The Ring of Fire: Waiting for Ignition

There was an exchange in Ontario’s Legislature yesterday between MPP Norm Miller and Minister of Northern Development & Mines Bill Mauro regarding whether or not the government would “finally take a leadership role that will make the Ring of Fire a reality in Ontario?”  The minister responded that mineral exploration activity in Ontario was climbing and progress was being made and more specifically asserted that: “there are three other mines under construction in the province. But they want to spend their time focusing on one. There’s one not too far from my home community of Thunder Bay called the New Gold project. Speaker, right now it’s under construction and 600 people are working on a construction site. When that mine is open for the next 10, 20 or 30 years of its life, there are going to be 450 people working in that mine.”

My belief is that any full-blown development of the Ring of Fire is many years away given the ongoing negotiations with First Nations, the immense cost of transportation infrastructure to access the Ring of Fire as well as the state of resource and commodity markets.  However, it is worth examining whether there has been some progress in northern Ontario’s resource sector particularly when it comes to employment generation.  Figures 1 and 2 present employment in northern Ontario’s resource extraction sector as measured by Statistics Canada series  v91415810 (Northeast) and v91415829 (Northwest) on employment in Forestry, Fishing, Mining, Quarrying, Oil and Gas presented monthly from 3^rd month 2001 to 1^st month 2017.  

 

The results in Figure 1 show that while there is some substantial fluctuation in resource extraction over time with some large upswings, when a linear trend is fitted to the data the long-term performance is quite flat.  Indeed, average monthly employment was 21,500 in 2001 and 21,867 in 2016 – actually a 1.7 percent increase.   

 

Figure 2 is more interesting because it separates the employment data up into northeast and northwest Ontario.  While the northeast has trended up over time, the northwest has trended down.  Average monthly resource extraction employment in the northeast was 12,470 in 2001 and 17,892 in 2016 – an increase of average monthly employment over time of about 44 percent.  Meanwhile, the northwest has seen average monthly employment in resource extraction fall from 9,030 in 2001 to 3,975 in 2016 – a decline of 56 percent. 

This is a remarkable difference in performance and likely represents the long-term impact of the forest sector crisis on the northwest – which was much more forestry intensive than the northeast – as well as the relative success of mining in the northeast relative to the northwest.  While the northwest is seeing mining activity, it has not yet been on a sufficiently large enough scale to be the employment generator it is touted to be.  I suppose we are still waiting for the Ring of Fire to be ignited.

Economic News Around the North: March 3rd Edition

Well, this has been a busy week when it comes to news of economic significance for northern Ontario.  Here are some of the items that caught my interest with some occasional commentary.  Have a nice weekend!

Mining report card shows Ontario has room for improvement.  Northern Ontario Business. February 28th, 2017.

According to this report out of the Fraser Institute, Ontario has dropped to 18th place globally as an attractive place to do business in a mining company survey and ranking.

Sault Locks to open on March 25. Northern Ontario Business.  March 2nd, 2017.

Here's why health care funds for First Nations children aren't being spent. CBC News. March 3rd, 2017.

As is often the case, coordination and transactions costs are important elements in government and economic policy.  First Nation's health is under federal jurisdiction while health care is a provincial responsibility and most health services are provided under provincial jurisdiction and therefore require travel to access if you live on a remote reserve - yet travel costs are often not covered by Health Canada.

Thunder Bay shipyard owners reveal their plans. Tbnewswatch. February 28th, 2017.

Apparently, Thunder Bay's shipyard facility - a facility with a long and storied history dating back to the early 20th century - will soon be up and running again and creating 25 full-time jobs.

New garbage limit excludes apartment buildings and business. Tbnewswatch. February 28th, 2017.

This is quite an interesting story relating to municipal public finances.  The City of Thunder Bay is looking to save money by reducing the current limit of containers for residential garbage collection to two.  Apparently, these changes along with others will eliminate one truck and two positions through attrition resulting in savings of $150,000.  Needless to say, I am not particularly impressed with savings of $150,000 on a annual tax levy that is growing at over 3 percent a year and is approaching 200 million dollars.  Reducing the garbage limit is something that has been done in many other cities but it has been accompanied by substantial expansion of convenient recycling options.  This is not the case in Thunder Bay.  However, what is even more interesting to me is that businesses and apartment buildings are being excluded from the limit.  What this means is that residential ratepayers - who are now responsible for two-thirds of the tax levy - are seeing a 33 percent reduction in their service - while other ratepayers are seeing no change in their service level.  This essentially means that residential ratepayers are going to further subsidize the garbage service collection of non-residential rate payers.

A brief history of mining in Greater Sudbury. Sudbury.com. March 2, 2017.

Check out the historical footage on the accompanying video.

Timmins economic outlook predicts population decrease. Timminspress.com, February 26, 2017.

Mayor unable to confirm possible OPG job losses.  nugget.ca, March 1st, 2017.

And of course, what I think is the biggest story of the week given the energy intensive nature of northern Ontario economic activity...

Ontario cuts hydro bills by 17%, but ultimately it will cost ratepayers $1.4 billion a year more. Financial Post. March 2, 2017.

Essentially, Ontario electricity policy has become a case of either pay more now or pay more later with the distribution of payment over time a function of the temporal distance until the next election.  Editorial reaction is not particularly positive.  And, businesses are excluded from these hydro rate reductions apparently.  Besides, I just received a letter from my local hydro utility dated March 2nd that has "re-adjusted" my monthly billing amount and in an odd coincidence my new monthly bill just went up 17 percent!

Economic News Around the North: February 25th edition

Here are some of the stories that have some economic significance for northern Ontario over the last week that managed to catch my interest It was for the most part a relatively quiet week. Enjoy.

Investments in First Nations Infrastructure and Economies. Net News Ledger. February 25th, 2017.

Community accepts $99M settlement deal. Chronicle Journal. February 25th, 2017.

This settlement provides resources for the long-term economic sustainability of Fort William First Nation.  Investing the funds in an endowment would generate a stream of income in perpetuity available for investment in economic, social and infrastructure projects.

Marshalls coming to Thunder Bay in 2018. Tbnewswatch. February 24th, 2017.

Time to reignite Ring of Fire.  Sudbury Star. February 25th, 2017.

This one is an op-ed from one of the many candidates currently running for leadership of the Federal Conservative Party. It might be interesting if not entertaining to hear what Kevin O'Leary thinks about the Ring of Fire as a viable business proposition.

Local economy needs immigration, forum hears.  Saultthisweek.com. February 21st, 2017.

DSSAB issue dividing region. Timminspress.com. February 24th, 2017.

Expect these types of cost-sharing issues to become more common around the north given declining urban populations and rising taxes.

Brace for impact of U.S. softwood lumber duties. Northern Ontario Business. February 22nd, 2017.

Again, it is difficult to know where this issue might go.  We may get some insight on Canada in the world of Donald Trump from Derek Burney at his talk this week in Thunder Bay.

Fiscal Comparisons for Major Northern Ontario Cities

The results of the 2016 Census for major northern Ontario cities draws attention to what I think is growing evidence that high and rising municipal property tax and user charge burdens have been inducing tax migration to surrounding lower tax townships and municipalities.  In many respects, northern Ontario cities are in a tough spot given that they have declining tax bases as a result of weak economic growth, dispersed urban areas to serve, weak population growth, and fixed costs and obligations to comply with provincial legislation affecting municipalities.

Economic News Around the North: February 17th Edition

Here is listing of some news stories across northern Ontario over the last few days that I feel are of some economic significance for the region.  There was actually quite a bit going on.  Have a nice weekend.

Why the North's Cities are Losing Population

Everyone is still pretty much digesting last week's census results and the news that many northern Ontario's cities actually lost population.  Of course, the immediate gut reaction to the population decline of what are supposed to be the regional magnets for growth will focus on a slow economy as well as cries that the provincial government needs to do something.  I think its important to think more carefully about what actually is happening given that northern Ontario as a whole actually saw a slight population increase.  Here is my take on what some of the factors may be.

Economic News Around the North: February 10th Edition

Here is a listing of some of the major news stories around northern Ontario this week that in my view have some economic significance for the region.  Of course, much of the week's news was dominated by the release of the 2016 Census population counts.  Most of the stories in the regional media focused on local results (major centers actually saw declines) and there was little in the way of putting the results together for northern Ontario as a whole - though you can always see my post on the regional perspective. Enjoy and have a nice weekend.

Preparing Northern Ontario for the Future. Government of Ontario News. February 8th, 2017.

This was an item that does not seem to have been picked up by regional media but then despite the title of the release the actual report was a long-term report on Ontario's economy.  The long and short - population and economic growth are being concentrated in the GTA.

Population decline is a Northern Ontario thing, says mayor.  Timmins Today. February 9th, 2017.

Thunder Bay's population experiencing low growth. TBnewswatch. February 9th, 2017.

City Stalled; Stagnant growth, aging population present economic challenges. Chronicle-Journal. February 9th, 2017.

While the Thunder Bay CMA remained stable (up 25 people from 2011), the city itself saw the loss of 450 people. However, it should be noted that in this story, Thunder Bay's Mayor was optimistic about the Ring of Fire and admitted being surprised by the numbers given that there had been indications of heightened economic activity like more building permits.  Given that the Thunder Bay CMA remained stable (0% growth), surrounding municipalities like Neebing (3.5%), Oliver Paipoonge (3.3%) and Shuniah (2.2%) saw increases, and the City of Thunder Bay fell (-0.4%), one wonders if the Mayor is willing to draw any insights from the Tiebout Model of migration as to why people have essentially been leaving the city but population in surrounding areas has been growing?  I'd explain more but my time is limited.  Looking for analysis? Hey, where is that research chair on the northern Ontario economy?

Sudbury's economic outlook positive. Sudbury.com. February 9th, 2017.

Mayor optimistic, despite weak population growth. Sudbury Star. February 9th, 2017.

Census. Thousands leave northern Ontario cities over last 5 years. CBC News Sudbury. February 9th, 2017.

Greater Sudbury is growing, but more people moving to the outskirts. CBC News Sudbury. February 9th, 2017.

Well, despite Tiebout effects, Sudbury is still growing.

North Bay's population down 3.9%-census. North Bay Nugget. February 8th, 2017.

Mayor confused by decline in North Bay's population. North Bay Nugget. February 8th, 2017.

I am not confused at all.  Despite the increase in construction and building permits, there is really only so much government building projects can do.  Sometimes, you need a surge in private sector investment too.

Census data shows Sault population declining. Sault Star. February 8th, 2017.

How on earth did Jocelyn Township's population grow one-third in five years? SOOToday. February 10th, 2017.

Sounds like more insights from the Tiebout Model in the Sault also.

2016 Census of Canada: Northern Ontario Results

Well, the population counts of the 2016 Census of Canada were released by Statistics Canada today and there is an odd assortment of results for northern Ontario that are both good and bad. Canada's population in 2016 was 35,151,728 - an increase of 5 percent from 2011 - while Ontario's population was 13,448,494 - an increase of 4.6% from 2011.  Northern Ontario's population actually grew between 2011 and 2016 from 775,178 to reach 780,140 for an increase of 0.64 percent. 

Economic News Around the North: February 3rd Edition

Here are some stories over the last week from across northern Ontario  that I feel have some significance for the region's economy.  Have a nice weekend.

What the Finns can offer Northern Ontario's biomass economy. Northern Ontario Business. Jan 27th, 2017.

Thunder Bay and Fort William First Nation partner on economic development. Northern Ontario Business. February 2nd, 2017.

City to push economic development at ROMA. North Bay Nugget. January 29th, 2017.

Ring of Fire mining development still years away from delivering on a decade of hype. CBC Thunder Bay, January 30th, 2017.

Province pulls plug on loan program. Sault Star. February 2nd, 2017.

Sudbury a magnet for newcomers. Sudbury Star. February 1st, 2017.

And for those of you who believe that politics and institutions are important to economic performance, two stories of interest this week.

First, while its not yet Easter, there is this resurrection (It must be a slow news week in Sudbury):

We're one Ontario, says Wynne. Dismisses separation effort. Sudbury.com. January 27, 2017.

And for those of you who believe that the context of leadership does matter and that government leadership should aspire to formal and decorous behavior in order to help foster a community environment attractive to business and economic activity, there are these:

Hobbs sues Zaitzeff over YouTube video. Tbnewswatch. February 2, 2017.

Hobbs serves notice against Zaitzeff. Chronicle Journal. February 1, 2017.

Demographics in Northern Ontario: Getting Ready for Census 2016

On February 8^th, Statistics Canada is expected to release the Population and Dwelling Counts for the 2016 Census.  This is of interest everywhere but no more so than in northern Ontario where the 2011 Census registered population declines from 2006.  Indeed, the long-term trend has been for a shrinking population in northern Ontario both in absolute numbers and as share of Ontario’s population.  In 1976, northern Ontario (Algoma, Cochrane, Kenora, Manitoulin, Muskoka, Nipissing, Parry Sound, Rainy River, Sudbury [District & Regional Municipality], Thunder Bay & Temiskaming) accounted for about 10 percent of Ontario’s population whereas by 2011 it was down to 6 percent.

Economic News Around the North: January 27th Edition

Here are some new items that I found to be of interest with respect to the economy of northern Ontario over the last week or so.  Some are not quite what they seem - North Bay (and Thunder Bay) do well by not making this list.  Have a nice weekend. Livio.


New Veterans Affairs office opens in Thunder Bay. CBC News, Jan. 26, 2017

5 Things to know about Thunder Bay's proposed city budget. CBC News, Jan 24, 2017.

Tax levy could rise by millions. Chronicle Journal, Jan 24, 2017.

Steel, hub important to Ontario, Wynne tells mayor. Sault Star, Jan 26, 2017.

Mineral exploration on the rebound. Northern Ontario Business. Jan 26, 2017

Putting a value on the North's assets. Northern Ontario business. Jan 24, 2017.

Proposed Sudbury arena would be a "showpiece of Northern Ontario" sudbury.com,  January 26, 2017.

North Bay fails to crack list of top 25 cities. North Bay Nugget. Jan 27, 2017.

Economic News Around the North: January 20th, Edition

Here is a listing of some stories around northern Ontario over the last few days of economic significance for the region. Congratulations to Thunder Bay International Airport and Laurentian University for their milestones. Enjoy. 

Thunder Bay Airport Sets New Passenger Record, Tbnewswatch, January 16, 2017.

Laurentian celebrates official opening of School of Architecture, sudbury.com, January 19th, 2017

Sudbury businesses question if labour law changes are necessary. Northern Ontario Business, January 16, 2017.

Carbon bill hits city hall. Chronicle-Journal, January 16, 2017.

Good news for Sudbury on jobs front. Sudbury Star, January 13th, 2017. 

Energy costs continue to be a concern across the north. SooToday, January 18, 2017.

FedNor invests $460,000 into Nipissing, Parry Sound, Muskoka economy. NorthBayNipissing.com, January 19, 2017.

NWO First Nations drop injunction bid against pipeline work. Tbnewswatch, January 19, 2017.

Housing Prices in Sudbury and Thunder Bay: The Boom is Over

A key feature of housing markets in Canada over the last decade is the sustained price increases particularly in larger urban centers such as Vancouver and Toronto.  Despite a relatively flat economy and stagnant population growth, even northern Ontario has seen a price surge in its two largest urban housing markets: Greater Sudbury and Thunder Bay.  However, while Ontario’s housing price surge especially in the GTA shows little sign of abating, it appears that economic reality may have finally caught up with northern Ontario’s largest housing markets as prices appear set to level off.

The North's Economy and Births: Bad Times Lead to Fewer Babies

The link between the economy and the number of births is an important one in both demographic and economic analysis.  One view maintains that a poor economy breeds uncertainty about the future and in turn results in families postponing children and therefore a reduction in both the number of total births as well as the birth rate.  Another view maintains that a poor economy reduces the opportunity cost of having children – that is, if you do not have a job, why not use the time to start a family – and the result would be a higher birth rate.  A lot of recent evidence from the current recession suggests that a poor economy results in fewer births. For example, the Economist Magazine recently chronicled a recent drop in fertility rates amongst European countries hit hard by the recession.

Figure 1 

 

In Ontario, a comparison of Ontario with its North – the chronic poor economic performer – also suggests that a more buoyant economy results in more births (Figure 1).  Using birth data from Statistics Canada, it appears that after a period of decline in the 1990s, total births in Ontario have been rising since 2000.  Between 2000 and 2010, total births in Ontario rose by 13 percent.  Meanwhile, between 2000 and 2010, the total number of births in Northwestern Ontario declined by 9 percent while the number in the relatively more prosperous Northeast (which had robust mining activity and a less severe forest sector downturn) actually grew by about one-half of one percent. 

Figure 2

 

If one looks at total births in Northern Ontario by region (Figure 2), many regions have stayed relatively flat in terms of the total number of births, some have declined and one in particular – Greater Sudbury and Nipissing – have seen increases over the last decade.  Indeed, much of the growth in the number of births that has occurred in the Northeast has been over the last five years reversing the declines of the late 1990s.  Between 2005 and 2010 (Figure 3), with the exception of Manitoulin, all the regions of Northeastern Ontario have posted increases in the number of births with the largest percent age increases being in Nipissing and Greater Sudbury.  Meanwhile, the Northwest has seen declines in the number of births in Rainy River and Thunder Bay and an increase only in the Kenora District.

Figure 3

 

Based on the total number of births as an indicator of economic opportunity and optimism, it would appear that over the period 2005 to 2010, the economy performed reasonably well in much of Northeastern Ontario relative to the Northwest.  In the Northeast, the Timiskaming and Manitoulin regions seem the most depressed while in the Northwest, Rainy River is in particularly poor shape especially relative to the Kenora region.  Nevertheless, the economy of the Northwest has begun to move beyond the forest sector downturn.  Given the improvements in the economy as a result of growing mining activity in the Northwest that have been occurring over the last two years, one thing we can expect in the future in Northwestern Ontario is an uptick in the number of births. Who knows, maybe in Thunder Bay they may actually find they need more schools after the slew they closed over the last decade.