NORTHERN ECONOMIST 2.0: December 2019

Sunday, 15 December 2019

Making Decisions at Thunder Bay City Council

Thunder Bay City Council does have a tough job when it comes to making decisions that affect the public welfare that have to balance diverse interests and needs as well as financial and economic criteria. At the same time, they sometimes do not do themselves any favours. Two cases in point come to mind - the soccer bubble on Golf Links Road and Dease Pool.

First, the decision to finally allow a private developer to go ahead with a project to build a soccer bubble on Golf Links Road. According to the news story, the project - which was proposed in spring of 2019 - was intended to open for winter 2020 but zoning restrictions halted the progress. Essentially, the area of the building site was zoned "Prestige Business Park" which meant that a recreational facility could only be built as an auxiliary feature to a "prestige" item like a hotel. This hurdle was finally overcome apparently by allowing the project to proceed with a promise to build the hotel later. No doubt, the City of Thunder Bay probably also has a planning definition of what a prestige hotel should be like and will intervene when it sees fit.

Why this could not have been done sooner is a good question. There is a shortage of space for soccer in the city and having a private developer step up is a good idea. Indeed, why should the City spend scarce resources on a publicly funded indoor turf facility at all if the private sector could provide the services thereby freeing up resources for things the private sector would likely not fund - like a swimming pool in a socio-economically challenged neighborhood? One wonders if the decision to stall the private developer was in part in the hopes they would go away so that there would be less competition for the City run turf facility - once it was finally built. If that is the case, they should move faster - taking years to decide and build the facility while not allowing for an alternate facility is a disservice to those who want their children to play soccer - and are willing to pay the fees for it. The need for the space is all the more urgent given the collapse of the Sports Dome in 2016.

Regarding the decision to close Dease Pool and "repurpose" the space, I have already opined at some length on the issues here in a previous blog post. The final decision is apparently going to be made tomorrow night and the outlook is grim for the people who want a new pool rather than any of the suggested alternative uses given the recommendation is for demolition. Moreover, there is some division in the local community itself given that the survey respondents happy with the alternatives proposed by the City (44%) is greater than those who are unhappy (38%). At the same time, one suspects that those happy with the alternatives are divided four ways while those who are unhappy all want to see a new pool but that nuance will likely escape the decision makers.

In the end, a decision will be made and the appropriate imperial decree made that public comment has been received and considered and had no effect on Council’s Decision as the proposed accepted redevelopment is consistent with all relevant planning legislation and represents good planning.

Thunder Bay City Council has spoken, the case is closed.

Tuesday, 3 December 2019

Should Lakehead University Go Private?

Universities in Ontario are in a transition period as the provincial government brings in a new performance based funding formula that ties a substantial portion of the government grant revenue to a set of ten indicators. The new Strategic Mandate Agreement – known as SMA3 - includes performance indicators such as “Research Funding”, “Graduation Rates” and oddly enough “Graduate Employment Earnings”. How a university is expected to acquire information on the latter is a bit of a puzzle to me.

While the previous formula also had a set of performance based indicators, they were more numerous. It remains that a reduction in the number of indicators while increasing the proportion of revenue tied to those indicators makes the prospects of future short-term revenue volatility a greater possibility. The public may be willing to accept a 5 or 10 or 20 percent revenue fluctuation in its local university and the subsequent disruption to programs and enrollment, that it would not tolerate if a similar model were applied to say hospitals or physician services or the provincial drug plan. In these latter examples, people could die in the wake of disruption from sudden funding changes, whereas in the case of universities it would be unlikely.

Lakehead will of course also be impacted by these changes to the funding formula and one wonders if in the long-run, Lakehead – not to mention other universities – should give serious consideration to ending their dependence on provincial government funding entirely and go completely private. The immediate reaction to this is to cringe given that provincial grants in Ontario still account for anywhere from 30 to 50 percent of university revenues and their elimination would probably necessitate as much as a doubling of tuition fees. Lakehead University is for example closer to 50 percent for its revenue share from grants, while University of Toronto is closer to 30 percent.

However, freeing oneself from the clutches of the provincial government might come with some benefits. Provincial governments in general have been encroaching on university autonomy for the last 50 years. In Ontario, if one goes back to the 1960s and 1970s, provincial grant revenues for some universities accounted for well over 50 percent of their revenue. Even more interesting is that despite accounting for the lion’s share of their funding, the provincial government generally left them alone to run their own affairs. Over time, as the provincial government has reduced its relative contribution, it has also gradually become more intrusive by setting performance targets, establishing lengthy bureaucratic quality assurance reviews and tying more and more funding to short term goals linked to provincial economic development and employment visions.

At the same time as grant funding has been reduced, the provincial government has also regulated and circumscribed the ability of universities to raise tuition because of the political fall-out. So, universities in Ontario – like many in the country – have come to have less autonomy from the provincial government while at the same time having their funding growth restricted. The government is calling more and more shots while providing less and less funding value. For its 30 to 50 percent funding share, it basically wants universities to operate as arms of the provincial training, education and economic development ministries. Moreover, its mandated goals end up affecting 100 percent of university operations and performance while only providing at best half the general grant revenue.

It is unlikely that any Ontario university would want to push the envelope and drastically change its funding. It would require a degree of innovation and risk taking that universities as currently structured and configured in their operations would be quite averse to. Indeed, the lack of experience in operating as a private and more profit oriented institution is a significant obstacle. Still, one wonders how much more autonomy universities in Ontario are willing to cede to the provincial government. Are there any rams among the sheep?