Northern Policy Advice for Ontario’s Next Premier: Hudak or McGuinty? – by Livio Di Matteo

Livio Di Matteo is Professor of Economics at Lakehead University in Thunder Bay, Ontario.  Visit his new Economics Blog “Northern Economist” at http://ldimatte.shawwebspace.ca/

For an extensive list of articles on this mineral discovery, please go to: Ontario’s Ring of Fire Mineral Discovery

A regional power authority could become a valuable tool for
northern development and provide the cheap electricity for
value-added processing and development necessary for mining
in the Ring of Fire. – Livio Di Matteo (January 17, 2011)

As Ontario heads towards its fall 2011 election, there will inevitably be discussion of what new policies can help drive Northern Ontario’s economy in the 21st century. Historically, economic development in Ontario’s North was a partnership between private sector resource exploitation and a public sector economic strategy to make the north an investment frontier for the south as well as a source of government revenue via the exploitation of natural resources.

Nineteenth century Ontario implemented a northern development scheme that could be termed a “Northern Ontario Policy” that operated parallel to the Federal government’s National Policy. Ontario’s Northern Policy provided a regional program of northern land grants to promote agricultural settlement and the building of the Temiskaming and Northern Ontario Railway and colonization roads to foster access.  As well, there was the passage of the “Manufacturing Condition” which required that timber cut on crown land be processed within the province so as to retain value added as well as provide government revenue.

At its peak, the province of Ontario obtained nearly one quarter of its revenue from northern resources and used it to fund expanding provincial services.  Indeed, in the early part of this century, Ontario’s northern forests and mines were akin to Alberta’s oil today.  However, the process of resource revenue maximization was also a factor in biasing our economic development away from a more diversified and innovative economy.

The last decade has seen government policies that have deliberately raised the cost of energy in the North and have sequestered large chunks of its territory from future development in the name of protecting the environment.  In the wake of the forest sector crisis, the McGuinty government has sponsored numerous consultations but we are of course still waiting for the release of the Northern Growth Plan.  Judging from the preliminary documents and discussion to date, there likely will not be anything truly innovative in the Northern Growth Plan aside from new ways of uttering bland platitudes aimed at providing palliative economic care.  Indeed, truly innovative proposals have generally been ignored not only by the provincial government but also by Northern political leaders whose main preoccupation is serving the needs of Queen’s Park first and their constituents second.

Here again are some policy suggestions for a growing North that will create economic activity and ultimately foster economic independence and prosperity.  First, Ontario and the Federal government together should set as their ambitious goal the four-laning of the Trans-Canada highway through all of northern Ontario by 2020.  Such an ambitious infrastructure project will generate substantial economic activity and the improved transport corridor will generate long-term commerce and trade throughout the North.  Such a corridor will also complete the vital east-west zone of highway transit for the Canadian federation.  Second, the province should explore the creation of northern tax incentive and trade zones to spur economic activity and attract investment. These incentive zones are especially crucial in border areas immediately adjacent to the United States such as Sault Ste. Marie, Thunder Bay and Kenora.

Third, the provincial government should allow the North to operate its own regional electric power grid through a regional power authority.  The North is blessed with thousands of megawatts of potential hydroelectric power that is cost-effective, sustainable and not a contributor to greenhouse gases.  A regional power authority could become a valuable tool for northern development and provide the cheap electricity for value-added processing and development necessary for mining in the Ring of Fire.

Finally, the province should foster institutional change and bring about the creation of regional government in the north to foster regional planning and direction in the areas of energy, environment, transportation, economic development and resource management.  Indeed, the creation of new hydroelectric corridors in the North should fall under the auspices of a regional government.  Moreover, the regional authority would also open up access to crown lands for cottage and recreational development.  To date, crown lands have been administered as if they are as scarce as in the more populated South.  Indeed, an entire sea of regulations designed in Southern Ontario to administer a heavily urbanized region has been broadly applied to the North as a set of one size fits all policies.

These are not new ideas but it is time to bring them up again as we move into an election year as they are unlikely to be brought up by Ontario’s current governing party.  If Northern Ontario is to prosper and provide opportunities for its children, Northern Ontarians must advocate more strongly than ever before.  The North is a resource abundant region with a skilled labour force but it requires the institutional tools to affect its development and chart its economic course.  Ontario’s next premier should think differently and unleash the potential of the North by giving it the tools its needs to help itself.

One Response to Northern Policy Advice for Ontario’s Next Premier: Hudak or McGuinty? – by Livio Di Matteo

  1. charlesnyabeze January 18, 2011 at 11:15 am #

    “Ring of Fire” Resource harvesting and its impact on Human Community Economic Development is a topic that I am passionately interested in. Having said this I can see how the Southern Provinces have grown dependant of reaping the fruit of the North to sustain the pleasures of the South. I agree it is high time for the Northern Residents to stand up with a unified voice and demand North Jobs from Northern Resources. At the same time, the North should not allow southern politics to send valuable jobs across the Ocean. Why must the North settle on the crumbs?

    Charles Nyabeze
    http://www.nyabeze.com
    Ring of Fire