OPINION: Time for a New Deal for Municipalities both Provincially and Federally
Municipalities often receive little attention in discussions about governance and power distribution within the federation.
While federal and provincial governments wield significant authority over cities, towns, and villages of all sizes, it is crucial to acknowledge the vital role played by municipalities in our society.
As the closest level of government to the people, municipalities are responsible for providing essential services and addressing local needs. However, their significance within the federation is often overshadowed by the powers and responsibilities of higher levels of government.
According to our constitution, which federal and provincial politicians often hold up as the model for our confederation, municipalities fall under provincial jurisdiction. The federal government has no direct involvement in their governance or operations.
Nonetheless, the federal government does offer some financial support to municipalities through various transfers, such as the Canada Community Building Fund (formerly the federal gas tax). However, these transfers come with conditions and are primarily allocated for capital purposes.
In Canada, provincial governments have the authority to create or dissolve municipalities. Just imagine if the federal government decided that we no longer need 13 provinces and territories, and suggested merging Alberta and British Columbia into the Province of Albermbia! Or all the Atlantic provinces (Newfoundland and Labrador, New Brunswick, Nova Scotia, and Prince Edward Island) had to merge together to become the Province of the Atlantic. The idea alone would cause a stir.
Provinces also have the power to determine the size of towns or cities through provincial legislation. They can define the responsibilities of municipalities, set limits on their taxing authority, and impose restrictions on their borrowing capacity. In fact, the province of New Brunswick has recently asserted the right to overturn any municipal by-law it deems unfavourable, with Bill 45.
Provinces can reduce the size of municipal councils. We witnessed this in Ontario when the number of wards in the City of Toronto was reduced from 44 to 25 in 2018.
Just imagine if Justin Trudeau told Scott Moe or Danielle Smith that they had too many Members of the Legislative Assembly (MLAs) and needed to cut the size of their provincial governments in half. The uproar on Twitter would call for provincial separation, claiming federal interference!
While the federal government accounts for 45% of tax revenue and provincial governments for another 45%, municipalities contribute only 10% of the total. The fiscal health of municipalities has been and will continue to be a topic of concern and scrutiny in the foreseeable future. Unlike provinces and the federal government, municipalities are not allowed to run deficits by law.
The federal government holds the necessary funding, while the provinces possess the authority to shape municipal governance. This has raised questions about the sustainability of municipalities and the need for a more equitable distribution of fiscal responsibilities, resources, and sovereignty from the other layers of government.
Recognizing the importance of municipalities within the federation is essential for promoting effective governance and addressing the diverse needs of local communities.
Scott Pearce, the new president of the Federation of Canadian Municipalities, put me straight in a recent conversation when I said that the federal and provincial governments were higher levels of government. Pearce corrected me by saying they aren't. Which is true. They are equal.
It was rather amusing to see federal and provincial governments convene last week in Ottawa to discuss municipal issues without the presence of municipal leaders. The provincial ministers responsible for local government gathered, and invited the federal government, to discuss matters that directly affect municipalities, neglecting municipal input.
Provincial and federal leaders may be intelligent, but one has to question the wisdom of discussing municipal issues without municipalities being present at the table.
It is high time to give municipalities a fair chance and stop treating them like children, but rather with the respect they deserve. Provincial leaders should stick to their own areas of responsibility, and federal politicians should refrain from dictating what municipalities must do to secure funding.
Municipalities are the heart of the Canadian Federation, and it is time that the provincial and federal governments come to the table, and strike a deal that favours all levels of government - not just the ones already at the table.
