Well, the Statistics Canada GDP numbers are out for the first quarter of 2018 and real GDP in the first quarter of 2018 grew at 0.3 percent which down from 0.4 percent the previous quarter. Indeed a quick glance at a chart with the quarterly growth rates going back to 2013 suggests the period of more robust growth that took place in 2016 and somewhat into 2017 is winding up perhaps explaining the reluctance of the bank of Canada to raise interest rates yesterday. More to the point, expressed at an annualized rate, real GDP was up 1.3% in the first quarter. In comparison, real GDP in the United States grew 2.2%.
Real Gross Domestic Product Growth (Source: Statistics Canada)
The slower growth was driven by by a deceleration in household spending, lower exports of non-energy products and a decline in housing investment (-1.9%). The impact of changing household spending is indeed a factor in the slowdown and may be tied to the recent increase in interest rates as well as other factors such as the rise in gasoline prices and rents. According to Statistics Canada: "investment in housing fell 1.9% in the first quarter, the largest decline
since the first quarter of 2009, due to a drop in ownership transfer
costs (-13.5%). Lower resale activity coincided with new mortgage stress measures introduced nationwide in January...Household final consumption expenditure decelerated for a third consecutive quarter, slowing to 0.3% in the first quarter."
The sustainability of an economy led by consumer spending and housing may finally be coming into question. How do things look going down the road? Well, FocusEconomics June 2018 Consensus Forecast still has Canada's real GDP growing at 2.2 percent annually this year with a decline to 1.9 percent in 2019 and 1.8 percent in 2020. Given an annualized growth rate of 1.3 percent in the first quarter of
2018, we have a lot of ground to make up to reach 2.2 percent.The United States meanwhile is projected at 2.8, 2.4 and 2 percent for the same years. Normally, when the United States does well so do as a result of our exports to them we but that traditional link has been under increasing stress given a more protectionist US economy. Today's news that the United States may be going ahead with tariffs on Canadian aluminum and steel will not help matters much.
Northern Economist 2.0
Thursday 31 May 2018
Tuesday 29 May 2018
Northern Ontario Property Tax Update
The 2017 edition of the BMA Municipal Study is out and there is a wealth of material here for blog posts for the next little while. It is a municipal election year so comparisons of property taxes and service levels are particularly of interest. For this post, an update of property taxes paid for a detached bungalow in the five major northern Ontario cities. According to the BMA, the definition of a single detached family bungalow is: "A detached three-bedroom single story home with 1.5 bathrooms and a one car garage. Total area of the house is approximately 1200 sq, ft. and the property is situated on a lot that is approximately 5,500 sq. ft."
Figure 1 plots the average residential property tax paid for a detached bungalow for the five cities for the period 2005 to 2017. In 2005, these averaged $2,260 and by 2017 the average was $3,530 representing an increase of 56 percent. While property taxes trend up everywhere there are several features that caught my interest. First, there is a clustering with Thunder Bay, Timmins and North Bay as higher property tax jurisdictions while Greater Sudbury and Sault Ste. Marie are generally cities with lower property tax levels - at least for this class of property. In 2017, average taxes for a detached bungalow were highest in Timmins at $4,294, followed by Thunder Bay at $3,695, then North Bay at $3,576 then Greater Sudbury at $3,123 and finally the Sault at $2,954.
Second, the last year has seen the property taxes paid on an average detached bungalow in Timmins apparently spike while those in North Bay actually declined. Between 2016 and 2017, the value for Timmins rose from $3,574 to $4,294 - an increase of 14.4 percent. Meanwhile, in North Bay, there was a decline from $3,632 to $3,576 - a decline of 1.5 percent. Naturally, these changes need to be put into the context of the local municipal economic and fiscal environment.
Keep in mind, this also does not mean every property owner in Timmins saw a 14.4 percent increase in Timmins but the steeper increases may be related to how a change in assessment values for mining companies by MPAC that turned out to be lower than expected was measured in the BMA Report. The projected decline could have resulted in higher rates on residential properties but the full impact appears to have been mitigated for the time being. It turns out the average homeowner only saw a $125 increase in 2017 in Timmins. As for North Bay, there apparently are rate decreases underway as a result of market assessment value shifts.
In any event, the annual percent increases for 2015 to 2017 plus an average of the three years are plotted in Figure 2. The average increases in property taxes for a detached bungalow were highest in Timmins at 7.2 percent and lowest in North Bay at 0.6 percent. Thunder Bay was in the middle of the pack at 2.9 percent - just below Sudbury at 3 percent and ahead of the Sault at 2.6 percent. more to follow.
Figure 1 plots the average residential property tax paid for a detached bungalow for the five cities for the period 2005 to 2017. In 2005, these averaged $2,260 and by 2017 the average was $3,530 representing an increase of 56 percent. While property taxes trend up everywhere there are several features that caught my interest. First, there is a clustering with Thunder Bay, Timmins and North Bay as higher property tax jurisdictions while Greater Sudbury and Sault Ste. Marie are generally cities with lower property tax levels - at least for this class of property. In 2017, average taxes for a detached bungalow were highest in Timmins at $4,294, followed by Thunder Bay at $3,695, then North Bay at $3,576 then Greater Sudbury at $3,123 and finally the Sault at $2,954.
Second, the last year has seen the property taxes paid on an average detached bungalow in Timmins apparently spike while those in North Bay actually declined. Between 2016 and 2017, the value for Timmins rose from $3,574 to $4,294 - an increase of 14.4 percent. Meanwhile, in North Bay, there was a decline from $3,632 to $3,576 - a decline of 1.5 percent. Naturally, these changes need to be put into the context of the local municipal economic and fiscal environment.
Keep in mind, this also does not mean every property owner in Timmins saw a 14.4 percent increase in Timmins but the steeper increases may be related to how a change in assessment values for mining companies by MPAC that turned out to be lower than expected was measured in the BMA Report. The projected decline could have resulted in higher rates on residential properties but the full impact appears to have been mitigated for the time being. It turns out the average homeowner only saw a $125 increase in 2017 in Timmins. As for North Bay, there apparently are rate decreases underway as a result of market assessment value shifts.
In any event, the annual percent increases for 2015 to 2017 plus an average of the three years are plotted in Figure 2. The average increases in property taxes for a detached bungalow were highest in Timmins at 7.2 percent and lowest in North Bay at 0.6 percent. Thunder Bay was in the middle of the pack at 2.9 percent - just below Sudbury at 3 percent and ahead of the Sault at 2.6 percent. more to follow.
Friday 25 May 2018
Large Municipal Operating Surpluses Do Not Always Mean You Are Good at Budgeting
The City of Thunder
Bay’s final 2017 budget surplus is apparently
now double what was originally projected. Whereas a $2.8 million year-end
surplus had been forecast in January, it has now apparently grown to $5.6
million dollars. Note that when the budget
was approved last year, there would not have been a projected surplus as
at the municipal level projected revenues need to match projected expenditures.
Moreover, it should be
noted that this is not an overall operating surplus but a “tax-supported”
surplus meaning that there is a surplus on the tax supported side of municipal expenditures. This is an important distinction because while
it is a “tax reported” surplus, the variance is being reported as a percentage
of the total net operating budget (2.3% of $240.1 million) and the total gross
operating budget (1.6% of $358.7 million).
Given that municipal tax revenues in 2017 were $183.987 million, the
variance can also be reported as a percent share of that which comes out to 3 .04
percent – a much larger number. Indeed,
I would argue that this is the correct variance number.
Thursday 24 May 2018
Wealth Inequality in the North Atlantic Anglosphere
I have been working on historical wealth and wealth inequality for most of my career and have put together a lot of my thinking and long-term analysis together in one spot - a new book published by Palgrave MacMillan in their Pivot series. The ebook edition was released several days ago and is available on the Palgrave site. The hard cover version should be available at the end of June or early July. If you want a short overview of the book, I put together a post for the Palgrave Exploring Economic History Blog that provides a nice summary of the book and some of its main ideas. An excerpt from the blog:
"Before 1750, wealth inequality was higher in the United Kingdom than the United States, but American inequality grew rapidly to match the United Kingdom by mid-nineteenth century. The preindustrial period was marked by lower wealth inequality in both the United States and the United Kingdom. The subsequent era of industrialization is marked in all three Anglosphere countries by rising wealth inequality. Wealth inequality declined in the twentieth century with redistribution away from the top one and ten percent. The decline in wealth inequality halted in the 1970s but with a rebound in American wealth inequality.
For the United Kingdom, the top 1 percent wealth share rose from an average of 25 percent in the pre-1850 period to 64 percent for the 1850 to 1900 period. More remarkably, the average share of wealth held by the top ten percent of the wealth distribution in the second half of the nineteenth century was just over 90 percent in the United Kingdom, approximately 72 percent in the United States and about 56 percent in Canada. By the early 21st century, Canada and the United Kingdom have their top ten percent with approximately 50 percent of wealth and the United States over 70 percent. Meanwhile the top one percent own just under 20 percent in Canada and the United Kingdom while in the United States the share is closer to 35 percent.
The twentieth century mitigation of wealth inequality correlates with several factors: rates of economic growth closer to the rate of return on capital, increased unionization rates, rising public spending on health and education, larger public sectors, increased home ownership rates, the onset of substantial estate taxation, more progressive income tax systems and in the case of the United Kingdom a housing policy that resulted in the disposition and dispersion of much public housing into private hands. A reduction in the strength of unions as measured by unionization rates as well as the end of estate taxation and less progressive income tax systems is associated with more economic inequality since the 1970s especially combined with lower economic growth rates relative to the return to capital."
You can also get quite a few bits of the book on Google Books if you want a free preview. The book surveys the evolution of wealth inequality as measured by the Gini Coefficient and the wealth shares of the top 1% and top 10% for Canada, the United States and the United Kingdom. A quick sample of one of the figures below on the wealth share of the top 1 percent in the United States from 1774 to 2012.
"Before 1750, wealth inequality was higher in the United Kingdom than the United States, but American inequality grew rapidly to match the United Kingdom by mid-nineteenth century. The preindustrial period was marked by lower wealth inequality in both the United States and the United Kingdom. The subsequent era of industrialization is marked in all three Anglosphere countries by rising wealth inequality. Wealth inequality declined in the twentieth century with redistribution away from the top one and ten percent. The decline in wealth inequality halted in the 1970s but with a rebound in American wealth inequality.
For the United Kingdom, the top 1 percent wealth share rose from an average of 25 percent in the pre-1850 period to 64 percent for the 1850 to 1900 period. More remarkably, the average share of wealth held by the top ten percent of the wealth distribution in the second half of the nineteenth century was just over 90 percent in the United Kingdom, approximately 72 percent in the United States and about 56 percent in Canada. By the early 21st century, Canada and the United Kingdom have their top ten percent with approximately 50 percent of wealth and the United States over 70 percent. Meanwhile the top one percent own just under 20 percent in Canada and the United Kingdom while in the United States the share is closer to 35 percent.
The twentieth century mitigation of wealth inequality correlates with several factors: rates of economic growth closer to the rate of return on capital, increased unionization rates, rising public spending on health and education, larger public sectors, increased home ownership rates, the onset of substantial estate taxation, more progressive income tax systems and in the case of the United Kingdom a housing policy that resulted in the disposition and dispersion of much public housing into private hands. A reduction in the strength of unions as measured by unionization rates as well as the end of estate taxation and less progressive income tax systems is associated with more economic inequality since the 1970s especially combined with lower economic growth rates relative to the return to capital."
You can also get quite a few bits of the book on Google Books if you want a free preview. The book surveys the evolution of wealth inequality as measured by the Gini Coefficient and the wealth shares of the top 1% and top 10% for Canada, the United States and the United Kingdom. A quick sample of one of the figures below on the wealth share of the top 1 percent in the United States from 1774 to 2012.
Anyway, it has been great working with Palgrave MacMillan and its staff in putting this project together and seeing it through. Am glad to see the book out.
Labels:
anglosphere,
canada,
inequality,
palgrave,
UK,
USA,
wealth
Friday 18 May 2018
Ontario's Political Future: Yours to Discover
Ontario’s election may very well be decided over the next few days as Ontarians pause to take in the long weekend and use it to step back and ruminate over the political future of the province. One of the most recent polls reveals that the PCs are poised to form a majority government with 40 percent support. However, what is also interesting is that over the last little while this poll shows that Liberal support has plummeted to 22 percent while NDP support has soared to 35 percent. All this suggests that there is still a certain amount of volatility amongst the voters as we head into the home stretch of campaigning into the June 7th election.
So, what do
Ontarians want? On the one hand, the
recent policy initiatives of the Ontario Liberals are popular across a large
swath of Ontarians especially in the larger urban centers. Investments in transit and infrastructure,
the raising of the minimum wage, rent control, more health spending and a
general activist government approach to social and economic policy seem to be
what many Ontarians want. Indeed, these
policies are much like those the NDP is advocating and if one combines the
Liberal and NDP totals it is obvious that 55 percent of Ontarians seem to want
some type of centre-left approach to government and the economy.
It seems
that many Ontarians want Liberal-NDP type policies but seem tired of having them
implemented by the Liberals and particularly by Premier Wynne. Kathleen Wynne is undoubtedly the most capable of the
three leaders in terms of her handling of issues and her analysis and
discussion of policy issues. Yet, she is
also quite driven and intensely focused with a sort of self-absorbed messianic
zeal that can be interpreted as exclusionary to alternate opinions. The
Liberals have been governing since 2003 and Ontarians who like centre-left policies
and would like to see a change in government are likely to shift to the NDP –
hence the Andrea Horwath-NDP surge.
As for the
PCs, their policy platform has been less clear and it is difficult to see if
they really are driven by conservative values and policies or are now simply a
change party driven by the personality of their leader. Doug Ford has a much larger appeal than urban
elites in the Toronto-Ottawa corridor would have expected and his support is
also diverse. However, to date the
policies and changes the PCs might bring to government have not been as clearly
articulated as those of the other two leaders.
Much of the campaign is really a populist drive for change with a
rhetoric directed at the “little guy” to contrast with perceptions of the
Liberals as elitist.
Put another
way, you know what you are going to get if the Liberals form the government –
more of the same. If the NDP form the
government, it will be essentially the same policies but more so and with a new
leader. In terms of fiscal management,
there will be a very elastic budget constraint for years to come from either
the Liberals or the NDP. Yet it should
also be noted that, to date none of the three leaders seem particularly concerned
about the state of the province’s finances and one does not see the province’s
debt abiding anytime under either Wynne, Horwath or Ford.
If the PCs
form the government, it is not so clear what you are getting in terms of policy
approaches to social and economic policy as well as fiscal management. One might assume that as PCs, there will be
an emphasis on deregulation or more efficient government but this is not
clearly apparent to me. There have been a number of promised tax cut announcements but this is not the same as a coherent tax reform strategy. Yet, making it
clearer might also coalesce support more strongly around one of the two
centre-left options. At this point, the
PCs appeal cuts across a wide socio-economic range and perhaps their strategy
is to promise change but not get too specific and split the left.
So, what is
an Ontarian to do this long weekend as they think about the province’s
future? It should be to think long and
hard about the direction of the province in terms what is the coherent big
picture vision of the economy and the province’s finances these three main
party leaders are offering. To date, the
campaign has focused on disjointed announcements of spending and programs
designed to target key ridings or voter demographics. The money to pay for all of this is not a concern. Ontarians of course deserve much more than
this but are unlikely to get it. All
three leaders seem to believe that elections campaigns are not the time to
articulate coherent economic and fiscal visions.
Sunday 13 May 2018
When Will the Trans-Canada Be Completely Four-Laned Across Northern Ontario?
Ontario's provincial election campaign is in full swing and Thunder Bay Liberal party candidates and cabinet ministers announced the Liberal party's northern platform on May 11th. A key highlight of the plan was to completely four-lane the Trans-Canada Highway throughout the province from the Manitoba border to the Quebec border. As we all know, after years of lobbying going back to the 1980s and early 1990s, four-laning of northern Ontario highways finally commenced and has been underway for a number of years in two key areas - Thunder Bay to Nipigon as well as from Sudbury to Parry Sound. So, my question is - if we want to completely four-lane the Trans-Canada Highway, how long will it take to fully four-lane the Trans-Canada in northern Ontario?
So here is a quick back of the envelope estimate. Let us assume only the "southern" route will be completely four-laned. This is a 1,628 km stretch (based on Google maps) going from Kenora to Parry sound via Thunder Bay-Nipigon-Marathon-the Sault-Sudbury and Parry Sound. The stretch from Thunder Bay to Nipigon is about 109 km long with the commitment to four-laning announced in 2009. As of spring 2018, 30.2 km has been completed and another 19.5 km are underway. Based on the 30.2 km completed to date and a nine year completion date, we are looking at 3.3 km a year. If we want to be charitable and include the 19.5 km underway, then we are looking at about 50 km over 9 years or approximately 5.5 km per year as the highway completion rate.
The stretch from Sudbury to Parry Sound - part of the old Highway 69 - is 173 km long (again using Google maps). The provincial government announced the four-laning of Highway 69 in 2001 and to date 70 km from Parry Sound south to Port Severn have been completed and about 70 km from Parry Sound north to Sudbury is either complete or underway with the aim to be done by 2021. This still leaves quite a bit of highway to be started and apparently the remainder is in the engineering and property acquisition phase. So, based on the total of 140 km completed (including Port Severn to Parry Sound) since 2001 with completion scheduled for 2021, this means 140 km over 20 years or 7 km per year. The pace of northern Ontario highway four-laning is a little faster south of Sudbury.
So, take the total distance of 1,628 km and subtract what is underway or completed and you have about 1,438 km left to go. Let's make it a nice 1,400 km left as there already is some four-laned highway near the Sault and Kenora also. If we average the Thunder Bay-Nipigon and Highway 69 four-laning speeds, we get 6.25 km per year as the pace of highway four-laning in northern Ontario. At this pace, it will take 224 years to completely four-lane the remainder of the southern route from Kenora to Parry Sound bringing us to the year 2242. This as many of you should know is about 20 years before the events of Star Trek the original series which is supposed to take place between the years 2265 and 2269.
Needless to say, its going to be a long road, getting from there to here. Saying you are going to need faith of the heart to get there is probably an understatement.
So here is a quick back of the envelope estimate. Let us assume only the "southern" route will be completely four-laned. This is a 1,628 km stretch (based on Google maps) going from Kenora to Parry sound via Thunder Bay-Nipigon-Marathon-the Sault-Sudbury and Parry Sound. The stretch from Thunder Bay to Nipigon is about 109 km long with the commitment to four-laning announced in 2009. As of spring 2018, 30.2 km has been completed and another 19.5 km are underway. Based on the 30.2 km completed to date and a nine year completion date, we are looking at 3.3 km a year. If we want to be charitable and include the 19.5 km underway, then we are looking at about 50 km over 9 years or approximately 5.5 km per year as the highway completion rate.
The stretch from Sudbury to Parry Sound - part of the old Highway 69 - is 173 km long (again using Google maps). The provincial government announced the four-laning of Highway 69 in 2001 and to date 70 km from Parry Sound south to Port Severn have been completed and about 70 km from Parry Sound north to Sudbury is either complete or underway with the aim to be done by 2021. This still leaves quite a bit of highway to be started and apparently the remainder is in the engineering and property acquisition phase. So, based on the total of 140 km completed (including Port Severn to Parry Sound) since 2001 with completion scheduled for 2021, this means 140 km over 20 years or 7 km per year. The pace of northern Ontario highway four-laning is a little faster south of Sudbury.
So, take the total distance of 1,628 km and subtract what is underway or completed and you have about 1,438 km left to go. Let's make it a nice 1,400 km left as there already is some four-laned highway near the Sault and Kenora also. If we average the Thunder Bay-Nipigon and Highway 69 four-laning speeds, we get 6.25 km per year as the pace of highway four-laning in northern Ontario. At this pace, it will take 224 years to completely four-lane the remainder of the southern route from Kenora to Parry Sound bringing us to the year 2242. This as many of you should know is about 20 years before the events of Star Trek the original series which is supposed to take place between the years 2265 and 2269.
Needless to say, its going to be a long road, getting from there to here. Saying you are going to need faith of the heart to get there is probably an understatement.
Wednesday 9 May 2018
Renting in Northern Ontario-You Are Richer Than You Think
When it comes to
housing markets, what gets the most attention is the affordability of single
detached homes particularly in large urban centres like Toronto and
Vancouver. However, the high price of
housing has boiled over into rental markets and it turns out that more
Canadians are now renting than ever before. Over half of the new households formed since
2011 are apparently renting and the greater demand is being reflected in higher
rents.
So, what are rents
like in the five major northern Ontario cities? Figures 1 and 2 plot the
monthly rent for one and two-bedroom apartments in major northern Ontario
cities from 1992 to 2017 using data from Statistics Canada. In 1992, rent for a one-bedroom was the
highest in North Bay at $510 monthly and lowest in Timmins at $451 while for a
two-bedroom it was highest in Thunder Bay at $620 and lowest in Timmins at
$565. By 2017, monthly rent for a
one-bedroom was highest in Sudbury at $848 followed by Thunder Bay at $779. For
a two-bedroom in 2017 Sudbury was the highest at $1058 followed again by
Thunder Bay at $957.
Over the period 1992
to 2017, the annual average growth rate in rents for a one-bedroom was 2.4
percent in Sudbury, 1.9 percent in Thunder Bay, 1.6 percent in North Bay, 1.8
percent in the Sault and 2.2 percent in Timmins. Over the same period, for two-bedroom
apartments, the average growth rate was 2.4 percent in Sudbury, 1.8 percent in
Thunder Bay, 1.9 percent in North Bay, 1.9 percent in the Sault and 2.1 percent
in Timmins. Indeed, these increases are pretty close to the inflation rate as measured by the CPI.
The results are
informative – rents have gone up in all northern Ontario cities - but the pace of
increase picked up after 2004. The
average annual growth rate for one-bedroom apartments in these five cities was
2 percent from 1992 to 2004 and 3 percent from 2004 to 2017. For Greater
Sudbury, rent growth was especially pronounced from 2004 to 2017 with an annual
average growth rate of 3.5 percent for both one and two-bedrooms. Thunder Bay in comparison saw average annual
growth of 2.5 percent for one-bedrooms and 2.6 percent for two-bedrooms. However, this period saw Sudbury with a
mining boom whereas Thunder Bay experienced the forest sector crisis.
The higher growth
rates in rent since 2004 coincide with the run-up in housing prices over the
same period. Even with rent controls, as
new tenants come into a rental unit, there is the opportunity to raise the rent
to reflect market conditions and the market is getting tighter. As all first
year economics students can tell you, the long-term impact of rent control
policies is to reduce the stock of units below what they would have been. As a result, with rising demand, rents have
climbed.
However, rents in
Thunder Bay and Sudbury are still quite a bit lower than Toronto based on the
numbers here. In 2017, a one-bedroom in
Toronto rents out at $1194 – 41 percent more than Sudbury and 53 percent more than
Thunder Bay. A two-bedroom in Toronto in
2017 rents out at $1403 – 33 percent more than Sudbury and 47 percent more than
Thunder Bay. According to the Winter
2018 Conference Board CMA reports, in 2017, household income per capita in
Toronto $47,548 compared to $48,742 in Greater Sudbury and $47,287 in Thunder
Bay. Given that average incomes in
Toronto are not really that much higher than either Thunder Bay or Sudbury it
stands to reason that after paying your rent you will have a lot more
disposable income left over in Thunder Bay and Sudbury relative to Toronto.
This really should be getting greater play in the economic marketing of these
two cities.
Tuesday 1 May 2018
Gasoline Prices Are Going Up Again
Gasoline prices are on the rise in North
America as a result of rising demand combined with more restrictive
supply. An aspect of tightening supply comes as a result of more "cooperative behavior" between major suppliers Russia and Saudi Arabia which was recently highlighted in a report on NPR. Vancouver made the news with the
highest prices on the continent hitting $1.62 a liter on Monday. Along with refinery issues in Washington State which supplies a portion of Vancouver's gasoline, part of the high price in Vancouver also is a
function of taxes in that Vancouver has very high taxes on motor fuel
and a new carbon tax came into effect this month.
While prices in Canada generally have headed up over time, there is a substantial range between the highest and lowest prices. The accompanying figure plots the monthly maximum and minimum price of unleaded gasoline at self service stations for 18 major centers as compiled by Statistics Canada over the period January 1990 to March 2018. The cities are:St. John's, Winnipeg, Regina,Saskatoon, Edmonton, Calgary, Vancouver, Victoria, Whitehorse, Yellowknife, Charlottetown, Halifax, Saint John, Quebec, Montreal, Ottawa-Gatineau, Toronto and Thunder Bay. Needless to say, the trend for gasoline prices over time is upwards (Figure 1).
What is also of interest is what appears to be a growing gap between the trend lines over time. For example, if you go back to January of 1990, the price per liter of unleaded gas ranged from a low of 47.9 cents in Calgary to a high of 58.9 cents in Yellowknife - a gap of 11.1 cents. In March of 2018, the price ranged from a high of 151.4 cents in Vancouver to a low of 106.9 cents in - a gap of 44.5 cents. Indeed, if one plots the gap between the highest and lowest prices, one finds that it has grown over time as shown below (Figure 2). This of course suggests that over time there has been increased dispersion of gasoline prices across cities and regions in Canada.
However, one needs to standardize for the mean and if one takes the standard deviation of these gasoline prices by month and divides by the average, one gets a measure of dispersion known as the coefficient of variation and it tells a slightly different story (Figure 3). The period from 1990 to about 2009 was one of a declining coefficient of variation - that is prices across these cities were actually becoming less dispersed. However, since 2008, the coefficient of variation has been rising suggesting greater dispersion. The overall linear trend from 1990 to 2018 however shows a declining coefficient of variation.
As a final bonus. here is a plot of Thunder Bay's monthly unleaded gasoline prices since 1990 compared to the 18 city median over the same period (Figure 4). Thunder Bay's prices are pretty close to the median but since 2008 have been more often than not above the median. In March of 2017, the average price in Thunder Bay was 110.7 cents per liter compared to the 18 city median of 104.8 cents. In March of 2018, the monthly price in Thunder Bay was 123.6 cents per liter compared to a median of 121.8 cents. Anyway, above the median or not, it looks like prices are going up. Thunder Bay has seen a year over year increase of nearly 12 percent. The increase for the 18 cities in this analysis over the same period in the median price was 16 percent and for the average monthly price it was 13 percent. So to date, we have been lagging a bit when it comes to price increases.
Sunday 29 April 2018
Choosing Thunder Bay's Next Mayor
O for a Muse of fire, that would ascend
The brightest heaven of invention,
A kingdom for a stage, princes to act
And monarchs to behold the swelling scene!
Henry V
The
municipal election process in Thunder Bay culminating this October is starting to pick up
steam and there are now two candidates in the running for mayor:
Iain Angus and Larry
Hebert. Both are long time stalwarts
of Thunder Bay City Council and have contributed years of valued service to the
community in assorted capacities. Both
also topped the polls last election for the position of Councillor at Large
with Angus at 15,861 votes and Hebert at 14,664. Given that the two top contenders for the
Mayor’s Chair last election came in at 14,463 (Keith Hobbs) and 12,051 (Ken Boshcoff)
votes, they are certainly credible contenders for the position of Mayor.
Of course,
when one looks at the current composition of City Council, there is indeed an embarrassment
of riches when it comes to potential candidates for Mayor. It is always time for a
female Mayor in Thunder Bay and given Rebecca Johnson’s sterling career of
community service, one would expect that she would also consider a run for
Mayor. It would be credible given she garnered 14,620 votes last election in
the At Large race. Frank Pullia has carved out a strong role both
as an advocate for community causes as well as a strong showing in the finance
portfolio at City Hall. At 14,112
votes last election, he is a key contender.
And of
course, who can forget the ubiquitous Aldo Ruberto whose passion
for quality of life issues in Thunder Bay plus 14,311 votes in the last At
Large Race also puts him within reach of the Mayor’s Chair. There are also some strong candidates in the
ward Councillor category – the names that particularly come to mind are Joe
Viridiramo and Andrew Foulds. They are
both high profile candidates committed to their city and with exposure across
the community.
Of course,
they cannot all be mayor but being the Mayor in Thunder Bay is important given the
need for a sustainable economic future that embraces all the people of Thunder
Bay and the leadership role that Thunder Bay plays in the region. It is important to have as strong a slate of
visionary candidates as possible to generate the ideas we need to move forward. This election is an opportunity for defining
debates and visions in the areas of economic development, First Nations
relations and social and urban affairs and what better way than a strong Mayor’s
race with many quality candidates.
It should
be noted that the race for Mayor need not be relegated to current City Council
incumbents. There are many individuals
in Thunder Bay who also have strong community leadership credentials and it
would be a shame if Ken Boshcoff or Shane Judge did not put their names forward
again. Indeed, Shane Judge apparently will
be running. It is also a shame that
Lisa Laco has stated she
is not running. And then there is
the business community. Having someone prominent from our local
business community step up would also bring a vital perspective to the municipal
election especially with respect to issues of business development and
taxation.
This is a
crucial time for picking Thunder Bay’s next Mayor and council given the many
challenges that have faced our community over the last four years and that will
continue in the future. We are also
picking a Mayor who will be the public face of our community at an important
milestone – the 50th anniversary of Thunder Bay’s creation that will
occur in 2020. Having a strong mayor’s
race full of vigorous visions would be the ultimate community contribution our
community leaders could make. Having a
strong slate of candidates for Mayor would be a vote of confidence in the
importance of municipal politics in Thunder Bay and the importance of civic
leadership in shaping our future. It is
time for our accomplished community leaders to step up to the leadership
challenge and run for mayor.
Friday 20 April 2018
A Unity Circle: Celebrating Thunder Bay
The new Thunder Bay
City Council that will be elected in October of 2018 will have a number of
economic and social challenges on its plate but there is one item that should
be a source for celebration. The year
2020 will mark the 50th year of the amalgamation of the twin cities
of Port Arthur and Fort William and the rural townships of Neebing and McIntyre
to form Thunder Bay. The urban history of
the Lakehead communities actually goes back to the late nineteenth century and both
Port Arthur and Fort William obtained city status in the first decade of the
twentieth century as the great boom drove their urban growth and
development.
I always thought it
was somewhat of a shame that not more effort was made to celebrate the
centennials of the twin cities circa 2006-07 but I suspect the history of urban
rivalry between the two cities was such that no one really wanted to deal with
it. However, we now have an opportunity
to celebrate amalgamation and I think it should go beyond simply a number of
commemorative events and the publication of self-congratulatory histories. I think an effort should be made to leave behind
something concrete that adds to the city’s environment and is a legacy for the future.
As a result of its
urban history of being two separate cities, Thunder Bay has always lacked a more
centrally located focal point that could serve as a gathering place for the
public to celebrate events. Many cities
around the world often have public squares or sites that can serve as gathering
points for celebrations and events and that act as emblems for the city. Think of Trafalgar Square in London, for example
or Washington Square or Times Square in New York or the iconic four columns in
Barcelona.
We of course cannot
reproduce these types of landmarks nor should we but I think as a city we can
take the step of creating a public space that celebrates the creation of
Thunder Bay as well as points the way to a future that includes all its
residents. Somewhere in the Intercity
area, preferably close to the banks of the McIntyre River – the old boundary
between Port Arthur and Fort William – we should consider putting into place
what I would like to call Unity Circle.
It would be a celebration of amalgamation and the bringing together of
the twin cities to form Thunder Bay and would also look towards the future by
including First Nations.
Unity Circle would be
a public space in the Intercity area that would contain a number of columns - I suggest six large columns of
identical height arranged in a circle with the columns representing the original four
municipalities that came together to form Thunder Bay, the City of Thunder Bay
and Fort William First Nation. At the center of Unity Circle there would be a
flame that would burn perpetually. I
think a message of unity is very important given the many social challenges
that have faced Thunder Bay over the last decade and may help represent a way
of moving forward into the future.
So, it is just an
idea. The actual piece of land and
location is of course one of those details best left to the politicians and
administrators and community leaders who make these decisions. The design of the space and a suitable set of commemorative structures is also of course up for discussion and debate. What is most important right now is the concept. The concept of a Unity Circle is something
that celebrates our history and looks forwards by leaving the legacy of a
substantial central public space that could form the focus of future public
community events. I think it is worth
consideration.
Friday 6 April 2018
Lakehead Faculty of Science & Environmental Studies Celebrates Service!
Well, today was the last day of classes at Lakehead and there was an impromptu gathering at the end of the day at the Lakehead Outpost of faculty from Economics, Chemistry and Physics to celebrate the end of term. As well as celebrating the end of this term's classroom service, there was also recognition of the long time service of three faculty members - two who are are the table in the accompanying photos. Dr. Steve Kinrade from Chemistry and Dr. Bakhtiar Moazzami from Economics have reached the 30 year service milestone - I'll let you guess who they are. A third member of our faculty - Dr. Scott Hamilton from Anthropology - also is celebrating 30 years and was even seen at the outpost but did not make the photo. Congratulations to all our colleagues on the completion of another teaching year!
Thursday 5 April 2018
Yet Another Growth Plan for Northern Ontario
Most of us are familiar with the Northern Ontario Growth Plan which is a 25-year plan that was released on March 4, 2011 by the Ontario government that aimed to strengthen the economy of the North by:
- Diversifying the region's traditional resource-based industries
- Stimulating new investment and entrepreneurship
- Nurturing new and emerging sectors with high growth potential.
The Plan's policies were
built upon six themes that each was to contribute to the region’s long-term
sustainability and prosperity: Economy, People, Communities, Aboriginal
Peoples, Infrastructure and Environment.
I have discussed this plan in several posts on this
blog.
Well,
it turns out that the federal government also has a growth plan for northern
Ontario though I must admit that it has flown under my radar. I guess, when one works in an ivory tower,
one sometimes loses sight of activity on the ground though how I never got wind
of the extensive range of consultations escapes me. I am obviously moving in the wrong social circles. As part of the follow up to
the 2017 budget, FEDNOR began to put together a
Prosperity and Growth Strategy for Northern Ontario (PGSNO) as a “roadmap
to economic development and success” for the region.
FEDNOR undertook a series of
engagement activities from June to November 2017 which included
round tables, meetings and online tools aimed at reaching stakeholders across the
region. According to FEDNOR, there was an online questionnaire with over 600 respondents, 33
round tables and 12 presentations with over 400 participants. The result was a report with 12 common areas/themes
of action (see the report for details):
1.
Infrastructure (broadband;
transportation; and, energy)
2.
Diversification and self-sufficiency
3.
Northern image
4.
Rural and remote communities
5.
Timely and effective support
6.
Shortage of human resources
7.
Indigenous participation
8.
Building on regional strengths
9.
Business supports
10. Indigenous enterprises
11. Technology adoption
12. Access to support for innovation
There was an item by MP Bob
Nault in February 2018 discussing the report and its availability online but there
seems to be little else until now.
Apparently, on Monday April 9th there will be an announcement
by federal ministers Navdeep Bains and Patty Hajdu with respect to the
PGSNO. One imagines that there will be an announcement of federal development money to implement or address some aspect of the PGSNO. Or perhaps there will be an announcement of further study and consultation. Maybe both? Nevertheless, given that the federal report had
twelve themes as opposed to six for the provincial growth plan, I would imagine
that it will be twice the fun.
Tuesday 3 April 2018
Banking at the Post Office
This morning's Chronicle-Journal had a story on a call for post offices to provide banking services in small northern Ontario towns that had lost their major financial institution. As the story notes:
"Northern towns with reduced banking options, or those with no bank outlet at all, would benefit from a plan to offer regular financial services at local Canada Post outlets, says the federal NDP.
“Now is the opportune time for Canada Post to explore alternative revenue streams such as postal banking,” NDP MP Carol Hughes (Algoma-Manitoulin-Kapuskasing) said last week in a news release."
The concept was being "revived" according to the story but the precedent was countries like France, Italy and Japan which continue to offer banking services in their postal outlets.
This was an interesting story given that there appeared to be no realization that Canada once did have banking functions in post offices. Along with Federal Government Savings Banks which assumed the responsibilities of government savings banks in the Atlantic region upon Confederation, there were post office savings banks started in 1868 in Ontario and Quebec modelled in part on the success of British Post Office Savings Banks. The size limit on a personal deposit that could be held was limited to a maximum of $1,000 in order - so it would seem according to financial historian E.P. Neufeld* - to protect the deposit business of private banks. (See: E.P. Neufeld (1972) The Financial System of Canada, Its Growth and Development, MacMillan).
There was rapid growth in government savings banks as well as the post office savings banks until the 1890s and indeed, in 1888 the savings deposits of government and post office savings banks were over two-thirds the size of savings deposits of the chartered banks. However, this growth was due to the competitive rate the federal government offered that was in excess of private rates. The federal government lowered their interest rate in 1889 and after that the relative importance of government savings banks - and post office savings banks -began to decline. Post office savings banks absorbed the activities of government savings banks in 1929 and continued to chug along in an ever diminishing role until 1968 when they were finally abolished. They took a long time to disappear.
Could post office savings banks make a comeback? It seems like an attractive option for small towns in rural remote regions that still have a post office but it remains that the prospect faces obstacles in the internet age. Banking consolidation has been underway in larger cities as well as in smaller towns as a result of electronic banking services and a post office savings bank would have to offer banking services competitive with any private banking sector's e-banking services. Besides, they have also been closing post offices in rural remote areas and consolidating services across the country. For the concept to work, Canada Post would have to demonstrate that it offered a unique product that filled a need and could actually generate revenues in excess of the costs of operation. It might be useful to see what the ingredients of success are in for postal banking outlets in countries that still have them.
"Northern towns with reduced banking options, or those with no bank outlet at all, would benefit from a plan to offer regular financial services at local Canada Post outlets, says the federal NDP.
The concept was being "revived" according to the story but the precedent was countries like France, Italy and Japan which continue to offer banking services in their postal outlets.
This was an interesting story given that there appeared to be no realization that Canada once did have banking functions in post offices. Along with Federal Government Savings Banks which assumed the responsibilities of government savings banks in the Atlantic region upon Confederation, there were post office savings banks started in 1868 in Ontario and Quebec modelled in part on the success of British Post Office Savings Banks. The size limit on a personal deposit that could be held was limited to a maximum of $1,000 in order - so it would seem according to financial historian E.P. Neufeld* - to protect the deposit business of private banks. (See: E.P. Neufeld (1972) The Financial System of Canada, Its Growth and Development, MacMillan).
There was rapid growth in government savings banks as well as the post office savings banks until the 1890s and indeed, in 1888 the savings deposits of government and post office savings banks were over two-thirds the size of savings deposits of the chartered banks. However, this growth was due to the competitive rate the federal government offered that was in excess of private rates. The federal government lowered their interest rate in 1889 and after that the relative importance of government savings banks - and post office savings banks -began to decline. Post office savings banks absorbed the activities of government savings banks in 1929 and continued to chug along in an ever diminishing role until 1968 when they were finally abolished. They took a long time to disappear.
Could post office savings banks make a comeback? It seems like an attractive option for small towns in rural remote regions that still have a post office but it remains that the prospect faces obstacles in the internet age. Banking consolidation has been underway in larger cities as well as in smaller towns as a result of electronic banking services and a post office savings bank would have to offer banking services competitive with any private banking sector's e-banking services. Besides, they have also been closing post offices in rural remote areas and consolidating services across the country. For the concept to work, Canada Post would have to demonstrate that it offered a unique product that filled a need and could actually generate revenues in excess of the costs of operation. It might be useful to see what the ingredients of success are in for postal banking outlets in countries that still have them.
Saturday 24 March 2018
Big Numbers, The Public Finances and Salary Lists
Well, in what has become almost a form of annual homage to Gilbert and Sullivan, Ontario released its public sector salary list yesterday and there are a lot of "victims" on this year's little list - 131,741 to be precise. The number has grown steadily since the list was first published in 1996 with 4,576 names on the list and since the $100,000 threshold remains the same without any inflation adjustment, twenty years of salary progression has increased the number of names above the threshold. Indeed, if you adjust for inflation, the threshold today would be about $150,000 and about 85 percent of names currently on the list would be eliminated bringing it down to about 20,000 which still is nearly a quadrupling of numbers since 1996.
However, there is a reluctance to adjust the threshold to account for inflation and as the Premier of Ontario herself has noted, the people of the province have a right to know what public servants are earning because after all $100,000 is still a significant amount of money to the "vast majority" of Ontario residents. This is a somewhat curious statement given what seems the Premier's lack of concern about other big numbers when it comes to Ontario's public finances. For example, the provincial net debt is at about $312 billion which is indeed a significant amount of money as is the nearly $12 billion dollars annually required to service it.
Perhaps the problem is the difficulty many have in dealing with numbers that are so large that they are outside their daily experience. After all, most people deal with numbers in the thousands when it comes to salaries and annual living expenses rather than billions. What is needed here is perhaps some type of currency conversion mechanism that translates these large numbers into something the public can more easily grasp.
So, how many "Listers" at a threshold of $100,000 would make up the Ontario public debt? That number comes out to 3,120,000 - which is still a very large number - and represents just under half of total employment in Ontario which is at about 7 million people. However, a number in the millions is still very large. Ontario this week will deliver a budget and the expectation is that the deficit may reach $8 billion. How many "Listers" would make up an $8 billion deficit? Well, 80,000 which is a much more manageable number but as a number still higher than the median income of Canadians. How many Presidents and CEOs of the Independent Electricity System Operator fit into the net public debt? About 416,000. Ministers of Northern Development and Mines? You can get 1.89 million of those. But I digress...
It remains that the list is needed as an indicator of public sector spending as well as to provide transparency as to what the public sector spends notwithstanding what has become an exercise in showmanship without any effort to gain some additional insight and understanding about public sector spending. Indeed, the fixation on the large numbers in the annual release masks the fact that there should be some serious concerns expressed about how the list is constructed, transparency and indeed what it tells us about people and what they are paid and how that information is used.
First, while the "List" was supposed to be an accountability device that would somehow restrain the growth of public sector salaries it remains that it has not. Indeed, I would venture that making the salaries public has actually provided a basis of individual comparison that has resulted in driving salaries up in the broader public sector not just in Ontario but across the country. You don't hear about private sector salaries being driven up in part because that information is usually considered proprietary or confidential and its absence hinders the ability of individuals to make comparisons and decide they deserve more and make use of it to negotiate a higher salary.
Second, the list is inequitable because it separates public servants based on an arbitrary threshold that was selected because at the time it seemed like a big, round number - $100,000. However, for true accountability, all public sector salaries should be reported. There should be two lists released every year - a public sector salary disclosure list with those making over $100,000 and another with those making under $100,000. Yes, the list would be very very large but that would be the point. There are a large number of broader public sector workers and public sector spending in Ontario is not just driven by the 131,741 people making over $100,000 but also by the over 1 million people in the broader public sector making under $100,000. Would it be an invasion of the privacy of those individuals making a more modest income of say $80,000. Well, what do you think releasing a list of the salaries of someone making $100,000 actually is in a town with only 100,000 or 5,000 people? We don't all have the relative anonymity of living in the GTA.
Third, the list also needs to be expanded to truly reflect the spending of public sector money on compensation. A case in point, universities must report all of their employees making over $100,000 because they are a public sector agency but it remains that universities in Ontario today only directly get between 40 and 50 percent of their funding from the Ontario taxpayer. The rest is own source revenue generation and tuition and while you can argue that many Ontario students get loans or even free tuition from the taxpayer that still does not sum up the public sector funding share to 100 percent. University professors do not get 100 percent of their salaries from the Ontario taxpayer and yet 100 percent of their salary is reported. On the other hand, physicians who are nearly 100 percent taxpayer funded are not on the list (unless they are directly salaried or employed by a public agency) because they are independent contractors. Two points here: 1) a taxpayer dollar is a taxpayer dollar no matter how it is spent and 2) I'm surprised universities have not been more enterprising in redefining how their faculty are paid thereby removing large numbers of them from the list.
So, there you have it. I think the list released under the Public Sector Salary Disclosure Act is important and part of the mechanism of accountability and democracy in government. However, by focusing only on salaried employees of public sector agencies and government making over $100,000 a year misses the point as to how large the public sector actually is when it comes to employment and the spending of taxpayer dollars. The list should be expanded. As the song goes, the task of filling in the names I'd rather leave to you.
However, there is a reluctance to adjust the threshold to account for inflation and as the Premier of Ontario herself has noted, the people of the province have a right to know what public servants are earning because after all $100,000 is still a significant amount of money to the "vast majority" of Ontario residents. This is a somewhat curious statement given what seems the Premier's lack of concern about other big numbers when it comes to Ontario's public finances. For example, the provincial net debt is at about $312 billion which is indeed a significant amount of money as is the nearly $12 billion dollars annually required to service it.
Perhaps the problem is the difficulty many have in dealing with numbers that are so large that they are outside their daily experience. After all, most people deal with numbers in the thousands when it comes to salaries and annual living expenses rather than billions. What is needed here is perhaps some type of currency conversion mechanism that translates these large numbers into something the public can more easily grasp.
So, how many "Listers" at a threshold of $100,000 would make up the Ontario public debt? That number comes out to 3,120,000 - which is still a very large number - and represents just under half of total employment in Ontario which is at about 7 million people. However, a number in the millions is still very large. Ontario this week will deliver a budget and the expectation is that the deficit may reach $8 billion. How many "Listers" would make up an $8 billion deficit? Well, 80,000 which is a much more manageable number but as a number still higher than the median income of Canadians. How many Presidents and CEOs of the Independent Electricity System Operator fit into the net public debt? About 416,000. Ministers of Northern Development and Mines? You can get 1.89 million of those. But I digress...
It remains that the list is needed as an indicator of public sector spending as well as to provide transparency as to what the public sector spends notwithstanding what has become an exercise in showmanship without any effort to gain some additional insight and understanding about public sector spending. Indeed, the fixation on the large numbers in the annual release masks the fact that there should be some serious concerns expressed about how the list is constructed, transparency and indeed what it tells us about people and what they are paid and how that information is used.
First, while the "List" was supposed to be an accountability device that would somehow restrain the growth of public sector salaries it remains that it has not. Indeed, I would venture that making the salaries public has actually provided a basis of individual comparison that has resulted in driving salaries up in the broader public sector not just in Ontario but across the country. You don't hear about private sector salaries being driven up in part because that information is usually considered proprietary or confidential and its absence hinders the ability of individuals to make comparisons and decide they deserve more and make use of it to negotiate a higher salary.
Second, the list is inequitable because it separates public servants based on an arbitrary threshold that was selected because at the time it seemed like a big, round number - $100,000. However, for true accountability, all public sector salaries should be reported. There should be two lists released every year - a public sector salary disclosure list with those making over $100,000 and another with those making under $100,000. Yes, the list would be very very large but that would be the point. There are a large number of broader public sector workers and public sector spending in Ontario is not just driven by the 131,741 people making over $100,000 but also by the over 1 million people in the broader public sector making under $100,000. Would it be an invasion of the privacy of those individuals making a more modest income of say $80,000. Well, what do you think releasing a list of the salaries of someone making $100,000 actually is in a town with only 100,000 or 5,000 people? We don't all have the relative anonymity of living in the GTA.
Third, the list also needs to be expanded to truly reflect the spending of public sector money on compensation. A case in point, universities must report all of their employees making over $100,000 because they are a public sector agency but it remains that universities in Ontario today only directly get between 40 and 50 percent of their funding from the Ontario taxpayer. The rest is own source revenue generation and tuition and while you can argue that many Ontario students get loans or even free tuition from the taxpayer that still does not sum up the public sector funding share to 100 percent. University professors do not get 100 percent of their salaries from the Ontario taxpayer and yet 100 percent of their salary is reported. On the other hand, physicians who are nearly 100 percent taxpayer funded are not on the list (unless they are directly salaried or employed by a public agency) because they are independent contractors. Two points here: 1) a taxpayer dollar is a taxpayer dollar no matter how it is spent and 2) I'm surprised universities have not been more enterprising in redefining how their faculty are paid thereby removing large numbers of them from the list.
So, there you have it. I think the list released under the Public Sector Salary Disclosure Act is important and part of the mechanism of accountability and democracy in government. However, by focusing only on salaried employees of public sector agencies and government making over $100,000 a year misses the point as to how large the public sector actually is when it comes to employment and the spending of taxpayer dollars. The list should be expanded. As the song goes, the task of filling in the names I'd rather leave to you.
Subscribe to:
Posts (Atom)