Homicide Rates for 2017: Canada (and Sudbury) Up but Thunder Bay Down

Well, with all the excitement about the Federal Fall Economic Statement yesterday, the release by Statistics Canada of the 2017 homicide numbers flew in somewhat under the media radar.  According to Statistics Canada, the homicides in Canada hit its highest rate in almost a decade in 2017 with much of the increase attributed to more firearm-related and gang-related incidents. The firearm-related homicide rate increased 18 percent from 2016 to 0.72 per 100,000 population—the highest rate since 1992. Police reported 660 homicide victims in Canada in 2017, 48 more than in 2016. The homicide rate rose 7 percent in 2017 to 1.80 victims per 100,000 population—the highest level since 2009.  It would appear that the upward increase in homicide rates was driven by British Columbia and Quebec.

 

 

What is also of interest is the homicide rate by CMA for 2017 as shown in Figure 1.  In 2017, the homicide rate per 100,000 ranged from a high of 5.8 in Thunder Bay to a low of 0 in Saguenay.  Greater Sudbury came in close to the bottom at 0.61.  The good news for Thunder Bay is that the homicide rate for 2017 is down from 2016 when it stood at 6.62 per 100,000.  The bad news is if one takes the average homicide rates for all CMAs for the period 2006 to 2016 (see Figure 2)  Thunder Bay also ranks the highest at an average of 4.04 per 100,000, just ahead of Winnipeg at an average of 3.69. As for Sudbury, its homicide rate is up from last year - when it stood at zero - but given the rankings there does not seem to be that much to worry about there.

Needless to say, despite an improvement in 2017 Thunder Bay still has work to do.

Ontario 2018 Economic Outlook and Fiscal Review: Commentary

The Ontario government delivered its Fall 2018 Economic Statement and the end result was not as dire as anticipated.  From a revised deficit of $15 billion dollars just weeks ago, the Ford government has now brought the deficit down to $14.5 billion – not the fiscal Armageddon many would have expected.  Indeed, some might argue that the fiscal statement was positively underwhelming given that there was not as significant a dent in the deficit as the rhetoric suggested, there was no timetable for balancing the budget, nothing about how to deal with a large net debt and the fact that the net debt is now $347 – up from an amount that was itself revised upwards to $338 billion from $323 billion only a few weeks ago.

Part of what is happening here is that the provincial government is facing a much larger fiscal challenge than it probably even itself realized.  The Ford government has promised to tackle the deficit and restore Ontario’s public finances.  It also wants to enact more tax relief (for example the LIFT credit for lower income workers) and wants to spend money on the promises it made – including infrastructure such as long term care beds.  At the same time, Ontario’s economy is expected to slow – eroding revenue growth – while interest rates are creeping upwards adding to debt service costs.

So, moving from its financial commission review 11 weeks ago, revenues are now projected to be $2.7 billion dollars lower going from $150.9 to $148.2 billion.  This is the result of the cancellation of cap and trade – which for 2018-19 is a $1.5 billion revenue hit – as well as a projected slowdown in land transfer tax and corporate income tax revenue.  This is accompanied by a decline in spending by $3.1 billion as expenditures go from $165.8 to $162.8 billion with much of this involving cancellation of previous government initiatives.  As a result of spending dropping just a bit more than revenue, the deficit is reduced $500 million from $15 to $14.5 billion.

A glance at spending by ministry showed that most ministry functions are still up from 2017-18, including health and education.  Ministries that are seeing drops include the Attorney General, Economic Development, Government and Consumer Services, Indigenous Affairs, Municipal Affairs and Housing and Tourism.  There does not appear to have been a major hit to any of the major transfer partners.  Infrastructure spending also is still on track and may be a factor in the increase in the estimate of the net debt to $347 billion. 

So, the long and short of it is that this is really a place holder fiscal statement.  There is really no significant dent in the deficit, no time table for balancing the budget and the net debt is higher than what was projected just 11 weeks ago.  If the Ford Government is sincere about reducing the deficit, it probably needs more time to develop and implement a strategy that "will require difficult decisions" and will tackle it in the spring 2019 budget.  Until then, we wait.

Natural Resource Resurgence in the Northwest

There has been good news when it comes to the forest sector in northwestern Ontario in the wake of nearly a decade of doom and gloom.  Softwood lumber prices have rebounded and there is expanded production underway at sawmills in Ear Falls and Kenora with the two plants now providing about 250 jobs.    In White River, the previously closed sawmill has now been operating for about five years.  Resolute Forest Products just announced its third quarter profits were up and  it would pay a special dividend and its optimism for the future recently translated into an announcement that it would invest $53.5 million on its northwestern mill operations. 

According to the MNR, in 2006, there were 40 large active sawmills in Ontario (mills that processed more than 50,000 cubic metres annually) of which 34 were in northern Ontario.  There were 58 medium size mills (processing 5,000 to 50,000 cubic metres annually) in Ontario of which 14 were in northern Ontario. There were nearly 60 small sawmills in Ontario (less than 5,000 cubic metres in production annually) of which 19 were in northern Ontario.  The sawmill industry was distributed throughout the province, but large employment intensive mills were concentrated in the north.  By 2012, Ontario was down to about 97 mills – a 40 percent reduction from 158 to 97 sawmills. 

As for the pulp and paper mills, Canada as a whole saw a decline from 50 to 30 pulp mills between 2000 and 2014 – a reduction again of 40 percent.  Approximately over the same period, total employment in logging, paper and wood products in Canada fell from 308,664 to 190,651 – a loss of 118,000 jobs or a drop of about 38 percent.  As for northern Ontario, in 2003 there were 12 large pulp and paper mills in northern Ontario while by 2012 the number had gone down to 7 – a drop of 42 percent.  Since then, the mill in Iroquois Falls has also shut down and while there were plans for redevelopment it has since suffered an unfortunate fire.

The forest sector crisis in northern Ontario saw the loss of over 20,000 jobs in the northwest part of the province alone.  It was not just a downturn but in many respects the end of an entire way of life.  Well-paying industrial jobs in many small communities that supported a small-town friends and family oriented lifestyle vanished. After the destruction of the forest sector crisis that saw pulp and sawmills shuttered and significant employment losses, we are now seeing new investment and some employment recovery.  However, despite this recovery in investment and employment, it is unlikely that the size of the industry well ever again return to its former glory.

The following figures present an overview of the evolution of employment in northwestern Ontario’s resource sector.  Figure 1 plots the number of resource occupations defined by Statistics Canada as production, supervisors, technical, laborers and harvesting in natural resource, agriculture and related activities.  Note that these numbers include all resource activities and not just forest sector ones.  Still, the good news is that the number employed in resource occupations bottomed out in 2012 and has since been on an upward trend with the last few months of 2018 showing a distinct surge. In 2012, monthly resource employment in NW Ontario averaged 5600 whereas in 2018 to date it has been 7270 – an increase of almost 30 percent.  Much of this has been due to the mining sector but forestry has also played a role.

Figure 2 shows a similar trend, but it is annual resource employment by industry rather than occupation with resource industries defined as forestry, fishing, mining, quarrying, oil and gas.  Needless to say, for northwestern Ontario this would mainly be forestry and mining.  Here, the rebound seems to date from 2014 with annual employment going from 3000 in 2014 to 5100 in 2017 – an increase of 70 percent.  However, from 2002 to 2009 total employment plummeted from 9000 to just under 3000 - a drop of about 67 percent.

So resource employment is on the rebound, but we are nowhere near the peaks reached in the period from 2000 to 2003 just before the forest sector crisis took hold.  The remaining firms are more efficient and capital and technology intensive and therefore will not employ as many people for similar levels of output as produced a decade ago.  Still, the sector has survived and in some respects is even thriving which is good news.

So What Is the New Plan for Northern Ontario's economy?

As the Ford government forges ahead, we should soon expect to see evidence of what its plans for boosting the economy of northern Ontario will be.   Given the change of government, the previous Northern Growth Plan is gone and will not be mourned given that evidence of its positive impact was hard to come by.  The Northern Growth Plan was essentially a form of palliative policy care given that despite the lack of progress on the economic front, there were nevertheless numerous press releases and announcements to the effect that many things were happening in the north -usually announcements of government funding - and we should feel good.  As a strategy, it has even been embraced by the federal government.

Ontario is now apparently open for business and while that can certainly be beneficial for northern Ontario, it is necessary for the government to demonstrate what that actually means for the North.  During his recent visit to northern Ontario, the Premier reiterated his “open for business mantra” and stated a commitment to sectors like steel, mineral exploration and forestry.  His visits in late October to the steel facilities in the Sault, the opening of Harte Gold’s new Sugar Zone mine near White River and Thunder Bay for Resolute Forest Products investment announcement provided excellent photo opportunities for economic success but these were projects that have been in the works for some time.

It is now time for the Premier to demonstrate his commitment to growing the northern Ontario economy.  As to what the new approach will be, one can start by an examination of the election platform that brought the provincial Ford conservatives to office.  The northern platform was a five-point plan that involved:

• Developing Northern Resources, including the Ring of Fire.
• Moving forward with resource revenue sharing from mining, forestry and aggregates to help Northern towns and Indigenous communities share in resource development
• Ensuring hunting and fishing revenues go toward their stated purpose of conservation
• Cutting the aviation fuel tax for the North to reduce the cost of living in the North and,
• Bringing back passenger rail service to the North (which I take to mean the Ontario Northland and probably not full service across the north shore).

In terms of proposed implementation, the election platform of the victorious Conservatives said that a provincial conservative government under Doug Ford would:

1.     Build the roads to the Ring of Fire.

2.     Establish resource revenue sharing from mining, forestry and aggregates to help Northern and Indigenous communities share in the benefits of resource development by having the province take a portion of provincial revenues collected from aggregate licenses, stumpage fees and the mining tax and direct it to the local, host Northern and Indigenous communities. This was estimated at $20-$30 million in annual revenue.

3.     Ensure all hunting and fishing license fees are spent on wildlife conservation.

4.     Reverse the 148 percent increase to the aviation fuel tax for all Northern airports returning the aviation fuel tax to its original 2.7 cents per litre

5.     Bring back full passenger rail service to the North by first completing an environmental assessment of what equipment needs to be purchased and what upgrades need to be made to restore the service and then providing $45 million annually for operating costs.

Despite the flurry of activity with respect to announcements about promises made and kept, it remains that these five points and their associated implementation specifics have yet to be addressed.    How they will be implemented given the fiscal constraints the province faces will be an important issue.

In terms of fostering the northern Ontario economy, to these five points, I would add the freeing up of more Crown Land for cottage and camp development to provide the inputs to grow and develop a tourism service sector in the north that can be serviced out of its existing towns and cities. I would also urge extension of the highway twinning projects already currently underway to grow needed transport infrastructure in the north and hopefully improve upon the previous government’s anticipated completion date.

When these specifics will start to take firmer shape may be indicated in the November 15^th Ontario Economic Outlook and Fiscal Statement.  Until then, we wait.  Hopefully, the Ford government will repudiate the adage that while provincial governments go and come, the problems of the northern Ontario economy abide.