NORTHERN ECONOMIST 2.0

Sunday, 13 May 2018

When Will the Trans-Canada Be Completely Four-Laned Across Northern Ontario?

Ontario's provincial election campaign is in full swing and Thunder Bay Liberal party candidates and cabinet ministers announced the Liberal party's northern platform on May 11th. A key highlight of the plan was to completely four-lane the Trans-Canada Highway throughout the province from the Manitoba border to the Quebec border. As we all know, after years of lobbying going back to the 1980s and early 1990s, four-laning of northern Ontario highways finally commenced and has been underway for a number of years in two key areas - Thunder Bay to Nipigon as well as from Sudbury to Parry Sound. So, my question is - if we want to completely four-lane the Trans-Canada Highway, how long will it take to fully four-lane the Trans-Canada in northern Ontario?

So here is a quick back of the envelope estimate. Let us assume only the "southern" route will be completely four-laned. This is a 1,628 km stretch (based on Google maps) going from Kenora to Parry sound via Thunder Bay-Nipigon-Marathon-the Sault-Sudbury and Parry Sound. The stretch from Thunder Bay to Nipigon is about 109 km long with the commitment to four-laning announced in 2009. As of spring 2018, 30.2 km has been completed and another 19.5 km are underway. Based on the 30.2 km completed to date and a nine year completion date, we are looking at 3.3 km a year. If we want to be charitable and include the 19.5 km underway, then we are looking at about 50 km over 9 years or approximately 5.5 km per year as the highway completion rate.

The stretch from Sudbury to Parry Sound - part of the old Highway 69 - is 173 km long (again using Google maps). The provincial government announced the four-laning of Highway 69 in 2001 and to date 70 km from Parry Sound south to Port Severn have been completed and about 70 km from Parry Sound north to Sudbury is either complete or underway with the aim to be done by 2021. This still leaves quite a bit of highway to be started and apparently the remainder is in the engineering and property acquisition phase. So, based on the total of 140 km completed (including Port Severn to Parry Sound) since 2001 with completion scheduled for 2021, this means 140 km over 20 years or 7 km per year. The pace of northern Ontario highway four-laning is a little faster south of Sudbury.

So, take the total distance of 1,628 km and subtract what is underway or completed and you have about 1,438 km left to go. Let's make it a nice 1,400 km left as there already is some four-laned highway near the Sault and Kenora also. If we average the Thunder Bay-Nipigon and Highway 69 four-laning speeds, we get 6.25 km per year as the pace of highway four-laning in northern Ontario. At this pace, it will take 224 years to completely four-lane the remainder of the southern route from Kenora to Parry Sound bringing us to the year 2242. This as many of you should know is about 20 years before the events of Star Trek the original series which is supposed to take place between the years 2265 and 2269.

Needless to say, its going to be a long road, getting from there to here. Saying you are going to need faith of the heart to get there is probably an understatement.

Wednesday, 9 May 2018

Renting in Northern Ontario-You Are Richer Than You Think

When it comes to housing markets, what gets the most attention is the affordability of single detached homes particularly in large urban centres like Toronto and Vancouver. However, the high price of housing has boiled over into rental markets and it turns out that more Canadians are now renting than ever before. Over half of the new households formed since 2011 are apparently renting and the greater demand is being reflected in higher rents.

So, what are rents like in the five major northern Ontario cities? Figures 1 and 2 plot the monthly rent for one and two-bedroom apartments in major northern Ontario cities from 1992 to 2017 using data from Statistics Canada. In 1992, rent for a one-bedroom was the highest in North Bay at $510 monthly and lowest in Timmins at $451 while for a two-bedroom it was highest in Thunder Bay at $620 and lowest in Timmins at $565. By 2017, monthly rent for a one-bedroom was highest in Sudbury at $848 followed by Thunder Bay at $779. For a two-bedroom in 2017 Sudbury was the highest at $1058 followed again by Thunder Bay at $957.

Over the period 1992 to 2017, the annual average growth rate in rents for a one-bedroom was 2.4 percent in Sudbury, 1.9 percent in Thunder Bay, 1.6 percent in North Bay, 1.8 percent in the Sault and 2.2 percent in Timmins. Over the same period, for two-bedroom apartments, the average growth rate was 2.4 percent in Sudbury, 1.8 percent in Thunder Bay, 1.9 percent in North Bay, 1.9 percent in the Sault and 2.1 percent in Timmins. Indeed, these increases are pretty close to the inflation rate as measured by the CPI.

The results are informative – rents have gone up in all northern Ontario cities - but the pace of increase picked up after 2004. The average annual growth rate for one-bedroom apartments in these five cities was 2 percent from 1992 to 2004 and 3 percent from 2004 to 2017. For Greater Sudbury, rent growth was especially pronounced from 2004 to 2017 with an annual average growth rate of 3.5 percent for both one and two-bedrooms. Thunder Bay in comparison saw average annual growth of 2.5 percent for one-bedrooms and 2.6 percent for two-bedrooms. However, this period saw Sudbury with a mining boom whereas Thunder Bay experienced the forest sector crisis.

The higher growth rates in rent since 2004 coincide with the run-up in housing prices over the same period. Even with rent controls, as new tenants come into a rental unit, there is the opportunity to raise the rent to reflect market conditions and the market is getting tighter. As all first year economics students can tell you, the long-term impact of rent control policies is to reduce the stock of units below what they would have been. As a result, with rising demand, rents have climbed.

However, rents in Thunder Bay and Sudbury are still quite a bit lower than Toronto based on the numbers here. In 2017, a one-bedroom in Toronto rents out at $1194 – 41 percent more than Sudbury and 53 percent more than Thunder Bay. A two-bedroom in Toronto in 2017 rents out at $1403 – 33 percent more than Sudbury and 47 percent more than Thunder Bay. According to the Winter 2018 Conference Board CMA reports, in 2017, household income per capita in Toronto $47,548 compared to $48,742 in Greater Sudbury and $47,287 in Thunder Bay. Given that average incomes in Toronto are not really that much higher than either Thunder Bay or Sudbury it stands to reason that after paying your rent you will have a lot more disposable income left over in Thunder Bay and Sudbury relative to Toronto. This really should be getting greater play in the economic marketing of these two cities.

Tuesday, 1 May 2018

Gasoline Prices Are Going Up Again

Gasoline prices are on the rise in North America as a result of rising demand combined with more restrictive supply. An aspect of tightening supply comes as a result of more "cooperative behavior" between major suppliers Russia and Saudi Arabia which was recently highlighted in a report on NPR. Vancouver made the news with the highest prices on the continent hitting $1.62 a liter on Monday. Along with refinery issues in Washington State which supplies a portion of Vancouver's gasoline, part of the high price in Vancouver also is a function of taxes in that Vancouver has very high taxes on motor fuel and a new carbon tax came into effect this month.

While prices in Canada generally have headed up over time, there is a substantial range between the highest and lowest prices. The accompanying figure plots the monthly maximum and minimum price of unleaded gasoline at self service stations for 18 major centers as compiled by Statistics Canada over the period January 1990 to March 2018. The cities are:St. John's, Winnipeg, Regina,Saskatoon, Edmonton, Calgary, Vancouver, Victoria, Whitehorse, Yellowknife, Charlottetown, Halifax, Saint John, Quebec, Montreal, Ottawa-Gatineau, Toronto and Thunder Bay. Needless to say, the trend for gasoline prices over time is upwards (Figure 1).

What is also of interest is what appears to be a growing gap between the trend lines over time. For example, if you go back to January of 1990, the price per liter of unleaded gas ranged from a low of 47.9 cents in Calgary to a high of 58.9 cents in Yellowknife - a gap of 11.1 cents. In March of 2018, the price ranged from a high of 151.4 cents in Vancouver to a low of 106.9 cents in - a gap of 44.5 cents. Indeed, if one plots the gap between the highest and lowest prices, one finds that it has grown over time as shown below (Figure 2). This of course suggests that over time there has been increased dispersion of gasoline prices across cities and regions in Canada.

However, one needs to standardize for the mean and if one takes the standard deviation of these gasoline prices by month and divides by the average, one gets a measure of dispersion known as the coefficient of variation and it tells a slightly different story (Figure 3). The period from 1990 to about 2009 was one of a declining coefficient of variation - that is prices across these cities were actually becoming less dispersed. However, since 2008, the coefficient of variation has been rising suggesting greater dispersion. The overall linear trend from 1990 to 2018 however shows a declining coefficient of variation.

So, the long-term trend for gasoline prices in Canada is that they are on the way up. The range in prices between highest and lowest in cents per liter is also growing with the gap across major cities as much as 45 cents per liter. However, in terms of dispersion as measured by a coefficient of variation, the overall long-term trend since 1990 is for a declining coefficient of variation - that is less dispersion. However, there are two periods - declining dispersion from 1990 to 2008 and then a rebound towards more dispersion of prices since 2008 to the present.

As a final bonus. here is a plot of Thunder Bay's monthly unleaded gasoline prices since 1990 compared to the 18 city median over the same period (Figure 4). Thunder Bay's prices are pretty close to the median but since 2008 have been more often than not above the median. In March of 2017, the average price in Thunder Bay was 110.7 cents per liter compared to the 18 city median of 104.8 cents. In March of 2018, the monthly price in Thunder Bay was 123.6 cents per liter compared to a median of 121.8 cents. Anyway, above the median or not, it looks like prices are going up. Thunder Bay has seen a year over year increase of nearly 12 percent. The increase for the 18 cities in this analysis over the same period in the median price was 16 percent and for the average monthly price it was 13 percent. So to date, we have been lagging a bit when it comes to price increases.

Sunday, 29 April 2018

Choosing Thunder Bay's Next Mayor

O for a Muse of fire, that would ascend

The brightest heaven of invention,

A kingdom for a stage, princes to act

And monarchs to behold the swelling scene!

Henry V

The municipal election process in Thunder Bay culminating this October is starting to pick up steam and there are now two candidates in the running for mayor: Iain Angus and Larry Hebert. Both are long time stalwarts of Thunder Bay City Council and have contributed years of valued service to the community in assorted capacities. Both also topped the polls last election for the position of Councillor at Large with Angus at 15,861 votes and Hebert at 14,664. Given that the two top contenders for the Mayor’s Chair last election came in at 14,463 (Keith Hobbs) and 12,051 (Ken Boshcoff) votes, they are certainly credible contenders for the position of Mayor.

Of course, when one looks at the current composition of City Council, there is indeed an embarrassment of riches when it comes to potential candidates for Mayor. It is always time for a female Mayor in Thunder Bay and given Rebecca Johnson’s sterling career of community service, one would expect that she would also consider a run for Mayor. It would be credible given she garnered 14,620 votes last election in the At Large race. Frank Pullia has carved out a strong role both as an advocate for community causes as well as a strong showing in the finance portfolio at City Hall. At 14,112 votes last election, he is a key contender.

And of course, who can forget the ubiquitous Aldo Ruberto whose passion for quality of life issues in Thunder Bay plus 14,311 votes in the last At Large Race also puts him within reach of the Mayor’s Chair. There are also some strong candidates in the ward Councillor category – the names that particularly come to mind are Joe Viridiramo and Andrew Foulds. They are both high profile candidates committed to their city and with exposure across the community.

Of course, they cannot all be mayor but being the Mayor in Thunder Bay is important given the need for a sustainable economic future that embraces all the people of Thunder Bay and the leadership role that Thunder Bay plays in the region. It is important to have as strong a slate of visionary candidates as possible to generate the ideas we need to move forward. This election is an opportunity for defining debates and visions in the areas of economic development, First Nations relations and social and urban affairs and what better way than a strong Mayor’s race with many quality candidates.

It should be noted that the race for Mayor need not be relegated to current City Council incumbents. There are many individuals in Thunder Bay who also have strong community leadership credentials and it would be a shame if Ken Boshcoff or Shane Judge did not put their names forward again. Indeed, Shane Judge apparently will be running. It is also a shame that Lisa Laco has stated she is not running. And then there is the business community. Having someone prominent from our local business community step up would also bring a vital perspective to the municipal election especially with respect to issues of business development and taxation.

This is a crucial time for picking Thunder Bay’s next Mayor and council given the many challenges that have faced our community over the last four years and that will continue in the future. We are also picking a Mayor who will be the public face of our community at an important milestone – the 50^th anniversary of Thunder Bay’s creation that will occur in 2020. Having a strong mayor’s race full of vigorous visions would be the ultimate community contribution our community leaders could make. Having a strong slate of candidates for Mayor would be a vote of confidence in the importance of municipal politics in Thunder Bay and the importance of civic leadership in shaping our future. It is time for our accomplished community leaders to step up to the leadership challenge and run for mayor.

Friday, 20 April 2018

A Unity Circle: Celebrating Thunder Bay

The new Thunder Bay City Council that will be elected in October of 2018 will have a number of economic and social challenges on its plate but there is one item that should be a source for celebration. The year 2020 will mark the 50^th year of the amalgamation of the twin cities of Port Arthur and Fort William and the rural townships of Neebing and McIntyre to form Thunder Bay. The urban history of the Lakehead communities actually goes back to the late nineteenth century and both Port Arthur and Fort William obtained city status in the first decade of the twentieth century as the great boom drove their urban growth and development.

I always thought it was somewhat of a shame that not more effort was made to celebrate the centennials of the twin cities circa 2006-07 but I suspect the history of urban rivalry between the two cities was such that no one really wanted to deal with it. However, we now have an opportunity to celebrate amalgamation and I think it should go beyond simply a number of commemorative events and the publication of self-congratulatory histories. I think an effort should be made to leave behind something concrete that adds to the city’s environment and is a legacy for the future.

As a result of its urban history of being two separate cities, Thunder Bay has always lacked a more centrally located focal point that could serve as a gathering place for the public to celebrate events. Many cities around the world often have public squares or sites that can serve as gathering points for celebrations and events and that act as emblems for the city. Think of Trafalgar Square in London, for example or Washington Square or Times Square in New York or the iconic four columns in Barcelona.

We of course cannot reproduce these types of landmarks nor should we but I think as a city we can take the step of creating a public space that celebrates the creation of Thunder Bay as well as points the way to a future that includes all its residents. Somewhere in the Intercity area, preferably close to the banks of the McIntyre River – the old boundary between Port Arthur and Fort William – we should consider putting into place what I would like to call Unity Circle. It would be a celebration of amalgamation and the bringing together of the twin cities to form Thunder Bay and would also look towards the future by including First Nations.

Unity Circle would be a public space in the Intercity area that would contain a number of columns - I suggest six large columns of identical height arranged in a circle with the columns representing the original four municipalities that came together to form Thunder Bay, the City of Thunder Bay and Fort William First Nation. At the center of Unity Circle there would be a flame that would burn perpetually. I think a message of unity is very important given the many social challenges that have faced Thunder Bay over the last decade and may help represent a way of moving forward into the future.

So, it is just an idea. The actual piece of land and location is of course one of those details best left to the politicians and administrators and community leaders who make these decisions. The design of the space and a suitable set of commemorative structures is also of course up for discussion and debate. What is most important right now is the concept. The concept of a Unity Circle is something that celebrates our history and looks forwards by leaving the legacy of a substantial central public space that could form the focus of future public community events. I think it is worth consideration.