State of the City and a New City Agenda
Institute on Local Government
July 12, 2005
for speech by John Sewell.
legislation was first passed in central Canada in the mid-19 th
century and it laid the groundwork for municipal legislation in
Canada ever since. The general approach was to treat municipal councils
as minor administrative devices with bits and pieces of power functioning
under the thumb of provincial governments. This attitude was reflected
in the British North America Act of 1867, the prime constitutional
document of Canada , in which provinces are given the power to legislate
about municipal matters. That has led to the statement that
are mere “creatures of the province” and thus a province can do
with them what it likes. The sad situation was summed up in 1997
when, in a court case challenging amalgamation in Toronto , Mr.
Justice Stephen Borins of the Ontario Supreme Court stated:
there are four principles which apply to the constitutional
status of municipal governments:
municipal institutions lack constitutional status;
municipal institutions are creatures of the legislature and exist
only if provincial legislation so provides;
municipal institutions have no independent autonomy and their powers
are subject to abolition or repeal by provincial legislation; and
municipal institutions may exercise only those powers which are
conferred on them by statute. “
might be an accurate statement, but it is chilling nonetheless.
course, times have changed since the mid-19 th century. The locus
of private decision-making has clearly moved into large urban areas,
urban areas which are part of an international network often obscuring
national roots. Cities have become important players in the world,
the locus of new ideas about politics, social services, culture
the legislation that creates the structures for municipal governments
has not changed. City decision-makers are hedged in by an incredible
number of rules. Their powers are very limited. Their need to seek
provincial approval is extensive. Their revenue sources are very
municipalities were established in the mid-19 th century they were
given the power to levy taxes on property, then a significant source
of revenue. Today, however, the main sources of revenue come from
transaction taxes such as income taxes, sales taxes and corporate
recent years there have been nods in the direction of municipal
reform. New legislation has been introduced in Alberta and in several
other provinces, including Ontario . The Alberta legislation attempts
to expand municipal powers by creating spheres of jurisdiction but
the change has not been significant. The legislation in Ontario
is somewhat modeled on Alberta , but its special detail makes it
more restrictive than the legislation it replaced. It is fair to
say tinkering with municipal powers in this manner has not been
particularly helpful for municipalities. When limited power is tied
to limited resources then cities are left with very little maneuvering
room to resolve the problems they face.
makes the matter worse is the recent downloading. The federal government
began shedding financial obligations with Paul Martin's budget in
1994-5. Provincial governments responded in turn by shedding some
of their financial obligations and imposing them on the municipalities.
Municipalities were granted no new revenue sources, just added expenditures,
and in the case of Ontario some of those expenditures were significant.
For instance, Ontario municipalities which had engaged in building
a great deal of affordable housing in the 1970s and 80s found they
were now stuck with paying all of the subsidy costs involved in
that housing. They were punished for having attempted in the past
to resolve one of their largest problems, namely housing.
has the divergence in interest between levels of government been
so clear and plain. The most common picture today is of a municipal
leader making an impassioned plea to the provincial or federal government
for some new or extra stipend for a good cause – more money for
the transit system, please, or for sewers and water pipes. Or a
mayor will ask for a smidgen more legislative room to enact, for
instance, a hotel room levy to help fund an advertising campaign
directed at tourists, or an improved convention centre, perhaps.
On a day-to-day basis, such requests seem to the woman on the street
like the inevitable squabbling of elected leaders as they vie for
power and prestige. The big issues – severe social inequality, homelessness,
unsafe neighbourhoods, spiraling health costs – are necessarily
pushed to one side by local leaders in the hope that some small
amelioration can be achieved.
can't afford to put off resolving the dispute for much longer. The
big problems must be addressed.
the problem is so clear, why haven't the provincial and federal
governments responded in a rational way? One answer is power. Senior
politicians, like everyone else in positions of power, oppose the
idea that someone else should have the ability to do what they are
doing. Lord Atkin came up with the phrase “Power tends to corrupt
and absolute power tends to corrupt absolutely”, which captures
the problem of the powerful. If we were to soften the phrase, and
denude it of references to corruption, one might say: “Power tends
to be self-admiring and those holding it are wary of sharing their
authority with others.” So the first problem we have is a psychological
course, giving local government more power does not mean that other
governments have less. The paradox is that empowering the city helps
to empower other levels of governments and creates opportunities
for them to be supportive of each other. We know this from family
dynamics. When children are treated as adults and act as adults,
family members become stronger – everyone wins and the family becomes
more viable. Forcing local government to continue within the rigidity
of antique legislation creates reactions of resentment and belittlement
and does not encourage creativity, flexibility and maturity. We've
seen lots of that.
second problem is that city politicians often seem unable to figure
out what it is that they want. In recent years they have been saying
the problem is a financial one but as they ask for more money, too
often they have shown themselves to be incapable of spending the
resources already available to them wisely.
well, they have trouble formulating in legislative terms what exactly
they mean by having more power. One thinks, for example, of the
negotiations that have been going on between the province and officials
both from the City of Toronto and the Association of Municipalities
of Ontario about new municipal legislation for Ontario municipalities
and for the city. These negotiations have been going on for nine
months, but have produced little. There are no significant proposals
on the table and municipal politicians have not managed to say what
they want. Nor have they been willing to rely on outsiders to help
them with that task. It is as though the municipal politicians are
acting like the very children which the province is trying to treat
have been made by people like Alan Broadbent and Jane Jacobs a few
years ago to bring the mayors of Canada 's largest cities together
to work out a united agenda. That initiative went beyond the politicians,
and included representatives in each city from United Way , business
and labour. But the good intention ran aground in two areas: first,
there was often what could charitably be called a deficit in municipal
leadership. Toronto was saddled with Mayor Mel Lastman who disliked
working with others and was unpredictable in his behaviour. It meant
the mayors had a very hard time working together. And when it wasn't
Mayor Lastman who was causing a problem, it was someone else.
well, each of the large cities was lodged in its own province and
therefore each had a different political master. The federal government
felt it really did not have much to contribute to these mayors,
apart from a few speeches. Thus, this attempt to get a city agenda
in the forefront of political change failed.
Martin himself urged the idea of a new deal for cities two years
ago, but in the end this has been watered down to a new deal for
communities – which turns out to be simply a device for transferring
funds (about $30 per person per year) from the federal government
to local governments. It is not a device to strengthen either cities
or local government.
on John Godfrey
like to comment on the remarks of John Godfrey which we have just
heard. My life seems filled with Godfreys. First Paul Godfrey, as
chair of Metro Toronto, now John Godfrey as Minister of State and
whatever. I'm an admirer of John Godfrey – he's stuck out his neck
in the past for children and immigrants, and has done much to define
agendas for both at the federal level. But the mandate he's been
given on this file is limited.
gas tax transfer, as I've mentioned is equivalent to about $30 per
person per year, although in the first two years the amount flowing
to most communities is $20 per capita. For Toronto that is peanuts,
and its peanuts for most Canadian cities. It will buy you one fifth
of a monthly transit pass.
to put it in perspective: the tax surplus generated by the provincial
and federal governments from the city of Toronto is $11 billion
a year. They collect $11 billion more in taxes than they return
in services. That's about $4000 for every man woman and child in
Toronto , every year. Returning $30 of that is returning less than
1 per cent.
sure many will say, yes, but they have also promised money to Toronto
for day care and immigrant settlement services. And the NDP budget
amendments provide money for the next two years for transit, affordable
housing, and Kyoto .
true these files all bring new money to Toronto and to other cities.
In the case of Toronto , I've looked at each area and have calculated
the amounts that would flow to Toronto . Including the gas tax money,
the total amount of new money coming from federal sources to the
Toronto governments and its agencies, as well as to social agencies,
is about $500 million this year, and $550 million next year. It
then drops considerably since the NDP amendments are in place only
for two years.
$500 million is not a sum to scoff at. However, it represents less
than 5 per cent of the tax surplus generated from Toronto . Those
senior governments still walk away with 95 per cent of the tax surplus
they generate from Toronto – money they spend in the rest of the
country. The problem is that Toronto is starved for money and programs.
If you are wondering why there are so many homeless people on the
street in our city, it's because there has been no program to build
affordable housing for the past decade. If you are wondering why
there is so much gun culture among our youth, it's because we've
refused to fund adequate support programs for very poor youth during
the last ten years and they are now paying the price, just as Stephen
Lewis warned us when he reported on the challenges facing black
youth after the shooting of Rodney King in Los Angeles, and the
ensuing mini riot in Toronto..
parts of the country are doing well living off Toronto 's wealth
– and the wealth of other large cities, since Vancouver , Calgary
, Edmonton , Winnipeg and other large cities also produce tax surpluses
which are carted away by provincial and federal governments to be
concerns me is that Mr. Godfrey doesn't seem to recognize this.
He doesn't make reference to this problem. And if the federal government
is to get serious about cities and the roles they play in making
a strong Canada , that is something which Mr. Godfrey and Prime
Minister Paul Martin must do. When Mr. Martin introduced the idea
of a new deal for cities two years ago, many thought that was about
to happen. It didn't the program is watered down so cities are treated
no differently than the smallest town or village. Throwing a small
amount of money at the city problem isn't good enough.
me turn to the question of what a new arrangement might look like
for larger municipal governments, those governments that operate
in cities. I believe a viable new arrangement would encompass three
general points: Revenues,
and Regional decision-making
are several ways of approaching the question of revenue. One is
to re-establish the relationship that cities and provinces had before
downloading began. If the provincial governments were required to
take back downloaded costs for such matters as affordable housing,
child care, and transit, a significant amount of revenue room would
be created for cities. This would remove the immediate problems,
and allow cities the flexibility to improve spending on things like
road maintenance, park maintenance, recreation programs, by-law
enforcement, and so forth. This seems to be a good first step.
would be to provide cities with small revenue sources that they
have been asking for - a hotel-motel occupancy tax, for instance,
as well as excise taxes on fuel, liquor, tobacco, vehicle registration
and land transfer. These are all relatively small sources of revenue
but they would help the city to address specific problems. For instance,
a hotel tax could fund tourist information programs. The city should
also have the power to levy tax increment financing, TIF, to support
neighbourhood infrastructure development.
third approach would be some arrangement for better revenue sharing.
The model here is the Edmonton Commitment which the Ontario Government
agreed to in the 1970s. The Edmonton Commitment obligated the Ontario
government to increase grants to municipalities equal to the increase
in general revenues available to the province. It seemed like the
perfect way to help municipalities share in the increase of wealth
as reflected in sales, income and corporate taxes. Of course it
lasted only several years and was abandoned when the province found
it had other financial challenges. This will always be the fate
of revenue sharing. No government likes to raise taxes, the revenue
from which it then has to pass on to a different level of government.
The province will be accused of taxes that are too high, and blamed
for funding municipal programs over which it has no control. Revenue
sharing is a good idea in theory but it is not so good in practice.
fourth approach is to give the city powers to raise revenues from
the big income sources, namely income and sales taxes. But that
is very difficult to do when urban areas consist of a number of
different municipal councils. One council can't levy a sales tax
if the others don't because of the border problem – shoppers will
cross the border to shop more cheaply. Same with trying to levy
income taxes. So these taxes can't be used until someone addresses
the regional questions.
question is pretty straightforward. The city should be granted legislative
powers which are broad and expansive, free of the need for provincial
approval of city decisions. These powers should permit the city
to take actions which ‘meet or beat' provincial and federal laws
and regulations – that is, the city should be able to do things
which strengthen (but do not weaken) standards set out in senior
government legislation or regulation. This was expressed by the
Supreme Court of Canada as the ‘dual compliance' test: a municipal
bylaw would be disallowed only if it compelled what senior government
is imperative that the institutional capacity be created locally
to address regional issues. Most cities consist of a number of different
municipalities that are not joined together in any useful framework.
Vancouver is an exception, with the Greater Vancouver Regional District.
Megacities have usually been created to be dysfunctional rather
than to cerate stronger local government, and most need to be rethought.
even most megacities don't cover the whole of the urban area. We
need some new structures which are the current embodiment of the
metropolitan government spirit of 50 years ago. Those structures
must be empowered to deal with land use and infrastructure planning,
transportation, and the protection of natural systems. They must
be capable of creating and maintaining a strategic growth management
plan for the larger city, and provide a context for local planning.
a bit unclear exactly what form this structure might take, but what's
needed is an agreement by provinces and municipalities in urban
areas that independent studies must be undertaken to find what's
best for each area. A process should be undertaken by the province
in consultation with the city and other local governments to forge
a consensus on the shape and structure of this institution (or institutions)
– that's the starting point.
legislative framework for municipalities is inappropriate and serves
no one's long term interest. It must be replaced.
failure of remedial action can be laid at the feet of provincial
and municipal leaders alike, and both must take action.
best way to start implementing more appropriate revenue arrangements
is to think small – make small changes about reversing downloading,
and provide some new revenue tools which are limited.
of powers are more straightforward – allow cities to do what they
want, while removing the need for approvals.
these questions together by studying and establishing regional frameworks
appropriate to different locales.
this is seen as a limited agenda, but it seems to me that unless
we can go this far, we can never start considering some of the larger
matters of autonomy that have been talked about. Until we get agreement
on these small and reasonable steps, I suspect we'll never get agreement
on a larger picture. The challenge is to create a constituency for
these kinds of changes at the local and provincial levels. Once
they have been made, maybe it will be found that these are adequate
to allow considerable local autonomy.