The Star’s business columnist David Olive wrote a piece about the extreme antipathy in Canada directed towards cities on Saturday:
Outside Canada, great cities are regarded as national treasures, the face that countries show the world. Principal cities like Rome, Beijing and Kuala Lumpur, and even “sub-national†centres such as Shanghai, St. Petersburg and Edinburgh, are adequately funded by national governments.
Outside Canada, senior governments partner with cities in what are regarded as national projects.
Paris has funded a stunning makeover of the Charles de Gaulle airport in a successful bid to share European gateway status with Heathrow, Frankfurt and Amsterdam’s Schipol.
With Britain’s enthusiastic support, London is attempting to outmuscle New York as the world capital of finance.
Washington, whose ambivalence toward cities contrasts with Ottawa’s resolute disregard for them, financed Boston’s “Big Dig,†one of the largest U.S. urban-renewal megaprojects in American history.
And to help spur tourism in the gritty industrial city of Bilbao, Madrid footed much of the bill for Canadian expat Frank Gehry’s Guggenheim Bilbao museum.
Outside Canada, cities have authority to collect local retail and income taxes, and they share in regional taxes. All that applies to U.S. cities, as well, which also have long been permitted to engage in debt-financing by issuing tax-free municipal bonds. Canadian cities, by contrast, are in a fiscal straitjacket, forbidden from running deficits, much less issuing and managing debt.
Read the rest here. He concludes the above survey of other cities with what is now part of a growing sentiment: “Bottom line: It’s time Canada’s communities were funded directly by Ottawa, which is projecting $26 billion in excess funds over the next six years.“
28 comments
Shawn, you, me, David Olive and all the countries in the world which support their cities are wrong because we must obey to the last word what the irrelevant British North America Act of 1867 says (although it has loopholes that can be used). It is a bit ironic, since not even the British neglect their cities as much as we do… Some people just can’t accept that the rest of the country loves to see us flounder, they go as far as using the 1867 act as an excuse, even if it means a weaker Canada. I guess this is a clear example of self-sabotage…
Carlos: Amend the constitution, and then we’ll talk. I’m surprised that you care nothing about the laws of our country, so as to just throw them away when you might find them expedient. Which other aspects of our constitution would you like to see thrown in the garbage?
The Feds DO fund national interest items in Canadian cities, for example the Vancouver Olympics (and that required special legal considerations). However, Toronto’s crumbling infrastructure is a local matter, not a national matter.
What other countries do is mostly irrelevant, as their laws and political powers separations are different.
Sean> Widespread disillusionment, and chatter — like that of Carlos and/or David Olive — about what might be wrong with how our country is organized, is the first step in moving towards changing that. Here, and in the “Amen” thread, you are rhapsodically condemning this sentiment based on the fact that it is not how Canada is currently set up (and strangely deeming what other countries do, as a model/example, “irrelevant”). Toronto’s crumbling infrastructure is a local matter sure, that doesn’t mean it’s right, or that workable local solution can be found, given how this country has evolved from when that system was set up.
We all know it’s a local problem — we see it everyday — everybody understands that.
In fact the decline of infrastructure is a systemic national problem. It is occurring in cities nationwide for much the same reasons and hence merits national attention. Surely that is at least as important to the nation than a one-off sporting event.
Sean,
There is no need to amend the British Act, it should just be “loopholed”, how hard can it be to claim infrastructure as a national interest item? So I guess it is acceptable for the Feds to bend their own rules for Vancouver so that doped athletes can compete in venues financed with our money, but they will not do it to finance infrastructure projects that will decrease pollution and increase competitiveness? I consider fighting pollution and our economy as matters of national interest, and if the Feds don’t see it that way, then they are not doing their jobs (I might be wrong about this again…). If Harper believes he can abolish the Senate (which goes against the Act) then why isn’t he able to create an amendment for the cities? I know why, because destroying the Senate is a populist move (especially in the West) whereas doing something to help Toronto would be a very unpopular thing to do (especially in the West). If you also read the act you will see that the parliament must be represented according to the Provinces population, yet our gracious PM is trying to pass bill C-22 which would undermine Ontario’s representation (my vote would be worth even less than an Albertan vote already does). I guess it is ok to bend the Act if it will help your personal political agenda, but wrong if it means helping Canadian citizens who live in urban areas…
I personally would be all for abolishing a stupid piece of paper with the word “British” in it, but good luck in getting all the provinces on board, it simply will never happen. So you have to work around it (like Harper is trying to do). Law does not imply justice, and a fair share of the taxes I pay not staying in my city is a huge injustice that must be rectified independently from an act imposed on use by colonialists. You are right, I do not care about laws that are antiquated and irrelevant for our modern days, especially the ones written by old colonial masters who are long dead.
Feigned respect for provincial responsibilities was probably pioneered in this country by the Quebec nationalists, who are of course most interested in making the federal government look useless. Harper and friends are happy to expand that concept to the rest of the country, seeking as they forever will to lower everyone else’s opinion of government to match their own.
Shawn> My point is that the solution already exists fully within the Constitutional framework already in place here in Canada: Lobby the Provinces to increase taxes to give cities the money and lobby the Feds to cut taxes to levels that represent what they need. Overall it is tax neutral, and respects the framework of our country.
Sean> I agree, of course, with that, somewhat. I just think — and I feel there is growing sentiment along these lines — that the importance of cities (as engines of the Canadian economy & etc) should have a direct relationship with Ottawa.
I agree “somewhat” with you because the trickle-up lobby you outline that is currently available to Toronto is inefficient as it includes all kinds of political factors (provincial “stuff”) that could affect that chain-of-demand.
More than anything, this discussion has me wondering about city-state provinces. I just wish the people currently pushing for them weren’t so — weird.
Hmmm.
On one hand, I of course agree with the core of Sean’s point. Cities really are the province’s responsibility. The province really is doing very little about it.
Carlos and Eric plainly have no clue on this issue; it’s not clear to me that it’s worth belabouring the point. Even Shawn, who is usually reasonable, seems to be aiming to polarize debate by writing off attention to the issue as “rhapsodic”, as though describing something and delighting in it were identical, and rewriting “provincial” as “local”.
So — still on the first hand — this assimilation by Carlos and Eric, and now Shawn, of “let’s hold the fire to the province’s feet” to “do nothing at all, only the federal government matters” is just plain weird. Especially when the province arguably has a responsibility to act in this area.
What is it going to talk for experts-of-all-things columnists like Olive to, y’know, notice that there’s a provincial government around, with legal responsibility for stewardship over the municipalities, and it’s doing jack? Is this a question of politics trumping government — of hatred for a particular political party (the federal Tories) trumping reasonable responses to government action (lobbying the province first and foremost, just like we’d do with healthcare)?
On the other hand. Let’s not overstate the case here: the federal government has always shown the ability to find and squeeze itself through loopholes when it believes that doing so serves it politically. (Kind of like ScotiaBank, as commenters on this blog have pointed out.)
Now, I believe that the end-result of relying on the feds in dossiers like this is never a sustainable one. The federal government always has to proceed with such things. through special arrangements and frameworks. The feds never have to and, in a way, never can comment to the long-term sustainability of such arrangements outside of special agreements with provinces, and the like.
Still, woo-hoo! free money. It could be good. And if I thought the whole forget-the-province, lobby-the-feds thing had legs, I’d probably support it as another patch on a pretty ugly problem. The thing is: I’m skeptical it will work altogether.
So, between the one hand and the other, I can’t help but see the province’s obvious ability to raise a penny per dollar in sales tax — coupled with the province’s stated support for doing so — as the most direct route to addressing the immediate problem.
What I don’t get is why there’s so little enthusiasm for doing so. Are we so married to that extra penny of GST cut that we prefer it to seeing the municipalities get funded? Does this all go back to, screw practicality, we hate the Tories and that’s that? Or is there something screwy in Ontario’s political DNA — I’m still new to Toronto after spending most of my adult life in Montreal, I must admit — that makes Ontarians actually believe that the federal level is the only place where “real” governing happens?
Disparishun> Attention to the issue was not “rhapsodic†but rather the tone and tenor of the counter-points. The debate is good, not polarized.
Disparishun: It might have to do with Ontario remembering full well how the province downloaded costs onto the cities during the 90s and wondering, if we gave the costs back, how long that would actually last.
Oh, Disparishun. I’m all for roasting McGuinty’s feet, but he’s not the one crowing about a surplus, is he? And his “I won’t raise taxes this time, really!” election promise means that he’s in something of a spot when it comes to raising the PST.
Harper, on the other hand, has made the strategic error of admitting that he has extra money. That will naturally attract the attention of cities that are having so little luck getting money out of the province.
Any nonsense about respecting provincial jurisdiction is the thinnest of excuses: who would complain?
hi boys — as an aside, if toronto’s infrastructure and social programming aren’t national issues, then who the hell are all these people i see everyday using the infrastructure and social programming in toronto? seems to me that people from the whole country are here, and not necessarily on a permanent basis. not to mention the newcomers who live in toronto and are kind enough to help keep this whole country’s economy from tanking.
Any nonsense about respecting provincial jurisdiction is the thinnest of excuses: who would complain? Eric, seriously? The federalism-ain’t-no-biggie argument is, as you say, a bit thin. Although, as I underlined above, YES TO FREE MONEY. That would be, like, awesome! And I’m all for it, all things being equal — although it doesn’t seem like the most fruitful plan of attack to me. as an aside, if toronto’s infrastructure and social programming aren’t national issues, then who the hell are all these people i see everyday using the infrastructure and social programming in toronto? seems to me that people from the whole country are here, and not necessarily on a permanent basis. The argument that interprovincial mobility implicitly transforms municipalities into a federal affair and moots the explicit language of the Constitution is, um, an unlikely one, too, particularly given the incorporation of interprovincial mobility rights by the very same drafters.
I’m all for roasting McGuinty’s feet, but he’s not the one crowing about a surplus, is he? This is beside the point for three reasons.
First, this is not about past surpluses — it’s about future revenue, with a view to a recurring revenue stream that won’t require cap-in-hand every few years. I can’t believe I’m the last defender of the penny campaign but, well, there it is. The difference is rather vital, don’t you think?
Second, this does not require new spending. It doesn’t even require new taxing. It’s occupying the tax room. I know, I know, “tax room” sounds all buzzword-y, just the thing to divert from a rousing Tories-suck politics-fest. But let’s consider thinking about it for a second, right?
Third, as it happens, Ontario has a rather massive surplus of its own. Not that surpluses are relevant, for the reasons above.
And his “I won’t raise taxes this time, really!†election promise means that he’s in something of a spot when it comes to raising the PST.
Again, I’m not sure you can go on about thinnest of excuses and then pull out that rabbit. I mean, he also promised to support the penny campaign. And this leaves taxes at the rate they were at when he made that promise. In short, it’s — read Dalton’s lips — no new taxes, and significant new money for municipalitities.
Which, I admit, would take moving in concert with the federal government rather than putting conflict with it above the well-being of the municipalities for which provinces are, erm, responsible.
But that dear price may just be worth paying, no? An equally valid question, I would think, is why you are so against the penny tax. Do you really think that that’s more difficult or complex to accomplish, or less beneficial long-term, than looking for a one-time federal handout?
It might have to do with Ontario remembering full well how the province downloaded costs onto the cities during the 90s and wondering, if we gave the costs back, how long that would actually last. Ryan, I’m afraid I don’t get what you’re saying here. What is it that might have to do with Ontario remembering how Ontario downloaded costs? Costs back to whom? And so on.
Americans can’t have a serious discussion about gun control without getting tangled in the issue of what the “founding fathers” intended with the Second Amendment. I fear we’re heading down the same path here if we focus on the separation of powers in our Constitution.
At Confederation, less than 20% of Canadians lived in urban areas. Now it’s more than 80%. And in 1867 the feds got about 25% of all tax revenue in the country; now their share of the tax pie is 43%. Clearly whatever wisdom Sir John A. and friends had on this issue is pretty dated.
This doesn’t invalidate the constitution, but it does make it a lame excuse. The provinces would be only too happy to facilitate the transfers, just as they did with the federal gas tax money that went to cities a couple of years ago. If the will was there, I’m convinced the lawyers could figure it out. (If not, why doesn’t Harper or Flaherty say so? If it has to be about the Constitution, it’d be nice to get real experts involved in the debate.)
Ottawa’s surplus is far larger than Ontario’s, and far more insulated from the effect of the weakening US dollar and a possible economic slowdown. Both levels of government could do more, but the federal government has the greatest means. They have the ability to lead a major transformation of cities across the country, and they’re just not interested.
Be careful Matt, soon you will be accused of not knowing what you are talking about. At least you aren’t contradicting yourself and making it seem like you are an expert on constitutional matters…
Maybe it’s my Quebec roots showing, but I feel deeply uncomfortable with any long term solution that calls for federal funding of municipal infrastructure. Eeek!
I dislike the federal conservatives on multiple levels, but when they started cutting the GST and other taxes, I cheered (it pains me to say), naively thinking the provinces would take up the taxation space. Back to the good ol’ days (I hear), when the federal government only raised what it needed and provinces were where the real action happened.
Sure, we’ll take the surplus now that it’s here. But a regular source of revenue doled out by the feds – are you nuts?!?
Both levels of government could do more, but the federal government has the greatest means.
You’re focussing on one-time transfers from past surpluses. And, yes, it is interesting to compare the surpluses of the federal and provincial governments.
And, hey, the federal government could do a ton. Anyone who says different is silly. Constitution? Just as with health care — it ain’t no biggie: the federal government has always shown the ability to find and squeeze itself through loopholes and fund stuff when it believes that doing so serves it politically. (Kind of like ScotiaBank, as commenters on this blog have pointed out.)
But you’re avoiding the much more important, and much more obvious, approach of allocating tax revenue for municipalities on an ongoing basis — say, I don’t know, a penny on every dollar. What is baffling is that doing so is politically easier, legally easier, and a far more expedient and effective route.
So the questions remains open. Why do you want to continue to cripple cities as permanent wards of special one-time-by-the-grace-of-god transfer agreements, instead of giving them the sustainable revenue to ensure their growth?
Americans can’t have a serious discussion about gun control without getting tangled in the issue of what the “founding fathers†intended with the Second Amendment. I fear we’re heading down the same path here if we focus on the separation of powers in our Constitution.
We have been focussed on the separation of powers for many years now. Toronto, I agree, seems to have a weird political DNA on this front — it is the first time I have seen the provincial government airily dismissed as irrelevant to the very jobs that the provincial government is doing.
And, as above, don’t get me wrong — WOO-HOO FREE MONEY would be great. I would love to see the feds allocate a whole whack of it. The health-care analogy is a good one. From time to time the federal government has found it politically expedient to get involved. And it has. And maybe we can lift our eyes Ottawa-ward and, by gum, the great manitou will rise again.
But those who, like you and, well, David Olive and so forth who believe that the federal route is the most likely and most effective route have, I would argue, read the political situation very, very poorly. You simply do not understand what the Tories are all about. They are not going to be burrowing through loopholes to fund cities any time soon. And we certainly cannot oblige them to.
Oh, we can kick and scream and shout. But our kicking and screaming and shouting will accomplish a heck of a lot more if we direct it to the provincial governments responsible for cities — and fully able to deliver on the promise which, in McGuinty’s case, I’d say he’s pretty clearly broken. You know — the penny, the tax room. Yes I will. No I won’t.
That’s why your vociferous opposition to real debate — and, in fact, the absence of a public voice from our municipalities — on what our provincial government is doing, and not doing, in this area, is appalling. Is there any reasonable way to understand this, other than pure political partisanship?
Be careful Matt, soon you will be accused of not knowing what you are talking about. At least you aren’t contradicting yourself and making it seem like you are an expert on constitutional matters…
Carlos, I’m afraid the shoe fits. Expertise is not required, though: access to the Web, and the willingness to read what you find there, will probably do.
I’m an avid reader of Spacing and its blogs. I’m a big fan of debates and discussions and I find this whole Fed responsibility debate pretty fascinating. There seems to be two main camps in this debate: Those who think the Feds have some responsibility towards Canada’s cities, lets call them Urbfeds and those who think cities are solely the responsibility of Provinces, lets call them Urbprovs. Now it seems to me that both the Urbfeds and the Urbprovs both acknowledge that cities in Canada have a rough deal. Where they seem to differ is whether the federal government should give any kind of assistance to cities or not. I find both sides have valid points. It seems to me that the 1 Cent Now campaign is the main focus of this debate. The Urbfeds agree with it, the Urbprovs don’t. Urbprovs say that the province should have moved in and taken up the tax room vacated by the feds when they cut the GST and channelled it to municipalities. I somewhat agree that that would have been a perfect solution, but I think McGuinty wanted the feds to announce the decrease of the GST, not as a tax cut, but as making tax room for provinces to do as they saw fit. Flaherty apparently was willing to do so if Ontario agreed in implementing the HST. McGuinty apparently was considering it, but wanted to have all the things excluded in the PST to also be excluded in the HST (books, children’s clothes, feminine hygiene products). Flaherty said “no dice” and the whole thing fell apart (just an aside, it seems that when Quebec implemented the HST, the feds agreed with exemptions asked by Quebec; why couldn’t they do the same for Ontario?). This is all hearsay and not official, but there seems to be a thread of logic behind it. My point here is that it seems the feds almost came around in helping the cities, but since that entailed helping the Provincial Liberals, they really weren’t that keen. As for the Provincial Liberals, they could have taken the initiative, shown some leadership and increased the PST 1%. Alas, that would be helping the Provincial Conservatives (and probably the Federal Conservatives a bit to) who would scream bloody murder, the sky is falling, the tax and spend Liberals are at it again. In the mean time, all this playing games just keeps dragging Toronto and all of Canada’s cities into a deep sink hole (which I’m sure we’ll be seeing more and more of). Are the Urbfeds right in hoping for something from the feds? History shows that they’ll be hoping forever. Are the Urbprovs right in saying that cities are the sole responsibility of the Provinces? Of course not. The environment, fight against poverty and increasing Canada’s competitiveness are Federal responsibilities that directly tie into Urban issues. The Feds could help cities immensely by taking concrete actions in addressing these issues. As an aside, the United Way put out a report showing Torontonians are heavily discriminated when it comes to EI. Is it the Federal government’s responsibility to address this? And if it does, isn’t it helping Toronto directly?
Thomas, can I be both?
Disparishun, I’m all for the province doing more, and I was frustrated when McGuinty promised during the election campaign not to raise taxes. Would “no net tax increase” have been such a weaker platform? The federal Conservatives had been quite open about their plans to cut the GST another point; why McGuinty couldn’t plan ahead for that I don’t understand. But he didn’t, and I fear it’s reading the political situation poorly to expect a dramatic upswing in municipal funding from the province. I’d be entirely happy to be proven wrong.
I’m well aware of the Tories’ ideological issues and agree they’re at least as strong as the province’s money issues. But we could have a federal election fairly soon, which would provide a great opportunity to pressure all federal parties to support cities. The main point of my earlier post was simply that we shouldn’t hold back from doing that just because of section 92 of the Constitution.
I’m well aware of the Tories’ ideological issues and agree they’re at least as strong as the province’s money issues.
Okay, but — what money issues? We’re talking about new revenues raised from taxation.
Mind you, there are the peripheral money issues — helping the Provincial Conservatives (and probably the Federal Conservatives a bit to) who would scream bloody murder, the sky is falling, the tax and spend Liberals are at it again, as Thomas puts it (correctly I would say).
Except that I really don’t think it would be so politically suicidal for the provincial Libs. People were pretty underwhelmed by the latest penny GST cut. And they are pretty overwhelmed by municipal underfunding, which is really hitting home — in terms of road- and subway-car-traffic overloading in Toronto, for instance.
The main point of my earlier post was simply that we shouldn’t hold back from doing that just because of section 92 of the Constitution.
I kind of agree — like I keep saying, the Constitution renders nothing outright impossible (think federal-provincial agreements), and indeed the federal government has often tred into the marasm of healthcare: in terms of vision-setting the Romanow report comes to mind, for instance.
The point is not to wield the Constitution to say, hey, it can never happen — that’s caricature. The point, or at least mine, is to demonstrate that the road that the municipalities’ current lobbying campaign is driving down is far more strewn with obstacles, both legally and politically. Why would you keep on banging your heading against a federal brick law when so many of the pieces are in place to act provincially? Like, isn’t that where you’d want to direct your energy?
On which, I found Annie’s comment really interesting, mainly because we’re both from Quebec and she’s encapsulated my feelings personally. The more I participate in this debate, the more I really think there is something fundamental about Ontario, or maybe just Toronto, that simply writes off provinces as lesser or irrelevant or uninteresting elements of the federal system.
The idea that Toronto’s federalism is basically a centralising federalism has a lot going for it — remember that Toronto, like the westest parts of Montreal, and maybe the Maritimes, is one of the few places in Canada where Trudeau was actually popular and still is. (The last Ontario election notwithstanding.) Maybe it’s just against the DNA of Ontario, or at least Toronto, politics to look to the provincial government to do anything? I don’t know, but it’s pretty odd.
(ha — for “federal brick wall” I wrote “federal brick law”.)
(and: encapsulated my feelings perfectly, not personally.)
“WOO-HOO FREE MONEY” – considering every city in America is littered with the tragic consequences of free money from on high, I would expect a bit more skepticism from an urban forum of the merits of federal funding. Money should be spent where it is raised, by and for the ratepayers most familiar with the needs that should be addressed. Free money tends to be spent clumsily and on projects that you can cut a ribbon in front of or pave. Shawn recently made a post on Ottawa – I wonder if he visited the LeBreton Flats?
“Is this a question of politics trumping government  of hatred for a particular political party (the federal Tories) trumping reasonable responses to government action?” Clearly.
GDH> No I didn’t go to LeBreton, but the “NCC Watch” site I linked to details it.
I think you’re confusing megaprojects with the money needed to make a city work as it should (Though I also think you’re trying to create a straw man here).
If Toronto has a “centralising federalism” attitude, maybe that’s the opposite of Western alienation? If the feds ignore Vancouver, Vancouverites feel it just confirms what they always suspected and are resigned to it never changing. If the feds ignore Toronto, Torontonians feel the feds clearly aren’t being rational and are convinced it must change.
As for a 1% GST cut being underwhelming, totally agree — I’ve said so myself elsewhere. Capitalizing on it requires McGuinty to do something bold and unexpected: unexpected he does well enough (e.g. Highway of Heroes, Family Day) but bold is not his forté. I wish you luck breaking through the provincial wall; I’m not giving up on the federal wall just yet. I worry we’re both in for a headache.
I am saying money from the sky tends to favor megaprojects, usually bad or wasteful ones. The city has been given extra taxing powers, the province now has the room for the ‘one cent’ campaign, but what do you know, they’d rather not take their case for raising taxes to their respective constituencies.
I really don’t see any reason to cheer this obvious buck passing exercise.
Matt, interesting point re: flip side to Western alienation. Kind of makes sense.
GDH, I’m going to agree with Shawn on this one — maybe it does favour megaprojects, but right now we have a bunch of megaprojects that really need the money. (Infrastructure.) Long-term it doesn’t work so well, granted, but right now we’re gasping for short-term air here.