Northern Ontario: Demographic Indicator Overview

 

Last week, I gave an economic overview of the challenges and opportunities facing northern Ontario’s economy at the Regional Meetings of the Economic Developers Council of Ontario in Thunder Bay.  I covered a lot of ground, and it is worth presenting some of the highlights for the regional economy in terms of current indicators.  This post, a quick overview of some of the key demographic trends that have been emerging in northern Ontario over the last while.   

 

 

Figure 1 provides Census results from 2006 to 2021 and they show that despite the perceptions, northern Ontario’s population is starting to grow once again.  While the period 2006 to 2016 saw a slight decline, the 2021 Census shows that population is up in both the Northeast and Northwest of the region. Between 2016 and 2021, northern Ontario’s total population grew from 780,140 to 789,519 – an increase of 1.2 percent (See figure 2) with the Northeast growing much faster that the Northwest.  On the other hand, from 2011 to 2016, the Northwest grew substantially while the Northeast actually shrank.  

 

 

 

Two other trends worth noting.  First, while the conventional wisdom is that the major urban centres in Ontario’s north are all major attractors of population within the region, it turns out that between 2016 and 2021, Thunder Bay, Sudbury and North Bay grew while Timmins and Sault Ste. Marie shrank somewhat (See Figure 3).  Second, the population that self-identified as Indigenous in the Census has been growing.  According to the Census (See Figure 4) the Indigenous population in the Northeast rose from about 61,000 to 67,000 (about a 10 percent increase while that in the Northwest grew from about 53,000 to 55,000 – about a four percent increase.  If one adds up the two regions, in 2021 about 122,345 people in that year identified as Indigenous in the north or about 15 percent of northern Ontario’s population.  About 24 percent of the Northwest’s population self-identified as Indigenous while 12 percent of those in the Northeast did so.  However, it should be noted that these figures may be an under count of the Indigenous population.

 

 

 

 

 

The trends are positive in that the region’s population is growing but the point to consider is that it is growing slower than Ontario as a whole.  While Ontario’s population was up nearly 5 percent from 2016, the North is only up about 1 percent.  This means northern Ontario’s share of Ontario’s population (which peaked in the early 1950s at nearly 12 percent) will continue to decline, all other things given.  While 2021 saw the region’s share at 5.6 percent, according to Ontario government population projections, that share could decline to 4 percent by 2046.  It is relative rather than absolute decline in population that is the real concern given that a declining share is also associated with declining long-term representation and influence within the province and the country.

The Provinces and Federal Health Transfers

 

The federal and provincial health ministers meeting in Vancouver last week ended somewhat abruptly without an outcome regarding an increase in transfers. The provinces have been asking for increases to the Canada Health Transfer that would raise the federal share of provincial health spending from 22 percent to 35 percent.  Given that for 2022-23 the Canada Health Transfer to the provinces is expected to be 45.2 billion dollars, such an increase would amount to an additional cash transfer of well over 25 billion dollars.

 

The provinces maintain that they need the money to deal with an increasingly strained and stressed system beset by labour shortages and the aftermath of the pandemic.  The federal government is leery of simply handing over the money without conditions because of the concern that more money without structural reforms to the health system or some conditions is simply business as usual.  After all, the enhanced transfers of the 2004 Health Accord with its 6 percent annual increase escalator that lasted until 2017 was supposed to buy fundamental reforms and transformative change and yet the same problems persist pandemic notwithstanding.

 

The solutions here are problematic.  The federal government could simply hand over more money given that health is a provincial responsibility and wash their hands of the matter.  However, given their concerns that the provinces may not necessarily spend the money on health given they are almost as busy as the federal government in handing over rebates and assistance to deal with inflation, they are unlikely to do so.  They could proceed unilaterally and create a grant with conditions that provinces could accept if they wished or otherwise deal with the matter on their own – probably by increasing their own source revenues (i.e., raise their own taxes) . Or they could simply do nothing and wait for the provinces to come around.  After all, health is a provincial responsibility and the blame for a lack of family physicians or crowded ERs ultimately lands at the feet of provincial governments.

 

Of course, in dealing with the issue it is perhaps useful to look at some indicators to see what the dimensions of the problem might be.  The accompanying figure plots the average annual growth rates from 2008 to 2022 for an assortment of health spending, fiscal and economic indicators. This period includes both the pandemic as well as the 2008-09 Great Recession - both periods that saw surges in federal spending including transfers.  This period also coincides with the 2004 Health Accord and its immediate aftermath.  The results are intriguing given that they provide some support to both sides in this debate.

 

 

 

The average annual growth rate (all growth rates here are nominal) for total federal transfers was 5.6 percent with the component Canada Health Transfer and Equalization growing at 5.2 and 4.1 percent respectively.  Provincial-Territorial government health spending over the same period grew at an annual average of 5 percent – slightly below the rate of growth of the Health Transfer.  Needless to say, score one for the federal side.  Moreover, total provincial-territorial program spending (including Health) grew at 4.8 percent which means that program spending net of health was also growing slower than health. Score one for the provincial side – the money is not necessarily going to other programs.  P-T health spending is growing faster than either nominal GDP or population (though once inflation and population growth are factored in it means that per capita spending growth has been rather anemic). 

 

Nevertheless, total P-T health spending has grown faster than GDP, but provincial-territorial own source revenues have grown slower than GDP while the value of the much-vaunted federal tax points have grown at nearly the rate of GDP.  Here, the federal government can claim that there is indeed own source revenue capability on the part of the provinces that remains untapped.  On the other hand, the provinces can claim that they are caught in a bind – on the one hand they are trying to bend the cost curve to address sustainability issues (hence the anemic per capita growth rate) while on the other hand the high growth rate of total population plus the aging of the population is adding to total health spending at a rate they are having difficulty coping with.

 

Is there a solution here?  In the absence of a unilateral federal move of transfers with conditions (which is not going to work for everyone) the only solution here is a political one and if the two sides are not talking it is a long way off.

Does Balloting Method Matter?

 

The October 24^th municipal election in Thunder Bay featured an assortment of voting options in an effort to make voting more convenient and thereby encourage greater turnout.  On that front, the results were not favorable in that despite the increased options for the 2022 election, there was a decline in turnout.  Apparently, about 43 percent of the city’s 83,679 eligible voters cast a ballot which was down from nearly 51 percent in 2018.  While Thunder Bay voters were more engaged than the provincial average, the results were a disappointment given the effort expended.

 

What is also of interest is whether or not different voting methods may be associated with the outcomes.  A case in point is the Councillor-At-Large Race which saw 140,095 ballots cast.  Given that there were about 35,980 voters who cast ballots, and each could vote for up to five choices, this means that a total of 179,900 votes were up for grabs.  Given that only 140,095 were cast – 78 percent of those available –a proportion decided to vote for fewer than five candidates.  This suggests that some voters were unhappy with the available choices even given the large number of candidates or may have been voting more strategically by voting for their preferred candidate(s) and not supporting anyone else.

 

More to the point is the difference between the number of paper ballots and internet ballots cast.  Of the 140,095 ballots cast, 50,403 (or 35 percent) were paper ballots while 89,692 (65 percent) were internet ballots.  This suggests that there was indeed a marked preference for internet voting in this election.  Figure 1 shows the results for total ballots cast with the five winners in red – Bentz, Ch’ng, Giertuga, Agarwal and Etreni – followed by Judge, Barrett, and Margarit.   

 

 

 

 

If one looks at only the paper ballot results, the winners would be Bentz, Giertuga, Ch’ng, Judge and Agarwal, followed by Etreni, Barrett and Mauro.  If one only uses the internet results, the five winners would be Bentz, Ch’ng, Giertuga, Etreni and Agarwal, with the next three spots taken by Barrett, Judge and Margarit.  While the top three spots were unaffected – and went to incumbents – there were differences in who would occupy the next two spots.  Paper ballots alone would see Judge and Agarwal on council with Etreni in sixth place while internet balloting alone would see Etreni and Agarwal with Barrett in sixth place.

 

 

 

 

 

 

Can one draw any conclusions from these results? Without detailed data that allows you to correlate voter characteristics (eg. age and income) with ballot method preferences and voting outcomes, it is difficult to really know if these results mean anything at all.  However, it is not too much of a stretch to argue that most important conclusion is that candidates need to campaign to attract both types of voters – paper ballot voters and internet voters.  Victory is ensured by coming out on top in both types of voting methods.  Voters who prefer internet voting are probably more likely to be web and social media savvy and will require a more sustained campaign targeted towards them as well as more traditional door to door type campaigning. 

 

In the end, internet voting makes it easier to vote well in advance of election day meaning much of the campaign is over well before the official voting day.  However, if you are an incumbent, name recognition alone seems to guarantee a top place finish. It is only for the new entrants that campaigning vigorously on a variety of platforms seem to matter more.

 

One other thing. Given the differences across voting platforms that can emerge and the rather erratic flow of results on election night, it is imperative that the release of results be better coordinated in future.  One can only imagine the effect on candidates as they watched their rankings seesaw in the blink of an eye on election evening as internet voting tallies flooded in.

Federal Finances and Fiscal Projections

 

The Federal Fall 2022 Economic and Fiscal Update is now economic history and for 2022-23 it projects budgetary revenues of $446 billion, program expenditures of $438 billion, public debt charges of $35 billion, a deficit (including net actuarial losses) of $36 billion and a net federal debt of  $1.283 trillion.  By 2027-28, revenues are expected to rise to $542 billion with total expenses including actuarial losses of $537 billion meaning that a budget surplus is anticipated within five years. 

 

While total spending in 2022-23 is actually down from 2021-22 as a result of the COVID-19 unwind, it remains that compared to spending in 2018-19 of $346 billion just prior to the pandemic, "reduced" federal spending in 2022-23 is expected to be one third higher and projected to rise to $487 billion in 2023-24.  In other words, over a five-year period, the federal fiscal footprint after the COVID-19 unwind expanded at an average annual growth rate of 8 percent.

 

Despite the economic uncertainty currently present with respect to inflation, interest rates and the potential of a recession, the federal forecast is remarkably upbeat with both its  ‘downside’ and ‘upside’ forecasts for growth, unemployment, and the federal finances remarkably close to one another.  This of course means that the deficit forecasts that range from $36 to nearly $50 billion are also in a sense somewhat optimistic and hinge on economic conditions and in particular the impact of any downturn on federal revenues.  When it comes to forecasting the fiscal future, the greatest source of uncertainty is apparently not on the expenditure side – which is more in the hands of the federal government – but the revenue side which is in the hands of the economy.

 

A case in point is illustrated in figure 1 which presents federal estimates for revenue and expenditure for the 2021-22 fiscal year starting with the spring budget pf 2021.  What is remarkable moving forward to the final numbers for 2021-22 as released in the public accounts and also presented in the Fall 2022 update is the remarkable stability of the expenditure estimates and the constant revisions on the revenue side.  Compared to the initial budget forecast in 2021, expenditures went down slightly from $497.6 billion to $493.3 billion by fall 2022 – less than 1 percent variance.  On the other hand, revenues appear to have been significantly underestimated as the economy did better than expected and inflation helped pump up federal revenues from an original estimate of $355 billion to $413 billion – a 16 percent variance.  As a result, the deficit estimate also fell from $143 billion to eventually $90 billion.  This was not the result of fiscal restraint – expenditures stayed pretty much stable.  It was purely from the revenue surge.

 

 

 

Why does this matter?  What goes up can also come down.  Expenditures over the next five years are projected to rise steadily recession or not and one suspects based on past performance that barring a sudden policy shift those estimates will be close to the mark.  Meanwhile, while revenue growth is a function of the economy.  The economy rebounded better than expected and as a result revenues did too. However, while revenue was underestimated over the last couple of years, it could easily be overestimated going forward which means the optimistic deficit reduction scenario with a surplus by 2027 is as uncertain as economic forecasting in general.   

 

Despite the public pronouncements that there is now more frugality at the federal level, that is not the case.  The federal government is projecting average annual revenue growth from 2023 to 2027 at an average of 4.7 percent while expenditures (after the drop in 2022-23) will rise at 2.6 percent.  The federal government is banking on the revenue surge of the last couple years to continue and keep revenues growing faster than spending.  A severe recession could upset that optimistic projection.