Dissecting Drummond – Livio Di Matteo

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Canadian MoneyTHUNDER BAY – Editorial – Well, the Drummond Report (a.k.a. The Commission on the Reform of Ontario’s Public Services) is finally out and it is indeed a weighty tome. It is encyclopedic in its scope and details hundreds of recommendations. Despite it being described as gloomy, I thought that it was actually a relatively optimistic document. While Ontarians have to come to grips with a diminished economy and diminished fiscal state, as the report writes: “By current international standards, Ontario’s debt is still relatively small. We are a very long way from the dreadful fiscal condition of countries that have dominated the news in the past two years.” This reinforces my prior view that the report is in many ways a bogeyman designed to scare Ontarians before a relatively more modest program of expenditure restraint is introduced in the spring Ontario budget.

There is a lot of material here but a preliminary scan suggests the report has some very interesting and useful ideas – some of which will not be palatable to the government. Health and education get off relatively lightly in that they are recommended to have nominal if small expenditure increases.

With respect to Northern Ontario, the Drummond Report is rather impressive in its grasp of the significance of various aspects of Northern economic development. The following points in particular extracted from the Drummond Report:

Ring of Fire: This development of major mineral deposits in northern Ontario offers the prospect of substantial socio-economic opportunities for all northern residents, particularly Aboriginal Peoples. The government should collaborate with Aboriginals, industry and the federal government to maximize these opportunities.

Recommendation 9-8: Develop a labour-market policy framework to link planning for employment and training services more strongly to economic development initiatives led by ministries such as Economic Development and Innovation; Agriculture, Food and Rural Affairs; and Northern Development and Mines.

Ring of Fire: The Ring of Fire development in northern Ontario represents a significant opportunity to both realize major mineral development in the region and improve socio-economic opportunity and quality of life for Aboriginal People and other residents of the north. Managed properly, the project will provide benefits over several decades. Success in the Ring of Fire will require collaboration between Aboriginal People, industry, and the federal and provincial governments.

With a focus on creating a healthy workforce, education and skills training, and basic community infrastructure, the government should take innovative approaches to expand labour-market and training programs for First Nations communities. This approach would include implementing a full range of employment programs and related social supports that are available through social assistance for recipients living on reserve. These include education programs, job-specific training, literacy programs and programs that support young parents.

The Commission is optimistic that industry partners will employ Aboriginal People throughout the life of the Ring of Fire and work as partners with government to deliver or fund (perhaps both) the employment and training services required. If voluntary efforts by the business sector lag, the government should consider putting a levy on mining-related activities to directly fund initiatives that will prepare Aboriginal People to participate economically in the Ring of Fire.

All in all, this is not bad news for the north. The specific focus on the Ring of Fire and its potential benefits for Aboriginal peoples will hopefully provide an impetus for the provincial government to pursue this region as an investment frontier for the entire province.

The Drummond Report also mentions regional gas tax revenues, which suggests that he may be more inclined towards devolution in his perspectives than the Ontario government as a whole. After all, if you can have regional gas tax revenues, why not regional resource revenue retention?

As for the Northern Ontario Heritage Fund, there is no specific mention of what should be done with it. However, while the report is critical of business subsidies, it recommends that future policy should refocus the mandate of business support programs from job creation to productivity growth in the private sector. Refocusing the NOHF to productivity investments is not a bad thing.

Livio Di Matteo

Di MatteoLivio Di Matteo is an economist in Thunder Bay, Ontario specializing in public policy, health economics, public finance and economic history.  Livio Di Matteo is a graduate of the Fort William Collegiate Institute (1898-2005) whose school motto “Agimus Meliora” has served as a personal inspiration.  Livio Di Matteo holds a PhD from McMaster University, an MA from the University of Western Ontario, and an Honours BA from Lakehead University. He is Professor of Economics at Lakehead University where he has served since 1990. His research has explored the sustainability of provincial government health spending, historical wealth and asset holding and economic performance and institutions in Northwestern Ontario and the central North American economic region. His historical wealth research using census-linked probate records is funded by grants from the Social Sciences and Humanities Research Council of Canada. He has constructed, assembled and analyzed nearly 12,000 estate files for Ontario over the period 1870 to 1930. Livio Di Matteo writes and comments on public policy and his articles have appeared in the National Post, Toronto Star, the Winnipeg Free Press, Thunder Bay Chronicle-Journal, and NetNewsledger.com.  Livio Di Matteo has had an entry in Canadian Who’s Who since 1995.

This article was originally posted on Livio Di Matteo’s NORTHERN ECONOMIST Blog at Northern Economist 2.0.

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