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Description:
THE POITRAS REPORT
(“MUNICIPAL DEMERGERS IN QUEBEC”)

This summary was provided by Peter Trent, former Mayor of Westmount.

FREQUENTLY ASKED QUESTIONS

What is the Poitras Report?
This report, which was made public 17 March 2003, studied the legal, practical, and economic consequences of municipal demergers in Québec.

Who wrote the report?
The Honourable Lawrence A. Poitras, Q.C., former chief justice of the Quebec Superior Court was responsible for the overall report. He also wrote the section of the report dealing with the legality of demergers; Me Marc Laperrière wrote the section dealing with the feasibility of demergers; and Professor François Des Rosiers wrote the section on economic aspects of demergers.

Who were the clients?
The report was commissioned by ten citizen groups from all over Québec that are against forced mergers.

What was its mandate and scope?
The mandate of the report was to investigate the legality and feasibility of demergers - but not to make a case for the demerger idea itself. While most of the report focussed on the Island of Montréal, its conclusions are applicable to all of Québec.

Are demergers legal?
Since the courts have confirmed that the recent forced mergers were legal (without saying they were legitimate), it follows that the provincial government can also legislate demergers.

Were forced mergers the norm in Québec?
In imposing the recent mergers, the provincial government went against a long tradition of voluntary mergers. From as far back as 1845, the law has required the formal demand of the majority - or an approval by referendum – for any merger or annexation.

If the law did not permit forced mergers, how were they imposed in the past?
It was only in rare and special circumstances that the government, in the past, put aside its consensual policy for an authoritarian approach. To do this, a special law was adopted to impose mergers. This happened in the case of Laval and also Baie-Comeau/Hautrive.
The City of Laval was created in 1965. After citizen consultation, the Sylvestre Commission had concluded the towns there were “absurd and improbable” (only three of them had a roads department).

Why were there no legal contestations of mergers before 1999?
Since successive governments had, by and large, scrupulously respected the wishes of citizens, no one had ever contested mergers in the past.

How was the recent spate of mergers imposed?
For the first time ever, Bill 124 gave the Minister of Municipal Affairs the power to impose mergers anywhere in Québec if, in her view, they would result in “fiscal equity and services at lower cost”. By a legal fiction, the government could, by decree, impose a merger “as if the municipalities had made the request themselves”.
For the creation of the megacities, including the one-island-one-city of Montreal, there was another special law. This law, Bill 170, was adopted with all of 30 minutes of debate.

Wasn’t one-island-one-city the result of 30 years of government studies?
No government report has recommended one-island-one-city - whether the 1973 Hanigan report, the 1976 Castonguay Report, the 1986 Parizeau Report, the 1993 Pichette report, or the 1999 Bédard Report. Neither did Jacques Parizeau, nor Lucien Bouchard (in 1999). Even the ministers of Municipal Affairs - Claude Ryan, Rémi Trudel, and Serge Ménard – were against a megaMontreal, at least by force.

But weren’t most people in favour of mergers?
In January 1999, only 12% of Québec residents were in favour of forced mergers. In November 2000, only 35% of Quebecers were in favour of mergers of any sort. At the time of its creation, only 29% of the residents of the island of Montreal were in favour of the megacity.

Has Québec ever demerged a municipality before?
In 1974, the provincial government merged nine municipalities to form the new city of Buckingham. Later, citizens in seven of the former municipalities, by referendum, pronounced in favour of demerger. In 1979, the PQ government demerged this new city into 4 cities.
Also in 1974, seven municipalities were merged to form the new city of Gatineau. Following a referendum, the city of Cantley was demerged from it in 1988.

Won’t it be impossible to undo the mergers?
While legally speaking, the recent mergers have been completed, practically speaking the amalgamation of services has just begun. It will also be a simple matter to retrace the documented steps taken by the transition committees that were created to merge the cities in the first place.

What organization will provide the regional services of the old MUC?
Since the mergers, all regional services that were provided by the MUC are now provided by the megacity or the Montreal Transit Commission. That would not change. The demerged cities would write a cheque to the City of Montreal instead of to the MUC, using the same cost-sharing formula based on real-estate wealth. If a sufficient number of cities demerge, a board (“régie”) could be set up to oversee regional services other than public transit.

What would be the recommended demerger process?
1) In order to minimize the period of uncertainty, voters in a former, now-merged, city would have 30 days to petition for a register to be opened, after which there would be no further opportunity for demerger. Across Québec, one would then know just how many cities had even a possibility of being re-established.
2) If a minimum of 2.5% of these voters sign the petition, a formal register would be then opened. If 5% of voters sign the register, two things would be set in motion: firstly, the creation of a transition committee charged with the task of preparing a study outlining the pros and cons of demerger and, secondly, the organizing of a referendum.
3) Once the study is made public, the referendum would be held. If a majority of votes in the referendum are for demerger, the transition committee is then charged with making it happen.

Who would pay the costs of demerger?
The report recommends that all costs up to and including a referendum should be paid by the government: after all, the newly-elected administration wish to repair the injustice of forced mergers. However, if the referendum vote is positive to a demerger, the citizens of the demerged city would pay for all subsequent costs.



What about the economies of scale that mergers bring?
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%.

What are the estimated costs of demerger?
Minister Harel calculated the cost of demerger by assuming these supposed economies of merging would be lost on demerging. Since we know now there are no such economies, these imaginary costs of demerger are without foundation. In fact, since it is now clear that the megacities cost more to run, the greater the extent of demerger, the greater the savings.
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.

But shouldn’t cities merge to share the wealth?
In the Canadian system, municipal taxation is not intended to be a method of wealth redistribution: that is the role of federal and provincial income tax. A municipal tax bill should be proportional to the cost of services received. Even though real estate assessment may not be the optimal measure of consumption of services, it is, because of its simplicity and relative stability, the base of the local tax system.
That being said, the report does recommend a form of equalization payments based on real estate wealth per capita. It turns out that, while the former City of Montreal would receive a substantial share of such a fund, this would have little impact on its tax rate, owing to the size of its budget.

Did not the mergers bring fiscal equity?
The megacity proponents equate fiscal equity with a uniform tax rate. First of all, the merger legislation requires each former city to be responsible for its own debt and actuarial deficits. Once these items are removed, the former tax rates were much closer to one another. Secondly, the tax rate by itself is meaningless. A tax bill is the product of the tax rate times the evaluation: In 2001, the owner of an average single-family dwelling in Westmount, for example, paid $6,161 in taxes, compared to $2,500 in Montreal. Fiscal inequality would occur, for instance, if certain cities did not pay for regional costs. Figures show that this is not so: for instance, 52.8% of Westmount property taxes went to pay for regional services in 2001.

Don’t we need to merge in order to compete internationally?
The average size of municipalities in Québec, even before the mergers, was 1½ times greater than those in the U.S., and 3 times greater than those in France. The Boston region has 282 municipalities.