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Jane Jacobs Speaks to Paul Martin About the New Deal
20/05/2004

In her new book -- Dark Age Ahead, which I discussed here -- Jane Jacobs recounts a conversation she had with Paul Martin, when he was finance minister.

The topic of discussion was ways in which the federal government can help bring spending power closer to municipalities... i.e., a new deal.

Since we're about to have an election, and since the new deal for cities will be an issue, I thought it would be interesting to share what Jacobs has written:

A gentler remedy [than separation as independent provinces] could be for the federal government to allot, as of right, a share of its income-tax yields to municipalities or, again as of right, a portion of the federal goods and services tax, which is a value-added tax under another name. Municipalities would thus share in the investments made possible by the rewards of economic expansion. Perhaps best would be a mixture of the two allotments. Since they would go to municipalities as of right, without strings, the so-called senior governments could cease trying to micromanage and to standardize municipal policies and governance. Standardization is the parent of stagnation.

When I had an opportunity to discuss this revenue-sharing possibility with Mr. Paul Martin, who at the time was federal finance minister and who has become Canada's new prime minister, he first dismissed the suggestion out of hand with the excuse that the constitution doesn't allow it. I pointed out that nothing in the constitution forbids sharing the yields from forms of taxation that did not even exist until generations after the adoption of the British North America Act, and that the federal government already allots income-tax shares, or points, as they are called, to the provinces.

When I saw a shadow pass over his expressive and attentive face, I assumed he was glumly contemplating tax increases. I remarked that sharing income tax with municipalities would not entail higher taxes because it would be only fair to subtract equivalent funds from allotments to provinces to care for their erstwhile dependents. Possibly it was a mistake to mention this, although he is a smart man and would surely soon have looked at this side of the equation for himself. He quickly shout out, "Impossible! Everybody wants money!" bringing our taxation discussion to a halt. Our vantage points, and therefore our views, were different. A reform that meant to me correction of a grave social and economic disconnection that is unraveling the country's complex modern functional networks meant to him, I saw as his ears and face closed up, a nasty power struggle with the premiers of ten provinces who are determined to keep their power instead of sharing it with their more knowledgeable, anachronistic wards.

Perhaps to cheer or placate me, he told me that he intended to announce a program of federal grants enabling municipalities to install light-rail public transit. Now it was my turn to demur. I told him that unfortunate experiences already showed that fixed transit routes were expensive failures when they were not preceded by evidence of sufficient demand. Underused routes not only are a drain on transit systems but are ill-suited as contributors to the needs and convenience of users. In the past, designers of transit systems had usually chosen to locate rail routes by observing which bus routes were most heavily used, a pragmatic method that worked well in Toronto and elsewhere. After it was apparently lost to transit engineers' memories in the 1960s, Toronto and a number of other cities, among them Atlanta, Buffalo, Detroit and Chicago, tried rail routes justified by other goals and these have proved unable to pull their weights, literally or figuratively. They don't have enough passengers. I asserted that a prudent program to promote transit must be flexible enough to encourage experiments with routes, should that be what a city wanted to do, and possibly experiment with bus sizes, before settling on fixed rail routes. Why not specify grants for transit? I wondered aloud. Why specify from on high what form the transit must take?

I was too tactful to mention the hazards of being out of touch with specific needs, nor my suspicion that he found a light-rail grant program attractive because it would be a federal goody to extend to Bombardier, a Canadian multinational corporation that manufactures streetcars, with headquarters in Montreal, and that this benefit would be well received by Quebec voters, ever a pressing concern of the federal government, but these thoughts went quickly through my head.

As he saw my ears and face close up, he pointed out that the mayors of every large city had asked for light rail transit grants. I told him that I had attended the meetings where they arrived at this unanimity; they reasoned that asking for light-rail grants was politically more realistic than asking for other kinds of public transit equipment or more general transit help, such as grants for operating costs, the most desperate need in some municipalities.

Mr. Martin perfunctorily conceded that flexibility might be worth taking into consideration. Again I saw that our points of view were different. What he could contemplate as attractive bonanzas for clamoring cities and perhaps for complaining corporations producing rails and streetcars, I feared as foregone fiascoes.

This is all in the context of a chapter that discusses how out of whack our governments are. Fiscal responsibility is out the window because the higher levels of government have all the power and access to money, while the lower levels are left begging.

In one way this sounds very much like what Stephen Harper might say (except he would want to deal with provinces, not municipalities). At the same time, the entire chapter -- and much of the book -- is a brutal indictment of the Harris years and the mindless tax cutting that has proven to be counterproductive for Ontarian communities.


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