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This archived article was published 18 January 2004
Canadian government announces
more details of new deal for cities

By Nick Swift

Official bodies at all levels of government throughout Canada have welcomed the explanation in February 2005 by John Godfrey, Minister of Infrastructure and Communities, of many of the details of Prime Minister Paul Martin’s government’s ‘New Deal for Cities and Communities’. In particular he revealed the formula by which the federal government will allocate federal gas (petrol) tax revenues toward maintenance and development of municipal infrastructures.

In May 2004 Mr. Martin expanded on commitments made in that year’s Budget by announcing plans to give municipalities a portion of the gas (petrol) tax with up to CAN$2 billion a year, and the total rebate to cities of the Goods and Services Tax (GST), expected to amount to about $7 billion over a decade, as well as accelerating disbursement of the Municipal Rural Infrastructure Fund over five years instead of the 10 that had been proposed.

Environmental dimensions were then considered important, with Mr. Martin emphasizing in an address to the Federation of Canadian Municipalities (FCM) that “environmental sustainability” was one of “three pillars” of the New Deal, the others being adequate housing and infrastructure, and “other” funding. Mr. Godfrey has more recently confirmed that meeting Kyoto Protocol targets for limiting greenhouse gas emissions by large city transportation systems was an important factor in the design of the New Deal.

Less satisfied were those who viewed as inadequate the programme for implementing the transmission of the gas (petrol) tax funds, with no commitment for it to reach the five cents per litre level until 2010, and an absence of details on how it would filter through to the municipal level. Mayor David Miller of Toronto was one of them, and minority federal New Democratic Party leader Jack Layton made a more generous offer. Mr. Miller has also expressed disagreement with the idea that Toronto, by far the largest city in Canada, should be expected to interact with the federal government solely through the Association of Municipalities of Ontario (AMO). February’s announcement appears to leave the gas tax escalation plan much as it was.

Infrastructure Canada, however, which, “within the Government of Canada, leads on national infrastructure initiatives including research, policies and programs”, and “works with other levels of government, First Nations communities, as well as the private sector, to identify the regional and local development priorities, and to evaluate proposals and finance specific projects, through several funding programs”, is explicit that “since both rural and urban communities are vital to the economic, social, environmental and cultural viability of the country, we must address the very pressing needs of our large cities as well as those of smaller communities”.

The Infrastructure and Communities portfolio includes four Crown Corporations that report to Parliament through Mr. Godfrey. They work with “key partners – in the federal government, other orders of government, universities, research institutes, the private sector and other experts – to build knowledge about sustainable communities and infrastructure issues; to connect researchers in Canada; and to communicate knowledge about sustainable communities and infrastructure in order to help decision-makers in communities, provinces and territories across Canada, and internationally”.

Beginning in January 2004, Mr. Godfrey travelled across Canada, visiting every province and meeting municipal leaders, including at least 80 mayors and councillors. At the same time, there has been “regular consultation with provinces, territories, municipalities and stakeholders on the shape, direction and management of Canada’s multi-billion dollar infrastructure program”. Mr. Godfrey’s efforts focused on “improving collaboration between all orders of government and private-sector stakeholders involved in municipal affairs”.

Also unchanged, in addition to the program that will see a portion of the gas tax or an equivalent amount going to municipalities for infrastructure in such a way that only in the last and fifth year will they receive the remaining $2 billion of a total $5 billion, is the per capita criterion to be used in determining the allocation of funds, with the much less populated areas of Nunavut, the Northwest Territories, the Yukon and Prince Edward Island receiving targeted allocations. “A number of different approaches were put forward for allocating the gas tax among provinces and territories; we chose a balanced approach that is comparable to that recommended by the Federation of Canadian Municipalities and which will benefit all cities and communities,” said Mr. Godfrey. He also said that the government’s commitments in areas including health care are the reason for the delayed escalation of disbursement of funds.

Public transit and water and wastewater systems will be among the environmentally sustainable infrastructures benefiting from the gas tax funding, as will be capacity building, rehabilitation of roads and bridges, solid waste management, and community energy systems.

Ontario will receive $1865.5 million over five years, $746.2 of it in the fifth; Quebec, $1151.0 million and $460.4 million, respectively; and British Columbia, $635.6 and $254.2 million.

Positions with regard to the New Deal have already been worked out by some provinces and territories. Roger Anderson, President of the AMO, said, “By adopting an allocation formula for provinces and territories based on population, the federal government has opted for equity and fairness over any particular regional or local interest... Coupled with last year’s full GST rebate for municipalities and the announcement of the Canada-Ontario Rural Municipal Infrastructure Program in November, the federal New Deal is moving forward”. The next stop for Ontario, he said, is three-way discussions between Canada, Ontario, and Ontario’s municipal governments to develop an allocation formula that works.

Ann MacLean, President of the FCM, said, “The Federation of Canadian Municipalities and the municipal sector applaud Prime Minister Martin and Minister Godfrey for having listened to our concerns and for having delivered a plan to address them... Clearly, the Government has delivered on its commitment and has taken a critical step in the evolution of a New Deal for Cities and Communities”.

Ontario Municipal Affairs and Housing Minister John Gerretsen welcomed the New Deal details by repeating his government’s intention to work toward giving Ontario municipalities “a seat at the table”.

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