Ontario NDP leader and local MPP Howard Hampton is blaming soaring hydro rates for the lagging forestry industry in Northern Ontario, and is urging the McGuinty government to take action.
Hampton said the province needs to establish separate hydro rates for industry in northern and southern Ontario, or must develop an investment strategy for the forest industry—much like it has done for the automotive one—before more mills close and the region’s economy is wiped out.
Last week, the Ontario Energy Board announced a 12 percent increase in hydro rates for industrial users. Hampton said this hike is especially hard on industry in Northern Ontario, which tends to be electricity-intensive.
“The problem we face is almost all of our industries are electricity-based,” Hampton said during a visit to the Times office on Friday.
This includes mining, steel mills, smelting, and refining, along with the forest industry.
“If you jack up the price of electricity, it causes serious pain across Northern Ontario,” he argued.
In contrast, Hampton said southern Ontario’s economy is becoming less electricity-intensive, focusing on financial services, education services, and information technology.
“Electricity might be only five percent of their cost structure,” Hampton explained. “Large increases [in hydro rates] have a small impact.”
In the forest industry, for instance, the cost of electricity can account for up to 30 percent of its cost structure.
“This very big part of their cost picture has gone completely out of control,” Hampton said. “The cost of hydro has gone up 30 percent over the last four years.”
This increased cost of doing business is now being reflected in the economy.
Hampton said 6,000 jobs were lost in Northern Ontario between September, 2003 and September, 2004.
“We’re the only part of Ontario that lost jobs,” he noted. “Most of these losses are appearing in forest industry communities.”
Mills in Dryden, Kenora, and Terrace Bay all have laid off workers in the last year—and more mills are under review. Neenah Paper in Terrace Bay is closing one of its two paper mills, throwing some 130 people out of work.
“The closing of the Neenah pulp mill shows the McGuinty government has no plan for Northern Ontario,” Hampton charged.
“The premier has turned his back on the north while his failed economic and hydro policies gut our communities and put our people out of work.”
In many of these communities, mill jobs are the best-paying ones in town. When these jobs are lost, the entire community’s economy slows down because families are spending less.
“These are the jobs that create economic activity,” he noted.
The solution, Hampton said, is to have a separate hydro policy for northern and southern Ontario, and to end the hydro rate hikes for Northern Ontario industries.
“There has to be an acknowledgment of the Northern Ontario perspective,” he argued. “We need an industrial electricity rate that recognizes the unique aspect of our economy.”
Historically, provincial governments have taken into account the different economies of Ontario.
“In the last five years, the Northern Ontario part of the equation isn’t even looked at anymore,” he noted.
A second option for dealing with the problem would be for the McGuinty government to develop an investment strategy in the forest industry.
Hampton noted the provincial government has spent $500 million on a co-investment strategy with the automotive industry while the federal government has invested about $1 billion in the aerospace sector.
“The automotive investment strategy is sustaining jobs,” Hampton said. “If you can afford to make these investments, where’s the co-investment strategy for Ontario forest industries?”
He stressed that electricity supply is not an issue in the north.
“We have a surplus of power in the northwest,” Hampton said. “It’s not an issue of supply, but price.”
If the province fails to act on this, Hampton predicted further trouble for Northern Ontario’s economy.
“If this issue isn’t addressed within the next year, that number of 6,000 [jobs lost] will be small compared to what we will lose,” he warned.
Fort Frances Times
Local News from Across the Rainy River District
