Toronto In Decline? – Blame Oil and Potash

by John Laforet
posted on July 8th, 2008 at 17:47:24 pm

The Fraser Institute’s recent report “Toronto in Decline” views Toronto through a very limited lens and argues that the city is in decline and is losing it’s place as the business hub for Canada. The report heavily relies on Census data and a very limited number of variables like the number of head offices in Toronto, Toronto’s median income compared to the national average and the number of management occupations. 

I immediately began noticing that Edmonton, Calgary and Saskatoon were leading the growth in areas where Toronto is apparently in decline. This is not surprising when one considers the strength of western-based commodities in the world markets recently. Basically this is a case of supply and demand. Unemployment rates in Alberta and Saskatchewan are considerably lower than the national average at 3.5% and 4.2% respectively in 2007. Canada’s unemployment rate, the lowest in 30 years, was 6% in 2007 and 6.4% in Ontario. Below is a table to show the average weekly earnings by province. I’ve used Statistics Canada data and ranked provinces highest to lowest to demonstrate my point.

Average Weekly Earnings by Province Ranked Highest to Lowest

All incomes are up. But Alberta and Saskatchewan grew at fast enough rates to pass other provinces. Perhaps the astronomical increase in the price of oil and potash and the demand to get each of these resources out of the ground at such an alarming rate is the real news in the census data. According to Alberta’s own Ministry of Energy, Alberta’s oil exports to the U.S are up 40% between the years 2000 and 2007. Potash production is up 26% in the same period of time according to the Canadian Ministry of Natural Resources. Could it be that the increased price and resulting production of resources based in two western provinces are throwing off the national averages and that the Fraser Institute has not factored this unprecedented shift into their concerns about Toronto’s apparent decline?

One of the most troublesome aspects of the report was what appeared to be a contradiction of a very basic point the author made early to defend his report, and then abandoned when the source no longer provided the data he needed. “The best data produced in Canada are the census data. While no data are perfect, the census attempts to reach each and every Canadian.” The Fraser Institute reports that Statistics Canada “shows a growth of 12 percent between 2001 and 2005 in head offices. (in Toronto)” A TD Economics Study – using a slightly different definition of Toronto, found a 7 percent decrease. The Fraser Institute later states “The new data presented in this Alert is more consistent with the results of the TD study, showing a decline in head offices in Toronto, than the Statistics Canada study.” When given the opportunity to use what the Fraser Institute had previously referred to as “the best data” they opted to challenge that data, and suggest that data from one of the big banks would paint a better picture of Toronto’s business climate than the providers of the “best data”.

I have not read “Torontonians Speak in a New COMPAS Poll: Is Toronto in Decline?” as I was previously the Field Manager at COMPAS and do not feel it would be appropriate for me to provide comment on a poll conducted by that firm. In general, I will say about the “Poll results summary” in the Fraser Institute report that waste and poor value for taxes being paid to city hall in Toronto has absolutely no impact on the price or demand of Alberta’s Oil or Saskatchewan’s Potash or employment rates in these provinces, which could explain why both Alberta and Saskatchewan’s incomes are raising faster than incomes in Ontario.

Toronto in Decline? appears to me to be an attempt by a right wing think tank, and two of it’s neo-conservative senior fellows to trash Canada’s largest city, and its economic potential. Another neo-conservative and former minister in Harris’s government has been making statements intended to hurt Ontario as well. It is the same line of attack just focused on the city of Toronto instead of the province of Ontario as a whole.

Mike Harris was the Premier who forcibly amalgamated the component cities that now make up Toronto. He did so against the will of the people. His downloading has financially crippled the city, and in the 2003 election his party lost every seat within the City of Toronto. Preston Manning is a former Leader of the Opposition, whose party was unable to elect a single Member of Parliament east of Manitoba during his last election as leader.

Like many Torontonians who have written in to the editors of various Toronto papers, I will join the chorus and say these men and their right wing BC based think tank are likely not the best source to judge the city of Toronto.  Torontonians had two opportunities to vote on Preston Manning’s vision for Canada and overwhelmingly rejected it. His party folded mainly as a result of its inability to make gains in Ontario. Torontonians also overwhelmingly rejected Harris’s party in 2003 and 2007 when John Tory was not even able to win a seat in the city of Toronto as a party leader.

Toronto should always strive to continue to develop our local economy. The federal and provincial governments need to recognize their dependence on our economic success and work as partners in our endeavor. As someone from Scarborough, I’ve seen first hand what hard work and entrepreneurship can do to build a local economy and provide families with a rewarding income. As someone from Scarborough, I’ve also seen that more work needs to be done to ensure all residents of our city can participate in that success.

 I reject the claims of the Fraser Institute that somehow something Toronto is doing is chasing away business. While I am not a member of the current City Council’s fan club, I have great difficulties with the factual basis of the Fraser Institute’s anti-Toronto report and feel it does nothing more than further weaken the credibility of the Fraser Institute and the other neo-conservatives who subscribe to this shared view.