The e-library contains information about issues of local autonomy and local self government.

Those who visit the site are encouraged to suggest documents - speeches, research, legislative initiatives, news items, etc. - which might be added to the library. If you have material that you think should be part of the e-Library, please click `suggest a resource' and follow the instructions.

search   |   show all   |   suggest a resource

Description:
Globalization and city-region governance
By Andrew Sancton

Published in `Policy Options’, November 1999, Vol.20, No.9, pp.54-8.

Does globalization require that we restructure municipal government within our city-regions? Many people in Canada seem to think so, but the answer to this question far from obvious - even if we acknowledge that globalization increases the importance of city-regions within the world’s economy and that investors are increasingly likely to compare the attributes of city-regions in different countries as they make their investment decisions.

Armed with these truths, some Canadians go on to make claims about the need for systems of municipal government to adapt to this increasingly competitive environment. Such claims have been especially evident in Canada in recent years and have affected provincial policy-makers in virtually all provinces. This article is concerned with examining the connection between the global competitiveness of city-regions and the organization of their municipal governments and with briefly comparing the Canadian context to that of the United States and England.

Many Canadian politicians and commentators assume that municipal government somehow represents (or should represent) city-regions in global competition. In a political sense, it is of course true, for example, that the mayor of Montreal represents his city (and even the suburban area formally beyond the territory of his jurisdiction) to the outside world. It is also true that there are various municipally-employed economic development officers in Montreal whose jobs compel them to present themselves as local champions.

But anyone who thinks seriously about Montreal’s competitive position in the world economy must realize that whatever the mayor and economic-development officials do pales in importance compared to such factors as access to customers and suppliers, political stability, labour-force skills, corporate and personal income-tax levels, and proximity to good ski hills. These are key factors about which municipal government can do very little, if anything.

It is true that systems of municipal government can determine levels of some forms of taxes and they can play a major role in nurturing the quality of urban life. For some investors, these factors will be very important. Determining how municipalities can best be structured so as to optimize a city-region’s competitive position is therefore a crucially important issue.

Many Canadians consider it dysfunctional for many municipalities to exist within a single city-region. For some, such a state of affairs seems obviously inefficient: local taxes will be higher than they need to be given the level of services; the problem can be solved by municipal amalgamation. We shall return to this reasoning later.


Others see a different kind of problem. Ontario’s Liberal opposition leader, Dalton McGuinty, has been quoted recently as saying that Ottawa-Carleton can only compete in the global marketplace as one city. “We have to develop a critical mass here in Eastern Ontario so we can weigh in and be seen to be competitive.... If we are going to have some sort of impact, if we’re going to put a dent on the global economy, we need to have a large enough critical mass and the only way to that is with one city.”

Such reasoning simply does not make sense - unless one assumes that investors and entrepreneurs need populous municipalities (not just populous city-regions) in which to grow their businesses. But nobody who has studied the competitiveness of global cities has ever suggested that city-regions with fewer and more populous municipal governments are better off than those with more and less populous municipalities.

For the last decade, the United States has been universally acknowledged as the country that is driving and leading the globalization process. In fact, global competition usually means competing with Americans. Whatever our judgments about American city-regions, we cannot deny that somewhere within their grimy inner cities or their suburban industrial parks can be found the territorial source of American global competitiveness. But most American city-regions comprise scores of municipalities. Is the Chicago city-region uncompetitive because it contains more than four hundred? Simply to ask the question demonstrates the absurdity of Mr. McGuinty’s position.

Americans are, however, concerned about the need to establish regional institutions for their cities. They realize that centre cities and suburbs cannot continue on as though the other does not exist. Some American experts have recognized for a long time that Canada has had much to teach the United States about regional governance. In the 1950s and 1960s the Municipality of Metropolitan Toronto showed how an upper-tier metropolitan government could use the wealth of the central city to build much-needed suburban infrastructure. In the 1970s and 1980s the Montreal Urban Community demonstrated how well-off residents of suburban municipalities could be forced to share the high costs of policing the central city. Since the late 1960s, the Greater Vancouver Regional District has been a North American model for developing innovative forms of intermunicipal cooperation.

In short, Canadians in the past few decades have had little to learn from Americans about the municipal governance of city-regions. In recent years, however, things have changed. In Ontario and Quebec there have been constant pressures to make upper-tier municipal institutions more accountable through direct election. Where this has happened - notably in Metropolitan Toronto and in Ottawa-Carleton - battles between the tiers were exacerbated. Each level fought for supremacy. In 1998 the Municipality of Metropolitan Toronto was no more, replaced by a newly-amalgamated city of Toronto. The same could well happen in Ottawa. Montreal is now experiencing its version of the same debate.


Americans have been spared endless conflict about municipal amalgamations or about the relative merits of one-tier or two-tier systems. This is because politicians have acknowledged that structural change is simply not possible, except in the most unusual of circumstances. State legislatures will not or cannot act without local approval - which is not forthcoming because either white suburbanites or African-American central city residents, or both, feel their political strength threatened by any plan to change municipal boundaries or to establish a new level of government.

Such structural deadlock has prompted other forms of action, usually involving public-private partnerships that bring suburban and central-city interests together. Success stories are numerous - and have been well documented - but they have rarely been duplicated in Canada. Instead we continue our endless debate about municipal structures.

In his recent plea to create one municipality for the island of Montreal, the city’s mayor pointed to Boston as a model, apparently in complete ignorance that his municipality was already twice as populous as that of the mayor of Boston. Montreal, and other Canadian cities, do indeed have much to learn from economic development in Boston’s suburbs and from the rebuilding of its downtown infrastructure. But, as long as we are consumed by our structural debates, such learning is unlikely.

The private sector in Canada and elsewhere usually calls for less government. The Ontario government has responded in part to such pleas by reducing the number of governments and the number of politicians. That there should be confusion between “less government” and “fewer governments” is a shameful commentary on our political literacy, if not our general literacy.

Reducing the number of municipalities has nothing to do with reducing the size of government. Reducing the number of local politicians can only have one result: insuring that a higher proportion of local councillors are full-time politicians. If such people are not well paid, the inevitable result will be that municipalities will be governed by people who are either retired, supported financially by someone else, independently wealthy, or unable to obtain more lucrative employment.

Is there a relationship between the level of municipal expenditures and the number of municipal governments within a city-region? This is a matter for empirical investigation. Based largely on evidence from the United States, we can only conclude that there is no evidence that the existence of fewer municipalities reduces spending.

We are already hearing from amalgamated municipalities in Ontario that there have been massive savings. In most cases, however, including the newly-amalgamated city of Toronto, few, if any, collective agreements have been negotiated between the new municipality and the new union locals. We do not know whether pay scales will be raised to those that were the highest within the pre-existing municipalities, thereby cancelling out the savings that do result from amalgamation. Common service levels - for fire protection, for example - have yet to be fully determined. Until we know all the outcomes of the amalgamation process, it is irresponsible for anyone to make claims about savings or additional costs resulting from any particular amalgamation.


What about the arguments that amalgamations save money by eliminating overlap and duplication? Just as the merging of Air Canada and Canadian Airlines could save money, so too can the merging of various groups of municipalities. But when we contemplate the creation of an airline monopoly we all know the potential future problems: higher fares, lower service levels; lack of choice. Why do so many policy-makers not foresee the same problems with gigantic municipal service-providers? Why do those who favour competition in the private sector attempt to stamp it out when they confront issues relating to municipal organization?

Those who observe innovation in the private sector are quick to praise an environment in which small, specialized companies are constantly emerging to develop new ways of meeting customers’ needs. Just because many are in competition with each other and because each hires its own executive team does not mean that there is wasteful overlap and duplication. Having many municipalities in a metropolitan area means that potential investors and residents can choose from among a mix of different service levels of taxes. In such a system it is more likely that people will get what they want. Advocates of gigantic municipal mergers seem totally to ignore this kind of allocative efficiency.

No one disputes that some municipal functions - water-supply systems, for example - are generally more efficient when they service large numbers of urban residents rather than small numbers. It makes no sense for each municipality in the same metropolitan area to establish its own separate water-supply system. But this does not mean that they all need to merge into one. There are numerous alternatives: larger municipalities with access to water sell to smaller ones and/or to those without access to water; a local special-purpose body for water is established; water is provided by a centrally-regulated private company or by an agency of the central government.

Another option is that an upper-tier metropolitan government be established to provide water and other services that benefit from economies of scale. As we have seen, Ontario and Quebec have been world leaders in establishing such multi-purpose upper-tier authorities (although it is significant that the Montreal Urban Community has never become involved in water supply because there was a pre-existing network of relatively efficient intermunicipal contractual arrangements). In Ontario, however, the two-tier systems remain under intense pressure because they are seen as a particularly obvious example of “too much government.” So far - as we have seen in Toronto - the preferred remedy is to abolish the constituent municipalities.

Despite these sentiments in Ontario, the Quebec government apparently aims to establish a powerful directly-elected upper-tier authority for almost all of Montreal’s census metropolitan area. Since virtually none of the affected municipalities favour such an arrangement and since the political base of the current government is in the outer suburbs which are most opposed, the politics around this issue in the next few months will be fascinating to observe. It appears that the Quebec government has decided against forced municipal amalgamations in the Montreal area, apparently because the ramifications for linguistic arrangements in almost any such amalgamation are too complicated and politically explosive. In fact, it is presumably the linguistic factor that explains why Quebec is opting for a quite different solution for Montreal than what Ontario chose for Toronto.


The Quebec government might well claim that it is simply following Tony Blair’s policy for local-government restructuring in London. Britain’s Labour government is in the process of re-establishing an upper-tier authority that had been dismantled by Margaret Thatcher. There are three crucial differences, however, between Montreal and London: 1) Unlike Montreal, London has no strong central-city municipality because the old city of London covers a tiny territory and is little more than an antique relic; 2) the new arrangements for London have already been approved by referendum, while there are no such referendum plans for metropolitan Montreal; and 3) the political head of the new authority is to be directly elected in London (and to be called “the mayor of London”) while the equivalent position in Montreal is likely to be indirectly elected by members of the metropolitan council, thereby assuring that the new position’s political legitimacy is unlikely to rival that of Quebec’s premier.

While the Quebec government struggles to establish a new level of metropolitan government, a quite different kind of institution is emerging within the Greater Toronto Area (GTA). The Greater Toronto Services Board (GTSB) came into existence with relatively little fanfare on 1 January 1999. Its functions are to advise on coordinated infrastructure development and to manage commuter transit. It is governed by a 40-person board, comprising at least one representative from each of the constituent municipalities of the regions of Halton, Peel, York, and Durham. The new city of Toronto has eleven representatives. The chair of Hamilton-Wentworth region is a member for commuter-transit purposes. There is a system of weighted voting so as to promote representation by population. By-laws to establish formal GTA infrastructure strategies require a two-thirds majority to be approved.

The first chair of the GTSB is Alan Tonks, the last chair of the Municipality of Metropolitan Toronto. Mr. Tonks seems just as cautious and conciliatory in his new job as in his previous one. It is far too early to judge whether or not the GTSB will have any impact on improving the quality of life in the Toronto city-region. An early worry, however, is that the GTSB will be consumed by structural issues. It now appears that the Ontario government expects the GTSB itself to sort out the difficulties caused by imposing the GTSB on top of the existing two-tier systems within Halton, Peel, York, and Durham. Everyone acknowledges that a three-tier system of municipal government within the suburban GTA is simply not viable.

Toronto will be more competitive in the global economy if the GTSB helps insure that investments in new roads, transit facilities, and sewer and water-supply systems are accomplished efficiently and rationally, where they are needed and when they are needed. The task clearly does not require a single municipality for four-million people. It probably does not require a directly-elected metropolitan government. If we are really interested in global competitiveness, our provincial and municipal leaders should be paying more attention to public-private cooperation and to encouraging the development of intermunicipal agencies such as the GTSB; they should be paying less attention to merging municipalities and establishing new levels of directly-elected metropolitan councils.

Andrew Sancton is a Professor of Political Science specializing in local government at the University of Western Ontario.