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Oct 2016 | LOCAL ECONOMIC DEVELOPMENT

UNDERSTANDING THE LACK OF MUNICIPAL AUTHORITY IN CANADA
BRITTANY VAN DEN BRINK, PSD RESEARCH

A profound power imbalance is a problem facing Canadian federalism, an institution that has long structured Canadian government. While citizens vote for and are governed by federal, provincial, and local governments in practical terms, municipalities have very little legal power in the Canadian federal system compared to the federal and provincial governments. In fact, the Canadian Constitution only recognizes the federal and provincial governments, leaving local governments with limited autonomy, as their authority and responsibilities are set by the provinces.[i]             

 

i. understanding the power imbalance

 

Since Canadian municipalities are not recognized by the Constitution, they are often referred to as “creatures of the province.” As a result, they must adhere to provincial legislation that governs municipal affairs, as most municipal practitioners are well aware.[ii] While specific legislation varies from province to province, what a municipality can and cannot do depends on the powers that the province decides to bestow it with, which can be granted, revoked or changed at any time.
 
One major indicator of a power imbalance in the Canadian federal system is the limited municipal ability to raise revenue. Municipal choices are few when it comes to accessing and allocating financial resources. Instead, provinces regulate how municipalities can generate revenue by disallowing the levying of various taxes. As of 2008, nearly 50% of total municipal revenue in Canada was generated through property taxes, while just 1.4% of own-source revenue came from other taxes.[iii] Unlike many municipalities in the United States, Canadian municipalities simply do not have a broad range of revenue tools at their disposal, burdening Canadians with some of the steepest property tax rates in the world. Moreover, when municipalities do levy additional taxes, while innovative, the revenue is minimal, making fiscal autonomy a struggle.[iv]
 

ii. canadian federalism and the development of a power imbalance

 

The history of the Canadian federation helps explain why a power imbalance developed. Federalism, which is the Canadian system of government, is one in which there are two or more levels of government. The constitution outlines how powers are divided and it cannot be amended by one order of government alone.[v] Being a former British colony, Canada adopted many of its laws and customs, including its attitude toward local governments.[vi] Britain’s central government has a history of distrust of local governments, which extended to its colonies. Upper Canada’s first Lieutenant Governor, John Graves Simcoe, was opposed to local government in any form, which was an extension of the prevailing view of the whole British government at the time. This was in part due to Britain’s fear of losing another colony if confronted with another revolution and exemplifies why local governments were seen to give rise to disloyalty.[vii]
 
Limited local self-government was slowly granted as Canada matured and became a federation. However, although the twentieth century saw the successful change of many doctrines that were prominent in nineteenth century constitutionalism, the control of municipalities by central governments persists today.[viii] The result is a power imbalance at the expense of Canadian municipalities.
 

iii. implications

 

While it would be a significant change from the status quo, we could benefit from rethinking how power is distributed in the Canadian federal system because urban centres are more important than in the past. According to Census data,[ix] urbanization has resulted in over 80 percent of Canadians residing in urban areas of over 1,000 people. This is a drastic change from data outlined in Canada’s first Census in 1861, a few years before municipalities were excluded from the Constitution Act, 1867, when 84 percent of Canadians lived in rural areas.
 
Cities also breed innovation. Where people are concentrated, creativity, productivity, jobs and economic growth tend to ensue.[x] This is important because urban areas provide valuable economic output for the country as a whole. Additionally, Canadians are directly impacted by local government on a daily basis in terms of the services they provide. However, despite the responsibility to deliver certain services, it is often the provinces that control the revenue to provide those same services.[xi] Though cities and municipalities have increased in importance, a power imbalance has persisted.
 
Recognizing the lack of municipal autonomy in spite of the growing importance of urban centres, scholar Warren Magnusson argues that without local self-government Canadians cannot create political institutions that meet their needs. Magnusson calls the extent of provincial control over municipalities “totalitarian”,[xii] asserting that Canada’s free and democratic society suffers as a result. Though a bold argument, it is important in illustrating that there are alternative ways to conceive of federalism in Canada.
 
The limited revenue raising capacity of municipalities also impacts service delivery, especially in terms of infrastructure. The Federation of Canadian Municipalities (FCM) recently claimed that municipalities have been delegated increased responsibilities from federal and provincial governments over the past two decades and also endured decreased transfer payments.[xiii] As a result, municipalities cannot keep up financially, causing a mounting infrastructure deficit across Canada. The good news is that, since 2003, the federal government has provided various sources of infrastructure funding to respond to the deficit, and the provinces have implemented their own programs as well. Though this funding is helpful, it is an example of the central governments responding to municipal problems retroactively; it does not indicate that municipalities are gaining power, which is problematic because they cannot govern themselves as they see fit and fiscal shortfalls remain.
 
A prime example is Canada’s Infrastructure Report Card, which reported that one-third of the nation’s infrastructure is in fair, poor or very poor condition and needs to be replaced which illustrates that municipalities still struggle to pay for upgrades.[xiv] This is dangerous because not only is the deferred maintenance of infrastructure much more costly in the long run than regular maintenance, Canadian citizens risk service disruptions that could potentially limit how they move around, access clean drinking water and dispose of waste.
 
Canadian federalism is based on outdated conceptions of local government, resulting in a problematic power imbalance. Municipalities are integral to multilevel governance in Canada but they do not have the tools to reach their full potential. It does a disservice to citizens to limit local governments from providing adequate services. On a broader scale, urban areas are more important today than when federalism was implemented. It is therefore worth re-examining the power imbalance in Canadian federalism and discussing ideas for reform in the field of Canadian politics.
 
BRITTANY VAN DEN BRINK is a Research Analyst for Public Sector Digest. She received her honor's bachelor degree from the University of Western Ontario in 2012 and her master's degree in Political Science from the University of Windsor in 2014. Beginning September 2016, Brittany rejoined Western's Political Science department to complete her PhD in local government. She can be reached at bvandenbrink [at] publicsectordigest [dot] com
 

[i] Federation of Canadian Municipalities, 2006, p. 6.
[ii] Sancton, 2005, 317; FCM, 2006, 6.
[iii] FCM, 2012, 4.
[iv] FCM, 2012, 4-7.
[v] Watts, 1999, 7.
[vi] Magnusson, 2016, 225.
[vii] Tindal et al, 2017, 28.
[viii] Tindal et al, 2017, 29; Magnusson, 2016, 225.
[ix] Statistics Canada, 2016.
[x] Florida, 2011.
[xi] Gee, 2014.
[xii] 2016, 225.
[xiii] 2016, 1.
[xiv] Canadian Infrastructure Report Card, 2016, 10.