Getting Ready for Budget Season: A look at Thunder Bay Municipal Indicators

 

Municipal budget season is well underway in Thunder Bay, but the main public theatrics over the 2025 budget should be transpiring over the next few months.  The most recent indication is that City Council is expected to target a 3.8 percent municipal tax levy increase.  There are budget pressures underway not the least of which is apparently an additional $5.6 million to cover wages and benefits. Putting budgets into context is always more useful if a long term is taken and fortunately the Ontario government does provide resources to track municipal spending.  Here, a useful tool are the multi-year financial reports provided from the Financial Information Returns which provide standardized reporting of a municipality’s financial activities as well as additional statistical information.

 

Figure 1 presents municipal property taxes per household and water and sewer charges per household since 2000.  While many other municipalities appear to have filed their 2023 returns, Thunder Bay appears to be lagging and therefore this long-term snapshot only goes to 2022.  From 2000 to 2022, municipal property taxes in Thunder Bay have nearly doubled going from $1,947 to $3,918.  The growth of water and sewer charges has been more pronounced going from $379 per household in 2000 to $1,158 in 2022 – a tripling of the average per household charge.

 

 

 

Figure 2 plots a dual scale chart with the total municipal workforce (full time, part time and seasonal) on the right size axis and the value of wages, salaries, and benefits per employee on the left axis.  Perhaps one of the reasons Thunder Bay is lagging in putting out its financial information is that it is a bit short staffed given that the total size of the municipal workforce has declined from a peak reached circa 2013 and has been pretty flat since 2016.  On the other hand, since 2000, the size of the municipal workforce has gone from 2,344 employees (there is a data  gap in 2003) to 3,404 in 2022 – an increase of 45 percent.  Over the same period, average wages, salaries and benefits per employee have grown from $46,978 to $83,799 – an increase of 78 percent.

 

 

 

However, these indicators and the increases over time are best placed in context to an assortment of other indicators and this is done in Figure 3 which plots the percent increase in an assortment of indicators from 2000 to 2022.  As one can see, prices in Thunder Bay as measured by CPI inflation have risen by 49 percent.  Own purpose property tax revenues (the total tax levy) has grown 122 percent while total grants revenues have only grown by 55 percent.  Municipal property taxes per household have grown 101 percent while water and sewer charges have grown 205 percent.  

 

 

 

Meanwhile the total taxable assessment has grown by 60 percent which when divided by the number of years works out to an annual average growth of 2.7 percent.  This seems at odds with the fact that published reports have been of average assessment growth over the last ten years of only 0.6 percent annually.  However, one suspects that the 0.6 percent is real growth – after inflation – because the average annual assessment growth of 2.7 percent minus the average annual inflation rate of 2.2 percent from 2000 to 2022 yields real average annual assessment growth of 0.5 percent.  Given that property prices have grown substantially in Thunder Bay over the last decade in particular, the nominal rather than inflation adjusted tax assessment has been growing in tandem

 

More interesting is the fact that between 2000 and 2022, the population of the City of Thunder Bay has actually decreased by 6 percent.  This also seems at odds with recent reports that Thunder Bay is over 130,000 people but it must be remembered that FIR deals with municipal finances and the population of the City of Thunder Bay is that within its city limits while the recent population reports are for the larger Census Metropolitan Area.  Essentially, growth in Thunder Bay has been occurring outside the city limits where they do not have to pay property taxes to the City of Thunder Bay.

 

And finally to round things off, the municipal workforce over the 2000 to 2022 period grew by 45 percent, the total compensation per employee grew 78 percent and the total value of building permits grew 85 percent.  However, after inflation of 49 percent, salaries and benefits per employee only grew in real terms by 29 percent while to end things,  the real total value of permits grew by 36 percent. 

The Growing North

 As a followup to my last post dealing with dealing with Canada's growing population based on the Statistics Canada population estimates for sub-provincial areas as of July 1st, 2023, this post focuses on northern Ontario Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs).  It turns out that the era of declining or stagnant population in northern Ontario urban centers has come to an end.  The period from 2001 to 2015 was essentially one of stagnant and even declining population.  From 2001 to 2015, Ontario's population  grew by 15 percent and its CMAs by 18 percent.  However, during this period, Thunder Bay, Elliot Lake, Timmins, Sault Ste. Marie, and Kenora all saw declining populations.  Only Greater Sudbury saw an increase during this entire period and it was just under 3 percent.  Fast forward to the period since 2015 and there has been quite the reversal.

The accompanying figure ranks northern Ontario's CMAs and CAs by their population growth from 2022 to 2023 but includes alongside the growth rate from 2015 to 2023 as well as the accompanying growth rates for all of Ontario, Ontario's CMAs and Ontario's CAs.  The results show that from 2022 to 2023, Sault Ste. Marie and Timmins grew the fastest at a population growth rate of nearly 4 percent, followed by North Bay at 3.8 percent, then Greater Sudbury at 2.8 percent, Elliot Lake at 1.6 percent, then Thunder Bay at 1.4 percent and finally Kenora at 0.4 percent.  The Sault, Timmins and North Bay all grew faster than both Ontario as a whole as well as either its total CMA population or total CA population.  

The results are not as impressive but still quite robust for the entire period from 2015 to 2023.  Here, North Bay, Sudbury and Elliot Lake have been growing at rates below Ontario as a whole but still well above 8 percent while Ontario as a whole grew 14 percent.  The remaining CMAs and CAs ranged from 0.8 percent (Kenora) to 4.9 percent (Sault Ste. Marie).  Overall, while population growth in northern urban centers has picked up, growth has been more robust in the Northeast than the Northwest. While the percent increases place the Sault as the top recent performer, in absolute numbers, Greater Sudbury grew the most from 2022 to 2023 hitting a population of 185, 230 by adding nearly 5,000 people to its population in one year. Greater Sudbury seems well on its way to hitting the Mayor's population target of 200,000 and indeed has already exceeded a recent Ministry of Finance projection of its population hitting 183,871 by 2042.  Next came the Sault which added 3,158 and then North Bay adding 2,924.  Overall, good news after decades of seeing little to no growth.

Ranking Recent CMA GDP Growth in Canada

 In the wake of the pandemic, with inflation, lagging productivity growth and a slowing economy, it is sometimes useful to look back on what economic performance was like in the "before time" particularly amongst Canadian urban areas.  Statistics Canada currently provides GDP estimates for Canadian CMAs for the period 2009 to 2020.  While 2020 sees a dip in GDP for everyone, the 2009 to 2019 period provides a snapshot of which parts of the country were growing the fastest prior to the pandemic.  The accompanying figure provides the growth rate in nominal  GDP from 2009 to 2019 for Canada's 36 CMAs and ranks them from highest to lowest. 

The expansion of GDP over ten years across these 36 CMAs averaged 45 percent and ranged from a high of 66 percent for Guelph, Ontario to a low of 16 percent for Saint John, New Brunswick. Three of the top five CMAs are in Ontario - Guelph, Kitchener-Cambridge-Waterloo and Toronto.  At the same time, four of the bottom five CMAs are also in Ontario - Thunder Bay, St. Catharines-Niagara, Peterborough and oddly enough, the Ontario portion of Ottawa.  Western Canadian CMAs in general did quite well with the exception of Victoria and Edmonton which placed in the bottom third.  In northern Ontario, Sudbury fares substantially better than Thunder Bay while in southern Ontario, the worst performers are Peterborough and St. Catharines-Niagara along with London, Windsor and Kingston.  

 

 

What happens as we continue to move forward from the pandemic will be interesting.  Vancouver and Toronto until the pandemic were major areas of GDP growth with their economies also totaling over 600 billion dollars or over one-third of Canada's economy.  If you add in Montreal, these three CMAs account for about half of Canada's economy.  With the run-up in housing prices and rents during the pandemic as well as general labor shortages in pandemics wake, one wonders how successful they will continue to be as urban growth leaders in Canada's economy.

Ontario Economic Decline is Real and Substantial

 This post originally appeared in the Fraser Institute Blog.

A spectre is stalking Ontario, and it’s the spectre of decline. For most of post-war Canadian economic history, Ontario has had a per-capita real GDP substantially above the Canadian average. At the same time, Ontario has had real per-capita GDP growth relatively close to the Canadian average.

This dominance was rooted in Ontario’s role as Canada’s industrial heartland that developed in the wake of Confederation. Ontario was indeed a beneficiary of Canada’s national economic development policies based on development of the Canadian prairie wheat economy, a tariff wall to protect domestic manufacturing and an east-west railway transport corridor. At the same time, Ontario’s economy was also marked by prosperity driven by market-based economic development best described in the words of economic historian Ian Drummond as “progress without planning.”

Ontario’s performance can be summarized in two charts using data from the Macro-data Base of Finances of the Nation. The first chart below plots real per-capita GDP separately for Ontario versus the rest of the country (Canada without Ontario) from 1990 to 2022.

 

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The second chart plots the average annual growth rate for Ontario, the rest of the country and all of Canada for the 1990 to 2022 period and the approximately 30-year period preceding it. The evidence suggests that during the 1990s, Ontario fell dramatically below the rest of the country in terms of its real per-capita GDP growth. In 2006, the rest of the country surpassed Ontario’s real per-capita GDP and remained higher for a decade before converging from about 2015 to the pandemic era. However, in the immediate post-pandemic era, Ontario has once again fallen behind the rest of the country.

 

 

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During the 30-year period prior to 1990, Ontario’s real GDP per-capita growth was quite close to the overall Canadian average and that of Canada without Ontario. What’s remarkable is what’s happened since.

Ontario’s average annual growth rate of real per-capita GDP fell from 2.6 per cent to 0.6 per cent. To be fair, a productivity decline has also marked the rest of the country. Indeed, Ontario and the rest of Canada appear locked as partners in a long-term productivity and growth decline, but Ontario’s performance is both dire and unique. The rest of Canada since 1990 saw its per-capita income growth rate cut in half. While hardly a sterling performance, compared to Ontario it was a veritable boom given that Ontario’s post-1990 average annual growth rate was barely one-quarter that of its 1960 to 1990 growth rate. One can argue that Ontario is dragging down the overall Canadian growth rate.

One can construct all kinds of palatable and soothing stories to explain why this has happened and why it’s not as unflattering as these statistics suggest. For example, one can argue that convergence of income is a good thing as it provides for a more economically balanced federation and is a logical outcome of economic development spreading across the country. At the same time, convergence could also mean that once per-capita incomes have equalized, growth rates should be similar, too, which is not the case here.

One could argue that Ontario was exceptionally hard hit by the economic adjustment its manufacturing base underwent during the 1990s in the wake of the 1998 Canada-U.S. Free Trade agreement and then NAFTA. Yet most of that adjustment was done in the 1990s and a breakdown of growth rates in the 1990 to 2022 period shows 1990 to 2000 had higher per-capita income growth than afterwards. One could also argue that the real per-capita slowdown is an illusion fuelled by rapid population growth. This of course ignores the reality that Ontario’s population has been growing about the same as the rest of the country and its share of total Canadian population today remains pretty much the same as 30 years ago.

Another potential argument is that the relatively better performance of the rest of the country is the result of natural resources with Alberta, Saskatchewan and Newfoundland and Labrador doing much of the heavy lifting. Yet this ignores that Ontario, and especially its north, is resource rich with abundant minerals and hydropower resources. Yet Ontario has been planning for more than two decades to access its Ring of Fire and little yet emerged. If the early 20th century could be characterized as “Progress without planning” then the early 21st may as well be “Planning without progress.”

Finally, one could argue it’s all just a rough patch for Ontario and that things are about to turn around. At the 1960 to 1990 growth rate, Ontario’s per-capita income would double in about 30 years. At the post-1990 average annual growth rate, the next doubling will take more than a century.

These are all ultimately unconvincing stories strung together to provide a comforting and bearable account as to why we shouldn’t worry and indeed shouldn’t do anything at all. Yet the first step to a solution is acknowledging a problem exists. Unfortunately, Ontario seems serene in the confidence it does not have to worry. Ontario needs to wake up and realize it has a problem.

 

Tracking Thunder Bay’s Economy: Another View

 

As 2022 begins to wind up, it is worth taking a look at how Thunder Bay’s economy is doing using less traditional indicators to shed light not only on its economic performance but the perennial question of whether its population is growing or not.  One way of looking at Thunder Bay’s economy and making some comparisons to other centers is the use of Tax Filer data available from Statistics Canada. The number of T1 Tax Filers can be used as a correlate of not only population numbers but also incomes and economic activity.   

 

Figure 1 plots the number of tax filers by year from 2000 to 2001 in the Thunder Bay CMA with a linear trend.  There has definitely been some growth in the number of tax filers over the last few decades. From 88,240 T1s filed in 2000 to 92,660 in 2021, Thunder Bay has seen a 5 percent increase in the total number of tax filers between those two years though numbers do fluctuate from year to year.  Thunder Bay’s CMA population in the 2001 Census was 121,986 and its CMA population in the 2021 Census was 123,258 – an increase of 1 percent.  One would expect the number of tax filers reporting income is somewhat a more robust count than the number of people filling out the census at least in terms of compliance. 

 

 

 

If the 5 percent growth Tax Filer growth rate was applied to Thunder Bay’s population in 2001, then in 2021 one would have a CMA population of 128,085.  So, in response to the question of whether or not there are more people living in Thunder Bay than the official census count states, the answer it is perhaps so.  Even so, it is not the tens of thousands of people that seems to have seized the imagination of local politicians lobbying for more resources.  At least that is assuming that these tens of thousands of additional people have employment and are reporting an income.  Of course, if they are not working and therefore not reporting an income or are working and not reporting an income, well those are entirely different matters that should definitely concern the federal and provincial governments.

 

 

 

Delving deeper into the numbers, Figure 2 plots the average annual growth rate of the number of T1 Tax filers over the period 2001 to 2021 for Thunder Bay, as well as Toronto, Hamilton, Greater Sudbury, and Ontario as a whole.  It appears that Thunder Bay’s average annual tax filer growth rate is well below that for Ontario and Toronto but also Hamilton and Greater Sudbury.   Thus, another indicator that while we are growing, we are not growing as quickly as other population centres. 

 

 

 

Finally, Figure 3 plots average annual T1 Tax Filer Income and it illustrates that while average income has grown, Thunder Bay is below Ontario and also below the other three comparison cities in the chart.  As of 2021, average tax filer income in Thunder Bay is $53,289 compared to $56,691 in Greater Sudbury, $57,936 in Hamilton and $59,410 in Toronto with the average for Ontario at $56,893. Given that average rents and cost of living in Thunder Bay have grown to levels not incomparable to southern Ontario cities, this would suggest that many in Thunder Bay are currently quite stretched when it comes to their finances.

 

So, there you have yet another set of performance indicators on Thunder Bay’s economy. 

Population, Growth and Statistics in Thunder Bay

 

The City of Thunder Bay’s population according to the Census of Canada has remained essentially the same since the 1970s with some minor growth in the surrounding CMA.  This has occurred while elsewhere in the province and country, population soars.  Indeed, the city’s growth rate between July 2021 and July 2022 while positive at 0.2 percent, was actually the lowest in Canada for cities with populations above 100,000. 

 

With every census, there are the usual concerns with stagnation but despite the census evidence, there are actually two narratives when it comes to population in Thunder Bay.  One story is that given the city’s growth rate in population, there is a lack of economic growth and stagnation is a real concern given that population is attracted to economic opportunity.  When combined with the fact that the city and region appear to be aging faster than the rest of the province, the prospects for a more dynamic future look increasingly precarious.  However, the other story often voiced by local officals is that Thunder Bay’s population is much larger than the official population figures indicate.  In this narrative, Thunder Bay is an attractor for a transient regional population that comes in and makes use of its services. 

 

Even the current Mayor of Thunder Bay recently was quoted asserting that “he believes there are 15 per cent more people than recorded by Statistics Canada, adding that’s where a lot of the city’s financial problems come from, having to provide services for people that aren’t officially on the books, and hence aren’t counted when senior levels of government hand out transfer payments.” More directly, he said: ““We’ll ride with 120,000, but the police know, the hospitals know, the health-care system knows, and even the mercantile areas know it’s more than that. There’s more people around and if you spent one hour at city hall you’d know there are a lot more people wandering around the city than actually meet any census.” With an offical City population of 108,843 and a CMA/Metro population of 123,258, the mayor’s assertion suggests that Thunder Bay’s actual population range from City to CMA is from about 125,000 to 142,000.

 

Of course, such assertions would be useful if accompanied by time series data from police, paramedic, and hospital services though even that of itself is not sufficient.  After all, it is possible to have population growth flat, but usage rates rise.  With more use per capita, even with flat population growth, one could see paramedic or police services rise in total incidents.  Indeed, rising usage for hospital and paramedic services could be a function of a larger transient population or it could also be the result of an aging population.  However, without more detailed data, simply saying “if you spent one hour at city hall you’d know there are a lot more people wandering around the city than actually meet any census” is probably not going to cut it with the city’s governmental transfer partners. 

 

 

 

In the search for other approaches to the numbers, another way at looking at growth in a city is through federal tax filer data collected by the Canada Revenue Agency and disseminated through Statistics Canada.   The accompanying Figure 1 presents an index for the number of tax filers and their dependents for the period 2000 to 2021 for Ontario as a whole and a number of its major cities with the year 2000 set at a value of 100.  Over this period, the total number of tax filers in Ontario rose from 11,331,080 to 14,248,730 which when normalized with 2000 equal to 100 means Ontario went from 100 to 125.7 for an increase of 25.7 percent (See figure 2).  Over the same period, Thunder Bay went from 120,140 to 119,180 which when normalized goes from 100 to 99.2 for a decrease of -0.8 percent.  Indeed, of the cities on these two charts, Thunder Bay is the only one that sees a decrease in the number of total tax filers and dependents.

 

 

 

Does this mean that the mayor is wrong? Not necessarily. Given that the assertion is that these additional users of services are transient or temporary population, there is no reason that they would be registered with a residential address in Thunder Bay for income tax purposes.  All these figures do is confirm the official narrative from the Census and Statistics Canada that Thunder Bay’s population is essentially flat and has been for quite some time.  If there are indeed a large number of unofficial residents moving to and from the city using its services, then Thunder Bay needs to do a better job of presenting a credible statistical method of capturing that population.

Measuring Ontario: Introducing "The Polygon"

 

Happy 2023! This is the first post of the year.  Northern Economist started out as a blog dealing mainly with Thunder Bay and northern Ontario economic and policy issues but over the years the posts have branched out into a wider range of topics with Ontario as a whole much of the focus.  For 2023, I will be looking at Ontario issues a lot more given Ontario’s importance as an economy in its own right not only within Canada but indeed the world economy.  At 14.2 million people, Ontario is the largest province in Canada making up 37 percent of its population.  Within North America, if Ontario was a US state, it would be the fifth largest in terms of population coming in between New York (19.3 million) and Pennsylvania (12.8 million).  If Ontario was a country, it would be the 75^th largest country in the world by population. And as for its economic size, with an estimated GDP of 956 billion dollars in 2021 ($707 billion USD), Ontario would be among one of the 25 largest economies in the world.  Yet, most of Ontario’s population and economy is highly concentrated in a rather small geographic area as illustrated in Figure 1.

 

 

 

As part of getting to Figure 1, let me review some of the other ways of looking at Ontario's population and economy in terms of boundaries.  Ontario’s population has been growing robustly and this robust growth is a factor -along with low productivity and business investment - why per capita GDP lately has not been growing as fast.  Ontario’s population can be looked at a variety of different lenses – economic regions, CMAs or municipalities.  Ontario used to be a very rural province but as industrialization progressed by the early 20^th century half of its population lived in urban areas.  Today, over 85 percent of Ontario’s population is urban and it is increasingly being concentrated in a number of large urban areas chief of which is the GTA. 

 

 

 

Figure 2 plots the ranked populations of Ontario’s CMAs.  A CMA (Census Metropolitan Area) must have a total population of at least 100,000 of which 50,000 or more must live in the core.  Generally a CMA is formed of one or more adjacent municipalities and CMAs and municipalities bearing the same name usually differ in size.  For example, the City of Hamilton is just over 500,000 but its CMA is closer to 800,000 people.  The largest CMA in Ontario is the Toronto clocking in at 6.6 million.  Next comes the Ottawa CMA at just over one million, and then comes Hamilton at over 800,000 and they fall away after that in size with Belleville at about 114,000. 

Figure 3 shows the population share of these CMAs and they show the Toronto CMA – the GTA – accounting for nearly half of Ontario’s population.  Indeed, the GTA, Ottawa and Hamilton together account for 60 percent of Ontario’s population, the remaining CMAs account for 25 percent and the rest of Ontario represents 15 percent of the population.  

 

 

 

Another way of looking at the distribution of Ontario’s population is via the Economic Regions used by Statistics Canada and the provincial government – which total eleven.  These are broader geographic entities covering specific parts of the province and contain not only CMAs and municipalities but also all the other urban entities whether they are villages, townships, etc… as well as rural areas.  Think of them as the eleven kingdoms of Ontario.   Figure 4 ranks the regions by population size and again the Toronto (GTA) region at 6.9 million people is the largest followed this time by Hamilton-Niagara at 1.6 million and the Kitchener-Waterloo-Cambridge region at 1.5 million.  The region centered on Ottawa comes in fourth place and the much of western Ontario followed by the north and east.  At 241,000 people the Northwest is Ontario’s smallest economic region by population size.  Figure 5 plots the distribution of population by region and Toronto and the adjacent regions of Hamilton-Niagara and Kitchener-Waterloo-Cambridge account for two-thirds of Ontario’s population.  Eastern Ontario – consisting of Kingston-Pembroke and Ottawa together account for 13 percent.  Western Ontario including Stratford-Bruce is 11 percent the remaining largely northern regions – Northeast, Northwest, Muskoka-Kawartha account for nine percent.

 

 

 

 

 

As total output is well correlated with total population, these rankings are also pretty good indicators  of the economic size  of these regions.   However, these CMA and economic regions are just one way of dividing up the province geographically.  Here is another. Take a map of Ontario and starting at Barrie, draw a line to Oshawa and then to the end of the Niagara peninsula just below Niagara Falls, and then continue up to Kitchener and back to Barrie.  You get a rather nice looking polygon that on a map of Ontario looks a bit like a postage stamp in terms of its size.  Let's look at figure 1 again to better introduce "The Polygon'.

 

It turns out nearly two-thirds of Ontario population and just over two-thirds of its economy is clustered in this small polygon going from Oshawa to the end of the Niagara peninsula and then to Kitchener-Waterloo and finally out to Barrie with Toronto and the GTA  approximately in the center.  This small postage stamp area relative to the rest of the province – See Figure 1 again -  has most of Ontario’s economy and population concentrated. “The Polygon” is essentially the GTAPlus and while Toronto since confederation has always been Ontario’s largest city, its dominance of the province’s economy and population has grown to an extent that was unimaginable in the 19^th century when Ontario was a more dispersed province in terms of its economic activity and population.  Much of this dominance however is rooted in the growth of a regional economy as demarcated by the Polygon. More on that in a future post.

Income Growth in Canada: The Regional Results May or May Not Surprise You

Statistics Canada has just released its data on the income of families and individuals in sub-provincial areas for 2019.  There are two aspects to any comparison of census metropolitan areas in Canada - the level of income and the growth in that income.  The first figure below plots median after tax income of census families and persons not in census families by CMA for 2019 and the results show that higher incomes are a feature of western cities and also smaller centres.  Calgary and Edmonton are in first place followed by the Ontario part of Ottawa-Gatineau but Saskatoon, Guelph, and Regina are also up there with median incomes above $60,000.  Thunder Bay and Sudbury fare quite well also and are at the top of of the list at $57,510 and $54,780 respectively.  Canada's major metropolitan centres - Vancouver, Toronto and Montreal - do not fare as well coming in the bottom third of this list.  The five lowest median incomes are mainly in Quebec with the addition of St. Catharines-Niagara in Ontario.  In many respects this is not that big of a surprise.  Smaller cities especially in resource based regions tend to have higher incomes. The big cities have a lot of very high income people but also a lot of low incomes bringing down the average.

 

What is more interesting is where the growth has been over the last five years.  The next figure presents the percentage growth in median after-tax income of census families and persons not in census families by CMA between 2014 and 2019.  Vancouver and Montreal saw the largest growth at 6.8 and 6.4 percent respectively.  Indeed, cities in Quebec and BC dominate the top rungs in terms of median income growth with an Ontario city - Toronto - coming in 9th place.  Sudbury comes in the middle of the pack at 1.4 percent and Thunder Bay is in the bottom third with its median income growing barely one percent over the course of five years.  Cities in the west - hard hit by the resource sector downturn - see negative income growth along with St. John's in Newfoundland and Labrador which is at the bottom at -4.9 percent.  However, the high tech Kitchener-Cambridge-Waterloo area also saw negative income growth during this five year period. 

 

 

British Columbia and Quebec have seen the best growth over the last five years with cities in western Canada experiencing the worst growth and everyone else somewhere in between.  The broader GTA from Oshawa to Niagara Falls and is not doing as well as Quebec or British Columbia and of course these numbers are all from before the pandemic.

Thunder Bay's Population Growing

Statistics Canada has just released its population estimates for sub-provincial areas as of July 1, 2019 and it appears that Thunder Bay's population -  while one of the slowest growing of Canada's CMAs - is nevertheless growing.  On July 1st 2019, Thunder Bay's Census Metropolitan Area reported 127,201 people which is an increase over the previous year of 0.7 percent.  Of the 36 major CMAs, Thunder Bay ranked 32nd and its growth rate was larger than the other major northern Ontario city on the list - Sudbury - which came in at 0.4 percent.  Population growth rates ranged from a high of 2.8 percent for Kitchener-Cambridge-Waterloo to a low of -0.1 percent for St. John's with the Canadian CMA average being 1.7 percent.  The accompanying chart presents the population growth rate rankings for all of the CMAs.  So, as far as things demographic go, this is pretty go news.  Thunder Bay is not shrinking.

Which Federal Party Can Open the Door to Thunder Bay's Employment Growth?

With the federal election into its home stretch and the vote scheduled for tomorrow, voters in Thunder Bay have to decide who to vote for.  Needless to say, it has been a disappointing election given that the major parties – as well as the smaller ones – have presented grandiose expenditure visions that are for the most part fiscally unsustainable.  Moreover, much of the campaign has been not on policy but on opportunistic promises with major efforts expended on digging up dirt on opponents, mixing it with a little self-righteous water and then spattering it about in the hope that it sticks somewhere. 

When it comes  to making a ballot-box decision, the prevailing sentiment on the street seems to be that it is hard to choose from a set of equally unpalatable national parties.  So, the next best approach might be: let us look locally and make the decision, based not on what might be best for the country, but what might be best for Thunder Bay.  Here too, the answer is really quite muddy as ultimately what is best for Thunder Bay is making sure that at least one of the ridings is with whoever ends up as the governing party.  However, even that is a difficult game to play given that we are probably looking at a minority government situation.  And such strategic behaviour is made even more difficult by Thunder Bay's historical genetic aversion to any federal choice but Liberal - except when they seek to punish the Liberals by voting New Democrat.  Thunder Bay has not elected a federal conservative since the 1930s but then oddly wonders why conservative governments do not grant its wishes.

In terms of what is best for Thunder Bay, needless to say a government that promotes economic growth and diversification is always a safe bet but that can often only be judged years after the fact.  The current north side incumbent who is also a member of the present governing party certainly points to the last four years as a period of economic growth for Thunder Bay and northwestern Ontario in part due to the “millions of dollars coming into our area” which she no doubt ascribes to her government and her role as a Minister of the Crown.

Quantitatively assessing growth in Thunder Bay and the region is never easy but a glance at employment numbers is one way of providing an evidence-based attempt on how much growth there has been.  Between 2014 and 2018, total employment in Thunder Bay has indeed grown by 3.6 percent – from 61,500 to 63,700 jobs – which is actually not bad given that Ontario over the same period increased by 5.3 percent.  However, when employment is examined in a longer-term framework using the period from 2001 to 2018 – see Figure 1 – it is still within the traditional employment range of the last two decades.  We basically bounce up and down between 60,000 and 65,000 jobs and never seem to break out of that corridor in any sustained fashion.  Between 2001 and 2018, Thunder Bay’s employment grew 3.4 percent while Ontario grew 22 percent. 

 

What is also interesting as shown in Figure 2 is when employment growth by occupational category over the period 2014 to 2018 is examined. The most employment growth since 2014 has been in occupations related to arts and culture (26.7%), health (22.2%), natural and applied sciences (17.6%), manufacturing (13.3%) and law, social and government services (12%).  However, sales and services, business and finance, and construction have all seen declines.  As for the manufacturing resurgence, given the 550 jobs slated to disappear at Bombardier, manufacturing is poised to continue the decline that has been underway since 2001.

 

So, has Thunder Bay’s employment grown over the last four years?  Yes, but there are important qualifications given the dynamic nature and unique features of any local economy.   Here in Thunder Bay jobs are both created and destroyed but in almost perfect balance over time so as to keep total employment locked within a narrow corridor.  This corridor has remained the same for decades and Thunder Bay remains in an overall total employment stasis despite the efforts of two growth plans - one provincial and the most recent federal.   This is unlike Ontario as a whole where jobs are both created and destroyed but on net over the last 20 years many more jobs have been created than have been destroyed.  In choosing who to vote more tomorrow, voters need to think long and hard on which party they believe can actually open the door to getting us outside our historical corridor of employment stasis.

Thunder Bay Airport Flying Higher

Thunder Bay Airport (YQT) has seen another year of growth hitting an all-time high for passenger numbers in 2016 by exceeding 800,000 passengers for the first time – 807,041 passengers to be exact.  Some of the recent growth has come from the depreciation in the Canadian dollar relative to the US dollar, which has attracted Americans away from airports in Duluth and Minneapolis.  This is certainly a welcome development given that market size in northwestern Ontario is relatively stable given population trends. This is also a regional success story and according to the Thunder Bay International Airport Authority’s (TBIAA) own estimates generates an estimated $645 million dollars in GDP annually and creates 5000 jobs. 

And of course, one does not need an economic impact study to see the importance of better air connections to Toronto with three airlines now competing for your business and offering on weekdays a total of 16 flights daily (Air Canada-6; Porter – 6; Westjet – 4).  When one adds seasonal flights to tropical destinations as well as assorted regional airlines like Wasaya and Bearskin, It is indeed a golden age for air travel out of Thunder Bay.

Figure 1 plots the total number of passengers out of Thunder Bay airport and they show an increase from 503,428 in 1997 to 807,041 in 2016 – an increase of 60 percent.  The average annual growth rate of passenger volume over this period has been 2.6 percent but there have been some fluctuations as Figure 2 illustrates.   


 
The years 2002, 2005 and 2008 saw large dips in the growth rate as a result of the forest sector crisis and the onset of the Great Recession.  There was a substantial rebound starting in 2009 but 2014 and 2015 also witnessed a flattening out of growth.  As a result, the increase of 4.5 percent in 2016 is certainly quite welcome and hopefully represents the start of a new growth curve similar to what occurred after 2009.  If this new phase of growth is being based on American travelers out of Minnesota taking advantage of a stronger US dollar then the exchange rate as well as border crossing issues will be crucial variables.