Travelling in Helsinki, Hamburg and Copenhagen, I am reminded of how differently the city, state and national governments here relate to each other, compared to their counterparts in Canada. It’s a difference that is played out in the negotiations now underway about how Toronto’s affordable housing crisis will be addressed.
There are obviously differences in detail between Finland, Germany and Denmark, but the general model here is the same: in each country the three governments are all on an equal footing, each with clear responsibilities and the ability to raise the tax revenues needed to meet those responsibilities.
In Canada, the federal government, the `senior’ government, is on top with the most responsibilities and the broadest powers to raise revenues; under it are the provincial governments, and at the bottom are cities, the `junior’ governments, with few powers and very limited taxation abilities.
As Prime Minister Trudeau’s parliamentary assistant Adam Vaughan has made clear, the feds want to play a strong role in creating new affordable housing, something which cities want but cannot afford. But what should that role be?
The feds can decide to provide funds to each city calculated on population, but some cities like Toronto face much stronger demand for affordable housing than say North Bay or Cornwall. Nor does it account for higher construction costs in Toronto. The feds want to use one formula across the country, as though one size fits all, so they cannot be accused of playing favourites. But some cities will get more affordable housing money than they need, and others get much less. That doesn’t make sense.
Or the feds can decide to give the money to provinces and let them sort out how much each city gets. But then provincial politicians would get the credit for affordable housing grants rather than members of parliament, and that’s hardly something you can expect MPs to agree with.
And what should the financial arrangement be? Should the feds provide 50 per cent of the money for each affordable unit, with the provinces and cities to pick up the rest? If that happens, where will a city such as Toronto find its share of the money, given its main source of revenue, the property tax, is so limited and is already stretched to the breaking point?
None of the choices make much sense. It’s easy to see why Mayor John Tory spends most of his time as a professional beggar at Queens Park and Ottawa. City mayors from across Canada have banded together to beg together, even though no one policy decision will be attractive to all of them.
But here in northern Europe the leaders from the different governments don’t find themselves in such a bind. Cities are responsible for affordable housing (and transit) and they have the taxing powers – income, corporate and sales taxes – to meet the financial costs of their decisions. Regional or state governments are responsible for health and education and they too have access to the same revenue sources. National governments are responsible for economic strategies, foreign affairs, defense, international trade, and have revenue sources to deal with these. Here, governments are not tripping over each other, or begging at each other’s doors.
A smaller city such as Helsinki (population 700,000) can sort out its affordable housing strategies as it sees fit, as can Hamburg (population five million), as can Copenhagen (population 600,000), and they do. These cities are well kept and prosperous, managing their own affairs.
This is the model we should be working towards in Canada. Give Toronto the taxation powers available to the federal government, and tell the city it must address its affordable housing and transit problems on its own, with its own new revenue tools. Instead of the feds turning revenue over to the city, the feds could simply stop using those taxing powers and turn the powers over to the city.
City politicians would then have to levy those taxes and of course some politicians would shirk that duty. But we could develop tough city leaders who would happily raise the taxes and deliver programs to an electorate that would reward them for doing it well.
Brave new Canadian city: it is a world that is alive and well here in Helsinki, Hamburg and Copenhagen.
John Sewell is a former mayor of Toronto.