NORTHERN ECONOMIST 2.0

Friday, 14 April 2017

Economic News Around the North: April 14th Edition

Well, we are heading into the Easter weekend. Spring is a time of rebirth and who knows, after two decades of slow growth, perhaps the north's economy will finally resurrect itself in the third. On the other hand, Good Friday this year coincides with the anniversary of the sinking of the Titanic. Here are some of the stories that I felt were of economic significance for northern Ontario over the last week or so.

Gas prices soar in city. TbNewswatch, April 13th, 2017.

Well the price of gas has shot up again, just in time for a long weekend but it is a phenomenon that hit the entire province. If you want some insight on Canadian gasoline prices in general, there is an old post I did on gas prices on Worthwhile Canadian Initiative that also attracted quite a few comments that provided some interesting points. The long and short, in my opinion, prices are higher because the companies can get away with charging more. Price differentials across regions have converged over time and this may signify greater market power on the part of gas companies.

Alexander Henry one step closer to returning home. CBCThunderBay. April 11th, 2017.

There seems to be some support for relocating the former icebreaker Alexander Henry from Kingston to Thunder Bay's waterfront. In principle, this will be an excellent addition to the waterfront as it can serve as the core exhibit for a transportation museum. This might mesh in nicely with the plans for a grain museum which is being worked on by Nancy Perozzo's group. As well, there are plans to relocate the Thunder Bay Art Gallery to the waterfront also. When one looks at the restaurant development in the Waterfront area combined with the location of Magnus Theatre and the long-term plans to place an Events Centre in the area, one can finally see a substantial entertainment district coming into shape. The one caveat - customers and money. I know, presenting caveats and pros and cons does not go over well with local movers and shakers who prefer expressions of cheerful mindless optimism when it comes to economic development in the north but Thunder Bay's tax base is under stress and the city's population base and market size are limited. Can Thunder Bay become a tourism destination with its central Canadian waterfront marked as "The Mid-Coast?" Who really knows?

Thunder Bay taxi bylaw causes concern for council, taxi companies. CBCThunderBay. April 11th, 2017.

Getting a taxi in Thunder Bay is a ordeal. If you ever needed a taxi in the middle of a weekday afternoon on short notice, forget it as they are all engaged in "school runs". This is another example of how dependent even the private sector in northern Ontario is on public sector spending. I won't even get into trying to get a taxi at the airport or late on a weekend after an evening out or the price. Supply constraints have been very profitable for Thunder Bay taxi companies and by taking five years to re-write the taxi bylaws, Thunder Bay City Council has been aiding and abetting a cozy oligopoly.

Other Thunder Bay economic news:

First salty arrives in port. TbNewswatch. April 8th, 2017.

Grain shipments make for busy March at Thunder Bay port. CBCThunderBay. April 5, 2017.

Well, this has all been rather Thunder Bay centric to this point. In other news:

Sudbury loses 400 jobs in March. SudburyStar.com. April 7th, 2017.

Yet, things are going to get better as the Canada Revenue Agency has announced it is adding 543 full-time jobs to the Sudbury tax centre.

Council sets criteria for location of new events centre. CBCNewsSudbury. April 12th, 2017.

Sudbury appears to be moving forward at a rapid clip with a site selection team in place. However, four of the five members of the selection team appear to be directly related to Sudbury's municipal government with a consultant from PWC as the fifth. It would have been useful from an optics point of view to have a more arm's length group of experts. Apparently the criteria for site selection includes cost, economic impact and parking. In the end, it is all about weighting the criteria and if parking carries the biggest weight, then one should expect the greenfield site outside of the downtown as the final destination.

Here are some interesting items from North Bay.

Casinos siphoned millions from Sudbury, Brantford and Thunder Bay in 2014-15. Nuggest.ca. April 12th, 2017.

And in another tourism infrastructure related story. ..

North Bay city council votes to keep Dionne house. CBCNewsSudbury. April 5th, 2017.

The only surprise here is that the City of North Bay was actually considering giving the historically significant house to a group that was going to move it to a "pioneer village" project 70 miles south of North Bay. Why stop there, maybe they should consider moving it to Thunder Bay's waterfront - a nice plot of land between the yet to be completed hotel and the new condos?

And in the relentless and ongoing efforts to attract new business activity via marketing techniques....

Invest Sault Ste. Marie website launched. SaultOnline. April 6th, 2017.

Sault needs to find gaming 'sweet spot'. SaultStar.com. April 9th, 2017.

And in Timmins, this story about the mining sector.

Gold is the new economic driver for Ontario mining. TimminsPress.com. April 12th, 2017.

There were a number of interesting comments made. I was particularly intrigued by the Red Tape Challenge - an Ontario government consultation program for mining asking for input on what could be done to make the mining industry work better with government. Dealing with red tape by engaging in yet more consultation seems like a typically Ontario way to address questions of efficiency and regulatory barriers. However, with respect to gold as a driver, according to the president of the Ontario Mining Association:

“What has changed in Ontario in the last 10 years is that gold is now a larger contributor than nickel and copper. That’s new and it is a combination of the price of the commodities and the number of new discoveries of gold and the new investments around gold,” said Hodgson.

Have a nice long weekend.

Tuesday, 11 April 2017

How Many Jobs Have Been Created in Thunder Bay?

One of Thunder Bay's Members of Parliament and currently Minister of Employment, Workforce Development and Labour - Patty Hajdu - asserted in a letter to the Chronicle-Journal this morning that "In the last eight months alone, the Canadian economy has created more than a quarter-million full-time jobs. In fact, 1,600 jobs new jobs have been created here in Thunder Bay since we were elected." Needless to say, this piqued my curiosity and so I went off to Statistics Canada to see what Thunder Bay's total employment numbers have looked like since October of 2015 - the year the Trudeau Liberals took office.

The results are provided in Figure 1, and are monthly seasonally un-adjusted total employment (three month moving average) for the Thunder Bay CMA. The numbers show rising monthly employment from October 2015 to August 2016 and a decline since. In October of 2015, total employment in Thunder Bay was 59,100 jobs and the total employed reached a peak of 61,300 by August of 2016. This represents an increase of 2,200 jobs. However, between August of 2016 and March of 2017, employment then declines from 61,300 to 59,300 - a drop of 2,000 jobs. So, based on these numbers, from October of 2015 to March of 2017 Thunder Bay goes from 59,100 to 59,300 jobs for an increase of 200 jobs.

Of course, while these numbers are three month moving averages, they are not adjusted for seasonality. If we go from October 2015 to October 2016, employment grows from 59,100 to 60,800 for an increase of 1,700 jobs. If we go from March 2016 to March 2017, we see total employment grow from 59,500 to 59,300 jobs - a decline of 200 jobs. Based on Figure 1, Thunder Bay may have indeed seen the creation of 1,600 new jobs since the election of the Trudeau Liberal government but it also appears to have lost nearly as many jobs making for little in the addition of net new employment.

Saturday, 8 April 2017

Evaluating Northern Ontario's Growth Plan-Part III: Investment Spending

This is the third in a series of posts in which I am presenting evidence evaluating the Growth Plan for Northern Ontario, which was released on March 4, 2011. The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy. The goal was strengthening the economy of the North by:

Diversifying the region's traditional resource-based industries
Stimulating new investment and entrepreneurship
Nurturing new and emerging sectors with high growth potential.

While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data. My first post was an overview of the series while my second post looked at employment. In this third post, I will be looking at new investment spending as measured by building permits.

Evaluating Northern Ontario's Growth Plan-Part II: Employment Generation

This is the second in a series of posts in which I will present evidence in an attempt to evaluate the Growth Plan for Northern Ontario, which was released on March 4, 2011. The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy and its ultimate goal was to strengthen the economy of the North by:

Diversifying the region's traditional resource-based industries
Stimulating new investment and entrepreneurship
Nurturing new and emerging sectors with high growth potential.

While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data. In this first post, I will be looking at employment.

Economic News Around Northern Ontario: April 2nd Edition

Well it has been a busy end of term not just on campus but across northern Ontario. Here are the items that caught my interest over this last week in terms of general economic significance for the region. The first two stories deal with the MPAC assessments this week.

Commercial, industrial property reassessments 'absolutely devastating' says Thunder Bay council, CBC.ca. March 29^th, 2017.

Economists weigh in on municipalities' spat over property reassessments, CBC.ca. March 30^th, 2017.

This is a municipal public finance story that has been many years in the making. Essentially, as a result of appeals and a ruling by MPAC, the City of Thunder Bay will have to refund $2 million to several retailers and grain elevator companies. While this refund has been planned for, it does mean a reduction in revenues from these properties in the future. This is part of a long-term trend away from business/industrial properties towards residential ratepayers and over the course of 25 years in Ontario has meant a shift in the share of property taxes away from the business/industrial sector and onto residential ratepayers. While one might argue that in the past, the business/industrial sector was bearing too large a share, the situation has certainly gone the other way. Of course, the real question is what should the optimal division be between the share of property taxes paid by residential ratepayers and business/industrial one. In Thunder Bay, the situation has been aggravated by the industrial decline of the last 25 years which has seen several pulp and sawmills as well as grain elevators shut down, For my take on property taxation in Thunder Bay, see my January 24th 2017 post. While there is certainly an economic case to be made about the division between residential and business property taxation, in the end the balance will be a political decision.

In other news:

Sudbury loses in 3rd bid for Canada Summer Games, CBC.ca. March 30^th, 2017.

The Niagara Region will be hosting the 2021 games beating out bids from Kitchener-Waterloo, Ottawa and Sudbury. The Games are an opportunity to showcase your community and acquire some new infrastructure but at the same time they do come with some expenses. Getting them can be a mixed blessing but they are fun. I remember participating in the opening ceremonies of the 1981 games that were held in Thunder Bay. I was much more agile as a dancer then.

Budget could transform FedNor: MP, Chronicle Journal, March 31^st, 2017.

A lot is being made about the $25 million boost to FedNor as some type of trans-formative change to the agency. A similar spin in a story in North Bay.

Feds ‘rebuilding’ FedNor, nugget.ca. March 26^th, 2017.

The fact remains that FedNor's budget a decade ago was $76 million and last year it was $31 million and the $25 million is being spread out over 5 years. I guess I really would need to be sold on what FedNor actually is other than a fund to sprinkle some politically motivated funding on assorted projects to give some semblance to the idea that the federal government cares about northern Ontario's economic development. The minor increase in funding without some kind of vision of what FedNor is transforming to suggests treading water in a palliative care setting rather than trans-formative change.

In other news of concern to long-term regional infrastructure and the north's transportation role:

Soo Locks economic necessity; future worries USACE, Saultthisweek.com. March 28^th, 2017.

The Chamber of Commerce did a big presentation in Timmins last week (They are coming to Thunder Bay April 21st).

Report cites challenges for Northern economy, TimminsPress.com. March 29^th, 2017.

Other items:

North Bay commercial real estate: Leasing and sales to level off in 2017, North Bay Business Journal. March 21, 2017.

Facts ‘n’ Figures: Canadian mining by the numbers, The Northern Miner. March 28^th, 2017.

This last item presents some numbers for the provinces but since all of the mining in Ontario is a northern Ontario economic activity, it provides an interesting snapshot. Have a great week!

NORTHERN ECONOMIST 2.0