Why are northern Ontario’s cities really shrinking?
The latest census results have caused quite a bit of alarm in northern Ontario as three out of the five major cities have seen a drop in their population while the other two are displaying rather stagnant population growth rates. Between 2011 and 2016, population growth was greatest in the Greater Sudbury CMA at 1 percent. This was followed by 0 percent growth for the Thunder Bay CMA, and rates of decline for the North Bay, Timmins and Sault Ste. Marie Census Agglomerations (CA) at -2.6, -3.2 and-2.1 percent respectively.
Needless to say, this has sparked some alarm and even confusion. Thunder Bay’s Mayor admitted surprise at the numbers given that he had seen signs of heightened economic activity such as record building permits and tax assessment growth. North Bay’s Mayor is apparently confused by the population decline given that construction activity is up. Of course, what is being missed by these assessments of the situation is that the economic benefits from government spending are not all they are cracked up to be.
Northern Ontario has become notoriously dependent on government employment and construction projects and the general weakness of its private sector activity is obviously starting to catch up with it. For example, the employment share in public administration, health and social welfare and education – all heavily public sector activities – stands at 34 percent in Thunder Bay and 33 percent in Greater Sudbury. In Toronto, its 20 percent, Barrie 26 percent and in Kitchener-Waterloo it is 22 percent. To attract population, broad-based economic and employment growth also needs vibrant private sector activity.
However, there is more to the story than just a greater dependence on government. What many of these reports in northern Ontario missed is that while these cities are either slow growing or have seen negative growth, adjacent areas outside these cities have seen population growth. or example, while the Thunder Bay CMA remained stable (0% growth), surrounding municipalities like Neebing (3.5%), Oliver Paipoonge (3.3%) and Shuniah (2.2%) saw increases. However, the City of Thunder Bay itself actually fell by -0.4%. In the case of Greater Sudbury, while it still managed to grow 1 percent, the small towns near Greater Sudbury have been growing faster. For example, Markstay-Warren saw its population grow 15.6 percent and French River 9 percent since 2011.
What is going on here? Tax migration. Because of weaker tax bases, northern Ontario municipalities have increasingly been raising their residential municipal taxes and sewer/water charges and people are voting with their feet not necessarily by leaving the north but by leaving higher tax jurisdictions for lower tax ones. For example, in the case of Thunder Bay, 2016 residential taxes per 100,000 dollars of assessment were about $1,720 but only about $1,182 in adjacent Neebing Township. For the municipality of French River, residential taxes per $100,000 of assessment in 2016 were about $1,002 whereas for Greater Sudbury they were approximately $1,389.
When it comes to water and sewer charges in the five major northern Ontario cities, some of the steepest increases in recent years have been seen in cities that have now seen the largest population declines. Between 2005 and 2015, the average annual rate of increase in water and sewer charges was under 1 percent for Sudbury but 12.3 percent for North Bay, 9.5 percent for Thunder Bay, 11.2 percent for Sault Ste. Marie and 8 percent for Timmins.
Why are people leaving northern Ontario cities? Growing municipal taxes and water/sewer charges for residents are a factor. As the Mayor of French River notes, when he asks newcomers why they have chosen to move to French River, 99 percent of them say “Your taxes are very low.”
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