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Canada’s major cities should be given
greater autonomy and more resources

Anne Golden reviews a report by the Conference Board of Canada

24 February 2007: Cities and city-regions worldwide are at the core of national prosperity agendas, attracting public and private investment to make them more liveable, more competitive and more sustainable. In Canada, cities rival the country’s natural wealth as one of the pillars of sustainable prosperity - but this importance is not reflected in the country’s policy choices. Today Canada’s major cities face major challenges - from accelerating growth and deteriorating infrastructure to environmental degradation and deepening social divides - and lack the power and the resources they need to fulfil their potential.

The emphasis on the largest cities is not accidental, since the success of major cities is pivotal to the economic health of smaller communities. Recent research by The Conference Board of Canada has demonstrated that boosting the economic growth of major cities is the best way of producing spin-offs for surrounding communities. For this reason, all citizens should be worried that Canada’s big cities are struggling to stay competitive. Endowed with growing and diverse populations and chronically short of resources and new revenue sources, major cities cannot provide the services, the infrastructure and the community assets that they need to thrive. If the country does not address these shortfalls, neither its cities nor its economy will be globally competitive.

The Conference Board’s research suggests that the Canadian government should invest funds strategically to maximize the economic growth of major cities whose success boosts the growth of surrounding regions. (The list of major cities, based on provincial economic dominance and size, includes Vancouver, Calgary, Edmonton, Saskatoon, Regina, Winnipeg, Toronto, Ottawa, Montreal and Halifax.) Such an approach does not, however, preclude other cities and communities from receiving funding to help them realize their potential. All cities and communities stand to benefit from a national commitment to building strong, prosperous and healthy cities.

The argument to give special attention to major cities may seem like an un-Canadian approach, but it’s time to give up an outdated notion of ‘fair’ treatment as ‘the same for everyone’. Refusing to differentiate among communities that differ in size, problems and economic potential means that everyone loses in the end.

Within the constellation of Canada’s major cities, Toronto, Vancouver and Montréal stand out for their sizable contributions to the national economy and equally sizable investment needs. Sprawling growth requires funding for region-wide integrated mass transit systems; immigrant settlement places unique demands on these cities to supplement funding for settlement services, language training and skills development. Cultural and educational investments are needed to help these regions compete as ‘global cities’. All of these features call for corresponding levels of special investment.

As for where new investment in major cities should be spent, it is recommended starting with four basic cornerstones: a strong knowledge economy; connective physical infrastructure linking people, goods and ideas; ecologically sustainable and efficient industrial systems; and socially cohesive communities. Globally competitive cities focus on reinforcing each of these cornerstones; Canada’s cities must do the same.

The first thing we must do is to ensure that major cities have adequate fiscal resources. With all the talk about fiscal imbalance between the central government and the provinces, big-city mayors are asking about the municipal fiscal imbalance - and they are right to do so. Of total revenues collected by governments, the federal government receives 39 per cent; provincial and territorial governments just under 50 per cent; and less than 12 per cent goes to municipal governments. And the gap is growing.

These numbers mean that local governments are facing fiscal crises stemming from rising expenditures and limited revenue options. In addition to higher costs associated with urban growth, cities are coping with new funding responsibilities related to programs and services off-loaded from federal and provincial governments. At the same time, municipal revenue growth has grown far more slowly than that of provincial and federal governments.

Conference Board research has shown that the fiscal health of Canada’s cities will only worsen under status quo arrangements, in which property taxes are the dominant revenue source. Of course, municipal governments could do more with the tools that they have, but it is imperative that provincial and federal governments do more to enhance cities’ revenue-raising capacity.

Better urban governance is another prerequisite for building more vibrant and prosperous cities. The diversity of the nation’s cities means that there is no single best model for urban governance. However, greater political autonomy (coupled with more control over revenue-raising and expenditures) will give Canada’s cities the tools they need to succeed.

Canada is richly endowed with cities that could be among the best in the world, if their potential were realized. Ignoring cities’ needs and treating them all the same won’t get us there.

Mission Possible: Successful Canadian Cities is available from The Conference Board of Canada


...and Montreal should be given more power


On other pages
Study of Canada’s hub cities blinkered by regional politics
The 2006 Conference Board of Canada study released ‘Canada's Hub Cities’ is an interesting exercise designed to say that the country's hub cities should get extra help to support their economies and build up their infrastructure. A worthy message, for sure.

Unfortunately, the Conference Board falls victim to Canadian politics, something startling for an organization of its stature. A big part of the study's shortcoming is its puzzling reliance on provincial boundaries to identify nine hub cities. The Conference Board tests whether the rest of a province's economy is converging toward the GDP growth rate of its ‘hub city’.

The trouble is that, given the size disparity of provincial and regional economies across Canada, the list of the nine hub cities includes hubs of completely different magnitudes and ignores the hierarchy of urban centres, which has nothing to do with provincial boundaries. Notably, the list manages to discard Ottawa-Gatineau, the nation's fourth-largest metropolitan centre and a G-8 capital city.

Let's take a look at what the Conference Board says. The cities that qualify as hubs in its study have a leading share of their province's GDP. The three undisputed hubs in this respect are Winnipeg, Vancouver and Montréal (65 per cent, 53.2 per cent and 49 per cent respectively). Then, the Conference Board combines pairs of cities: Calgary and Edmonton, despite being three hours apart, are somehow joined as one ‘hub’ that commands 64.8 per cent of Alberta's GDP. And Regina and Saskatoon are joined to account for 44.7 per cent of Saskatchewan's GDP. Just so the east doesn't feel left out, Halifax is added as a hub city because it takes 46.3 per cent of Nova Scotia's GDP. The Conference Board actually elevates Halifax as a super-regional hub for all four Atlantic provinces, but does this without calculating Halifax's GDP as a share of the Atlantic Region's GDP (obviously, its share would be much smaller).

What follows is a list of calculations that attempt to demonstrate how each region's economy is trying to catch up to their hub's economy, with actual results showing that this convergence, in the Conference Board's own words, is "minimal at best."

What we have here is mathematics obscuring logic. More