Why Canada’s cities - especially Toronto - struggle for the federal government’s attention
By tradition and the constitution, urban areas are hobbled in what they can demand of the federal government.

thestar.com
Oct. 15, 2015
By Christopher Hume

In making demands on Ottawa, cities are hobbled by tradition and the constitution

David Crombie has no illusions about any role the federal government might play in the life of Canadian cities.

“If Toronto went out of business tomorrow, the federal government would say: ‘Oh, that’s too bad,’ ” says the former Toronto mayor and cabinet minister under Joe Clark and Brian Mulroney. “Ottawa has no connection to or institutional memory of cities. The whole notion that big cities get together and the federal government pays attention to them overlooks one thing - the constitution.”

In Canada, cities are creatures of the provinces.

Even the best intentions, Crombie points out, don’t survive. In 1974, Pierre Trudeau created a Minister of State for Urban Affairs and Housing, a position that lasted only a few years. “All that was left,” Crombie notes, “was the CMHC (Central Mortgage and Housing Corp).”

The secret to getting the federal government’s attention, he explains, “is to create a constituency that it can’t ignore.”

One of the most celebrated examples of inter-government co-operation, the St. Lawrence Neighbourhood, dates from the 1970s.

“We created a sense that the city was important,” Crombie explains. “We brought the federal and provincial governments together. Cities are all different places. What matters aren’t just the relationships you build, but also the relationships you build with constituents.”

Architect and planner Alan Littlewood cut his teeth at St. Lawrence, the large, mixed-income residential enclave rightly hailed as a paragon of the public sector working in partnership. “It could not have been done without direct and indirect federal support,” he says. The federal minister at the time, Donald Macdonald, “was directly involved. There was backup through the whole system. Money was available for rebuilding and infrastructure.

“My impression was that the Liberals under Trudeau eventually backed away from cities because they were accused of interfering. When Mulroney got in, an ideological change took place to withdraw and let cities take care of themselves.”

In his latest book, How We Changed Toronto: The inside story of twelve creative, tumultuous years in civic life, 1969-1980, another former mayor, John Sewell, recalls the genesis of the federal housing programs that made St. Lawrence possible. It begins with Trudeau’s minority government of 1972, one in which the NDP under David Lewis held the balance of power.

“When Trudeau and Lewis talked about hammering out a deal that allowed Trudeau to govern,” Sewell writes, “it included . . . a powerful new housing program . . . (that) provided grants and mortgages to non-profits and non-profit co-operatives to buy land and build and operate housing.

“Without this new program, none of our housing initiatives would have gotten off the ground . . . The program was so popular that when Trudeau did manage to achieve a majority in the election in July 1974, the housing program was strengthened, not cancelled.”

In Crombie’s parlance, housing had become the constituency. Decades later, when Waterfront Toronto was launched in 2000 with $500 million each from federal, provincial and municipal governments, the “constituency” was the 2008 Olympics, the sort of thing senior levels of government care about.

More recently, Jim Flaherty, federal finance minister from 2006 to 2014, showed more than usual interest in Toronto. “He was a good man,” Crombie says. “Early on, he understood the importance of cities.”

Flaherty was quick to get on board with Evergreen Brick Works and made waterfront revitalization a personal priority.

Despite the fact Canada is overwhelmingly an urban nation, cities remain largely impotent. Until the City of Toronto Act was passed in 2006 - by the provincial government - speed limits couldn’t be altered or traffic-calming devices installed without Queen’s Park approval. Though Toronto has since been granted more legal independence, it never received the revenue-raising powers - income and sales tax - it desperately needs.

Sadly, trying to finance a city on property taxes alone gets us where we are today; unable to pay our way.

THE 1 PER CENT SOLUTION

Joe Pennachetti, Toronto’s recently retired city manager thinks municipalities fiscal problems can be fixed if they received 1 per cent of the harmonized sales tax. Toronto’s share would be $576 million.

The Problem - Part 1: Property taxes funded 20th century cities - barely. This was a revenue source to fund core municipal services (roads, garbage, water, parks and recreation) but cannot finance social services and massive transit/transportation issues in the 21st century. Cities make up 80 per cent of our population and growing. Property taxes make up only 8 per cent of the total tax bill for a resident; the other 92 per cent consist of sales taxes and other taxes that are provincial and federal.

The Problem - Part 2: Today’s cities need more funding to meet huge growth pressures and services that historically were funded by provincial and federal governments - social housing and major transit/highway expansions. Around the globe, for decades, cities have received federal and provincial/state funding.

The Fix: Cities currently get a small share of the federal gas tax to help pay for highways, roads and bridges. If we similarly got a thin slice of the HST for transit and housing, it would be a game-changer for cities. Toronto’s share of 1 per cent of HST - $575 million a year - would take care of our social housing budget and half of the TTC’s operating costs. That would allow investments in transit and road repair that would dramatically reduce congestion in Toronto. For social housing, it would dramatically hasten badly needed TCHC repairs and give us more flexibility to house our most vulnerable citizens. A huge weight would rise from cities’ shoulders.

The Alternative: The only other option is dedicated program funding transferred to cities from the federal and provincial governments for transit/transportation and housing. But, as we well know, program spending is subject to annual ups and downs. Cities need certainty and sustainability through a sharing of taxes collected within our cities, the economic engines of Canada.

The Odds: The federal government is now in a surplus position and has more flexibility than the other levels of government to support allocation of these needed HST funds across Canada.

WHAT THE PARTIES SAY

Liberals: No commitment to giving cities a share of the HST. Promises include $60 billion over 10 years to provinces, territories and municipalities for public transit, social and green infrastructure.

Conservatives: No commitment to giving cities a share of the HST. Promising up to $2.6 billion as Ottawa’s one-third share of Mayor John Tory’s proposed SmartTrack commuter rail plan. Ontario municipalities to get $11 billion for infrastructure over 10 years, until 2024, from the New Building Canada Fund.

NDP: No commitment to giving cities a share of the HST. Promises include giving cities an extra cent of the federal gas tax - $420 million a year more, divided among municipalities. Also, $12.9 billion over two decades for Toronto region infrastructure, including $7.7 billion that would be targeted exclusively to transit projects.

Greens: Are committed to providing one point of the GST/HST - $6.4 billion - in long-term funding to municipalities for infrastructure, “creating good local jobs, and building vibrant, safe, and livable Canadian towns and cities.”