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Bulletin No. 37, May 2003
 LOCAL GOVERNMENT BULLETIN – No.37, May 2003

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. The local self-government web site is http://www.localgovernment.ca

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In this issue:
1. Paul Martin’s urban vision
2. Hobbling municipal governments even more
3. De-mergers in Quebec
4. And in Ontario
5. Subscribe to the Bulletin
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1. Paul Martin’s urban vision

Paul Martin, the man expected to become the next prime minister of Canada after the Liberal Party of Canada convention in November and after the (promised) retirement of Jean Chretien next February, has released his package of changes he’d make for Canadian cities. He did it at the Creative Cities conference arranged by Mayor Glenn Murray in Winnipeg on May 29.

As one person noted, the tone of Martin’s speech might have been its key value - unlike most government members in Ottawa, Martin exhibited some passion and sense of urgency about urban issues. Does a strong tone make up for weak content? Admittedly Martin does not want to increase expectations, but it does not serve cities well to have their interests categorized in such small ways.

Martin built upon his previous commitment made a year ago, to give a New Deal to cities, although the ambit has been broadened: “Any New Deal for cities must be a New Deal for all municipalities”, he said, “not only our biggest cities.”

His speech outlines two initial steps in building the New Deal. First, “cities need an open door in Ottawa” and “a real seat at the table of national change.” Urban leaders would be consulted before the federal budget was announced, and cities would be brought into discussions with federal officials on aboriginal issues, the disposal of federal land for affordable housing, immigration, and the regulatory framework that complicates the development of brownfields.

Second, the New Deal involves “fairer access to reliable and predictable funding,” a signal that, subject to appropriate provincial guarantees, Martin would have the federal government vacate several points of the federal gas tax to be made available to municipalities. This is a limited financial commitment, doing little to reverse the extraordinary tax surplus the federal government now generates from urban areas.

“There is a hunger to move beyond tired old ways of doing things,” said Martin, hitting a theme of considerable interest. The real question is when the hunger might be satisfied.

The full text of Martin’s speech can be found at http://ww/paulmartintimes.ca and click on “Where Paul Martin Stands” and then on “Speech Transcripts.”

2. Hobbling municipal governments even more

Ontario has been on the brink of a provincial election for several months, although with the polls indicating he is trailing Dalton McGuinty and the Ontario Liberals by 17 or 18 per centage points, Premier Ernie Eves has shied away from actually announcing a date.

But to keep the election idea alive, in mid-May Eves released the Conservative party platform, entitled `The Road Ahead.’ The document generally returns to the hard-edge policies of Mike Harris. The document touts the Taxpayers Protection Act, which prohibits the provincial government from raising tax levels without obtaining the support of a majority of voters in a referendum, although it does not mention how the government amended that Act to push through a tax increase it wanted to make. Suggesting that the principles of that Act should have more general application, the platform then goes on to state: “Your local government will not be able to introduce a new tax or hike an existing one without the permission of the majority of voters.”

This policy takes away any last financial independence of municipal government in Ontario. Already the province has impinged on the property tax base – ten years ago property tax revenues were entirely in municipal coffers, but today about half the property taxes collected are passed on to the province. The province has established arbitrary criteria to control property tax increases, preventing large cities such as Ottawa and Toronto from increasing property taxes on commercial properties. Further, Ontario has downloaded significant costs onto municipal governments, so that most local councils are experiencing severe financial constraints.

This new policy is the last straw. The province has passed legislation requiring that any question to be placed before municipal voters must have the approval of the Minister of Municipal Affairs, which means the province determines what the wording of any referendum question will be. As well, there is no recent municipal election in Ontario in which a majority of those on the voters list have cast a ballot, both because the voters list is such a poor representation of those actually entitled to vote, and because municipal voter turnout has always been low. Requiring a fifty per cent show by voters rings a death knell to any referendum question.

If enacted into law, this new policy effectively terminates the practice of local government in Ontario. The Association of Municipalities of Ontario has reacted strongly to the proposal, (see http://www.amo.on.ca, and click on `What’s New’), noting that it was not consulted before this policy was announced, as contemplated under a Memorandum of Understanding signed with the government in late 2001. (See Bulletin 23, January 2002.) Section 3.2. of the Memorandum reads: “In the spirit of fairness, openness and good faith, any proposed change in legislation or regulations that, in the province’s opinion, will have a significant financial impact in the current financial municipal budget year or on the current municipal planning cycle, will be accompanied by prior consultation.”

Perhaps Mr. Eves decided that he was not acting in a `spirit of fairness, openness and good faith’ so that this section didn’t apply to him.

At one time, municipal government in Ontario was admired, and looked to for innovation. That’s no longer the case. More than ever Ontario municipalities need legislation – perhaps a constitutional change, given that the provincial government cannot be trusted to protect local governments - which establishes them as independent orders of government.

3. De-mergers in Quebec

The latest news is that the demerger bill promised by Quebec Premier Jean Charest will be introduced into the National Assembly in the first week of June. Reports in La Presse indicate that over 50 per cent of registered voters will have to vote before the referendum's result is recognized, and that referendums will not be held until the fall of 2004. The first condition is a very substantial restriction given that voter turn-out for municipal elections is considerably less than 50 per cent. The delay is disappointing, forcing people to live with a system which does not work in their interest, and giving the amalgamated governments another year to make the case that they are the best local government anyone could expect.

The summary of the report by Judge Poitras, promised in the last newsletter, is finally available, and available in the library of our web site. The summary contains useful information about how mergers happened in Quebec, and how they might be undone. In terms of the savings that would come from de-mergers, the report states:

“All economic studies – even the government’s own Bédard Report - show that the bigger the city, the more it costs per capita: therefore, there are diseconomies of scale in creating megacities. This tendency is exacerbated in Québec because of union monopolies that just got bigger by the mergers. Yet as late as November 2000, Premier Bouchard was promising yearly economies of 5%. After one year of existence, the budgets of the megacities have increased, not decreased: Montreal by 1.8%, Quebec by 3.5%, and Longueuil by 5.5%.

“The Poitras Report calculated the savings inherent in demerger by using the tendency of costs to drift upwards to the highest common denominator in the event of merger. In the most conservative estimate, the cost of the Montreal merger will be $200 million per year. Therefore the savings of demerger are the same amount – if all suburban cities were demerged. This works out to be $111 per capita, every year.

“There is, of course, a one-time cost of demerger. The costs of studies, referendums, and elections are estimated to be about $17 per capita.”

The full summary can be found at in the library (`Poitras Report’) at http://www.localgovernment.ca .

4. And de-amalgamating in Ontario

The question which has been authorized by the Minister of Municipal Affairs for the November 10 municipal ballot in what’s ludicrously called the City of Kawartha Lakes, is: “Are you in favour of a return to the previous municipal model of government, with one upper tier and 16 lower tier municipalities? YES or NO”

The previous municipal government consisted of an upper tier, Victoria County, and 16 townships and towns, the largest of which was the Town of Lindsay, population about 16,000. The Yes web site is http://www.yesvictoria.com.

5. Subscribe to the Bulletin

The bulletin is sent, at no cost, to about 1500 individuals involved directly or indirectly in local government in Canada. The next bulletin will be available in June 2003. Those who receive this Bulletin directly (not forwarded by a third party) are already part of the subscription list. Others who wish to subscribe should go to the web site http://www.localgovernment.ca and follow the instructions. To unsubscribe, please send a message to info@localgovernment.ca indicating your wish to unsubscribe.

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.
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