Jeffrey Simpson thinks that Paul Martin's New Deal for Cities is a mistake, and says so in his column today (Google shortcut).

He explains the theoretical reasons why a federal-municipal cash transfer is a bad idea. Then he presents his own plan for how to help Toronto:

How? For starters, scrap the archaic Ontario Municipal Board that stands watch over the cities like a reproachful nanny. If citizens don't like municipal decisions, throw out the bums who made them or, if there are legal irregularities, try the courts, Then create a new act to give Toronto (and presumably other cities) the power to levy taxes beyond certain fees and the property tax. Finally, the province should reshoulder responsibility for services downloaded on the cities under the Harris/Eves government -- social welfare and/or transit. These changes would raise Toronto's revenues and reduce its expenditures, thereby helping to ease its structural deficit.

But what about the province? Wouldn't absorbing the costs of, say, social welfare worsen its fiscal situation? Yes, of course. But here's where Ottawa could and should help.

Ottawa is running large surpluses, although the Martin government's profligate spending is devouring them. Much of that spending is in areas of clear provincial jurisdiction (health, cities, daycare).

If Ottawa has too much money relative to constitutional responsibilities, rather than pitchfork money into provincial and/or municipal budgets, it should reduce federal taxes, thereby clearing room for provinces to raises theirs -- and be held accountable for those taxes and services. If Toronto, with new taxing authority, negotiated with the province to levy other municipal taxes, two things would happen. The net tax burden wouldn't necessarily rise: as Ottawa's taxes fall, provincial/municipal ones rise. Second, citizens would be clearer on who does what, meaning better accountability.

There are, in short, better ways of helping Toronto (and other big cities) than what's happening now.

There is nothing new about this sort of plan. People have been talking this way for years. The problem is that Queen's Park has no interest in the most important part of this deal, the uploading of costs that can't and shouldn't be supported by municipalities.

Now sure, I can agree with Simpson and with Stephen Harper that in an ideal world each level of government would have its own responsibilities for which they would gather only as much tax as they need, and no more. No level of government would interfere with the responsibilities of another, although this would not rule out a systematic equalization program.

And it is obvious that the Canada we have is a far cry from Simpson's and Harper's ideal world. But it has come to be that way because we voters have demanded it... and the federal government's New Deal for Cities is a perfect example of this. Toronto demanded, demanded, demanded and finally got help from Ottawa because Queen's Park was so utterly unconcerned about the needs of the city -- malicious, even. Were we not to tell Ottawa about our unmet needs simply because this doesn't fit with the theoretical model of Canada? I say no, even though I recognize the superiority of what Simpson describes.

The ironic thing about Jeffrey Simpson's position is that he bashes the feds for stepping into the municipal file, and then goes on to list all the things the province should be doing instead. Why aren't they doing it? If Simpson is arguing that Ontario can't do that because Paul Martin's government takes up too much tax room, then he is arguing in favour of the fiscal imbalance theory, which is funny since he seems to have little respect for the idea.

The reason that the government of Ontario continues to milk the city of Toronto is the same reason that the province of Quebec likes to complain about a fiscal imbalance. It is also the reason that Paul Martin introduces a gas tax transfer for municipalities, and it is the same reason that he gave in to Danny Williams' unreasonable demands. The factor driving all of these events is political expediency, i.e., doing what is necessary to get the votes that you need. I salute Simpson for taking on this idealistic fight, but there is no point in bashing Ottawa for the gas tax transfer unless we first convince Queen's Park to reverse downloading and grant the City new powers.

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