Editorial: Cities need to see a truly `new deal'-Star-Jan 4/05

[Are Be]

Jan. 4, 2005. 01:00 AM
Editorial: Cities need to see a truly `new deal'


There is an old saying in China that even a 10,000-mile journey begins with a single step. Almost three years ago, in a front-page editorial, this newspaper took the first step in a long campaign to convince Ottawa, Queen's Park, and the Canadian public that cities deserve a "new deal."

Slowly, coalitions were built and politicians were won over. But change was slow. At long last, the campaign hopped several steps forward this year toward its goal. There is reason for optimism, although a long road remains to be travelled before Toronto, and Canada's other big urban areas, win the fair deal they deserve.

The most significant new deal milestones reached in 2004 occurred on the financial front, beginning with Prime Minister Paul Martin's decision early in the year to waive the Goods and Services Tax on purchases made by municipalities. That saves Canada's cash-starved communities and their agencies about $525 million each year. Delivery of infrastructure funding was speeded up, and Martin outlined a plan to give municipalities five cents from the federal tax on every litre of gasoline sold in Canada.

When fully implemented, that sharing of federal gas tax money is expected to pump $2 billion each year into municipal coffers. But there is a catch — or two — in Martin's arrangements. First, shared gas tax revenues are flowing too slowly. It will take up to five years for the full five cents promised by Martin to be delivered, and cities need help now.

Even worse, Martin has missed the point of a new deal for cities. He has adopted the language of new deal advocates but applies it to policies designed to benefit every community, no matter how small. True, villages and hamlets across the country, native reserves, and Prince Edward Island farmers have serious needs. Bridges and water systems are crumbling in many communities. Clearly, they deserve federal funding to help themselves rebuild, but not under the auspices of a new deal for cities.

Large urban areas warrant special help for two reasons: First, they are the economic engines that drive the Canadian economy. In Toronto, alone, residents and businesses have paid out $4 billion more in taxes each year than Ottawa and Queen's Park have put back in. Second, Canada's big cities are struggling under unique burdens. Toronto, for example, runs the country's largest mass transit system, shelters most of its new immigrants, and is a magnet for homeless people from across Canada. Costs far exceed the city's limited income from property tax and user fees.

Toronto is in desperate need of help. But rather than concentrating his gas tax money on large cities that are in desperate straits, Martin says he will deliver a new deal for everyone. Politics is likely at play here. Martin clings to power as head of a minority government and he seems unwilling to risk offending rural areas — and voters — with special help for big cities. Federal officials note that large urban areas will still receive some gas tax benefit. And that's true. But it will be watered down help. Martin might do more, in future, if he achieves majority government status in the next election. But, so far, on the road to a new deal, Martin's gas tax plan should be considered two steps forward, and one big step back.

Ontario has done better. Premier Dalton McGuinty is carrying out a key campaign promise by giving cities two cents from the provincial tax on every litre of gasoline sold in Ontario. There was internal debate at Queen's Park over how to split this money, with politicians from rural areas lobbying hard to divide it according to population. That would have given Toronto just one quarter of the whole.

Instead, McGuinty's government wisely settled on a hybrid distribution formula. It allocated 70 per cent of the gas tax payout according to transit ridership, favouring Toronto, and the remaining 30 per cent according to population. Most municipalities received something, but the lion's share went exactly where it should — to support mass transit. The Toronto Transit Commission is set to receive $355 million, over the next three years, thanks to that decision.

In another significant step toward a lasting new deal, the province has opened talks with Toronto toward reforms that would give this city increased autonomy and power. It isn't yet clear exactly how much more clout Toronto is to receive. What it has now is hopelessly inadequate to meet the needs of Canada's largest city. Councillors complain that they can't extend local bar hours, set parking fines, or even install speed bumps without first receiving approval from Queen's Park. The city is also squeezed by limited access to new revenue. It lacks the power to have a small tax added to hotel room charges to go toward promoting tourism.

Ideally, a new and revised City of Toronto Act would give the municipality more freedom to raise money. New revenue sources are desperately needed to pay for responsibilities that upper governments have imposed on Toronto without accompanying funds. Ottawa and Queen's Park simply aren't paying their share to cover housing programs, childcare, public health costs, and transit downloading. To cover that gap the city needs new money from a dedicated share of income taxes or the provincial sales tax. Unlike property tax assessments, these have the advantage of growing in lockstep with the economy. Having a share of federal and provincial gasoline taxes does help, but the funding gap remains.

Unable to cover its costs, Toronto currently survives on handouts from upper governments — a series of "one-time" grants and bailouts that are increasingly resented by taxpayers in other communities. Toronto suffers, too, because these handouts usually come with strings attached and can't be spent where money is most needed. For example, a $1 billion funding package for the TTC, announced in March, allocated much of the money to pet projects of the federal and provincial governments, such as a GTA-wide electronic fare system. But the TTC needed money for basic repairs, expanding bus routes, keeping fares down, and supplying fuel.

A new deal for cities is ultimately about giving large urban areas the respect and independence they deserve by virtue of their growing population, the wealth they generate, and the heavy burdens thrust upon them. The journey toward a fair deal is well underway. It must not falter.

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[Are Be]

Who shall we blame:
1, the Fiberals in Ottawa, or
2, the Fibeals at Queen's Park?

I say we should blame the feds, because they take out about 10 times more than the province. The province only takes out around a billion a year.

[KGB]

"Who shall we blame:"


Blame the provinces that need the transfers. Doesn't matter what party is in charge...the constitution requires then to make the transfers.

Of course inter-provincial transfers in Ontario aren't as much...the rest of the province isn't as poor as other provinces.

This really old news anyway...I don't see what the point of another thread about it is for.






KGB

[Are Be]

We need to keep the heat on. We need to make the feds squirm - it's budget planning time, and it's a minority government. Now's the time to put the Liberal's feet to the fire.

[SD]

Originally Posted by KGB

This really old news anyway...I don't see what the point of another thread about it is for.


KGB

Are Be has been slacking on his Anti-Liberal propaganda. It seems the gas tax and other measures taken by the current Liberal government must've been forgotten.

I guess at the beginning of the year he resets to his Standard Propaganda mode, forgetting the knowledge accumulated in the previous year.

[Are Be]

Blame the Liberals -- it's a good bet they are to blame -- the feds in particular.