Canada’s ailing cities wake up to decline
Alarming signs of neglect across the country’s main metropolitan centres are worrying businesses and politicians
The Financial Times
By Dan Westell
Alarming signs of neglect across the country’s main metropolitan centres are worrying businesses and politicians
Toronto’s proud subway system, like much else in the city, is showing alarming signs of neglect. Many of the subway walls’ thick concrete slabs, each weighing tons, are damaged and need to be replaced.
But the Toronto Transit commission must make do with regular inspections, patching up the walls when serious problems develop. The commission estimates it would need CDollars 4bn (Dollars 3.3bn, Pounds 1.8bn, Euros 2.6bn) over the next decade just to maintain the existing system.
The capital shortfall is one small example of the financial crunch facing Canadian cities from Halifax to Vancouver. With tax collection left to the federal government and the provinces, Canadian cities - which generate most of the country’s wealth - have only limited means of raising revenue. As a result, urban infrastructure is deteriorating, services have been cut and garbage blows across cities once renowned for order and cleanliness.
The evidence is in the streets, says Anne Golden, president and chief executive of the Conference Board of Canada think-tank. Homelessness and open-air drug markets, severe pollution and traffic gridlock are all symptoms of the urban stress, she says. Some fear that unless the decline is reversed, Canada could become a backwater in a global economy where capital and talent flow to the most attractive urban environments.
Now, after years of lobbying by the cities, urban advocates and business groups and a decade or so of neglect, federal and provincial politicians are beginning to wake up. The Ontario and federal governments have promised to give the cities billions of dollars from petrol taxes, offer breaks on a federal sales tax and increase infrastructure and social housing spending.
“We’ve had more progress in the last 12 months than in the last 12 years,” says Dale Richmond, interim head of the Toronto Board of Trade. The board has pushed the business community’s case for more public money for the cities.
The problems are rooted in old legislation and new politics. Canadian cities were defined in the 19th century as subject to the provinces. To this day, the provinces still prevent the cities from collecting their own taxes, other than property taxes.
That practice effectively divorces the provinces’ spending from their engines of economic growth, says Glen Murray, former mayor of Winnipeg. Over a decade, revenue growth in the cities trailed rates of inflation. Indeed, the cities’ revenue has grown at about a fifth of the federal rate, while federal income and sales taxes have kept up with gross domestic product.
Property taxes had always been adequate for municipal needs when demands for services were limited. But now firefighting requires skyscraper-ready equipment and the TTC must provide information in 20 languages.
Ottawa and the provinces cut spending to deal with deficits, while passing on responsibilities. At the end of the chain, cities found themselves required to do more with less.
They slashed infrastructure spending as a start, and services were also cut. In Toronto, cuts in bus routes (and frequencies of buses and subway trains) have led to a drop of more than 10 per cent in ridership since 1990.
Businesses have become increasingly worried about the urban decline. Toronto-Dominion Bank, one of Canada’s largest banks, and various boards of trade began to agitate for a new deal.
Deteriorating cities would erode Canada’s competitiveness, they warned, as creative people, from artists to executives, would shun Canada as the cities declined.
According to the Toronto Board of Trade, Toronto residents and businesses pay up to CDollars 10bn more in annual federal and provincial taxes than they receive in services.
The loss of competitiveness is hard to document, and there is some data that contradicts the advocates’ argument. “There is no evidence to say they (Ontario cities) are less competitive (than US cities),” says Enid Slack, an economist who studied the issue last year for the Institute for Competitiveness and Prosperity.
But there is no dispute that Canada’s cities are ailing nationwide. The debate now is about how much money can be provided, and how quickly - and whether it will be enough to fix an estimated CDollars 60bn infrastructure shortfall.
