Drummond Report: An excerpt on how Ontario got into this mess

FROM THE DRUMMOND COMMISSION REPORT

The roots of Ontario’s current fix lie in both the economy and in the province’s record of failing to keep growth in government spending in line with revenue growth. Ontarians have long been accustomed to their economy growing faster than the rest of the country. This was once true: in 15 of the 21 years from 1982 to 2002, Ontario grew faster than the national economy. But changing economic conditions have hit Ontario harder than other provinces over the past decade; in all nine years from 2003 to 2011, Ontario’s real economic growth was below that of the rest of the country.

The reasons are simple. Beginning in 2003, the Canadian dollar began a strong ascent that lifted it from the persistent lows of the previous decade (around 70 US cents) to the recent highs (around parity with the U.S. dollar) during the past four years, with only a brief dip in late 2008 and early 2009. This surge in the currency made Ontario’s exports more expensive for foreigners to buy and rendered the province’s exporters less competitive, while also making imports cheaper.

The impact on Ontario’s nominal GDP was huge. The contribution of trade to the economy is measured by net exports, the difference between what the province sells outside its boundaries and what it buys from other countries and provinces. Ontario’s net exports to other provinces, where there was no currency effect, remained relatively stable. But the contribution to GDP of net exports to other countries first vanished entirely and then began to detract from Ontario’s growth. The financial crisis and resulting U.S. recession, during which auto sales fell by about one-third, aggravated this trend. The province’s international trade surplus, which accounted for 4.3 per cent of GDP in the 1998–2002 period, disappeared by the middle of 2006 and was replaced by a trade deficit, which in the first three quarters of 2011 diminished nominal GDP by 7.5 per cent.

Ontario’s overall GDP per head relative to the rest of the country reflects the turnaround in trade. In 1998–2002, Ontario’s GDP per person was 14.1 per cent higher than the average for the other nine provinces and three territories; in the first three quarters of 2011, it was 6.5 per cent lower. Since 2006, Ontario’s GDP per person has been below the average for the rest of Canada.

Another way to look at the data is to track the growth of total GDP in current dollars, because that is the province’s tax base. Since 2002, the year before the dollar began its ascent, nominal GDP has grown by less than 33 per cent in Ontario, compared with almost 59 per cent in the rest of the country.

The recent recession was tougher on Ontario than on the rest of Canada. The province’s growth faltered in 2007, slowing while the rest of the country continued a brisk expansion. In 2008, Ontario’s real GDP fell during the winter (the first quarter) and, aside from a small uptick that spring, continued to shrink until growth resumed in the summer of 2009 (the third quarter) — five quarters of contraction over a period of six quarters. Elsewhere in Canada, the recession did not begin until the final quarter of 2008 and then lasted only three quarters in total. From peak to trough, Ontario lost 5.0 per cent of its GDP; the rest of the country lost only 3.7 per cent. Since the low point in the second quarter of 2009, the Canadian economy as a whole has recorded respectable real growth. But in the two years through the third quarter of 2011, Ontario lagged the rest of the country, with 5.8 per cent growth compared with 7.4 per cent elsewhere.

The human cost of this lacklustre performance shows up in the employment picture, where the old verities of a labour market in which Ontario always outshone the rest of Canada have been replaced by new patterns:

Ontario’s unemployment rate, once reliably lower than the national average, has been above the national rate for over five years now and was generally higher than the jobless rate in Quebec from the beginning of 2009 through the third quarter of 2011. In 2009 and 2010, the Ontario unemployment rate was 0.7 percentage point higher than the national rate; the gap narrowed in 2011, when the Ontario rate was 7.8 per cent, while the Canadian rate was 7.5 per cent.

The employment rate, perhaps the best measure of the health of the labour market, could once be counted on to be at least three percentage points higher than the national average. But since 2008, it has been lower than the national rate. In 2011, 61.6 per cent of working-age Ontarians had a job, compared with 61.8 per cent nationally. The Ontario rate is down 2.1 percentage points from the most recent peak in 2003 and 2004. Such a difference translates into about 229,000 jobs.

The decline of factory employment — traditionally a source of well-paid jobs — as a share of total employment accelerated in the past decade. Such jobs have been growing steadily less important in all developed countries, a consequence of strong productivity gains relative to other sectors of the economy and of outsourcing manufacturing activity to lower-wage Asian countries. In 1976, manufacturing accounted for 23.2 per cent of all Ontario jobs; this fell to 18.2 per cent in 2002 after recovering from an even lower reading during the recession of the early 1990s. Through the rest of the latest decade, as the dollar climbed and the auto industry faded, manufacturing’s share of employment has slid rapidly — to 11.8 per cent in 2010 and 2011.

Not surprisingly, incomes have also been affected. In the 1980s, real personal income per capita — that is, average personal income per person adjusted for increases in the implicit price index for all consumer spending — grew by an average of 1.9 per cent annually in Ontario, compared with 1.4 per cent in the rest of the country and 1.6 per cent nationally. Those were the days when Ontario was substantially richer than other parts of Canada. In the second half of the 1980s, when the Ontario economy was booming and other provinces were struggling with low prices for oil and other resources, Ontario’s average personal income was more than 20 per cent higher than the average in the rest of Canada. This changed dramatically after 1990. In both the 1990s and in the period from 2000 to 2010, Ontario’s real personal income per capita grew at only about half the rate that it did in the rest of Canada. In the period from 1990 to 2000, the average annual growth rates were 0.4 per cent and 0.8 per cent respectively; between 2000 and 2011,4 they were 1.0 per cent and 2.0 per cent. By the third quarter of 2011, this extended period of slow growth relative to other regions had left the average Ontario income, in current dollars, 0.5 per cent lower than incomes in the rest of Canada.

Can we expect better in the future? Barring another major global financial or economic crisis, a caveat that on some days feels shaky, Ontario and Canada will continue to recover from the recession and embark on a new expansion. But for Ontario, future growth will almost certainly be slower than it has been in the past. This has not been a normal business cycle for the world economy, one in which recession is usually followed by a rapid return to full capacity and further growth beyond that. It has been one set in motion by a financial crisis. As Bank of Canada Governor Mark Carney noted recently, “… history teaches that recessions involving financial crises tend to be more severe and have recoveries that take twice as long.”

Ontario also faces further structural changes. Manufacturing, once the vibrant heart of the Ontario economy, has for years been dwindling as a share of the province’s output and employment base. This is true in most of the developed world as factory work continues to migrate to low-cost Asia. In addition, the higher dollar continues to make it harder for Ontario to compete in world markets, especially in the United States, the province’s main external market. The U.S. is choking on public and private debt and faces years of slow growth as governments and individuals work off their excess borrowing. At the same time, U.S. auto sales, though up from their low point, will take many years to fully recover from a precipitous decline between 2007 and 2009. Ontario’s auto industry has also bounced back from its even steeper drop in production during those years, but it remains much diminished, perhaps permanently. Ontario industry, which has benefited for decades from plentiful electricity at subsidized rates, faces much higher power prices, made necessary by the imperative to replace essential infrastructure after years of neglect.

There is another barrier to income growth: almost all the growth in Ontario’s working-age population and labour force will come from immigration, but the incomes of recent immigrants have been well below those of workers who were born in Canada or arrived earlier. The average wage of recent immigrants (those who have been here for five years or less) was only about 76 per cent that of Canadian-born workers in 2010, while immigrants who have been here for 5 to 10 years had an average wage that was 85 per cent that of Canadian-born workers. Those with over 10 years in Canada had wages comparable to Canadian-born workers. Since more than two-thirds of future jobs will require some form of post-secondary education, it is particularly distressing that immigrants with university degrees are having such a difficult time integrating into the workforce. In 2005, recent immigrants with a university degree had median earnings of only $24,636, less than half the $51,656 earned by those with degrees who were born in Canada. The $27,020 gap was wider than it had been in 1995.5

In short, we cannot count on robust economic growth alone to resolve our difficult fiscal challenges

Ontario immigration hobbled by Ottawa

John Ivison, National Post · Feb. 17, 2012 | Last Updated: Feb. 17, 2012 3:06 AM ET

Attacking Dalton McGuinty's Liberals is a waste of time - they've done such a good job themselves. Still, when it comes to making a mess of Ontario's finances, they've had some help from Ottawa.

Take immigration policy. As the Drummond report on reforming Ontario's public services makes clear, the federal government's immigration programs have undermined Mr. McGuinty's attempts to attract skilled workers to his province, in favour of guiding them westward.

The report, released Wednesday, emphasizes how important immigration is to Ontario - it will account for all net growth in the working age population in the forseeable future. Ontario is still the top destination for immigrants to Canada. Yet that dominance is slipping - in 2010, Ontario's share of new immigrants was 52%, down from 64% just five years before.

More worryingly for Mr. McGuinty is the mix of those immigrants - a high number of refugees and family-class migrants, and fewer skilled workers.

The province has long received the majority of refugees who arrive in Canada - 65% in 2010. This costs Ontario taxpayers millions, since they are not eligible for federally funded services until their claims are settled.

At the same time, Ontario is receiving fewer of the skilled workers needed to help drag the province out of its fiscal funk.

For years, the federal skilled worker (FSW) program was geared toward making Ontario the destination of choice for the high-priority migrants everyone wanted to attract. In 2001, Ontario attracted 89,078 workers through the FSW program; in 2010, that number was just 53,885.

This hasn't happened just because new arrivals decide they prefer the prospect of Regina in January over what is laughingly referred to as winter in Toronto. It has happened because the federal government has introduced new rules to ensure a flow of skilled workers heads to the resourcerich Western provinces.

A quick scan down the list of the 29 job descriptions prized by Ottawa as the skilled occupations Canada needs, confirms why those workers are not coming to Ontario - the requirement is for mining engineers, geological engineers, petroleum engineers and so on. The Conservative government has put a cap on the number of skilled workers coming into Canada, in order to clear a six-year backlog, but Ontario's fiscal situation is so dire that the feds should level the playing field - or even tilt it in the province's favour.

Before anyone begins howling that no province should be given special treatment, consider that Quebec receives nearly double the rest of Canada when it comes to immigrant settlement and language services - $5,800 per head, compared to $3,200 in the rest of Canada.

In addition, British Columbia and Manitoba have been granted devolved powers when it comes to designing and administering their settlement and language programs - powers for which Ontario has long lobbied. As the Drummond report concluded: "Ontario should push for greater policy control and full funding support for immigrant settlement. This will allow the province to reduce duplication and help immigrants get services they need, when they need them."

Another policy initiative where Ontario is at a disadvantage is the provincial nominee program that allows provinces to directly recruit workers to their province, at which point the feds fast-track the application. Ontario has come late to this party and has been allocated just 1,000 spots, compared to 5,000 or so for Manitoba. "Expanding the provincial nominee program could help the province partially offset the recent decline in the number of economic migrants," the Drummond report concluded.

Jason Kenney, the Immigration Minister, threw Mr. McGuinty a bone Thursday, by introducing refugee reforms that should save the province an estimated $1-billion over five years, by reducing the time that bogus refugee claimants from countries in the European Union are able to game the Canadian system. The new rules should knock two and half years off the time claimants are able to claim provincially funded social benefits.

But Mr. Kenney could do more. The sheer size of the province means that as goes Ontario, so goes the nation. The jobs are few and far between at the moment, but labour shortages will start to appear as the Boomers start retiring. Ontario needs once again to become a magnet for the best migrants the world has to offer, and the federal government has a role to play in making that happen.

JIVISON@NATIONALPOST.COM

Tories say new refugee bill will make it easier to deal with bogus claims

OTTAWA—The federal government is overhauling Canada’s overloaded and “broken” refugee system to put questionable refugee claimants on a fast-track back to their homelands.

But immigration experts are sounding the alarm, warning that legitimate refugees risk being tossed out, too, in the government’s rush to process applications and cut a backlog of 42,000 people.

And they say the changes put too much power in the hands of Immigration Minister Jason Kenney to decide which countries are deemed safe or not around the globe.

Kenney tabled legislation Thursday meant to streamline the refugee process and in particular target a growing number of “bogus” claimants from Europe.

“To be blunt, Canada’s asylum system is broken,” Kenney said.

“The growing number of bogus claims from European Union democracies is only exacerbating the problem. Too many tax dollars are spent on people who do not need our protection,” he told a news conference Thursday.

These latest reforms comes less than two years after the Conservatives did an overhaul of the refugee system, changes that Kenney lauded back then as a “win-win.”

But now the Conservatives are using their majority muscle to roll back concessions made at that time under pressure from the opposition parties in the minority Parliament.

Kenney denied that he was playing a “political game,” and said instead that the government needed new tools to rebuff the influx of claims from Europe.

“We have a serious problem. We are facing a large wave of unfounded asylum claims coming from the European Union in particular,” Kenney said.

Under the changes, Canada will create a list of safe countries of origin, countries considered capable of providing state protection to its citizens.

Refugees from those countries will be fast-tracked through the process — in just 45 days, down from 1,000 days now — with a speedy hearing and they’ll be denied recourse to appeal a negative decision to the refugee appeal division.

And while they’ll be able to still appeal a denial to the Federal Court, no longer will they remain in Canada during that legal process.

“We are sending a message today,” Kenney said. “If you do not need Canada’s protection, we will give you access to our fair asylum system quickly and then send you home quickly.

“You will not be allowed to remain in Canada for years using endless appeals at the expense of Canadian taxpayers.”

Canada now gets more refugee applicants from Europe than Asia and Africa. In the crosshairs are refugee applicants from countries in Europe, notably Hungary, which immigration officials argue are democratic and are seen to have robust justice systems.

The package of changes also bundles in the Tories’ previous human smuggling bill, with one key change — minors under the age of 16 caught up in a smuggling operation will not be kept in detention.

As well, the government wants to require visa applicants to provide biometric data — fingerprints and a digital photograph — moves that Kenney said would “substantially improve immigration security.”

NDP MP Don Davies condemned the changes to the refugee system, calling it a “serious step backwards” from the legislation proposed in 2010.

“This bill once again puts too much power in the hands of the minister,” said Davies, noting that Kenney will have the “sole” power to deem which countries safe or not.

“You will see people who are bona fide refugees be returned to countries where they face persecution, maybe even death,” Davies said.

Former Immigration and Refugee Board chair Peter Showler called the new bill “bad news,” saying that the notion of declaring a country “safe” is dangerous because that safety is not necessarily for everyone.

He said the 2010 legislation required that independent human rights experts had to be consulted to ensure the minister didn’t “arbitrarily” designate a country as safe or not.

“This new bill removes those protections. There is a danger that countries will be designated by the minister for political expediency rather than legitimate protection concerns,” said Showler, now a University of Ottawa law professor.

Lorne Waldman, president of the Canadian Association of Refugee Lawyers, said lawyers, advocates and asylum seekers themselves appreciate a fast refugee determination system, but not at the expense of fairness.

He said measures in the 2010 legislation to ensure a “fair and efficient” system have been removed. The refugee lawyers’ association does not rule out any legal challenge to the changes.

While many countries may seem “safe,” there can be serious problems of persecution, discrimination and violence against victims of domestic abuse, ethnic minorities or gays and lesbians, whom the state may fail to protect, said Rob Shropshire, acting executive director of the Canadian Council for Refugees.

“The designation of a safe country is at the sole discretion of the immigration minister. It makes it dangerously vulnerable to political considerations, rather than ensuring a fair and independent decision about who is a refugee,” said Shropshire.

Tories unveil bill to thwart 'bogus' refugees

The Tories have introduced a bill that will once again attempt to deter “bogus refugees” from applying to Canada.

The new bill, Protecting Canada's Immigration System Act, will go back on many of the changes the Conservatives were forced to make under a minority government in their previous attempt to reform the asylum system in 2010.

To be blunt, Canada's refugee system is broken," said Immigration Minister Jason Kenney. "Too many tax dollars are spent on bogus refugees."

The legislation would crack down on human-smugglers and grant authorities the ability to collect biometric data from people entering Canada on a visitor visa, work permit or study visa.

Mr. Kenney said the biometrics would be phased in starting in 2013 for travellers from high-risk countries and then expanded globally.

In particular, the government wants to limit the number of claims for the European Union, of which they say 95 per cent were withdrawn, rejected or abandoned and cost taxpayers $170 million.

Bill C-31, tabled in the House of Commons Thursday, will toughen measures taken in the earlier bill - Balanced Refugee Reform Act - which received royal assent in June 2011.

“It has become clear there are gaps in the Balanced Refugee Reform Act and we need stronger measures that are closer to the original refugee bill,” said Mr. Kenney.

Under the new bill, the immigration minister would have the power to place countries on the safe country list without the benefit of a committee that was to include human-rights experts -- a change the official opposition says politicizes a system that should be judicial.

'It's a serious step backward," said NDP critic Don Davies. "This minister didn't even implement Bill C-11," he said, adding it's been a mere 20 months since the older bill received royal assent. "How he can say the system doesn't work when he didn't give it a chance is beyond me."

Mr. Kenney said that with the previous act and today's legislation, provinces and territories can expect to save in the range of $1.65 billion over five years in social assistance and education costs.

Harper Government Introduces the Protecting Canada's Immigration System Act

OTTAWA, ONTARIO, Feb 16, 2012 (MARKETWIRE via COMTEX) -- Legislation to protect the integrity of Canada's immigration system was introduced today by Citizenship, Immigration and Multiculturalism Minister Jason Kenney.

The proposed measures include further reforms to the asylum system to make it faster and fairer, measures to address human smuggling, and the authority to make it mandatory to provide biometric data with a temporary resident visa application. "Canadians take great pride in the generosity and compassion of our immigration and refugee programs. But they have no tolerance for those who abuse our generosity and seek to take unfair advantage of our country," said Minister Kenney.

The new bill, Protecting Canada's Immigration System Act, proposes changes that build on reforms to the asylum system passed in June 2010 as part of the Balanced Refugee Reform Act.

The proposed measures would provide faster protection to those who genuinely need refuge, and faster removal for those who don't.

In particular, refugee claimants from generally non-refugee-producing countries such as most of those in the European Union (EU) would be processed, on average, in 45 days compared to more than 1,000 days under the current system, or 171 days under the Balanced Refugee Reform Act.

"It has become clear that there are gaps in the Balanced Refugee Reform Act and we need stronger measures that are closer to the original refugee bill we tabled back in March 2010," said Minister Kenney. "Canada receives more refugee claims from Europe than from Africa or Asia. Last year alone, 23% of all refugee claims made in Canada were made by nationals from the EU. That's up from 14% the previous year. This growing trend threatens the integrity of our immigration system."

In recent years over 95% of EU claims were withdrawn, abandoned or rejected. If that trend continues, that means that the unfounded claims from the 5,800 EU nationals who sought asylum last year will cost Canadian taxpayers nearly $170 million.

"Too many tax dollars are spent on bogus refugees. We need to send a message to those who would abuse Canada's generous asylum system that if you are not in need of protection, you will be sent home quickly," added Minister Kenney.

With the Balanced Refugee Reform Act and today's legislation, the provinces and territories are expected to save in the range of $1.65 billion over five years in social assistance and education costs.

Most of the provisions in the former Preventing Human Smugglers from Abusing Canada's Immigration System Act (Bill C-4) have also been included in this new bill, with one modification. Minors under the age of 16 would be exempt from the detention proposals designed to deal with all mass arrivals from human smuggling operations.

"Our Government is sending a clear message that our doors are open to those who play by the rules, including legitimate refugees. However, we will crack down on those who endanger human lives and threaten the integrity of our borders," said Minister Kenney. "Human smuggling is a despicable crime and Canadians think it's unacceptable for criminals to abuse Canada's immigration system for financial gain."

Mandatory detention remains for people who enter Canada as part of a designated smuggling event. But once the identity of a claimant has been established and a refugee claim is approved, individuals would be released from detention.

The final component of the new legislation would give the Minister the authority to make it mandatory for visa applicants to provide biometric data (i.e., fingerprints, photograph) to visit Canada. Documents can be forged or stolen, whereas biometric data provide greater certainty, confirming the identity of applicants when they apply.

"Biometrics will be an important new tool to help protect the safety and security of Canadians by reducing identity fraud and identity theft," said Minister Kenney. "As fraudsters become more sophisticated, biometrics will improve our ability to keep violent criminals and those who pose a threat to Canada out. In short, biometrics will strengthen the integrity of Canada's immigration system while helping facilitate legitimate travel."

These measures would put us in line with international partners such as the United Kingdom, the European Union, Australia, and the United States. This would help prevent known criminals, failed refugee claimants and deportees from using a fake identity to obtain a visa. The use of biometrics would also bolster Canada's existing measures to facilitate legitimate travel by providing a fast and reliable tool for confirming identity.

All these reforms are aimed at deterring abuse of Canada's generous immigration and refugee system. With these proposed measures, the integrity of Canada's immigration programs and the safety and security of Canadians will be protected.

"To maintain the support of Canadians for our generous immigration and refugee systems, we must demonstrate that Canada has a fair, well-managed system that does not tolerate queue jumping," concluded Minister Kenney.

For more information on these proposals, visit the CIC website at www.cic.gc.ca .

Photo of Minister Kenney will be available later today at: www.cic.gc.ca/english/department/media/photos/high-res/index.asp

Backgrounders:

Refugee Reforms:

        
        --  Overview of Reforms to Canada's Refugee System
        --  Designated Countries of Origin
        --  Summary of Changes in the Protecting Canada's Immigration System Act
        
        

Human Smuggling

        
        --  Overview: Ending the Abuse of Canada's Immigration System by Human
            Smugglers
        --  Protecting Our Streets and Communities from Criminal and National
            Security Threats
        --  Tougher Penalties for Ship Owners and Operators Who Use Their Ships for
            Human Smuggling
        --  Deterring Abuse of the Refugee System
        --  Designating Human Smuggling Events
        --  Cracking Down on Human Smugglers Who Abuse Canada's Immigration System
        --  Better Tools to Successfully Prosecute and Impose Mandatory Prison
            Sentences on Human Smugglers
        
        

Biometrics

        
        --  Biometrics in Canada's Temporary Resident Program
        --  Five reasons why we need biometrics
        
        

Follow us on Twitter at www.twitter.com/CitImmCanada .

Building a stronger Canada: Citizenship and Immigration Canada (CIC) strengthens Canada's economic, social and cultural prosperity, helping ensure Canadian safety and security while managing one of the largest and most generous immigration programs in the world.

        
        Contacts:
        Citizenship and Immigration Canada
        Minister's Office
        Candice Malcolm
        
        Citizenship and Immigration Canada
        Communications Branch
        Media Relations
        613-952-1650
        CIC-Media-Relations@cic.gc.ca
        
        
        

SOURCE: Citizenship and Immigration Canada

        mailto:CIC-Media-Relations@cic.gc.ca