Northern Economist 2.0

Wednesday, 13 November 2019

Ontario’s Health System is Undergoing Structural Change Again

Ontario is embarking on yet another transformation of its provincial government health care system with its creation of Ontario Health Teams which will replace the LHINs.  The LHINS (Local Health Integration Networks) were created in 2006 to create regionally integrated health delivery systems to essentially streamline services.  The move to a regional approach in Ontario at the time was a bit late given that most other provinces that had gone the regional/decentralization approach had done that in the 1990s and in the early 21st century began to move away from the approach.  This continual restructuring of health care service delivery in Canada has if anything been quite disruptive and we are now about to undergo another round of it in Ontario.

The LHINs were to have jurisdiction over hospitals, community care access centres, various community health services as well as mental health and addiction.  However, they were not given jurisdiction over physicians, public health, diagnostics or the provincial drug spending plans.  This made the LHINs only a partial health integration network and in the end that was probably their undoing as the seamless one stop shopping system of care never really fully emerged. 

 As for the OHTs which are going to replace the LHINS, according to the provincial news release, this is “an administrative step only and not a merger of the LHIN boundaries. Further, there will be no impact to patients' access to home and community care or long-term care placement as Ontarians continue to receive the care they need from the care providers they have built relationships with at the 14 LHINs. These changes are a means of streamlining the regional oversight as an interim measure as the government continues to work toward moving home and community care supports out of bureaucracy to integrate them with Ontario Health Teams.” The Ontario Health Teams will be responsible for all of a patient’s care including primary and emergency care, home and community care, palliative care, cancer care, residential long-term care and mental health and addiction services. 

An OHT is a team of health care providers working together to deliver at least three types of health services – the initial call expressed a preference for a minimum of primary care, hospitals, home care and community care.  The aim is to create a truly integrated health care system for Ontarians with seamless transitions.  How many of these teams will ultimately emerge will depend on the population size covered.  If there are about 250,000 people per health team – a not unreasonable number given the Northwest LHIN covers that amount – then there would be about 60 teams ultimately.  Eventually, if all of this pans out,  I suspect there will be anywhere from 50 to 70 of these teams covering the entire population of Ontario and they will report to a new centralized oversight agency – Ontario Health.  Given population aging and the impact of new technologies and drugs on health care costs, part of the goal will also be to contain rising costs by eliminating duplication streamlining transactions costs and thereby slowing the rate of provincial government expenditure growth.

How is all this going to go?  Will it be effective in improving services? Good questions.  We have been reforming health care for two decades in Canada to deal with access, coverage and sustainability of the system and all the same issues still seem to be there – physician shortages, long waits for services, hallway medicine – and total spending has still grown though spending growth has moderated over the last few years. Will this time be different? We will have to wait and see.  In the meantime, this is as good a time as any to look at the Ontario health system and its spending in more detail.  Over the next few weeks, I will devote a number of blog posts to health spending in Ontario to provide some context for spending in the system as well as review where we have been over the last few decades.  Visit this page for updates.


Wednesday, 6 November 2019

Ontario’s Finances: A Quick Review of the November 6th Fiscal Statement

The 2019 Ontario Fall Economic and Fiscal statement was delivered by finance minister Rod Phillips today and the basic message is that the deficit is down from the 2019 budget projection but spending on government priorities is up - notably in health and education.  Compared to last spring, this is a “good news” statement and the outcome of a process of retreat that has marked the Ford Government over the last six months given the outcry from a number of directions that restored among other things, funding for autism programs and a new French language university. 

Revenue growth is greater than anticipated, given Ontario’s booming economy and this has allowed for a smaller deficit as well as more spending.  The deficit is now projected to be $9 billion which is down from the original budget estimate of $10.3 billion – but based on interim numbers had already come down to $9.3 billion. 

Based on the interim numbers since the budget, spending is up from $163.4 billion to $164.8 billion (which incidentally includes a $1 billion reserve) billion but revenues are up $154.2 billion to $155.761 billion.  Revenues are basically about $1.5 billion dollars more than anticipated while total spending including the reserve has gone up by about $1.4 billion.  So, the deficit is lower than what was both in the budget and in the interim update but at $9 billion, it is still the largest deficit since 2014-15 when it stood at $11.268 billion.  Moreover, it is expected to decline to $6.7 billion in 2020-21 and $5.4 billion by 2021-22. As a result, the net debt will rise though the net debt to GDP ratio will stay flat at about 40 percent.  Nevertheless, the net debt but is expected to be $353.7 billion – up from $338.5 billion in 2018-19.

So, based on the 2018-19 numbers, by 2021-22, revenues will have grown by $11.7 billion – an increase of 7.6 percent - while total expenditures will grow by $9.7 billion – an increase of 6 percent.  So, the plan is essentially to slow expenditure growth and wait for revenues to catch up which is a traditional approach used by Ontario governments before this one.  Revenues in 2019-20 are definitely up with CIT revenue $936 million higher and PIT $525 million higher than anticipated.  As well, if the government holds the line on further spending, the reserve will likely be applied to the bottom line allowing the 2019-20 deficit to come in at closer to $8 billion. 

Nevertheless, despite all the cries of austerity, it would appear that its business as usual in Ontario given the “grow your way out of deficits” approach that is being used – again.


Saturday, 2 November 2019

Rising Health Spending Is Not Just About Seniors

The Canadian Institute for Health Information (CIHI) has released its 23rd annual report on health spending in Canada - National Health Expenditure Trends, 1975 to 2019As a member of the CIHI National Health Expenditures advisory panel, it is always great to see the wealth of data on trends in health spending across Canada.   Total health spending in Canada in 2019 is expected to reach $264.4 billion which represents an increase of 3.9 percent over last year and accounts for 11.6 percent of Canada’s GDP – a figure also up slightly from last year.  After a period of zero average annual growth in real per capita total health spending from 2010 to 2014, the period since 2014 has averaged about 1.4 percent a year.  This, however is lower than the average annual growth rate from 1996 to 2010 which was at 3.3 percent.  Health spending growth has resumed but on what currently seems like a more sustainable trajectory given that real per capita GDP growth is closer to 2 percent.

Much of the concern about rising health spending has focused on the effects of population aging.  Health spending does rise with age as Figure 1 below shows rather dramatically.  Aside from those aged less than 1-year, per capita provincial/territorial government health spending is well  below $5,000 until the 60-64 age group when it starts to rise above that threshold reaching over $30,000 for those aged over 90 years.  Yet, despite this surge after age 60, what is also interesting is that when the drivers of rising health spending are broken down, in 2019, aging per se only contributes 0.8 percentage points out of the 3.8 percent growth in public sector health spending – about 21 percent – with general inflation, population growth and other factors (eg. Technology and utilization) accounting for the rest.  It does lead one to wonder whether this is because today’s seniors are generally quite healthy compared to the past or perhaps whether there are unmet needs.

What is also interesting and seldom noted is that while provincial and territorial government per capita health spending is highest among seniors, over the last two decades, the rates of growth in per capita spending have not been for seniors.  Indeed, between 2000 and 2017, the highest average annual growth rates have been for children and youth aged 5 to 19, followed by children under age 1-year and adults aged 35-39 as shown in Figure 2.

Indeed, per capita spending for adults between the ages of 35 and 64 has been growing at a faster rate than those aged 65 to 89.  While, it is true that much lower per capita amounts are being spent on those below age 65, spending for this demographic has been growing much faster.  Again, this leads one to wonder given scarce resources whether there is an implicit transfer of resources underway away from seniors when it comes to new growth or whether younger people today have more health problems or utilize health care more than similarly aged groups in the past.  Given the epidemic of obesity and mental health issues among the young, perhaps this is having an impact on health spending needs and expenditures.

If a significant cohort shift in health care needs and utilization is underway is an interesting question. I suppose fully knowing if this is a recent development or has been underway for the last 50 years requires per capita age spending data going back quite a ways - I am only aware of the CIHI data going back to the mid 1990s or so.  This is an important issue.  While an aging population may only be contributing 21 percent of the increase in health spending now, if younger cohorts today have deteriorating health status or more health issues than in the past, they may be poised to be a more important driver of health spending both now and in the future.

Friday, 25 October 2019

The City of Thunder Bay Has Spoken, The Case is Closed

Thunder Bay City Council and its municipal administrative apparatus seems to have embarked on its Roman imperial phase with respect to community relations with its taxpayer base.  In response to those who provided input ( my input here ) on the 105 Junot Avenue South Rezoning application and following the October 21st decision to uphold the rezoning in a 7-5 vote, the Office of the City Clerk provided a Notice of Passing decree that begins as follows:

The Thunder Bay City Council passed By-law 94/2019 on the 21st day of October 2019, under Section 34 of the Planning Act, R.S.O. 1990 as amended.

Public comment has been received and considered and had no effect on Council’s Decision as the application is consistent with all relevant planning legislation and represents good planning.”

I suppose all that was missing at the end of this statement was a simple “All Hail the Glory of the Emperor” to convey the full message of conquest and victory.  The implied message seems to be that any resistance to the edicts of City Council is futile and has no effect.   Whatever is decided is consistent, represents good planning, and the final collective decision is ultimately infallible. 

The entire public drama and division over 105 Junot was amplified by The City of Thunder Bay because they encouraged the Ontario Aboriginal Housing Corporation to expand the scale of the transitional project from 20 to 58 beds to “maximize” the use of the site which one suspects probably really means greater property tax revenues for the City - assuming that the OAHC pays property taxes.  A smaller scale facility more in keeping with other such projects around the province would have been more suitable given the many concerns raised by residents in the area and generated less discord. 

Unfortunately, the Aboriginal Housing Corporation was caught in the middle of this unfortunate situation and making it into an emotional issue that attracted the attention of the Globe and Mail did not serve anyone’s long-term interests.  What the City of Thunder Bay should have done in response to the input received was return to the original proposal of 20-beds but that would have required actually listening and accepting at least some of the arguments made by those who presented their concerns.  Really, how can a facility approved on a much larger 58-bed scale in a neighborhood with the social and crime issues that were raised be “good planning?" 

In the end, it is water off a duck’s back because many members of council believe they have been annointed as “progressive” thinkers who love their community.  The strength of their love means that they are doing good and therefore the ends always justify the means.  If that means tacitly implying that opponents to their good works are insensitive to poverty or diversity, then so be it.  They constantly solicit input from constituents but listen through a set of political noise cancelling headphones so that the discordant notes from any input not coinciding with their vision of fighting social and economic injustice is politely filtered out.

Those in Thunder Bay who uncritically champion all social injustice issues with unquestioned fervour and feel they have the ear of City Council and its municipal-corporate apparatus should be cautious.  In the end, any dispensed progressive works are to be accepted on The City’s terms because they know what is best for you.  Take the example of Dease Pool as a case in point.  Here, a long-standing community pool in what is considered a disadvantaged neighborhood was closed because it was old and needed substantial and expensive renovations.  There is continuing opposition to the closure but The City forges ahead.

The proposed new draft plan (available here) will essentially replace the pool area with a tennis court and a community garden.  Given that swimming pools accommodate a greater and more diverse number of users than a single tennis court, it seems like an oddly elitist rather than progressive use for the site.  However, consciences will be soothed with a multi-user community garden – which also atones for the environmental sin of an asphalt surface on the tennis court.  If all this redevelopment was designed to somehow deal with the rising costs of an old and aging pool, those of us with a more fiscally conservative bent could be understanding.  However, this will still cost a lot of money and in the end not fully serve the needs of the area.

As for the money that will be spent, it does not seem to matter because a “progressive” council that wants to do great things will simply raise the tax rates on its residents - who by the way are now responsible for the lion’s share of property tax revenue given the declining industrial and commercial base.  Be prepared this year for an initial budget proposal that stakes out a high increase in the tax levy.  This will be blamed on the provincial government who, being conservative rather than progressive, are the source of all fiscal evil.  After a cleansing public ritual of debate and input of appropriate length, The City will then retreat to an increase of between 3 and 4 percent thereby demonstrating that it is both fiscally responsible and generous in matters of expenditure. 

We should not complain too much.  We elected them.


Wednesday, 23 October 2019

The Federal Election Results: Northern Ontario

The people have spoken, and Canada has a minority Liberal government.  In my home community of Thunder Bay, there will be double representation on the government side as both ridings went Liberal.  This however was not the result of strategic voting or a calculated decision by the local electorate to go with what they saw as the winning side but the outcome of ingrained behaviour.  Thunder Bay always votes Liberal at both federal and provincial levels except on occasion when it goes NDP because the voters feel the Liberals ought to be punished.  However, their NDP support is a temporary dalliance and they ultimately return to their original faith.   

If Monday’s election had yielded a Conservative minority or majority, then Thunder Bay would have been on the outs and of course complaining incessantly about the lack of government attention. Yet, loyalty to one party by a smaller and more remote community does not always ensure you will get what you want if your team is in power.  If your support is always assumed to be there, than that can also work against you when it comes to getting your issues on the table.

Electing a variety of representatives over the years based on calculation rather than political faith or loyalty is another approach to collective voter wisdom and diversity in outcomes over time is one way of ensuring your support is not taken for granted.  While Thunder Bay generally always votes the same way, nearby Kenora is much more flexible and over the years has voted in representatives at the provincial and local level affiliated with all three of the major parties.  This time, they switched from Liberal to Conservative at the federal level.   

While parts of northern Ontario seem to be closed shops when it comes to voting patterns, the region as a whole, has actually elected a diverse portfolio of representatives with the balance what one might term centre-right rather than centre-left - if you assume the Liberals are more centrist than the other two parties.  Given that the Liberals and NDP generally term themselves as “Progressive” the region as a whole is probably more centre-left.  One can only imagine what the “Progressives” would now term themselves if the federal Conservatives had not rebranded and retained their “Progressive Conservative” label.

In terms of results for the 10 ridings, they are:

Kenora: Conservative
Thunder Bay-Rainy River: Liberal
Thunder Bay-Superior North: Liberal
Timmin-James Bay: NDP
Algoma-Manitoulin-Kapuskasing: NDP
Sault Ste. Marie: Liberal
Nickel Belt: Liberal
Sudbury: Liberal
Nipissing-Timiskaming: Liberal
Parry Sound-Muskoka: Conservative


On a map, electoral northern Ontario is a bit of an oreo sandwich made up of two conservative graham wafer borders -Kenora and Parry Sound-Muskoka - and a rather large dollop of Liberal cream accented with some additional NDP filling.  Obviously, northern Ontario voters as a whole like their electoral food spiced with diversity even if smaller regions within prefer more monotonous diets.  However, if one takes a pan-northern view, the north is greater than the sum of its local parts when it comes electoral wisdom and has made sure it has its bases covered.

On a final note, a special congratulations to Eric Melillo who pulled ahead of incumbent Bob Nault to win the Kenora riding.  Eric is a graduate of the Economics program at Lakehead University and I am thrilled to see him do well.  Eric was a hardworking and keen student in Economics and a very pleasant young man and I wish him all the best.

Sunday, 20 October 2019

Which Federal Party Can Open the Door to Thunder Bay's Employment Growth?

With the federal election into its home stretch and the vote scheduled for tomorrow, voters in Thunder Bay have to decide who to vote for.  Needless to say, it has been a disappointing election given that the major parties – as well as the smaller ones – have presented grandiose expenditure visions that are for the most part fiscally unsustainable.  Moreover, much of the campaign has been not on policy but on opportunistic promises with major efforts expended on digging up dirt on opponents, mixing it with a little self-righteous water and then spattering it about in the hope that it sticks somewhere. 

When it comes  to making a ballot-box decision, the prevailing sentiment on the street seems to be that it is hard to choose from a set of equally unpalatable national parties.  So, the next best approach might be: let us look locally and make the decision, based not on what might be best for the country, but what might be best for Thunder Bay.  Here too, the answer is really quite muddy as ultimately what is best for Thunder Bay is making sure that at least one of the ridings is with whoever ends up as the governing party.  However, even that is a difficult game to play given that we are probably looking at a minority government situation.  And such strategic behaviour is made even more difficult by Thunder Bay's historical genetic aversion to any federal choice but Liberal - except when they seek to punish the Liberals by voting New Democrat.  Thunder Bay has not elected a federal conservative since the 1930s but then oddly wonders why conservative governments do not grant its wishes.

In terms of what is best for Thunder Bay, needless to say a government that promotes economic growth and diversification is always a safe bet but that can often only be judged years after the fact.  The current north side incumbent who is also a member of the present governing party certainly points to the last four years as a period of economic growth for Thunder Bay and northwestern Ontario in part due to the “millions of dollars coming into our area” which she no doubt ascribes to her government and her role as a Minister of the Crown.

Quantitatively assessing growth in Thunder Bay and the region is never easy but a glance at employment numbers is one way of providing an evidence-based attempt on how much growth there has been.  Between 2014 and 2018, total employment in Thunder Bay has indeed grown by 3.6 percent – from 61,500 to 63,700 jobs – which is actually not bad given that Ontario over the same period increased by 5.3 percent.  However, when employment is examined in a longer-term framework using the period from 2001 to 2018 – see Figure 1 – it is still within the traditional employment range of the last two decades.  We basically bounce up and down between 60,000 and 65,000 jobs and never seem to break out of that corridor in any sustained fashion.  Between 2001 and 2018, Thunder Bay’s employment grew 3.4 percent while Ontario grew 22 percent. 

What is also interesting as shown in Figure 2 is when employment growth by occupational category over the period 2014 to 2018 is examined. The most employment growth since 2014 has been in occupations related to arts and culture (26.7%), health (22.2%), natural and applied sciences (17.6%), manufacturing (13.3%) and law, social and government services (12%).  However, sales and services, business and finance, and construction have all seen declines.  As for the manufacturing resurgence, given the 550 jobs slated to disappear at Bombardier, manufacturing is poised to continue the decline that has been underway since 2001.


So, has Thunder Bay’s employment grown over the last four years?  Yes, but there are important qualifications given the dynamic nature and unique features of any local economy.   Here in Thunder Bay jobs are both created and destroyed but in almost perfect balance over time so as to keep total employment locked within a narrow corridor.  This corridor has remained the same for decades and Thunder Bay remains in an overall total employment stasis despite the efforts of two growth plans - one provincial and the most recent federal.   This is unlike Ontario as a whole where jobs are both created and destroyed but on net over the last 20 years many more jobs have been created than have been destroyed.  In choosing who to vote more tomorrow, voters need to think long and hard on which party they believe can actually open the door to getting us outside our historical corridor of employment stasis.

Friday, 11 October 2019

Why Understanding Crime Numbers Is Important for Public Policy

The meetings currently underway in Thunder Bay for police service boards and chiefs is focusing on challenges facing the north and in particular those dealing with guns, drugs and gangs.  In particular, the lack of funding for addressing what is perceived to be escalating crime is a major grievance given that the federal government has transferred money to the Ontario government to fight gangs, drugs and gun related activity but to date the province has apparently only chosen to assist Toronto and Ottawa.  Jeff McGuire, executive director of the Ontario Association of Chiefs of Police, is in Thunder Bay for the meetings and stated: “I think the government had the right intentions, there were serious guns and gangs issues going on at that moment in Toronto and GTA area. Members of OACP were quick to point out it’s not just a GTA challenge.”

What is interesting when looking at this issue is taking a look at the violent crime statistics.  Figure 1 plots total violent crimes from 1998 to 2018 for Thunder Bay, Toronto and Ottawa.   If a provincial government politician handing out money to fight growing violent crime is deciding on where need was most urgent based on Figure 1, they would automatically judge that need was greatest in Toronto.   Toronto not only has the most violent crime incidents of the three cities but also what seems visually to be a rapidly escalating problem since 2015 - which by the way was preceded by a long decline.  Indeed, after a period of decline, all three cities have seen an increase in total violent crime largely related to increased gang and drug activity, but Toronto has the most violent crimes, followed by Ottawa and then Thunder Bay.


However, making the decision only based on total volume misses the point that crime is not only about total scale but also intensity relative to the size of local populations. Toronto and the GTA does indeed have the most violent crime, but it also accounts for almost half of Ontario’s population.  What is also relevant is crime per person or per capita which adjusts for total population size.


Figure 2 plots the number of violent crimes per 100,000 population and here the difference is startling.  While all three cities have seen an increase in violent crimes per capita over the last three years, Thunder Bay’s rate is practically double that of either Ottawa or Toronto.  Its policing numbers and resources per capita are definitely not double those of either city.  Some help is obviously needed.

The provincial government does need to address the local policing situation though as has been noted, more money alone will not solve the problem.  We need to understand why it is that after years of decline, violent crime in all three cities is now trending upwards.  As was noted by Jeff McGuire, there are other issues to be addressed including mental health, poverty and firearm access. Nevertheless, a good start would be understanding the distinction between totals and per capita amounts and making it part of any decision making process that allocates new resources.

Wednesday, 9 October 2019

International Relations & Trade Discussion Missing in Current Federal Election Campaign

Monday's Federal Leader's debate made nary a mention of international trade, our current dispute with China or even what is going on with the USMCA ratification in the United States.  With exports accounting for about 30% of our GDP, it is astounding that such an important issue is being ignored.  It is therefore worth re-posting the piece I had published early this week on the Fraser Institute Blog.

Canada needs more major trading partners beyond China and the U.S.

First Appeared in Fraser Blog , October 7th, 2019

On the campaign trail, there’s little talk about Canadian trade policy and the repercussions of our current poor political relationship with China. The need to continue diversifying our trade is the elephant in the room this federal election.

In what seems to be explicit retaliation over the Meng Wanzhou Affair, China has detained Canadian citizens—putting a chill on business travel there—and essentially halted our exports of meat and canola. Any memories of Norman Bethune appear to have faded as China reveals its view of us as a small, inconsequential and puny power that should do as told. As a result, an important trade strategy—to diversify our trade away from dependence on what has also become a more capricious United States—lies in tatters.

The U.S. takes nearly 75 per cent of our exports, and despite recent bumps, has been by international trade standards a dream trade partner. It’s a large, rich, populous market literally on our doorstep where we share a close political and social culture, common language and history. It’s a market economy like ours with a strong rule of law. Subsequently, Canadians have not had to work very hard when it comes to exports given that the access to such a profitable market has historically been easy. A one stop export market for 75 per cent of your exports has become the gold standard of Canadian trade policy.

But Canadian business has been seduced by the prospects of China’s growing economy and the vision of a rich market of 1.4 billion people as a sort of future U.S.-like trade relationship. China has rapidly industrialized and is developing a large, dense and wealthy market. At first, it even seemed to be moving towards a more liberal market order in its economy.

Yet despite early promise, it would appear China is only playing lip service to liberal economic values and seems set on explicitly using trade relationships as part of its diplomatic and political arsenal, given that it views government policy and trade relationships as one dominion. Its recent behaviour raises an important question: Do we really want to ever be in a situation where 75 per cent of our exports are dependent on China’s market? Do we really want to give the Chinese government a quasi-monopoly over both our trade and political affairs?

It really would be the road to serfdom.

Despite the large dollar value of our trade relationship with China, it currently still only represents five per cent of our exports. Trade is about free exchange and mutually beneficial gains. If China wants our trade goods, we should certainly sell them as part of a free and open bargaining process. However, if it wants to use its economic relationships as a tool to get its way when dealing with countries on other issues, then we must protect ourselves. We are a small open economy dependent on trade and we must diversify our trade. Our recent efforts in negotiating agreements with the EU and the Trans-Pacific are only a start. We need many countries to compete for our business, but to do so we also need to show interest and compete for theirs. Part of this also involves reducing our own protectionism (agricultural supply management would be a good place to start).

If the Asia-Pacific is the future of trade, then look for opportunities in other wealthy Asian countries. Japan, India, Thailand, Vietnam, Taiwan, Singapore, Malaysia, Indonesia and the Philippines are all important economies that can serve as markets for Canadian products.

Moreover, instead of waiting for government-led initiatives, Canadian businesses should start the process themselves. Rather than placing all your eggs in a one-shot market-access strategy in the hopes that China can one day replicate our success in the U.S., shift your markets to other partners. Make sure there are a lot of them so no one country can ever hold our economy hostage. This should become the new gold standard for Canadian trade policy.

Tuesday, 1 October 2019

CNEH 2019 Wraps Up in Thunder Bay

The Canadian Network for Economic History (CNEH) successfully concluded its 2019 Meetings sponsored by Lakehead University in Thunder Bay and held at the historic Prince Arthur Waterfront Hotel. The three-day event from September 27th to 29th, 2019 included three days of sessions, two keynote speakers and also provided keynote Professor Ann Carlos from the University of Colorado-Boulder as the speaker for the Lakehead Faculty of Science and Environmental Studies September 26th Science Speakers Event.  The event was met with sunny crisp autumn weather that highlighted the scenic Sleeping Giant out in the harbour.

The conference theme was the economic history of Indigenous communities, and interactions between Indigenous and non-Indigenous economies in Canada and the conference attracted Canadian and international scholars. The Mary MacKinnon Memorial Lecture was given by Donna Feir (Federal Reserve Bank of Minneapolis and University of Victoria) and was titled “Economic History and Reconciliation”.  The Saturday evening keynote by Ann Carlos (University of Colorado-Boulder) was on “Globalization and the Fur Trade.”  Elder Gerry Martin from Mattagami First Nation shared his insight and wisdom with opening and closing remarks.  A theme that emerged from all speakers as well as the specific sessions dealing with Indigenous and European interaction, Indigenous health and well-being was that more effort must be made to bring the Indigenous perspective into our research and teaching on Canadian and North American economic history. 

Generous financial support was provided by the Canadian Economics Association, the Alan Green Memorial Fund, Lakehead University's departments of history and economics, the Faculty of Science and Environmental Studies at Lakehead and the Lakehead University Office of the Vice Provost of Aboriginal Initiatives.  Special thanks to administrative assistants Jennifer McKee (Lakehead) and Sharon Sullivan (Queen's) for their hard work in putting everything together.

Plans are for the next CNEH to be held in Vancouver in the Spring of 2021.  From the mid-coast to the west coast.  See you there!

Sunday, 22 September 2019

CNEH 2019: Canadian Economic History Meetings In Thunder Bay for the First Time

The Canadian Network for Economic History - originally the Conference on the Application of Quantitative Methods to Canadian Economic History - has been meeting since 1965.  I gave my first paper at the 1990 meetings on research based on my thesis and have made most of the meetings since.  There have been 34 meetings since 1965 and the 35th meeting is being sponsored by Lakehead University and the sessions are being held at the scenic and historic Prince Arthur Hotel in Thunder Bay, Ontario this coming week from Friday September 27th to Sunday September 29th.  The meetings over the years have been held from coast to coast and this will be the first time the meetings are being held in Thunder Bay.

The conference theme is the economic history of Indigenous communities, and interactions between Indigenous and non-Indigenous economies in Canada. The CNEH is pleased to announce that Ann Carlos (University of Colorado at Boulder) will give the keynote address and Donna Feir (University of Victoria and Federal Reserve Bank of Minneapolis) will give the Mary MacKinnon Memorial Lecture.

The  conference is receiving generous financial support from  the Alan G. Green Memorial Fund, the Canadian Economics Association, and the Faculty of Science and Environmental Studies(FSES), the Department of Economics and the Department of History at Lakehead University.  As well, the Anthropology Department and the FSES is also sponsoring the visit of Ann Carlos who along with delivering the Keynote Address will also be providing a public lecture on the fur trade as part of the Science and Environmental Studies Faculty Speaker Series on Thursday September 26th.

We are looking forward to a great conference.  The program is below.  If anyone would like to join use, registration is still open at this link.

Monday, 16 September 2019

A Saudi Recession Trigger?

Recessions do not just happen.  They are made.  They spring from the accumulation of a long-period of underlying contributing economic factors, but then along comes a trigger - or two if you are really unlucky - and before you know it there is a recession underway.  We have had a particularly long stretch of economic prosperity in Canada and indeed the United States and the world that has seen rising employment.  However, the last few years have seen turmoil on the trade front and still high public and personal debt levels which have been sustainable only because of continuing record low interest rates.

Despite the threat of rising interest rates, they have remained low and this appears to have encouraged consumers to continue taking on personal debt.  Indeed, consumers in Canada have been maintaining their standard of living by extending their credit not just for mortgages but also for all kinds of other things - if there is an expenditure, there is a monthly payment plan for it.  And of course, governments have also enjoyed the bounty of low rates by taking on more debt despite the good economic times.

Now, debt is a tool and Canadians have also been managing to build equity given the rise in housing prices but the question is if there is simply too much debt.  This piece in the Globe and Mail points out debt situations that apparently are common in a lot of Canadian suburban areas though the more interesting question is really how a 29 year old making $30,000 a year is able to obtain a $700,000 mortgage. When and if the reckoning comes, Canadian banks will have a lot of explaining to do - especially to the savers who been given low returns and have been financing this debt blowout for the last decade.

Responsible consumers who have taken on debt have nothing to worry about but many consumers have simply taken advantage of really cheap money to leverage themselves to the point where they have very little room to maneuver.  Apparently, nearly 15 percent of household disposable income is going to service household debt.  A loss of employment or an increase in costs - from say a rise in interest rates - will very quickly lead to unsustainable finances for a lot of Canadian households.  Fortunately, interest rates do not look like they are going anywhere soon and with a federal election underway in Canada now - and more importantly - an American election in 2020, one expects government policy to continue favoring low interest rates.

However, the events in Saudi Arabia over the weekend revealed a new trigger of financial stress - rising oil and gasoline prices.  All those suburban households around the world dependent on relatively cheap gasoline for their commute to work and home could face a new source of financial stress if gasoline prices go up. dramatically  Sure, its not a rise in interest rates but it will operate the same way - it will take money away from other things like food and groceries, lead to a rise in the cost of living and divert money away from debt service.

The ten percent spike in oil prices after the attack on Saudi oil facilities is unlikely to be sustained according to venerable sources like the New York Times but then who really knows?  The key here is uncertainty about what comes next.  Can any damage be repaired quickly?  Will there be other attacks?  How was such an attack even possible given the level of security and the amount of military hardware around to ensure that such things do not happen?  This uncertainty is the key issue and should there be another supply disruption, you can count on a more sustained price spike and economic fallout for consumers.  If one especially looks at how North American drivers  have been shifting to driving larger shiny new trucks - financed by debt of course - one can see a pretty severe impact.

However, it looks like for now that oil supplies are still abundant as the disruption occurred during a period of relative surplus.  And of course, there is the U.S. strategic oil reserve.  Nonetheless, watchful waiting is the word.

Saturday, 14 September 2019

Demanding Better from Canada's Federal Politicians

Well, it is nearly one week into the Federal Election campaign and the start was less than auspicious for the Liberals given that a campaign bus damaged the official plane on day one.  I was surprised that no pundit noted that it seemed like the left wing of the plane carrying Canada’s self-styled champions of progressive thought was damaged.  But then, media observers were probably too entranced by the plethora of slogans and ads which had already started to crescendo a few days before the call.   Yet, the slogans were for the most part predictable and really rather bland.  The general blandness of indeed the entire election, is coming during a time when Canada’s position in the world is under severe stress and change. How a country with an export to GDP ratio of 30 percent can continue to prosper in a world of tariffs and trade wars is a pressing question.  One was expecting more.

The campaign slogans are remarkably interchangeable.  The federal Liberals are asking us to “Choose Forward” which I am sure means other parties are a backwards choice rather than an exhortation to engage in time travel or perhaps go to an advance poll.  The federal Conservatives are telling us that “It’s time for you to get ahead” which again is a call to vote Conservative as a way of doing materially better rather than proceed to the front of a checkout line or perhaps take early action in setting your clocks back for the fall. 

Keeping to the theme of moving forward and ahead, both the Liberals and Conservatives are facing the Green Party with their “Not Left. Not right. Forward Together” which suggests rival parties are directionally challenged when it comes to deciding where to go.  And of course, there are the New Democrats who want us to know that they are “In it for You” which is a comment on the other parties being focused on themselves rather than a call to attract more candidates of which they are still woefully short.  And who can forget the People’s Party of Canada who are simply “Strong and Free” but based on their polling numbers are not strong and probably do not wish to apply the concept of free to immigration.

These are of course only slogans designed to highlight differences and send subliminal messages.  The Liberals are suggesting that choosing anybody other than them is a step backwards especially when it comes to their much-vaunted promotion of growing the middle class.  I suppose this  is a more charitable interpretation of their message than a more strident “We always know what is best for you” or “We are going to help the middle class whether you like how we do it or not.” 

Meanwhile the Conservatives, seem to be telling us if you want to be middle class, the best way to get ahead is to support them which is probably a more prudent line than “We want to help you help yourself get more”.  As for the New Democrats, well they are middle class boosters too but want to explicitly let you know they are in it for you if you vote for them with the policy prescription being there is no problem that cannot be fixed with more government spending - even if not necessary or counterproductive.  Here, the more accurate reality might be a reverse Walmart ad like “Spend more, Get Less”.

In the end, these official slogans are all interchangeable and designed to sell a message that if stated more bluntly would probably not be seen as a good idea by the in-house advisors.  It would be a fun party game to see how many permutations and combinations can emerge by combining and rearranging these words.  How about, “Not left, Not right, but forward and backwards” or “Forward for a Strong and Free You” or “Time to choose forward to get ahead together while strong and free and realizing what’s in it for you.”   We are truly in a pickle this fall but unless we demand better from our politicians, we will not get anything better.  It can start with better slogans but a better policy debate would be even more useful. 


Sunday, 8 September 2019

Air Canada’s On Time Record Needs to Improve

I noted in a July post that Air Canada’s service from Toronto to Thunder Bay had been showing some rather erratic performance when it came to on-time arrival.  I monitored performance rather casually for a few weeks later and noticed there were still issues and finally decided to do a more formal monitoring and see what statistics I could come up with.  For the period August 25th to September 7th 2019, I noted the scheduled and actual arrival times for the three daily Toronto to Thunder Bay Air Canada flights.  If the flights actually arrived within 15 minutes of their scheduled time, they were deemed to be on time. Otherwise, they were late and the amount of time they were late was also noted. 

The 15-minute window is a pretty standard application of this type of this type of airline performance metric.  If you are looking for a benchmark, Forbes reported on a recent airline performance – the OAG 2019 Punctuality League statistics – and they also use this 15 minute window.  If you are looking for an international benchmark, in the top 20 airlines for on-time performance for all airlines in the report, the top airline was Copa Airlines with a 89.8 percent on time rate (that is arrived within plus or minus 15 minutes of the scheduled arrival nearly 90 percent of the time).  Rounding out the top 20 was Alitalia which was on-time 82.9 percent of the time.   If one only looked at mega airlines, the top 20 ranged from 85.6 percent for LATAM Airlines Group to 66.8 percent for – Air Canada – just below Air China at number 19 with 68.8 percent.  By the way, Westjet had a 76.3 percent on time rate.  Porter did not appear to be included in the report.

Without giving to much away early for the rest of the post, Air Canada’s Toronto to Thunder Bay on time performance during the August 25th to September 7th period was pretty abysmal as it did not even meet its low overall on-time performance.  Over this time period, the planes were late 57 percent of the time with an average late arrival of 29 minutes.  You might think that 29 minutes is not so bad – but the time differential ranged from a maximum of 201 minutes (that is 2 hours and 21 minutes late for AC 1512 on September 1st) to 11 minutes early for AC 1512 the next day.   

The accompanying figure plots each flight during this period and at least 8 flights (that is about 20 percent of flights) were at least 50 minutes late.  The only good news is that during this period, there is a slight downward trend in minutes late but there is still a lot of room for improvement.  Keep in mind, aside from the last flight of the day which even if a couple of hours late is able to take off as the first flight the next morning on time – all the late flights coming mean a late flight the other way.  And, this poor performance is during a summer period where there is relatively good weather.  One can only imagine what this winter is going to be like.

So, there you have it.  Air Canada has work to do period but it would be nice if it could bring up its Thunder Bay run performance to at least its overall standard – which is not great by international standards.

Wednesday, 4 September 2019

Weighing In on the Transitional Housing Project

There has been a fair amount of debate on the proposed transitional housing project in the neighborhood across John Street adjacent to ours.  When the project was initially proposed, my wife and I were fine with it but as the issue has progressed we have come to the conclusion that if it goes ahead, it needs to return to what was originally proposed in terms of both scale and scope. So, the following was sent today via email to the Mayor and Council of the City of Thunder Bay.

Dear Thunder Bay City Councillors:

We are writing to express our concerns regarding the proposed transitional housing project at 105 Junot.  This has become a difficult issue to discuss as any criticism of the project immediately seems to lead to one being labelled as insensitive or worse. Yet, this is not a constructive way to counter appropriately voiced concerns as there are legitimate issues regarding the project.  While there is an urgent need in Thunder Bay for additional shelter and transitional housing for the homeless and those with mental health and addiction issues, what is being proposed requires more thought.  The time for reflection on the project is now, given that the land required apparently needs a zoning change to allow the multi-unit transitional residence to be constructed.  

The original proposal was for a 20-bed unit but the scale of the project has nearly tripled to 58 beds.  If this project had stayed at 20-beds, we would not be writing this letter.  The purpose of transitional housing is temporary assistance for those who are homeless and have addictions and provides an environment with support on a scale that facilitates individual attention.  For example, a recently funded 9-bed transitional housing project in Kitchener will provide 24-hour on site medical and healing supports and services.  In Sioux Lookout, a 20-unit transitional housing development opened last year.  In Thunder Bay, the announced Lodge on Dawson is 30 beds with staff on-site 24-hours, 7 days per week providing services and supports. 

 We have a real concern that once the project obtains the rezoning, the scale of the expanded project may be increased yet again.  What is to prevent a project that has already tripled in size to not double or triple yet again?  This is no longer community scale supportive transitional housing but a multi-unit residential project being placed in a neighbourhood that is composed of lower density housing and major institutions including several schools.  Moreover, we are still not aware as to the exact details on the types of counselling, services, staffing and supports that will be offered for residents.   The is effectively a large multi-unit apartment project and should really be placed in a denser area such as a downtown core where the homeless and addiction problems are quite obviously severe, there are nearby services being provided for the homeless and the current density of functions and activities better reflects what now seems to be a large apartment complex.

 If there is a need to rezone the land for the proposed project, that means the land was not originally zoned for a large multi-unit residential structure.  The City of Thunder Bay’s planning department wanting denser utilization– hence the increase in scale by the proponents after the original proposal – has stoked this issue.  The original zoning is part of an established land use plan approved by the City of Thunder Bay after a formal process of planning and consultation.  A need for the zoning change means that this is an ad hoc change and not part of a longer-term plan and requires a more formal process of consultation.  Simply having a convenient piece of land available that the City of Thunder Bay desires to build density on without long term planning or consultation is not the best reason for building such a large facility.

 Rushing to rezone a piece of land for a project that appears to be very fluid in both scale and scope of purpose is not good policy and not wise long-term decision making. 


Livio and Rosanna Di Matteo

Thunder Bay, Ontario