Method
The study was conducted using Survey Monkey, an online survey engine. The respondents were a self-selected sample of Facebook users. There were 19 usable responses. No demographic data was collected.
The population size was taken to be 1262, the average number of votes cast for mayor in the last three elections (2003, 2006, 2009). The 2007 by-election was not used as MACA could not make the numbers available.
The purpose of this survey was to study the public's response to the GNWT's 2012-13 budget.
Sources of information
The most notable finding was the thorough lack of interest it generated. It took two weeks to get 19 responses; in contrast, the survey on doctors and midwives (also a GNWT responsibility) got 16 responses in the first 24 hours. Yet the GNWT spends 17 times as much per person as the Town of Hay River ($33,067 per year versus $1,944) and is responsible for almost everything that Hay River citizens identify as important local matters.
It is therefore not surprising that 56% of respondents said they had not obtained any information about the 2012-13 budget. Out of the remaining 44%, almost two thirds had listened to radio coverage; half had read the budget address; two out of five read newspaper coverage; a quarter read each of online coverage and the main estimates; and 13% used "word of mouth", that is, discussion with others. No one reported reading the capital estimates, which is perhaps a wise choice given the volatility of estimates for, say, the Deh Cho Bridge, to name just one project.
Evaluation of the minister's statements
The respondents' opinion of the Minister of Finance's broad statements in the budget address was measured using a Likert-type scale. The statements tested were as follows:
- The economic downturn in now over.
- The economic outlook for the NWT is good.
- Recovery in the NWT labour market is strong.
- Mining is the economic engine of the NWT.
- Mining is a cornerstone for robust growth in our economy.
- Future mines are critical to our economy.
- The NWT is one of the best-managed jurisdictions in Canada.
- New funding through federal transfers should not be a part of our plan.
- Increasing our population will grow our revenue and our economic base.
- Capital investment employs Northerners.
- Our construction industry is well poised to see strong growth this year.
- Corporate profits will increase by more than 250% this year.
The last item was not actually a statement in the minister's address, but an assumption in the main estimates.
(You'll want to click on the graphics to make them legible-sized.) The three shades of blue represent the bottom, middle and top of the 95% confidence interval, respectively. And now in table form:
It's worth noting that five-point Likert scales are known to introduce a statistically-significant bias towards higher scores, and that respondents tend to avoid the extreme responses. These results therefore overstate the respondents' confidence in the Finance Minister, though there is no way to quantify that effect from available data.
The scary thing about these results isn't just that people think Miltenberger is talking out of his arse and have no way of removing him; what's really sad is that they're right. Miltenberger has a BA in Sociology, 17 years in the Legislature, and is on his second term in Finance, and his economic analysis makes no sense at all.
The idea that the economy has recovered from the 2007-08 crisis is not supported by anything but propaganda from The Harper Government. Even cautious optimism earlier this year that recovery might start to take hold in 2013 has since vaporised. The hiring outlook is at a two-year low in Canada. The construction industry is in especially bad shape and still losing jobs. Apparently the minister is unaware of the ongoing world-wide deleveraging, and of the fact that the real-estate bubble has yet to begin correcting itself in the Northwest Territories. The idea that the construction industry would see strong growth in the near future, when the GNWT itself is cutting back on capital projects, the residential market is not viable, and the corporate sector is weak everywhere, is just fantasy.
Likewise the minister's estimate of a 269% increase year-on-year in corporate tax revenue is bordering on delusional. The GNWT and GNWT employees together account for 37% of the territory's expenditure-based GDP; this will see no increase from last year. Personal income tax is forecast to increase by only 0.9% year-on-year, which is less than inflation, hence predicting a decrease in real purchasing power. This near-quadrupling in corporate profits would therefore have to come entirely from exports, which is unlikely since we have virtually no exports. (The extractive industries are neither owned nor headquartered in this jurisdiction and pay royalties, not corporate income tax, for the commodities they remove. In any case, the probability of production from these industries quadrupling this year is just as non-existent.)
The notion of a strong labour market will be obviously absurd to any job seeker. The minister's claim that the territory added 1200 jobs last year is fascinating considering this would power a large mine, represents 5% of the workforce, and would have virtually eliminated unemployment in the territory. The minister does not quote his source for this figure, so left to my own speculations, I'll hazard a guess that the actual statistic showed fewer employment insurance claims, not more jobs. Though some may have been due to job creation, the bulk of it is likely caused by claimants running out of entitlement, and, as in the rest of the rich world, by job seekers giving up and withdrawing from the workforce. This is a particularly potent mechanism in the territory, where people simply up stakes and leave for greener pastures.
The idea that capital investment employs northerners, though somewhat popular with respondents, is only marginally valid. A cursory glance at construction crews, particularly on government projects, reveals a very large percentage of workers from BC and Atlantic Canada. Worse, construction is by definition a seasonal and temporary job (the Diamond Jenness upgrade project excepted, apparently). The migrant workers simply leave when the job is done; the locals stay and go back on the dole. The end result is to spend a lot of money on southerners and create no future for locals. Just like that other big government job-creation scheme, "Come Make Your Mark".
The most popular of the minister's statements was that "increasing our population will grow our revenue and our economic base." However, this widely-held notion is just as flawed as the rest. The projected personal income tax take is only $2,181 per person, compared to spending of $34,036 each. (The number for the territory as a whole is different from the Hay River number quoted above due to the funding provided by MACA to community governments, which is not equal across all communities.) ECE and Health & Social account for 45% of the spending and would only increase with increasing population, leaving an even larger deficit, the current number being already 33% of GDP. In a normal economy, population growth would increase demand for and therefore production of manufacturing outputs, and therefore drive job creation. In our economy, almost everything is imported with no corresponding export; any increase in population therefore only increases the trade deficit.
There is a good deal of truth to the statement that "future mines are critical to our economy", but this is not a good thing. It only reflects the fact that the mines practically are the only exporters we have and that the GNWT has no strategy to change this situation. It does not follow, however, that "mining is the economic engine of the NWT." In fact, as of the 2006 census (2011 data is not available yet), only 6.7% of the workforce was employed in mining and oil and gas extraction, versus 6.9% in Alberta. The figure for the NWT, it should be noted, includes those who are resident here but work in other jurisdictions. The real engine of what economy we have is the GNWT itself, which employs directly 22% of the territorial workforce, and more through contracts. Austerity in the GNWT, were it actually to happen (which is in no way the case in this budget), would be a disaster for the economy.
The minister expanded on the mines as "cornerstones for robust economic growth" thusly: "to return to busy times like we saw in 2007 requires another large project. The good news is, we’ve got quite a few in the wings. If approved, these projects could bring more than $2 billion in new investment, as well as 2,000 new jobs to a number of regions. Projects such as Avalon’s Rare Earth Element Project provide opportunities for the establishment of a non-precious metals secondary processing industry in the territory. Projects such as Prairie Creek and Pine Point will facilitate economic growth in the Deh Cho and South Slave." The key words of course are "if approved", to which all one needs to say is "Mackenzie Valley Pipeline." And as for the 2000 new jobs, again they would be to a great extent temporary, seasonal, and taken up by southerners.
The minister's most solid statement was in fact "new funding through federal transfers should not be a part of our plan." Indeed, until The Harper Government collapses into the dustbin of history where it belongs, no one but the US military industry should be planning on new funding from federal transfers.
Finally, it's reassuring to see that no one bought into the bizarre assertion that "the NWT is one of the best-managed jurisdictions in Canada." Only one respondent even somewhat agreed with this statement. As I've discussed it at some length before (Perchance to dream, 13 June 2012), I'll leave it alone at this time.
Evaluation of salient points of the main estimate
The second set of questions was another Likert-type scale designed to measure what the respondents thought of the minister's reallocation of funds. The results as graph:
And as chart:
It should be noted that although the minister presented his work as an "austerity" budget, there is no actual decrease in government spending; the money is simply moved around hither and yon to give the impression of something happening. As a result, selecting the Likert items posed some difficulties. Some items were excluded simply because they were too difficult to explain to the respondents, for example, the second-largest dollar increase, which was $5.3 million to Highways labelled "others". As there is no indication of what that might actually be used for, I can't really survey people on what they think of it.
In the end the selection of Likert items was somewhat biased towards those that I expected to get a "disagree" rating, in that I included five cuts and only three increases in funding. But even by giving extra weight to the increases to balance out the larger number of cuts, the average rating only increases from 2.1 to 2.3 – still firmly in the realm of "disagree".
Predictably, the funding increases all scored better than the funding cuts; yet to my surprise, not even the populist power subsidies made it to the "agree" level; only slightly above "no opinion." In fact from an economic point of view, this is probably the worst measure in the budget. Power subsidies are proving disastrous everywhere, as they simply encourage gluttonous consumption of a commodity whose real price is not under the state's control, and once in place, they are nearly impossible to remove. The respondents wisely reserved their opinion on the Rent Supplement Program, which sounds like a good deal except we've yet to find out what it will do and for whom. One can easily pardon the scepticism.
Not surprisingly, the serious cuts made to those services that most directly impact the public's quality of life were censored. Considering both the method of this survey and the habits of the population being surveyed, scoring 1.4 on a scale of 1 to 5 is serious indeed.
Out of the two Likert scales, the minister ended up scoring 2.6 for his economic analysis and 2.1 for his budget measures. That is to say, he just got himself a non-confidence vote. The fact that there is absolutely no way for the voters to boot him from power partly explains the lack of interest the public takes in his work.
Devolution
The bars in this case represent the number of respondents for each category. The outcome is 2.7 ± 1.3, that is to say, on the disagreeing side of no-opinion.
The devolution, touted as a great creator of jobs (to be filled once again by carpetbaggers, since the GNWT will of course require qualifications and experience that cannot be gained in the Northwest Territories) and source of endless bounty from repatriated royalties, is making no friends among Facebook-using voters. In this case the results may be particularly subject to bias from the method of sample selection, since devolution appears popular among the indigenous people, who are less likely to be completing Facebook surveys. The fact that the GNWT is offering to hand them 25% of proceeds could have something to do with it.
The number of jobs to be created by devolution varies with the weather. An early estimate of 350 jobs yields the following calculation:
This is assuming that the 350 new hires bring no family with them, and that there are no costs of doing business, such as offices, travel, phone bills, etc. In short, there won't be a penny left of the reclaimed royalties once the GNWT is done administering them. Forget the "leaky bucket" – this government is more of a sieve. What's more, there is no reason the government of Canada wouldn't cut our transfer payments by the same amount as the royalties. In short, until more numbers to the contrary are produced, devolution looks like a financial disaster for us.
Federal funding
The purpose of this question was to test whether citizens actually know where their money is coming from. The actual number is 76% for this year. Only three respondents, I being of course one of them, picked the right answer. The most popular choice was 40-60%. Using the mid-point of each interval as an estimated average of the guesses in that interval, I estimate the public's impression of federal funding at only 44%, a 42% error.
The enduring fiction that "we're rich because of the mines" belies the fact that mining and oil and gas extraction account for only 34% of GDP, whereas the GNWT makes up 37%. And 76% of the GNWT's revenue comes as grants and transfers from Canada – that is to say, 28% of our GDP is federal dole.
Besides this woeful statistic, we should also bear in mind that relying on mining and oil and gas extraction is essentially a Third World economic model. South Sudan, for example, is loaded with oil and gas, and yet hideously poor. It's the refining, not the extraction, that's worth money.
Conclusion
The moral of this sad tale:
- The citizens are not receiving sufficient information about the territory's finances, nor do they care.
- The Minister of Finance does not have the support of the voters.
- Inability to hold the government to account likely is a significant cause of the citizens' apathy towards it.
No comments:
Post a Comment