Tag Archives: economy

Reflecting on our successes this term


Collingwood CouncilWith just over a year left to go in this term, I’d like to take a few minutes to consider all the accomplishments of this council over the past three years. They are not inconsiderable, and worth celebrating, I think you’ll agree.

Most recent are the two new state-of-the-art recreational facilities; jewels in our community. Centennial Pool Aquatic Centre is now open, to the public’s delight and great excitement. If you haven’t seen it, stop by and look inside. Everyone who does is impressed. It certainly exceeded expectations. Bring your bathing suit and come for a swim.

It proved to be a good choice – and not merely economically – that the whole community can take pride in. It has a full-sized, FINA-endorsed, 25m, six-lane competition pool, with touch pads and starting blocks, as well as a separate warm-water (94F) therapeutic pool residents can use every day (cost to swim is a mere $3; we are looking into options for passes or memberships).

Centennial PoolPlus we can now host those aquatic competitions that are so important to the swimming community. That will prove a benefit to the whole community, economically and in public relations. The Collingwood Clippers held their open house at the new pool, Sept. 5, and presented the town with the anticipated donation cheque for the pool upgrades: $158,000. Thank you, Clippers!

The new (as yet unnamed) arena in Central Park will open this fall. We will have enough ice available to allow groups time that previously we could not accommodate. Women’s and girls’ hockey, and sledge hockey come to mind. Figure skating, too.

It will have a viewing area-mezzanine (with kitchenette for catering), which groups can rent for events – an economic bonus.

Both facilities offer something else, perhaps even more important: safety and time. Local kids and adults can play and practice here in town, and not have to drive to other communities for ice or swim time.

Parents no longer have to get up well before dawn to drive their kids to a distant rink or pool in the early hours of a winter morning, risking whiteouts, rough driving conditions and bad visibility to get their kids to and from a far-away site. Our community’s children and their parents will be much safer, and will have more time to spend together at home or in play, rather than on the road.

That’s worth celebrating.

That we did it all without having to increase taxes is just icing on the cake.

This new arena will allow us to upgrade and enhance the venerable and much-loved Eddie Bush Arena next year. We will be able to use it for other purposes in the non-hockey season: car shows, conventions, entertainment, indoor soccer and lacrosse – the possibilities are great. We will use it to expand our local events and activities, which turn will draw more visitors and improve business. This opens all sorts of possibility for economic development.

Fiscal responsibility has been the watchword for us this term. We have kept the town’s portion of your property taxes from rising for three straight years, while still maintaining services and infrastructure. We have an excellent staff which has been galvanized to hold their budgets by council’s determination and our forward thinking approach to financial responsibility. We plan to continue that trend through 2014.

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Clawing our way back up the ladder?


In 2006, Moneysense listed Collingwood as the 11th best place to live in Canada. The other ten above us on that list were all major cities. We were the number one town. Mayor Geddes beamed.

Today we’re a lot further down the list. Numero 54 to be exact, out of 200.

I wrote about that list back in 2011. We plummeted from the giddy heights of 11th place to 61st by 2008. The fall didn’t stop until we hit 94th place in 2012, in the bottom half of the 180 places listed.

Now we’re back at 54th place. I suppose that’s come consolation – a rise of 40 places up the ladder, and in the top half.

You have to take the recently released 2013 list with a rather large grain of salt. Click on the town’s name in the overall ranking list and see what comes up.

NOT CollingwoodThat’s right: the photo is NOT Collingwood. It’s Blue Mountain Village. Now read the amounts for average house price and average household income. Wow. We’re rich!

Or maybe not – StatsCan reported the average family income here is roughly $60,000 (or $67,000 as shown here). Our treasurer reports the average family home is about $250,000 (it’s calculated as $274,000 here).

Moneysense shows our average income as $81,499 and average house price as $331,594. Way above the figures usually accepted for this town.

You think maybe Moneysense got it – and maybe the rest of their data for Collingwood – wrong? You think maybe they’re ranking the Village under Collingwood’s name?

I look at some of those stats and wonder. rain days: 110 – almost one out of three days per year? A 7% increase in population since 2011? Where did they get those figures? Maybe they can’t tell us apart from the Village.

I think we should ask for a recount. And maybe supply some correct data and a proper photo to the magazine.

(PS. We can always take heart we’re not among the ten worst places to live – seven of which are in Quebec).

 

 

Tax the Rich – a video



You really should watch this video. It explains in clear, simple terms the argument of the billionaires and the rest of us. I like it because – while it’s simplistic – it is succinct and presents its argument in a powerful story. It also clearly underscores the very polarized US arguments about both taxation and wealth.

This was commented on the Daily Kos as well. Amusingly, it was immediately pounced upon by the rightists as “socialist” propaganda. Sean Hannity, talking head for the uber-right Fox News, was apparently “outraged.” It was titled “Villifying $uccess.”

That they would associate success with money (the $ sign) identifies the basic flaw in their argument. Money, in their simple minds, is merely a measure of itself. Unless that money has contributed beyond mere accumulation – created jobs, built economies, served a greater good such as education – it’s merely a measure of greed. So the video vilifies greed, not success. A person can be successful without accumulating millions or even billions of dollars.

That’s a typical conservative canard – the idea that any challenge to unrestrained (laissez faire) capitalism or suggestion of taxing the wealthy is a socialist plot to enslave America. The real villain here is not money per se, but how a series of US governments has failed in its responsibilities to oversee and manage capitalism. They have allowed the money to shift from productivity, manufacturing, creativity and jobs to the gambling system called Wall Street. They have allowed shareholder profits and executive salaries and benefits to become more important than jobs, local economies, businesses and overall wellbeing. It’s a sad condition when the CEO of Wal-Mart, Mike Duke, makes more in one hour ($16,827) than his typical employee makes in a whole year (average annual wage in the US for a Wal-Mart employee: $13,650).

For the ultra-conservatives, any attempt to rein in the excesses of capitalism is to raise the spectre of that political Cthulhu – socialism, a truly misunderstood word for most Americans. There is an irony here, since the US oligarchs are mostly living in states of entitlement not unlike that of Stalin’s and Khrushchev’s and Brezhnev’s politburos under Communism. Communism may have fallen as an economic system, but its class system still thrives in modern America.*

These conservatives believe the market – that is, the economy – will best regulate itself, much the same way your cat will choose the best vet for its care, or your children will choose the healthy, steamed and unsalted broccoli over the sugar-saturated, heavily advertised junk food for dinner. But if you associate success with mere wealth (as, it seems, many conservatives do), then the greedier the person, the greater his or her success. And thus you get the mess the US economy is in, with jobs going overseas in order for CEOs to be able to afford another yacht, with home foreclosures for the the recently-unemployed middle class while billionaires thrive after having gutted the factories and sold off the assets (Mitt Romney for president, anyone?).

Okay, that’s another simplification, but one only needs to look at the economic figures to see how crazy this has become. Capitalism is a wondrous system for growth, but it needs the government’s hands on its rudder to keep it off the shoals of madness. And it’s been without a captain for many decades now, at least in the USA. In most other Western nations, at least a modicum of control has been provided (Canada, for example, avoided the worst of the recession not by being smarter than Americans, but because we have more stringent controls on our banking and financial sectors).

So government intervention helps capitalism, helps strengthen it, helps build economies, by preventing the excesses it is capable of, from happening.

The Young Turks throw in this comment about the difference between cutting services and social support versus taxing the rich, with some counterpoint:

And James Galbraith, of the LBJ School of Public Affairs, makes some cogent points about the US economy in this video:

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* The other irony is that many of these conservatives claim – rather loudly – to be Christian, yet they act in a very un-Christian, even anti-Christian manner, towards their fellow Americans – again like the politburo.

Gambling: money and statistics


gambling cartoonNo, I’m not going to write about the morality of gambling.* I’ll save that for another post. This is about money. And numbers.

I attended the OLG four-community presentation in Wasaga Beach, Tuesday, and it got me thinking about what gambling means to the economy, what it means to the government, what effect it might have on things like growth and recession. It also made me wonder how governments became addicted to gambling revenue, but that, too, is for another post.

I also found some of the statistics presented interesting enough to do some extrapolation, which I’ll get to at the end.

What does gambling contribute to our economy? Well, the OLG and the province always like to tout the benefits: the OLG paid more than $2 billion profits into provincial coffers, in 2011. They’ve given more than $34 billion since 1975. That’s an average contribution of $149 per person in the province per year. OLG’s plans are to build that payment to the province up to $3.3 billion by introducing more and newer forms of gambling.

On a very basic level, that looks good. After all, at least some of that money would have had to come from taxes instead, so it can be seen as a user-pay system, or a self-tax system. Of that $2 billion last year, $120 million went to the Trillium Foundation, $10 million for Ontario Amateur Sport, and $41 towards problem gambling programs.

That’s an interesting ratio: four times the amount given to develop sports is given to treating the problems created by gambling. A point not missed by the audience.

The OLG made that profit from revenue of $6.685 billion. That’s a far more intriguing number. It’s just over one percent of Ontario’s GDP in 2011. As a former business owner, seeing a 33% profit margin is impressive. Extrapolating, it suggests OLG plans to increase net gambling revenues to almost $10 billion if the ratio remains the same. It will do this by expanding gaming sites, adding internet gambling, allowing bingo halls to run more games – making more gambling available to more people more often.

That doesn’t sit too well with me. The same people who won’t let grocery and convenience stores sell wine and beer because it might corrupt someone, will make gambling so ubiquitous it will be hard to avoid tripping over a slot machine (real or virtual). Online gambling will offer easy access, 24/7 from your home. Play in your jammies until the early hours. All you need is a credit card. Makes me wonder if the goal is to make gambling mandatory some day in the future, like taxes…

What happened to the rest of the money the OLG took in?

Online gamblingAccording to the OLG’s annual report, operating expenses were $4.975 billion. Of that, $1.835 billion went to payouts to lottery and bingo winners. Commissions ($648 million – this, I assume, was paid to operators ), marketing ($300 million – the amount paid for advertising is 7.5 times the amount paid to help problem gamblers), interest ($32 million), payments to the federal government ($228 million) and amortization ($226 million) gobbled up another 1.43 billion. Paying for the OLG and its 18,000 employees is one of those expenses. Six thousand of those employees got bonuses, too – $11.6 million worth. Not a large slice of $4.7 billion. Horse racing got $345 million; host municipalities got $92 million and First Nations got $117 million.

It almost looks like the OLG is on a drunken giveaway spree, handing out the bucks to everyone except, of course, the gamblers. Nice of them to give us back some of our money, though.

Who doesn’t want to get free money? That’s the attractiveness of hosting a casino: all you need to do is nod your head, zone some land, then sit back and watch the money roll in. Suddenly flush with cash, the town’s taxes plummet, everything gets rebuilt, new sports facilities sprout, downtown gets renewed, sidewalks rebuilt, streets paved with gold and the local politicians get halos.

Well, maybe not.

As an aside, based on media stories, all three seem worried that their slot machines will be removed from the tracks when the agreement ends, sometime in the next year.

The OLG presented the audience with examples from Hanover, Central Huron and Chatham-Kent: all three communities have an OLG money machine in a racetrack. Hanover has 130 slots; Clinton (Central Huron) has 123, and Hanover (Chatham-Kent) 130. All three are currently questioning whether the slots will remain in their raceways with the OLG’s new strategic plan. In 2011, Hanover received about $800,000; Central Huron $641,000 and Chatham-Kent about $700,000. Exuberant endorsements from their mayors, we were told.

Assume we could get, say, $1 million per year as a host community. That translates to just over 2% of our annual municipal budget. Minus, of course, what we would pay to our neighbours as per the memorandum of agreement we signed. We might end up with 1% of our budget as “free” cash. Does this mean your taxes won’t go up? Nope. The extra money would likely end up going to infrastructure improvements and maintenance required by the extra traffic, maybe to extra policing costs too.

Gambling and drinking cartoon
Even if we kept it all for ourselves (as one councillor has suggested), and damn the rest of the region, is that money enough to make us want a casino? If I’m going to sell our municipal soul, I think I want a bigger slice of that pie for the town. As Faustian agreements go, we’re not getting much from our side of the bargain.

Besides, we might think we’re agreeing for “just” 300 slots, but the OLG said it could expand the site’s licence to other games anytime in the future. The demographics change when you have other types of gambling, but I didn’t hear anything to suggest the town will have a say in that expansion.

If the cash doesn’t move me, the opportunity to create 80 to 90 jobs in the area is more attractive. Any job creation is welcome, but I get an uneasy feeling these aren’t the “quality” jobs some folks are expecting.

From what I understand, many of these jobs would be similar to what the hospitality industry already offers – janitorial, serving, cooking,security, valet parking, landscaping, counting cash. Whether these (non-union?) jobs would pay better than the hospitality sector or offer any benefits would be up to the private operator. They aren’t government jobs: the OLG won’t be running these new casinos.

Will a private operator pay more than $10-$12 an hour for someone to sweep the floor and polish the slot buttons? I wouldn’t expect so. Any new jobs are better than no jobs, but my passion to create more McJobs is somewhat less. Would you like fries with those casino tokens?

Back to the money. According to the OLG, the net revenue from adults to the gaming industry in Ontario is $459 per year. Doesn’t seem like a lot, but that’s money that doesn’t go directly into the economy – it doesn’t create jobs outside the gambling sector. It doesn’t buy anything from local merchants or restaurants. It goes directly to the government. Well, okay, two thirds goes to the OLG and its minions, and the remaining third gets into public coffers.

Most economists measure consumer spending as a yardstick to whether we are in or out of a recession – it’s called the consumer confidence index. See here for the Canadian index. It’s a simple measure of consumption – consumers who are confident in the state of the economy buy more stuff. Recessions happen when that confidence falls to a point where we stop buying and start hoarding (okay, it’s one reason; there are others, but it’s a big part of it).

A strong consumer confidence report, especially at a time when the economy is lagging behind prevailing estimates, can move the currency markets quickly. The idea behind consumer confidence is that a happy consumer – one who feels that his or her standard of living is increasing – is more likely to spend more and make bigger purchases, like a new car or home, leading to a stronger domestic economy and consequently a stronger currency.
Source: www.investopedia.com/walkthrough/forex/advanced/level8/consumer-confidence-index.aspx#axzz29kZLXgcV

Gambling cartoonIs gambling measured as consumption? Does the money pushed into slots contribute to the level of confidence? Is gambling measured in the index? I can’t find anything online to suggest that it is. So rather than spending that $459 on, say, a new TV, a shelf of books, a library of DVDs, new skates, skis or a bicycle, a purebred puppy, teeth whitening or any other goods and services – this money is spent on gambling. It bypasses the usual consumer channels. Gambling doesn’t add to the consumer confidence, even though the money is still flowing out of consumers’ pockets.

Yes, there is trickle down and spin-off – some of the money goes to suppliers, some to wages – and thus some gets back into the general economy. But how much? How much just ends up fattening the bank accounts of the operators? I don’t know, but clearly it’s not as beneficial as if it were all spent in a retail store.

Would $6.7 billion have a positive effect if it was spent in retail instead of gambling? Of course, but overall not as much as you might imagine. It’s about 4% of Ontario’s total retail sales (2011 figures). So it would help, but wouldn’t change the world. A few hundred people spending an extra $459 each every year in a local business could make a real difference to the local economy.

As a personal choice, I’d rather buy that shelf of books from local bookstores than pump quarters into a noisy metal machine and walk away with nothing. At the end of the day, I will have something to show for my money, not to mention many more months, even years, of enjoyment from the books.

It strikes me that putting the money directly into the economy helps buoy consumer confidence (thus the economy) better than spending it on gambling, and it might help keep us on the farther side of a recession. The OLG’s own statistics show that Ontario’s gambling revenue didn’t seem significantly affected by the last recession, so gamblers apparently don’t seem to feel the need to hoard as much as consumers when the economy tanks.**

Let me wind up with some thought on statistics. According to the OLG’s own estimates. 3.4% of Ontario residents have a “severe or moderate” gambling problem. In Problem Gambling in Canada (see footnote), the authors quote a 2005 study of Ontario residents by Wibe, Mun and Kauffman, that has a higher number: 5.8% are “at risk of gambling problems,” 2.6% have “moderate problems” and 0.8% have “severe problems” (the latter two combine to make the 3.4% OLG mentions).

We have around 21,000 people in Collingwood. At 3.4%, we expect to have more than 700 people here with “severe or moderate” gambling problems. Another 1,218 (5.8%) are “at risk”. That’s about 2,000 local adults for whom gambling is or may be a problem. These are your friends, relatives, neighbours. That concerns me. These are the people most likely to be found in a casino that’s in our back yard – especially during the week when there are fewer visitors.

We have about 16,000 adults 18 and older here. That means about one in every eight adults who may have or who have a problem with gambling. If the government was to allocate funds to problem gambler programs by that percentage, they would have to spend more than $250,000,000!

Add in about the same number of people from Wasaga Beach, and more from Clearview, Springwater and Town of the Blue Mountains, and we have more than 5,000 people in our immediate vicinity who either have or are at risk from gambling problems. That’s a lot of people in our region who may find a casino an irresistible place to spend their money.

I just don’t see 5,000 people lining up at the problem gambling office to voluntarily disbar themselves from the irresistible urge to push quarters into that hungry metal mouth, while others shove past them to get at the seats they vacated. I guess they’ll still be able to enjoy the province’s online gambling sites, when they are launched. The government may not want you in the casino with your bad habits, but it still wants your money, and won’t even mind if you play in your jammies.

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As you might gather from the above, I am less than enthusiastic about having a casino here. I’m still open to debate and to having my mind changed, but it has to be a lot more compelling an argument than what I’ve heard to date.

Worth reading: Public Affairs 101 on gambling
The Walrus: story on Alberta’s gambling
Stats Canada report on gambling, 2011
The Social Effects of Gambling

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* In the book, Problem Gambling in Canada (Tepperman and Wanner, Oxford University Press, 2012), gambling is identified as a learned behaviour; like smoking, like watching TV, playing sports or reading. Adults often become gamblers because of how it is portrayed in family or social situations. Because gambling is legal, it gets advertised in mass media, making it appear on the same level as consumer goods and entertainment, banks, and music concerts. From buying lottery tickets to trips to Las Vegas, how gambling is perceived in the home affects how children will develop as adult gamblers; just as children brought up by smoking parents are very likely to become smokers themselves.
** While this was also noted in the UK, in the USA, the pattern seems different. Overall the US gaming industry lost about 5.5% revenue during the recession, with New Jersey reporting a 13% drop from casino revenue. How much of that was caused by an increase in online gaming or in the general increase in gambling opportunities as more and more states legalize it, is unknown. Also, the US was hurt more by the recession than was Canada.

Grim outlook for Canadian manufacturing


Abandoned Arrow Shirt factory, OntarioThe outlook for Canadian manufacturing, warns the CIBC, will remain grim as long as a strong dollar keeps labour costs high, “deepening the hollowing out of the industrial heartland and boosting regional income inequality in the years ahead,” says the Huffington Post.

The Canadian loonie looks good for shoppers who buy consumer and retail goods made outside Canada. Our import prices are actually 10% lower than they were a decade ago. Back in 2002, when the loonie was $0.62CAD to the $USD, our labour costs were lower, so it made Canada a good place in to make products. Now we’re not: we’re too expensive. Our labour costs are now 20-25% higher than those in the USA (see graph, below).

The factories have moved elsewhere and they’re not coming back any time in the foreseeable future. So you have to ask which is the greater advantage for Canadians: being able to buy cheaper goods from China or having good-paying jobs so you can afford better products?

Canadian labour costs risingThe CIBC report notes that, “Canada is no longer a cost-effective location for a host of non-resource-related manufacturing activities. Initially, shutdowns were seen in sectors like apparel and furniture that had earlier hung on in part due to an undervalued exchange rate. More recently, Canada has lagged in attracting or retaining facilities for autos and parts, rail cars, steel mills, and other goods where the competition is now more weighted to US producers… barring a big correction in the currency, or a sharp shift in relative wages, factory growth will subsequently stall.”

Ontario has been hardest hit, the report continues. “Real GDP growth in that province has now trailed the rest of the country for nine straight years—underperformance that has coincided with C$ appreciation. Had Ontario kept pace with the rest of the country, its economy would be almost 10% larger than it is today, making it much easier for the government to dig itself out of deficit.”

Only last month, the HuffPost reported that Canada lost industrial plants at twice the pace of the United States in 2011. The story adds,

Ontario led the decline in industrial plants, shedding 33 of them for a total of 7,853 jobs lost, the report stated. Quebec shed 23 plants, costing nearly 3,000 jobs. Western Canada and Atlantic Canada lost fewer than 2,000 industrial plant jobs each.
But the 14,000 jobs lost at shuttered plants don’t tell the full story. According to Statistics Canada, total employment in manufacturing declined by 50,000 from December, 2010, to December, 2011.
The IIR report suggests the pace of industrial job losses will be similar this year. There are already 76 plants scheduled to close in the next few months in the U.S., while Canada already has four closings scheduled, for job losses totaling 2,700.

At the bottom of the story is a slide show that documents the 10 hardest-hit manufacturing sectors, with the greatest job losses since before the 2008 recession.

Manufacturing isn’t the only sector hit. It’s the classic domino effect. Last month we saw a story on the grim outlook for the air cargo industry: “The immediate future doesn’t look at all rosy for the air cargo business.”

A report from TD Securities just after the recession began stated, “There’s no reason to expect anything good from the Canadian manufacturing shipments report on the 16th, with every single leading indicator that we know of in negative territory.” That picture has not improved significantly. A look at their forecasts for 2012 doesn’t show any improvement predicted. The once robust automobile sector remains flat: “…there is limited upside for new auto sales over the medium term. Perhaps the most difficult challenge facing automakers is the likely absence of any meaningful pentup demand in the Canadian market.” The housing market is at a crossroads: “Overall, we expect sales to record annual average declines of 2.4% and 3.5% in 2012 and 2013, respectively. Prices are poised to suffer a similar fate – annual average declines of 1.9% in 2012 and 3.6% in 2013.”

Furniture sales forecasts have been rewritten with lower expectations. Canadian retail sales in December – the best month of the year – were lower than expected (“There is also a direct connection between the retail shopping numbers and the Personal Consumption Expenditure (PCE) line item in gross domestic product (GDP). PCE accounts for 55% of Canada’s national output.”)

Overall, the economic future does not look rosy for Canada, and especially not for Ontario. Coupled with the Drummond Report on Ontario’s troubled economy and its recommendations for significant cuts to government spending, it looks like we’re in for a few lean years. It’s something for Collingwood Council to keep in mind when working through its next few budgets.