Mining towns in Ontario feel shortchanged on resource riches – by Rita Celli (CBC News Business – May 13, 2015)

For Rita Celli’s CBC Radio program on “Ontario’s mining take: Should the Auditor General investigate?” click here:

Province gets mining tax, while northern towns get potholes and a shrinking share of property taxes

Ontario mining towns with rich gold and nickel deposits sit on billions in resources, but they feel poor and ignored.

“You get to a point you’re frustrated. You can only go to the well so often,” says Red Lake Mayor Phil Vinet. “The last couple of times I just felt like I was farting against thunder.”

The northern leaders often appear to be stuck in a perpetual fight to squeeze more money and basic information from mining companies and the provincial government.

Red Lake is built on gold. During the gold rush in 1936, Red Lake claims to have had the busiest airport in the world, surpassing Atlanta, Chicago, New York, Paris, London and Toronto. Except there was no airport — planes landed on the lake in summer and on ice in the winter. The biggest mine is operated today by Goldcorp. The owners have changed over the years, but the same mine is still giving up gold after decades.

Like many northerners, Vinet has a beef with Queen’s Park.

“Just share what you have,” he says of the province’s parsimony. “How hard is that? It’s not hard. We put a guy on the moon 45 years ago and we can’t get a formula in place? I don’t buy that.”

Province gets it all

In Northern Ontario, there is unease that riches are being vacuumed from right under their feet, while local communities are not able to get money for infrastructure. They accuse Queen’s Park of hoarding taxes based on mining profits, which companies agree to pay for the right to extract non-renewable resources.

All over Northern Ontario people complain that they don’t have enough to show for the wealth underground.

One major obstacle is mining companies contribute little to local property taxes.

“No buildings. Ergo no property taxes. Ergo no moolah,” says former Sudbury mayor John Rodriguez.

Cities can only collect property tax from mining companies for structures like refineries and smelters, which are above the surface. The networks underground are substantial and exempt.

There are garages, repair shops, dining rooms and laboratories. There are massive tunnels and gigantic machines. One geologist estimates that by connecting all the drifts or tunnels under Sudbury you could cross Canada and end up in Vancouver.

Rodriguez, a longtime politician who is now retired, is irritated by the 40-tonne mining trucks hauling ore all around the Sudbury region, chewing up the roads. He says the good-paying mining jobs are nice, but the city also needs cash for road repairs.

Mines use local infrastructure

“Lo and behold, there are 104 trucks that run on these roads 24/7. Twenty-four seven … because they have to keep supplying the smelter with ore. Using our roads, our infrastructure and we get piss all from it,” he said.

“Who picks up that shortfall? The people in their homes have to pick that up. They’re paying more than their fair share. The mining companies don’t pay, we pay!”

According to Rodriguez, “20 years ago, 26 per cent of the revenues of the City of Sudbury came from those mining properties. Today, we’re down to 4.6 per cent.”

The tax base has shrunk in Timmins too. In 2008, the mining industry contributed more than $9.4 million in property taxes. By 2014, that number had fallen to less than $5.6 million.

A major blow was the closure of a copper refinery. Then-owner Xstrata (now Glencore) announced the closure in December and by March, the demolition and dismantling was underway.

Timmins Mayor Steve Black says his city has not received its fair share of the billions that have been extracted for nearly 100 years.

In the North, the handwringing about the untaxable underground has persisted for decades. No one at Queen’s Park ever took up the cause. Now communities are pushing the province to get a share of the taxes the province collects. They admire the revenue-sharing agreements some First Nations are negotiating with mining companies.

No attention from Queen’s Park

“It’s a lot of money to the local community. It’s not a lot of money to the province,” says Chris Hodgson, head of Ontario’s Mining Association.

A CBC-Michener Deacon investigation shows that the province has collected on average 1.5 per cent of the billions of ore extracted.

“Personally, what I think should happen is that it should go towards local communities, whether it be municipalities or First Nations,” says Hodgson, who was a PC cabinet minister during the Mike Harris era at Queen’s Park.

One barrier is political willpower. Ontario’s Minister of Northern Development and Mines Michael Gravelle, the Liberal MPP for Thunder Bay-Superior North, says he doesn’t give much thought to the mining profits tax collected by the province.

“I’m not going to sit here and tell you I’m asking every year or every month for that matter for the total amounts,” he told CBC News. “I’m focused, as I think I should be, on working with the industry, working with the communities, working with the mining associations, working with all those involved in the mining sector to try and see investment come to the province.”

Lack of straight answers

Mining communities have a tough time getting straight answers about how much the province collects on deposits. CBC submitted a Freedom of Information (FOI) request asking for a breakdown of how much money the province collects on gold, nickel and other precious and base metals.

But the mining profits tax is recorded in public documents as an aggregate sum. And companies are not required to report in detail what comes from each community. The FOI reply says those records don’t exist.

“That’s their responsibility. It’s the provincial government!” says Rodriguez.

“It’s got to go into some coffer in Queen’s Park. Somebody’s got to enter that cheque and deposit it. There’s got to be a pot of money there that’s got a label on it,” he says.

Vinet agrees with Rodriguez.

“Maybe that’s why we’re in trouble. I don’t buy that bull. No one at Queen’s Park could feed me that line. I just flat out don’t buy it that they don’t know where their money comes from. Some guy dropping off cheques in the middle of the night! Eh?”

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