Natural Resource Resurgence in the Northwest

There has been good news when it comes to the forest sector in northwestern Ontario in the wake of nearly a decade of doom and gloom.  Softwood lumber prices have rebounded and there is expanded production underway at sawmills in Ear Falls and Kenora with the two plants now providing about 250 jobs.    In White River, the previously closed sawmill has now been operating for about five years.  Resolute Forest Products just announced its third quarter profits were up and  it would pay a special dividend and its optimism for the future recently translated into an announcement that it would invest $53.5 million on its northwestern mill operations. 

According to the MNR, in 2006, there were 40 large active sawmills in Ontario (mills that processed more than 50,000 cubic metres annually) of which 34 were in northern Ontario.  There were 58 medium size mills (processing 5,000 to 50,000 cubic metres annually) in Ontario of which 14 were in northern Ontario. There were nearly 60 small sawmills in Ontario (less than 5,000 cubic metres in production annually) of which 19 were in northern Ontario.  The sawmill industry was distributed throughout the province, but large employment intensive mills were concentrated in the north.  By 2012, Ontario was down to about 97 mills – a 40 percent reduction from 158 to 97 sawmills. 

As for the pulp and paper mills, Canada as a whole saw a decline from 50 to 30 pulp mills between 2000 and 2014 – a reduction again of 40 percent.  Approximately over the same period, total employment in logging, paper and wood products in Canada fell from 308,664 to 190,651 – a loss of 118,000 jobs or a drop of about 38 percent.  As for northern Ontario, in 2003 there were 12 large pulp and paper mills in northern Ontario while by 2012 the number had gone down to 7 – a drop of 42 percent.  Since then, the mill in Iroquois Falls has also shut down and while there were plans for redevelopment it has since suffered an unfortunate fire.

The forest sector crisis in northern Ontario saw the loss of over 20,000 jobs in the northwest part of the province alone.  It was not just a downturn but in many respects the end of an entire way of life.  Well-paying industrial jobs in many small communities that supported a small-town friends and family oriented lifestyle vanished. After the destruction of the forest sector crisis that saw pulp and sawmills shuttered and significant employment losses, we are now seeing new investment and some employment recovery.  However, despite this recovery in investment and employment, it is unlikely that the size of the industry well ever again return to its former glory.

The following figures present an overview of the evolution of employment in northwestern Ontario’s resource sector.  Figure 1 plots the number of resource occupations defined by Statistics Canada as production, supervisors, technical, laborers and harvesting in natural resource, agriculture and related activities.  Note that these numbers include all resource activities and not just forest sector ones.  Still, the good news is that the number employed in resource occupations bottomed out in 2012 and has since been on an upward trend with the last few months of 2018 showing a distinct surge. In 2012, monthly resource employment in NW Ontario averaged 5600 whereas in 2018 to date it has been 7270 – an increase of almost 30 percent.  Much of this has been due to the mining sector but forestry has also played a role.

Figure 2 shows a similar trend, but it is annual resource employment by industry rather than occupation with resource industries defined as forestry, fishing, mining, quarrying, oil and gas.  Needless to say, for northwestern Ontario this would mainly be forestry and mining.  Here, the rebound seems to date from 2014 with annual employment going from 3000 in 2014 to 5100 in 2017 – an increase of 70 percent.  However, from 2002 to 2009 total employment plummeted from 9000 to just under 3000 - a drop of about 67 percent.

So resource employment is on the rebound, but we are nowhere near the peaks reached in the period from 2000 to 2003 just before the forest sector crisis took hold.  The remaining firms are more efficient and capital and technology intensive and therefore will not employ as many people for similar levels of output as produced a decade ago.  Still, the sector has survived and in some respects is even thriving which is good news.

So What Is the New Plan for Northern Ontario's economy?

As the Ford government forges ahead, we should soon expect to see evidence of what its plans for boosting the economy of northern Ontario will be.   Given the change of government, the previous Northern Growth Plan is gone and will not be mourned given that evidence of its positive impact was hard to come by.  The Northern Growth Plan was essentially a form of palliative policy care given that despite the lack of progress on the economic front, there were nevertheless numerous press releases and announcements to the effect that many things were happening in the north -usually announcements of government funding - and we should feel good.  As a strategy, it has even been embraced by the federal government.

Ontario is now apparently open for business and while that can certainly be beneficial for northern Ontario, it is necessary for the government to demonstrate what that actually means for the North.  During his recent visit to northern Ontario, the Premier reiterated his “open for business mantra” and stated a commitment to sectors like steel, mineral exploration and forestry.  His visits in late October to the steel facilities in the Sault, the opening of Harte Gold’s new Sugar Zone mine near White River and Thunder Bay for Resolute Forest Products investment announcement provided excellent photo opportunities for economic success but these were projects that have been in the works for some time.

It is now time for the Premier to demonstrate his commitment to growing the northern Ontario economy.  As to what the new approach will be, one can start by an examination of the election platform that brought the provincial Ford conservatives to office.  The northern platform was a five-point plan that involved:

• Developing Northern Resources, including the Ring of Fire.
• Moving forward with resource revenue sharing from mining, forestry and aggregates to help Northern towns and Indigenous communities share in resource development
• Ensuring hunting and fishing revenues go toward their stated purpose of conservation
• Cutting the aviation fuel tax for the North to reduce the cost of living in the North and,
• Bringing back passenger rail service to the North (which I take to mean the Ontario Northland and probably not full service across the north shore).

In terms of proposed implementation, the election platform of the victorious Conservatives said that a provincial conservative government under Doug Ford would:

1.     Build the roads to the Ring of Fire.

2.     Establish resource revenue sharing from mining, forestry and aggregates to help Northern and Indigenous communities share in the benefits of resource development by having the province take a portion of provincial revenues collected from aggregate licenses, stumpage fees and the mining tax and direct it to the local, host Northern and Indigenous communities. This was estimated at $20-$30 million in annual revenue.

3.     Ensure all hunting and fishing license fees are spent on wildlife conservation.

4.     Reverse the 148 percent increase to the aviation fuel tax for all Northern airports returning the aviation fuel tax to its original 2.7 cents per litre

5.     Bring back full passenger rail service to the North by first completing an environmental assessment of what equipment needs to be purchased and what upgrades need to be made to restore the service and then providing $45 million annually for operating costs.

Despite the flurry of activity with respect to announcements about promises made and kept, it remains that these five points and their associated implementation specifics have yet to be addressed.    How they will be implemented given the fiscal constraints the province faces will be an important issue.

In terms of fostering the northern Ontario economy, to these five points, I would add the freeing up of more Crown Land for cottage and camp development to provide the inputs to grow and develop a tourism service sector in the north that can be serviced out of its existing towns and cities. I would also urge extension of the highway twinning projects already currently underway to grow needed transport infrastructure in the north and hopefully improve upon the previous government’s anticipated completion date.

When these specifics will start to take firmer shape may be indicated in the November 15^th Ontario Economic Outlook and Fiscal Statement.  Until then, we wait.  Hopefully, the Ford government will repudiate the adage that while provincial governments go and come, the problems of the northern Ontario economy abide. 
 
 

Final Thunder Bay Municipal Election 2018 Analysis: Ward Races

It is now a week since the municipal election in Thunder Bay and as the dust settles I have been doing some retrospective looks at the races and outcomes and providing some vote tallies - first for the Mayoral race, then the At-Large competition and in this last election post - the races for the seven Ward councillors. Down below, I have seven figures detailing the distribution of the total vote in each of the wards and they differ from both the Mayor and At-Large results in that in most of them, the winners took a rather sizeable share of the vote - as high as 65 percent in one of the races.







 

 

A total of 39,222 ballots were cast for Ward councilors which is lower than the 41,108 cast for mayor.  This suggests that there were individuals who voted for mayor and not for their ward councilors.  This type of difference was also noted in the At-Large race as the total number of votes cast At-Large was smaller than the potential number given the total vote for Mayor.  As for the online/telephone and paper ballot results, there was not substantive difference in the ward outcomes across the two methods with the exception of Neebing where Lynda Rydholm had more paper ballots than Cody Fraser but Cody Fraser won with the online ballots.

The vote share of the winners ranged from a high of 65 percent for Shelby Ch'ng in Northwood to a low of 33 percent for Cody Fraser in Neebing. Current River and McIntyre had the next highest winning vote shares at 59 percent for Andrew Foulds and 50 percent for Albert Aiello.   After Neebing Ward, the next lowest shares were 42 percent for Brian Hamilton in McKellar and 44 percent for Brian McKinnon in Red River.  Kristen Oliver in Westfort won with 47 percent of the vote. On average, the winning vote share across these seven wards came in at nearly 50 percent  - 48.6 percent to be precise.



 

 

Given that the total vote share of the winning mayoral candidate was 34 percent while At-Large candidates won with 7 to 11 percent of total votes cast, it suggests to me that most Ward councilors can reasonably claim to have a stronger representative mandate from their respective constituencies than either the At-Large candidates or even the Mayor.  Of course, one of the reasons for the more fractured vote distribution in these other races was the large number of candidates.  Even in the ward races, there is some inverse correlation between the number of candidates and the vote share of the winner.  Neebing with the most candidates at five saw its winner take the smallest proportion of total votes while Northwood with only two candidates had the winner take the largest share.

Still, we have a system of 12 councilors and one mayor with five of the twelve councilors elected At-Large.  This hybrid system was due to the Larson compromise which attempted to deal with the strong interurban rivalries still around at Amalgamation in 1970 and the fear that having only ward based councilors evenly split between the two former cities would result in deadlocks.  We are nearly 50 years out from amalgamation and the case can be made that the time has come to revisit our municipal system of representation and consider whether we should go to either an all At-Large system or all Ward based system.  I think given how Thunder Bay has grown together over the last 50 years, there is less north-south antagonism and rivalry that needs the attention of At-Large candidates.  Moreover, I think the At-Large positions detract from the position of Mayor by adding 5 individuals who also have a city wide mandate.  There is less of a case to be made today for electing 5 mini-mayors especially given that the relative mandates and support for ward councilors is actually stronger.

There is also a case for reducing the number of councilors at the same time.  Thunder Bay has one municipal politician for approximately every 8,500 people while a City like Hamilton (with 15 councilors and a mayor) has one municipal politician for approximately every 33,500 people.  And then there is Toronto which given the latest reforms imposed by Premier Ford now has one municipal politician for about every 101,000 people.  Thunder Bay could easily go down to a system of either 10 councilors plus a Mayor or even 8 councilors plus a mayor with a redesigned set of ward boundaries.   While the actual costs saved are small, it would send a message of frugality to residents given the levels of property taxation were a much mentioned concern.

The new council has the opportunity to consider these types of changes especially as we draw near to 2020 and the 50th anniversary of Amalgamation and the creation of Thunder Bay.

Municipal Election Analysis 2018: Thunder Bay At-Large Race

The results of the October 22^nd municipal election in Thunder Bay also saw the election of five At-Large Councilors from a rather large pool of 26 candidates.  There are three new At-Large councilors though given two are former councilors (Giertuga and Bentz) there is really only one new face – Peng You.  Most of the actual change in the composition of Thunder Bay City council came at the ward level where there are four new faces (Aiello, Hamilton, Fraser and Oliver) out of the seven positions.  The new council in the end represents a significant amount of change that will contribute new ideas and approaches but not an overwhelming amount that might lead to a more bumpy ride.

To me this also suggests that dramatic change in council composition may be easier at the Ward level because name recognition is much more important in the At-Large races given the large number of candidates – especially this time around.  In many respects, the race for an At-Large seat is really a race for five mini-mayor positions as once elected they can claim to speak for the entire city whereas ward councilors can be seen as representing specific ward interests.  Every voter gets to vote for five making the total number of votes greater than the actual number of voters creating different dynamics than a ward election.

Figure 1 presents the ranked total ballots for each of the At-Large candidates and they range from a maximum of 20,346 votes for Peng You to a low of 973 votes for Frank Wazinski.  After the two leading candidates - Peng and Aldo - there is a drop off to the next three with not that many votes separating them – Giertuga at 11,718, Johnson at 11,692 and Bentz at 11074 – and then another drop to 8,807 with Larry Hebert.  Thus, given this particularly large pool of candidates, the critical number of votes to win was just over 11,000 or just under 7 percent of the total votes cast (172,523) for At-Large candidates.  This perhaps explains why so many choose to run for Councilor At Large – given that there are five votes per elector – one can win a seat on council with a relatively low percentage of the total votes cast.  Ward races on the other hand seem to have stiffer competition and a larger share of the total is required to win.

 

Figures 2 to 4 plot some rather dizzying figures of the distribution of the vote for the paper ballots, online telephone ballots and total ballots and they generally parallel each other pretty closely.  Unlike the mayor's race which I examined in my last post, there was no major difference between online and paper ballots among the front runners.  Peng You essentially captured about 12 percent of the total ballots cast which in the end does not seem like a particularly strong mandate.  On the other hand, perhaps the better point of comparison is the number of votes cast for Mayor which provides a more accurate estimate of the number of voters participating.  Of the 41,108 individuals who cast a ballot for mayor, one can argue that 20,346 of them cast a ballot for Peng You or nearly 50 percent of voters.  

 

 

 


Interpreted this way, Peng’s accomplishment is quite astounding because if one looks at the race for mayor, the winner only captured 34 percent of votes cast.  In the same manner, the next highest At-Large candidate – Councilor Ruberto at 14,745 – captures nearly 36 percent of the voters –also slightly better than the mayor’s performance.  Of course, what is also of note is that if one takes the number of votes for mayor – 41,108 – and multiplies by the number of votes you are allowed to cast At-Large, you get at pool of At-Large votes equal to 205,540.  However, the total number of votes cast At-Large was only 172,523 – about 16 percent less meaning that some chose to vote for fewer than five At-Large candidates.

In the end, these results are interesting because they suggest that at least two of the At-Large winners may be more popular than the mayor which all but ensures they may want to consider a run for mayor the next time around.  However, that is four years away and a lot can happen during four years that can erode your political capital. It is always risky to be more popular than the boss and standing out can also make you more of a political target.  Still, one cannot deny that the stand out feature of this year’s At-Large race was the victory of newcomer Peng You given the energy of his campaign and the size of his win.  I suppose local sentiments may be best summarized borrowing from the words of the immortal Alexandre Dumas – it was All for Peng and Peng for All!

Municipal Election Analysis 2018: Thunder Bay Mayoral Race

The results are in and former provincial Liberal Cabinet Minister Bill Mauro will be the next Mayor of Thunder Bay.  Congratulations to Mayor Mauro as well as all the hard-working candidates who chose to run for office.  Thanks also to outgoing council members who have seen years of public service.  Public service is never easy and putting your name forth as a candidate and serving as an elected official is an important act of participation in our democracy.

The new Mayor-Designate took 34 percent of the 41,108 votes cast for mayor edging out soon to be former City Councillor Frank Pullia who took 32 percent of the vote.  The choice of mayor was in many respects part of a general desire for change at the municipal level given that both of the higher profile council incumbent candidates for mayor went down to defeat.  Indeed, the new council represents a significant but not overwhelming amount of change with a number of new faces as well as new but familiar faces – as in the example of the new mayor.

Yet, the aspect of this race I found the most interesting was the collapse of the protest vote which saw Shane Judge garner only 5,155 votes (13 percent of the total) compared to his 2014 total of 9,531 which was a 26 percent share of the total.  Even more interesting was the collapse of support for Iain Angus who as a Councillor at Large in 2014 won with 15,861 votes and who as a candidate for mayor in 2018 was only able to manage about a third of that at 5,816. 

One wonders if this signals a general rightward shift in the Thunder Bay electorate given at least my perception of the generally left of center positions of Iain Angus.  Indeed, this may reflect a weakening of the labour vote in general given that Angus was endorsed by the Thunder Bay District Labour Council for Mayor and none of the five at large candidates endorsed by the Labour council won either.   Only three of the Labour Council ward endorsements won (Foulds, Ch’ng and Oliver). Or it may reflect a shift in voter priorities towards lower property taxes given that taxation was continually brought up as an issue during this campaign.The new mayor and several of the winning candidates have emphasized that taxation rates were an issue.

Figure 1 presents the ranked votes by mayoral candidates and most starkly illustrates how despite there being four high profile candidates, it was essentially a two-person race.  Indeed, one wonders what results would have been like if the provincial liberals had won the spring election and Bill Mauro had not entered the municipal race.  It is possible that in the absence of Bill Mauro’s entry, Frank Pullia might very well be the mayor today.  
 

Much is being made of the success of the new online/telephone voting system so a breakdown by type of ballot is interesting.  While voter participation is up above 50 percent this election and voter totals are up I would not venture to say that more convenient online voting options have resulted in a dramatic surge in participation.  Those who want to vote will vote no matter what the system is and the chief advantage of the new system is that it is more convenient for many people. While 41,108 ballots were cast for mayor this election, last time it was 37,123.  The result was an additional 3985 ballots cast – an increase of 13.4 percent.  This is actually a respectable increase but whether it was due to an appetite for change or the convenience of online voting will take a few more elections to see if the increase is sustained.

Of the 41,108 ballots cast for mayor, 15,249 - 37 percent- were paper ballots while 25,775 – 63 percent – were online/telephone ballots.  The preference does appear to be for the convenience of online/phone voting.  Figure 2 shows the distributions of the paper mayoral ballots. 
 

Figure 3 shows the distribution of the online/telephone ballots and Figure 4 the total distribution.  The results for the paper and the online/telephone ballots generally parallel each other but a closer examination shows that among the paper ballots, Frank Pullia had 33 percent of the vote and Bill Mauro 32 percent while in the online/telephone results it was 35 percent for Bill Mauro and 31 percent for Frank Pullia.  Overall, Bill Mauro became Mayor with 34 percent of the total vote and Frank Pullia was second with about 32 percent.

 

 

This is quite an interesting result because it raises the question as to whether the outcome might have been different if only paper ballots (which incidentally are also tabulated electronically) had been used.  It does appear that Frank Pullia had an edge with more traditional medium voters while Bill Mauro’s edge was with online voters.  This is also interesting given that the Pullia campaign was very social media intensive meaning it was fully engaged with the new technology.

This is also an interesting result because given the overall turnout – about 51 percent – and the number of candidates splitting the votes resulting in the winner only holding 34 percent of the total vote.  It means the mayor in the end was elected by about 17 percent of eligible voters.  This is not Bill Mauro’s fault by any stretch of the imagination.  People who are unhappy with small pools of voters rather than a majority deciding their leaders should make sure they get out and vote. On the other hand, perhaps recognition of this low effective support is why the incoming mayor seems relatively low key and unambitious given that his goal is to focus on one or two soft infrastructure projects - like an indoor tennis facility - rather than roads and bridges. I suspect many voters will be surprised to find out a tennis facility is going to be one of the new mayor's priorities.

In any event, these results should provide food for thought for many analyses to come. Next time, I will take a look at the At-Large results.