Canada and the World
Current Events with a Canadian Perspective
Last update
06 April 2011
Canada’s Cities
Struggle With Funding
Canada used to have model cities, but funding
cutbacks have knocked them down for decades
A century ago, 80 percent of Canada’s population was rural; today, 80 percent of the country’s 33 million people lives in towns and cities, and that figure is expected to reach 90 percent by the year 2020.
Between 1996 and 2001, almost all of Canada’s population growth was in the four largest
urban regions: the extended Golden Horseshoe (Toronto and surrounding area) in Ontario,
the Montreal region, the Lower Mainland of British Columbia, and the Calgary (below)-
Vlasta Juricek
These parts of the country grew by 7.6% (compared with 0.5% for the rest of Canada), and they are home to more than half of the Canadian population.
In 2002, 48 percent of Canadians lived in the eight largest metropolitan areas: in
order, Toronto, Montreal, Vancouver, Ottawa-
Cities Short of Money
But, cities have been starved of resources by the country’s senior levels of government for years. Ottawa and the provinces tackled their own deficits by cutting spending and downloading responsibilities to cities. And, the cities didn’t receive more money to deal with their new tasks.
Figures from the OECD (Organization for Economic Cooperation and Development) show that, in 1995, federal and provincial funds made up 21.4% of municipal revenues; by 1999 they provided only 16.5%.
So, cities were forced into the position of having to provide more services with
less money. Not surprisingly, they became cash-
Infrastructure Falling Apart
Now, sewers, roads, bridges, transit, and other important elements of infrastructure
are in a state of near collapse. 
By one estimate, the broken pipes and pavement will cost billions of dollars to fix: the Federation of Canadian Municipalities said in 2003 that there’s a backlog of $57 billion needed to repair the damage done by years of neglect, a bill that rises by $3 billion to $4 billion a year. Civic leaders are saying (yelling, actually) to senior government levels: “You must pay us now, or pay us later. Later, will be more expensive.”
Property Tax Base
Municipalities get most of their income from property taxes, accounting for more
than 50 percent of their revenues. Property tax is paid by anybody who owns real
estate -
Municipalities don’t have a lot of leverage to increase property taxes and they are forbidden by law to run deficits. So, by taking an income hit from above, they are in a tight spot.
Mayors across the country say they need a bigger share of tax revenue beyond property taxes. Winnipeg’s former mayor, Glen Murray, pointed out recently that federal revenues are up 70 percent over the past decade, and provincial revenues are up by 50 percent. Meanwhile, he says city revenues “can’t even keep up with inflation.”
Canada Behind Other Countries
In 2002, federal New Democratic Party leader Jack Layton was a Toronto Councillor and president of the Canadian Federation of Municipalities. He pointed out that Canada is lagging in its treatment of cities compared with other countries.
U.S. municipal governments spend more than twice as much per resident as Canadian cities. They depend on property taxes for only 27 percent of their total revenue, and they have more access to local sales taxes and income taxes. They also receive more than their Canadian counterparts in transfers from state and federal governments.
For example, in 2002, Washington put $54.55 (U.S.) per resident per year into municipal budgets, compared with Ottawa’s $10.22 (U.S.) for similar services: American cities received about 27 percent of revenue from senior governments, and in Europe the contribution to cities from senior governments was 31 percent and rising.
Our cities, said Mr. Layton, need more power and more money. In an article in The Globe and Mail, he wrote that, “The future of the country relies on cities with robust and diverse economies that can generate wealth to support the less fortunate, integrate newcomers, and connect into the global economy.
“But cities can’t thrive when thousands are homeless, affordable housing is dwindling,
public transportation is neglected, child care programs are starved, (public) swimming
pools are closed, and roads are clogged…”
Cities Are Engines of Growth
Cities are the great generators of wealth in Canada. In 2002, for example, Winnipeg
accounted for 64 percent of Manitoba’s Gross Domestic Product (GDP) -
The story’s similar across the country. Halifax produced 48 percent of Nova Scotia’s
GDP; Toronto accounts for one-
The business growth within cities, the jobs and personal income growth, the increase in consumer spending, all are taxed by Ottawa and the provinces. But, the cities cannot tax personal incomes, retail sales, or profits. Toronto, for example, points out that it receives only eight cents of every new tax dollar that residents pay on their rising incomes; the other 92 cents goes to the federal and provincial governments.
As an editorial in The Globe and Mail observed, in September 2003, “Something’s got to give (in relation to the sorry state of Toronto)…the underlying malaise remains. The income gap widens. The inner city needs repair. The hospitality industry hasn’t really recovered from the fallout of the SARS outbreak [in the spring of 2003]. Public services have been cut back. Public transit limps along with low funding, even as all governments give lip service to its benefits.”
Calls for Action
A coalition of almost 200 business and community groups called the Toronto City Summit
Alliance, now called the CivicAction Alliance, prepared a 36-
The alliance said it wants Ontario to resume paying for some of the social programs it offloaded onto the City of Toronto. The coalition called for senior governments to beef up funding for transportation, education, housing, and community services for poor neighbourhoods. It wants city purchases to be exempt from federal and provincial sales tax, and it wants Ontario municipalities to be free to levy new taxes and set fees for services.
Another coalition says poorly maintained roads are hurting the economy of the entire country.
The Canadian Automobile Association (CAA) says the problem discourages tourism, causes accidents, and increases wear and tear on cars, and is partly responsible for rising insurance premiums.
The CAA, along with associations of trucking firms, road contractors and motor coach operators, has formed a group called the Municipal Roads Coalition. The group wants roads to be a priority for both provincial and federal governments.
It says more of the fuel taxes and road user fees ($3.7 billion in Ontario in 2000-
As reporter Bruce Little put it in a Globe and Mail article, cities are “Like young teens (because) they remain under the parental thumb of their provincial governments, which set the rules they live by: what chores they must do, what money they can earn on their own, and how they can handle their money.
“And, if the grandparents -
© Canada and the World, April 2011
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According to a Federation of Canadian Municipalities study “each $10 billion invested in local infrastructure generates:
- 115,000 new jobs, including 54,000 new construction jobs;
- A six percent increase in the national construction market, representing a significant benefit to builders and suppliers; and
- A 1.3 percent increase in national GDP.”
SICK TRANSIT
In the United States, a six-
To match this level in Canada, Ottawa would need to spend $5 billion a year -
In The Netherlands, users pay only 28 percent of their transit costs at the fare box; Americans pay just 41 percent; and Sweden’s rate is 44 percent.
In Vancouver, transit users pay 54 percent of the cost, while Montreal’s is 56 percent, and Toronto’s is 82 percent.
By contrast, except for a tiny number of toll roads, people commuting by car in Canada get to use highways free of charge.
Canada is the only G8 country without a national, urban transit investment program.
Greater Toronto has a larger population than eight of the 10 provinces, and Calgary and Edmonton each have about the same number of people as Saskatchewan.