There is going to be a conference on economic development ithis week. The Impact of Development workshop will be held this Thursday and Friday at Trinity United Hall, 310 Park Street Thunder Bay and has been made possible through the support of the Resources, Economy, and Society Research Group (RESRG) at Lakehead University, ReSDA: Resources and Sustainable Development in the Arctic, Lakehead University Department of History, Canadian International Council – Thunder Bay Branch, and Lakehead University Faculty of Social Sciences and Humanities.
The focus of the conference is single industry communities and features presentations on northern Ontario, Atlantic Canada as well as the Arctic and even Latin America. Among the resource sectors covered are forestry and mining. Moreover, a glance at the program will illustrate that there will be a diverse set of perspectives available with respect to development. I will be doing an overview on the resource sector experience in northwestern Ontario with a foray into mining and the Ring of Fire on the Friday afternoon. See the program below.
Last week’s labour force numbers for Canada
from Statistics
Canada were seen as a bit of a shock given that employment
fell by 88,000 in January. Part-time employment declined (-137,000), while full-time employment was up (+49,000). At
the same time, the unemployment rate increased by 0.1 percentage
points to 5.9%.Ontario also
declined by about 51,000 jobs and much of the loss was due to part-time work.So how does northern Ontario compare when
recent labour force estimates are looked at?
The accompanying figure looks at
employment growth for northeast and northwest Ontario compared to Ontario and
Canada between December 2017 and January 2018.Whereas Ontario and Canada saw employment drop by just over one half of
one percent, total employment in the northeast declined 2.4 percent while in
the northwest it fell by 1.8 percent.As
well, the losses were more driven by full-time employment as it dropped 2.5 percent
in the northeast and 2.3 percent in the northwest.All one can hope is that the January numbers
are a short-term aberration because northern Ontario saw its employment drop
more than either Ontario or Canada and the northeast seems to have been hit harder.
Statistics Canada has released its recent sub-provincial population estimates for 2016/17 and the results find that
population is still growing faster in the Prairies
well as parts of Ontario but the two major northern
Ontario CMAs are not in the pack.According the Statistics Canada, the 10 CMAs with the highest population
growth in 2016/2017 were in either the Prairies or Ontario. In 2016/2017, the
population growth rate was 2.0% or higher in four CMAs: Saskatoon (+2.8%),
Regina (+2.4%), Guelph (+2.2%) and Ottawa–Gatineau (Ontario part) (+2.2 and were
followed by Toronto (+1.9%), Oshawa, Winnipeg, Edmonton and Calgary (+1.8%
each), and Kitchener–Cambridge–Waterloo (+1.7%). The figure below shows the picture pretty clearly.
At the bottom of the rankings are Sudbury,
Thunder Bay and Saguenay.Sudbury is
third from the bottom with a population increase of only 0.1 percent.The population decreased in the Saguenay
(-0.2%) and Thunder Bay (-0.1%) CMAs for the fourth consecutive year with
Saguenay’s population decrease partly attributable to out-migration of young
adults aged 18 to live elsewhere in Quebec. In Thunder Bay, the number of
deaths surpassed the number of births, and has done so since 2006/2007,
contributing to its population decline.
Well, traveling in winter is never much fun and this weekend I was in
Montreal for the Fraser Institute Student Seminar Series and my way back has
been affected by snow and freezing rain and assorted other things.Still, there is always time to blog so here
are the economic news stories that have caught my attention over the last
little while with respect to northern Ontario economic affairs.
Well, this makes a lot of sense.I recall speaking on a Thunder Bay Chamber of Commerce panel last spring
where I made a similar remark that it was time to plan for a new span across
the Kam River.I suppose Thunder Bay City
council is gambling that they can get something for nothing by getting CN to
maintain the bridge but it would be forward looking to plan and line up the
funding for a new modern bridge.Best
case scenario – they could end up with two bridges.How’s that for infrastructure!
This is a good news story not least of which is that 40 jobs from the
crew base are coming to Thunder Bay but because it bodes well for the
development of Porter’s air network.With a crew base in Thunder Bay, Porter can use Thunder Bay as a mini
hub perhaps for an expansion west to Winnipeg or a link through Chicago as part
of it existing network.Porter is
innovative and service oriented and a great alternative to Pearson. They are
also adding a 7th daily flight out of Thunder Bay to Toronto. This weekend reminded me why I rarely fly out of Pearson.
In other transportation news, it would appear air travel is big in
northern Ontario. North Bay is also getting some aviation jobs. I guess 40 is a
magic number for airlines as it is expected that 40 jobs will be created here
also.
Apparently, less than a fifth of businesses in northeastern Ontario are
confident in Ontario’s economic future according to this Chamber of Commerce
annual report. This was reinforced by regional data, as the Business Confidence
Survey reveals that nearly half of northeastern Ontario businesses expect their
organization’s revenue to stay the same over the next 12 months.
It could be that the Canadian economy is finally slowing down given the
recent numbers from Statistics Canada.
While Canada lost 88,000 jobs and Ontario and part time workers were
heavily affected, it is only one month’s data – January – and you would need
several months more before you could argue a trend was underway.However, Thunder Bay and Sudbury saw their
unemployment rates remain pretty much the same with Sudbury remaining at 6.8
percent and Thunder Bay dropping slightly from 6.1 to 5.8 percent.However, as I have noted previously, the
unemployment rate in northern Ontario is not the best indicator of job growth
given the shrinking labour force.Indeed, even the
Sudbury Star noted that while Sudbury’s unemployment rate stayed at 6.8
percent, it nevertheless shed 800 jobs.
Thunder Bay City Council
has voted to pass the 2018 municipal budget and will formally ratify it at a
vote this evening.The Mayor and Council
have of course been patting themselves on the back about how it is a “responsible
budget” and how it keeps the tax levy increase in spending within the average
of the last two terms of council.The tax
levy increase is now coming in a 2.4 percent now – just above the rate of
inflation - which is down from the 3.03 percent increase that was originally on
the way after several weeks of deliberation and debate.This was managed by essentially taking out
about $1 million from the city reserve fund to lower the levy against the
advice of City administration it turns out who also noted that the reserves –
used to cover unexpected costs or deficits throughout the year - have been
declining since 2012
What this all really
means is that this is an election year.The average municipal tax revenue increase over the period 2011 to 2018
has averaged 3.3 percent and ranged from a high of 5.7 percent in 2015 to a low
of 2.2 percent in each of 2014 and 2016.The increase of 2.2 percent in 2014 was also during an election year and
was followed by a 5.7 percent increase in 2015.Keeping the increase low this year can be interpreted as a deliberate political strategy to not raise
the ire of ratepayers in the lead up to the October election and one can expect
a hefty increase to make up lost ground when the 2019 budget comes in.
In the end, a tax levy
increasing at just above the rate of inflation is not much of an accomplishment
given that it was done by dipping into the reserve fund.While much was said during council debate
about the hard decisions that have been made the fact remains that spending is
going to go up by the amount originally agreed upon – just over 3 percent – but
it is going to be subsidized by borrowing from the reserve fund.
But then, cost control
is hard work and in the end some of the efforts at cost control have
backfired.One need only look back at
the attempt by Thunder Bay to reduce garbage collection costs in 2017 which
were supposed to eliminate a truck and labour costs via attrition while at the
same time reducing bag pick-up to two bags from three with additional bags
requiring a tag.And what was the end
result?After a period of chaos, the truck
was reinstated but the three-bag limit was not and things have remained very quiet since.So, one has to conclude that costs have remained the same while less
garbage is being collected and revenue is probably up for the City from the bag
tags. It was certainly a win for the City of Thunder Bay but not for rate
payers who altogether have to pay more but are getting less.
We can expect more of
the same next year after the dust clears from the election.The current cast of councilors will largely
be returned to office and the cycle will start anew. We will be paying more and
getting less, and the debut will be a hefty tax levy increase to replenish the
reserve fund as well as boost spending to make up for the previous year’s
slowdown. There will be the usual
grumbling and complaints, but they will be dismissed because after all Thunder
Bay voters are the ones doing this to themselves by falling for the same thing election after election. Why would city politicians take them seriously
when they complain?
Additional Note: February 6th - Well, the budget did pass last evening. Please note that the 2.4 percent levy increase coming in is "net" or after factoring in "new growth". The gross levy increase is actually 3.13 percent. Originally, the net increase was going to be close to 3 percent and the gross increase nearly 3.6 percent. So, total spending is still going up 3 percent and the net is 2.4 because of the use of projected surplus funds from 2017 budget away from the reserve fund and towards the tax bill. However, apparently there was an effort to move even more of the projected 2017 budget surplus away from the reserve but it did not succeed. Of course the 3.13 percent does not mean that everyone's tax bill will be going up 3.13 percent or 2.4 percent if you are an "existing" ratepayer. That is the total increase in tax financed expenditure. Much of the burden of the increase will go to residential ratepayers. See my post last month here for a more detailed discussion.
Ontario has wrapped up its 2018 pre-budget public consultations as it
prepares to deliver its next provincial budget. Ontario Finance
Minister Charles Sousa confirmed in the fall fiscal statement that
Ontario’s 2018 budget will be balanced, as will budgets over the next
two years. However, the average Ontarian may be confused by the
fact that despite a future of projected balanced budgets, the provincial
net debt will continue to increase.
Indeed, recent years have
seen the provincial debt grow by amounts exceeding that year’s deficit.
For example, in fiscal year 2014-15, Ontario’s budgetary deficit was
$10.315 billion but the net debt rose by $17.386 billion. In 2015-16,
the deficit was $3.515 billion but $10.796 billion was added to the net
debt. In 2016-17, the deficit was $0.991 billion but $6.276 billion was
added to the net debt.
So how can this happen? See here for the rest of the post on the Fraser Blog...
