Northern Economist 2.0

Showing posts with label thunder bay. Show all posts
Showing posts with label thunder bay. Show all posts

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.

Friday, 17 March 2017

Fire Services in the North: The Case of Sudbury

Sudbury is in a bit of a tizzy over proposed changes to its fire and paramedic services.  The proposed plan will see nine of the current 24 fire halls closed and a move to reduce the number of volunteer firefighters and hire more full time firefighters. The staff report estimates that the full-time compliment would go from 108 to 166 within the next decade, while the volunteer ranks would be almost cut in half from the current staffing level of 350.

Sudbury is a very large and dispersed municipality with the central core area served by full time firefighters and outlying areas served by volunteers who are paid part-time employees. Under the new plan, Sudbury's municipal government maintains that firefighters would be able to reach 90 percent of Greater Sudbury within nine minutes, as opposed to the current 69 percent.  Part of what is planned is an equalization of services to standardize and improve coverage and response times.  However, part of the plan also involves composite stations staffed by both full-time and volunteer firefighters, as well as increases in taxes in the areas currently served by volunteer firefighters.

It is useful to see where Greater Sudbury stands in its fire service costs relative to other cities in Ontario.  Figure 1 uses data from the BMA Management Consulting 2016 Municipal Study to plot the net per capita fire service costs (including amortization of any capital assets) for cities in Ontario with more than 100,000 of population as well as the Northern Ontario Five (N5) – Thunder Bay, Timmins, Sault Ste Marie, North Bay, and Greater Sudbury.  The results show quite a difference in per capita costs ranging from a high of $273 in Thunder Bay to a low of $102 in Milton.  Sudbury’s costs are quite modest coming in at $149 – the lowest among the N5 – and placing 22nd among the 27 cities in Figure 1. 
Of course, one can understand the concerns of ratepayers in Greater Sudbury that the proposed changes will raise costs and therefore raise taxes. The costs of fire fighting according to the BMA Municipal Study 2016 Report can vary as a result of a number of factors, which include:

1. The nature and extent of fire risks: The type of building construction, i.e. apartment dwellings vs. single-family homes versus institutions such as hospitals
2. Geography: Topography, urban/rural mix, road congestion and fire station locations and travel distances from those stations
3. Fire prevention and education efforts: Enforcement of the fire code, and the presence of working smoke alarms
4. Collective agreements: Differences in what stage of multi‐year agreements municipalities are at and also differences in agreements about how many staff are required on a fire vehicle
5. Staffing model: Full‐time firefighters or composite (full‐time and part‐time)

Costs in the end are an interactive function of the geographic area that must be served as well as the population base in that area that is available to cover the costs as well as its compactness - in other words, population density is a factor.  The importance of population density as a determinant of fire service costs is highlighted in Figure 2, which plots the net costs per capita of Figure 1 against population density (population per square kilometer) and reveals an inverse relationship when a linear regression is fitted to the data.  It of course does not control for any other variables and there is a fair amount of dispersion (the R-squared is also very low) around the fitted relationship but if Sudbury’s population density is plugged into the relationship, all other thing given, the per capita cost of its fire services rise to 181 dollars per capita.  Thus for Sudbury to be at 149 dollars per capita it must mean there are other factors affecting its costs or it is doing something to keep its costs well below – nearly 20 percent below - what is predicted by its population density alone.
It is the volunteer staffing model which has probably been a factor in keeping Sudbury’s fire fighting costs per capita relatively low given the large land area that must be served and the accompanying low population density.  Moving away from this model will probably bring Sudbury’s per capita costs more in line with other major Ontario municipalities.  No wonder ratepayers are upset.  At the same time, making the changes needs to weigh the improvements in service and response time that are expected to emerge against the expected additional costs.  It is an important cost-benefit analysis and should make for an interesting City council meeting in Sudbury on March 21st.

Friday, 10 March 2017

The Wall

Thunder Bay is a relatively young city by historical standards and springing into life on the resource frontier and yearning for acceptance into the big leagues, it has always had a conflicted relationship with its architectural past.  Thunder Bay seems to equate growth and development with being new and something new is always assumed to be better except of course when it comes to its politicians as the longevity of its political representation often illustrates.  A great deal of Thunder Bay’s architectural heritage has been lost over the decades and invariably the arguments for tearing it down involve bringing in something new and supposedly cheaper. 

The latest case involves the controversy over “The Wall”.  Whereas Donald Trump’s “Wall” and the “The Wall” from Game of Thrones are both designed to keep people out, in Thunder Bay’s case, the wall along High Street was designed to keep things in place – it is a retaining wall.  Looking at it, one might think it is a remnant built in medieval times and anchored a fortress of the Knights Templar but it was built in the 1940s along a section of High Street –once one of Port Arthur’s most exclusive neighborhoods.  


Now, the wall is in need of repair and the majority of Thunder Bay city council has opted to replace it with a pre-cast concrete wall at a proposed cost of $2.4 million.  My guess is that members of City council probably think this is a reasonable compromise.  After all, it will still resemble an old wall and it will be new! Apparently, the members of the local Brick and Allied Craft Union who might be deemed to have some expertise with respect to bricks, stones and walls have suggested that the wall can be repaired and more cheaply than the $2.4 million earmarked for the replacement.

The attitude of City Council is probably best summarized by Mayor Hobbs, who stated in a letter to the editor that: “Historic Hadrian’s Wall is just a pile of crumbled stones now.  What is modern today and not satisfactory to some will one day be historic.  Roll with it folks.”  Needless to say, the remark succinctly reflects the attitude that has been responsible for the razing of large sections of our history.  And to be fair, it is an attitude that exists in  other parts of urban Canada.  Downtown Toronto has seen large swaths of its past similarly demolished because despite its size and self perceived sense of grandeur and sophistication, Toronto is really just a large version of Thunder Bay.

We are a young city and simply disposing of everything after 50 or 100 years means that in the end our city will always look like it has just been put together.  Perhaps this is what the vast majority of people in Thunder Bay prefer because they do not feel that their past is as glamorous as that of Athens, Rome, Paris or London.  Always having something new and shiny may give you something to boast about in the short run but it is short sighted and reflects a people who are fundamentally insecure about who and what they are.  True, we cannot keep everything but we should at least make more of an effort to give the past a fighting chance.

Wednesday, 1 March 2017

Thunder Bay Airport Flying Higher

Thunder Bay Airport (YQT) has seen another year of growth hitting an all-time high for passenger numbers in 2016 by exceeding 800,000 passengers for the first time – 807,041 passengers to be exact.  Some of the recent growth has come from the depreciation in the Canadian dollar relative to the US dollar, which has attracted Americans away from airports in Duluth and Minneapolis.  This is certainly a welcome development given that market size in northwestern Ontario is relatively stable given population trends. This is also a regional success story and according to the Thunder Bay International Airport Authority’s (TBIAA) own estimates generates an estimated $645 million dollars in GDP annually and creates 5000 jobs. 

And of course, one does not need an economic impact study to see the importance of better air connections to Toronto with three airlines now competing for your business and offering on weekdays a total of 16 flights daily (Air Canada-6; Porter – 6; Westjet – 4).  When one adds seasonal flights to tropical destinations as well as assorted regional airlines like Wasaya and Bearskin, It is indeed a golden age for air travel out of Thunder Bay.

Figure 1 plots the total number of passengers out of Thunder Bay airport and they show an increase from 503,428 in 1997 to 807,041 in 2016 – an increase of 60 percent.  The average annual growth rate of passenger volume over this period has been 2.6 percent but there have been some fluctuations as Figure 2 illustrates.   

The years 2002, 2005 and 2008 saw large dips in the growth rate as a result of the forest sector crisis and the onset of the Great Recession.  There was a substantial rebound starting in 2009 but 2014 and 2015 also witnessed a flattening out of growth.  As a result, the increase of 4.5 percent in 2016 is certainly quite welcome and hopefully represents the start of a new growth curve similar to what occurred after 2009.  If this new phase of growth is being based on American travelers out of Minnesota taking advantage of a stronger US dollar then the exchange rate as well as border crossing issues will be crucial variables.

Historical Workshop This Weekend

The Lakehead Social History Institute is sponsoring a community workshop on quantitative history this weekend on Saturday March 4, 2017 at the Mary J. L. Black Library.    There will be five brief presentations on research using a variety of sources from 12:30 to 2:30 and then a hands on workshop from 2:30 to 4:30.  Admission is free.

I will be doing a presentation titled "Who Had What? A Quantitative Analysis of Wealth and Inequality in the Thunder Bay District Using Probate Data, 1885 to 1930."  I will be discussing my wealth research using probate records and apply the data I have compiled for the Thunder Bay District to examine trends in wealth during the foundation, settlement and boom periods of the Lakehead as well as the distribution of wealth and property.

See you there!

Tuesday, 24 January 2017

Do Municipalities Really Need New Revenue Tools?

Municipalities in Ontario have been agitating for new revenues particularly given the sluggish growth in provincial government grants.  Well, apparently at least one municipal councilor in Thunder Bay also believes that cities need more revenue tools.  This is in spite of the evidence that Ontario municipalities have seen their revenues grow quite robustly over time.  According to the Financial InformationReturns maintained by the Ontario Ministry of Municipal Affairs, between 2000 and 2015, total municipal revenues in Ontario more than doubled growing from $22.7 billion to $47.8 billion.  While the growth rate has slowed somewhat since the 2009 recession, it remains that since 2000 these revenues have grown at an annual average rate of 5.2 percent.  This is much faster than either Ontario’s population or GDP growth.

Friday, 20 January 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.

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. 

Sunday, 8 January 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.

Friday, 24 August 2012

Civic Reflections on a Summer Day

Well, it is still summer and the living is easy which is a much nicer way to view life when you get up in the morning than House Stark’s motto Winter is Coming though inevitably winter will be here soon enough.  Summer walks are definitely a great way to reacquaint yourself with your neighborhood and over the last few days I’ve been up and down the Junot Street corridor off of which I live to observe the state of developments.

As many in the neighborhood know, the City of Thunder Bay is planning to reconstruct the Golf Links Road/Junot Avenue corridor between the Harbour Expressway and Walkover Street.  The road will be widened to four lanes and there are plans to improve sidewalks and bike paths as well as municipal servicing.  Indeed, some new sidewalks are going in as I write.  This is also all related to plans for additional density development as the area continues to grow as a central residential and commercial area.  An open house was held in April to solicit input on land use in the area with suggestions ranging from the proposed new events centre to industrial use to a mining innovation centre.

Of course, development proposals and actual development are already underway – sort of. Condominium construction appears to be stalled at the Thunder Bay Golf Club on Junot aside from a rather large pile of dirt.  Hotel construction on Junot is proceeding well with the Days Inn there completing yet another lengthening.  One wonders if the plan is to make it into the world’s longest hotel as a tourist attraction.

The controversial new EMS Station is now open and still causing controversy given the new 75,000 dollar sculpture that was recently unveiled.  Of course, that piece of art is quite the bargain compared to the waterfront beacons, which ran nearly one million dollars.  The EMS art piece is much smaller and does not have whispers emanate from its base.  Indeed, being so small is probably why all the trees and brush were cleared from the other side of the street prior to installation – to afford the houses there a better view of both the new EMS station as well as its new art work.

The desire to develop this part of the City has been present for some time given the past attempt to put in a new Tim Horton’s/Hotel complex in the same area that sparked enormous neighborhood opposition.  Wooded land in the city does not generate tax revenue as well as residential, commercial or industrial land.  As a result, the wooded area across from the EMS station was apparently sold off for residential building lots with at least one municipal councilor on the evening news saying how it was a prime residential area.  That was of course quite amusing given that the original location of the EMS was further up the street where the residents of the prime residential area there chased it off.  In some respects, this is actually a clever strategy as once the EMS station is built, only people who want to live across from it will actually build there – with the exception of the homeowners who used to have trees as a buffer.

Given the ideal location of this land, we can no doubt expect many of our local politicians and notables to erect their homes there.  Perhaps we can be innovative and erect a new public centre in the spirit of our 55 Plus Centre – the Politician Plus Centre where current and past local politicians can go hang out and engage in creative discussions and activities or perhaps rent cheap accommodation in a prime neighborhood as a reward for their years of service.

However, winter is coming and with winter will come a reengagement with issues and debate for City Council.  While it is fun to debate bike lanes and tanning salons in the summer, I suppose they will need to deal with questions like what actually caused the water treatment plant to fail during last spring’s flooding.  Perhaps, we will also find out what is going to happen with the plans for the events centre or if we will indeed see hotel and condominium construction begin on the waterfront this year.   If we do not get answers, I suppose we can all go to the waterfront and ask for guidance from the whispering beacons.

Friday, 10 August 2012

Bureaucratic Entropy in Thunder Bay

There are constant comments in Thunder Bay that there are too many municipal workers and that the numbers have grown faster than the city itself.  In a 1979 article in the Urban Affairs Quarterly titled “Economy of Scale or Bureaucratic Entropy? Implications for Metropolitan Governmental Reorganization”, Hutcheson and Prather examine the relationship between the number of city employees and city population.  This study was done given the fashion of the time to implement metropolitan and regional city governments that consolidated jurisdictions that often was justified by the argument that more efficiency and economy in service delivery would result.  According to the authors:

“If efficiency can be defined as serving more residents with fewer employees, economies of scale might be demonstrated by a relative decrease in the size of bureaucracies as city size increases.” (Hutcheson & Prather, 167).

However, the authors find that not to be the case.  Increases in the number of employees appear to have outstripped the growth in population in the wake of amalgamations and metropolitan reforms.  The new institutions appear to have generated a dynamic in which has resulted in less rather than more efficiency.  They call this bureaucratic entropy.  Essentially, the new institutions create a kind of disorder, which decreases the efficiency with which manpower is converted into service outputs.  Or as they write:

“Or more simply put, it could be easier to ‘goldbrick’ in a larger bureaucracy.  Thus increasing city size may mean proportionately larger bureacracies, and perhaps diseconomies of scale.” (Hutcheson & Prather, 168).

Well, it would appear that bureaucratic entropy is alive and well in Thunder Bay at the municipal level.  The accompanying figure shows full-time equivalent employment numbers for the City of Thunder Bay for the period 2001 to 2011.  In 2001, FTE employment was 1,632.0 whereas by 2011 it had risen by 25 percent to reach 2032.7 (my estimate based on the 2012 operating budget breakdown).  Over the same period, the CMA population of Thunder Bay went from 121,986 to 121,597 – essentially, a stable population.

So is this bureaucratic entropy?  Did the creation of monopoly municipal government at the Lakehead after amalgamation in the place of the former competitive municipal structure of twin cities put in place a bureaucratic structure that does not keep costs in check?  That may be part of the explanation.  Another explanation lies in the mix of city services, the demand for new services as well as changes in their quality.  Municipal governments are expected to do more than they did in 1970 particularly in the areas of health and environment. Tied to all of this is the fact that in Ontario, municipalities are creatures of the provinces and there is often the downloading of functions that necessitate new employment.

A better question is the following.  Has municipal employment in Thunder Bay been growing faster than Canada as a whole?  Compare the following – from 2001 to 2011, municipal employment in Thunder Bay grows by 25 percent while population remains stable.  For Canada as a whole during this period, the number of municipal employees grew by 24 percent but population grew by 11 percent.  While municipal employment in Canada has been growing faster than population – perhaps an indicator of some bureaucratic entropy – the growth is more pronounced in Thunder Bay. 

Friday, 3 August 2012

Resolute Responds

Today’s Chronicle Journal had a one-page ad by Resolute Forest Products written in response to a Chronicle Journal editorial on July 18th entitled “Innovation But When”.   In the response, Resolute maintains that the editorial implies that there has been no capital investment or pro-active action taken by any Canadian or North American company relative to the forest products industry.  Resolute then proceeds to list the major capital projects it has recently announced: a 54 million dollar investment for improvements to a wood waste boiler and steam turbine installation at the Resolute Thunder Bay mill, an 8 million dollar upgrade of its sawmill complex, a 30 million dollar investment in the idled Ignace mill and another 20 million dollars at the newsprint mill in Iroquois Falls.

Resolute is justifiably miffed at being lumped in with a large chunk of the forest industry that did not invest sufficiently in its mills and met the perfect economic forestry storm of the early 21st century with aging infrastructure and equipment. Resolute is indeed an example of a proactive and engaged forest products company and its investments are key to the survival and prosperity of the forest products industry in Thunder Bay and the Northwest.  There is also its relationship with CRIBE (Centre for Research and Innovation in the Bio-Economy) and FP Innovations, which will look at innovative ways of using forest biomass.

In Thunder Bay, Resolute is the only survivor of that economic storm with a mill complex that dates back to the 1920s.  The Resolute mill is the latest corporate incarnation of the Great Lakes Paper Company, which over time has been Great Lakes Forest Products, Canadian Pacific Forest Products, Avenor, and Abitibi-Bowater. A hallmark of the original Great Lakes Paper was that it was locally owned and an example of local Lakehead entrepreneurship.  Having our own locally owned head office meant substantial control over investment decisions and white-collar employment that deepened our local labour and professional opportunities.  Indeed, the fact that this is the only pulp mill that ultimately survived out of the four mills in Thunder Bay is a testament to the original good decision making in plant and equipment that made the company viable for resale and continued production in the long run.

Resolute is also correct in maintaining that it had to deal with economic events largely out of its control such as the appreciation of the Canadian dollar or the decline in demand for newsprint driven by the technological change of the computer age.  Indeed, taking out a one-page newspaper ad is a wonderful example of supplier- induced demand. However, Resolute has developed a selective historical memory and conveniently omits the effect of provincial government policies on the forest sector crisis.  Indeed, it was not too long ago that the North cried out in protest against provincial wood allocation and electricity price policies.  Moreover, there was the exceedingly slow response of the provincial government in realizing the extent of the crisis and finally offering some relief in areas such as electricity prices. 

Finally, it should be noted that even active management and being proactive cannot always save you from the realities of the market especially when combined with slow or ineffective government policy assistance or indeed detrimental trade policies such as the softwood lumber dispute.  Witness what has happened to the Buchanan mills even with all their energetic responses and efforts.  It is an important lesson we should not forget.

Wednesday, 4 July 2012

Globe2Go From Thunder Bay

Well, I was rather disappointed to receive a letter from the Globe and Mail last week
informing me that the Globe and Mail would no longer deliver a paper copy in Thunder Bay starting September 1st.  The letter stated rising costs and service delivery issues as the reason and offered as a substitute a cheaper subscription to the electronic Globe and Mail known as Globe2Go.  Oddly enough, our service has actually improved immensely over the last while and given all the airline competition and additional flights out of Thunder Bay (The Toronto edition of the Globe & Mail is flown into Thunder Bay every morning and delivered throughout the day) I do not see how costs have risen that much.  Yet, who am I to quibble with one of our many overlords from Toronto who constantly develop new methods to affect our daily lives here in the North.

In some respects, I suppose this was probably inevitable. I used to have a subscription to the National Post and they too left the local market citing costs.  They also dangled the prospect of a digital subscription at the time they left. This departure is particularly annoying because it also means I will no longer get my Sunday New York Times delivered.  It came on the Monday but its heft was something I looked forward to. 

Now, its not that I do not use computers or the internet (I'm blogging am I not?).  However, I find reading a newspaper on the computer or an ipad or an ipod inevitably feels like …being at work.  For some reason, I find reading the physical newspaper a more reflective ritual whereas once I’m on an electronic device I simply point and click on a few items, scan quickly and move on.  I get greater personal value from the more expensive hard copy than I do from the cheaper digital version.  If I’m only going to point and click on half a dozen stories, well the main ones are available for free on the web either from the Globe or dozens of other competitors.

Moreover, once you are into electronic subscriptions, the market opens up dramatically.  Whereas I only have the choice of the Globe and Mail or my own local paper when it comes to hard copy newspapers, once I start to consider electronic subscriptions – well, the choice is limitless. In some ways, this is an opportunity to reappraise how I currently get my news. I suppose the Globe and Mail is gambling I am so addicted to their product that an electronic Globe is better than no Globe at all.  I’m not so sure.  Maybe it is time to subscribe to the New York Times electronically or perhaps the Guardian to get my international news and rely on my local newspaper subscription and free web access to Canadian dailies for my Canadian news.  Maybe it is time to consider the choice between what the Globe offers electronically compared to the National Post.  In any event, I’m going to take some time to decide what I’m going to do given that I now am being forced to choose.

By the way, when the National Post decided to stop delivering in Thunder Bay, I did not take out the digital subscription.

Friday, 15 June 2012

Thunder Bay's Employment Surge

Data from Statistics Canada on Thunder Bay's unemployment rate, employment and labour force suggest that its economy is experiencing a rebound after quite a few years of slow performance.  The most recent unemployment rate in Thunder Bay for May 2012 came in at 5.7 percent, which is well below the national and Ontario unemployment rates.  Of course, one of the reasons our unemployment rate is so low is that the labour force has not been growing as fast as employment but the last twelve months suggest that employment has actually begun to grow faster than the labour force.

Figure 1 shows unemployment rates (seasonally adjusted) for Canada, Ontario, Thunder Bay and Greater Sudbury for the 2009 to 2012 period on the left and total employment (seasonally adjusted)  for Thunder Bay over the same period on the right.  As can be seen, the period from June 2011 to January 2012 saw robust increases in employment followed by a decline since.  Overall, employment levels in Thunder Bay are the highest that they have been in the last three years.

Figure 1

The second figure shows annualized growth rates (May to May) for 2010, 2011 and 2012.  Thunder Bay's labour force actually shrank in both 2010 and 2011 but it grew substantially in 2012 - along with employment.  Employment in 2012 grew by 5.3 percent while the labour force grew by 3.8 percent.  As a result,  the unemployment rate dropped below 7 percent in 2011 and in 2012 has fallen below 6 percent.  However, the total level of employment in May 2012 is 61,500 - which is still down from the high of 67,400 reached in March 2003 but up from a low of 57,400 as recently as June 2011.

Thunder Bay's economy appears to have begun to recover from the forest sector collapse but still has ground to go.  Moreover, its employment still seems to be subject to somewhat erratic fluctuations.  While June 2011 to January 2012 saw a period of sustained increases, employment has declined since then.  Thunder Bay is still very much an economy in transition.

Figure 2

Friday, 24 February 2012

Thunder Bay's Fiscal Follies

The Thunder Bay City Council budget situation grows more and more curious.  A media report yesterday contained what can only be termed contradictory information.  On the one hand, the story in the Chronicle-Journal stated that: “The proposed budget includes a 2.67 per-cent property tax increase on top of a 1.5 percent hike for the enhanced infrastructure renewal program.”  This means that the combined property tax increase for this budget year is actually 4.2 percent.  Yet, a little later in the story, Councilor Linda Rydholm is quoted as saying she was willing to support the budget because: “At ward meetings and other places, it seems like people are expecting the 2.67 per cent increase, particularly knowing that 1.5 percent is for infrastructure, roads and buildings.”  In other words, the tax increase is 2.67 percent but the 1.5 percent is included. 

It would appear that we are still sorting out the size of the actual increase in Thunder Bay’s 2012 municipal taxes.  Moreover, it would appear that even city councilors are confused as to whether the total increase is 2.67 percent or 4.2 percent.  Add to this the fact that seven million dollars was inadvertently left out of this year’s municipal budget and now will be funded out of the reserve fund, one has to wonder what exactly is going on?  Is there some confusion on the part of the media in understanding council's message?  Are city councilors unable to grasp the details and complexity of the budget process?  Are city administrators and councilors engaged in a strategy of sowing confusion to obscure the true size of the increase? Or is this simply some giant comedy of errors at taxpayer expense?

If the total municipal tax increase is indeed 4.2 percent, it means that total payments to the city by municipal ratepayers will rise nearly 5 percent this year once the rise in water rates of 6.7 percent is included.   In 2011, the water bill for the average household was 714 dollars while the average property tax bill was 2,501 dollars.  Using these figures to compute a weighted average results in an increase of 4.8 percent in total payments by ratepayers to the city in 2012 (4.8=0.22*6.7+0.78*4.2).  Breaking up a 4.8 percent increase into three separate numbers may fool some of the taxpayers some of the time but it cannot fool all of them.  If City Council wants to remain at all credible, it will need to come clean and address this confusion and very quickly.  This credibility is all the more important given the cost overruns for operating the new waterfront park and the desire to build a new multiplex that will also require a large public operating subsidy.

Thursday, 9 February 2012

Northern Economist on the Census!

Well, the release of the 20111 Census results yesterday spawned alot of media activity for me yesterday ranging from the Huffington Post to Thunder Bay Television News to editorial mention in the Thunder Bay Chronicle-Journal.  Thunder Bay Television has posted part of the interview they conducted with me on Youtube which you can access here.

Wednesday, 8 February 2012

2011 Census Results for Population In: Northern Ontario Declines

Statistics Canada released the first set of 2011 census results today dealing with population and dwelling counts.  Canada's population is up 5.9 percent from 2006, Ontario's is up 5.7 percent while within Ontario, the North is down overall by 1.4 percent.  As the accompanying table shows, the Northeast stayed stable in terms of its overall population while the Northwest showed a decline of 4.7 percent.  As for the major urban centers of the North, Greater Sudbury posted a 1.6 percent increase, North Bay a 1 percent increase, and Timmins a 0.4 percent increase.  The Sault and Thunder Bay both saw declines in their populations of -0.4 and -1.1 respectively.

The Northwest during the period 2006 to 2011 worked its way through the aftermath of the forest sector crisis with the region outside of Thunder Bay bearing the brunt of the employment and population adjustment.  Employment and GDP in Thunder Bay shrank by about 10 percent during the forest sector crisis and its population has been remarkably resilient given the decline.  Employment in the region outside of Thunder Bay shrank by almost 30 percent.  Employment numbers over the last year have been showing increases in Thunder Bay and the Northwest and these population results are hopefully a lagging indicator.  The Northeast has been buoyed by its mining sector though there is a redistribution of population towards the major urban centers.  Evidence from the Northeast suggests that should the Ring of Fire mining development successfully proceed, the Northwest can also expect to see stabilization and even some growth in its population.

What will be interesting is the additional sub-regional breakdowns in population with the Northeast and the Northwest.  For example, between 2001 and 2006, while the Northwest declined in population, the Kenora District actually saw increasing population.  As well, the aboriginal population increased substantially in the Northwest between 2001 and 2006.  Further results and analysis on whether these trends have continued since 2006 to come.

Sunday, 5 February 2012

Investment Activity and Trends in Northern Ontario: Part Three – Thunder Bay and Sudbury

In this third installment on investment activity in Northern Ontario as illustrated by building permit data, I am going to focus on the roles of Thunder Bay and Sudbury.  These are the two largest urban centres in Northern Ontario with CMA populations of 122,000 and 158,000 respectively accounting for about 38 percent of Northern Ontario’s population of 745,000.  As the largest urban nodes, one would expect them to be major drivers of economic activity and new investment and the data suggests that they are indeed major economic contributors but are not exactly punching much above their population weight.

Figure 1 shows the total nominal value of building permits (and the linear trends) issued in Thunder Bay and Greater Sudbury over a 20-year period and reveal that Thunder Bay has stayed relatively flat over this period whereas Sudbury enjoyed a pronounced boom from 2003 to 2009 but has since cooled off somewhat.  More interesting is Figure 2, which plots Sudbury’s share of Northeastern Ontario’s permits, Thunder Bay’s share of the Northwest’s permits and then their combined share of all of Northern Ontario.  On average, over the period 1989-2011, Greater Sudbury has accounted for about 34 percent of all building permit values in the Northeast and Thunder Bay for about 60 percent of the values in the Northwest.  Both of these are in line with their respective population shares with Thunder Bay somewhat more dominant in its region and together they account for an average of about 41 percent of Northern Ontario’s building permit activity.  This share has been trending down slightly over the period 1989-2011 generally as a result of weaker performance by Thunder Bay given that the trend for Sudbury has been pretty constant.

While Thunder Bay and Sudbury are important economic drivers for the region, these results suggest that they are not overly dominant and that new investment activity is dispersed throughout Northern Ontario.  The other towns and cities of the North – particularly Sault Ste. Marie, Timmins and North Bay – are also important drivers.  Thunder Bay and Sudbury’s share of new investment activity in Northern Ontario is approximately the same as their combined population share of the region.

Friday, 3 February 2012

Employment Picture Improves in Thunder Bay

The latest Labour Force Survey numbers from Statistics Canada suggest the Canadian economy as a whole is treading water as employment stayed virtually unchanged while the unemployment rate edged up slightly.  However, the results for Thunder Bay show a decline in the unemployment rate to where it now is at 6.2 percent - well below the national average of 7.6 percent.  In addition, the numbers for the last four months show that both employment and the labour force have expanded in Thunder Bay.  Between October 2011 and January 2012, employment rose from 60,100 to 63,600 - an increase of 6 percent.  Meanwhile, the labour force grew from 64,600 to 67,800 over the same period - an increase of 5 percent.  Employment has actually been growing faster than the labour force recently which is good economic news.  What is the source of all this growth?  Well, the numbers are not broken down locally by sector but the national numbers show increases in annual employment growth (January 2011 to January 2012) in the natural resource and construction sectors as well as transportation and housing.  It is likely a similar trend is at work in Thunder Bay given the numerous construction job sites dotting the city, the mining service activities and our traditional transportation role.