Delivering Community Power CUPW 2022-2023

Toronto needs a bailout for the ages

Without proactive and big-dreaming progressive leadership at all levels, the municipal financial crisis will only grow worse

Canadian PoliticsCOVID-19

Toronto skyline taken from the CN Tower. Photo by VV Nincic/Flickr.

As the poster child for financial calamity, it should surprise no one that COVID-19 has essentially set Toronto ablaze. Carrying the costs of the pandemic, the city currently projects a budget shortfall to the tune of $1.5 billion, and Mayor John Tory has outlined a “doomsday” scenario of unprecedented austerity to address it. The plan will take millions from the Toronto Transit Commission (TTC), libraries, shelters, public housing, and social services—that is, if higher governments don’t bail them out—drastically reducing the extent of service and coverage each of these provide. Worse, belt-tightening at the provincial and federal levels to manage the costs of the pandemic are likely not far away.

Examining the cuts closely casts light on the other crises that have been intensifying across the city for years (and getting worse rapidly). Toronto has been unable to soften the edge of its unreal, 25-year long housing crisis—the city remains award-winningly unaffordable with average rent hovering around $2,063 per month for a one-bedroom apartment—as public, non-profit, and affordable housing remain chronically underfunded, underbuilt, and backlogged. Some 102,049 sat on the social housing waitlist in 2019. Meanwhile, with growing unemployment, Bill 184 at the provincial level, and all-round financial insecurities, the possibility of mass evictions and significant increases in poverty and homelessness remains high.

Social services, on the other hand, like shelters and subsidized child care spaces, have already been scaled back; the TTC suffers billions of dollars in infrastructure deficits; and there is less and less money available for libraries, community centres, and public health. Pursuing the COVID-related cuts will bring many of these areas within an inch of collapse, further hollowing out an already-hollow social welfare state. As outlined in the 2020 study Toronto After a Decade of Austerity: the Good, the Bad, and the Ugly, the state of public services has substantially worsened since 2010.

Yet municipal finance, and its related crises, carry an important and oft-forgotten history. As “creatures” of provinces—a reality laid out in the Canadian constitution—municipalities are legislatively subservient and subjugated to the whims of the province. They also remain financially restrained: Ontario’s Municipal Act greatly restricts what levers are available for generating money, permitting only a combination of user fees, property taxes—which constitute a huge percentage of overall revenue—and very limited forms of debt (the city is not allowed to run a deficit on operating expenses). Municipalities thus rely heavily on intergovernmental transfers. What this situation implies for municipalities, and Toronto specifically, has been extremely significant since the end of the Second World War.

After the war, federal and provincial governments played a far greater role in funding and planning social services. Through the Canada Assistance Plan (established in 1966) and Established Program Financing (1977), the federal government had enshrined permanent and consistent funds for things like healthcare, transit, and social housing, which it shared with the provinces; not just ad-hoc agreements and occasional cash. Canada also once had a national housing program to build affordable units in cities—which built 20,000 affordable units a year—an ambitious example of federal assistance, vision, and planning. Higher government intervention in these areas represented a Keynesian outlook towards social welfare funding and planning that, as the 1980s approached, began to fall out of vogue. This system, however, worked well. And it could do so again.

However, as neoliberalism took root in the 1980s and 1990s, federal and provincial governments began “downloading” service provision onto the lowest rung of the federation food chain. Predictably, municipalities have never been able to afford the responsibility on their own. But they had no choice. According to political economist and professor Carlo Fanelli, this included “social services, public school services, non-profit housing, roads, public infrastructure, long-term healthcare, childcare, shelters, children’s aid societies, ambulance, fire and police services, waste collection, as well as public health and transportation.” He adds: “Provincial and federal governments sought to ‘solve’ their own budgetary impasses by shifting the cost of social and physical infrastructure downward to lower tiers of government,” augmented only by “some grants, bilateral agreements and emergency relief [and] ad hoc agreements.” In just a few years, these decisions removed three decades of funding for a myriad of public services, fundamentally restructuring Canadian federalism and the welfare state.

On the hook to deliver public services, but with ever-dwindling financial support from above and few ways to generate cash independently, Toronto has turned often to austerity. Or, to fill gaps, it relies on public-private partnerships (P3s) and coalition-building that come with huge price tags, are undependable as long-term sources of funding and growth, and lack public oversight. P3s are often floated to the public as a way to transfer risk from the public to the private sector and fund more projects for less. Yet they repeatedly fail at this task, often leading to higher costs, delays, high profits for investors, and little accountability, as is the case with the Eglinton LRT and Ottawa’s LRT expansion. In other cases, private partnerships come in the form of “innovative” ideas, like Google or Shopify helping to “save Toronto from its housing crisis.”

Private collaboration is also occurring in an important way at the federal level within Canada’s Infrastructure Bank. The Trudeau government plans to gift future infrastructure projects—many which will undoubtedly be in Toronto—to private sector investors who will expect “high rates of return” and will “end up owning some of the projects they invest in,” Linda McQuaig writes.

People wait in line in front of a boarded up storefront in downtown Toronto. Photo by Louis Bavent/Flickr.

Downloading, limited independent funding opportunities, unhealthy dependence on the private sector— all signs lead to collapse. In the present moment, the system perfectly demonstrates its own outdatedness: the city finds itself making impossible choices between hanging onto its barely-intact transit system and providing meagre amounts of affordable housing for its citizens.

It is clear that this history needs immediate intervention. Now more than ever, as the pandemic threatens the remains of the local welfare state, Canadian federalism must enter the twenty-first century, recognize the importance of keeping cities healthy and liveable, and uplift them to a more privileged position in the intergovernmental food chain. Only then can the perpetual cycle of austerity-led decay come to an end.

To start, access to new revenue streams like taxes or tolls will help (somewhat) cover bases. Jurisdictions like New York City generate tons of money through some potpourri of income taxes, tolls, local sales taxes, and more, therefore relying less narrowly on property taxes.

But the heavy lifting will also need to involve, as one might guess, an aggressive re-uploading of service funding to the higher levels of government. In fact, this should be a central component of any plan to end the endless cuts. As well, establishing a bold, permanent, and dependable cost-sharing framework—similar to that of the 1960s and 1970s—will be paramount for directly addressing and fixing challenges, new and old.

At the provincial and federal levels, higher taxes levied against the rich and corporations will be necessary to help fund this venture and correct three decades of higher government divestment. Progressive parties, especially the New Democratic Party (NDP), should get comfortable with these ideas and the scale of the work to be done—and set the agenda accordingly in the legislature.

Calling this big-picture thinking would be putting it lightly. It would require unseen levels of political wherewithal.

Yet at this point in history, when so little is left to be cut but so much is left to lose, what is the alternative? The endless patchwork of “innovative” solutions—like unreliable and costly private-public partnerships, wooing private investment by slashing taxes, or having search engines build homes—are at best wet band-aids slipping off Toronto’s scrapes, requiring flexibility and ever-more private sector collaboration.

The question of alternatives is even more pressing as the city plans for staggering cuts, an unsurprising but unconscionable culmination of Toronto’s 30-year municipal finance fire. Can we really afford for things to get much worse? Have we not already gone way too far? Why is it that the largest city in the country, a metropolis that generates unimaginable profit and revenue and value, is mostly unliveable for so many of its residents?

Simply put, Toronto cannot withstand the financial pressure of its responsibilities, nor do so to the extent that is necessary in a decent society that takes care of its citizens (as Canada purports to do). It cannot budget its way into the city its residents need. It needs help, badly.

It is possible, indeed likely, that the province or federal government will intervene in some manner, preventing the “doomsday” cuts from taking place. But a temporary bailout or grant will only return city finance to its precarious normal, constantly teetering on the edge of austerity and unable to serve the community proportionate to its need. As it is presently conceived, the system is designed to fail, to tend toward cuts—and those cuts are always borne by the vulnerable, coming on the backs of housing, shelters, libraries, transit. Demanding national and provincial action that might transcend the situation altogether—a bailout for the ages—needs to be the priority.

The city need not get bogged down by its status as a mere “creature” of the province, either. Lacking the legislative jurisdiction to act is not a death sentence for action. In her case study of Toronto mayors, Kate Graham writes in Leading Canada’s Cities? that mayoral success is less rooted in “institutional variables” than it is in “leadership,” “empowerment,” and “mobilization.” Perhaps we can apply this to city government at-large. No, Toronto cannot just create its own reality as it sees fit, and the constitutional arrangements from yesteryear are disempowering, but it can make real and compelling demands by setting a tone, having a specific vision and the confidence to back it up, while leveraging the authority that comes with being a major city. And in a place the size of Toronto—in terms of population, but also economic and cultural impact—there’s lots to be leveraged.

Following the ideas explored by Graham, both municipal and provincial representatives should communicate how things went awry in the 1980s and 1990s, how our present system is a vestige of the past, and empower constituents to rally behind charting a new path.

Of course, it is easy to simply declare that we should upload costs to the province or federal government. It is unfathomably harder to actually get that done. But city government should be its own biggest advocate, treating the issue with the seriousness and ceaseless urgency it deserves, and escaping the trap of creating only temporary conflict during each budget cycle. In fact, it should make an unignorable stink, escalating the issue to a fever pitch. 30 years of higher government neglect has created local dysfunction and service paralysis tantamount to a crime. Crises in housing and public services, after all, have a human cost: hunger, homelessness, addiction, poverty, death. Is this not reason enough to raise hell?

All of the above begs the question: what kind of city do we want? Staring down unprecedented cuts in the middle of a pandemic is a hard pill for many to swallow, and understandably so; it is obvious that we should be investing, not divesting, in our communities. But we also can’t go back to piecemeal and part-way funding. What the COVID-19 crisis has brought, in spite of the misery and pain, is a chance to talk about alternatives, an opportunity to discuss futures that toss neoliberalism to history. In the city, where neoliberal ideology is so acutely felt, this task can’t come sooner. Capturing this rare and strange moment effectively involves big-picture thinking that reflects the real, gargantuan size of the issues.

Without proactive and big-dreaming progressive leadership at all levels, after all, the municipal financial crisis (and the housing and social service crises embedded within it) will only grow worse. As we ask about the city we want, the question then becomes: what kind of leaders do we want, and what kind of leaders should we kick to the curb? Is their urgency proportionate to the scale of our city’s crises? Is it life and death to them as it is to us?

Dan Darrah is a writer of nonfiction and poetry from Toronto. He has written about work, culture, money, and debt for Jacobin, Canadian Dimension, Briarpatch Magazine, and more. He is a member of Spring.


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