Thunder Bay Budget 2022: Once Again the Drama Begins

The City of Thunder Bay has launched its Budget 2022 consultation process with a town hall meeting that occurred on Tuesday of this week.  The online meeting hosted by the elected chair of the finance committee as well as the treasurer and city manager, provided an overview of city finances as well as the opportunity to ask submitted questions.  Of course, this ensured that nothing would be said about the ongoing leaky pipe saga which continues unabated in city neighborhoods or indeed anything else deemed too awkward. Not surprisingly, given the federal and provincial abundance that has been showered on municipalities everywhere, the financial impacts of COVID-19 in 2020 were borne well and even generated a surplus of about $4 million.   The presentation also made the usual plea for funding infrastructure deficits which apparently is estimated at $20 million every year.  It is a deficit which no matter how much is spent just seems to get bigger.

The presentation on the city's finances was actually useful in that it tried to present a discussion of how the basic budgets fitted together in terms of tax and rate supported expenditures as well as the capital budgets and provided a breakdown of where the money went.  The City Manager did go on to say that the budget was complex and the plethora of multi-colored slides did certainly convey an impression of complexity.  However, municipal budgets are actually not that complex - they are only presented in such a manner because it is to the advantage of administrators who may want to manage the amount of scrutiny. 

The CD Howe Institute has already noted that municipal budgeting in Canada is a bit of a travesty with opaque and late budgets that impede understanding and accountability.  Moreover, the format of budgets differs from the public sector accounting standards used in year-end financial statements making budgeting very  confusing, even for elected councilors. The fact is the budget is really quite simple.  Money comes in and money goes out.  In general, more money comes in than goes out which is why there is an operating surplus that is then placed into reserves.  

The most entertaining part of the evening was the City Manager's response to a question as to why Thunder Bay's municipal staffing levels seemed to be so much higher than other municipalities with comparable populations which of course leads to the real elephant in the room, the number of employees on the provincial sunshine list.  The answer provided was that the comparisons provided - municipalities like Kingston, Cambridge, Guelph, Waterloo and Whitby - were not really appropriate because they were lower tier municipalities.  Thunder Bay was a single tier municipality and responsible for delivering police, fire and paramedic services whereas these other lower tier municipalities only had to do fire. Indeed, the dancing around required to answer this question and other questions suggests that the current City Manager may have a promising future as a chief medical officer of health at either the federal or provincial level.

Now, Ontario does have two broad  types of municipalities: upper-tier and local with the latter divided into lower tier and single tier municipalities.  County and regional municipalities are considered upper tier.  A single tier municipality is a lower tier municipality that is not part of an upper tier.  A lower tier municipality is a municipality that is part of an upper tier - the City of Waterloo for example is lower tier because it has both a local municipal authority and is part of a regional municipality.  On the other hand, all the northern Ontario municipalities are considered single tier - including Sudbury, which despite being considered as a regional municipality, is regional only in terms of its geographic coverage. 

So, given that we should compare apples with apples, let us compare the five major northern Ontario municipalities in terms of their sunshine lists: Thunder Bay, Timmins, Sault Ste Marie, Greater Sudbury and North Bay.  Figure 1 presents the number of municipal workers earning more than $100,000 in 2020 and not surprisingly, the numbers track pretty closely with population size with Sudbury in first place with 592 employees on the list and Thunder Bay next at 557.   North Bay comes in next with 187, then Timmin with 144 and Sault Ste Marie - which is actually bigger than North Bay or Timmins - at only 114.  

 

 

Figure 2 takes the total salary bill for its members on the provincial sunshine list and divides by the number of employees on the list to provide the average salary per municipal sunshine lister.  In this chart, North Bay comes out on top at $131,015 per municipal sunshine lister followed by the Sault at $127,787.  Then comes Thunder Bay just below the Sault at $127,319 followed by Timmins at $121,643 and then Sudbury at $120,912.   This particular ranking would probably be the most pleasing to city administrators as it places Thunder Bay in the middle of the pack.  Expect to see this slide in a future City of Thunder Bay budget presentation.

 

 

However, the real comparison should be relative to your resources available and in this regards it is always per capita comparisons that should be done if you want an estimate of per person effects.  Population is correlated with the size of your economy and resources available so what happens when we take the total salaries paid to municipal sunshine list members and divide by city population?  Figure 3 shows this and reveals that Thunder Bay spends about $640 dollars per capita on its municipal sunshine list employees, well above the next highest North Bay at $475.  Sudbury is next at $434 followed by Timmins at $419 and Sault Ste Marie at $199.  Thunder Bay spends 35 percent more than North Bay in per capita terms and 47 percent more than Sudbury - which stylizes itself as a "regional" municipality.

 

 

The truth probably is that Thunder Bay spends so much because it is behaving on the expenditure side like a regional government especially in district housing, paramedic services and public health but it has the resource base of a single tier municipality.  Needless to say, we have here an irresistible spending force which has yet to come up against an immovable budgetary object.  That immovable budgetary object is the property tax and rate paying property owner of Thunder Bay whose taxes on comparable properties across these five cities are generally higher.  Property owners in Thunder Bay are essentially helping to pay for a regional empire they probably did not ask for.

Growing Old in a World without Personal Services

 

The retail reopening in Ontario this last week prompted my wife and I to go shopping for new mattresses given our decade old ones were a little worse for wear.  We went to one of our local “big box” furniture stores in Thunder Bay.  There are only three here so as a skill testing question,  if you want to know the one we purchased at, its name translates into Italian as il mattone.  It was a pleasant experience and efficient and unlike some of the other purchases we have made over the last few months, this product did not appear to be stuck on a container ship in the Suez Canal and arrived within a few days. 

 

The delivery people came while I was out foraging for food, and my wife took the delivery.  The delivery people were polite, quick and efficient and took out the old mattress and box spring for disposal.  We were told in advance we had to place them into the prepared bags provided.  The large heavy-duty plastic sheeting provided was reminiscent of the crime programs where a serial killer planning a nefarious murder lays out the material on the floor in order to dispose of the body, but I digress.  In any event the delivery went smoothly, and I actually arrived as the delivery people were leaving.  Upon entry, I found the new mattress and box spring were still wrapped, and we were required to unwrap everything – providing us with a new supply of heavy-duty plastic sheeting for any future crimes – and then put everything in place.  Which we did.

 

My point? My wife was surprised the delivery people did not unwrap and place the new mattress and boxspring when asked  – as was I. The reason?  As she was home alone, she expected the delivery people to do so.  There is a delivery fee after all and the instructions we had on a sheet dated March 2021 that were provided with the bill of sale even stated:

 

“Mattress & Boxspring will be unwrapped and placed in frames or on bedroom sets.”

 

Moreover, after checking, something similar is also stated on the company’s web site.  And yet, the delivery people stated that due to COVID-19 precautions they did not do set up of mattresses as part of their delivery.  The salesperson at the time of sale did not mention this was not done.  You can say we did not ask but really why would you?

 

My wife and I are still able bodied and given that we had to wrap the old stuff up for removal, we were quite capable of unwrapping and placing the new.  That is not the point of course. My wife was on her own at the time and could have used the help. As for COVID-19 precautions as the excuse, the delivery people apparently arrived without masks on and inquired if my wife would like them to wear masks before entering. It was nice of them to ask but so much for not setting up the mattress because of pandemic precautions.  They were obviously quite willing to work without masks if you allowed it.

 

In the end, if policy has changed on delivery and removal, salespeople need to state it at point of sale.  Of course, one understands reasons why not mentioning it might be an optimal business strategy.  After all, once mentioned we likely would have checked out a few more stores to see if they did full service when delivering.  Everyone wants a sale.  And during COVID one suspects a lot of companies like delivering with minimal effort because it saves money during a tough time. They will probably continue doing this because it saves money. This type of behaviour does reduce sympathy for all the businesses who have been clamouring for assistance, complaining that the pandemic has hurt business.

 

However, this is also not the real point. The problem here is the following.  If my wife had been a little 80 year old widow, they probably would have done the same thing – drop off the mattresses and leave her to her own devices.  Which brings me to the real point of this story.  There is an aging population and not everyone has a lot of young able-bodied friends or children living nearby to help out on a lot of personal services.  Even if you do, it would help to be told in advance you need to do something like setting up furniture on your own especially when a reasonable search of company documents says they are going to do it.  And even for the non-aging population, there are a lot more people on their own these days. The single largest household type in Canada now  is a single person rather than a more traditional two partner household.

 

I find the general lack of accountability a lot of businesses practice once they have made their sale pretty deplorable.  The long-term implications are pretty stark.  We are often told about how we need to have more home care and aging at home strategies and remain longer in homes by paying for services.  However, it turns out that there actually is not a lot of commitment to personal services in Canada and the few that there are tend to be quite pricey whether it is assistance with personal care, home maintenance, lawn care, snow removal and now by our experience, the delivery and installation of large heavy bulky furniture.   The problem will likely get worse.  Personal service is labour intensive and the pandemic seems to have made growing labour shortages worse given the substantial disincentives to work provided by easy government cash.

 

Of course many will counter that this is just the rant of a privileged boomer with multi-million dollar real estate  assets who just wants more.  However, I have always found demographic stereotyping of this nature rather odd because my demographic timing at the very tail end of the baby boom always seemed to give me more in common with the bust generations of the latter 60s and early 70s than the duck-tailed front end of the baby boom.  Whether it was job opportunities or housing or access to programs and services for the kids, it always felt like getting to a wedding reception at about 11pm. Sure there was dancing and a buffet but the substantial main course had been served a while ago.  

 

And as for the real estate, well I like a lot of other people do not live in Toronto or Vancouver.  If I liquidate my real estate, the assets are enough for a ten percent down payment on something equivalent in one of those cities.  And, good luck generating income to pay for services from any assets in retirement given the low interest rate policies being pursued which have essentially created a landholding aristocracy in major urban centers.  But there is always a silver lining.  Given the rather lack lustre defined contribution pension my university has,  I suppose upon retirement,  I may have a future providing personal services as an old family retainer to some suburban aristocrat in the GTA in return for room and board and a little cash for books.

 

 

Reading the Tea Leaves in Ontario's Cabinet Shuffle

 

Premier Ford has shuffled his cabinet and put in place the team for the last year of his mandate with an eye to next spring’s election.  It has been a tumultuous year for the Premier to say the least given the pandemic but with the end of the pandemic seemingly in sight, Ontario’s government now has to plan for dealing with the aftermath of the pandemic as well as the future.  Key portfolios remain in the same hands, but there are some notable changes.

 

Health and long-term care will continue to be important portfolios and here there is both continuity and change.  Christine Elliott remains Minister of Health and is Deputy Premier an indication of both her importance as well as the centrality of health.  As for long-term care, Merrilee Fullerton has been replaced by Rod Phillips.  This change has received a lot of media attention mainly because Fullerton’s departure is seen as a demotion and the resurrection of Phillips comes after last winter’s travel escapade to St. Barts and the theatrical staging to mask his absence.   However, going to Children, Community and Social Services is not necessarily a demotion given the size of the ministry in terms of its budget share.  And as for Mr. Phillips, well he has atoned for his sins and not allowing an otherwise competent person back into cabinet does not seem particularly productive.

 

The more interesting analysis and discussion with respect to health and long-term care is what the challenges are and how Elliott and Phillips will deal with them.  In the case of health, the pandemic has disrupted the system and along with everything else the FAO now predicts that it will take years to address the backlog of surgeries in Ontario that were delayed by the pandemic.  Indeed, the elective surgery backlog will reach 419,200 procedures and the diagnostic backlog will reach nearly 2.5 million procedures by the end of September 2021.  This is on top of dealing with COVID and its after-effects, the risk of another wave in the fall should the variants outstrip vaccination efforts and the human resources issues of a stressed health care sector.  This will all cost a lot of money.

 

As for long-term care, the long and short of the matter is that bed numbers from the early 2000s to the election of the Ford government stayed flat at just under 80,000.  The pandemic and its toll on long-term care homes resulted in thousands of beds being removed from service because they were 3-4 resident bedrooms more conducive to infection spread thereby reducing capacity even further.  On top of this the government has promised raising daily hours of care per resident from 2.75 to 4 hours, hiring 9,000 more PSWs and adding another 30,000 beds to this system.  This will all cost a lot of money,

 

As for money, the spring 2021 Ontario budget provided some interesting projections of spending by general category up to 2029-30.  Between 2020-21 to 2029-30, health spending is projected to rise from $66.7 to $82.0 billion.   This may seem like a lot but if you take the medium-term population projection scenario from the Ministry of Finance, assume inflation of about 2 percent and convert to inflation adjusted dollars, once the COVID-19 spending spike dissipates real per capita health spending can actually be expected to decline by about 11 percent from 2022 to 2029.  In moving forward their priorities, one hopes that both Elliot and Phillips are really good friends with Peter Bethlenfalvy who remains Minister of Finance though his Treasury Board responsibilities now go to Prabmeet Singh Sarkaria.

 

In other news of note, Ross Romano is no longer Minister of Colleges and Universities and has been moved to Government and Consumer Services.  One suspects there has been some displeasure with the handling of that portfolio by Minister Romano given that Ontario is the first province in Canada to see a university declare insolvency and seek creditor protection under the CCCA while simultaneously creating two new universities – Hearst and NOSM.  Such a feat of creative destruction has not gone unnoticed and the move to Government and Consumer Services is hopefully not a strategy to put Minister Romano in charge of a process to have the entire province of Ontario's operations seek CCCA protection given the ballooning size of the provincial debt and deficit.

 

The new incoming minister for Colleges and Universities by the way is Simcoe North MPP Jill Dunlop who moves there from being Associate Minister for Children and Women’s Issues so this is definitely a promotion.  Given that Minister Romano was from the north and thoroughly disrupted a northern university, one is a bit concerned that there may be a curse attached to this portfolio and Minister Dunlop may be fated to disrupt post-secondary education in Simcoe County.  That is of course the home of Lakehead’s Orillia Campus and one wonders if we are in store for the freeing of yet another institution from its administrative shackles by creating another stand-alone university?  Residents of Simcoe County who are planning to create an Orillia University Liberation Army may want to take notes from the Dean of the Northern Ontario School of Medicine.  In a recent virtual town hall, the Dean apparently referred to creation of a new medical university separate from Lakehead and Laurentian as “Emancipation.” I suspect that no one ever truly realized that the poor medical students in northern Ontario had actually been enslaved for the last fifteen years.  

 

On a final note, Greg Rickford is truly now King of the North.  The MPP for Kenora-Rainy River, assumes a merged role as Minister of Northern Development, Mining, Natural Resources and Forestry, as well as Indigenous Affairs.  Mr. Rickford has gained a reputation as being quite competent and unlike some ministers, he never makes the boss look bad.  He follows the last true King of the North who was Leo Bernier, a minister in the Davis government of the 1970s.  And another of my favorite northerners and the only current cabinet minister I have ever had the pleasure of meeting, Vic Fedeli, remains Minister of Economic Development, Job Creation and Trade and is Chair of Cabinet.  Congratulations to both Mr. Rickford and Mr. Fedeli. 

 

 

Ontario: Is it Requiem for the Pandemic ?

 

Well the news in Ontario has improved dramatically on the pandemic front.  Daily case numbers today were 370 – down from over 2,000 a month ago.  Daily deaths have also been falling.  If one takes a look at the daily case counts since the start of the pandemic in late January of 2020, it looks like that the third wave is definitely on the way out.  Ontario (See Figure 1) had three waves each worse than the other.  The first wave now looks relatively minor compared to the second one which peaked in early January of 2021 and the third wave which peaked in mid-April of 2021.  

 

 

 

While the steep decline can be attributed to the lengthy lockdown and the rising vaccination rates (as of today 76% of Ontarians aged 18 plus have received a first shot and almost 20% have had two shots) there is also the effect of seasonality. Much like last summer, warmer weather and more people being outdoors has helped slow transmission.  Note that the second wave peaked in early winter and the drop was not as pronounced as what we are experiencing currently because we are mainly indoors in the December to March period of the year. As for the lengthy protracted lockdowns, it will be interesting to see what the retrospective analysis will be like on their actual effectiveness.

 

Of course, data will be a challenge and as we all know in Canada data on the pandemic from the outset  has been less than optimal. Governments at both the federal and provincial level are hoping to declare victory and move on hoping that we all forget the chaos of coordination of data, response and most recently vaccine distribution.  Trying to snag a vaccine appointment in a decentralized and chaotic system has made the process a veritable rodeo.  It will be tempting to shrug one’s shoulders and move on, but the most important lesson of the pandemic is to learn from the pandemic. If we simply do what we did in the wake of SARS two decades ago - study, plan and ignore -  what is the point? 

 

As for Thunder Bay District, Figure 2 illustrates that after the initial onset of the pandemic in spring of 2020 which produced a very small first wave, we had a long period of relative inactivity until mid-November of 2020 when our second wave began, and it never really ended until recently.  We had a long second wave that peaked in early March of 2021 and then began to decline and bottomed out in mid-April.  We have not gone to zero cases but have instead since mid-April been averaging 5 to 6 cases daily.  Our active case count is down and in recent days most of the cases have been outside the City of Thunder Bay, but the infection is still there percolating quietly.  

 

 

 

So, is this it? Is the pandemic over?  With rising vaccination rates, it is tempting to see this as the last wave.  However, there are caveats.  Full vaccinations need to continue to rise as herd immunity requires anywhere from 75 to 85 percent of the population getting two doses. However, even once fully vaccinated, it does not mean that new variants might not come along that can overcome vaccines.  And there will be no doubt a need for boosters at some point.  In addition, the steep decline is a function of the warmer weather and the real test will come this fall.  In the before time, the return to indoor activity in September was always marked by a resurgence of colds and flus and asthma with a peak usually hitting the third week of September.  If reasonable precautions such as continued masking are maintained, this should not be a problem. Still, it will be difficult to sort out colds from flus from COVID this fall. While things should be much more normal, it will probably not be as normal as we would like.

Thunder Bay City Council Swimming In Cash - Again.

 

Well, after a break of a few weeks, Thunder Bay City Council will be back in session this evening and the agenda is long.  Of course, much of the attention will be focused on Councillor Peng You’s move to put a question on the next municipal ballot regarding the size of council that specifically would ask: “"Are you in favour of a smaller city council, one made up of 8 councillors elected at-large and one mayor elected at-large?"  This is an old issue in Thunder Bay and usually resurfaces the year before an election and is a cheap and convenient way for a councillor to get attention as being fiscally responsible while not having much happen afterwards.  As we all know, the current arrangement consists of 12 councillors (seven ward and five at large) as well as the Mayor elected at large.

 

Reducing the size of council as an economy measure is largely symbolic as a $200 million plus tax supported budget is not going to be significantly affected by having four fewer councillors.  The quality of council is a more significant factor in driving the budget than the quantity of councils and council would be better off having fewer councillors and paying them more to attract better candidates able to actually analyze issues and make better decisions.  So, the question Councillor You wishes to place on the ballot is typical in that it is a simplistic question designed to address a much more complex issue.  A smaller city council makes sense as a symbolic political gesture and would be more useful if some of the meagre savings were reallocated to attract better candidates. 

 

However, there is also another issue here and that is the effectiveness of democratic representation.  Moving to a completely At-Large system potentially reduces accountability for neighborhood issues.  Councillors must be assigned to a Ward.  Otherwise, you have a council composed of a mayor and eight mini mayors each of whom will be more concerned with the big picture at the expense of the more mundane grass roots concerns of constituents.  It is a question of balance and a completely at-large-system runs the risk of affording councillors the opportunity to shirk even more when it comes to neighborhood issues they would rather avoid.  It is bad enough now having a mayor and five prima donnas with the ward councillors having to pick up the slack.  Good luck getting attention once they are all at large.  

 

However, that is only one of many issues this evening.  The other, tucked away near the end of the 248-page Committee of the Whole document, is the non-consolidated financial statement and reserve fund update.   It turns out that even with the ravages of the pandemic and the wringing of hands about budget problems and the need for resources, the City of Thunder Bay has turned out to have a net positive variance in 2020 of $4.1 million or in other words a surplus.  Moreover, in terms of total assets: “Cash and investments of $131.6 million have increased by $11.7 million from the prior year, primarily resulting from an increase in reserve funds of $21.8 million.”  It would appear that all that federal and provincial money was not all spent on the pandemic and substantial savings were generated.  Given that Thunder Bay was projecting a $3 million surplus for 2021 at the same time that 2020 seemed to only be on track for a $1 million surplus, it would appear that things have improved even more. 

 

Now of course, municipal governments of course are not allowed to run deficits on operating expenditures by the provincial government, so deficits are covered out of reserve funds while surpluses augment reserve funds.  Having reserves is important and fiscally responsible. At the same time, many municipalities – Thunder Bay included – are now in the practice of running habitual surpluses funded by tax increases that are often higher than they need to be. The 2020 and 2021 tax hikes are in the end larger than they needed to be.  The City of Thunder Bay consistently overshoots with the increase used to fund a savings program at ratepayer expense. For 2020, there was additional help from Ottawa and Queen’s Park and Thunder Bay is now swimming in cash.

 

 

 

 

NOSM Moves On. Good bye NOSM and Hello NOMU.

 

The creation of Ontario's newest universities - NOSM and Hearst - is a done deal. The successful passing of the legislation creating the Northern Ontario School of Medicine (NOSM) as a stand-alone university is not a surprise given that there is a majority government.  In addition, NOSM itself was not opposed and is in agreement with the move.  Indeed, one always wonders where the idea came from and one cannot help thinking that it was at the quiet instigation of NOSM itself given the disruption caused by the financial crisis at Laurentian and any issues with NOSM funds there. All NOSM would have to do is bring up their concerns about access to their funds - assuming there were any - and let the government's imagination do the rest. One expects there will be new capital projects in the offing to provide ribbon cutting opportunities as well as a new name for rebranding purposes - The Northern Ontario Medical University (NOMU). All governments like the sense of achievement that comes with new things even if they are a reconstitution of other people's hard work.

 

NOSM was always a unique entity in that it was essentially independent within the Laurentian-Lakehead operating framework.  The two universities helped provide its start with space and an administrative operating framework.  It was never truly a faculty within a university like all the other medical schools and that decision laid the groundwork for the day when NOSM would seek its full independence. Just imagine the provincial government trying to sever the University of Toronto medical faculty from the university - not likely. But who knows, perhaps the provincial government  will now feel inspired and free all the provincial medical schools from the tyranny of their own universities. Perhaps economics departments will be next.  As an aside, I always thought that Lakehead's economics department as a stand alone entity - The Lakehead School of Economics (LSE) would be wonderful for marketing purposes.  

 

The structure of the medical school was a political compromise twenty years ago so that both universities could have a medical school sparing the government of the day the political difficulty of picking one over the other.  The current government has no such political qualms because they already know the extent of their support within both Sudbury and Thunder Bay given their voting patterns over the last few decades.  There was no political cost to them.

In terms of the future, NOSM will not be leaving its main operations in Thunder Bay or Sudbury given they are  the northern Ontario communities with the largest concentrations of population and physicians.  However, that is not the same as not leaving the Lakehead and Laurentian campuses and setting up shop elsewhere in the cities. That is a distinct prospect in the longer term leaving both universities with the additional capital infrastructure and its associated costs.  As for the additional costs to the provincial government, it has already demonstrated by its actions that it is not worried about those costs.   NOSM's future as a stand alone entity is an undiscovered country and will be watched with interest by medical associations and medical faculties throughout North America.  Such is the way of the world.  

 

 

COVID-19: An International Overview

 

COVID-19 case counts, mortality rates vary widely across developed world

 

Livio Di Matteo

Appeared in the Epoch Times, May 26, 2021

 

Perhaps the most noteworthy feature of the pandemic is that there was no uniform pattern of impact across advanced countries. The pandemic unfolded differently in each developed country, and governments that spent more did not as a rule more successfully contain the virus or better maintain their economies.

From the first reports of a pneumonia of unknown origin in Wuhan, China, in December 2019, the COVID-19 pandemic grew and spread around the world, with massive impacts on health, mortality rates, economies, and government budgets. Currently, the global tally is nearly 165 million cases and 3.5 million deaths. With the spread of new variants and differential rates of vaccination around the world, the effects of the pandemic will continue to reverberate worldwide.

 

However, we can already learn from this pandemic to help shape responses to future outbreaks.

Many people, including policymakers, view the pandemic as unprecedented or surprising, but only because the technological and economic progress of the 21st century—and resulting high living standards—has caused many to lose historical perspective. Plague and pestilence have been part of the human experience since the start of recorded history. Pandemics have happened before and will happen again. Nevertheless, many countries were caught unprepared for COVID-19.

 

Moreover, the pandemic did not strike everyone simultaneously, and even with additional time, some advanced countries seemed unable to heed warning signs and act quickly to implement proactive measures. Despite our instantaneous 21st-century communication and information dissemination, many countries seemingly had to experience their own pandemic before taking the matter seriously—even countries that experienced past viral outbreaks such as SARS.

 

As such, the pandemic’s effects were surprisingly severe in developed countries. For example, the International Monetary Fund’s advanced economies, which comprise only 18 percent of all countries, in 2020 accounted for 40 percent of the 30 countries with the highest COVID-19 deaths per million (although the older populations of advanced countries were a key factor in initial death tolls).

 

In the absence of vaccines or effective treatments, the world’s first year of the pandemic response unfolded more like a medieval plague or the Spanish flu. Control efforts consisted largely of face-masking, quarantines, lockdowns, and physical distancing. In the end, unlike the Black Death, it was not the deaths from COVID-19 per se that devastated economies, but rather the restrictions and stringent measures imposed by government to reduce spread. Lockdowns, quarantines, and travel restrictions disrupted global supply chains and had severe economic impacts on the international travel industry, labour-intensive services, food and accommodation, tourism, and the arts and entertainment sectors. Indeed, a one unit increase in the Oxford Stringency Index, which tracks government policy responses to the pandemic based on data from more than 180 countries, was associated with an approximate percentage point drop in real GDP growth of 0.1 percent.

 

Moreover, as noted in a new study published by the Fraser Institute, prolonged levels of stringent government restrictions did not significantly reduce COVID-19 case counts or deaths per million. On the plus side, high rates of testing helped control mortality rates, with each additional 100,000 tests per million associated with 21 fewer COVID-19 deaths per million. And again, countries with larger elderly populations experienced higher COVID-19 mortality rates.

 

Crucially, the number of hospital beds played a key role. Internationally, each additional hospital bed (per 1,000 people) was associated with 31.5 fewer COVID-19 deaths per million. Even among advanced countries, there are substantial variations in bed numbers. In 2020, hospital beds per 1,000 ranged from highs of 13.1 in Japan, 12.2 in South Korea and 8.0 in Germany to lows of 2.5 in Canada and Denmark, 2.4 in Singapore and 2.2 in Sweden.

 

In the end, though all countries experienced the pandemic, its intensity and severity varied as did the economic impact, and there wasn’t always a direct linear relationship between the intensity of the disease and the economic and fiscal impact. Indeed, countries with governments that spent more did not necessarily experience a better outcome in either maintaining their economies or containing the virus.

Clearly, how each country chose to play the cards they were dealt was an important determinant of the health and economic impacts reported during the pandemic’s first year.