Government’s plan for Northern Ontario fails to deliver
When it comes to economic policy, good government involves knowing when to do something and when to do nothing. Ontario’s Northern Growth Plan is an interesting variation on this motif as a government policy that despite its lofty goals of trying to do something, does not seem to have done anything.
The Ontario government released the 25-year Growth Plan for Northern Ontario in March of 2011 in response to years of slow growth and economic stagnation in northern Ontario. Its goals were to diversify the region’s economy, stimulate new investment and nurture high-growth potential emerging sectors. One suspects that a reasonable expectation is that the economy of northern Ontario should grow during the plan’s tenure.
To date, the results, as measured by basic economic indicators compiled by Statistics Canada, are not pretty.
Between 2011 and 2016, the population aged 15-years-of-age and over in northern Ontario declined from 637,642 to 627,792 for a drop of 1.5 per cent. Full-time employment declined from 284,083 jobs in 2011 to 278,717 jobs for a drop of 1.9 per cent. Part-time employment fell over the same period from 75,433 jobs to 68,883 jobs for a drop of 8.7 per cent. Meanwhile, the labour force fell from 390,133 to 374,450 for a drop of 4 per cent. Total employment fell 3.3 per cent while the labour force shrank by 4 per cent, which explains why the unemployment rate managed to fall slightly from 7.8 per cent to 7.2 per cent between 2011 and 2016.
With respect to investment spending, the total value of building permits in northern Ontario from 2011 to 2016 declined from $1.099 billion to $813 million—a decrease of 26 per cent. Residential permits parallel this decline going from $528 million in 2011 to $409 million in 2016 for a decline of 23 per cent. The value of industrial permits fell from $117 million in 2011 to $66 million in 2016 for a percent drop of 44 per cent. Commercial permits fell from $257 million to $198 million—a drop of 23 percent. Moreover, even institutional and governmental permit values drop 28 per cent.
To date, the presence of a Growth Plan for Northern Ontario has done little to reverse the long-term decline of the northern Ontario economy. There has not been a significant diversification in composition of economic activities as measured by employment distribution across goods and services production. Population is not growing, employment is shrinking, and new investment spending has also shrunk.
Of course the Ontario government might counter this evidence by arguing that the Growth Plan has a 25-year time horizon and it’s still early days for positive effects to be felt. Of course, saying we need to wait another 20 years to definitely reach a conclusion merely postpones any accountability on the part of the government.
Indeed, at current rates of decline in both employment and new investment, by the time the plan winds up in 2036, one might see total employment nearly 10 per cent lower than at the start and new investment at a virtual standstill.
The plan is clearly not working. But really, how can it?
It’s yet another example of the hubris of a provincial government that believes it can generate economic success better than market forces. The government that has given Ontario higher electricity rates, presided over the largest debt accumulation in Ontario history, and seen Ontario become a recipient of equalization payments should be held accountable for the failure of its Northern Growth Plan.
Employment in the broader public sector comprises nearly 30 per cent of employment in northern Ontario—well above the national and provincial shares. In the long run, northern Ontarians might be better served by not relying on Queen’s Park and becoming more entrepreneurial and leveraging their resource base into greater value-added activities.