Northern Economist 2.0

Tuesday, 25 April 2017

Economic News Around the North: April 25th Edition

It has been a very busy few days when it comes to economic news affecting northern Ontario.  Here is a quick summary of stories:

Well, the softwood lumber dispute is back.  Just as the industry in northern Ontario was beginning to recover from the forest sector crisis, there is going to be a tariff on softwood lumber.  The rates apparently range from 3% to 24%.  Resolute is facing a 12.82 percent tariff with other producers in northern Ontario apparently getting the blanket tariff of 19.88 percent.

Canada vows to fight 'unfair and punitive duty' as Trump slaps tariff on softwood lumber. Financial Post. April 25th, 2017.

Ontario is launching its basic income pilot project and the northern Ontario city selected to participate is Thunder Bay (along with Lindsay and Hamilton) where about 1,000 households will be selected to participate.  According to the news item reported here: "A single person could receive up to about $17,000 a year, minus half of any income he or she earns. A couple could receive up to $24,000 per year. People with disabilities could receive up to $6,000 more per year."

Ontario basic income pilot to launch in Hamilton, Lindsay and Thunder Bay. CBC News, April 24, 2017.

I would imagine that none of the Thunder Bay recipients basic income will be residents of the new housing development approved by Thunder Bay City council this week. A 49 lot subdivision was approved that really is a testament to urban sprawl and an example of poor long-term financial planning given the costs of servicing the infrastructure. Ultimately a three kilometer sewer line will have to be extended from Parkdale to the new subdivision.  That is a long sewer line to put through very low urban density areas.

Maplewood Estates expansion approved by Thunder Bay city council. CBC News, Thunder Bay, April 25th, 2017.

In other news around the north.

New flight training centre could create up to 150 jobs in Sudbury. Northern Ontario Business. April 18th, 2017.

Northern Ontario railway still struggling. April 25th, 2017.

The release of the latest in a series of Northern Policy Institute reports on boosting immigration.

Project aims to attract immigrants to the North. Sault Star, April 20th, 2017.

Decline in available workers a growing concern. April 18th, 2017. 

Also in the Sault:

Ontario Supporting Craft Brewery Expansion in Sault Ste. Marie., April 21st, 2017.

City pleads the need for Essar's tax money. Sault Star. April 19th, 2017.

Some controversy still in North Bay regarding a new casino project.

Casino risky for economy., April 20th, 2017.

Is help on the way for northern Ontario from the federal government?  Apparently: "The federal government is working to attract jobs and qualified people to Northern Ontario in an attempt to turn around the loss of population – particularly young people – according to the federal minister of Innovation, Science and Economic Development."

"All-hands on deck" needed to reverse trend-minister. April 20th, 2017.  It was not exactly specified if the ship was heading into stormy waters or was sinking and needed to be abandoned.

And remember, Thursday is budget day in Ontario.  For my take on what to expect? See this.

Have a great week. 

Friday, 21 April 2017

Evaluating Northern Ontario’s Growth Plan-Part IV (Business and Consumer Insolvency)

This is the fourth in a series of posts in which I am presenting evidence evaluating the Growth Plan for Northern Ontario, which was released on March 4, 2011.  The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy. The goal was strengthening 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.
While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data.  My first post was an overview while my second post looked at employment and my third post looked at new investment spending as measured by building permits. In this post, I will be looking at consumer and business bankruptcies or insolvencies as an indicator of economic health.  All other things, during times of economic distress, one would expect to see more consumer and business bankruptcies while during better economic times, the numbers should be expected to decline.

Tuesday, 18 April 2017

Mortality in the North

Ontario’s Health Quality Council has just released a new report on Health Equity in northern Ontario that shows that Ontario’s northern regions lag behind provincial averages in quality of health and health care.  The geographic focus of the report is on the area that “extends north of Lake Huron to Hudson Bay and James Bay, and from the Quebec border in the east to the Manitoba border in the west, which represent nearly 80% of Ontario’s landmass.”  If you do not want to read the report, there is a pretty good overview in the Globe and Mail.

While northern Ontario has seen health gains over time, it remains that the gap in health indicators between the north and the south is growing and it may be worse than the report suggests because the report’s data is drawn from Statistics Canada’s Community Health Survey, which does not cover Indigenous people living on reserves.  As it stands, the relative gap in mortality rates has grown to 30 percent in 2012 from a 12-17 percent range in 1992.  In 2012, the age standardized mortality rate per 1,000 people was 5.7 in the northwest, 5.7 in the northeast and 4.4 in Ontario.

People in the North West LHIN region have a life expectancy of 78.6 years, compared to 81.5 years in Ontario. People in the North East LHIN region also have a markedly lower life expectancy than Ontario overall, of 79.0 years, or 2.5 years shorter than the Ontario average. The North West LHIN region has nearly double Ontario’s number of potential years of life lost due to avoidable deaths, at 6,023 years lost per 100,000 people over a two-year period, compared to 3,243 years per 100,000 people in Ontario. The North East LHIN region also has considerably higher potential years of life lost due to avoidable deaths than Ontario, at 4,763 years per 100,000 people. People in northern Ontario are more likely to die prematurely due to suicide, circulatory and respiratory disease.

The reasons for these differences are complex.  The north is a sparsely populated region and the vast differences make it difficult to deliver the same level of care one might get in Toronto to smaller isolated communities.  There are also lifestyle factors such as higher smoking, drinking and obesity rates in the north.  For example, the self-reported smoking rate was 26.0% in the North East LHIN region and 22.9% in the North West LHIN region, compared to 17.3% in Ontario.

However, access is also still an an issue.  According to the report: “People in the north are less likely than Ontarians as a whole to report having a family doctor, nurse practitioner or other regular health care provider – 89.2% of people in the North East LHIN region and 83.8% in the North West LHIN region, compared to 93.8% of people in Ontario.”  The Globe and Mail story quotes NDP health critic Frances Gélinas as saying that part of the blame for health-quality gaps between the north and south lies with the Liberal government’s move to concentrate health services and surgeries in “centres of excellence” in big cities in the south.

To that, let me add the following anecdotal observation.  Its not just centralization in the south that may be affecting access to health care in northern Ontario but also concentration of health services and facilities within the north’s few major urban centers themselves.  Take the case of Thunder Bay since the new centralized hospital and new medical school were put into place over a decade ago, there has been a steady migration of health services and facilities to the area around the new hospital on the north side of the city.  Indeed, even the Fort William Clinic is now technically in what used to be the old City of Port Arthur.  Twenty years ago, hospitals, diagnostic facilities and clinics appeared to be much more dispersed across the city’s two north-south population clusters. 

I would like to see a study of if there has been any impact on access to medical services and access particularly for those on the south side of the city to physician visits and diagnostic tests.  Especially, how have seniors with limited mobility and lower income people on the south side continued to access physician appointments and tests.  Do they have a higher rate of cancellation?  Would the south side benefit from having an Urgent Care Access Center like the types that have been springing up in southern Ontario cities? Perhaps there has been no change but I would like to see some evidence based results because my gut feeling is that it is much harder to access care even in the north’s larger urban centers and the result is fewer people going to see doctors and getting tests.  Moreover, those most likely to not make it to the doctor may be among more vulnerable populations. However, gut feelings are not enough to make policy. We need evidence.

Friday, 14 April 2017

Economic News Around the North: April 14th Edition

Well, we are heading into the Easter weekend.  Spring is a time of rebirth and who knows, after two decades of slow growth, perhaps the north's economy will finally resurrect itself in the third. On the other hand, Good Friday this year coincides with the anniversary of the sinking of the Titanic. Here are some of the stories that I felt were of economic significance for northern Ontario over the last week or so. 

Gas prices soar in city. TbNewswatch, April 13th, 2017.

Well the price of gas has shot up again, just in time for a long weekend but it is a phenomenon that hit the entire province.  If you want some insight on Canadian gasoline prices in general, there is an old post I did on gas prices on Worthwhile Canadian Initiative that also attracted quite a few comments that provided some interesting points.  The long and short, in my opinion, prices are higher because the companies can get away with charging more.  Price differentials across regions have converged over time and this may signify greater market power on the part of gas companies.

Alexander Henry one step closer to returning home. CBCThunderBay. April 11th, 2017.

There seems to be some support for relocating the former icebreaker Alexander Henry from Kingston to Thunder Bay's waterfront.  In principle, this will be an excellent addition to the waterfront as it can serve as the core exhibit for a transportation museum.  This might mesh in nicely with the plans for a grain museum which is being worked on by Nancy Perozzo's group.  As well, there are plans to relocate the Thunder Bay Art Gallery to the waterfront also.  When one looks at the restaurant development in the Waterfront area combined with the location of Magnus Theatre and the long-term plans to place an Events Centre in the area, one can finally see a substantial entertainment district coming into shape.  The one caveat - customers and money.  I know, presenting caveats and pros and cons does not go over well with local movers and shakers who prefer expressions of cheerful mindless optimism when it comes to economic development in the north but Thunder Bay's tax base is under stress and the city's population base and market size are limited.  Can Thunder Bay become a tourism destination with its central Canadian waterfront marked as "The Mid-Coast?"  Who really knows?

Thunder Bay taxi bylaw causes concern for council, taxi companies.  CBCThunderBay. April 11th, 2017.

Getting a taxi in Thunder Bay is a ordeal.  If you ever needed a taxi in the middle of a weekday afternoon on short notice, forget it as they are all engaged in "school runs". This is another example of how dependent even the private sector in northern Ontario is on public sector spending.  I won't even get into trying to get a taxi at the airport or late on a weekend after an evening out or the price.  Supply constraints have been very profitable for Thunder Bay taxi companies and by taking five years to re-write the taxi bylaws, Thunder Bay City Council has been aiding and abetting a cozy oligopoly.

Other Thunder Bay economic news:

First salty arrives in port. TbNewswatch. April 8th, 2017.

Grain shipments make for busy March at Thunder Bay port. CBCThunderBay. April 5, 2017.

Well, this has all been rather Thunder Bay centric to this point.  In other news:

Sudbury loses 400 jobs in March. April 7th, 2017.

Yet, things are going to get better as the Canada Revenue Agency has announced it is adding 543 full-time jobs to the Sudbury tax centre.

Council sets criteria for location of new events centre. CBCNewsSudbury. April 12th, 2017.

Sudbury appears to be moving forward at a rapid clip with a site selection team in place.  However, four of the five members of the selection team appear to be directly related to Sudbury's municipal government with a consultant from PWC as the fifth.  It would have been useful from an optics point of view to have a more arm's length group of experts.  Apparently the criteria for site selection includes cost, economic impact and parking.  In the end, it is all about weighting the criteria and if parking carries the biggest weight, then one should expect the greenfield site outside of the downtown as the final destination.

Here are some interesting items from North Bay.

Casinos siphoned millions from Sudbury, Brantford and Thunder Bay in 2014-15. April 12th, 2017.

And in another tourism infrastructure related story. ..

North Bay city council votes to keep Dionne house. CBCNewsSudbury. April 5th, 2017.

The only surprise here is that the City of North Bay was actually considering giving the historically significant house to a group that was going to move it to a "pioneer village" project 70 miles south of North Bay.  Why stop there, maybe they should consider moving it to Thunder Bay's waterfront - a nice plot of land between the yet to be completed hotel and the new condos?  

And in the relentless and ongoing efforts to attract new business activity via marketing techniques....

Invest Sault Ste. Marie website launched. SaultOnline. April 6th, 2017.

Sault needs to find gaming 'sweet spot'. April 9th, 2017.

And in Timmins, this story about the mining sector.

Gold is the new economic driver for Ontario mining. April 12th, 2017.

There were a number of interesting comments made. I was particularly intrigued by the Red Tape Challenge - an Ontario government consultation program for mining asking for input on what could be done to make the mining industry work better with government.   Dealing with red tape by engaging in yet more consultation seems like a typically Ontario way to address questions of efficiency and regulatory barriers.  However, with respect to gold as a driver, according to the president of the Ontario Mining Association:
What has changed in Ontario in the last 10 years is that gold is now a larger contributor than nickel and copper. That’s new and it is a combination of the price of the commodities and the number of new discoveries of gold and the new investments around gold,” said Hodgson.

Have a nice long weekend.

Tuesday, 11 April 2017

How Many Jobs Have Been Created in Thunder Bay?

One of Thunder Bay's Members of Parliament and currently Minister of Employment, Workforce Development and Labour - Patty Hajdu - asserted in a letter to the Chronicle-Journal this morning that "In the last eight months alone, the Canadian economy has created more than a quarter-million full-time jobs. In fact, 1,600 jobs new jobs have been created here in Thunder Bay since we were elected."  Needless to say, this piqued my curiosity and so I went off to Statistics Canada to see what Thunder Bay's total employment numbers have looked like since October of 2015 - the year the Trudeau Liberals  took office.

The results are provided in Figure 1, and are monthly seasonally un-adjusted total employment (three month moving average) for the Thunder Bay CMA.  The numbers show rising monthly employment from October 2015 to August 2016 and a decline since.  In October of 2015, total employment in Thunder Bay was 59,100 jobs and the total employed reached a peak of 61,300 by August of 2016.  This represents an increase of 2,200 jobs.  However, between August of 2016 and March of 2017, employment then declines from 61,300 to 59,300 - a drop of 2,000 jobs.  So, based on these numbers, from October of 2015 to March of 2017 Thunder Bay goes from 59,100 to 59,300 jobs for an increase of 200 jobs.

Of course, while these numbers are three month moving averages, they are not adjusted for seasonality. If we go from October 2015 to October 2016, employment grows from 59,100 to 60,800 for an increase of 1,700 jobs.  If we go from March 2016 to March 2017, we see total employment grow from 59,500 to 59,300 jobs - a decline of 200 jobs.  Based on Figure 1, Thunder Bay may have indeed seen the creation of 1,600 new jobs since the election of the Trudeau Liberal government but it also appears to have lost nearly as many jobs making for little in the addition of net new employment.

Saturday, 8 April 2017

Evaluating Northern Ontario's Growth Plan-Part III: Investment Spending

This is the third in a series of posts in which I am presenting evidence evaluating the Growth Plan for Northern Ontario, which was released on March 4, 2011.  The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy. The goal was strengthening 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.
While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data.  My first post was an overview of the series while my second post looked at employment. In this third post, I will be looking at new investment spending as measured by building permits.

Tuesday, 4 April 2017

Evaluating Northern Ontario's Growth Plan-Part II: Employment Generation

This is the second in a series of posts in which I will present evidence in an attempt to evaluate the Growth Plan for Northern Ontario, which was released on March 4, 2011.  The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy and its ultimate goal was 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.
While the provincial government did commit itself to the development of performance measures for ministry specific initiatives that supported the implementation of the plan, I will be using a broader set of indicators of overall economic performance that are supported by the availability of readily accessible public data. In this first post, I will be looking at employment.

Sunday, 2 April 2017

Economic News Around Northern Ontario: April 2nd Edition

Well it has been a busy end of term not just on campus but across northern Ontario. Here are the items that caught my interest over this last week in terms of general economic significance for the region.  The first two stories deal with the MPAC assessments this week.


This is a municipal public finance story that has been many years in the making.  Essentially, as a result of appeals and a ruling by MPAC, the City of Thunder Bay will have to refund $2 million to several retailers and grain elevator companies.  While this refund has been planned for, it does mean a reduction in revenues from these properties in the future.  This is part of a long-term trend away from business/industrial properties towards residential ratepayers and over the course of 25 years in Ontario has meant a shift in the share of property taxes away from the business/industrial sector and onto residential ratepayers.  While one might argue that in the past, the business/industrial sector was bearing too large a share, the situation has certainly gone the other way.  Of course, the real question is what should the optimal division be between the share of property taxes paid by residential ratepayers and business/industrial one.  In Thunder Bay, the situation has been aggravated by the industrial decline of the last 25 years which has seen several pulp and sawmills as well as grain elevators shut down,  For my  take on property taxation in Thunder Bay, see my January 24th 2017 post.  While there is certainly an economic case to be made about the division between residential and business property taxation, in the end the balance will be a political decision.

In other news:

The Niagara Region will be hosting the 2021 games beating out bids from Kitchener-Waterloo, Ottawa and Sudbury.  The Games are an opportunity to showcase your community and acquire some new infrastructure but at the same time they do come with some expenses.  Getting them can be a mixed blessing but they are fun.  I remember participating in the opening ceremonies of the 1981 games that were held in Thunder Bay.  I was much more agile as a dancer then.

Budget could transform FedNor: MP, Chronicle Journal, March 31st, 2017.

A lot is being made about the $25 million boost to FedNor as some type of trans-formative change to the agency.  A similar spin in a story in North Bay.

Feds ‘rebuilding’ FedNor, March 26th, 2017. 

The fact remains that FedNor's budget a decade ago was $76 million and last year it was $31 million and the $25 million is being spread out over 5 years.  I guess I really would need to be sold on what FedNor actually is other than a fund to sprinkle some politically motivated funding  on assorted projects to give some semblance to the idea that the federal government cares about northern Ontario's economic development.  The minor increase in funding without some kind of vision of what FedNor is transforming to suggests treading water in a palliative care setting rather than trans-formative change.

In other news of concern to long-term regional infrastructure and the north's transportation role:

Soo Locks economic necessity; future worries USACE, March 28th, 2017.

 The Chamber of Commerce did a big presentation in Timmins last week (They are coming to Thunder Bay April 21st).
Report cites challenges for Northern economy, March 29th, 2017.
 Other items:

Facts ‘n’ Figures: Canadian mining by the numbers, The Northern Miner. March 28th, 2017.

 This last item presents some numbers for the provinces but since all of the mining in Ontario is a northern Ontario economic activity, it provides an interesting snapshot.  Have a great week!

Sunday, 26 March 2017

Economic News Around Northern Ontario: March 26th Edition

Here are some of the recent items I found to be of economic significance to northern Ontario.  If you are interested in the regional impact of the Federal budget this week from my perspective, see my previous post. There was also this somewhat more upbeat story on CBC:

First nations, northern infrastructure to benefit from federal budget.  CBC News Sudbury. March 23rd, 2017.

As well, the 25 million dollar boost to Fednor seems to have gotten some attention.  I guess in northern Ontario, 25 million dollars is considered alot of money and the source of much optimism.

FedNor gets $25-million funding boost. March 24th, 2017.

In other upbeat news....

First ship of season arrives in Thunder Bay. Tbnewswatch. March 24th, 2017.

The arrival of the M.V. Manitoulin was a record breaking early arrival for the first ship and leads to the hope this is the start of another great shipping season for the Port of Thunder Bay.  The Port of Thunder Bay has been on an upward trend the last few years.

As well, it turns out Sunrise Records will be adding to Thunder Bay retail filling the hole left by the closure of HMV. See:

Thunder Bay indie store welcomes Sunrise.  CBC Thunder Bay. March 24th, 2017.

And the upbeat news continues all over the north.  In the Sault, despite concerns raised by the local Chamber of commerce at a public forum, the city's Mayor has assured everyone that municipal costs are under control.

City is controlling costs: mayor. March 24th, 2017.

After all, the city council in the Sault has shrunk from 12 to 10 saving $60,000 annually! However, to put $60,000 in perspective, keep in mind the total municipal levy for 2017 in the Sault is projected at 108.9 million dollars.

In terms of infrastructure, Timmins is opening a new hospice center  and the optimism was contagious also spilling over to a generally positive view of certain elements of the federal budget by the Timmins Chamber of Commerce.  Perhaps some of that new Fednor funding is headed towards highway construction in the Timmins area. See:

Timmins might choose concrete highways. March 24th, 2017.

Hopefully, concrete might do a better job withstanding the potholes that have been plaguing me as I drive around Thunder Bay.  It is difficult to remain upbeat when one's innards are constantly jarred by potholes.

Meanwhile, things are looking up in North Bay.  While North Bay's population, like much of that in northern Ontario is aging at a fast rate, it remains that there might be a silver (no pun intended) lining....

Growing seniors resource to north and south represents jobs., March 25th, 2017.

Finally, this item in terms of potential impacts of alleviating access in remote First Nation communties:

Pilot project could see drones deliver much-needed items to northern Ontario First Nations. CBC Toronto. March 19th, 2017.

Have a great week!

Saturday, 25 March 2017

Evaluating Northern Ontario's Growth Plan - Part I

The Growth Plan for Northern Ontario was released on March 4, 2011 and nearly six years on it is probably time to see what impact it has had on the economy of northern Ontario.  The 25-year plan was to guide provincial decision-making and investment in northern Ontario with the aim of strengthening the regional economy and its ultimate goal was 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.

Of course, evaluating the success of the Growth Plan for Northern Ontario can be a complicated endeavor as it is very important to decide what to measure.  The Plan itself did have a section on monitoring and performance measures – Section 8.4 that read as follows:

8.4 Monitoring and Performance Measures
8.4.1   The Minister of Infrastructure and the Minister of Northern Development, Mines and Forestry will jointly monitor overall implementation of this Plan and report on what progress provincial ministries and municipalities have made to implement the policies in this Plan.
8.4.2   The Minister of Infrastructure and the Minister of Northern Development, Mines and Forestry will work with external partners to develop a set of performance indicators to assist in Plan monitoring and reporting as set out in Policy 8.4.1.
8.4.3   Success in achieving this Plan's outcomes will, in part, be measured by assessing progress in:
  1. attracting investment and business growth in Northern Ontario
  2. diversifying the North's economic base
  3. supporting education and skills development of the North's workforce
  4. increasing the involvement of Aboriginal peoples in the northern economy
  5. improving the connectivity of the northern population though information technologies.

It is further acknowledged that long-term progress in these areas requires sustained, co-ordinated efforts by the Province and all its external partners.
8.4.4   The Province is further committed to the development of performance measures for ministry-specific initiatives that support implementation of the policies in this Plan.

Now the indicators suggested by this section can be considered important indicators of success but actually measuring them is a much more difficult endeavor and in the end one will have to measure some of them indirectly.  While it might be possible to measure government investments in aboriginal education and skills development, how does one measure diversifying the North’s economic base or increasing the involvement of Aboriginal people’s in the northern economy? 

So in the absence to my knowledge of any official effort to yet present comprehensive evidence as to what the overall progress and evaluation of the Growth Plan for Northern Ontario has been to date, I have decided to devote several blog posts in the coming weeks to assessing the impact of the plan on economic performance and activity in northern Ontario. And of course, as an economist there are some pretty standard measures or indicators of what I would term to be economic growth.  After all, if something is called a "Growth Plan" then one needs to see growth over the time period spanned by the plan.   Stay tuned!

Wednesday, 22 March 2017

Federal Budget 2017 Analysis

Well, the 2017 federal budget is out and I have put together some comments in two parts: general and northern Ontario specific.
General Comments

Today’s federal budget addresses Canada’s economic uncertainty by stimulating spending without adequately addressing the long-term productivity growth of Canada’s economy.  Total spending is expected to rise from 315.1 billion dollars in 2016-17 to reach 371.8 billion dollars by 2021-22 – an increase of 18 percent.  The 2017 federal budget is disquieting given that revenues will still rise from 292.1 billion dollars to 356 billion dollars – an increase of 22 percent - over the same period and yet still result in the accumulation of more deficits. 

The federal debt is 637.1 billion dollars in 2016-17 and projected at 756.9 billion dollars by 2021-22.  Debt service costs will rise from 24.3 to 33.3 billion dollars over the same period. The deficit will be 23 billion dollars in 2016-17, 28.5 billion dollars in 2017-18, 27.4 billion dollars in 2018-19 and decline moderately to 18.8 billion dollars in 2021-22.

While the introduction of a contingency reserve is welcome, it still remains there is no long-term plan for addressing the fiscal deficit situation of the federal government.  This is of concern given the importance of private sector confidence when it comes to making investment and business decisions.  This is also worrisome given that interest rates are projected to rise as well as the economic uncertainty we still face given the trade and economic policies of the Trump administration in Washington.

Despite the increased spending, there is to date relatively little to show for promised federal infrastructure investment and the federal government’s promises of a bold and transformative agenda have fallen flat when it comes to actual implementation.  While today’s budget focus on social policies such as more skills training, better access to child care, innovation and infrastructure spending for First Nations is commendable, there is really no assurance that the government will be able to implement anything given its slow pace of implementation on the preceding year’s infrastructure and spending commitments.   

According to a recent report from the Institute of Fiscal Studies and Democracy, the federal government already spends nearly $23 billion on innovation, skills development and training across 147 activities and there is little available in the way of performance measurement to evaluate what works and what does not.  
In the case of assistance to the middle class, it remains that the recent reduction in middle class tax rates from 22 to 20.5 percent generally benefited tax filers making between $50,000 and $100,000 per year while nearly two-thirds of Canadian tax-filers report total income below $50,000 and saw no benefit from the tax decrease. Moreover, the increase in unemployment insurance premiums in 2018 to partly offset the government’s skills-training proposals and the increase in excise taxes constitute a tax increase on the middle class. However, the government is to be commended for not further increasing the tax burden via increases in capital gains taxation.

While the federal government has grand aspirations and seems willing to spend a lot of money it falls short on achievement and does not appear able to fully address concerns that it is generating the best value for money.  A budget must be more than an aspirational document that announces spending that is to be spread out over time.  It should set goals and then achieve them. 

Northern Ontario Comments

This is a government that has decided to run large deficits and add substantially to the public debt.  In the case of northern Ontario, one has to ask where the regional benefits of this increased spending are given the federal emphasis on infrastructure investment, the innovation agenda and assistance to the middle class?  In many respects, the budget is a disappointment with respect to some of the specific issues the northern Ontario economy faces.    Northern Ontario is still characterized by slower economic and employment growth relative to the rest of the country and given that its has substantial representation at the federal level both in terms of MPs as well as cabinet, one wonders where the federal growth agenda for northern Ontario is now that we are two years into the federal mandate?

Northern Ontario receives little in the way of specific mention in Budget 2017.  An extra 25 million dollars over five years for Fednor is not much in a world of multi-billion dollar spending projects.  Here is what I would have liked to see in the 2017 federal budget with respect to the economic future of northern Ontario. 

·      1. It is Canada’s 150th anniversary.  Where is the federal vision that would see us embark on finally completing the Trans-Canada highway through northern Ontario up to a standard that is worthy of a nation as wealthy and developed as Canada?  When will there finally be a commitment to complete a four-lane national highway through the middle of Canada fully linking east and west?
·     2.  Northern Ontario municipalities have not had the increase in economic base characteristic of larger urban centers and their revenue is increasingly being borne by residential ratepayers.  At the same time, the physical infrastructure in northern Ontario municipalities is increasingly in need of repair and renewal.  Notwithstanding the announcements of investing in infrastructure, where are the federal infrastructure projects and dollars infrastructure in terms of roads, bridges and sewers here in northern Ontario?
·      3. Where is federal leadership when it comes to investing in the Ring of Fire?  Commodity prices have bottomed out and are in the process of starting an upturn.  What are the federal plans to providing the infrastructure investment to assist in development of mining resources in northern Ontario in advance of the coming upturn in commodity prices?
·      4. The federal government maintains it is committed to research and innovation and economic development.  When can we see some direct and more substantial federal investment in research directly related to northern Ontario economic development issues, to the analysis of the regional economy of northern Ontario, and the economics of natural resources, mining and transportation?  Where are the Federal Research Chairs and research support directly dedicated to these areas?
·      5. The 2016 Federal Budget said it planned to invest $8.4 billion over five years for indigenous people with $1.5 billion earmarked for 2016-17 and the 2017 Budget earmarks an additional 3.4 billion over the next five years.  The money was supposed to be spent on health, infrastructure, renovating and building schools on-reserve as well as improving water supply and treatment infrastructure.  How much of this in 2016-17 made its way to northern Ontario?  How much in 2017-18?

Sunday, 19 March 2017

Economic News Around Northern Ontario: March 19th Edition

Well, another week has come and gone and there are many economic stories bubbling around northern Ontario and even farther afield with implications for northern Ontario.  For example, this morning's Thunder Bay Chronicle-Journal reported on upcoming talks between the forest sector and the federal government on preparing for the upcoming Canada-US softwood lumber negotiations.  However, little information was provided in the story as to what strategy options are being explored as Canada moves into negotiations with the Trump administration on this file.

Stakes high for forestry sector, Chronicle-Journal March 19th, 2017.

The policies of the Trump administration will soon also be front and center with respect to environmental funding dealing with the Great Lakes.  The budget proposed in the United States has put forth rather large cuts to program spending and one area that will have a direct impact on northern Ontario is what seems to be the complete elimination of $300 million dollars annually for the Great Lakes Restoration Initiative with plans shifting the responsibility onto state and local governments.  See:

Canadian politicians outraged at Trump Great Lakes funding cuts.  The Globe and Mail, March 17th, 2017.

In brighter news, while northern Ontario reports the lowest optimism when it comes to construction activity in the Ontario Construction Secretariat 2017 Construction confidence Indicator, it is nevertheless up from 2016 and part of that optimism is due to a number of post-secondary construction projects in Sudbury and North Bay at Laurentian University and Canadore College.  However, the Trump effect is again rearing its head here as: "Despite the boost in overall confidence, nearly half of the 500 contractors surveyed report they expect the Donald Trump presidency to have a negative or harmful effect on Ontario’s economy and construction industry. This sentiment is most acute in Windsor-Sarnia where 59 per cent of respondents believe Trump’s government will harm Ontario’s economy." See:

Post-secondary projects generate optimism in North Bay, Sudbury-survey. North Bay Nugget, March 16th, 2017.

In business activity and expansion news:

Explor Resources starts drilling program on Timmins-area property. Northern Ontario Business. March 16th, 2017.

Prime Gelato makes the leap to grocery stores and restaurant menus in Thunder Bay. CBC News. March 17th, 2017.

U.S. Coast Guard ready to break ice from Duluth to Thunder Bay. CBC News. March 15th, 2017.

Seminar offered to help local firms export to the U.S. Saultonline. March 14th, 2017.

When it comes to civic issues and municipal government, a couple of items.  The urban renewal legacy of the 1970s haunts us still.  In Thunder Bay, they are revisiting the future of Victoriaville Mall.  In the 1970s, both the north and south downtowns in Thunder Bay (corresponding to the old cities of Port Arthur and Fort William) received urban renewal makeovers that in the long run were less than successful.  The Keskus Mall in downtown Port Arthur was eventually demolished to make way for the Casino but Victoriaville which was built right on the main downtown intersection and permanently affected traffic patterns lingers on and apparently costs the City of Thunder Bay $500,000 annually.  Victoriaville hit tough sledding right off the bat in the recession of the early 1980s as its anchor store -the Chapples family store - went under.  Keskus did not lose its major retail anchor until the late1990s when Eaton's went under. 

Thunder Bay city council considers step towards Victoriaville mall demolition. CBC News. March 15th, 2017.

And in Sudbury, the big municipal fiscal issue is the contentious reorganization of its fire and paramedic services with a big meeting slated for March 21st.  For my take on the issue and links to some of the news stories, see my earlier blog post here.

In Sudbury mining news, see:

Vale to mothball century-old Ontario nickel mine. March 13th, 2017.

It is also Federal budget week with the budget coming down March 22nd and we will have to see what emerges specifically geared towards northern Ontario.  For my contribution to federal budget debate this week, see here. Have a great week.