Ontario no longer an economic magnet for newcomers

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Appeared in the Toronto Sun, July 6, 2016

Ontario was once a magnet for immigrants as well as Canadians from other provinces seeking greater economic opportunity. People came to Ontario for its good jobs and high incomes. In return, Ontario benefitted from the skills, knowledge and productive energy of newcomers.

In recent years, all this has changed. Thanks to misguided government policies and a resultantly sluggish economy, Ontario now attracts a much smaller share of immigrants to Canada than was the case just over a decade ago. What’s more, substantially more people now leave Ontario for other provinces each year than come here from other parts of Canada.

In fact, just over a decade ago 60 per cent of new immigrants chose to make their home in Ontario. Today, Ontario attracts just 38 per cent of new Canadians.

A look at inter-provincial migration trends within Canada (the movement of people from province to province) tells a similar story.

Between 1996 and 2002, Ontario experienced positive net inter-provincial migration each and every year. This simply means more people came to Ontario from other parts of Canada than left Ontario for another province.

In 2003, the flow of inter-provincial migration reversed. That year, Ontario lost approximately 7,000 more people to other parts of the country than came to Ontario from another province. Since then, Ontario has experienced negative net out-migration every single year. In total, since 2003, more than 140,000 more people have left Ontario for elsewhere in Canada than the other way around.

Ontario has clearly lost its status as a magnet for people moving from one province to another within Canada. But why? In short, the answer is that poor policy choices have undermined Ontario’s competitiveness and made the province less economically attractive.

Consider that as recently as the late 1990s, real disposable income per capita (after taxes) in Ontario was 10 per cent above the national average. Sluggish economic performance throughout the first decade of this century caused this gap to shrink until finally in 2012, incomes in Ontario fell below the national average for the first time. The province’s average income is now materially below the Canadian average.

Ontario’s economy has declined relative to the rest of Canada due to misguided policy choices including rapid increases in government spending that have created a public debt burden that’s among the largest in Canada, and economically harmful tax increases that have weakened incentives for Ontarians to work, save and invest.

Given the economic weakness these policies have created, it’s no wonder a smaller share of new immigrants from abroad, and inter-provincial migrants within Canada, are choosing Ontario.

The decision to relocate to a new jurisdiction is one that people don’t take lightly. Uprooting one’s family, disposing of assets, searching for work and leaving behind what is known in search of something better is a hard decision.

For this reason, observing patterns in where people choose to settle is a powerful way to gauge which economies are succeeding and failing. And Ontario’s migration data tell a clear sad story of an economically underperforming province that is no longer a magnet for people from within Canada and around the world seeking a better life and greater opportunities.

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