Written by Almos Tassonyi
As noted in earlier work, Canadian cities and metropolitan areas are coping with myriad challenges including infrastructure pressure, changing demographics and threats to a property-based fiscal structure from the “sharing economy” and global forces. The newly elected Progressive Conservative government in Ontario led by Premier Doug Ford has just added significantly to these challenges.
The risk posed by the mercantilist leanings of the Trump administration to the fiscal health of municipalities should not be discounted. A simple calculation shows that in Ontario alone, taxable industrial assessment has shrunk in real terms between 2009 and 2016. As a recent analysis has shown, the largest concentration of manufacturing jobs that use steel are in the southern tip of Ontario, in a corridor stretching from Windsor to Guelph. In the census division of Oxford, which includes Woodstock and Ingersoll, 23.5 per cent of jobs are in metal manufacturing. Of greater concern is the threat of a 25 per cent tariff on cars and auto parts. It has been predicted that one in five manufacturing jobs in Ontario could be at risk. The consequences for the fiscal stability of the municipalities are potentially dire.
As if the uncertainty created by the Trump tariffs for the short and long term industrial base in southern Ontario were not enough, the interference by the new Progressive Conservative government in the municipal electoral process has heightened the uncertainties facing urban policy makers throughout Ontario. Not only are they likely to face real threats to municipal fiscal stability but also to the stability of governance arrangements not only in Toronto but also in other major urban centres.
The shoe dropped as Toronto news first emerged on Thursday evening, with a press release on Friday, then a first reading of the bill on Monday. The process borrowed from the Mike Harris playbook – governing first by a press release, then a thin legislative proposal (albeit with significant consequences), and finally overwhelming regulatory power to take care of finicky details as they arise. So much for the orders of government campaign of the last decade.
By contrast to theories of multi-level governance, the real world of Canadian municipalities, Section 92(8) of the British North America Act (1867) gave the provinces responsibility for “municipal institutions.” As “creatures” created by provincial legislation, there is no constitutional recognition of the notion of “an order of government.”
However, as the City of Toronto Act (2006) notes, “the city council is a democratically elected government which is responsible and accountable; the Province of Ontario endorses the principle that it is in the best interests of the Province and the City to work together in a relationship based on mutual respect, consultation and co-operation; and, for the purposes of maintaining such a relationship, it is in the best interests of the Province and the City to engage in ongoing consultations with each other about matters of mutual interest …”
Among the things the City must have the ability to do to provide good government is: “determine what is in the public interest for the City; respond to the needs of the City; determine the appropriate structure for governing the City; ensure that the City is accountable to the public and that its process for making decisions is transparent.”
The provincial initiative has been taken without consultation and in the midst of the ongoing election and is not consistent with the intent of the existing statute.
The proposed ‘Better Local Government Act, 2018” is in direct contradiction to the thinking embodied in the City of Toronto Act. By eliminating Council’s power to determine its own structure and the boundaries of wards, it represents a direct attack on municipal competence to determine “effective representation” at the local level. After a thorough and tribunal tested ward boundary adjustment took place, this new proposal nearly doubles number of constituents that each councillor will represent.
It is also specious to suggest that any major savings will accrue to the City as $25 million over 4 years represents approximately 1/20th of 1 percent of the operating budget (i.e., a rounding error).
Similarly, the reversal of the mandatory election of Regional Chairs in Muskoka, Niagara, Peel and York and returning the selection of Chair to the Regional Councils is also a backward step, although being characterized “as a pause”. It is completely specious for the current Minister to characterize these regions as less “mature” than Durham, Halton and Waterloo when all of these governments were established within a six year period from 1968 to 1974.
Further, during this “pause”, an intention has been declared that “a long look will be taken at regional government across the province”. While it may be premature to judge, given the biases of this government and the publicity given to chafing within regional governments, amalgamations may not be far off. Given the unacknowledged merits of two tier local governments in terms of representation, infrastructure finance (enhanced borrowing capacity), limiting destructive tax competition, and solving cross-border service delivery issues, this announcement augurs ill for policy based on anything other than the shibboleths of “fewer politicians” being equal to effective and accountable governments.
From my previous experience as part of the elephant in the room, stakeholders, experts and municipal officials may propose but the Province disposes. Municipal governance and finances (including property tax policy) are whereas the Ford government has an untrammeled authority in contrast to other areas of tax policy including income, corporate, sales (GST) and carbon taxes.
While in many instances, governance and fiscal reviews may well be long overdue, those seeking more such initiatives should be careful as to what they wish for.
Almos T. Tassonyi is Executive Fellow at the School of Public Policy, University of Calgary, with over thirty years experience in developing municipal fiscal policy at the provincial and municipal level in Ontario, with the World Bank and the Canadian Urban Institute in China and Hungary, as well as teaching at the University of Toronto, Ryerson and Laurentian Universities.