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Cities must be able to thrive, not just survive

Written by Think Forward Staff
Thursday, 28 March 2013

Although the Canadian federal government is not constitutionally responsible for municipalities, federal programs and policies have a major impact on the ability of local governments to meet the needs of their citizens. The most obvious example is federal immigration policy, which welcomes thousands of new immigrants into Canada’s municipalities - and large urban centres especially - every year. But instead of sharing policy responsibilities with Ottawa, local governments are often saddled with the costs of accommodating new Canadians.

To a large extent, federal programs are implemented with little regard to their impact on municipalities. However, there is now an emerging consensus among local government leaders, businesses, and political parties of all stripes that the federal government needs to address the country's urban challenges by putting cities at the forefront of its agenda.

A number of recent developments suggest the need for greater federal involvement in municipal affairs. The Federation of Canadian Municipalities (FCM) notes that poverty and income inequality have increased dramatically in Canada’s large urban communities while the Canadian Centre for Policy Alternatives (CCPA) says our local governments face a combined infrastructure replacement cost of $171.8 billion.

Municipalities are restricted in their ability to tackle these issues, though, because they lack revenue sources besides the property tax and user fees. Upper level governments have also downloaded program obligations to the local level – such as housing, public health, and welfare - while reducing or withholding the monies needed to properly administer these programs. This means our communities don't have the funding or the financial tools needed to confront the problems they face.

In its 2013 budget, the federal government has partly responded to the funding conundrum by renewing an infrastructure deal, called the Building Canada Fund, for 10 years and increasing transfers to cities through the federal Gas Tax Fund. The deal will provide $4 billion to support local public transit and highway projects. It will also help Canada's young workers and students by financing improvements to internet connectivity and broadband services and infrastructure at colleges and universities.

The renewed funding has been welcomed as "good news" by the FCM, and yet the reality is that it will simply allow cities to survive rather than thrive. The $14 billion that is being allotted to municipalities over 10 years is a far cry from the $16 billion annually that the CCPA's Alternative Federal Budget (AFB) claims local governments need to rebuild crumbling roads, bridges, and waste water systems. Investing in these areas would not only allow our cities to compete more effectively in the global economy - it would also enable them to focus on other pressing issues such as reducing urban sprawl.

So how could the federal government pay for all of this? Right now Ottawa is losing almost $14 billion per year from its 2 percent cut to the Goods and Services Tax (GST), which was phased in between 2006 and 2008. By restoring the GST to its pre-2006 level, the federal government could cover 88 percent of the costs outlined in the AFB's infrastructure plan. The remainder could come from raising additional revenue that has been needlessly cut, like corporate taxes. Ultimately budgets are about choices, and rebuilding our cities for the 21st century is an easy one to make.



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