Improving Life in Canadian Communities

The New Deal was the real deal. What next?

It was almost eight years ago to the day that then finance minister Paul Martin delivered a speech to the Federation of Canadian Municipalities’ annual general meeting in Hamilton, Ontario. It was the last speech he delivered as finance minister before he launched his bid to become prime minister, and it focused on his commitment to delivering new resources and relationships to cities and communities across Canada.

This weekend, Martin, along with John Godfrey, his right-hand man on the New Deal for Cities and Communities, will be back at the Federation of Canadian Municipalities’ national conference in Toronto. The heavy-hitter speakers list also includes Prime Minister Stephen Harper and Liberal Leader Michael Ignatieff.

Why is this important? The New Deal for Cities and Communities transformed federal-provincial-territorial-municipal relationships and modernized mechanisms for investment in infrastructure. While the recent stimulus funding was one-time and time-limited, the investments under the New Deal go on forever.

The 2009 stimulus funding for infrastructure has been helpful in sustaining Canada’s economy, but one day soon it will stop. If all goes according to plan, the gas tax agreements signed in 2005 will continue to deliver $2 billion per year to municipalities for sustainable infrastructure. I expect that this stable and predictable funding will continue to do a great deal to get shovels in the ground and create jobs.

The New Deal was a decisive move by Prime Minister Martin, built on the relationships and intellectual work of Godfrey, then minister for infrastructure and communities, and support from an External Advisory Committee on Cities and Communities led by the Honourable Mike Harcourt.

From my point of view, there were six catalysts for the New Deal – demographic shift and urbanization, globalization and economic transformation, quality of place and quality of life, infrastructure deficit, municipal fiscal capacity, and environmental sustainability. While these come across as too big-picture and clean because they don’t get at the grittiness of both urban and rural life, they do get at the good reason for the federal government to take action in partnership with other levels of government. The thing is, despite all of the hype about infrastructure investments to stimulate the economy during the recession, these issues continue to and will increasingly change the way Canada looks, feels, and works.

Minister Godfrey often spoke about the four parts of the New Deal – a new vision, an urban lens on the federal government’s activities in cities, new money, and more productive and cooperative relationships. He was passionate about the New Deal including four elements of sustainability – the quadruple bottom-line of economic, environmental, social, and cultural sustainability. On a lighter note, he talked about the “steak” of the New Deal being the gas tax funding from Infrastructure Canada and the “sizzle” being the policies from the Cities and Communities Secretariat. On a hard-line note, when mayors asked him for the gas-tax funding, he would say with a smile and a stare, “Show me your plan and I’ll show you the money.”

What did all of this get him? Standing ovations at meetings of the Federation of Canadian Municipalities and Canadian Urban Transit Association; the largest collection of municipal flags in Canadian history, presented by thankful mayors, councillors, and reeves from across the country; the first meeting of federal-provincial-territorial ministers responsible for local government in 25 years; and 13 federal-provincial-territorial gas-tax agreements between April and November 2005 to make sure that only municipalities benefit from the federal funding.

Not bad for a minority government. Imagine if the current minority government could achieve such a major accomplishment?

Thanks to the New Deal, this year municipalities will start receiving $2 billion per year for transit, water, wastewater, green energy, and other environmentally friendly infrastructure. It also means partnerships are working, since the gas-tax agreements allow the City of Toronto to receive money directly from the federal government, the Association of British Columbia Municipalities will administer the federal investment in B.C., and the Government of Quebec will take on responsibility for municipalities in that province to administer the federal gas-tax revenue.

The New Deal was a national project that linked regions across the country. It showed that it’s possible to balance intergovernmental relations in Canada with independence and interdependence and to get things done without constant debates about jurisdiction.

The New Deal is an example of asymmetric federalism because it recognized that the issues facing the largest city-regions or the smallest rural and remote towns are beyond the resources and responsibilities of any one level of government. To deal with this, Prime Minister Martin and Minister Godfrey asked provinces and territories to engage. The New Deal may have been asymmetric, but it was fair, so that every part of the country was better off as a result. The New Deal was pragmatic because it recognized that issues in cities and communities play out in different ways in different places, and that different governments have different capacities to address them. Quite simply, the opportunities, benefits, risks, and challenges required that unequal players – with different geographic, economic, demographic, social characteristics – were treated fairly but differently.

The New Deal may only be a first step in a longer-term effort to address the importance of cities in particular and municipalities in general. As proposed by the External Advisory Committee on Cities and Communities, double devolution – shifting responsibilities and resources from the federal government to the provincial and territorial governments, and then from the provincial and territorial governments to the local level – could further enhance who raises, uses, and accounts for resources. Alternatively, the Canada West Foundation suggested an opt-in framework that would be flexible enough to enable but not require those municipalities that desire greater autonomy or new fiscal tools to adopt them. There is much work to be done on these and other options.

The New Deal for Cities and Communities transformed federal-provincial-municipal relationships and modernized mechanisms for investment in infrastructure. The question is, now that governments are facing deficits and low revenues and people are facing layoffs and family debts, what do we do next to improve life for people in cities, towns, and villages?