Northern mayors presentation at AMO conference

7/27/2019 Northern mayors presentation at AMO conference

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Priorities:Linking Municipalitiesand the Growth Plan for

Northern Ontario

Submitted by theNorthern Ontario Large

Urban MunicipalitiesAugust 9th, 2013

Priorities:Linking Municipalities and the

Growth Plan for Northern Ontario

Submitted by:

The Northern Ontario Large

Urban MunicipalitiesAugust 16, 2013


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Priorities:Six Key Needs For Large Northern Municipalities

Infrastructure Sustainable funding for local and regional infrastructure Advancement of multi-modal study for Northern OntarioPhoto: Jack Garland Airport, North Bay

Workforce Development Enhancement programming for immigration Skills development activities focused on key sectorsPhoto: Welder apprenticeship training, Cambrian College, Greater Sudbury

Research and Innovation Enhanced funding for research and innovation activities Increased collaboration with key stakeholdersPhoto: Thunder Bay Regional Research Institute, Thunder Bay

Revenue Sharing Fair sharing of resource revenue Long-term stable funding sourcesPhoto: Hollinger open pit mine, Timmins

Relationships A renewed collaborative relationship built on consultation, direct engagemen

and strategic thinking

Clear and coherent support across all Provincial ministriesPhoto: Queens Park, Ontario

Energy Affordable electrical pricing for all users Encouragement of generating projects in Northern OntarioPhoto: Transmission lines, Sault Ste. Marie


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Executive Summary:Since the earliest days of the Province of

Ontario, Northern Ontario has been a region of

both untold potential and major challenges. The

wealth of its natural resources minerals,forestry, water, energy generating potential

has made the region critical to the growth of the

Provincial economy for over a century.

However, the combination of geography, the

distribution of its residents and communities

and the cyclical nature of a resource-based

economy has in the past and continues to

present challenges to the development and

sustainability of the region. In many respects,

Northern Ontario is an exercise in extremes,

accounting for 88% of the Provinces total area

but only 6% of its total population.

As a means of addressing these challenges, the

Province has developed the Growth Plan for

Northern Ontario (the Growth Plan), intended

to address economic development,

infrastructure investment, labour market

requirements for the next 25 years, the Growth

Plan is touted as the framework for Provincial

decision-making in Northern Ontario. Structured

around the key themes of economy, people,

communities, infrastructure, environment and

Aboriginal peoples, the Growth Plan expressesthe Provinces intention to collaborate with

stakeholders in Northern Ontario while

maintaining, strengthening and creating new

partnerships for the benefit of the region.

Northern and Southern Ontario in perspective

Southern Onta

12.1 million resid(88%)

Northern Ont

775,000 resid

(6%)

Thunder Bay

Sault Ste. Marie

Timmins

North Bay

Sudbury

Southern

Ontario


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The Large Urban Northern Ontario Municipalities

Just as the City of Toronto, by virtue of its size

and significance, influences policy making for

the Province, so do the five largest

municipalities in Northern Ontario North Bay,

Sault Ste. Marie, Greater Sudbury, Thunder Bayand Timmins shape the course of Northern

Ontario. If anything, the significance of the five

largest Northern Ontario municipalities is

actually more pronounced than Torontos

relationship to the Province. One could argue

that over time, Northern Ontario has developed

into a group of sub-regions, with the five largest

centres acting as the de facto hubs for

economic activity, healthcare, education,

research and innovation and other services.

The Growth Plan recognizes the importance of the five largest centres in Northern Ontario throughtheir designation as strategic core areas. The expectation of the five municipalities is that their

significance to the region will be reflected not merely through special recognition in the Growth

Plan. Rather the degree of collaboration and consultation afforded to them, as well as the

allocation of the Provinces resources, investment and effort, is expected to be commensurate

with their role as regional hubs.

On a number of levels, the five largest municipalities have already forged strong relationships with

their surrounding smaller communities which will form the basis for ongoing development on a

sub-regional level. Similarly, all of the municipalities enjoy strong relationships with their

neighbouring First Nation communities as well. From the perspective of the five largest

municipalities, the implications for the actual implementation of the Growth Plan are self-evident

maximizing the focus of Provincial efforts on the five largest municipalities in Northern Ontario will

yield the greatest outcome for the region while at the same time ensuring benefits to smaller

centres and other stakeholders in the North.

At the same time, the five largest municipalities also believe that the timing is ideal for input to,

and more important the Province on how best to move the Growth Plan forward. By its nature,

the Growth Plan is both extensive and, in a number of instances, relatively high level. Achieving

results for Northern Ontario will necessarily require the prioritization of activities as well as the

development of more detailed action plans. The purpose of this document, which has been

developed collaboratively by the five largest municipalities, is to provide additional perspective on

what Northern Ontario needs, how best to deliver it and where the Provinces immediate focus

should lie.

0%

10%

20%

30%

40%

50%

60%

70%80%

90%

100%

Population Municipal

expenditures

Municipal

infrastructure

57%

64%59%

20%

29%

17%

The significance of the five largest centres

Five largest centres as a percentage of

Northern Ontario

City of Toronto as a percentage of Ontario


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The Case for Action

This report is timely and important for a number of reasons:

The potential for economic growth in Northern Ontario is both significant and immediate. TheRing of Fire development is recognized by all parties, including the Province, as being

transformational to the region as a whole. During the course of the development and

operation of the associated mines, processing facilities and ancillary activities, the Ring of Fire

project will provide an economic contribution to Ontario of the magnitude equal to the

discovery of copper and nickel in Sudbury, gold in Timmins or steel manufacturing in Sault Ste.

Marie. The Ring of Fire initiative is perhaps the best example of a project that is too big to fail

and represents arguably the most pressing priority, from an economic perspective, for not only

Northern Ontario, but the Province. However, it is not the only major initiative underway in

Northern Ontario. The City of Timmins is currently witnessing a major expansion of Goldcorps

mining operations while Essar Algoma Steel in Sault Ste. Marie is contemplating the potential

for expanding its annual production from 2.7 million tonnes to 4 million tonnes. In Greater

Sudbury upwards of $4 billion in new investment in expected from the development of new

mines and other projects by international mining companies (KGHM, Vale and Glencore), in

addition to the planned $2 billion investment in a new ferrochrome facility in connection withthe Ring of Fire development. These and other initiatives have the potential to contribute

significantly to Ontarios economic well-being but are also dependent on a supportive

legislative and regulatory environment.

The current economic environment in Northern Ontario is being influenced adversely byfactors that fall (either in whole or in part) within the Provinces mandate. While the

suspension of the environmental assessment of the Cliffs Natural Resources Ring of Fire

initiative demonstrates the pressing need to address a range of issues, including strategic

transportation infrastructure, electricity pricing and Aboriginal relations, it is only the latest in a

series of economic disruptions that have affected the region. The recent relocation of the

Xstrata copper refinery from Timmins to Quebec and the closure of St. Marys Paper in Sault

Ste. Marie have resulted in the permanent loss of 670 and 390 high paying jobs in Timmins

and Sault Ste. Marie, respectively. While the absolute number of jobs lost is consistent with

the closure of several car plants in Southern Ontario, they are more significant when viewed as

a percentage of the total available labour force. With the closure of St. Marys Paper, Sault Ste.

Marie lost the equivalent of 1% of the total labour force while the Xstrata closure represented

3% of Timmins total labour force. Job losses on a similar scale in Southern Ontario centres

would be measured in the tens of thousands 1% of the labour force in Toronto equates to

14,000 jobs lost, while a repetition of the Timmins experience would be the equivalent of

40,000 lost jobs in Toronto.

The prospect of continuing job losses in Northern Ontario continues to be a major risk, with

the potential relocation of the Ontario Lottery and Gaming Corporation from Sault Ste. Marie to

Toronto and the announced intention of the Province to cease financial support for the Ontario

Northland Transportation Commission placing at risk an additional 500 in Sault Ste. Marie and

950 in North Bay.

A number of changes to the policy and funding environments are being contemplated with thepotential for significant impacts on the five largest centres. Planned changes to the formula

for calculating Ontario Municipal Partnership Funding (OMPF) as well as the eliminating of

Connecting Link funding for highway maintenance will also increase the burden on the

municipalities.


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Concurrent with these factors, the five largest municipalities are facing increasing pressuresarising from the need to reinvest in their local infrastructure. Overall, the five largest

municipalities reported a total historical investment in infrastructure of $6 billion at the end of

2011, which likely equates to a replacement value in the order of $20 billion. The ability of the

municipalities to sustain this level of infrastructure, which is critical for economic development

and the health and well being of their residents (and those of the surrounding region) is

increasingly under strain due to industrial property assessment losses, inflation, regulatory

changes, wage settlements from interest arbitration and reductions in senior government

transfers. The consequence of this combination of factors is increasing infrastructure deficits

in Greater Sudbury alone the estimated infrastructure deficit for roads (to the exclusion of all

other municipal infrastructure) is estimated to be over $700 million, reflecting the inherent

challenges of being Ontarios largest geographic municipality. While programs such as

Provincial gas tax and the Northern Ontario Heritage Fund Corporation (NOHFC) provide

some contribution for infrastructure, the funding is often restricted for specific purposes (i.e.

transit) or involves a time consuming competition for funds, both of which challenge long-term

planning for infrastructure. The recently announced Municipal Infrastructure Investment

Initiative, while focused on infrastructure reinvestment, provides no direct benefit to four of

the five largest municipalities that are excluded from the program due to their population anddespite their infrastructure deficits.

Clearly, the case exists for both increasing and accelerating the role of the Province in supporting

the five largest municipalities in Northern Ontario and by extension, the region as a whole.

The Priorities

At 50 pages, the Growth Plan represents a broad ranging statement of the Provinces intentions

for Northern Ontario over the next 25 years. As a means of informing the Provinces decision-

making process concerning the implementation of the Growth Plan as well as the optimal means

of addressing the immediate needs of Northern Ontario, the five municipalities have identified six

key strategic priorities for Provincial intervention. While these priorities will differ to a certain

extent at the individual community level, they are recognized by all five municipalities as

representing the most pressing issues that should be addressed by the Province.

1. Developing a New Provincial-Municipal RelationshipThere is an overriding need to address the structure and function of the current relationship

between the Province and the Northern municipalities. Without a relationship that is built on direct

engagement, consultation and strategic thinking, the development of Northern Ontario will

continue to be impeded by competing priorities, the absence of a coordinated approach and the

dissipation of resources and efforts with little to no contribution to the region. The establishment

of a renewed and enhanced relationship between the Province and the Northern municipalities is

the single most important requirement for success.


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At one point, the Province took a direct role in economic development in Northern Ontario through

programs such as the Northern Ontario Relocation Program, which saw the Province transfer

services and jobs to the North as a means of economic development. However, in recent years,

and notwithstanding the completion of the Growth Plan, the Provinces response to the issues

facing Northern Ontario has been viewed as both ad hoc and reactionary the Growth Plan itself

being perhaps the best example by virtue of the fact that in the two plus years since the

publication of the Growth Plan, the perception is that relatively little has been accomplished in

attaining its objectives. Ironically, Ontario has used the same terminology to define its relationship

with the Federal Government at the recent Council of the Federation ad hoc, piecemeal while

at the same time calling for comprehensive planning, multi-year funding commitments and more

involvement and decision-making at the Provincial and municipal levels. The five large Northern

Ontario municipalities share the Provinces view on the importance of these elements and urge

that they form the basis for a new collaborative, consultative arrangement for dealing with the

North. This is a strategic relationship, one where the municipalities can contribute their expertise,

insight, resources and relationships to help the Province attain its goals.

The reality is that all residents of Ontario benefit from development and economic growth in the

North (and significantly so). What is needed is not so much a plan for Northern Ontario, but an

overall economic development strategy for the Province that factors in the needs of the North.Northern Ontario has the potential to make a significant contribution to Ontarios economic

recovery and the five municipalities welcome the opportunity to work with the Province in this

regard.

The most important strategic priorities to be addressed through a new arrangement are outlined

below.

2. InfrastructureThe continued need to ensure the adequacy and capacity of infrastructure in Northern Ontario is

viewed as the most pressing priority for Provincial investment and action in this region. At both

the local and regional level, infrastructure is critical to the economic well being of Northern Ontario

and the ability of the municipalities to compete for new investment. At the same time,infrastructure investment is elemental to the well being of their residents. The municipalities

recognize and thank the Province for strategic infrastructure investments such as the Northern

Highways Program.

The challenge from a municipal perspective with respect to infrastructure lies in both the absence

of a long-term funding commitment for infrastructure investment and the timing of regional

infrastructure investments. Addressing this issue will require the Province to:

Move towards a long-term funding arrangement for municipal infrastructure that avoids time-consuming competitive application processes and allows for a multi-year, recurring stream of

infrastructure financing. This will allow municipalities to address major infrastructure needs on

the basis of a known allocation of funding.

Act immediately to secure funding for key regional infrastructure needs, including Ring of Firetransportation assets in Northern Ontario, a restructured Ontario Northland Transportation

Commission, an expanded regional harbour in Sault Ste. Marie and necessary investments in

support of the Advantage Northwest Mining Readiness Strategy. In order to do so, the

Province should advance the timing for completion of the multi-modal transportation study

outlined in the Growth Plan. Strategic infrastructure investments are a critical component to

future industrial growth as outlined in the recently completed Advantage Northwest Mining

Readiness Strategy and business case for a regional harbour in Sault Ste. Marie.


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Reinstate Connecting Link funding for Provincial highways that transition throughmunicipalities, with the end result being a fair sharing of costs for Provincial infrastructure.

Recognize that the needs and circumstances in Northern Ontario differ from the South, withless of a need to address mass transit of passengers. At the same time, the Province needs

to expand its view of Northern Ontario infrastructure beyond primarily highways to include

other transportation modes (airports, short-line rail, short-sea shipping), housing stock(affordable housing, assisted living facilities, housing first programs as investments in harm

reduction) and healthcare and educational infrastructure.

3. EnergyElectricity is arguably viewed as the lifeblood of

economic activity and while the Province has

taken a number of steps to provide a measure

of affordability for electricity pricing

introduction of the Global Adjustment, extension

of the NIER program the reality is that

industrial electricity rates in Ontario for both

large and small users are significantly higher

than both Quebec and Manitoba. In an

environment of increasing competition for

inbound investment, often on the international

scale, the disincentive provided by Ontarios

electricity pricing is pronounced and has already

resulted in job losses for Northern Ontario in

favour of these neighbouring jurisdictions.

The generation, transmission, distribution and pricing of electricity falls fully within the mandate of

the Province and as such, the Province enjoys full discretion in resolving the challenges imposed

by the current pricing scheme. At the same time, the Province can also implement changes that

fully capitalize on electrical generation as an economic development engine for the North. Inaddressing the issue of energy, the Province should:

Review policies that are contributing towards increases in electrical prices and implement newstrategies to ensure affordable energy pricing in Northern Ontario, including the recognition of

differences between Northern and Southern Ontario and the avoidance of Province-wide

policies.

Establish the NIER program as a permanent Provincial program while at the same time re-evaluating its eligibility requirements for the NIER program as well as the allocation of Global

Adjustment Costs to expand the benefits of these programs to smaller industrial electricity

users, which represent an important element of the Northern Ontario economy.

Plan for regional electrical generation and transmission as an economic development andrevenue-generating opportunity by investing in necessary infrastructure, adjusting legislation topermit investments in larger generation projects and establishing incentives for projects that

benefit the Province as a whole.

Develop a comprehensive strategy for generating facilities in Northern Ontario, specifically theThunder Bay Generation Station and cogeneration facilities in Timmins and North Bay. The

establishment of a formal long-term plan for these facilities will send a critical message to

industry about energy supply in the region.

0 20 40 60 80 100

Manitoba

Quebec

Ontario (NIER)

Ontario (>5MW)

Ontario (


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It is important to recognize that energy policy and its implications for economic development

extend beyond electricity to include petroleum products and natural gas. This component of the

energy sector is undergoing significant change due to market forces, which gives rise to both new

opportunities and new challenges on an annual basis, pipelines provide over $22 million of

taxation revenue to Northern Ontario municipalities, with additional tax revenues generated from

commercial assessment associated with compressor stations and other facilities; revenues that

may be at risk due to the conversion of gas pipelines to crude oil and the approaching end of life

for various gas plants in the North. The Province should consider additional programs to

encourage competitive pricing for other types of energy.

4.Workforce DevelopmentIf electrical energy is seen as the lifeblood of Northern Ontarios economy, skilled labour is its

skeleton. The diversity of economic activity in Northern Ontario and the sheer scale and breadth

of industry sectors in the region is only possible through the retention of a suitably trained and

skilled workforce. The importance of skilled labour to the region cannot be overstated given that

trades and other specialists are often imported from Southern Ontario, other Canadian provinces,

the U.S. and internationally.

Developing a skilled workforce in Northern

Ontario has traditionally been a home-grown

affair. While immigration provided a significant

influx of labourers to the region prior to and

immediately after the Second World War, the

recent trend is for immigrants to remain within

the larger centres in Canada, including Toronto.

Demographic trends and increased demand for

skilled labour indicate the need to supplement

local workforce development efforts with an

increased focus on attracting and retaining

immigrants in the North and the Province can

play a key role in both aspects by:

Expanding the offering of skills development programming (including apprenticeships) throughenhanced funding to post-secondary institutions and other training providers.

Identifying and implementing best practices for skills development programs from otherjurisdictions with significant demand for trades, including a continuation of increases in the

ratio of apprentices to journeyperson that will bring Ontario in-line with other jurisdictions.

Supporting efforts by the municipalities and other organizations to attract and retainimmigrants, with the focus being on relocating immigrants that have settled in Toronto (as

opposed to efforts focused on immigrants in their home countries).

Reinstating the Apprenticeship Tax Training Credit for information technology workers at callcentres, the cancellation of which is estimated to put as many as 2,000 jobs at risk in NorthernOntario.

Reviewing the process for accrediting skil led immigrants to remove unnecessary obstacles. Enhancing funding for support programs to increase the retention of immigrants in Northern

Ontario and work with municipalities and the Federal government to accomplish this goal.

0.0% 5.0% 10.0% 15.0%

Ontario (total)

Toronto

Timmins

Thunder Bay

Greater Sudbury

Sault Ste. Marie

North Bay

Recent immigrants (last five years) as apercentage of total population


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Develop a comprehensive coordinated multi-ministry approach to supporting Aboriginalstudent education that includes additional supports.

5. Research and InnovationThe evolution of the five large municipalities away from a purely resource and transportation

reliance towards a more diversified economic base has been accompanied by a significant

increase in research and innovation capacity in the region. Through organizations such as the

Thunder Bay Regional Research Institute, the Ontario Forest Research Institute in Sault Ste. Marie,

SNOLAB and the Advanced Medical Research Institute of Canada in Greater Sudbury, Northern

Ontario has developed a world-class capacity for research and innovation. At the same time,

public and private sector organizations throughout the region are involved the commercialization of

research activities and the development of new technologies and processes that contribute

towards the level of economic activity and innovation in the region. While admittedly small

compared to Southern Ontario, research and innovation represents a growing activity in the North

with significant potential. In order to enhance and foster a growing culture of research and

innovation, the Province should:

Support increased research and innovation activities by Provincially-funded and controlledorganizations with a particular emphasis on healthcare and post-secondary educational

institutions.

Increase the number of Provincially funded graduate spaces at Northern Ontario universities. Expand incentives for private sector research, innovation and commercialization activities. Establish programs to address workforce requirements for specialist positions. Provide financial and other resources to the municipalities to support their efforts to further

develop the research and innovation capacity of Northern Ontario.

Support the formation of collaborative arrangements between post-secondary institutions inNorthern Ontario and their counterparts in Southern Ontario, Canada and elsewhere to expand

research capacity.


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6. Fair and Equitable Resource Revenue SharingAs early as the 1930s, the Province has shared

resource revenues with Northern communities, a

recognition of the fact that municipalities shoulder a

significant burden of the cost of resource-based

industrial activity without a commensurate share ofrevenue in return. Until 1990, the concept of

resource revenue sharing formed an identifiable

element of Provincial grant programs for Ontario

municipalities, (although the form and amount of

funding did change) but with the introduction of

Municipal Support Grants, the concept of resource

revenue sharing has disappeared. Subsequent

changes to Provincial funding programs for

municipalities (Community Reinvestment Fund,

OMPF) not only excluded a specific component for

resource-based revenue sharing, but also reduced

funding as a whole. For over 20 years, a formal

arrangement for sharing resource revenues with

Northern Ontario communities has not existed.

The issue of resource revenue sharing is of critical interest and importance to municipalities across

the North. While the Province has typically indicated that the Northern component of OMPF

funding as well as infrastructure financing available through the NOHFC addresses the issue of

resource revenue sharing, the reality is that:

Specific funding for resource revenue sharing provided to Northern Ontario municipalities hasbeen eliminated as part of the Provinces funding regime, with overall unconditional funding

being reduced over two decades despite increased Provincial tax revenues generated by

mining and corporate income taxes. Further changes to OMPF funding, including delays in the

reconciliation of downloaded costs and planned reductions, will further reduce Provincial

funding to northern municipalities.

While the NOHFC does provide meaningful funding for community and economicdevelopment projects, it does not support capital costs for roads or higher operating costs

resulting from heavy freight movements of forestry and mining commodities and the

associated deterioration of the municipal road networks and other infrastructure assets. For

example, over 50% of mineral ores mined in Ontario are transported over the road network in

Greater Sudbury, placing a significant toll on the Citys infrastructure. Given that a large

component of resource-based industrial assessment is either underground or located outside

the municipal boundaries, these municipalities have no recourse to recover these costs from

industry, while at the same time receiving no funding from the Province.

The ability of municipalities to recover even a portion of their costs through taxation ofresource-based industries is being further eroded by major appeals on industrial properties

(e.g. forestry mills) that are resulting in significant decreases in assessed values and ultimately

either (i) shifting more of the tax burden to other taxpayers, namely residential, in turn giving

rise to affordability concerns; (ii) reducing the overall amount of funding to the municipalities.

The issue of assessment appeals is becoming more problematic in that the precedents

established by resource-related appeals are now being applied across the broader industrial

and commercial sectors.

A history of resource-revenue sharing in Ontario

1930s

1950s

Resource-revenue sharing

grants based on percentage of

resource industry profits

Mining revenue-sharing grants

calculated based on number of

employees

Unconditional Support Grants

(1973-1989) include elements

for Northern communities, low

density and resource

equalization

Municipal Support Grants

(1990) and subsequent

programs exclude specific

resource-revenue sharingcomponents

1970s

1990s

Today


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Ensuring an appropriate sharing of resource revenues between the Province and the municipalities

requires a new arrangement, one that can be implemented as part of the reform of OMPF funding.

The arrangement needs to recognize the requirement for unconditional operating funding (not only

capital) so as to compensate all Northern Ontario municipalities for the cost of maintaining and

operating the infrastructure necessary to support resource-based industrial activities that cannot

be recovered through taxation.

Concluding Comments

The Growth Plan represents a significant investment and commitment on the part of the Province

to contribute positively to economic and community development in Northern Ontario. In addition

to providing their perspective on immediate priorities, the view of the five largest municipalities in

Northern Ontario is clear the time has come to move from planning to implementing. The

consequences of the current situation on the Northern Ontario economy are already manifesting

themselves and without meaningful change in Provincial policy and programming, economic

disruptions will continue into the future.

In order to advance the directions outlined in this document, the five largest municipalities would

appreciate the opportunity to host a summit with the Province within the next three months. This

meeting, which would involve both political representatives and personnel from relevantministries, would establish the framework for further interaction and cooperation between the

Province and five largest municipalities.

The municipalities look forward to discussing these priorities and next steps at the upcoming

Association of Municipalities of Ontario meeting.


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Introduction:This report from the cities of North Bay, Sault Ste. Marie, Greater Sudbury, Thunder Bay and

Timmins is intended to help facilitate an approach to planning for Northern Ontarios continued

success in a manner that is informed, strategic, comprehensive and effective. As the largest

communities in Northern Ontario, the five municipalities have the breadth of resources, expertiseand relationships to make a meaningful contribution towards economic and community

development in Northern Ontario, provided that senior levels of government, including the Province

of Ontario, allows for their participation on a meaningful basis.

The five municipalities have undertaken the preparation of this document in recognition of a need

to advance the broader objectives and high-level priorities identified in the Growth Plan, particularly

those that have the potential for the largest contribution to the North. These contributions can be

in the form of supporting new economic activity such as the Ring of Fire or preventing significant

adverse disruptions to the Northern economy resulting in job losses. While the Growth Plan is

admittedly in its early stages, the need for decisive action and intervention by the Province is now

if the North is to continue its significant contribution to the overall economic well-being of Ontario.

This report is not intended to be a critique of the Growth Plan or the efforts of the Province and its

ministries with respect to economic and community development in Northern Ontario. The

Province has and continues to make a substantial contribution to the North and these are

recognized and appreciated by the municipalities. That said, the Provinces efforts have at time

been disjointed as opposed to coordinated, reactionary as opposed to planned and both ill-timed

and ill-focused as opposed to responding to the actual needs of the North in a timely manner. The

reality is that Northern Ontario is different than Southern Ontario, requiring a deep understanding

of the region to allow for truly effective planning for the future. This report intended to provide

that insight to the Province.

In addition to this introductory section, this report is divided into three separate chapter:

Chapter I seeks to provide a brief overview of Northern Ontario as a whole and the five largestcommunities in particular so as to ensure an understanding of the region and the significance

of the five major centres.

Chapter II operationalizes the Growth Plan by suggesting precise courses of action that can beundertaken by the Province in its execution of the Growth Plan. By its nature, the Growth Plan

is both broad ranging and high-level and further refinement of its priorities is required. Linking

the Provinces implementation of the Growth Plan to the needs and priorities of the five largest

municipalities is intended to maximize the benefit from the Provinces involvement.

Chapter III suggests next steps towards the establishment of an effective and collaborativerelationship between the Province and the five largest municipalities that will contribute

towards the economic success of Northern Ontario.


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Northern Ontario in Perspective:With only 8% of Ontarios population, there is a risk of understating or misunderstanding Northern

Ontarios contribution to the Province of Ontario. The stereotypical image of the North involves

sparse population, large distances between communities and limited economic activity beyond

mining and forestry. The reality, however, is vastly different.

Overall, Northern Ontario has experienced a negative trend in its population over the last 15

years. Since 1996, the regions total population has decreased from 826,000 to 775,000, an

overall decline of 6%. In comparison, the population of the remainder of Ontario increased by

approximately 7% over the same period. The extent of the decline in Northern Ontarios

population has not been even over the region but rather has been most pronounced in areas that

were traditionally major centres for forestry.

Population levels Northern and Southern Ontario

(in millions)

Population change by district (1996 to 2011)

While a number of factors have influenced population levels in Northern Ontario, the most

significant has arguably been the near complete collapse of the forestry sector that commenced

in the late 1990s. Across Northern Ontario, a number of communities, particularly smaller

municipalities dependent solely on a single mill for the majority of employment, faced the

prospect of significant job losses and the resultant loss of population.

Community Primary Job

Losses

Total Available

Labour Force

Labour Force

Impact

Population Change

1996 to 2011

Terrace Bay 400 815 49.1% -36.7%

Smooth Rock Falls 250 670 37.3% -30.5%

Dorion 70 250 28.0% -28.4%Ear Falls 110 715 15.4% -12.3%

Kapuskasing 510 4,085 12.5% -18.3%

Marathon 230 2,360 9.7% -30.0%

The decline in the forestry sector over the last 15 years has only served to heighten the pace at

which Northern Ontario was already moving away from an economy heavily dependent on

extraction and processing of natural resources.

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

1996 2001 2006 2011

Remainder of OntarioNorthern Ontario

>15% decrease

10% to 15% decrea

5% to 10% decreas

< 5% decrease

Population increase


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Historically, primary resource activities such as

mining and forestry represented a major

percentage of employment in Northern Ontario

for example, the two largest mining

companies in Greater Sudbury employed an

estimated 25% of the total labour force in the

community during the mid-1970s. Now, primary

resource activities (extraction and processing)

account for only 7%, or one in 14 jobs in the

region. While the reduction in resource-based

employment reflects the impacts of technology

on mining and forestry, as well as the almost

complete collapse of the forestry sector in the

late 1990s, it does not necessarily reflect an

overall decline in the resource sector. Rather,

the decrease in employment related to direct

extraction and processing activities has been

offset by significant increases in the mining

supply and services sector, which involves a

focus both on higher value-added activities as

well as domestic and foreign markets.

The growth in value-added activities is best demonstrated by the significant portion of Northern

Ontarios labour force employed in manufacturing, wholesale trade and business services, which

collectively account for 27% of all employment in the region.

Despite historical population declines and job losses, Northern Ontarios economic performance

and prospects has improved significantly in recent years:

Reported taxable income for Northern Ontario residents has increased from $16.0 billion in2002 to $20.9 billion in 2009, an increase of 30%. This is the same level of increase as the

Province notwithstanding the differences in population trends over this period.

Over the same period, personal income taxes paid by Northern Ontario residents to theProvince have increased from $818 million to $1.2 billion. Despite decreasing population

levels compared to population growth in the remainder of Ontario, the percentage of

Provincial personal income taxes derived from Northern Ontario residents actually grew from

2002 to 2009 (4.6% in 2002 vs. 4.9% in 2009).

The Ring of Fire development will inject billions of dollars into the Northern Ontario economyin connection with mine development, transportation infrastructure and a new ferrochrome

processing facility.

0% 20% 40%

Construction

Resources and agriculture

Manufacturing

Retail and wholesale

trade

Business and financial

services

Education, healthcare and

social services

Other

Remainder of Ontario

Toronto

Northern Ontario

Employment by industry sector1


16/31

16

In addition to the Ring of Fire project, other major investments are being made orcontemplated across Northern Ontario, including:

o At least eight mining projects as identified in the Advantage Northwest Mining ReadinessStrategy;

o The potential expansion of Essar Algoma Steels Sault Ste. Marie operations from thecurrent level of 2.7 million tonnes per year to 4.0 million tonnes annually, expected to

create 1,800 direct and indirect employment positions;

o The expansion of Goldcorps operations in Timmins; ando Upwards of $4 billion in mining and mineral sector investments in Greater Sudbury.

Concurrent with significant levels of private sector investment, Northern Ontario alsobenefited from major public sector investments, including the establishment of Canadas

newest law school and architectural school and new research and innovation facilities

including the Thunder Bay Regional Research Institute, the Advanced Medical Research

Institute of Canada and the Vale Living with Lakes Centre.

Why Focus on the Five Largest Centres?As part of the Growth Plan, the five largest Northern Ontario communities have been designated

as strategic core areas, which recognizes that these cities are economic hubs that benefit all of

Northern OntarioThey possess the critical mass of skilled people, as well as regional assets

such as colleges and universities, innovation centres, media centres, commerce and cultural

facilities that anchor many of the Norths existing and emerging priority economic sectors. They

are optimal locations for infrastructure investments that help to expand on this potential, and that

serve citizens across the North. The significance of the five largest communities in Northern

Ontario is borne out by their comparison to the remainder of the region. If anything, the

importance of these five cities to Northern Ontario is actually more pronounced than Torontos

relationship with the Province:

The five largest Northern cities account for 57% of Northern Ontarios total population, whichis a significantly higher concentration of residents in proportion to Torontos population incomparison to Ontario (20%)

The five largest Northern cities account for 64% of all municipal expenditures in NorthernOntario, which is more than double Torontos relation to the Province as a whole. Compared

to the other communities in Northern Ontario, the five cities are proportionately larger, with

larger resources and scope of activities.

The five largest Northern cities account for 59% of all reported municipal infrastructure inNorthern Ontario, with Toronto accounting for only 17% of total reported municipal

infrastructure in Ontario. This is consistent with the Growth Plans view of these cities as

hubs for regional infrastructure.

The five largest Northern cities account for 63% of taxable income in Northern Ontario and65% of Provincial taxes paid (Toronto 21% and 24% of Ontario, respectively). This not only

reflects the concentration of population in the largest centres, but also the presence of more

employment opportunities and higher paying positions by virtue of their roles as economic

hubs.

Over the last 15 years, the total population decline experienced by the five largest cities was4.4%, which is almost half the population decline experienced by the remainder of Northern

Ontario (8.5%).


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17

In its efforts to implement the Growth Plan, the five largest centres encourage the Province to

adhere to this recognition of their importance as regional hubs. The expectation is that the degree

of collaboration and consultation afforded to them, as well as the allocation of the Provinces

resources, investments and efforts, will be commensurate with their significance to NorthernOntario as a whole.

From the perspective of the five largest municipalities, the implications for the actual

implementation of the Growth Plan are self-evident maximizing the focus of Provincial efforts on

the five largest municipalities in Northern Ontario will yield the greatest outcome for the region

while at the same time ensuring benefits to smaller centres and other stakeholders in the North.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Population Municipal

expenditures

Municipal

infrastructure

Personal income

(taxable)

Provincial

income taxes

(personal)

57%

64%

59%63%

65%

20%

29%

17%21%

24%

The significance of the five largest centres

Five largest centres as a percentage of Northern Ontario

City of Toronto as a percentage of Ontario


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18

Priorities:By its nature, the Growth Plan is both broad ranging and high level. While the Growth Plan

addresses a number of elements critical to the success of Northern Ontario (and by extension the

Province as a whole), the absence of clearly defined measurables and timeframes is a cause for

concern. The reality is that the time for action is now if the true potential of Northern Ontario is tobe realized:

The suspension of the environmental assessment of the Cliffs Natural Resources Ring of Fireinitiative demonstrates the pressing need to address a range of issues, including strategic

transportation infrastructure, electricity pricing and Aboriginal relations. The Ring of Fire

project has the potential to be truly transformational, representing a mineral deposit equal to

the Sudbury Nickel Basin, which created and sustains not only the largest community in

Northern Ontario but also one of the largest integrated mineral process complexes in the world

and a centre of excellence for the mining supply and services sector). In an environment of a

declining manufacturing sector and increased competition for international investment,

projects such as the Ring of Fire can materially impact the economy of the Province as a

whole, a fact recognized in the Advantage Ontarioreport recently issued by the Jobs andProsperity Council.

The recent relocation of the Xstrata copper refinery from Timmins to Quebec can be directlyattributed to the differential in energy pricing between Ontario and Quebec, which lies fully

within the Provinces mandate. While the loss of 670 high paying jobs is consistent with the

closure of car plants in Southern Ontario in absolute terms, it is more significant when viewed

in terms of the percentage of labour force affected. The Xstrata closure represented 3% of

Timmins total labour force and job losses on a similar scale in Southern Ontario would be

measured in the tens of thousands a repetition of the Timmins experience in Toronto would

result in the equivalent loss of 40,000 jobs.

Additional major job losses could potentially be avoided through more effective Provincialintervention and planning for the North. The potential losses of employment at the OntarioLottery and Gaming Corporation (up to 500 jobs) and the Ontario Northland Transportation

Commission (up to 950 jobs) represent significant areas of concern for the five largest centres.

Clearly, the case for change exists. The time has come to shift from planning to implementation

and the following pages contain recommendations from the five largest Northern Ontario centres

on how best to focus the efforts of the Province for the benefit of not only Northern Ontario, but

the Province as a whole. In order to prioritize the Provinces efforts and focus, six main priorities

have been identified infrastructure, energy, workforce development, innovation and research

and revenue sharing with secondary priorities also outlined in this section of the report.


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19

Priority No. 1 Establishing a New Relationship Between

the Province and the Five Largest Northern Ontario

Municipalities

Prior to advancing prioirites focused on economic and community development in Northern

Ontario, the five municipalities are of the view that their relationship with the Province needs tochange. Despite the efforts of the Province and various ministries in the past, the perspective of

the five largest communities is that the Provinces efforts and actions for Northern Ontario have

been disjointed, unilateral and not as effective as they could have been due in large part to the

absence of long-term comprehensive planning and the lack of comprehensive consultation with

the five largest municipalities.

If the Province is to be truly successful in its efforts to support development in Northern Ontario,

a new relationship with the five largest centres is required, one that is built on direct engagement,

consultation and strategic thinking. The inclusion of the five largest centres at the earliest stages

of planning, strategy development and resource allocation decisions will provide the Province with

the benefit of their expertise, insight, resources and relationships. What the municipalities are

seeking is consistent with the Provinces own objectives for its relationship with the Federal

govermment a move away from so-called ad hoc, piecemeal planning to comprehensive

planning, multi-year funding commitments and more involvement of all stakeholders in decision-

making.

At the same time as the Province opens its planning and decision-making to input from the five

largest centres, two other important changes to its relationship with the municipalities should also

change:

Currently, there is a perceived absence of coordination and leadership across Provincialministries, resulting in policy vacuums, competiting priorities and the lack of a focused

approach to resolving issues. What is required is an effective central leadership position

within the Province that has the authority and mandate to coordinate the efforts of various

Provincial ministries and other organizations.

At the same time, the planning environment for Northern Ontario should not be entirelysegregated from the remainder of the Province. While the North definitely has specific

circumstances, it is an important part of the Provincial economy and has perhaps the best

potential for growth as a result of projects such as the Ring of Fire and Essar expansion. The

development of separate plans and strategies for Northern Ontario can (and has) resulted in a

disconnect with broader Provincial policy, where such policy actually exists. The reality is that

Northern Ontario is a major and growing component of the Provincial economy and as such,

should be factored into Province-wide policy decisions. Where such policy does not exist, for

example, a Provincial mining strategy, the Province should advance its completion.

Once this new relationship is defined and estabished, the Province and five largest municipalities

can proceed in addressing the following key priorities for Northern Ontario.


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20

Priority No. 2 Infrastructure

Over the past decade, infrastructure has emerged as arguably the most pressing issue facing

municipalities not only in Northern Ontario, but across the Province and Canada as a whole. As an

increasing percentage of their infrastructure reaches the end of its useful life, municipalities are

faced with rising infrastructure deficits as need outweighs available funds. The financial

pressures caused by infrastructure are further compounded by the need for new infrastructurerequirements. Notwithstanding the nominal population growth in the five largest Northern

Ontario municipalities over the last 15 years, changes to demographic patterns (i.e. smaller

households, more vehicles) and infrastructure requirements driven by regulatory changes and

economic development are increasing the demand for new infrastructure investments. The

reality is that infrastructure requirements in Northern Ontario are two-fold:

Local infrastructure needs that will meet therequirements of municipal residents and

businesses. Overall, the five largest

municipalities reported a total historical

investment in infrastructure of $6 billion at

the end of 2011, which likely equates to areplacement value in the order of $20 billion.

The ability of the municipalities to sustain

this level of infrastructure, which is critical

for economic development and the health

and well being of their residents (and those

of the surrounding region) is increasingly

under strain due to industrial property

assessment losses, inflation, regulatory

changes, wage settlements from interest

arbitration and reductions in senior

government transfers.

The consequence of this combination of factors is increasing infrastructure deficits in Greater

Sudbury alone, the estimated infrastructure deficit for roads (to the exclusion of all other

municipal infrastructure) is estimated to be over $700 million. While programs such as

Provincial gas tax and the Northern Ontario Heritage Fund Corporation (NOHFC) provide

some contribution for infrastructure, the funding is often restricted for specific purposes (i.e.

transit) or involves a time consuming competition for funds, both of which challenge long-term

planning for infrastructure. The recently announced Municipal Infrastructure Investment

Initiative, while focused on infrastructure reinvestment, provides no direct benefit to four of

the five largest municipalities that are excluded from the program due to their population and

despite their infrastructure deficits.

Regional infrastructure requirements that are necessary to support major economicdevelopment initiatives such as the Ring of Fire and other mine developments (transportation,energy transmission), the potential Essar expansion (regional harbour) and the revival of the

forestry sector (transportation).

The importance of infrastructure investments is recognized in not only the Growth Plan, but also

the Advantage Ontario report, both of which call for an increased focus on infrastructure

investments.

Reported municipal infrastructure (historical cost)

Sudbury

$2.439 billion

Thunder Bay$1.963 billion

Timmins

$354 million

North Bay

$752 million

Sault Ste

Marie

$632 mill


21/31

21

While the Province has introduced a number of strategic infrastructure investments, such as the

Northern Highways Program, the reality is that there is a lack of long-term, predictable funding for

infrastructure projects at the municipal level which precludes a sustainable approach to planning

for infrastructure needs. Addressing the infrastructure requires the Province to:

Move towards a long-term funding arrangement for municipal infrastructure that avoids time-consuming competitive application processes and allows for a multi-year, recurring stream ofinfrastructure financing. Programs such as the Build Canada Fund and NOHFC, while

appreciated by the municipalities, require a significant investment in time, effort and resources

while at the same time provide funding only on project specific basis. The introduction of a

new, long-term funding program with guaranteed minimum funding amounts would allow

municipalities to undertake longer-term financial planning that ensures a sustainable amount of

infrastructure reinvestment on an ongoing basis.

Act immediately to secure funding for key regional infrastructure needs, including Ring of Firetransportation assets in Northern Ontario, a restructured Ontario Northland Transportation

Commission, an expanded regional harbour in Sault Ste. Marie, the completion of four-laning

Highway 69/400 and necessary investments in support of the Advantage Northwest Mining

Readiness Strategy. In order to do so, the Province should advance the timing for completion

of the multi-modal transportation study outlined in the Growth Plan. Strategic infrastructure

investments are a critical component to future industrial growth as outlined in the recently

completed Advantage Northwest Mining Readiness Strategy and business case for a regional

harbour in Sault Ste. Marie.

Reinstate Connecting Link funding for Provincial highways that transition throughmunicipalities, with the end result being a fair sharing of costs for Provincial infrastructure.

The elimination of Connecting Link funding effectively represents the unilateral downloading of

costs from the Province to the municipalities and places the responsibility for maintaining

Provincial infrastructure with local governments.

Introduce some form of funding for bridge rehabilitation and reconstruction, the cost of whichis often prohibitive and frequently relates to bridges that were previously transferred from theProvince to municipalities.

Work towards greater coordination between Federal and Provincial funding programs so as toeliminate duplication and streamline reporting and administrative processes.

Recognize that the needs and circumstances in Northern Ontario differ from the South, withless of a need to address mass transit of passengers. At the same time, the Province needs

to expand its view of Northern Ontario infrastructure beyond primarily highways to include

other transportation modes (airports, short-line rail, short-sea shipping), housing stock

(affordable housing, assisted living facilities, housing first programs as investments in harm

reduction) and healthcare and educational infrastructure.

Address the declining quality of winter roads maintenance on Provincial highways. Since theimplementation of area maintenance contracts, maintenance standards on Northern highways

during winter months has deteriorated significantly, increasing the risk of injury to Northern

residents and the disruption of transportation linkages as a result of road closures. The

Province should consider either (i) reassuming responsibility for winter roads maintenance

activities; or (ii) reevaluating the sufficiency of existing winter roads maintenance standards

and ensuring contractor compliance.


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22

Priority No. 3 Energy

For a number of years, Northern Ontario

municipalities, industry and other stakeholders

have identified the issue of electricity pricing as

a competitive disadvantage for Northern

Ontario, with the real potential for job lossesthrough relocations to lower cost jurisdictions

and foregone investment as industry locates to

areas with lower costs. The issue of energy

pricing continues to be a major concern for the

large-scale industrial developments proposed or

underway for Northern Ontario and requires the

immediate attention of the Province. While

programs such as the Global Adjustment and

NIER have contributed towards a lowering of

energy costs, these programs are limited in their

effectivess as a result of (i) the temporary

nature of the program (NIER); (ii) thresholds and

caps that preclude the full application of the

lower rate across all electricity requirements;

and (iii) the continued differential between

electricity prices in Ontario and other Provinces,

most notably Quebec and Manitoba.

The generation, transmission, distribution and pricing of electricity falls fully within the mandate of

the Province and as such, the Province enjoys full discretion in resolving the challenges imposed

by the current pricing scheme. At the same time, the Province can also implement changes that

fully capitalize on electrical generation as an economic development engine for the North. In

addressing the issue of energy, the Province should:

Review policies that are contributing towards increases in electrical prices and implement newstrategies to ensure affordable energy pricing in Northern Ontario, including the recognition of

differences between Northern and Southern Ontario, the avoidance of Province-wide policies

and regulatory changes that will allow Northern Ontario LDCs to identify potential opportunities

for efficiencies and cost reductions without the requirement for consolidation.

Establish the NIER program as a permanent Provincial program while at the same time re-evaluating its eligibility requirements for the NIER program by both lowering the threshold for

participation (currently 5 megawatts) and expanding the upper limit of the program (currently 2

terrawatts).

Reevaluating the allocation of Global Adjustment Costs to provide a fairer distribution of coststo smaller users.

Plan for regional electrical generation and transmission as an economic development andrevenue-generating opportunity by investing in necessary infrastructure, adjusting legislation to

permit investments in larger generation projects and establishing incentives for projects that

benefit the Province as a whole. The true generating potential of Northern Ontario is

constrained by the lack of transmission capacity, which precludes municipalities from

developing projects that provide both an economic and financial contribution to their

0 20 40 60 80 100

Manitoba

Quebec

Ontario (NIER)

Ontario (>5MW)

Ontario (


23/31

23

communities while at the same time contributing towards the Provinces goal of energy supply

stability and increased generating of power from renewable sources.

Develop a comprehensive strategy for generating facilities in Northern Ontario, specifically theThunder Bay Generation Station and cogeneration facilities in Timmins and North Bay. The

establishment of a formal long-term plan for these facilities will send a critical message to

industry about energy supply in the region by ensuring a long-term source of energy supply. Inaddition, the ongoing operation of these plants will provide an economic and financial

contribution to the communities involved.

It is important to recognize that energy policy and its implications for economic development

extend beyond electricity to include petroleum products and natural gas. This component of the

energy sector is undergoing significant change due to market forces, which gives rise to both new

opportunities and new challenges on an annual basis, pipelines provide over $22 million of

taxation revenue to Northern Ontario municipalities, with additional tax revenues generated from

commercial assessment associated with compressor stations and other facilities; revenues that

may be at risk due to the conversion of gas pipelines to crude oil and the approaching end of life

for various gas plants in the North. The Province should consider additional programs to

encourage competitive pricing for other types of energy.


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24

Priority No. 4 Workforce Development

As the economy of Northern Ontario has grown and diversified, the nature of its workforce

requirements has changed. A large part of post-World War II immigration to the region was driven

by the need for relatively unskilled labour in the mining and forestry sectors. However, the

increased use of technology, the expansion of the resource sector beyond primary extraction and

processing into value-added areas (including supply and services) and the development of ahealthcare, education and other social services into the largest employment sector in Northern

Ontario have combined to increase the skill set and training requirements of todays workforce.

The ability of the North to support continued economic development, both in the form of industrial

activities, services and innovation, requires a continuing increase in its workforce. In the absence

of labour force availability, projects such as the Ring of Fire development, Vales Clean AER project

and medical research facilities such as the Thunder Bay Regional Research Institute and Advanced

Medical Research Institute of Canada will be challenged.

Given the potential for significant developments

in the mining and manufacturing sector, as well

as the recent resurgence of the Northern

Ontario forestry sector, securing skilledtechnical trades is a particular priority for

Northern Ontario. While apprenticeships

represent the opportunity to develop a home-

grown skilled labour force, the potential to do

so continues to be challenged by the fact that

Ontario has among the highest apprenticeship

ratios in Canada. While the Ontario College of

Trades is currently reviewing apprenticeship

ratios in Ontario (and has reduced the ratios in

certain instances), the concern over

apprenticeship ratios and the impact on

workforce availability remain.

At the same time that apprenticeship ratios and

other regulatory issues pose challenges to

workforce development in Northern Ontario, the

region is also disadvantaged by its inability to

attract and retain immigrants in sufficient

numbers. In comparison to remainder of the

Province, Northern Ontario is marked under-

represented in terms of new Canadians. On

average, only 0.4% of the total population of the

five largest Northern Ontario municipalities is

comprised of recent immigrants (i.e. thosearriving in Canada in the last five years),

compared to 11% in Toronto and 5% in the

remainder of Ontario. In the absence of an

enhancement of Northern Ontario as a

destination for new Canadians, the ability to

meet the requirement for skilled workers in

Northern Ontario will be challenged.

Electrical apprenticeship ratios in Canada (journeypersons to

apprentices)

1:2

1:2

1:1

1:1

1:1

2:1

1:1

3:1

1:1

1:1

1:1

1:1

0.0% 5.0% 10.0% 15.0

Ontario (total)

Toronto

Timmins

Thunder Bay

Greater Sudbury

Sault Ste. Marie

North Bay

Recent immigrants (last five years) as a percentage of

total population


25/31

25

The availability of a suitably skilled and trained workforce in Northern Ontario is a priority not only

for the five largest cities but for the Province as a whole skilled labour supports economic

development initiatives such as the Ring of Fire, which will contribute significantly to the

Provinces economic performance. Accordingly, workforce development priorities for the

Province should include:

Expanding the offering of skills development programming (including apprenticeships) throughenhanced funding to post-secondary institutions and other training providers. Identifying and implementing best practices for skills development programs from other

jurisdictions with significant demand for trades, including a continuation of increases in the

ratio of apprentices to journeyperson that will bring Ontario in-line with other jurisdictions.

While the responsibility for establishing apprenticeship ratios rests with the College of Trade,

the Province should ensure that the process proceeds on a timely basis and attains results that

are in the best interest of the Provincial economy.

Supporting efforts by the municipalities and other organizations to attract and retainimmigrants, with the focus being on relocating immigrants that have settled in Toronto (as

opposed to efforts focused on immigrants in their home countries).

Reinstating the Apprenticeship Tax Training Credit for information technology workers at callcentres, the cancellation of which is estimated to put as many as 2,000 jobs at risk in Northern

Ontario.

Reviewing the process for accrediting skilled immigrants to remove unnecessary obstacles. Enhancing funding for support programs to increase the retention of immigrants in Northern

Ontario, including Municipal Immigration Information Online (MIIO) portals.

Develop a comprehensive coordinated multi-ministry approach to supporting Aboriginalstudent education that includes additional supports.


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26

Priority No. 5 Research and Innovation

Innovate or die is a mantra often used in the private sector to describe the importance of ongoing

innovation to the success of a business enterprise. The importance of innovation also applies to

regions such as Northern Ontario, which has witnessed a move away from a purely resource and

transportation reliance towards a more diversified economic base. Northern Ontario represents a

centre of excellence for research and innovation across a number of sectors, including mining,forestry, environmental sciences and medical research. Through organizations such as the

Thunder Bay Regional Research Institute, the Ontario Forest Research Institute in Sault Ste. Marie,

SNOLAB and the Advanced Medical Research Institute of Canada in Greater Sudbury, Northern

Ontario has developed a world-class capacity for research and innovation. At the same time,

public and private sector organizations throughout the region are involved the commercialization of

research activities and the development of new technologies and processes that contribute

towards the level of economic activity and innovation in the region. While admittedly small

compared to Southern Ontario, research and innovation represents a growing activity in the North

with significant potential. In order to enhance and foster a growing culture of research and

innovation, the Province should:

Support increased research and innovation activities by Provincially-funded and controlledorganizations with a particular emphasis on healthcare and post-secondary educationalinstitutions.

Increase the number of Provincially funded graduate spaces at Northern Ontario universities. Expand incentives for private sector research, innovation and commercialization activities. Establish programs to address workforce requirements for specialist positions necessary to

support research and development activities.

Provide financial and other resources to the municipalities to support their efforts to furtherdevelop the research and innovation capacity of Northern Ontario.

Support the formation of collaborative arrangements between post-secondary institutions inNorthern Ontario and their counterparts in Southern Ontario, Canada and elsewhere to expand

research capacity.


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27

Priority No. 6 Revenue Sharing

Notwithstanding the economic benefits that are derived from resource-based activities in Northern

Ontario, the significant presence of mining, forestry and other resource industry results in a

disconnect between the cost of maintaining the necessary infrastructure to support these

activities and the associated funding.

Presently, municipalities across Northern Ontario bear the cost of resource-based industry in the

form of the need to maintain infrastructure at a capacity sufficient to meet the needs of large

industrial users and the associated wear and tear on municipal road networks and other assets. To

a large extent, communities that are not host to mines or mills also incur these costs as a result of

the transportation of goods through their communities and the infrastructure requirements

associated with supply and services provided to the resource industry. At the same time,

municipalities are often unable to recover a sufficient level of funding directly from industry to

recover these costs as a result of:

The inability to tax underground workings of mines; The location of resource-based industries in areas without municipal representation; and The trend towards significant assessment losses on industrial properties as a result of appeals

and associated decisions by the Municipal Property Assessment Corporation (MPAC).

The issues facing Northern communities with

respect to obtaining a fair share of revenues

generated by resource industries is not new. As

early as the 1930s, the Province has shared

resource revenues with Northern communities, a

recognition of the fact that municipalities shoulder a

significant burden of the cost of resource-based

industrial activity without a commensurate share of

revenue in return. Until 1990, the concept of

resource revenue sharing formed an identifiableelement of Provincial grant programs for Ontario

municipalities, (although the form and amount of

funding did change) but with the introduction of

Municipal Support Grants, the concept of resource

revenue sharing has disappeared. Subsequent

changes to Provincial funding programs for

municipalities (Community Reinvestment Fund,

OMPF) not only excluded a specific component for

resource-based revenue sharing, but also reduced

funding as a whole. For over 20 years, a formal

arrangement for sharing resource revenues with

Northern Ontario communities has not existed withthe exception of the Northern component of OMPF,

although reference to this grant indicates it is for

higher costs resulting from Northern Ontario

conditions and not necessarily resource sharing.

A history of resource-revenue sharing in Ontario

1930s

1950s

Resource-revenue sharing

grants based on percentage of

resource industry profits

Mining revenue-sharing grants

calculated based on number of

employees

Unconditional Support Grants

(1973-1989) include elements

for Northern communities, low

density and resource

equalization

Municipal Support Grants

(1990) and subsequent

programs exclude specific

resource-revenue sharing

components

1970s

1990s

Today


28/31

28

The issue of resource revenue sharing is of critical interest and importance to municipalities across

the North. While the Province has typically indicated that the Northern component of OMPF

funding as well as infrastructure financing available through the NOHFC addresses the issue of

resource revenue sharing, the reality is that:

Specific funding for resource revenue sharing provided to Northern Ontario municipalities hasbeen eliminated as part of the Provinces funding regime, with overall unconditional fundingbeing reduced over two decades despite increased Provincial tax revenues generated by

mining and corporate income taxes. Further changes to OMPF funding, including delays in the

reconciliation of downloaded costs and planned reductions, will further reduce Provincial

funding to northern municipalities.

While the NOHFC does provide meaningful funding for community and economicdevelopment projects, it does not support capital costs for roads or higher operating costs

resulting from heavy freight movements of forestry and mining commodities and the

associated deterioration of the municipal road networks and other infrastructure assets. Given

that a large component of resource-based industrial assessment is either underground or

located outside the municipal boundaries, these municipalities have no recourse to recover

these costs from industry, while at the same time receiving no funding from the Province.

The ability of municipalities to recover even a portion of their costs through taxation ofresource-based industries is being further eroded by major appeals on industrial properties

(e.g. forestry mills) that are resulting in significant decreases in assessed values and ultimately

either (i) shifting more of the tax burden to other taxpayers, namely residential, in turn giving

rise to affordability concerns; (ii) reducing the overall amount of funding to the municipalities.

The issue of assessment appeals is becoming more problematic in that the precedents

established by resource-related appeals are now being applied across the broader industrial

and commercial sectors.

Ensuring an appropriate sharing of resource revenues between the Province and the municipalities

requires a new arrangement, one that can be implemented as part of the reform of OMPF funding.

The arrangement needs to recognize the requirement for unconditional operating funding (not onlycapital) so as to compensate all Northern Ontario municipalities for the cost of maintaining and

operating the infrastructure necessary to support resource-based industrial activities that cannot

be recovered through taxation. Additionally, municipalities in Northern Ontario see a strong need

to address concerns over assessment services provided by MPAC, including the need to:

Address the significant number of unexplained and/or unsupported changes in property valuesas well as MPACs perceived lack of regard for the consequences of their decisions;

Adopt more refined analytical techniques and expert resources for the valuation of special useindustrial properties such as pulp and paper mills


29/31

29

Other Priorities

In addition to the main priorities identified in this chapter, the five large Northern municipalities

have identified a number of other action items that, while not considered to be immediate

priorities, are important to the continued growth and development of Northern Ontario and which

are listed below.

Additional support for the forestry sector

Increase the requirement for sivilculture activities on crown land to ensure sufficient fibresupply in the future

Introduce policy and legislation that supports industrial innovation and increased use offorestry products, including revisions to the Ontario building code to facilitate increased use of

wood in taller structures

Provide funding for programs supporting the diversification of forestry and the value-addedforestry sector. The need to increase the value-added component of Northern Ontarios

resource-sectors is a major priority identified in both the Growth Plan and the Advantage

Ontario report.

Additional support for the mining sector

Provide funding for programs supporting increased value-added activities in the mining sector. Increase financial incentives for mining exploration to a level consistent with other

jurisdictions in order to address the low rate of incentive of mining exploration in Ontario.

Healthcare

Expand long-term care capacity by situating long-term care beds closer to community need(rather than on a district basis)

Continue to fund recruitment and retention programs for healthcare professionals Increase the Provinces share of funding for major capital projects Enhance funding for assisted living facilities so as to address housing and care needs across

the continuum of care

0% 5% 10% 15% 20% 25% 30% 35%

Ontario

British Columbia

Saskatchewan

Manitoba

Flow-through mining exploration tax credit rates for selected jurisdictions


30/31

30

Education

Increase incentives for youth and new Canadians to study in the North through expandedscholarship programs and tax credits

Modify existing rules to allow students to participate in experimental learning while studyingfull-time

Housing

Increase funding for the Northern component of the Canada-Ontario Affordable HousingProgram

Address financial pressures arising from downloaded social housing programs, changes tohousing agreements and reduced flow-through Federal funding for social housing

Establish financial support for local Housing Community Improvement PlansOther

Revise the focus of the Ministry of Northern Development and Mines trade and investmentmarketing activities to reduce the threshold targets for jobs, thereby allowing for focus onsmaller employers and opportunities

Provide financial incentives for downtown revitalization projects


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Next Steps:The five municipalities appreciate the opportunity to provide their perspective and input to the

Province on how best to support the continued development of Northern Ontario. This document

and the associated presentation at the Association of Municipalities of Ontario is only the first step

in establishing the new relationship that has been identified as the most pressing need by the fivemajor cities. To be truly successful, the municipalities request that within 90 days of our

presentation, the Province and municipalities host a joint summit involving both political

representatives and staff (Ministry and municipal personnel) to establish the framework for future

actions. Subsequent to this initial submit, the municipalities propose that ongoing interaction

between elected officials occur at least twice a year, while staff resources from the municipalities

and various ministries meet quarterly. The municipalities are strongly of the view that developing

a new relationship between the Province and municipalities necessitates frequent constructive

contact at senior levels.

As stated various times in this document, the time has come to move from planning to

implementation. Northern Ontario has the potential to expand significantly through projects such

as the Ring of Fire but these opportunities will ultimately succeed or fail based on the actions ofthe Province. The North has already witnessed the consequences of inaction and is committed to

supporting its economic growth and development, with the outcome being a major contribution to

the economic well-being of the Province as a whole.

Northern Ontario has the potential increase its already significant contribution to the Province and

the five municipalities welcome the opportunity to work with the Province and its ministries on

accomplishing this goal.

Northern mayors presentation at AMO conference

Documents