Bold Prescription for Our Cities

The world is becoming increasingly urbanized and Canada is no exception. Our major cities are vital national assets, the key to our current prosperity and comparative advantage in an intensely competitive global economy. Yet they face serious challenges that, if they are not addressed, will undermine our future prosperity and living standards. Who says so? Just about everybody who has taken a serious look at urban issues in Canada over the past decade.

Urban Nation: Why We Need to Give Power Back to the Cities to Make Canada Strong is a welcome addition to the relatively small library in the field because it incorporates and builds on the best thinking of “urban experts,” both to explain how we have reached the current impasse and what needs to change.

Alan Broadbent, chair and CEO of Avana Capital Corporation, a private investment holding company, and the chair of the board of the Maytree Foundation, has a long and deep interest in cities that was sparked (as was that of so many of today’s urban activists) by reading Jane Jacobs’s The Death and Life of Great American Cities in the 1960s. Broadbent has made his mark on Toronto by investing time and money in progressive projects in support of civil society and social justice. But his passion has been cities. For almost two decades he has been wrestling with the problems arising from the fiscal and governance constraints that Canada’s large cities face. In Urban Nation, Broadbent provides a lively, easy-to-read account of Canada’s urbanization and the pattern of immigration that has transformed our cities, a compelling argument for restructuring governance in Canada to give cities greater control over their own destiny and a radical, provocative plan to go forward.

Nine years ago, Broadbent convened a two-day meeting, which I attended, to discuss the possibility of Toronto getting more control over its future. A collection of background papers for the meeting—Toronto: Considering Self-Government—shared a common view of the urban problems facing Toronto but, significantly, no common vision of the solutions. Broadbent acknowledges this lack of consensus in Urban Nation even among the so-called urban experts.

The argument in Urban Nation develops in three parts. The first section describes how the two powerful trends of urbanization and immigration—each outlined in its own chapter—have converged to transform the face of Canada. It is a swift retelling of our history: “Sifton [Wilfrid Laurier’s minister of the interior] recruited immigrants (1891–1902) to move from farms to farms … [Since 1985] they are coming from cities to cities.” Most significant for Canada has been the impact of these forces on the three city-regions of Toronto, Montreal and Vancouver. These three cities will tell the tale of Canada’s demographic future.

This twinned dynamic of urbanization and immigration has created a Canada that would be barely recognizable to the Fathers of Confederation. In their time, the status of Canada’s cities was barely identified. Cities appear in section 92.8 of the British North America Act “nestled between Hospitals, Asylums, Charities and Eleemosynary Institutions in 92.7 and Shop, Saloon, Tavern, and Auctioneer licenses in 92.9.” Broadbent is hard-hitting on the disconnects:

Broadbent takes it as a given that Canada’s competitive edge depends on our big cities, which are home to Canadian businesses that compete worldwide and to a large and growing share of our population. Indeed, the research and analysis on this point is extensive—by The Conference Board of Canada among others. Broadbent focuses on the glaring gaps in the fiscal and governance capacity of our cities to provide services and infrastructure and to adopt the policies they need.

The second section of the book examines the governance, powers, finance and leadership of our large cities and argues strongly for reform. The common refrain is lack of control. Provincial governments control the revenue tools available to cities; in some cases—most notably in Ontario under the Harris government—they have downloaded additional responsibilities, leading to annual budgetary deficits. Deficient in powers, cities cannot build the infrastructure that they require, whether it is commuter transit or social housing.

A new City of Toronto Act, actually titled the Stronger City of Toronto for a Stronger Ontario Act, was enacted by the province in June 2006 in response to growing awareness that a city of its size needed more jurisdictional muscle. The act represents a bold departure from the traditional, incremental approach to enlarging the authority of municipalities. It granted Toronto broad and permissive governing powers that gave the city more autonomy, authority and accountability, including a broadened menu of financial management tools and revenue sources (new taxes on alcohol, tobacco and entertainment, but not access to sales or income taxes). Two changes were noteworthy: first, the act shifted the onus to the province to show the provincial interest in areas where it wanted to keep control; second, the act recognized the city’s role in policy development and, for the first time in Canada, enabled it to enter into agreements directly with other governments in Canada.

Leadership and the powers of the mayor are directly linked to the issue of powers. Here, as throughout the book, Broadbent acknowledges respectfully the lack of agreement among urban advocates. Former Toronto mayors John Sewell and David Crombie objected to the sections of the new act giving the mayor more powers and a four-year term, believing instead that a skillful mayor can make better use of existing powers. This debate is ongoing and very topical now since the report of the Mayor’s Fiscal Review Panel (February 2008) calls for further strengthening of the role of the mayor. One can look back to the 1970s in Toronto and to the 1970s and ’80s in Vancouver when those cities flourished under the imaginative leadership of mayors David Crombie, Art Phillips and Mike Harcourt, despite the limits on their formal powers. Yet Broadbent makes a persuasive case that “there is a problem with a political system that demands heroics to produce success.” The trick will be to find the right balance.

A genuinely new deal for cities must join authority and accountability. Because of its importance—to tax is to govern—Broadbent devotes a full chapter to finance. The problem, he explains, arises from the over-dependence of Canada’s cities on the property tax: since property values change slowly, the property tax does not grow apace with the economy as do income and sales taxes; moreover, it is levied only on residents so that commuters and tourists get a free ride when using taxpayer-supported services and infrastructure.

A genuinely new deal would allow cities to levy the full range of taxes if they chose to, including debt instruments. Now that the federal government has lowered the GST by two percentage points, there is tax room. Broadbent is open to giving cities the full range of tax and financing instruments with the authority to figure out the appropriate mix. His logic is commendable. But, at least in Toronto’s case, as the Fiscal Review Panel noted, there are issues of political culture—petty bickering and mistrust—that need to change, and this will take time. The Conference Board of Canada’s preference is to begin with a more narrowly defined approach to adding fiscal capacity to our cities: upload to senior governments the programs and services that have been inappropriately downloaded during the past 15 years and give municipalities permission to levy the equivalent of up to one percentage point of provincial sales taxes. These two steps would go a long way to address the municipal fiscal imbalance.

In the third section, Broadbent presents a spectrum of solutions to the crisis our cities face:

And the boldest solution of all,

Broadbent’s proposals for incremental change are all sound; few, if any, would disagree with them. He admits that a great deal can be achieved with incremental improvements: “baby steps— small enough to keep from toppling, but frequent enough to move forward slowly.” But “baby steps are for babies,” he writes at the beginning of his penultimate chapter. “Our modern city-regions have long since outgrown the adequacy of small, incremental steps toward the future … Incremental steps must give way to giant steps.” And the giant step is to give the three big city-regions the powers and status of provinces, with or without constitutional restructuring.

Why these three? Because “Vancouver, Toronto and Montreal are substantively different from British Columbia, Ontario and Quebec. Much more so than Edmonton and Calgary are different from Alberta and Halifax is different from Nova Scotia.” It is not just because of their size, but because of their unique demographics and challenges. Broadbent begins with the self-evident point that treating all parts of a province the same just does not make sense. He cites examples of the failures that grow out of the lack of local control where on-the-ground sensibilities would have led to better policies (for example, elimination of anti-racism programs in Ontario schools by a provincial government whose political constituency was suburban and rural; less than ideal responsiveness by a provincially run system to the healthcare needs of immigrants, both in protocols and pathology; land use planning decisions, which in the case of Ontario are made by the generally pro-developer Ontario Municipal Board, rather than by a local appeal body as is done elsewhere).

After reading this section of the book, I had a series of questions, but I was also intrigued by the possibilities. How could this possibly be done? How would these new city-provinces deliver educational or health or judicial services? How would the thorny problem of boundaries be solved? How would the hinterland provinces function without their city-states? And how do Broadbent’s proposals align with the challenges facing Canadian federalism in general?

Broadbent provides some answers. He makes the telling point that other countries have given their city-regions special status. In Germany, three city-regions have the status of provinces or Landers (Berlin, Bremen and Hamburg). In Austria, Vienna has the same power and responsibilities as the other eight states. Urban regions are singled out for special treatment elsewhere in Europe (Moscow and St. Petersburg in Russia, Vatican City in Rome), while Argentina made Buenos Aires an autonomous region in 1996. As for how it could be done, the province could make such a decision unilaterally, as Ontario did when it created regional governments between 1968 and 1974, and more recently when both Ontario and Quebec forced the constituent cities of Metropolitan Toronto and Montreal, in the face of heated opposition, to amalgamate (although in the case of Montreal, some of the municipalities were later allowed to de-merge).

Boundaries would be a thorny but not unsolvable problem. Because the new city-provinces would have access to the full range of revenue instruments, they would be able to deliver the formerly provincially run services such as health and education. After all, he reminds us, they already manage and operate large complex systems such as transit, police and, in the case of Toronto, housing.

Broadbent does not, however, address the question of what would happen to the remainder of the provinces, deprived of their primary urban engines. If this proposal were to be pursued seriously, we would need to model the full economic and fiscal implications, including all the federal-provincial fiscal relationships, from transfer payments to equalization. No small matter. That said, “given most governments’ unwillingness to provide differentiated solutions across their domains,” the idea of turning Vancouver, Toronto and Montreal into city-provinces is seductive.

How does this bold vision fit with Canadian federalism? The answer depends in part on how one sees federalism evolving. Two years ago, The Conference Board of Canada published Canada by Picasso: The Faces of Federalism, a monograph comprising three essays by our scholars-in- residence on the future of federalism. The title signals the lack of alignment among the three scenarios that were presented. Janice Gross Stein argued that, in an increasingly interconnected world, policy challenges will require all sectors and all levels of government to work together to create networks of expertise. We will need new and stronger chains of connection across Canada in all the important policy and governance fields such as education, housing, health, infrastructure and security. Instead of taking links out of the chain by doing what Broadbent proposes—i.e., removing Canada’s three largest cities from their provincial structures—we must find new ways to communicate and collaborate. Admittedly, this vision of “networked federalism” will require a level of goodwill among our political leaders and across governments not yet readily apparent. At the same time, the present federal government favours a decentralized federalism that leaves provinces more autonomous within their constitutional spheres of jurisdiction and narrows the federal government’s role in managing the nation’s affairs. A sustained and strategic focus by Ottawa on cities does not appear to be likely.

Broadbent’s bold vision for a “New Canada for the Twenty-First Century” with eight provinces, including the three new city-provinces and two new unions (the three territories would remain as they are with one seat each), may be fair and rational. And high-profile advocates, such as Richard Florida, are adding weight to the argument that it is the world’s large city-regions or mega-regions that are driving the global economy. But it is hard to imagine that Canadians will willingly reopen the Constitution and commit the required time and effort to make this proposal Canada’s new reality for the future.

Will Broadbent succeed in changing the conversation about our cities in Canada? I hope so, but for reasons he identifies, there is little appetite for the devolution of power to the cities. We are so preoccupied with federal-provincial relations in Canada that the issue of self-determination for cities has little chance of being heard above the din. The rural bias of electoral distribution and the under-weighting of urban votes give rural voters and rural interests disproportionate sway. Politicians rarely wish to give up power, yet provincial governments would have to give the powers to tax and to legislate to cities. Moreover, urban experts are divided on the need for and benefits of radical change. Who will pick up the gauntlet that Broadbent has thrown down?

The proposals for change may be too bold for many, but, to borrow the phrase that the author used to celebrate Jane Jacobs’s great work, the ideas presented in Urban Nation deserve to be debated as “ideas that matter.”