Economic News Around Northern Ontario: March 26th Edition

Here are some of the recent items I found to be of economic significance to northern Ontario.  If you are interested in the regional impact of the Federal budget this week from my perspective, see my previous post. There was also this somewhat more upbeat story on CBC:

First nations, northern infrastructure to benefit from federal budget.  CBC News Sudbury. March 23rd, 2017.

As well, the 25 million dollar boost to Fednor seems to have gotten some attention.  I guess in northern Ontario, 25 million dollars is considered alot of money and the source of much optimism.

FedNor gets $25-million funding boost. Sudburystar.com. March 24th, 2017.

In other upbeat news....

First ship of season arrives in Thunder Bay. Tbnewswatch. March 24th, 2017.

The arrival of the M.V. Manitoulin was a record breaking early arrival for the first ship and leads to the hope this is the start of another great shipping season for the Port of Thunder Bay.  The Port of Thunder Bay has been on an upward trend the last few years.

As well, it turns out Sunrise Records will be adding to Thunder Bay retail filling the hole left by the closure of HMV. See:

Thunder Bay indie store welcomes Sunrise.  CBC Thunder Bay. March 24th, 2017.

And the upbeat news continues all over the north.  In the Sault, despite concerns raised by the local Chamber of commerce at a public forum, the city's Mayor has assured everyone that municipal costs are under control.

City is controlling costs: mayor. Saultstar.com. March 24th, 2017.

After all, the city council in the Sault has shrunk from 12 to 10 saving $60,000 annually! However, to put $60,000 in perspective, keep in mind the total municipal levy for 2017 in the Sault is projected at 108.9 million dollars.

In terms of infrastructure, Timmins is opening a new hospice center  and the optimism was contagious also spilling over to a generally positive view of certain elements of the federal budget by the Timmins Chamber of Commerce.  Perhaps some of that new Fednor funding is headed towards highway construction in the Timmins area. See:

Timmins might choose concrete highways.  Timminspress.com. March 24th, 2017.

Hopefully, concrete might do a better job withstanding the potholes that have been plaguing me as I drive around Thunder Bay.  It is difficult to remain upbeat when one's innards are constantly jarred by potholes.

Meanwhile, things are looking up in North Bay.  While North Bay's population, like much of that in northern Ontario is aging at a fast rate, it remains that there might be a silver (no pun intended) lining....

Growing seniors resource to north and south represents jobs.  Nugget.ca, March 25th, 2017.

Finally, this item in terms of potential impacts of alleviating access in remote First Nation communties:

Pilot project could see drones deliver much-needed items to northern Ontario First Nations. CBC Toronto. March 19th, 2017.

Have a great week!

Federal Budget 2017 Analysis

Well, the 2017 federal budget is out and I have put together some comments in two parts: general and northern Ontario specific.

General Comments

Today’s federal budget addresses Canada’s economic uncertainty by stimulating spending without adequately addressing the long-term productivity growth of Canada’s economy.  Total spending is expected to rise from 315.1 billion dollars in 2016-17 to reach 371.8 billion dollars by 2021-22 – an increase of 18 percent.  The 2017 federal budget is disquieting given that revenues will still rise from 292.1 billion dollars to 356 billion dollars – an increase of 22 percent - over the same period and yet still result in the accumulation of more deficits. 

The federal debt is 637.1 billion dollars in 2016-17 and projected at 756.9 billion dollars by 2021-22.  Debt service costs will rise from 24.3 to 33.3 billion dollars over the same period. The deficit will be 23 billion dollars in 2016-17, 28.5 billion dollars in 2017-18, 27.4 billion dollars in 2018-19 and decline moderately to 18.8 billion dollars in 2021-22.

While the introduction of a contingency reserve is welcome, it still remains there is no long-term plan for addressing the fiscal deficit situation of the federal government.  This is of concern given the importance of private sector confidence when it comes to making investment and business decisions.  This is also worrisome given that interest rates are projected to rise as well as the economic uncertainty we still face given the trade and economic policies of the Trump administration in Washington.

Despite the increased spending, there is to date relatively little to show for promised federal infrastructure investment and the federal government’s promises of a bold and transformative agenda have fallen flat when it comes to actual implementation.  While today’s budget focus on social policies such as more skills training, better access to child care, innovation and infrastructure spending for First Nations is commendable, there is really no assurance that the government will be able to implement anything given its slow pace of implementation on the preceding year’s infrastructure and spending commitments.   

According to a recent report from the Institute of Fiscal Studies and Democracy, the federal government already spends nearly $23 billion on innovation, skills development and training across 147 activities and there is little available in the way of performance measurement to evaluate what works and what does not.  

In the case of assistance to the middle class, it remains that the recent reduction in middle class tax rates from 22 to 20.5 percent generally benefited tax filers making between $50,000 and $100,000 per year while nearly two-thirds of Canadian tax-filers report total income below $50,000 and saw no benefit from the tax decrease. Moreover, the increase in unemployment insurance premiums in 2018 to partly offset the government’s skills-training proposals and the increase in excise taxes constitute a tax increase on the middle class. However, the government is to be commended for not further increasing the tax burden via increases in capital gains taxation.

While the federal government has grand aspirations and seems willing to spend a lot of money it falls short on achievement and does not appear able to fully address concerns that it is generating the best value for money.  A budget must be more than an aspirational document that announces spending that is to be spread out over time.  It should set goals and then achieve them. 

Northern Ontario Comments

This is a government that has decided to run large deficits and add substantially to the public debt.  In the case of northern Ontario, one has to ask where the regional benefits of this increased spending are given the federal emphasis on infrastructure investment, the innovation agenda and assistance to the middle class?  In many respects, the budget is a disappointment with respect to some of the specific issues the northern Ontario economy faces.    Northern Ontario is still characterized by slower economic and employment growth relative to the rest of the country and given that its has substantial representation at the federal level both in terms of MPs as well as cabinet, one wonders where the federal growth agenda for northern Ontario is now that we are two years into the federal mandate?

Northern Ontario receives little in the way of specific mention in Budget 2017.  An extra 25 million dollars over five years for Fednor is not much in a world of multi-billion dollar spending projects.  Here is what I would have liked to see in the 2017 federal budget with respect to the economic future of northern Ontario. 

·      1. It is Canada’s 150^th anniversary.  Where is the federal vision that would see us embark on finally completing the Trans-Canada highway through northern Ontario up to a standard that is worthy of a nation as wealthy and developed as Canada?  When will there finally be a commitment to complete a four-lane national highway through the middle of Canada fully linking east and west?

·     2.  Northern Ontario municipalities have not had the increase in economic base characteristic of larger urban centers and their revenue is increasingly being borne by residential ratepayers.  At the same time, the physical infrastructure in northern Ontario municipalities is increasingly in need of repair and renewal.  Notwithstanding the announcements of investing in infrastructure, where are the federal infrastructure projects and dollars infrastructure in terms of roads, bridges and sewers here in northern Ontario?

·      3. Where is federal leadership when it comes to investing in the Ring of Fire?  Commodity prices have bottomed out and are in the process of starting an upturn.  What are the federal plans to providing the infrastructure investment to assist in development of mining resources in northern Ontario in advance of the coming upturn in commodity prices?

·      4. The federal government maintains it is committed to research and innovation and economic development.  When can we see some direct and more substantial federal investment in research directly related to northern Ontario economic development issues, to the analysis of the regional economy of northern Ontario, and the economics of natural resources, mining and transportation?  Where are the Federal Research Chairs and research support directly dedicated to these areas?

·      5. The 2016 Federal Budget said it planned to invest $8.4 billion over five years for indigenous people with $1.5 billion earmarked for 2016-17 and the 2017 Budget earmarks an additional 3.4 billion over the next five years.  The money was supposed to be spent on health, infrastructure, renovating and building schools on-reserve as well as improving water supply and treatment infrastructure.  How much of this in 2016-17 made its way to northern Ontario?  How much in 2017-18?