Published on: 3/5/2014 1:29:37 PM Print | Font Sizes:  Normal Text Large Text

Do sheep look up?


By: David Robinson

David Robinson, Economist, Laurentian University, drobinson@laurentian.ca.
David Robinson, Economist, Laurentian University, [email protected]

It should be easy to write a quick summary of the economy of Northern Ontario. After all, I have been writing about the Northern economy for years. I am one of the so-called “experts” that the CBC calls for comments. I can draw on Wikipedia and the Statistics Canada Database, CANSIM.

And I have Chris Southcott’s terrific studies based on the 2006 Census. In 2008, Southcott, a sociologist at Lakehead University, produced a dozen studies for the Local Labour Market Training and Adjustment Boards in Northern Ontario.

The studies look at age structure, wages, occupation, women, Francophones, Aboriginals, industrial structure, youth migration, and so on, for 2001 and 2006. The studies are online and should be required reading for all Northerners.

The picture Southcott drew wasn’t a surprise. Population was falling, the resource industries were employing fewer people, and “blue collar’’ jobs were disappearing.

Thirty-one thousand jobs had vanished in the industrial sector between 1986 and 1996. They were almost replaced by 30,365 jobs in the service sector. Even during the boom running up to 2007 the resource sector lost jobs. Mining gained 1,175 but agriculture, forestry, hunting and fishing lost 1,385. Health and social services gained 5,435 jobs but manufacturing lost 5,685.

Southcott found that outmigration has slowed down a bit. Incomes were a bit lower than the rest of the province and were declining, and we had fewer rich and more poor people. First Nations communities were lagging on just about every social indicator.

His studies tell us the North is in trouble. Behind the grim facts are three economic realities. The first is that every year technological progress reduces the labour needed in logging, mining and mills. The region either finds other products to export or it declines. It has been declining.

The decline has been hidden by the growth of the service sector and the expansion of the healthcare system. The shift to services is losing steam, however. It will get harder to ignore the declining need for Northerners.

The second fact about the Northern economy is that Northerners are costly.

Northerners need more roads, snow clearing, miles of sewer, water plants, schools and hospitals per person than people in the crowded south. They also require more police and fire services per person, especially in the rural areas. Northern communities average more broken water lines and more library use. (We seem to read more library books than southerners.) According to Ontario’s Municipal Performance Measurement Program (MPMP) most municipal services cost more in Northern Ontario.

Queen’s Park isn’t interested in promoting expensive population growth in the North. And Queen’s Park has no incentive to promoting secondary industry in the North either. Why should the Cabinet care if a plant locates north or south of the French River?

The third major economic fact is that the Northern Ontario economy is about as developed as the gut of an earthworm. As fast as money goes in one end, it goes out the other. Digital dollars from the Eurozone, China, the U.S. Or Queen’s Park land in local workers’ bank accounts. Before you can blink, part of every cheque is transferred to financial institutions in the south to cover mortgages and debt. Almost all the rest is paid out directly or indirectly to companies based elsewhere. And it’s getting worse: Walmart, Amazon and all the new economy firms have business plans based on minimizing the amount of money left north of the French. When money doesn’t stick, economic development doesn’t happen.

Southcott provides an explanation for Northern Ontario’s pathetic level of economic development. In the background section of each of his reports he notes that the North has always been run from outside. As a result, local political and economic entrepreneurship has been “more limited than in other areas.” The correct translation, I think, is that Northerners are political and economic sheep. There isn’t much point waiting for the province to change direction. It’s had 100 years. In the last few decades it has messed up the forestry sector and fumbled the mining portfolio.

Northern Ontario will just keep shrinking unless we sheep decide to do something different.

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