Canada’s cities expect a lot from Paul Martin
by Margret Kopala

Ottawa Citizen - Published Jan 31, 2004. Revised Feb 1, 2004

‘No matter how long it takes, we are going to provide Canadian municipalities with a portion of the federal gas tax,” Paul Martin told the Union of British Columbia Municipalities last fall. The mayors of Canada’s largest cities reminded him of his promise when they convened in Toronto last week and made a last- gasp big media push for consideration in Monday’s throne speech and the upcoming budget.

Few are more anxious than Winnipeg Mayor Glen Murray. Once one of Canada’s premier cities, Winnipeg has declined precipitously. Murray knows his city is not alone. “We have a $57-billion infrastructure problem in Canada and competition for federal dollars from the provincial governments,” he says, “but cities are the economic engines that create the taxpayer base that pays for things like health care.”

Breathlessly, he spins out the statistics. How in the last 10 years, the federal government increased its revenues through income, sales and corporate taxes by 70 per cent while provincial revenues increased 60 per cent. And how, at the same time, Winnipeg revenues grew only eight per cent while inflation went up 21 per cent. “There’s been massive growth in government revenues not matched by municipal revenues,” he says. “Sales taxes provide growth revenue. Property taxes do not.”

You don’t need to be a rocket scientist to understand the numbers and what they mean for older cities like Winnipeg, where century-old cast iron sewers are rusting through and roads and bridges need upgrades. But something else is going on with Canada’s cities, particularly the largest ones. It augurs big changes in the way Canada is governed in the future, a turn of the political tide with which Mr. Martin will have to swim if he doesn’t want to get swept away. It isn’t a simple matter of pledging a portion of the fuel tax or the GST rebate, or accelerating the $2-billion infrastructure fund, though even that is complicated enough.

“The lawyers will be working overtime,” says Prof. Jim Lightbody, a political scientist at the University of Alberta specializing in urban affairs. “To give money to municipalities means intervening in provincial jurisdiction. The Alberta government will transfer money to its municipalities quickly, but there are around 4,000 municipalities in Canada — from hamlets to cities the size of Toronto — and they all want money, and they all have different city councils, and they all have different relationships with their provinces. Paul Martin will need a strategy to transfer it.”

Among the exclusive powers of provincial legislatures, Section 92 of The Constitution Act of 1867 includes subsections “(8) Municipal Institutions in the Province and (9) Shop, Saloon, Tavern, Auctioneer, and other Licences in order to the raising of a Revenue for Provincial, Local, or Municipal Purposes.” Throw in subsection 13 — “Property and Civil Rights in the Province” — and you have a fair idea of the antiquated pickle in which cities find themselves vis-à-vis their provinces. Of course, no province refuses federal money whatever its intended purpose, but will cities benefit and the federal government get the credit? “If the municipalities get a GST rebate, the provinces will want it too,” adds Prof. Lightbody. “And giving a portion of the fuel tax prevents the targeting necessary for a national strategy.”

Of course, linking infrastructure spending to specific projects makes eminent sense — a National Sewer Strategy! — but has the new prime minister thought it through and would it, like health-care spending, require another body to monitor “outcomes?’’

Whether or not Mr. Martin delivers his New Deal for cities, the political tide is gathering speed under Canada’s surfer mayors. Toronto’s David Miller is calling for nothing less than “home rule,” while Winnipeg’s Glen Murray wants a “broader discussion” with “tripartite co-operation” and experimentation with different models and mixes of “tax tools and autonomy”.

In this era of subsidiarity, urbanization and the need for less government, some new order of government — one that subsumes provincial and municipal responsibilities (call it a city state, a region state or even a “provincipality”) — does appear to be in order. Some believe that municipalities can achieve this by invoking the Clarity Act which allows secession if a referendum on a clear question results in a 'yes' majority. Indeed, if the provinces can't get their act together on Senate reform, some may well find themselves outmanouevred by their cities.

“In the time available, the best-case scenario is that Martin sketches in a broad initiative for larger cities,” says Prof. Lightbody. “The worst is that he takes a half-hearted stab that is frustrated by provincial inaction and poisons the well.” Then watch what happens.

Margret Kopala writes weekly on western perspectives.

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