NORTHERN ECONOMIST 2.0

Thursday, 20 October 2022

Ontario Housing Prices Coming Down

The pandemic era in Canada saw a thirty percent increase in housing prices that were already high as a result of a decade of low interest rates and rising demand due to population growth. However, a combination of rising interest rates led by the Bank of Canada in an effort to curb inflation, the inevitable subsequent slowdown in the economy, as well as inflation reducing the household resources available for home purchases has meant that home prices in Canada have finally reached their peak and are on the way down. The latest Teranet-National Bank Housing Price Index Release shows that the National Composite House Price Index fell 3.1% from August to September, the largest monthly decline on record since the index began in 1999 and exceeded the previous month’s record decline of 2.4%. Needless to say, Ontario did not escape this trend but despite the drop, prices are still higher than they were a year ago.

Figure 1 shows that year over year (September to September), prices were up in 15 out of 16 major Ontario cities with the exception being Peterborough. The largest percentage increases year over year have been in Greater Sudbury, Kingston and Kitchener-Cambridge-Waterloo. Thunder Bay's increase over the last twelve months was just under 4 percent. However, prices are down from their peak in all of these cities as illustrated in Figure 2. Most of these cities saw their prices peak in May of 2022 with the exceptions being Belleville, Kitchener-Cambridge-Waterloo and London (peak in April 2022), Ottawa-Gatineau (peak in June 2022) and Thunder Bay (peak in July 2022).

The largest declines since peak price have been in Windsor (16.2 percent), Oshawa (16.4 percent) and Peterborough (23.2 percent). Meanwhile, the smallest declines since peak price were in Thunder Bay (5.7 percent), Greater Sudbury (6.1 percent) and Ottawa-Gatineau (8 percent). Northern Ontario cities like Thunder Bay and sudbiury are not immune from national or provincial trends but they have historically not been as subject to the same fluctuations as other cities. In Thunder Bay for example , the housing price boom while substantial relative to its historic prices was nevertheless more muted than the GTA. The downturn will likely be similar. It is probably no coincidence that to date the price drop in Thunder Bay, Sudbury and Ottawa-Gatineau has been the least of these 16 major cities as all three of these cities have an economic base of broader public sector employment at 30 percent of jobs or more (in the case of Ottawa- Gatineau) which provides a substantial economic stabilizer when the national average in closer to 20 percent.

Given that interest rates are expected to rise substantially next week as inflation really shows no signs of abating in Statistics Canada's latest release, one should see the price decline continue into the fall.

Friday, 14 October 2022

The Next Council: The Challenges for Thunder Bay

Shortly, there will be a municipal election in Thunder Bay with a new council selected. It is likely there will be a major change in composition with quite a few new faces and this will usher in a period of change though perhaps not as much change as one might expect. In the end, The City of Thunder Bay is a corporation and what an election does is essentially select its board of directors who serve as an executive laying out direction with execution and implementation being the responsibility of the City Administration. Sometimes, the more things change, the more they stay the same.

The City Manager reports to City Council and is responsible for putting into effect the directives of council within the framework of what is allowed by the Province of Ontario. More importantly, the City Manager and Administration possess the information set from which the councillors then make their decision. As well, given their role as full time employees rather than part-time representatives, they have the time to deal with the detail of issues. Inevitably, some councillors will find the level of information and detail overwhelming. The overwhelming complexity of issues in the past has often resulted in meetings where councillors on the advice of administration quickly make decisions on millions of dollars of spending and complicated bylaws with long-term impact while then spending hours debating relatively minor matters involving a few thousand dollars.

There are some departing members of the outgoing council that it will be sad to see go given that among them are the remnants of what passes for a fiscal conservative in Thunder Bay political life these days. Based on a perusal of the candidate slate currently up for election, this is likely to be one of the more activist councils that Thunder Bay has seen in some time and their first test will be the 2023 budget. A relatively new council will be heavily dependent on the advice of administration and also eager to deliver on whatever promises they have made and agendas they campaigned on, and the result will likely be a heftier tax increase than has occurred over the last few years.

The Mayor’s position is essentially one of first among equals despite whatever strong mayor powers are eventually afforded by the provincial government to Thunder Bay. The outgoing Mayor was good for Thunder Bay given he was articulate, well informed and lent a certain dignity and gravitas to the position – though some times while in the midst of yet another marathon Zoom meeting he seemed increasingly exasperated and resembled an artist being forced to work on a much smaller canvas. Such a sentiment is understandable, but the Mayor might have been happier by drawing inspiration from others in Thunder Bay and northern Ontario in a range of positions and occupations who have made a career of working on a smaller canvas.

In the end, the challenges for the next council are many. There is a housing and homelessness crisis in Thunder Bay that parallels that in other cities given the climb in rents and home prices during the course of the pandemic. There is crime – with 12 murders already in 2022, Thunder Bay is well on the road to regaining its title as Canada’s murder city in per capita terms. And of course who can forget infrastructure whether it is roads and sewers or recreational infrastructure given that the Turf facility has reared its head as an issue in the election with some candidates expressing support for the concept but not at the original high cost.

Surprisingly, little mention has been made of the other chaotic infrastructure problem Thunder Bay faced during the pandemic which was the plague of leaky pipes in homes throughout the city in the wake of the sodium hydroxide water supply lead mitigation experiment. Needless to say, the public silence from the outgoing Mayor and council on this issue - no doubt on the legal advice from City Administration and its lawyers given potential costs and legal liabilities - has left a bitter taste for many. So much for a friendly community oriented city with your elected representatives always ready to lend an ear.

And the biggest issue? Well elections are in the end obviously no place for serious long term policy discussions but the fact remains that Thunder Bay’s regional role as a centre for a growing and under counted Indigenous population is the big one. Increasingly Thunder Bay and its municipal ratepayers are paying for regional services on a city tax base. The latest example here is in the case of the Thunder Bay Police Service and the recommended changes that among other things ultimately mean the Police Service has to take a regional lens to its operations.

A move to a more regional approach in policing in the end is a continuation of a trend over the last twenty-five years that can be best described as informal and piecemeal northwestern Ontario regional government by default - a regional hospital service, a district social services board, a district emergency service organization, and regional public utilities such as Synergy North and TBayTel. Indigenous organizations have also established presence in Thunder Bay and Sioux lookout providing regional services to their members. Yet, there was never really any type of democratic regional mandate for this evolution. True, one can always blame the province or Ottawa given that much of this is under provincial or federal jurisdiction but our local municipal leaders to date have ignored the long term picture painted by this evolution. After all, it is a complicated and overwhelming set of circumstances.

Of course the trend to more regional services is also a function of the claim that Thunder Bay has under counted its population and more services need to be provided to service this under counted population. But how can you provide more services if you do not know how many people there are? After all, on the one hand there are claims made by some municipal candidates we are losing people “daily” to other cities but at the same time there are apparently tens of thousands more people here who need services. Which is it? Unfortunately, social surveys based on self-reporting and life stories however compelling and reflective of reality do not a rigorous estimate make.

At minimum you would think we could put an estimate together ourselves based on local and regional electricity use from Synergy, cell phone and phone subscriptions from TBayTel, patient counts (given they have addresses or OHIP cards) from medical facilities in the region, and school enrollments from all the public boards. These should be correlated with population growth and enable an estimate with upper and lower bounds keyed to census benchmarks. In the absence of this, one ultimately has to accept the Census results which do say that according to the 2021 census, the number of Indigenous residents of the Thunder Bay Census Metropolitan Area grew by about 12 per cent between 2016 and 2021, to a total of 17,000 people.

And so, what next? Well, one suspects that after a honey moon period of sunny optimism, it will be business as usual for the next council accompanied with a fairly hefty tax increase. All the candidates acknowledge a lot of issues ranging from roads to crime to homelessness to mental health to opioid addiction. They don’t agree with increasing what taxpayers pay when it comes to revisiting the Turf facility and want to explore alternatives like donations and fundraising but in the end they will solve problems by “taking action” and “working tirelessly” which usually means a tax increase as a starting point under the banner of investing in ourselves and then avoiding constituents when they complain too much.

Nevertheless, hope springs eternal. Maybe this council will be different.

Saturday, 8 October 2022

Thunder Bay's Mayoral Race: A Momentum Shift?

TBNewswatch has now done two online polls of the day asking respondents to indicate their preference for mayor. The August 20^th poll was at the start of the race just after nominations closed and they showed Ken Boshcoff out as the clear frontrunner with a majority of the votes cast (51.9 percent). In second place then was Peng You at 20.4 percent followed by Gary Mack at 17.3 percent. Going forward to October 8^th, as of approximately 12 noon there had been a total of 1,552 ballots cast and the results show that Ken Boshcoff still appears headed to take the mayor’s chair with about 40 percent of the vote. In second place is now Gary Mack with about 25 percent of the vote followed by Peng You at 24 percent. Clint Harris and Robert Szczepanski come in next at 6.6 and 4.5 percent respectively. These results are summarized in Figure 1 and the results for the October 8^th poll may change slightly as they were not yet final but after over 20 hours of online responding one suspects they will not change a great deal.

In terms of what has transpired, the clear majority of respondents in support of Ken Boshcoff at the dawn of the race has eroded somewhat as the campaign as progressed but he is still poised to take the mayor’s chair given the ground that has to be covered by the next two closest candidates – Mack and You. Moreover, the fact is that they appear pretty evenly balanced in terms of support. This is only an online poll with all of its attendant flaws and the only poll that counts is of course on election day but the two strongest candidates aside from Ken Boshcoff appear to have evenly split their support. However, there is an additional dynamic and that is illustrated in Figure 2.

In terms of the change percentage point share in candidate shares, the momentum since August 20^th appears to be in the Mack camp as his share has grown by 7.6 percentage points. The You support has nevertheless grown by 4 percent while Szczepanski has increased by 1.5 percent. This growth appears to have been accompanied by a shift away from both Harris and Boshcoff with the later seeing the greatest percentage point decline.

There are still nearly two weeks to go and it will be interesting to see if the mayoral race in Thunder Bay becomes a more competitive horse race with a photo finish.

Sunday, 2 October 2022

Saving Data: The Canadian Regional Historical Wealth Microdata Collection

As an economic historian, much of my work involved the collection and analysis of individual level and regional wealth data from late 19^th and early 20^th century central Canada. This work began in the 1980s with my thesis on wealth in Wentworth County under Peter George at McMaster and became a long term career project that used probate and census data to look at the determinants of Canadian wealth holding as well as its distribution. After 30 years, the responsible thing to do was to try and find a home for the data and in this regard I am delighted to announce that after conversations with Sara Janes at the Lakehead University Library Archives, a home has been found for the data collection and it has migrated so to speak. While the full electronic access to the data files is still in progress, the collection now has an entry point. A fuller description of the data set is available at the Archives site.

The data in the Canadian Regional Historical Micro Data Collection consists of over 12,000 probated decedents in Ontario and Manitoba for the period spanning approximately 1870 to 1930. In terms of the components housed at the Lakehead University Library and Archives, there are:

1) Canadian Historical Regional Micro-Data Collection: Survey Sheets: Approximately 12,000 estate files recorded on 3 to 5-page survey sheets (8” by 11”) comprising approximately 25 linear feet of material.

2) Canadian Historical Regional Micro-Data Collection: E-Files: 11 sets of e-files in excel format with accompanying coding information, approximately 30 MB of data.

3) Canadian Historical Regional Micro-Data Collection: Microfilm Resources: Several boxes of microfilm of estate files for Ontario in 1892 and 1902 and the Thunder Bay District, 1885 to 1930. Note that these will become part of the Northern Studies Resource Centre collection of the Paterson Library.

The work involving data collection and research has occurred over more than 30 years starting in the late 1980s with thesis research for a PhD in Economics at McMaster University, Hamilton and then occupying the bulk of an academic career at Lakehead University. Along with the SSHRC Doctoral Fellowship that funded the PhD (1986-1990) and the collection of the original Wentworth County estate files, there were three additional SSHRC Standard Research Grants (1991-94; 1999-02 and 2007-10) which helped put together the rest of the data.

The historical probate wealth micro data was collected for four regional areas: they are Wentworth County, Ontario (1872-1927), Thunder Bay District, Ontario (1885-1927), Ontario (1892, 1902) and Manitoba (1873-1927). Along with over 12,000 estate files collected in hard copy survey sheets which are now housed in the Lakehead University Archives, there are electronic data sets that have been generated that will eventually be available through hyperlinks through the provincial Permafrost digital data preservation system. Much of the wealth and asset information as well as personal information on the survey sheets has been placed in Excel spread sheets. Variables include gender, occupation age at death, wealth, portfolio composition, religious affiliation, birthplace, etc…However, there was substantial anecdotal and personal information taken down as well as details on bequests and estate division that was never coded and inputted and is still available in the paper-based survey forms. There is still research that can be done by coding and inputting the estate division details and subsequently analyzing it. While some preliminary work was done with Wentworth County in this regard and available for Wentworth County 1872 to 1892, funding for this last stage never materialized and remains undiscovered country. These decedents are also a potential resource for anyone doing genealogical research.

So, this is a preliminary message. When the data links are fully up and running, I will do another post. Until then, if there are questions about accessing the collection including the electronic data in advance of full hyperlink access, they can be directed to Sara Janes at the Lakehead University Archives [sjanes1@lakeheadu.ca (807) 343-8272]. Again, my thanks to the Lakehead University Archives for helping preserve this data for future research work.

Saturday, 24 September 2022

The Thunder Bay Police Service Saga: Regional Government by Default?

The expert panel appointed to advise the Thunder Bay Police Services Board has released an interim report with some recommended changes and reforms to the Thunder Bay Police Service and its oversight and operations. The interim report addresses three areas where action can be taken in advance of the final report and they include: (1) the selection of a new Chief of Police, (2) appointment of a new Board and, (3) labour relations. There are some key points made in this report that include more funding to strengthen civilian oversight, an arms-length Human Rights/Equity, Diversity Inclusion (EDI) Unit within the force, an expanded police services board with significant First Nations representation, and preference in the search for a new police chief to candidates who know Thunder Bay and who are Indigenous or racialized, as long as they meet other criteria. Indeed, when taken in its entirety, implementation will be an expensive proposition and can be expected to have a significant impact on the City of Thunder Bay’s budget.

In looking through the report, an implicit theme is that the Thunder Bay Police Service has to take a regional lens to its role and operation. Most interesting and significant in terms of a regional approach is the recommendation that a priority is to “Establish a formal nation-to-nation relationship with First Nations leaders to, among others, exchange information, consult on policy, address issues, and promote joint service delivery through a memorandum of understanding or formal agreement with policy and procedure (to ensure accountability and structure).”

For example, in selecting a new police chief there is an action recommendation to consult with, seek input from and participation of Fort William First Nation, Anishinabek Nation, Nishnawbe-Aski Nation, Matawa First Nations, and Grand Council Treaty #3 in the selection committee and hiring process. According to the interim report, the successful candidate must demonstrate “sound knowledge and appreciation of Thunder Bay as the regional hub of Northwestern Ontario” and understand “the presence and role of the region’s First Nations governments, and their relationship to Thunder Bay’s municipal government.”

In selecting board members, the interim report recommends that Ontario’s Solicitor General should “seek exemption to expand its membership to 7 members and remove the requirement of local residency due to the unique nature of Thunder Bay as the regional hub of Northwestern Ontario and the need for the Board to be reflective of the communities the Police Service serves” and “In an expanded seven-member Board, Indigenous representation should rise to three. While one member should be from Fort William First Nation, the additional one or two members should be drawn from First Nations based on considerations including use of Thunder Bay’s educational, medical, and other services by members of their communities, and their history of leadership and advocacy for changes to policing, such as the Coroner’s Seven Youths’ Inquest, implementation of recommendations from the Inquest and initiatives related to anti-racism.” Implementing this in terms of picking who gets to be on the board should prove to be an interesting political balancing act and a delicate nation-to-nation negotiation.

Looking forward, a move to a more regional approach in policing in the end will be a continuation of a trend over the last twenty-five years that can be best described as informal northwestern Ontario regional government by default. The Hardy Report on amalgamation for the Lakehead communities in the late 1960s made the case for a regional district government that was not acted on. During my past and more youthful forays on northern Ontario economic issues, the need for a regional approach not to mention regional government was something I opined on as the attached 1997 op-ed at the end of this article illustrates. In some ways the piece is as relevant now as it was then. Yet, what has come to pass over the subsequent decades is not a formal and structured approach to regional government but a piecemeal issue of the moment approach that in the end has created regional institutions but without direct accountability to a regional electorate except via an indirect process of voting for municipal representatives.

We have over the last twenty years acquired a regional hospital service, a district social services board, a district emergency service organization, and regional public utilities such as Synergy North and TBayTel largely driven by Thunder Bay but with regional input from other communities. Indigenous organizations have also established presence in Thunder Bay and Sioux lookout providing regional services to their members. We have achieved regional government by default but without any coordinating mechanism and without any over-arching effort to see if we are getting effective regional government or value for money. That might be fine if we were dealing with private economic endeavors and a competitive market that was creating regional businesses – after all, in the end, economic viability measures their performance and success - but taxpayer dollars are involved here.

With respect to the police service, giving it more of a regional mandate is in some sense at odds with its mandated purpose as Thunder Bay’s police service. Expecting municipal ratepayers to fund a regional mandate for policing as necessary, laudable, and noble as it might be is not what municipal ratepayers signed up for. Indeed, one might argue that what is needed here is twofold. Regional police services as well as appropriate regional funding from the participating affected indigenous and non-indigenous partners, as well as the provincial government.

One has to wonder if the ultimate result here given the documented shortcomings of the current police service, will not be reforming the Thunder Bay Police Service but a new Thunder Bay District Police Service that essentially absorbs the current police service into a new entity. Again, if this is the intention, it should be done explicitly rather than by stealth, so we all know what everyone has signed up for, what is expected in terms of financial contributions and with contributions from regional partners as well as the provincial government. Indeed, if what we are talking about is nation-to-nation relationships then there is also room for a federal role and contribution to this entire business.

This interim report represents a starting point for a much larger and very important conversation. Like all reports, it represents some great thoughts but, in the end, it will be more important to think everything through. It is remarkable that in the midst of a municipal election, this report has not been more front and center as an issue for the mayor and councilor positions.