Transcript: Bridging Ontario's Urban-Rural Divide | Nov 27, 2019

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a blue suit, white shirt, and checkered blue tie.

A caption on screen reads "Bridging Ontario's Urban-Rural divide. @spaikin, @theagenda."

Steve says URBAN ONTARIO AND
RURAL ONTARIO MAY BELONG TO THE
SAME PROVINCE, BUT THEY OFTEN
FACE VERY DIFFERENT ECONOMIC
OUTCOMES.
THAT'S ONE OF THE TOPICS
ADDRESSED BY A NEW PROJECT
CALLED "ONTARIO 360" THAT'S
COMING OUT OF THE U OF T's MUNK
SCHOOL OF GLOBAL AFFAIRS AND
PUBLIC POLICY.
IT'S LOOKING FOR EVIDENCE-BASED
APPROACHES TO BOOST ECONOMIC
DEVELOPMENT IN THIS PROVINCE.
HERE FOR MORE:
SEAN SPEER, HE IS ASSISTANT
PROFESSOR IN PUBLIC POLICY AT
THE MUNK SCHOOL...

Sean is in his forties, clean-shaven, with short brown hair. He's wearing a black suit, white shirt, and printed blue tie.

Steve continues AND WESEEM AHMED, ECONOMIC
ANALYST AND AUTHOR WITH THE 360
PROJECT.

Weseem is in his late thirties, with short black hair and a full beard. He's wearing a gray suit and dark blue shirt.

Steve continues IT IS GOOD TO WELCOME YOU BACK
TO TVO, AND YOU FOR THE FIRST
TIME, NOT ONLY HERE BUT ON
TELEVISION AT ALL, EH?

Weseem says THAT'S RIGHT.

Steve says GOOD FOR YOU.
WE'RE HAPPY YOU COULD MAKE YOUR
DEBUT HERE.
SEAN, YOU'VE BEEN ON BEFORE
TALKING ABOUT ONTARIO 360.
FOR THOSE WHO MISSED IT, BRING
US UP TO DATE.
WHAT IS THE PROJECT ALL ABOUT?

The caption changes to "Sean Speer. Munk School of Global Affairs and Public Policy. Ontario 360."
Then, it changes again to "Ontario 360."

Sean says THANKS FOR HAVING US ON TO TALK ABOUT THE RECENT PAPER.
THE ONTARIO 360 PROJECT WHICH IS
HOUSED AT THE MUNK SCHOOL, AS
YOU SAY, IS A PUBLIC POLICY
INITIATIVE, BUT A BIT DIFFERENT
THAN TYPICAL ONES.
INSTEAD OF TRYING TO ANTICIPATE
WHAT GOVERNMENT POLICYMAKERS ARE
GRAPPLING WITH, WE GO TO THEM.
IT'S A COLLABORATIVE TWO-WAY
CONVERSATION.
SO OVER THE PAST SEVERAL MONTH,
STEVE, WE'VE BEEN WORKING WITH
MEMBERS OF THE GOVERNMENT AND
THE ONTARIO PUBLIC SERVICE, WHAT
ISSUES ARE ON THEIR DESK, WHAT'S
KEEPING THEM UP AT NIGHT, AND WE
HAVE PAPERS FROM EXPERT SCHOLARS
IN DIFFERENT AREAS TO TRY TO
INFORM AND SHAPE POLICY MAKING
IN THE PROVINCE AS THEY, THE
GOVERNMENT THAT IS, GOES THROUGH
ITS OWN DELIBERATIVE PROCESS.
AND I CAN TELL YOU THAT THROUGH
THAT EXERCISE, THE ISSUE THAT
KEPT COMING UP OVER AND OVER
AGAIN, WITH REAL INTENSITY, WAS
THIS QUESTION OF REGIONAL
ECONOMIC DISPARITY IN GENERAL
AND THE URBAN-RURAL DIVIDE IN
PARTICULAR.
OVER THE PAST SEVERAL MONTHS,
WE'VE COMMISSIONED PAPERS,
INCLUDING ONE FROM WESEEM, AND
WHAT POLICYMAKERS CAN DO TO DO
WITH ECONOMIC ACTIVITY.

Steve says EVERYBODY WATCHING
THIS OR LISTENING TO THIS RIGHT
NOW HAS THEIR OWN INTERPRETATION
ABOUT WHAT THE RURAL-URBAN
DIVIDE MEANS TO THEM.

The caption changes to "Weseem Ahmed. Ontario 360."
Then, it changes again to "Defining regional disparity."

Weseem says IT'S A GOOD
POINT YOU'RE BRINGING UP BECAUSE
THERE'S NO ONE DEFINITION AS TO
WHAT RURAL OR URBAN MEANS.
WHAT I DID FOR THE STUDY IS WE
LOOKED AT ESSENTIALLY THE COUNTY
LEVEL ACROSS THE PROVINCE, AND
SO TO BREAK IT UP INTO RURAL AND
URBAN AREAS, WE USED STATISTICS
CANADA DEFINITION ON THAT.
SO IN A NUTSHELL, WHAT IT IS IS
THAT ANY REGION THAT'S PART OF A
CITY OR CENTRAL METROPOLITAN
AREA, TO BE MORE PRECISE, IS
CONSIDERED URBAN FOR THIS CASE.
OF COURSE THERE IS SOME MIXING
AND MATCHING HERE.
IT'S NOT A STRICT DEFINITION.
AND ANY REGION THAT'S NOT PART
OF AN URBAN CENTRE IS CONSIDERED
RURAL.
SO THIS DEFINITION IS ACTUALLY
BASED ON LABOUR INFLUENCE.
SO THE MORE PEOPLE WHO COMMUTE
FROM RURAL AREAS INTO CITIES,
THE LESS RURAL THAT REGION IS.
AND SO WHAT THIS DOES IS IT
ALLOWS US TO USE, BECAUSE IT'S
BASED ON STATS CAN'S DEFINITION,
WE CAN USE CENSUS DATA TO DRILL
DOWN AND GET TO THE CORE OF THE
DIVIDE BETWEEN URBAN AND RURAL
REGIONS.

Steve says LET ME MAKE SURE I
GET THIS THEN.
THERE ARE PARTS OF MILTON, FOR
EXAMPLE, WHICH IS AN HOUR, HOUR
AND A HALF FROM HERE, WHICH ARE
VERY RURAL.
THERE ARE PARTS OF HAMILTON,
LIKE FLAMBOROUGH, FOR EXAMPLE,
WHICH ARE VERY RURAL.
BUT THEY WOULD NOT BE CONSIDERED
RURAL FOR THE PURPOSES OF YOUR
STUDY; IS THAT RIGHT?

The caption changes to "Weseem Ahmed, @WeseemAhmed."

Weseem says THAT'S RIGHT, BECAUSE THEY
WOULD FALL WITHIN THE BROADER
HAMILTON OR THE BROADER GTA REGION.

Steve says I UNDERSTAND.
ALL RIGHT.
HOW MUCH INTEREST... YOU MENTION
THAT YOU WORK INTERLOCKING WITH
GOVERNMENT, WITH PUBLIC
SERVICE... HOW MUCH INTEREST
HAVE THEY SHOWN, THE FORD
GOVERNMENT IN SPECIFIC, HOW MUCH
INTEREST HAVE THEY TAKEN IN WHAT
YOU'RE DOING?

The caption changes to "Sean Speer, @Sean_Speer."

Sean says CONSIDERABLE.
JUST RECENTLY IN THE FALL
ECONOMIC STATEMENT OF THIS
GOVERNMENT, REAL RECOGNITION OF
THE REGIONAL ECONOMIC DISPARITY
AND THE NEED FOR A POLICY
RESPONSE.
THE FALL STATEMENT TALKED ABOUT
EFFORTS UNDERWAY TO TRY TO
IDENTIFY WAYS TO GET AT THIS
ISSUE, AND SO WE'RE HOPEFUL THAT
OUR CONTRIBUTION IS COMING AT
THE RIGHT MOMENT AND HOPEFULLY
IN THE END WILL CONTRIBUTE TO
THE GOVERNMENT THINKING.
WHAT'S INTERESTING, STEVE, IS IT
SEEMS TO ME THE INTEREST IS
REALLY... THIS HEIGHTENED
INTEREST IN THE URBAN-RURAL
DIVIDE COMES TWO PLACE, AS
WESEEM'S PAPER DEMONSTRATES,
WHILE WE'VE ALWAYS HAD THE
DISPARITY, IT SEEMS ACCENTUATED
DUE TO A WHOLE HOST OF FACTORS,
AND WESEEM CAN TALK ABOUT THAT.
IT'S A SELF-EVIDENT FACT THAT
THE FORD GOVERNMENT HAS A
DISPROPORTIONATE NUMBER OF SEATS
IN RURAL PARTS OF THE PROVINCE
SO IT'S INTUITIVE THAT THIS
GOVERNMENT IN PARTICULAR WOULD
BE SENSITIVE TO GROWING
ANXIETIES AND GROWING ECONOMIC
CHALLENGES IN RURAL CANADA...
RURAL ONTARIO, RATHER.
YOU PUT THOSE TWO THINGS
TOGETHER, AND YOU SEE THINGS
LIKE THE GOVERNMENT'S COMMITMENT
IN THE FALL ECONOMIC STATEMENT
TO TRY TO EXTEND INVESTMENT AND
ECONOMIC OPPORTUNITY TO ALL
PARTS OF THE PROVINCE.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Steve says I KNOW ONE THING
THEY DID WAS, AND I DON'T THINK
I'VE SEEN THIS BEFORE, THEY TOOK
THE AVIATION TAX OFF, NOT
ANYBODY IN THE SOUTH, BUT PEOPLE
WHO LIVE IN NORTHERN ONTARIO.
IS THAT THE KIND OF THING THAT
YOU GUYS ARE LOOKING FOR, A
DISTINCTION IN POLICY, WESEEM,
IN HOW GOVERNMENTS TREAT RURAL
VERSUS URBAN AREAS?

Weseem says THERE WOULD
HAVE TO BE A DISTINCTION IN THE
TREATMENT BECAUSE FUNDAMENTALLY
THEY'RE DIFFERENT.
IT DOESN'T TRANSLATE WELL INTO
THE RURAL REGION.
EVEN SAYING THAT, DIFFERENT
REGIONS ACROSS THE PROVINCE,
SPEAKING STRICTLY ON RURAL ALT
HERE, RURAL REGIONS IN THE SOUTH
THAT ARE CLOSE TO LONDON OR
KINGSTON, HAVE DIFFERENT
SITUATIONS THAN RURAL REGIONS UP
IN THE NORTHERN PART OF THE PROVINCE.

Sean says CAN I ELABORATE
ON THAT FOR A SECOND, PLEASE?
ONE OF THE STRENGTHS OF WESEEM'S
PAPER IS IT STILLS DOWN INTO THE
HEADLINE DATA.
SO OFTEN WE HEAR ABOUT HOW MANY
JOBS WERE CREATED IN THE
PROVINCE OF ONTARIO OR WHAT THE
ECONOMIC OUTPUT WAS IN THE
PROVINCE OF ONTARIO.
FOR THE PURPOSES OF PRODUCING
PUBLIC POLICY, THAT'S NOT ALL
THAT HELPFUL.

Steve says BECAUSE IT'S ALL IN
TORONTO AND OTTAWA AND K-W AND
NO WHERE ELSE.

Sean says EXACTLY.
AND SO BY LEVERAGING THE WORK
THAT WESEEM HAS DONE, TO
DISAGGREGATE, TO UNPACK WHERE
EMPLOYMENT AND INVESTMENT IS
OCCURRING, THEN POLICYMAKERS ARE
BETTER PLACED TO DEVELOP
TARGETED POLICIES TO ADDRESS THE
UNIQUE CIRCUMSTANCES IN
DIFFERENT PARTS OF THE PROVINCE.
THAT MAY BE A PROGRAM AROUND
URBAN PLACES, BUT IT MAY ALSO BE
A PROGRAM AROUND RURAL PLACES,
AND I THINK THAT'S... THAT'S THE
GOAL OF THIS WORK AT ONTARIO
360, TO CREATE AN OPPORTUNITY
FOR THE GOVERNMENT TO DISCERN
WHERE THESE DIFFERENCES ARE AND
TO DEVELOP A PROGRAM THAT
RESPONDS TO THEM.

Steve says LET ME FOLLOW UP
WITH YOU ON THAT.
THAT IS SUCH AN IMPORTANT POINT.
WHEN THEY TALK ABOUT THE
UNEMPLOYMENT RATE BEING THE
LOWEST IN 40 YEARS AND WHEN THEY
TALK ABOUT GROWTH RATES BEING
OKAY... NOT FABULOUS, BUT
OKAY... THEY'RE REALLY TALKING
ABOUT THE GREATER TORONTO AREA,
THEY'RE TALKING ABOUT OTTAWA,
THEY'RE TALKING ABOUT THE
CORRIDOR I GUESS BETWEEN HERE
AND KITCHENER-WATERLOO, AND
THAT'S IT.
AND THE REST OF THE PROVINCE
REALLY IS NOT ENJOYING THE
FRUITS OF THOSE GOOD NUMBERS.
DO YOU THINK POLICYMAKERS AT
QUEEN'S PARK ARE AWARE OF THIS
AND SEIZED OF THIS INFORMATION?

Weseem says I BELIEVE
THEY ARE AWARE OF IT BECAUSE
THAT IS WHERE A LOT OF THE
INTEREST IN THIS PROJECT STEMS
FROM.
SO A LOT OF RURAL ONTARIO,
DURING THE ELECTION, REALLY FED
INTO THE DECISIONS THAT DOUG
FORD AND THE CONSERVATIVES AND
EVEN ON THE FEDERAL SIDE INTO
SORT OF THE POLICIES THAT WERE
PROMISED TO RURAL REGIONS OF THE
PROVINCE AND ACROSS THE COUNTRY
AS A WHOLE, SO THESE SENTIMENTS
ARE FELT, AT LEAST THEY ARE
KNOWN, AND I BELIEVE THEY ARE
FELT BY THE GOVERNMENT, BY
POLICYMAKERS, AND OUR JOB HERE
TODAY IS TO PROVIDE... TWOFOLD:
ONE IS TO PRESENT SORT OF WHAT'S
GOING ON BEHIND THE SCENES AND
ALSO PROVIDE SOLUTIONS IN
ADDRESSING THESE PROBLEMS.

Sean says CAN I JUST SAY THIS
IS NOT A PARTISAN OBSERVATION
EITHER AND THESE TRENDS AREN'T
EVEN UNIQUE TO ONTARIO.
PRIME MINISTER TRUDEAU CREATED
FOR THE FIRST TIME TO MY
KNOWLEDGE A MINISTER OF ECONOMIC
DEVELOPMENT IN THE LAST CABINET
SHUFFLE.
INTERESTINGLY WHAT'S SOMETIMES
REFERRED TO AS PLACE-BASED
POLICIES, THAT IS POLICIES TO
TARGET PLACES THAT ARE
EXPERIENCING DIFFERENT ECONOMIC
CIRCUMSTANCES OR IN THIS CASE
ECONOMICALLY DISTRESSED
SCENARIOS, GROWING AND
INCREASING ATTENTION AND
INTEREST ALL OVER THE WESTERN
WORLD, INCLUDING THE UNITED
STATES.
WE'RE NOT UNIQUE, BUT IN A LOT
OF WAYS, ONTARIO'S URBAN-RURAL
DIVIDE IS MORE MARKED THAN OTHER
PLACES AND WHY IT REQUIRES, IN
OUR VIEW, A RESPONSE FROM
PROVINCIAL POLICYMAKERS.

Steve says I WAS JUST GOING TO
PULL A BIT OF AN AUDIBLE HERE.
SHELDON, ON THE MIDDLE OF PAGE
TWO, DO YOU WANT TO BRING UP
THIS GRAPH HERE.
WE HAVE PEOPLE LISTENING TO US
ON PODCAST WHO CAN'T SEE IT, GUYS.

A slate appears on screen, with the title "An employment gap."

A line chart shows that the change in employment has been significantly higher in Toronto than in Ottawa, Other CMAs and the rest of Ontario, where it has actually gone down.

Steve reads data from the slate and says
I THINK WE NEED TO, APROPOS OF
WHAT WE'VE BEEN DISCUSSING, THIS
IS A GRAPH THAT SHOWS THE
EMPLOYMENT GAP IN THE PROVINCE
OF ONTARIO OVER THE LAST, I
DON'T KNOW, 10, 11 YEARS, AND,
SEAN, MAYBE YOU COULD JUST SORT
OF DESCRIBE IT IN A BIT OF
DETAIL AND TAKE PEOPLE THROUGH
THIS.
WE'VE GOT TORONTO, WE HAVE OTHER
CMAs, CENSUS METROPOLITAN
AREA, OTTAWA, AND THE REST OF
ONTARIO, AND THE SQUIGGLY LINES
ARE REALLY, REALLY DIFFERENT.
TAKE IT AWAY.

Sean says THIS IS THE
GREAT WORK OF WESEEM.
WHAT HE DID WAS TO DRILL DOWN
INTO THE EMPLOYMENT DATA, TO
TELL US WHAT'S HAPPENING, NOT
JUST IN A MACRO SENSE BUT A
DISAGGREGATED WAY.
SINCE THE RECESSION IN 2009,
ONTARIO HAS CREATED 865,000 JOBS.

Steve says THAT SOUNDS GOOD.

Sean says IT SOUNDS GOOD.

Steve says LOOK AT THAT TORONTO
LINE GOING UP AND UP AND UP.

Sean says ANOTHER 12 percent IS
IN OTTAWA AND THE REMAINING
AMOUNT IS ALL BASICALLY
CONCENTRATED IN METROPOLITAN
AREAS.
WHAT'S STRIKING... REMEMBER,
THIS IS A NET NUMBER.
IT ACCOUNTS FOR THE FACT THAT
RURAL PARTS OF THE PROVINCE
HAVEN'T EXPERIENCED JOB GROWTH.
THEY'VE EXPERIENCED MARKED JOB
LOSSES.

Steve says FALL-OFF, YES.

Weseem says I DON'T THINK THERE'S A GRAPH
IN WESEEM'S PAPER THAT MORE
POINTEDLY CAPTURES, THINK WHAT
WE'RE GETTING AT IN THIS.

Steve says JUST SO WE'RE CLEAR,
OTHER CENSUS METROPOLITAN AREAS,
WOULD INCLUDE WHAT?

Weseem says FOR EXAMPLE,
WINDSOR, LONDON, BARRIE,
KINGSTON, THUNDER BAY.

Steve says GOT IT.
AND THAT LINE IS...
IT'S NUDGING UP VERY MUCH BUT
NOT DRAMATIC, RIGHT?

The caption changes to "The age gap."

Weseem says NOT DRAMA.
AS YOU MENTIONED MOST OF THE
GROWTH HAS BEEN CONCENTRATED IN
TORONTO, OTTAWA,
KITCHENER-WATERLOO.

Steve says THE MEDIAN RURAL
ONTARIAN, RURAL ONTARIAN, IS SIX
YEARS OLDER THAN HIS OR HER
URBAN COUNTERPART.
I WONDER WHAT THE IMPLICATIONS
ARE OF THAT?

The caption changes to "Watch us anytime: tvo.org, Twitter: @theagenda, Facebook Live, YouTube."

Weseem says IT SHOWS A REAL SHIFT IN
DEMOGRAPHICS ACROSS THE
PROVINCE.
SO THERE'S A LOT OF SORT OF SELF
SELECTION IN TERMS OF THE EXODUS
OF PEOPLE LEAVING RURAL PARTS OF
THE PROVINCE, FOR WORK, FOR
EDUCATION.
SO WHAT THIS DOES IS IT LEAVES
BEHIND THE PEOPLE WHO EITHER
CANNOT OR DO NOT WANT TO MIGRATE
TO MORE PROSPEROUS PARTS OF THE
PROVINCE, ESSENTIALLY URBAN
CENTRES.
AND A LOT OF TIMES, THESE ARE
OLDER FOLKS.
SO AN OLDER RURAL POPULATION
MEANS THAT THERE ARE FEWER
PEOPLE LESS LIKELY TO WORK, MORE
RETIREMENT AGE, SO YOU GET THE
WORKER TO RETIREE RATIO START TO
DECLINE AND IT BECOMES MORE
DIFFICULT TO SUSTAIN
ECONOMICALLY A LOT OF RURAL
REGIONS ACROSS THE COUNTRY.

Steve says WHY IS THAT
PROBLEMATIC?
IF YOU'RE A RETIRED PERSON AND
HOPEFULLY HAVE AN RSP TO DRAW ON
OR SOLD YOUR HOUSE AND YOU HAVE
DISPOSABLE INCOME, WHY IS THAT A
PROBLEM FOR ECONOMIC GROWTH IN
MORE RURAL PARTS OF THE
PROVINCE?

Weseem says A LOT OF TIMES A LOT OF
ECONOMIC GROWTH AND SORT OF
CATALYZING COMES FROM YOUNGER
PEOPLE WITH DISCRETIONARY INCOME
WHO ARE WILLING TO SPEND, FOR
EXAMPLE, GROWING THEIR FAMILIES,
BUYING CARS, HOUSES, ET CETERA.
SO ONCE YOU REACH A CERTAIN AGE,
THAT SPENDING STARTS TO DECLINE.
AND ALSO THINKING ABOUT IT, YOU
NEED YOUTH TO HELP TAKE CARE OF
A LOT OF OLDER RESIDENTS, FOR
EXAMPLE, RETIREMENT HOMES,
FAMILY MEMBERS, ET CETERA.

Steve says WHAT DOES THE REPORT
SAY ABOUT THE EDUCATIONAL LEVELS
OF THOSE WHO LIVE IN URBAN
VERSUS RURAL ONTARIO?

The caption changes to "The educational gap."

Weseem says WE SEE A SIMILAR TREND ACROSS
THE EDUCATION SPECTRUM.
URBAN ONTARIO, SO CMAs, SO
HALF OF THE PEOPLE WHO LIVE IN
CM As HAVE SOME SORT OF
UNIVERSITY DEGREES.

Steve says HALF THE PEOPLE WHO
LIVE IN CITIES HAVE A UNIVERSITY
DEGREE OR COLLEGE, POSTSECONDARY
POSTSECONDARY.

Weseem says YES.

Steve says THAT'S A PRETTY HIGH
NUMBER.

Weseem says AS WE GO INTO SMALLER CITIES
AND RURAL ONTARIO, THAT NUMBER
STARTS TO DECLINE.
WHAT'S REALLY STRIKING, STEVE,
IS BY THE TIME WE REACH THE MORE
ISOLATED PARTS OF THE PROBLEM,
NOT ONLY IS THAT NUMBER A
FRACTION OF WHAT IT IS IN LARGER
CITIES, WE SEE THERE ARE MORE
PEOPLE WHO HAVE DROPPED OUT OF
HIGH SCHOOL THAN COMPLETED IT.

Steve says WHY DOES THAT MATTER?

Sean says IT SPEAKS TO
THE POINT MADE ABOUT THIS
EXERCISE IN SELF-SELECTION.
WE'RE EXPERIENCING THIS PROCESS
OF SORTING.
SO PEOPLE WITH CREDENTIALS,
PEOPLE WITH THE APTITUDES OR
SKILLS THAT ARE VALUABLE IN A
KNOWLEDGE-BASED ECONOMY, THEY'RE
GOING TO THE PLACES WHERE THE
ACTION IS.
AND THE PEOPLE WHO REMAIN BACK
IN RURAL PLACES, AS WESEEM SAYS,
TEND TO BE OLDER PEOPLE, TEND TO
BE PEOPLE WITH LESS EDUCATION,
AND, IN TURN, TEND TO BE THE
TYPE OF PEOPLE WHO ARE NOT
WELL-PLACED TO PARTICIPATE IN
THE KNOWLEDGE ECONOMY, WHERE SO
MUCH NEW WEALTH AND EMPLOYMENT
IS COMING.
AND SO THIS IS... IT'S THIS
PROCESS OF SELF-SELECTION WHICH
IS WHAT'S TAKING THE RECENT
ECONOMIC DISPARITY, WHICH HAS
BEEN PART OF ONTARIO SINCE
CONFEDERATION, AND REALLY
PUTTING IT ON STEROIDS.
AND I THINK IT'S THAT TREND
WHICH IS INCREASINGLY DRAWING
THE ATTENTION OF POLICYMAKERS.

Steve says SO THE DIVIDE GETS BIGGER.

Sean says EXACTLY.

Steve says OKAY.
LET'S TALK ABOUT... HOW MUCH
FOREIGN DIRECT INVESTMENT DO
RURAL COMMUNITY GET AS OPPOSED
TO URBAN COMMUNITIES?
FOREIGN DIRECT INVESTMENT.

The caption changes to "Foreign direct investment."

Weseem says FOREIGN DIRECT INVESTMENT.
SINCE 2003, THE LEVEL OF FOREIGN
DIRECT INVESTMENT HAS REMAINED
RELATIVELY CONSTANT AT THE MACRO
LEVEL ACROSS THE ENTIRETY OF THE
PROVINCE.
BUT WHAT WE SEE IN 2009,
SOMETHING INTERESTING HAPPENS,
AND THAT THERE IS A MARKED SHIFT
FROM RURAL AREAS INTO TORONTO,
WATERLOO, OTTAWA.
AND SO WHAT THIS DOES IS IT
EXPOSES THE SORT OF
INEFFICIENCIES OF A LOT OF
REGIONS OR THE EFFICIENCIES OF
URBAN CENTRES, WHICHEVER WAY YOU
WANT TO SLICE IT.
AND SO THE AREAS OR THE CENTRES
THAT ARE ABLE TO ADJUST TO A
KNOWLEDGE-BASED ECONOMY, TOWARDS
MORE WHITE COLLAR JOBS, HAVEN'T
BEEN BENEFITING FROM THIS
ECONOMIC TRANSITION THAT WE'VE
BEEN SEEING OVER THE PAST 10, 20
YEARS ACROSS THE PROVINCE.

Steve says OKAY.
WE HAVE I THINK... YOU HAVE, I
SHOULD SAY, VERY NICELY LAID OUT
WHAT THE CHALLENGE IS.
HERE'S THE LAY OF THE LAND.
NOW LET'S TALK ABOUT SOME
POTENTIAL SOLUTIONS HERE.
YOUR REPORT LOOKS AT SOMETHING
CALLED OPPORTUNITY ZONES.
FOR THOSE WHO DON'T KNOW WHAT
THEY ARE, GIVE US THE HANDY
DANDY DEFINITION.

The caption changes to "Opportunity zones."

Sean says LET ME BE BRIEF.
OPPORTUNITY ZONES ARE A POLICY
EXPERIMENT IN THE UNITED STATES,
AT A TIME WHEN WE TALK SO MUCH
ABOUT POLITICAL POLARIZATION
DOWN SOUTH, THIS HAPPENS TO BE A
BIPARTISAN EXPERIMENT.
THE LEGISLATION THAT HAS LED TO
THE CREATION OF THE OPPORTUNITY
ZONES WAS CO-SPONSORED BID CORY
BOOKER, A DEMOCRAT FROM NEW
JERSEY...

Steve says RUNNING FOR PRESIDENT.

Sean says YES.
AND TIM SCOTT A REPUBLICAN FROM
NORTH CAROLINA.
IN EFFECT, OPPORTUNITY ZONES ARE
A MODEL THAT INVOLVES A SERIES
OF TAX PREFERENCES TO TRY TO
PULL INVESTMENT INTO
ECONOMICALLY DISTRESSED PARTS OF
THE UNITED STATES.
THE OPPORTUNITY ZONE FRAMEWORK
IS DESIGNATED ABOUT 8700 OF
THESE ZONES ACROSS THE U.S. AND
FOR INVESTORS THAT PUT
INVESTMENT, DEPLOY CAPITAL TO
THESE 8700 ZONES, THEY BENEFIT
FROM A SERIES OF TAX INDUCEMENTS
OR TAX PREFERENCES, AND WHILE
IT'S EARLY DAYS, THE MODEL LOOKS
INTERESTING.
PAST EFFORTS AT REGIONAL
ECONOMIC DEVELOPMENT HAVE NOT
TENDED TO BE SUCCESSFUL.
AND THE OPPORTUNITY ZONES MODEL
HAS SOUGHT TO LEARN THE LESSONS
OF THOSE PAST FAILURES, SO IT IS
MARKET-DRIVEN, IT'S BROADLY
FLEXIBLE, IT'S MOSTLY BOTTOM-UP,
IT'S NOT ABOUT GOVERNMENTS
DECIDING WHICH FIRMS AND WHICH
PLACES ARE GOING TO GET MONEY...
IT'S ABOUT SETTING A FRAMEWORK
AND THEN LETTING THE MARKET DO
WHAT MARKETS DO, WHICH IS TO
PULL INVESTMENT INTO DIFFERENT
ASSETS AND DIFFERENT PROJECTS,
AND AS WE SAY IN THE PAPER,
WHILE IT MIGHT BE PREMATURE TO
CALL MISSION ACCOMPLISHED BY ANY
MEANS, IF A GOVERNMENT IS
COMMITTED TO TRYING TO CATALYZE
ECONOMIC ACTIVITY IN THESE
DISTRESSED PARTS OF THE
PROVINCE, OPPORTUNITY ZONES
LOOKS LIKE A PROMISING MODEL
THAT DESERVES THEIR ATTENTION.

Steve says WHY DO YOU THINK
THIS MIGHT WORK HERE?

Weseem says SOMETHING
INTERESTING ABOUT THESE
OPPORTUNITY ZONES, IT TAKES A
REAL FOCUSED APPROACH INTO
SPECIFIC REGIONS.
AND SOME OF THE WORK I'VE DONE
IN PREVIOUS POSITIONS IN THE
PAST IS LOOKING AT WHAT WE CALL
CLUSTERS.
IT'S A RELATIVELY NEW CONCEPT
HERE IN CANADA, BUT EUROPE AND
THE U.S. HAVE STARTED ADOPTING
THESE METHODOLOGIES.
AND WHAT IT IS IN A NUTSHELL IS
THAT WE TAKE FOUR DIFFERENT
ACTORS.
YOU TAKE A TALENTED WORK FORCE,
YOU TAKE GOVERNMENT, HIGHER
EDUCATION, AND CAPITAL
INVESTMENT AND REALLY FOCUS ON
SPECIFIC REGIONS AND CATER
TOWARDS THEIR ADVANTAGES.
WHAT THAT DOES IS IT PROVIDES A
COMPARATIVE ADVANTAGE SPECIFIC
TO ONE PLACE AND MAKES IT HARDER
FOR OTHER PLACES TO COMPETE IN.
FOR EXAMPLE, NO MATTER HOW RICH
OR POWERFUL TORONTO BECOMES, IT
WILL NEVER BE AS BEAUTIFUL AS
MUSKOKA.
AND MUSKOKA KNOWS THAT.
WHAT THEY DID IS THEY TOOK THE
SORT OF BRANDING IMAGE AND THEY
CREATED A FOOD CLUSTER OUT OF IT.
SO THEY CREATED SORT OF A
HIGH-END WINE AND DINE SORT OF
ATMOSPHERE AND THEY SHIP THEIR
PRODUCTS OUT ACROSS THE REST OF
THE PROVINCE.

Steve says AND IT'S WORKING?

Weseem says IT'S BEEN WORKING SO FAR.

Steve says SEEMS TO BE WORKING.
I DON'T WANT TO CRAP ON YOUR
ENTHUSIASM HERE.
HOWEVER, I'M THE ONLY ONE AT
THIS TABLE OLD ENOUGH TO
REMEMBER THERE WAS A CONGRESSMAN
FROM NEW YORK NAMED JACK KEMP
WHO USED TO BE QUARTERBACK OF
THE BUFFALO BILLS AND HE TRIED
SOMETHING, I THINK THEY WERE
CALLED ENTERPRISE ZONES OR
SOMETHING.
WE'RE GOING BACK 35 YEARS NOW,
MAYBE EVEN MORE.
I THINK THE JURY WAS PRETTY MUCH
OUT ON WHETHER OR NOT THAT
ACTUALLY WORKED TO DO PRETTY
MUCH THE SAME THING OF WHAT
YOU'RE TALKING ABOUT RIGHT HERE.
SO WHY SHOULD YOU HAVE ANY
EXPECTATION THAT IT MIGHT WORK
THIS TIME WHEN IT DIDN'T APPEAR TO WORK LAST TIME?

Sean says THERE IS A HIGH
PROBABILITY THAT THIS MIGHT
PROVE ITSELF UNSUCCESSFUL.
REMEMBER, WE'RE PUSHING AGAINST
POWERFUL MARKET TRENDS.
THE MARKET'S CONCENTRATION OF
INVESTMENT AND OPPORTUNITY IN
URBAN CENTRES IS NOT A CASE OF
THE MARKET MALFUNCTIONING.
THE MARKET IS DOING WHAT IT DOES
WHICH IS ALLOCATING RESOURCES
EFFICIENTLY.
WHERE THE OPPORTUNITY ZONES
MODEL IS PROMISING IS IT SOUGHT
TO LEARN THE LESSONS FROM THOSE
LIKE THE ENTERPRISE ZONES, WHICH
WERE TOO HEAVY HANDED, TOO
NARROWLY FOCUSED, TOO TOP-DOWN.
IN EFFECT WHAT THE GOVERNMENT IS
SAYING, IF YOU CHOOSE TO INVEST
DOLLARS IN THESE ROUGHLY 8700
ZONES IN A WIDE RANGE OF ASSETS
WITH A PRETTY FLEXIBLE POLICY
AND REGULATORY FRAMEWORK, YOU'LL
BE ELIGIBLE FOR THESE TYPES OF
TAX INCENTIVES.
AND WHAT'S STRIKING IS, EARLY
ON, THE SIGNS ARE POSITIVE.
I'M CAUTIOUSLY OPTIMISTIC.
WE'VE SEEN A NUMBER OF
OPPORTUNITY FUNDS SPRING UP, SO
THESE ARE THE VEHICLES THROUGH
WHICH PEOPLE MAKE INVESTMENT.
SOME OF THESE FUNDS ARE
TRADITION ALIMONY FUNDS.
THAT IS, THAT THEY'RE LOOKING
FOR HIGH RETURNS.
SOME OF THEM HAVE SOCIAL IMPACT
INVESTING MANDATES.
THE ROCKEFELLER FOUNDATION, FOR
INSTANCE, HAS ONE.
AND SO I THINK ONE OF THE
STRENGTHS OF THIS MODEL IS, IT
ULTIMATELY IS MARKET-DRIVEN.
IT'S ULTIMATELY COUNTING ON THE
SELF-INTEREST OF INVESTORS TO DO
A LOT OF THE HEAVY LIFTING.

Steve says I GET YOU.
LET ME PICK UP ON THAT AS WELL
BECAUSE I'M SURE YOU GUYS SAW
THE FRONT PAGE OF THE NEW YORK
TIMES A COUPLE OF WEEKS AGO A
STORY ON THE FACT THAT MICHAEL
MILKEN, JUNK BOND MAN, WENT TO
JAIL, TRIED TO RESURRECT HIMSELF
BY GETTING INVOLVED IN GOOD
WORKS, AND THE TIMES FOUND
COINCIDENTALLY A LOT OF THE GUYS
LIKE MICHAEL MILKEN PUSHING THIS
IDEA IN THE UNITED STATES, STAND
TO PERSONALLY BENEFIT
SIGNIFICANTLY FROM THE TAX
ADVANTAGES THAT GO ALONG WITH
THIS KIND OF PROGRAM.
DOES THAT CAUSE YOU PAUSE?

Weseem says THERE IS
CONCERN ABOUT THAT.
I WAS DISCUSSING IT WITH SEAN A
FEW DAYS AGO, THAT THERE IS THE
RISK OF... FOR TARGETING AREAS
BASED ON PERSONAL BENEFIT,
COMING FROM THE POLICY SIDE OF
IT.
I'LL LET SEAN ELABORATE MORE ON
THAT.
BUT WE NEED TO ESSENTIALLY
DESIGN THESE POLICIES TO BENEFIT
THE REGION AND THE PEOPLE WHO
LIVE THERE, RATHER THAN HAVING
ULTERIOR MOTIVES FROM
GOVERNMENT.

Sean says IT'S WORTH
RESPONDING DIRECTLY TO THAT
QUESTION.
THESE ALLEGATIONS ARE OBVIOUSLY
CONCERNING.
IN A NUTSHELL, WHAT THE CHARGE
IS THAT A ZONE IN NEVADA WAS
DESIGNATED, EVEN THOUGH IT
DIDN'T MEET THE ECONOMIC
THRESHOLDS.
REMEMBER, THESE ZONES ARE
SUPPOSED TO BE UNDERPERFORMING
PARTS OF THE UNITED STATES,
ACCORDING TO FAIRLY CLEAR
THRESHOLDS.

Steve says EMPIRICALLY PROVABLE DATA.

Sean says EXACTLY.
AND THE ALLEGATION HERE IS THAT
ONE MANAGED TO GET DESIGNATED IN
NEVADA IN THE INTERESTS OF A
PARTICULAR INVESTOR, AND IF
THAT'S TRUE, THAT'S OBVIOUSLY A
CONCERN.
BUT I THINK ON BALANCE, RESEARCH
BY DIFFERENT THINK-TANKS AND SO
ON HAVE DETERMINED THAT MOST OF
THE 8700 ZONES ARE JUSTIFIED.
THESE ARE PLACES IN REAL NEED.
AND SO I WOULDN'T WANT ONE BAD
EXAMPLE TO KIND OF HARM THE
OVERALL...

Steve says FAIR ENOUGH.
DO YOU KNOW, SEAN, WHETHER OR
NOT THE ONTARIO TAX CODE IS EVEN
SET UP TO BE ABLE TO PROMOTE AN
IDEA LIKE THIS?

Sean says IT'S A GREAT QUESTION.
THE SHORT ANSWER IS NO.
AND THAT'S BECAUSE... BECAUSE OF
THE INTEGRATION OF TAX
ADMINISTRATION BETWEEN OTTAWA
AND QUEEN'S PARK.
IT WOULD BE VERY DIFFICULT FOR
ONTARIO TO SIMPLY TRANSPLANT THE
OPPORTUNITY ZONES MODEL IN THE
U.S. HERE IN THE PROVINCE.
IT WOULD REQUIRE COOPERATION
WITH OTTAWA.
BUT I THINK THAT'S WORTH
PURSUING.
I MENTIONED EARLIER THAT THE
TRUDEAU GOVERNMENT CREATED FOR
THE FIRST TIME THE MINISTER FOR
RURAL ECONOMIC DEVELOPMENT IN
THE LAST PARLIAMENT.
SO THE GOVERNMENT IN OTTAWA IS
SENSING THE SAME SENTIMENTS OR
CONCERNS IN RURAL PARTS OF
CANADA AS THE FORD GOVERNMENT IS
EXPRESSING... OR HEARING,
RATHER, HERE IN THE PROVINCE OF
ONTARIO.
SO THIS MIGHT BE AN OPPORTUNITY
FOR COLLABORATION.
IN THE EVENT THAT IT'S NOT,
THOUGH, THE PAPER SETS OUT SOME
ALTERNATIVE PROPOSALS THAT
ONTARIO COULD GO IT ALONE, BUT I
THINK FOR A WHOLE HOST OF
REASONS, THE FIRST STEP OUGHT TO
BE TO ENGAGE OTTAWA.
I THINK THIS IS AN OPPORTUNITY
FOR NATION-BUILDING THAT CAN
CROSS PARTISAN LINES, JUST AS
OPPORTUNITY ZONES HAVE IN THE
UNITED STATES.

Steve says WELL, THEY HAVE ALL
THE INCENTIVE TO WANT TO PUT A
LITTLE WATER IN THEIR WINE UP
THERE NOW, DON'T THEY, GIVEN THE
RESULTS OF THE LAST ELECTION.

Sean says THE OTHER REASON THEY HAVE
COMMON INTERESTS HERE, STEVE, IS
THE EXTENT TO WHICH THE
OPPORTUNITY ZONE MODEL HARMS THE
TREASURY, IT'S IN THE FOREGONE
REVENUES THAT WOULD COME FROM
CAPITAL GAINS TAXES.
BUT, FIRST OF ALL, IT REQUIRES
NO NEW GOVERNMENT EXPENDITURE,
AND EVEN THOSE REVENUES ARE A
BIT THEORETICAL, BECAUSE THIS
CAPITAL IS SITTING IN UNREALIZED
CAPITAL GAINS.
IN EFFECT WHAT YOU'RE DOING IS
PULLING IT INTO THE MARKETPLACE.
SO FOR TWO GOVERNMENTS THAT ARE,
ONE, CONCERNED ABOUT UNEVEN
ECONOMIC ACTIVITY BETWEEN URBAN
AND RURAL PARTS OF THE COUNTRY
AND, TWO, ARE BOTH RUNNING
FISCAL DEFICITS, THIS STRIKES US
AS A WIN-WIN OPPORTUNITY, AND AT
WORST, IT DOESN'T WORK, AND IT
SEEMS TO US, GIVEN THE EXTENT TO
WHICH WE'RE OBSERVING THIS
GROWING BIFURCATION, IT'S WORTH
GIVING IT A SHOT.

Steve says WESEEM, ONE LAST
QUESTION TO YOU, THAT IS, PEOPLE
IN NORTHERN ONTARIO ARE AWARE WE
HAVE A NORTHERN ONTARIO HERITAGE
FUND, THERE IS A RURAL ECONOMIC
DEVELOPMENT FUND, I THINK THERE
MAY BE AN EASTERN ONTARIO FUND
AS WELL.
IT'S NOT LIKE GOVERNMENTS
HAVEN'T TRIED... NOW, ADMITTEDLY
THEY'RE RUNNING THOSE THINGS AND
THAT'S DIFFERENT FROM WHAT
YOU'RE RECOMMENDING HERE.
BUT IT'S NOT LIKE IDEAS TO
PROMOTE RURAL DEVELOPMENT
HAVEN'T BEEN TRIED BEFORE.

The caption changes to "Delivering economic parity."

Weseem says ABSOLUTELY.

Steve says SO WHY DO WE NEED
THIS WHEN THERE'S SO MUCH IN
PLACE ALREADY?

Weseem says IT'S ACTUALLY GOOD YOU
BROUGHT THIS UP.
THOSE FUNDS, WHAT THEY DO IS
THEY MIGHT NOT NECESSARILY
INCENTIVIZE NEW CAPITAL INTO
THESE REGIONS.
WHAT THEY WOULD DO IS SOMEONE
WHO IS ALREADY LOCATED IN THESE
REGIONS WHO IS ALREADY PLANNING
ON INVESTING OR OPENING UP SOME
SHOP OR BUSINESS WOULD BE TAKING
THIS MONEY ANYWAYS.

Steve says AND THEY MAY NOT NEED IT.

Weseem says THEY MAY NOT NEED IT.
SEAN HINTED AT THIS EARLIER.
WHAT THESE OPPORTUNITY ZONES DO
IS THEY TAKE UNREALIZED CAPITAL,
SO MONEY SITTING ASIDE THAT'S
NOT BEING USED EFFICIENTLY IN
THE MARKET, PULLS IT OUT AND
PUTS IT INTO THESE DISTRESSED
REGIONS.

The caption changes to "Producer: Colin Ellis, @ColinEllis81."

Steve says THAT'S THE DISTINCTION.
THANK YOU FOR COMING IN TO TVO
TONIGHT AND DESCRIBING IT FOR US.
WE WILL WATCH WITH INTEREST AND
MAYBE WE SHOULD RECONVENE THIS
GATHERING IN A YEAR OR TWO AND
SEE WHETHER THE SEEDS YOU HAVE
PLANTED HAVE GROWN INTO SPROUTS
OR FLOWERS OR EVEN TREES.
WHO KNOWS?

The caption changes to "Subscribe to The Agenda Podcast: tvo.org/theagenda."

Steve says THANKS A LOT.

Weseem says THANKS SO MUCH.

Watch: Bridging Ontario's Urban-Rural Divide