The Major
City Insights for Thunder Bay by the Conference Board of Canada was
released October 15th and the report essentially summarizes the economic
situation in Thunder Bay as “Local economy treads water” with the key points
being as follows:
· Thunder Bay faces a tepid economic outlook featuring mixed
performances from the various sectors of its economy. Ongoing work on the
city’s $1.2-billion jail remains an economic bright spot, but other important
sectors face a range of difficulties.
· Plans for at least two local lithium plants remain in play, but
faltering demand for electric vehicles (EVs), which use lithium in their
batteries, and the recent removal of the federal EV mandate could scupper them.
The big drop in lithium prices since 2022 is a bad sign for the industry.
· Modest recent improvements in lumber
and pulp prices spell some optimism for the long-suffering local forest
products industry, although this year’s big jump in U.S. softwood lumber
tariffs to a total of 35.19 per cent is a setback.
· Thunder Bay’s real GDP has largely floundered against this uninspiring
backdrop. We forecast no change in 2025 following a 0.2 per cent easing in
2024, then a 0.7 per cent rise in 2023. Fractional 0.7 per cent growth is our
call for 2026, followed by annual advances just above 1 per cent in 2027–29.
· The window of migratory opportunity
might have closed for Thunder Bay due to sharply lower federal immigration
targets that are limiting the number newcomers from abroad. Rising
return-to-office orders from firms and governments, meanwhile, will eventually
limit other Ontarians’ ability to take advantage of very affordable local
housing.
Out of 24 CMAs covered in the Conference board reports,Thunder Bay ranks 24th in terms of real GDP growth
forecast for the 2026 to 2029 period. Total
employment is expected to remain flat going forward and while population for
the CMA is forecast at 134,000, it will remain at that level for the
foreseeable future.
Needless to say, it is not the most auspicious backdrop for the
unveiling of the City’s Smart Growth strategy. What the ultimate plan is to address the City’s economic
future will be is interesting to say the least and community input is being
solicited on the
draft as well as being subject to review by assorted City Standing
Committees. Despite what seems to be
some robust construction activity underway in the city in terms of residential and
hotel activity, it appears that this is not sufficient to offset what the Conference Board views as “tepid” economic performance.
Indeed, while the
City seeks to address growth, a lot of the emphasis to date seems to be on
assessment growth and growing the property tax base which are usually not the
main targets of economic growth inducing policies. It would be like next week's federal budget making the case that moving Canada's economy forward requires more people paying more income taxes. The aim
should be growing the city’s level of economic activity to increase both real total and
real per capita GDP through private and public sector investment in productive job
creating activities. The City of Thunder
Bay Smart Growth plan proposes two key measures to guide growth over the next decade:
• Grow the property tax base by 3% annually
• Grow the population by 1% annually
It would appear that in the end, this is not really an
economic growth plan per se but a plan to try and grow Thunder Bay’s municipal tax
base that is accompanied by a lot of social and quality of life and community goals masquerading as economic targets. This will probably go over well given the general level of economic literacy in the community. One
suspects that perhaps such an approach also works well in a city where
one-third of employment is broader public sector and public sector construction
projects have been key drivers for the last few years.
Of course, growing both the economy and the municipal tax
base are not mutually exclusive goals but it is odd the performance indicators
for successful growth do not include real GDP (which incidentally looks
somewhat flat going forward) though employment and labour force indicators as
well as building permits which are correlated with overall economic growth are
included. However, as the report states,
the “key performance indicators such as tax base and population growth are
priority metrics”. In other words,
as long as there are more people on public sector incomes paying more property taxes, this plan will be declared
a success.
In light of the Conference Board Report, one suspects the response
of our civic leadership to square the Smart Growth Plan with the Conference
Board report will be to remark they are measuring different things and growth
is more than about just measuring economic output – the perennial apples and
oranges comparison. They may even claim the Conference Board report is missing
the real sources of economic growth and performance just like Statistics Canada
is missing the true size of our population with their numbers. All we can do is wish our municipal leaders good
luck on this one.
