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The bulletin is prepared by John Sewell, the site manager, with the assistance and under the guidance of the advisory committee. It is published monthly, and is being sent to a wide range of people across Canada. Past copies of the bulletin will be archived in this section of the site.

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Bulletin No. 45, March 2004
Local Government Bulletin No.45, March 2004

The purpose of this bulletin is to focus debate on the need to increase local self-government in Canada and to help local communities achieve more autonomy. Our website is: http://www.localgovernment.ca

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In this bulletin:
1. An End to the New Deal for Cities
2. Local government going international
3. Ignoring local autonomy in Ontario, again
4. Subscribe to the Bulletin
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1. An End to the New Deal for Cities

When Paul Martin first announced his New Deal for Cities last year, there was considerable excitement about the prospects of how the new deal would unfold. But it turns out to have had a very brief shelf life. In the federal budget delivered on March 23, the New Deal for Cities has morphed into a New Deal for Communities. In fact the budget contains not one mention of the New Deal for Cities. That idea seems to be dead.

This change is one of the few things that is new about the budget in respect to municipalities. The budget confirmed that the federal government would no longer charge municipalities Goods and Services Tax, saving municipalities across the country $700 million a year. The budget confirmed that the $1 billion provided for infrastructure in the 2003 budget would now be disbursed over five years rather than ten. The budget confirms that no money will flow over the next 12 months in respect to gasoline tax revenues since the time will be taken up, according to the government, with discussions on how this might happen. None of this is new.

What’s new is that the federal government has removed any special status for cities, and has relieved itself of the recognition that cities have special needs in respect to housing, poverty and transit. Big cities will be treated no differently than any other municipality in the land – except that the federal government will continue to generate very large tax surpluses from those cities, as they have in the past. They will continue to take more in taxes from cities than they return in services. This is a serious blow for the many local leaders who have argued in recent years that the important role large urban areas play as social and economic engines deserves recognition. Their argument has fallen on deaf ears in the Martin government. The disappointment was evident in the reactions of politicians as different as Calgary’s mayor Dave Bronconnier and Toronto’s mayor David Miller. Both were critical and worried at the results of the budget.

One senses this budget is driving the status of cities directly into the political arena. In many urban ridings this will be a critical issue when the federal election is called later this year.

The Federal Budget can be found at http://www.fin.gc.ca/budtoce/2004/budliste.htm . Go to `Budget Plan’ and the text of the section `A New Deal for Communities’ begins on page 165.

2. Local government going international

Discussions are now taking place between representatives of Paul Martin’s Liberal government and the Federation of Canadian Municipalities regarding the international role that cities and other Canadian municipalities might play. In March, Yves Ducharme, president of the FCM, broached this subject in an after-dinner speech on March 9 to experts from around the world meeting under the auspices of UN Habitat, and hosted by the FCM in Gatineau, to draft a statement advocating more autonomy for local governments.

“It is an example of how we draw on the potential of our municipalities,” said Ducharme, referring to the success of the meeting. He also noted the FCM has helped involve Canadian municipal experts in many locales around the world, and that expanding that mandate would be very welcome. “Such an approach would acknowledge the inter-relatedness of local and global communities and mobilize local governments in common cause,” he said.

That seems to be the intent of current initiatives of the Privy Council Office that have been set in motion as part of the Prime Minister’s New Deal for Cities, since recast as a New Deal for Communities. The initiative would be carried by External Affairs, not by the Canadian International Development Agency.

Ducharme suggested three different initiatives for local government as part of the new mandate: diplomacy, peace building and international relationships; economic development and trade; and overseas development.
Ducharme sees these initiatives as one way to engage Canadians in the world.

It is expected that negotiations with the Privy Council Office to flesh out the exact involvement of FCM and Canadian municipalities in the international world will take another six months. An announcement is expected towards the end of 2004.

3. Ignoring local autonomy in Ontario, again

Despite promises to the contrary, it appears the new Ontario Liberal Government of Dalton McGuinty has abandoned the idea of empowering municipalities. As reported in Bulletin 44, the government reversed an earlier promise to allow residents in Victoria County to consider alternatives to forced amalgamation after a majority of voters indicated their preference to do so.

Now the government has decided to loosen the shackles that surround the municipal property tax. The Conservative governments of Mike Harris and Ernie Eves had stripped away virtually all of the autonomy possessed by local governments in Ontario regarding their ability to levy and control property taxes. In the name of reform and reassessment, Harris and Eves imposed rules which prevented certain large cities – Toronto, Ottawa, Sarnia and London, for example – from increasing the property tax rate on businesses and requiring that any tax increase be levied solely on single family residential homes.

They also seized a large portion of the property taxes paid by business and devoted it to educational purposes, on the premise that business should pay the same rate of property tax for education throughout the province. But the tax was implemented in such a way that it varied from municipality to municipality so that the education portion of the property taxes paid by businesses in Toronto was 40 per cent higher than that paid in Mississauga and abutting municipalities, and several times higher than that paid in small communities.

On March 15, the new Minister of Finance, Greg Sorbara, announced a very small change to Conservative policy. Henceforth Toronto and other municipalities caught by the welter of rules would be permitted to increase property taxes on businesses by half of the amount that they were being increased on single family residences. As the Minister said, “A municipality seeking a 2 per cent increase in residential taxes could raise business taxes by 1 per cent.” Cities such as Toronto had counted on the government to remove the control altogether, and expressed their concern that it was not done.

“The McGuinty Government is committed to a new way of doing business with municipalities,” said the Minister of Municipal Affairs, John Gerretsen. But to many, this is the old Mike Harris way of doing business. There’s nothing new about it at all.

This small decision has nothing to do with autonomy. It is simply a way of loosening one stringent rule without giving any reasonable flexibility to municipalities. The hope that things would be different for local government under a new Liberal government of Premier Dalton McGuinty is fading very quickly and there is a sense that in Ontario local government will stay firmly under the thumb of the province.

4. Subscribe to the Bulletin
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More information about the sponsors of the bulletin, a library of relevant and useful documents, and an archive of past Bulletins, can be found on our web site. We appreciate your comments, your feedback (to j.sewell@on.aibn.com ), and items of interest that you wish to share with us and others who visit the web site. Our next Bulletin will be in April.

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