Statistics Canada has just released its building permit results for November of 2016 and the numbers are down overall largely as a result of a decline in construction intentions in Alberta. According to Statistics Canada:
In the residential sector, the value of building permits fell 1.6% to
$5.1 billion in November, following three consecutive monthly increases.
Declines were posted in four provinces, led by Alberta. The largest
gains were posted in British Columbia and Quebec. The value of non-residential building permits rose 3.0% to $2.6 billion
in November, the fourth increase in five months. Higher construction
intentions were registered in five provinces, led by Quebec and Ontario.
The largest decline was reported in Alberta.
The interesting results are for Census Metropolitan areas as the value of building permits was down in 16 of 34 census
metropolitan areas for the month of November. Both of the major northern Ontario CMAs - Greater Sudbury and Thunder Bay - registered decreases in November from October at 61.6 percent in Thunder Bay and 5.9 percent in Sudbury.
When November 2015 to November 2016 is examined, over the course of the year Moncton registered the
largest increase at 227 percent while Brantford saw the largest decrease (See Figure). Over this same period, Thunder Bay saw a 49 percent decrease while Greater Sudbury saw a 19 percent decrease.
Tbnewswatch
ran a story on Thunder Bay City Council meeting attendance halfway through the
2014 to 2018 term.There were a total of
147 open and closed meetings over a two year period and the number of meetings
missed ranged from a low of 0 for Councillor Hebert to a high of 28 for Councillor
McKinnon according to the numbers presented in a Table. Of course, comparisons are often more striking when made using a graph.
Budget deficits have once again reared their head as a major policy issue at the federal level which is somewhat amusing given that not too long ago, the projection was for a new age of persistent surpluses at the federal level. Not only did the incoming Liberal government immediately begin running large deficits expected to continue until the early 2020s, but the forecast has worsened to an even longer run of deficits. The most recent projection by the Federal Finance Department says we are looking at deficits at the federal level until about 2055. For my take on this, see here.
As for budgets, deficits and fiscal sustainability at the provincial level - well, Ontario is still not out of the woods yet. Health spending is a big factor. The province's Financial Accountability Office has just released a report on trends and outlook in the Ontario health sector. Ontario is restraining health sector expense growth in an effort to balance its budget by 2017-18 but according to the FAO's review of the program changes introduced: "if the Province is to meet its 2016 Ontario Budget health sector expense
targets, the Province will need to implement additional program changes
that result in health sector expense savings of $0.4 billion in
2016-17, $0.9 billion in 2017-18 and $1.5 billion in 2018-19."
The FAO also notes that the continuation of 2% annual average growth in health spending - which is what the government is currently doing - may be difficult to sustain beyond 2018-19 if service quality and level are not to be compromised.
A key feature of housing markets in Canada over the last
decade is the sustained price increases particularly in larger urban
centers such as Vancouver and Toronto. Despite a relatively flat economy and stagnant population
growth, even northern Ontario has seen a price surge in its two largest urban
housing markets: Greater Sudbury and Thunder Bay.However, while Ontario’s housing price surge especially in the GTA shows little sign
of abating, it appears that economic reality may have finally caught up with
northern Ontario’s largest housing markets as prices appear set to level off.
Ontario has brought in its new cap and trade system as of January 1st. Northern Ontario is generally an energy intensive place in terms of its transportation needs as well as its industrial activity so one would expect some impact on costs. Business groups led by assorted Chambers of Commerce apparently would like to see the program delayed. In terms of the general impact on Ontario, I have a short piece here while Margaret Wente has another here. While dealing with climate change and saving the environment are important, doing it in a manner that causes more economic harm than good is not optimal policy but then Ontario has been raising the cost of doing business in the province for years and criticisms appear to be so much water off a duck's back. As for the specific effects on northern Ontario, you can check out this story on CBC regarding northeastern Ontario. Despite the optimism conveyed in this story there is a sense that there will not be a great deal of carbon emission reduction as a result. As for the northwest, another CBC story that also conveys a sense of opportunity despite the rise in costs that are anticipated given our colder winters and longer driving distances. It concludes with a quote from Chris Ragan at McGill that the impact will take a much larger bite out of lower income households.
Northern Ontario’s universities are proud of their research
intensiveness and success. Indeed, over the last decade they have made an
impressive effort to acquire the flagships of research intensity – the academic
research chair.Research chairs
highlight and foster a specific area of research importance by dedicating
specific resources to support the chair holder’s research.Along with budgets for research, these
chairs allow a professor to concentrate on research by reducing their teaching
load.
Many of the research chairs currently at northern Ontario
three largest universities - Laurentian, Lakehead, and Nipissing are funded by
the federal government via the Canada Research Chairs program.There are also other chairs that have
been funded with partnerships with other agencies and funding groups as well as
internal university resources.As
noted in a previous post there appear to be 17 such positions currently held at
Laurentian University, 16 at Lakehead University, 4 at Nipissing and one at
Algoma. Moreover, these
research chairs cover a wide range of topics stretching from applied
evolutionary ecology to indigenous health and aerial robotics.
However, there is a curious omission when it comes to these
many important topics – anything specifically to do with economics. Indeed, three important economic sub-fields
given northern Ontario’s economy are nowhere in sight: regional economics,
transportation economics and natural resource economics.Such an oversight is troubling
especially given the constant use by universities of the words “economic
development” or “economic impact” as background context whenever major research
projects or research chairs are announced.
Economic historians
will view the year 2016 as marking the end of the second great era of
globalization that began in the late 1970s and picked up speed after the fall
of the Berlin Wall.The year 2017
will usher in continuing significant economic and political change, tumult and
adjustment.The three seminal
signal events of 2016 - the Brexit vote, the election victory of Donald Trump
and the Italian referendum –herald the new era.Global economics and politics will be marked by
restraint of trade, reduced mobility, populist politics, more extremism and
continuing slow economic growth as a result.
The first great
globalization from 1870 to 1914 was marked by the spread of liberal economic
and political institutions, industrialization and rapid technological change
especially in transportation and communication. The prosperity of the pre-1914
era was marked by the centrality of Europe both economically and politically
and combined free markets and trade to create a world economy with liberal
legal and constitutional institutions in its primary economies and the British
pound as the international currency. Moreover, it was an age of free movement
not only for commodities but also in terms of labor with mass migration from
the old world to the new.
However, the pace of
rapid change and economic integration created strains in a world of nationalism
and imperial governments and the result was World War I.The years from 1914 to 1945 marked the
start of several traumatic decades in international economic and political
history that included revolutions, the rise of communism and fascism, two world
wars and the Great Depression.A
dominant feature of the period from 1914 to 1945 was reaction to a series of
major international economic and political shocks.We are embarking on a similar period – hopefully minus the
specter of global armed conflict.
Despite the 2009 Great Recession, the world economy has
grown dramatically over the last thirty years.The prosperity of the world economy that has been driven by
free markets, technological change and the global institutions led by post
World War II America and the US dollar as the international currency has given
way to an era of multi-polar economics and politics. The rise of China and
Russia led by its business oligarchs has been aided by the liberal economic
order, which has helped grow their economies and trade.Indeed, autocratic oligarchs do well in
a world of liberal economic and democratic rules that govern everyone's
behavior but their own. Russian and Chinese business oligarchs buying property
in Europe or North America to safeguard their wealth from their own capricious
government action is the most obvious example of such behavior.
The people of the United States have now put in place their
own set of oligarchs to counter a world that seems to be increasingly at odds
with their own interests. Along with Donald Trump’s own economic status, the
composition of his incoming cabinet leans toward ex-generals and billionaires –
not much different from say how countries are run in the Middle East, never
mind Russia or China. However, once everyone behaves like the oligarchs, growth
of the economic pie will suffer.Less liberal regimes in the rest of the world whose economies have
benefited from the economic environment maintained by the framework of American
diplomacy and power will definitely get more than they bargained for as trade
barriers rise.American
policy will become even more inward looking and more explicitly
self-interested.
The economic and technological progress of the last three
decades owes much to the economic policies of the post 1970s – liberal policies
ultimately rooted in the European Age of Enlightenment and the political
movements of the early nineteenth century.These liberal economic ideas include rule of law, free
speech, representative democracy, majority rule but respect for minority
positions, property and human rights, and the exchange of goods, capital and
labor in free markets.The result
was more trade agreements, deregulation and some effort at more efficient government.
While the results of liberal economic policies can be
imperfect and the benefits of trade and globalization unevenly spread, it
remains that a retreat into populism and tariff barriers will make us poorer in
the long run.It will take time
and tumult to illustrate the poverty of the road that the world is embarking
on.It will also take new ideas
and policies on the part of free market and liberal economic advocates on how
to better distribute the benefits of economic growth and deal with the labor
market trauma of technological and economic change that has stoked populism.
The end of the year is a good time for taking stock and research infrastructure is something worth considering. The economic future in northern Ontario will be in services
and the knowledge economy will feature heavily in this sector.Creation of new knowledge and its application
in the servicing of population needs as well as servicing the traditional transportation
and resource sectors will be the future.Northern Ontario universities are on the front line when it comes to
research and the knowledge economy and they have been successful in boosting
their research activity.One measure of
research success is their ability to attract funding for and then recruit
research chairs.
The role of a research chair is to boost research activity
in a specific field or specialty by providing a faculty member with concrete resources
to conduct their research as well as provide teaching release that enables them
to focus more on their research.A
research chair can often be financed by the public sector:for example, Canada Research Chairs.They can also be from private donors as the
result of fund raising activity by universities or by universities investing their
own budgetary resources.
In the case of federal Canada Research Chairs (CRC), there
are two types: Tier 1 Chairs, tenable for seven years and renewable, are for
outstanding researchers acknowledged by their peers as world leaders in their
fields. For each Tier 1 Chair, the university receives $200,000 annually for
seven years. Tier 2 chairs, tenable for five years and renewable once, are for
exceptional emerging researchers, acknowledged by their peers as having the
potential to lead in their field. For each Tier 2 chair, the institution receives
$100,000 annually for five years.
A list of research chairs at northern Ontario universities
was compiled from the Canada Research Chair web site as well as university
research pages and is presented at the end of this post.Research chairs in northern Ontario
universities are primarily dominated by CRCs.There are 24 CRCs currently listed as being held at northern Ontario
universities: 1 at Algoma, 10 at Lakehead, 9 at Laurentian and 4 at
Nipissing.Northern Ontario accounts for
just under 2 percent of Canada’s population and holds just over 1 percent of
CRCs.As well, most of the CRCs held at
northern Ontario universities are generally more junior Tier 2 Chairs.
Along with these 24 CRCs, there appear to be another 14
assorted research chairs listed on university websites as currently being held.These are funded internally (for example a
Lakehead University Research Chair), by the Ontario government (Ontario Research
Chairs) or other funding agencies or resources (for example, Fednor or the
Northern Ontario Heritage Fund).These
additional research chairs bring the total in northern Ontario up to 38.
What is conspicuous by their absence in this list of northern
Ontario research chairs is private donor financed named chairs in which an
endowment is donated to finance a named research chair in perpetuity.This is something that is more common at
much older, more established and more research-intensive universities. All these northern
Ontario chairs ultimately rely on short-term financing, which once expired ends
the chair meaning there is fragility to the current research chair
infrastructure at these universities.
A challenge for northern Ontario’s research future is for its
universities to engage in efforts to attract larger endowments to fund more
permanent research chairs.This is of
course a great challenge for any university in the current fund raising environment.In general, the weaker economy in northern
Ontario poses unique challenges that are reinforced by the absence of corporate
headquarters in the region.There are
two other more specific challenges.
First, it is often easier to raise money for things rather
than human resources.Donors can see the
outcome from a new building or piece of scientific equipment but it is more of
a challenge but not impossible to sell a research chair.Very often, private donors with a passion in
a certain area of study will look for an opportunity to fund their
passion.Finding and building such
relationships is a long-term investment of development office resources.
Second, given current conservative rates of return – circa 4
percent – it would take an endowment of four million dollars to generate
$160,000 in income.The salary, benefits
and research funding such an amount can support at best means a relatively junior
hire. It goes without saying that the fund-raising required to attract a more
senior scholar near the top of their field is much more substantial.
Knowledge intensive economic activity will be the front edge
of economic activity in northern Ontario.The challenge for northern Ontario universities is to grow their investment
in research activity with research chairs representing key anchor points in
their research infrastructure.Part of
this growth must involve greater efforts to attract private donor funding to
support those research chairs.
RESEARCH CHAIR INVENTORY FOR
NORTHERN ONTARIO UNIVERSITIES
Algoma
University
Canada Research Chairs
Antunes, Pedro
Tier 2, Natural Sciences and Engineering, Plant and Tree
Biology
Lakehead
University
Canada Research Chairs
Chen, Aicheng
Tier 2,Natural
Sciences and Engineering, Analytical Chemistry
Fatehi, Pedram
Tier 2,Natural
Sciences and Engineering,Chemical
Engineering
Greenwood, David
Tier 2,Social Sciences
and Humanities, Education
Levkoe, Charles
Tier 2,Social Sciences
and Humanities, Geography
Mushquash, Christopher
Tier 2,Social Sciences
and Humanities, Health Psychology
Rakshit, Sudip
Tier 1,Natural Sciences
and Engineering,Chemical Engineering
Rennie, Michael D.
Tier 2,Natural
Sciences and Engineering,Evolution and
Ecology
Reznik, Alla
Tier 2,Natural
Sciences and Engineering,Physics
Sameshima, Pauline
Tier 2, Social Sciences and Humanities, Education
Tocheri, Matthew W.
Tier 2,Social Sciences
and Humanities, Anthropology
Other Research Chairs
Dr. Peter Hollings, Geology, Lakehead University Research
Chair in Geochemistry and Ore Deposits (2017-2019)
Dr. Sandra Jeppesen, Lakehead University Research Chair in
Transformative Media and Social Movements (2017-2019)
Dr. Kristin Burnett, Department of Indigenous Learning:
Lakehead University Research Chair in Indigenous Health and Well-Being
(2014-2017)
Dr. Doug Morris, Department of Biology,
Research Chair in Northern Studies
Dr. Mitchell S. Albert, Department of Chemistry, Thunder Bay
Regional Research Institute, Chair in Molecular Imaging and Advanced
diagnostics
Dr. Lew Christopher, Director of the Biorefining Research
Institute and Senior Ontario Research Chair
Laurentian
University
Canada Research Chairs
Basiliko, Nathan
Tier 2,Natural
Sciences and Engineering, Soil Science
Crozier, Gillian
Tier 2,Social Sciences
and Humanities, Philosophy
Gunn, John
Tier 1,Natural Sciences
and Engineering,Evolution and Ecology
Kraus, Christine
Tier 2,Natural
Sciences and Engineering,Astronomy and
Astrophysics
Merritt, Thomas
Tier 2, Natural Sciences and Engineering,Molecular Biology
Schinke, Robert
Tier 2,Social Sciences
and Humanities, Other in SSH
Schulte-Hostedde, Albrecht
Tier 2,Natural
Sciences and Engineering,Evolution and
Ecology
Walker, Jennifer
Tier 2,HealthHealth Services Research – General
Ye, Zhibin
Tier 2, Natural Sciences and Engineering,Chemical Engineering
Other Research Chairs
Dr. Doug Boreham
Radiation and Health
Dr. Greg Ross
FedNor Algae and Environment
Dr. Michael Lesher
Mineral Exploration
Dr. Nadia Mykytzuk
NOHFC - Biomining, Bioremediation and Science Communication
Dr. Nancy Young
(No Specification)
Dr. Serge Miville
Franco-Ontarian History
Dr. Sheldon Tobe
HSF/NOSM Chair in Aboriginal and Rural Health
Dr. Tammy Eger
Occupational Health and Safety
Nipissing
University
Canada Research Chairs
Bruner, Mark
Tier 2,Social Sciences
and Humanities, Psychosocial Behavioural Research - General
Jason Kirby at MacLean’s Magazine has been putting together
year-end chart extravaganzas for the last few years and his 2017 list of charts to watch has 75 contributions.They are of course designed to help make sense of the Canadian economy
in the year ahead but they also are useful in understanding regional economic
performance.
There are contributions dealing with trends in population
aging, business investment, government debt, employment, housing markets, wage
growth, export performance, trade, service sector growth, electricity prices,
stock markets, environment, and manufacturing.Indeed, my own contribution to this year’s chart collection was
a simple one showing Canada’s manufacturing to GDP ratio and the exchange rate
since 1950. My point?A low dollar
may not help Canadian manufacturing and by extension what remains of the
manufacturing sector in northern Ontario.
As I note in the write-up: “A high Canadian dollar is often blamed
for Canada’s manufacturing malaise and with its recent depreciation there is
hope that a renaissance will be sparked in Canadian manufacturing. The
long-term evidence suggests otherwise. While Canada’s manufacturing output per
capita has grown in the long term, manufacturing’s share of national output has
fallen quite steadily from 27 per cent in 1950 to 11 per cent today. Our dollar
in terms of its exchange rate with the U.S. dollar (our major trading partner)
was relatively stable from 1950 to the late 1970s, and then began depreciating
from the mid 1970s to the early 2000s. It then appreciated again during
the commodity boom of the 21st century and has been depreciating
recently. Fluctuations in our currency’s value (relative to the U.S. dollar)
may have some short-term effects on manufacturing production. The period
from the late 1970s to the early 1990s does seem to have seen some
stabilization of the share of manufacturing in our GDP. However, Canada’s manufacturing
decline is rooted in long-term economic factors such as productivity
growth—which slowed substantially after 2000—and the trend of developed
economies around the world toward service production.”
In the case of northern Ontario, there has been some
movement in our forest sector recently with a pick-up in sawmill and pulp
sector activity.However, despite
a lower dollar, we should not expect a massive resurgence in this sector.The fact remains that the sector was
hit not only by a higher Canadian dollar during the forest sector crisis but
also the effects of environmental priorities, higher electricity prices, weak
business capital investment in an aging capital stock, and new and more
productive competitors around the world.As some of the other Maclean's charts show, electricity prices in Ontario are still an issue and business investment in Canada is still weak. Given the permanent shutdown of so much manufacturing capacity in Canada, a lower dollar now is
not going to automatically re-ignite production in manufacturing, let along the forest products sector in northern Ontario. The future of the northern Ontario economy, like the rest of Canada, is going to rely on services.
Some news worth sharing. As you know, I have been involved for a number of years now as a contributor to the economics blog Worthwhile Canadian Initiative along with my colleagues Stephen Gordon, Nick Rowe and Frances Woolley. I have always considered our mix of macro, finance, health, social policy and economic policy posts to be Canada's premier economics blog. However, we also make a mark internationally. Recently, Feedspot has announced that Worthwhile Canadian Initiative is one of its top 100 Economics Blogs! We have also made the list of top 100 Economics Blogs for 2016 done by Intelligent Economist. Moreover, global consulting firm Focus Economics has informed us that recognition is coming our way with their list of top economics blogs coming out in January 2017. Congratulations to my colleagues on WCI and looking forward to another year of great posts in 2017.
A new Fraser Institute report on recent economic and employment growth in Ontario noted that it has
been disproportionately concentrated in the Golden Horseshoe and Ottawa
regions.Meanwhile, southwestern,
eastern and northern Ontario have lagged when it comes to employment
growth.Indeed, as the accompanying
figure from the report below shows: “Average
annual net employment growth has been negative in Eastern and Northern Ontario
between 2010 and 2015. Average employment growth in Southwestern Ontario during
this time has been positive, but only barely (0.4% annually)”.
What is
surprising is how relatively little attention the report received in northern
Ontario from media outlets and local community economic and business leaders
given the usual preoccupation with the northern Ontario economy.The results of the report are more important
than one might expect because the negative aggregate employment performance of
northern Ontario is being driven largely by northwestern Ontario.The two largest urban economies in northern
Ontario are representative of this differential performance.
Figure 2
presents monthly seasonally adjusted employment for Thunder Bay (with fitted linear
trend) for the period 2001 to 2016 while Figure 3 does the same for Greater
Sudbury (Data source: Statistics Canada). Over the long term, the two
cities have travelled different roads with employment growing in Greater
Sudbury while it has shrunk over time in Thunder Bay. While employment growth
has slowed in Sudbury since 2010 while the decline appears to have flattened out in Thunder Bay, the long-term performance relative to Thunder
Bay still stands out. The long-term effects of the forest sector crisis in Thunder Bay appear to have been a permanent downsizing of the employment base.
Of course, one might want to counter with the
argument that unemployment rates in Thunder Bay and indeed the northwest are
quite low but this is misleading.The
fact is that the labour force has been shrinking along with employment over the
last decade in Thunder Bay hence improving the unemployment rate.A shrinking employment base is not generally
a cause for celebration even if it comes with falling unemployment rates.More on this in posts to come.
Well, it is probably time to resume the occasional post on aspects of northern Ontario's economy as well as broader economic issues from a northern Ontario perspective. I will do it here on Northern Economist 2.0 to provide continuity with previous posts and material. The advent of the Northern Policy Institute has provided a welcome supply of reports on northern Ontario issues and policy from a broad perspective but there is room I think for material focusing specifically on northern Ontario economic indicators. This particularly struck me with the recent publication by the Fraser Institute of an excellent report on differential economic performance across Ontario. Needless to say, it appears that the economic situation in northern Ontario has not improved substantially in recent years and indeed the recent mining sector downturn appears to have dealt a blow to the region. In the months to come, I will once again start providing the occasional post dealing with northern Ontario's economy using available data resources. Blogging is of course time intensive so I do not plan to resume with the frequency of Northern Economist 1.0 but I will be addressing areas where I think an analytical gap exists. To the future. Cheers. Livio.
Thank you for your interest in Northern Economist 2.0. I recently finished a sabbatical and have been directing my research activity more into my interests in economic history, health economics and public policy issues which leaves less time for analysis of the northern Ontario economy. I have also been doing some public policy research on public finance issues with the Fraser Institute. A visit to my Google Scholar page will provide you with background on the work I have been doing in areas like health expenditure determinants, wealth inequality and public policy in general. You are also welcome to visit my department web page at Lakehead University where I post materials related to my presentations. If you are interested in continuing to read my blog material on economic policy and analysis with a focus on Canadian public policy issues, please visit my postings on Worthwhile Canadian Initiative. As well, my old Northern Economist postings are still currently available here on the old Shaw Webspace site until March 2017. After that, the main content will still be avilable in an archive site I have set up which I am calling Northern Economist 1.0 (Archive). All the best. Livio.
Today, the Northern Policy Institute was finally announced by the
Ontario government simultaneously at Laurentian and Lakehead Universities with
the news that the institute will be jointly housed at Lakehead and Laurentian
with a 10 member board overseeing the operation and with the search currently
underway for a CEO.This is a process
that has been a long time in the making starting from the original North
Superior Planning Board Report in 2007 on a policy institute for Northwestern
Ontario and then the morphing of the concept into a pan-northern institute
through the 2008 Rosehart Report and then the 2011 Northern Ontario Growth
Plan. The idea of a policy institute definitely caught the interest of the provincial government given that during this long interim it provided 5 million dollars to University of Toronto to fund the Mowat Centre in 2010 - a public policy institute to research issues from an Ontario perspective.
According to the press release:
The
institute, an independent, not-for-profit organization, will monitor the
implementation of the Growth
Plan for Northern Ontario and make provincial policy recommendations for
the region. It will work with northern municipalities, post-secondary
institutions, research groups, Aboriginal organizations, francophone groups and
industry to set priorities and directions for northern development.
This is very good news for Northern Ontario as it provides
the recognition that there needs to be research and policy analysis on
economic, social and business issues in the North.The Presidents of both Lakehead and
Laurentian are to be commended for their work leading up to today’s
announcements as are many of the local community leaders and politicians who
devoted time to what at many times seemed to be a byzantine task with no end in
sight.
Having followed the Northern Ontario economy and regional
economic development policy for over twenty years and researching and commenting
on issues affecting the region, it is reassuring personally for me to know that
in a sense it will be possible to pass on the torch and finally move on
confident in the knowledge that there will finally be the commitment of
resources for the study of Northern Ontario issues.Despite popular perception (even at the
university where I work), as an academic economist, research and public commentary on northern
Ontario or the Thunder Bay economy was never my main area of academic interest.My fields are public finance and economic
history and “northern” work took much time away from those endeavors.While I enjoyed interacting with the local
media and was always treated very well and fairly by all, this activity also
took a great deal of time in the sense that it often meant completely
interrupting your train of thought.Over
the last while, I have been devoting more time to interests in health economics
and economic history and less to the North and so the actual operationalization
of the institute comes at a good time.
I was born and raised in Northern Ontario and as an academic
I made the sustained effort to apply my skills and knowledge to local and
regional public policy because I felt it was important to give something back
to the community and there was so little analysis of northern Ontario issues.Over the years, many
have thanked me for this work via conversations and personal notes whether it
was for columns in the Chronicle-Journal, interviews on TBT or CBC Radio and
most recently for my blogging on Northern Economist.Of course, in the process I also irritated a great many people.I do not apologize for that.Politicians and society’s leaders need to
realize that true university academics are passionate and committed researchers who speak their
minds and not cheerleaders to be trotted out as a pretty backdrop at a moments
notice for the pet issue of the day.Those politicians who think academics should simply provide blanket endorsements
for government actions and policies reveal just how little respect they have
for knowledge and education and the people employed in those fields.
As for the future of the Northern Policy Institute (NPI), I
would be remiss as an academic in not offering a final frank and honest
assessment.It is a great idea
and concept but the fact that its role will be to “monitor the implementation
of the Growth Plan for Northern Ontario” in essence undermines both its
independence and its effectiveness as an advocate for the region.Of course, these are just the words of a
press release and the reality will be in implementation but the board of the NPI
needs ensure that the institute sets its own research and policy agenda in
terms of collecting data on economic, social and business issues that reflect
the region’s priorities.If it is
simply a mouthpiece to support the latest government policy initiative in the
North, then what is the point?
That’s all folks!
For additional blog postings on public policy and economics, visit my material on Worthwhile Canadian Initiative. You will be able to continue to access Northern Economist 2.0 postings on this blog as well as my previous material at the old Northern Economist site for the next while.
Google Trends is a quick and popular way to assess the
importance of ideas, events and trends by looking at the results of people’s
web searches.If the searches for
something are trending up, it is suggestive that it is growing in
importance.One way of assessing
the impact of northern economic development in Ontario at least as a concept
that has seized the imagination is to conduct a Google Trends search. In
particular, it is interesting to see what the impact of two northern
development plans has been – The Northern Ontario Growth Plan and the Quebec
Plan Nord.I put in
“northern Ontario growth plan” and “plan nord” for trends in the “region” Canada
over the period all years (2004 to 2012) into Google Trends and downloaded the
results. I then graphed the results for the 2011 to 2012 period (See Figure)
The Northern Ontario Growth Plan was released in March 2011
while the Plan Nord was released a little later in May of the same year.The Google Trends plot is not the
number of searches but rather an index of the number of searches for a term to
the average number of searches for the term over the time period.For example, if there is a value in the
graph of 5; this means that traffic is 5 times the average for the time
period. As a result, it is a relative measure showing whether something is trending
up or down.The results were
intriguing in that they reveal enough activity to show a rising trend in the
wake of the release of the Plan Nord.However, there was so little interest in the Northern Growth Plan that
it did not generate enough activity to even register a trend.
This is not the same as saying the Plan Nord will be a
success and the Northern Growth Plan will not.What it is saying is that the Plan Nord seems to have
generated a lot more interest on the web whereas the Northern Ontario Growth Plan
has not.The fact that the Plan
Nord has generated so much interest could simply be better marketing but that
in itself would tell you something about how the Quebec government values its
northern development plan.Or, it
could be that people are more interested in Quebec’s northern development than
Ontario’s.However, it one truly believes
that large groups of people on average are very forward looking and very smart,
it also means they may see more potential in the Quebec
Plan than the Ontario Plan.Whatever way you look at it, it would appear that the Northern Ontario
Growth Plan does not look very credible.Google Trends has spoken.
Well, it is still summer and the living is easy which is a much nicer way to view life when you
get up in the morning than House Stark’s motto Winter is Coming though inevitably winter will be here soon
enough.Summer walks are
definitely a great way to reacquaint yourself with your neighborhood and over
the last few days I’ve been up and down the Junot Street corridor off of which
I live to observe the state of developments.
As many in the neighborhood know, the City of Thunder Bay is
planning to reconstruct the Golf Links Road/Junot Avenue corridor between the
Harbour Expressway and Walkover Street.The road will be widened to four lanes and there are plans to improve
sidewalks and bike paths as well as municipal servicing.Indeed, some new sidewalks are going in
as I write.This is also all
related to plans for additional density development as the area continues to
grow as a central residential and commercial area.An open house was held in April to solicit input on land use
in the area with suggestions ranging from the proposed new events centre to
industrial use to a mining innovation centre.
Of course, development proposals and actual development are
already underway – sort of. Condominium
construction appears to be stalled at the Thunder Bay Golf Club on Junot aside
from a rather large pile of dirt.Hotel construction on Junot is proceeding well with the Days Inn there
completing yet another lengthening.One wonders if the plan is to make it into the world’s longest hotel as
a tourist attraction.
The controversial new EMS Station is now open and still
causing controversy given the new 75,000 dollar sculpture that was recently
unveiled.Of course, that piece of
art is quite the bargain compared to the waterfront beacons, which ran nearly
one million dollars.The EMS art
piece is much smaller and does not have whispers emanate from its base.Indeed, being so small is probably why
all the trees and brush were cleared from the other side of the street prior to
installation – to afford the houses there a better view of both the new EMS
station as well as its new art work.
The desire to develop this part of the City has been present
for some time given the past attempt to put in a new Tim Horton’s/Hotel complex
in the same area that sparked enormous neighborhood opposition. Wooded land in the city does not
generate tax revenue as well as residential, commercial or industrial
land.As a result, the wooded area
across from the EMS station was apparently sold off for residential building
lots with at least one municipal councilor on the evening news saying how it
was a prime residential area.That
was of course quite amusing given that the original location of the EMS was
further up the street where the residents of the prime residential area there chased
it off.In some respects, this is
actually a clever strategy as once the EMS station is built, only people who
want to live across from it will actually build there – with the exception of
the homeowners who used to have trees as a buffer.
Given the ideal location of this land, we can no doubt
expect many of our local politicians and notables to erect their homes
there.Perhaps we can be
innovative and erect a new public centre in the spirit of our 55 Plus Centre –
the Politician Plus Centre where current and past local politicians can go hang
out and engage in creative discussions and activities or perhaps rent cheap
accommodation in a prime neighborhood as a reward for their years of service.
However, winter is coming and with winter will come a
reengagement with issues and debate for City Council.While it is fun to debate bike lanes and tanning salons in the
summer, I suppose they will need to deal with questions like what actually
caused the water treatment plant to fail during last spring’s flooding.Perhaps, we will also find out what is
going to happen with the plans for the events centre or if we will indeed see
hotel and condominium construction begin on the waterfront this year.If we do not get answers, I
suppose we can all go to the waterfront and ask for guidance from the
whispering beacons.
There are constant comments in Thunder Bay that there are
too many municipal workers and that the numbers have grown faster than the city
itself.In a 1979 article in the Urban
Affairs Quarterly titled “Economy of Scale or Bureaucratic Entropy?
Implications for Metropolitan Governmental Reorganization”, Hutcheson and
Prather examine the relationship between the number of city employees and city
population.This study was done
given the fashion of the time to implement metropolitan and regional city
governments that consolidated jurisdictions that often was justified by the
argument that more efficiency and economy in service delivery would
result.According to the authors:
“If efficiency can be
defined as serving more residents with fewer employees, economies of scale
might be demonstrated by a relative decrease in the size of bureaucracies as
city size increases.” (Hutcheson & Prather, 167).
However, the authors find that not to be the case.Increases in the number of employees
appear to have outstripped the growth in population in the wake of
amalgamations and metropolitan reforms.The new institutions appear to have generated a dynamic in which has
resulted in less rather than more efficiency.They call this bureaucratic entropy.Essentially, the new institutions
create a kind of disorder, which decreases the efficiency with which manpower
is converted into service outputs.Or as they write:
“Or more simply put,
it could be easier to ‘goldbrick’ in a larger bureaucracy.Thus increasing city size may mean
proportionately larger bureacracies, and perhaps diseconomies of scale.”
(Hutcheson & Prather, 168).
Well, it would appear that bureaucratic entropy is alive and
well in Thunder Bay at the municipal level.The accompanying figure shows full-time equivalent
employment numbers for the City of Thunder Bay for the period 2001 to
2011.In 2001, FTE employment was
1,632.0 whereas by 2011 it had risen by 25 percent to reach 2032.7 (my estimate based on the 2012 operating budget breakdown).Over the same period, the CMA population
of Thunder Bay went from 121,986 to 121,597 – essentially, a stable population.
So is this bureaucratic entropy?Did the creation of monopoly municipal government at the
Lakehead after amalgamation in the place of the former competitive municipal structure
of twin cities put in place a bureaucratic structure that does not keep costs
in check?That may be part of the
explanation.Another explanation
lies in the mix of city services, the demand for new services as well as
changes in their quality. Municipal governments are expected to do more than they did
in 1970 particularly in the areas of health and environment. Tied to all of
this is the fact that in Ontario, municipalities are creatures of the provinces
and there is often the downloading of functions that necessitate new
employment.
A better question is the following.Has municipal employment in Thunder Bay
been growing faster than Canada as a whole?Compare the following – from 2001 to 2011, municipal
employment in Thunder Bay grows by 25 percent while population remains stable.For Canada as a whole during this
period, the number of municipal employees grew by 24 percent but population
grew by 11 percent.While
municipal employment in Canada has been growing faster than population –
perhaps an indicator of some bureaucratic entropy – the growth is more
pronounced in Thunder Bay.
Today’s Chronicle Journal had a one-page ad by Resolute
Forest Products written in response to a Chronicle Journal editorial on July 18th
entitled “Innovation But When”.In the response, Resolute maintains that the editorial implies that
there has been no capital investment or pro-active action taken by any Canadian
or North American company relative to the forest products industry.Resolute then proceeds to list the
major capital projects it has recently announced: a 54 million dollar
investment for improvements to a wood waste boiler and steam turbine
installation at the Resolute Thunder Bay mill, an 8 million dollar upgrade of
its sawmill complex, a 30 million dollar investment in the idled Ignace mill
and another 20 million dollars at the newsprint mill in Iroquois Falls.
Resolute is justifiably miffed at being lumped in with a
large chunk of the forest industry that did not invest sufficiently in its
mills and met the perfect economic forestry storm of the early 21st
century with aging infrastructure and equipment. Resolute is indeed an example
of a proactive and engaged forest products company and its investments are key
to the survival and prosperity of the forest products industry in Thunder Bay
and the Northwest.There is also its
relationship with CRIBE (Centre for Research and Innovation in the Bio-Economy)
and FP Innovations, which will look at innovative ways of using forest biomass.
In Thunder Bay, Resolute is the only survivor of that economic
storm with a mill complex that dates back to the 1920s.The Resolute mill is the latest corporate incarnation of the
Great Lakes Paper Company, which over time has been Great Lakes Forest
Products, Canadian Pacific Forest Products, Avenor, and Abitibi-Bowater. A hallmark of
the original Great Lakes Paper was that it was locally owned and an example of
local Lakehead entrepreneurship.Having
our own locally owned head office meant substantial control over investment
decisions and white-collar employment that deepened our local labour and professional opportunities.Indeed, the fact that this is the only pulp mill that ultimately
survived out of the four mills in Thunder Bay is a testament to the original
good decision making in plant and equipment that made the company viable for
resale and continued production in the long run.
Resolute is also correct in maintaining that it had to deal
with economic events largely out of its control such as the appreciation of the
Canadian dollar or the decline in demand for newsprint driven by the
technological change of the computer age.Indeed, taking out a one-page newspaper ad is a wonderful example of
supplier- induced demand. However, Resolute has developed a selective
historical memory and conveniently omits the effect of provincial government
policies on the forest sector crisis.Indeed, it was not too long ago that the North cried out in protest
against provincial wood allocation and electricity price policies.Moreover, there was the exceedingly
slow response of the provincial government in realizing the extent of the
crisis and finally offering some relief in areas such as electricity prices.
Finally, it should be noted that even active management and
being proactive cannot always save you from the realities of the market especially
when combined with slow or ineffective government policy assistance or indeed detrimental trade policies such as the softwood lumber dispute.Witness what has happened to the
Buchanan mills even with all their energetic responses and efforts.It is an important lesson we should not
forget.