuesday, 18 September 2018

Wealth and Debt Accumulation in Early Financial Markets Stockholm Conference

I had the privilege of attending along with nearly 50 other participants  the "Wealth and Debt Accumulation in Early Financial Markets" conference that was held at the Stockholm School of Economics September 13-14.  The conference was organized by Elise Dermineur (Umea University/Stockholm School of Economics) and Håkan Lindgren (Stockholm School of Economics) who are both affiliated with the EHFF Institute for Economics and Business History Research at the Stockholm School. The conference united researchers working with a variety of historic sources of data on credit, wealth and debt but with very strong representation from probate inventories - an area that I have spent nearly thirty years working with.  

 

Conference attendees were welcomed by Lars Strannegard, the President of the Stockholm School of Economcs and keynote addresses were by Carole Shammas (USC)  titled "Why Did Finance Professionalize" and Phil Hoffman (CIT) titled "Dark Matter Credit".  Along with paper sessions, there were also two round tables.  On the Thursday, there was "The 'Market' as a Concept" which was moderated by Kristina Lilja (Uppsala) and the Friday afternoon saw "Women and Early Financial Markets" moderated by Ann McCants (MIT).  The conference wrapped by with a discussion and plans for future collaborative international research moderated by Anders Perlinge (Stockholm School of Economics).  

It was a lively, well organized and well attended conference with a lot of participation and interaction.  It was frankly rewarding to see so many researchers working in areas similar or parallel to mine and with similar types of data.  The strong resource base provided by Swedish probate records was particularly impressive and it is due to the hard work and initiative of Swedish researchers as well as generous research support.  The research into probate inventories as well as support for the conference comes from the Handelsbanken Research Foundation, the Wallenburg Economic History Foundation, the Marcus Wallenburg Foundation for International Scientific Collaboration, the Jacob Wallenburg Foundation, the Ebbe Kock Foundation, the Gunvar and Josef Aner Foundation, and the Swedish Foundation for Humanities and Social Sciences.  

Let me conclude with a warm thank you to our hosts and research supporters or as they would say in Sweden - tack så mycket - and end with a few pictures from the conference.


 

Sunday, 9 September 2018

What's Wrong With This Picture?


Well, Northern Economist is in Northern Europe on the way to a conference in Stockholm later this week. It is a lovely Sunday afternoon here with families out strolling enjoying the mild September weather in a major European city – Copenhagen to be precise.  The number of people out today in Copenhagen has been augmented by the holding of a Every Step Counts walk for the environment and the paths along the canals are packed with walkers as well as tourists.

What is also interesting about the canals is scenes like the one below:


 


Numerous boats are out with groups of people sitting around a table enjoying snacks and the passing scenery as they boat along.  Notice anything interesting about this picture?  Well, it turns out that Copenhagen seems to be a lot like Vegas when it comes to open carry alcohol.  Not only can you walk the streets while enjoying a beer but you can drive a boat while partaking in wine and beer also.

It is very important to drink responsibly but I do not think that responsible drinking is incompatible with drinking in public.  You certainly could not get away with drinking and boating in Canada but one wonders how it is that Denmark - and indeed much of Europe - can handle this but we in Canada cannot despite our socially liberal pretensions.  The canals in Copenhagen are quite crowded and yet here we have groups of people enjoying picnic lunches and wine while boating along. I won’t even get into a discussion of why Denmark has tons of people on bikes and yet no one seems to be wearing a helmet.

Perhaps Danes and Europeans in general are more mature and able to take more personal responsibility when it comes to personal safety?  It is certainly something I will think about some more over the next few days. However, in the absence of truly innovative change we in Canada will just have to bear with things the way we are.


Monday, 27 August 2018

Northern Ontario Economic Forecasts: Conference Board Forecasts Slower Growth for Thunder Bay and Sudbury


The Conference Board of Canada recently put out its Summer 2018 Metropolitan Outlooks for Thunder Bay and Greater Sudbury.  Greater Sudbury’s real GDP growth is expected to be 1.2 percent in 2018 and 1.1 percent in 2019 while its employment growth will be  -0.4 per cent in 2018 and rise 1.1 percent in 2019.  Meanwhile, Sudbury’s unemployment rate will rise from 6.7 per cent in 2017 to 7.0 per cent for 2018, before falling to 6.6 per cent next year.  Thunder Bay’s real GDP is expected to grow 1.2 percent in 2018 and 1 percent in 2019 with employment expected to rise 2.2 percent in 2018 but fall -0.7 percent in 2019.  The unemployment rate is expected to be lower than Sudbury’s at 5.1 percent in 2018 compared to 5.6 percent in 2017 but is expected to be 5.4 percent in 2019.

As the accompanying figures show, Thunder Bay and Sudbury have been growing more slowly and are expected to grow more slowly than Canada or Ontario.  Sudbury’s economy has been described as “unsettled” with a steady string of employment losses over the last few years.  Its primary hope is the current rebound in nickel prices given the employment losses have been hitting its mining sector.  


 



 
Thunder Bay saw a very good employment growth performance in 2017 that basically helped recover from the 3 percent drop in 2015 – its economy currently can be characterized as “moderate expansion.”  What seems to be driving things at the moment in Thunder Bay s a stronger construction sector with numerous small non-residential projects as residential demand is weak.  Indeed, the housing forecast for 2018 is 155 units – the lowest number of starts in 15 years.  As well, there has been some upturn in manufacturing and transportation.  

So, moving forward.  It appears that both Canada and Ontario are expected to see slower rates of economic growth moving towards 2020 with Thunder Bay and Sudbury even lower.  In terms of employment growth, Sudbury’s recent string of low employment growth is expected to end in 2019 if nickel prices continue their rebound while Thunder Bay in 2019 is expected to see negative employment growth again before resuming growth.  Thunder Bay’s economy has been performing marginally better than Sudbury’s recently as it is somewhat more diversified as in 2017 it had a higher economic structure diversity score of 0.78 compared to Sudbury’s 0.71.

Monday, 20 August 2018

Prelude to Municipal Election: Thunder Bay Economic Overview


As the election campaign for Thunder Bay Mayor and City Council begin to heat up, there will be attention focused on how Thunder Bay’s economy has been doing over the last four years.  The Conference Board and Statistics Canada both provide data for  quick snapshots about how Thunder Bay has done since 2014.  First, real GDP numbers for Thunder Bay (in 2007 dollars) from the Conference Board show that the city’s economy since 2014 has grown at annual rates ranging from a low 0.7 percent in 2015 to a high of 1.4 percent in 2017 with a forecast growth of 1 percent in 2018.  While the local economy is growing, its growth rate is well below that for Ontario and Canada which in 2017 alone saw real GDP growth at 3.2 and 3.1 percent respectively according to the Conference Board. Indeed, out of 29 CMAs in 2017, Thunder Bay ranked second last in real GDP growth – just ahead of St. John’s which saw growth of -1.7 percent.

It turns out that in the wake of the 2014 municipal election, growth faltered in Thunder Bay and that is also borne out by the employment numbers.  According to Statistics Canada, Average monthly employment in 2014 was 61,608 and fell to 59,650 in 2015 and then began to rebound (see Figure) and to date in 2018 averages 61,967.  So, this suggests that the last four years have seen just over 300 jobs added to the Thunder Bay economy which works out to about 75 jobs a year.  (By the way, don't be fooled by what looks like dramatic employment growth since 2015 - after all, the scale on the Figure ranges from 58,000 to 62,500) However, this masks the ebb and flow across sectors.  Manufacturing, public administration, finance, insurance and real estate employment have all declined while there have been increases in accommodation and food services, transportation and warehousing and retail.  Other sectors have been stable.

 
The shrinkage of employment in the finance, insurance and real estate sector is a function of declining house sales and weak housing starts.   As the Conference Board noted in its Winter 2018 Outlook: “Thunder Bay’s uneven economy and slumping population have impaired residential construction. While housing starts clocked in at just under 300 units last year, this was due to an upswing in construction of multi-family homes, particularly apartments, which are relatively infrequent here. Tellingly, CMHC data show that area builders have had no unsold apartments since August 2016. Such projects are risky in an economic environment like Thunder Bay’s, so builders wait for pent-up demand to accumulate, then pre-sell their units.”

What is also interesting is the comparison of employment between Thunder Bay and Ontario as a whole.  In 2016, according to the Conference Board, 16 percent of employment in Thunder Bay was industrial versus 20 percent for Ontario.  As for office employment, it was 20 percent in Thunder Bay and 28 percent for Ontario.  At 5 and 15 percent respectively, the shares in Transport and Warehousing and Wholesale and Retail Trade are the same as for Ontario as a whole.  However, when it comes to non-commercial services (i.e., health, education and public administration), Thunder Bay’s employment share is 27 percent compared to 19 percent for Ontario. When it comes to other services (arts, entertainment, recreation, accommodation and food) Thunder Bay is at 16 percent compared to 13 percent for Ontario.

So, the long and short of Thunder Bay’s economic performance over the last four years is that while not a disaster, it has been uneven.  Real output growth has been weak and total employment has essentially remained stable and within that there is a shift to services particularly of the non-commercial variety meaning more emphasis on public as opposed to private sector employment growth. The lack of population growth combined with an aging population has led to a weakening of the housing sector. That is the current reality.

  

Saturday, 11 August 2018

Building Permits Decline

Statistics Canada's most recent report on building permits shows that in June 2018, Canadian municipalities issued $8.1 billion worth of building permits, down 2.3% from the previous month.
The decline was the result of lower construction intentions for residential buildings, following a strong May. Multi-family dwellings accounted for the majority of the decline while the non-residential sector did see increases.  The value of industrial permits rose 5.3% to $603 million, a third consecutive monthly increase. The industrial permit gain in June was largely the result of a few high-value permits issued for agricultural and manufacturing buildings in Ontario.

When the results are examined on an annualized basis - that is June 2017 to June 2018, the total value of permits in Canada was down 5.6 percent with residential permits down 1.5 percent and non-residential down 12.4 percent.  The biggest drop on the non-residential side was for institutional permits which fell 31.1 percent.  When Canada's CMAs are ranked for the June 2017 to June 2018 period (see Figure below), the range is from a high of 202 percent for Moncton to a low of -72 percent for Regina.


With respect to northern Ontario, Thunder Bay saw a decline of 13.9 percent and Greater Sudbury a drop of 43,6 percent in the total value of permits.  Even the GTA and central Ontario area saw a decline with Toronto down 16.5 percent and Kitchener-Cambridge-Waterloo down 46 percent.

Interestingly, despite the weakening in intentions for new construction, the unemployment rate continues to fare well.  Statistics Canada also reported this week that the July unemployment rate in Canada was down to 5.8 percent with annualized employment growth.  With respect to northern Ontario, Sudbury's unemployment rate (3-month seasonally adjusted moving average) fell from 6.8 percent in June to 6.6 percent in July even though its total employment fell from 80,500 to 80,400 jobs.  Meanwhile Thunder Bay's unemployment rate fell from 5.1 percent in June to 5 percent in July while its employment level rose from 64,900 to 65,000.

Wednesday, 8 August 2018

Thunder Bay's Municipal Election Issues: A Brief List


With all of the candidates signed up and off and running, it is now time for the candidates running for municipal office in Thunder Bay to present their platforms and debate the issues they feel will define and shape municipal government here over the next four years.  While no one can predict the future, there are a number of issues that face municipal government in Thunder Bay and will affect its ability to deliver public services.  The role of municipal government is technically not to provide services to the public but to provide services to the owners of property.  However, when said and done what the City of Thunder Bay ultimately does is provide public services to everyone.

 

First and foremost, municipal services need to be paid for and so a  key issue is the long-term fiscal sustainability of municipal services in Thunder Bay.  This of course then becomes tied to property tax rates, provincial grants and user fees – the three main sources of revenue.  The City’s finances in terms of its credit rating are good though as I have noted before it is easy to be prudent when the ultimate budgetary insurance is simply raising taxes.   However, given that there has been a gradual shift to the residential property tax base, the candidates will need to address how much more can the residential taxpayer bear in terms of increased tax rates especially when the tax rate increases have been accompanied by rising user fees for water. What can be done to make city services more cost-effective?

Second, there is the city’s social fabric within which we can include crime rates – particularly homicides – as well as the homeless population, racism, poverty and the growing use of food banks.  The social fabric of Thunder Bay is a crucial issue given its effect on both the quantity and quality of life for its residents.  It is also an important issue from the prospect of attracting new investment in the city given the poor press Thunder Bay garners in major media outlets in the Toronto area.  While there is reason for hope, at the same time continued hope requires action.  How can we deal with our pressing social issues?

Third, is the issue of future municipal governance.  Thunder Bay currently has a council of twelve plus a mayor with five of the councillors At-Large and the remaining councillors ward-based.  We do need to have a conversation as to whether this is still the best institutional framework for municipal decision making.  The At-Large/Ward hybrid harkens back to Amalgamation in 1970 as a compromise to deal with the need to make city wide decisions in the face of strong regional loyalties to the old municipalities and neighborhoods.  However, it is not 1970 anymore and some thought should be given not only to having a smaller council - as a signal that there is a commitment to efficient government - but also one that is either all Ward based or all At-Large.  As noted in an earlier posting, my preference would be for an all Ward based system.

Fourth, is the general issue of what I would broadly term city development but encompassing not only the city’s economy – about which City Council actually not do much about directly – but also its urban development, infrastructure development (I would include a new bridge over the Kam here)  and demographics.  Aside from providing an environment conducive to business via tax and regulatory policy and ensuring cost-effective and appropriate services and infrastructure, City Council cannot really turbo start the local economy.  That is a function of national and international economic conditions and the demand for what we do here.  Ultimately, what can we sell to the rest of the world from Thunder Bay? Tourism is one area where we can still do more as a city.  However, we are also hampered economically by having a spread-out city that is costly to service with new housing developments springing up willy-nilly in outlying areas.  However, we have made some progress in core-specialization with many government services in the former south downtown and a thriving cultural/arts/restaurant scene on the north side adjacent to the waterfront.  We also face an aging population that is quite pronounced given that so many of our youth have left.  While the First Nation’s population is young and growing, much work needs to be done to ensure they are equipped with the human capital necessary to maximize their economic potential and many of those tools are under the purview of the federal and provincial government.  There are no easy or quick answers here but one hopes candidates have pragramtic and workable ideas.

Finally, I am somewhat cautious about bringing up the next point but feel that I should despite the fact it is the kind of thing that some candidates may latch onto and neglect the more important and difficult issues already covered.  We can all recall the last municipal election when the debate was consumed by the Events Centre with all other major issues relegated to the sidelines.  Still, I would be remiss if I did not mention that 2020 will be the 50th Anniversary of the creation of Thunder Bay and we should give some thought to what type of events or projects we will use to commemorate Thunder Bay’s amalgamation in a manner that is positive and celebrates our potential.  Again, I have had thoughts on this in the past but there may be other ideas out there.

So, without further ado. Let the campaign debates begin!

Wednesday, 1 August 2018

Explaining Thunder Bay's Municipal Election Candidate Growth

With over 101 individuals seeking municipal office for October's municipal and school board elections this October, the question that now comes to mind is why are there so many candidates seeking office?  More importantly, why has this number been growing over time?  After all, in 2000 only 76 candidates sought office.  While there have been some ebbs and flows in numbers since then - there was another surge in candidates in 2003 - it remains that particularly since 2006, the numbers seeking the Mayor's job as well as an At-Large Council position have grown steadily.  Yet the overall population of the City is flat.

Friday, 27 July 2018

Analyzing the Candidate Numbers: Thunder Bay Municipal Election 2018

The nominations are closed and what a difference an additional week makes.  When you add up all the candidates, as of 5pm today there are now a total of 101 individuals running for office in Thunder Bay’s fall municipal and school board elections – up from 78 in 2014 – and a total of 61 running for City Council – more than the 51 of 2014.  So, it would appear that despite changes to the municipal nomination process for the 2018 election – a shorter time period for filing to run as well as the requirement of 25 signatures of support – there are more than enough people who want to fill municipal office.

However, a closer examination of the numbers suggest that the interest is greater for the Mayor and the At-Large Councillors.  Compared to the 2014 election, the number of candidates for Mayor is up from 6 to 11 – a 83 percent increase while the number seeking at At-Large position grew from 19 to 26 – an increase of 37 percent.  However, those seeking a Ward Councillor position fell from 26 to 24 – an 8 percent drop.  On the bright side, numbers for both the Lakehead and Separate Boards were also up from 2014.