The Eleventh Province Revisited

I admit it, I am a separatist. I believe it is time for the Cities of Toronto and Hamilton, as well as the regional municipalities of Niagara, Halton, Peel, York and Durham should throw off the shakles of their Ontarian oppressors and become independent.

Well, not oppressors per se. And not completely independent, either. I’m not advocating that Toronto break away from the country, but that we reshape it. The area I mentioned should break off from Ontario and become Canada’s eleventh province, possibly named the province of Toronto.

And yes, I know I’m writing this from Waterloo Region — a city that will remain on the Ontario side of the new border. I am writing this as a committed Ontarian. I believe that it is in Ontario’s interest, as well as Toronto’s, that its urban region go its own way.

I’ve talked about this subject before. It was one of the first big posts on this blog. This post promises to be bigger. Recent events have conspired to make it relevent again, so I’m writing about the issue again. If nothing else, you can see how much more of a windbag I’ve become in the intervening four years.

The recent budgets brought forward by the City of Toronto and the Province of Ontario have a few people grumbling. The City of Toronto was able to temporarily close its budget shortfall thanks to an influsion of cash from Queen’s Park.

In the previous provincial budget, the Liberal government offered the Greater Toronto Area $670 million for a subway, $200 million in additional unconditional funds (technically it should have gone to the TTC, but Toronto is putting it in general revenue, for shame) and a fair chunk of the $1.2 billion being offered to repair roads and public transit infrastructure. The result, along with cost-cutting measures brought in by City Hall reduced a $500 million deficit to an $81 million surplus.

It doesn’t help that the provincial government might have gone a bit spend-happy in order to keep the province in deficit until a more politically opportune moment. In the view of the naysayers, the province has engaged in bad financial behaviour in rewarding Toronto’s bad financial behaviour.

I agree that the province’s budget has elements in it that are fiscally irresponsible, but speaking as someone living in Waterloo Region, I think the assistance that Toronto has received was necessary. It is a fallacy to believe that Toronto is any more fiscally irresponsible than other jurisdictions in this province. The city faces several structural challenges that its council has no power to resolve. My complaint about the assistance offered by the province is that it amounts to yet another hand out — a band-aid solution that does nothing to solve these structural challenges.

Mark my words, Toronto will come back to the province next year needing hundreds of millions more dollars to close its fiscal gap, and the frustration the rest of the province will feel is understandible. This in no way diminishes Toronto’s need, however. We need to fix the structural problems, or give Toronto the power required to fix the problems themselves.

First of all, let us put to rest the idea that Toronto is draining money from Ontario. The numbers I quoted above seem large, but when you consider that the number of Ontarians who benefit directly from these measures (those living in the GTA) comprise almost 50% of the province’s population and a slightly higher portion of the provinces gross domestic product, and when you consider that the funds quoted above are outnumbered by grants to the rest of the province (for things like new border crossings in Windsor, an LRT in Ottawa, roads in the north, infrastructure improvements all round, research grants to Waterloo, etc), and GTA residents pay their share for that, you can see that the flow of funds from Queen’s Park is heading out of the pockets of GTA residents and into the pockets of other Ontarians.

Don’t forget that Toronto taxpayers are Ontario taxpayers as well. The city proper comprises 20% of the province’s population, and a greater amount of the province’s Gross Domestic Product. Toronto taxpayers are paying tens of millions of their own bailout money. Furthermore, those who complain about the city’s $100 million per year bailout over the next two years should be reminded that City taxpayers are currently paying an additional education tax levy of $125 million per year, which is not spent on Toronto schools.

Not that Torontonians begrudge their obligations, but it should be noted that the investment heading into the GTA is required to ensure that the GTA can continue to operate effectively, and attract investment into the province.

The fact of the matter is, Toronto is subsidizing Ontario. It remains the largest engine of our economy, and it is a major draw of international investment and research. Because most municipal social services are mandated by the province while being paid for by municipal property taxes, much of Toronto’s budget is already set even before councillors sit down and fight over the funds that remain, and a number of the social work cases faced by Toronto tends to be exported into the city from other municipalities in the Greater Toronto Area and throughout Ontario.

What’s causing Toronto’s constant fiscal shortfalls is the structural problem of the way municipalities collect taxes. By provincial edict, Ontario municipalities are limited to property taxes, development charges on new development, fines and user fees. In developing cities, this situation works well, with property taxes paying for the city’s operation, and development charges paying for the cost of building new schools, sewers, roads, et cetera. Cities which have lots of developable land receive a windfall of cash each time a new subdivision opens. Voters tend not to complain, because this cost is hidden in the purchasing price of a new house.

On the other hand, cities which have developed most of their land can no longer rely on development charges to augment their revenues. This becomes a problem when the infrastructure the development charges paid for reaches the end of its design life and requires replacement. Such pressures can seriously jack up property tax rates. If these cities happen to be surrounded by other cities with developable land, whose development charges allow them to keep services high and property taxes low, what results is a serious pull on the population of established cities.

This is what Toronto has been struggling with since the late 1980s. Their developable land has run out and they can only grow through intensification. They have a huge amount of infrastructure that needs renewal, and social needs which dwarf that of the cities around it. The cities around it have access to vast stores of developable land and the charges that come with that. Their taxes are being kept artificially low, thanks to this, and thanks to various services that their population is able to access, without paying Toronto property taxes. Because of this, Toronto’s property taxes are being pushed artificially high. It’s a pattern that has contributed to the death of American downtown cores that was a hallmark of the 1970s, and only fixed with a serious infusion of cash from state and federal government sources.

Some jurisdictions are able to forestall this by annexing territory, but for Canadian cities, their ability to do this is limited by the constitution. Canadian cities are creatures of the province, and it is only through provincial legislation that their boundaries can be changed. In the 1970s, the Robarts Commission reported to Premier Bill Davis and told him that the boundaries of Metropolitan Toronto were now irrelevant. They did not reflect the true shape of Toronto’s social and economic region. But Bill Davis refused to expand Metro’s boundaries. For all of his legacy, he ultimately spelled the death of Metropolitan Toronto when he decided this.

If Toronto is allowed to descend into a morass of urban decay, the cities around Toronto will also suffer, since nobody from outside this country knows where places such as Mississauga, Vaughan, Markham and Pickering are except in relation to Toronto, and if people don’t want to invest their money in Toronto because it’s too much like Detroit, they won’t want to invest in the cities around Toronto either. It’s the centre city that sells the suburbs to the world. If the economy of the Greater Toronto Area falters, the rest of Ontario will suffer. So it is important not to kill the goose that lays the golden egg.

The real problem is that there is a growing disconnect between what the City of Toronto really is, and where its boundaries are. In the best-run towns and cities, the entire economic unit is contained within one boundary, and there is one council which administers the budgets and votes on the issues that affect its area. The voters who are affected by this council’s decisions know who they can vote for, or vote against, in order to hold their elected officials accountable.

In many Ontario cities, the provincial governments have stretched the boundaries too far, so that some voters in Essex County or Lambton have to deal with a city hall in Windsor or Sarnia that doesn’t have much to do with them, but in Toronto’s case, the problem is the opposite. The City of Toronto as defined by its municipal boundaries covers less than half of the urban area where people live, work, play and shop. The true urban area, here, is a massive blob of five million people stretching around Lake Ontario from Bowmanville to Hamilton to Niagara Falls. People cross the political boundaries with impugnity, clogging each other’s roads and pushing out development in each other’s suburbs. This amorphous blob is administered by five regional municipalities, two megacities and almost two-dozen lower-tier municipalities ranging in size from less than 10,000 to over a million.

Decisions are being made outside of Toronto which affect Torontonians and vice versa. There is no one manager which is accountable to all the people, and one is unlikely to materialize.

The situation in the Greater Toronto Area, with centre cities buckling under the weight of infrastructure in need of renewal, outer suburbs challenged by the pressures of growth, and a handful of areas rolling in cash from new industrial stock, has passed the point that existed in 1954 when the province decided that the best way to secure Toronto’s future was to combine the city with its twelve surrounding suburban municipalities in a federation that pooled borrowing power, developable land and other resources. Metropolitan Toronto went on to become the most successful urban federation in the history of North America.

Similar pooling is required, but given that the true urban region of Toronto now stretches around Lake Ontario, the province cannot be expected to create a monstrous regional government that would certainly challenge Queen’s Park for prominence. The province has looked at special purpose bodies like the Greater Toronto Services Board to provide a solution on a case-by-case basis, but these bodies tend to be appointed committees, unelected, and unaccountable within the Balkanized structure of the GTA.

So, without that regional manager responsible for the social programs, the infrastructure management and planned growth of the true region, that responsibility has fallen on Queen’s Park. You have seen the first steps of action in this regard these past few budgets. And you see the response from other areas of the province. Such a task may demand too much of the provincial legislature’s attention, alienating the voters of southwestern, eastern and northern Ontario. There is also the probability that, as the Greater Toronto Area grows, its power within Queen’s Park will grow, so that the voters of southwestern, eastern and northern Ontario aren’t just alienated, they are ignored.

For this reason, it may be in Ontario’s interest to break off the 416 and 905 area codes of the province, so that it can become the province of Toronto.

The things we are asking the Greater Toronto Area to do requires powers that only the province of Ontario has. So, why not make the Greater Toronto Area into a province, so that it has those powers? We could dissolve the balkanized and balkanizing regional governments, and break apart Hamilton and Toronto into their true communities, and let these cities concentrate on the truly local issues. For the regional issues, the province of Toronto becomes the one in charge, with the voters within knowing precisely who to hold accountable.

For Ontario, the rest of the province gets a legislature that can concentrate on their needs. And there will be no talk about more Toronto bailouts. That will be Toronto’s responsibility, as a have province in Confederation.

Toronto politicians have said repeatedly that they understand their obligations in Confederation. Even though billions of tax dollars leave the GTA bound for the rest of the nation, all the city needs to continue to prosper and continue to meet those obligations is more power and accountability. Right now, it doesn’t have that accountability. That’s not the fault of Toronto’s city council. That’s the fault of a structure that’s simply inadequate for the conditions.

The time has come to change that.

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