05/12/2006

2006 FONOM / MMAH Conference, Blind River, Ontario. Friday, May 12, 2006.
President of the Association of Municipalities of Ontario 
2006 FONOM / MMAH Conference
Friday, May 12 2006, 11:30 a.m.
Blind River, Ontario

Check Against Delivery

Thank you very much for inviting me to speak to you on behalf of AMO.

I’m very pleased to be back in Northern Ontario and especially here in the Town of Blind River – a town with a rich 100-year history. Congratulations and I wish you all the best for your Centennial celebrations.

The theme of this conference is “Sustaining the North: Embracing the Challenge.” We take that theme seriously.

AMO is always here to support you and to stand up for your concerns. Sometimes, standing up for your concerns leads to some real battles. Our fight against the OMERS changes under Bill 206 was one of our most significant labour related campaigns.

We went toe to toe with the Province on this one because we knew that the OMERS changes would ultimately cost your taxpayers more money – money that is limited and money if invested in services would be beneficial to your communities. This is not to say that emergency workers are not valuable but unlike other workers, they already enjoy better benefits.

We knew going in that stopping the Bill would be almost impossible. But we had to try. If we couldn’t stop Bill 206, we wanted to make sure everyone understood what the Province was doing. We wanted every taxpayer in the Province to know why this policy would see them paying more – for no increase in municipal services.

Our campaign was a great success in that regard. We couldn’t have done it without your local voices and support.

Now we are into the transition to the new OMERS governance model and I can tell you that AMO intends to do its utmost best to ensure that the 380 plus municipal OMERs employers are effectively represented. It is going to take professional representatives – people with negotiating skills, knowledge of pensions and actuaries – experts to ensure that our interests on both the Plans Administration Corporation and the Sponsors Corporation have the skills and knowledge to protect our interests. This is a $44 billion dollar pension plan. Its financial health is one of several significant cost drivers for municipal government as you experienced with the 9% rate increase this year.

Frankly, Bill 206 has changed AMO’s role as an advocacy organization to one of representative. And to do the right job as representative, it is going to need a structure and funding stream. To not do so, would be a disservice to the responsibility that the legislation has placed on AMO. We have asked the province for some transition funding to help bridge the costs, at least in the short term. The employee representatives have had pension experts for quite some time supporting their interests at OMERS, paid through union dues. The employer side is going to have to build this up from scratch. It won’t be easy, it won’t be free, but we also can’t afford not to have the best possibly prepared, positions going into benefit discussions. At this point, all I can say is stay tuned.

We have also been urging the government to reduce the 3.2 billion dollar Provincial-Municipal fiscal gap.  AMO’s long-standing position is that we can best address these fiscal challenges by making structural changes to how provincial and municipal services are financed.

The Premier has spoken a great deal about addressing Canada’s horizontal fiscal gap. The horizontal gap is the ability of provinces and territories to provide comparable public services at comparable levels of taxation – services such as health and education, social support programs. The federal government has recognized that there is a horizontal imbalance and their recent Budget set out a framework that the provinces and territories can use to begin addressing this imbalance.

And then there is the vertical imbalance – get the sense that the public is going to be a bit confused? Well, the vertical imbalance is about one order of government having more revenue and spending on areas outside of their ‘constitutional’ responsibilities.

AMO has an interest in all of this because of the trickle down effect. We know about that trickle down – it’s called downloading.  As you know municipal governments subsidize various provincial social and community health programs. And those same property taxes also pay for some federal services, such as homeland security elements, pandemic strategies.

We have yet to see a significant, sustained amount of movement on the uploading of provincial health and social services costs.  While some of the cost-sharing arrangements have changed a bit, the cost of those services themselves have generally increased. We are currently seeing this in the public health situation even though the province is eventually moving from 50% to 75% cost share. The fact remains that this Province continues to rely on municipal property tax revenues to subsidize provincial programs and services. And Ontario residents remain the highest taxed municipal taxpayers in Canada.

This has got to change.

The Premier in February made a commitment to pursue tri-level talks on Federal/ Provincial/ Municipal fiscal issues.  This commitment would include working towards relieving municipalities of downloaded costs.

The federal government, through its budget, set out in a broad framework for dealing with the Federal Provincial imbalance.  Some provinces and territories don’t want municipalities at the table.  Whether or not we are, AMO will be working on proposals for how any imbalance dollars are flowed through to municipal governments in Ontario. We will be working closely with the Premier’s office and the provincial team as well as FCM. So for the next year, when the Prime Minister is expected to provide his comprehensive proposal for dealing with the imbalance, I can assure you that your interests will be well represented.

The Province is well aware that addressing the financial challenges of Ontario municipalities is AMO’s greatest priority. These are challenges shared by all of us, but they particularly hard hit the North.  I want to thank your Chair, Aussie Hunt for his time and energy on the AMO Board and his role at our Memorandum of Understanding meetings.

The North is always a part of our work at AMO.

We know that Northern Ontario is experiencing the perfect storm of a declining local economy and rising social service costs. Since 1998, when the previous Provincial government downloaded many of these services, we have been warning about these problems. Now, they are coming home to roost.

At AMO, we’ve been fighting on your behalf to get the Province to address the problems caused by downloading. This fight will continue, because we know that a strong North is vital to a strong Ontario.

AMO has been working to help you overcome the financial challenges affecting your main industries, such as forestry. The report card on the new softwood lumber agreement with the US has yet to be completed but we know that it will not address all the factors that are affecting this industry. High lumber and electricity costs and a surging Canadian dollar make it difficult for Canadian companies to compete.

As you know, many mills are suffering and have had to shut down operations. That has put hundreds of Northern Ontarians out of work.  According to the Ontario Forestry Association, more than 35-hundred forestry jobs have been lost in Northern Ontario over the past three years.

In February, the Province announced some help in the form of $220 million for roads and stumpage fees. This came about mainly due to your own hard work. I want to congratulate municipal leaders from Northern Ontario for their leadership in this effort.  The fact remains - more help is needed.

One of the main reasons for the forestry industry’s troubles is high electricity costs. Last month, we learned that electricity prices will rise even more – perhaps by as much as 10 per cent in some communities.

When you consider that electricity can account for as much as 30 per cent of a mill’s operating costs, it is clear that Ontario needs a viable plan of action to address the challenges in Northern communities.  

The Province recently gave us what some have called a “municipal” Budget. We were happy to see that 400 million dollars will be going to roads and bridges in the North. Many of your communities have already had announcements on infrastructure improvement projects. This money is urgently needed and will help in fixing municipal infrastructures that have long been neglected.

However, I expect that some of the highways that this funding will improve were Provincially run before being downloaded onto your property tax bases. In fact, more than 5-hundred-thousand kilometers of roads and bridges are now our responsibility. So the obvious need for the Province to step in and provide this funding speaks to the fact that the downloading strategy wasn’t viable and needs to be fixed.

We know municipalities need more than $400 million in one-time funding. You also want a permanent arrangement regarding the Federal gas tax. The province could extend its gas tax for transit to municipalities that have a much different type of transit system – called roads and highways in your neck of the woods.

Again, thanks to your help, we were able to convince the Government to pick up its share of land ambulance costs. The Premier actually made the announcement at the recent ROMA/OGRA Conference. He promised $50 million in new funding for 2006 and a total of $300 million over the next three years.  That’s very good news.

We believe this commitment on behalf of the Premier demonstrates a true partnership with municipalities. It’s a partnership that will benefit every property taxpayer in the Province. It’s also a positive step toward achieving our number one priority, which is lifting the costly burden of health and social service costs downloaded onto municipalities almost a decade ago.

But we must not let up on the need to fix the $3.2 billion subsidy that we make to the province. We are on the hook in 2007 for added social services costs as a result of the rate increase for Ontario Works recipients this year. This puts the spotlight on the fundamental problem – that municipal governments will have more costs in 2007 in this area than they do in 2006.  This is just another demonstration of why the fiscal relationship has to be fixed.

While the short-term initiatives provided in the Provincial Budget are appreciated, they are no substitute for the practical solutions and commitment to a long-term sustainable financial policy for Ontario’s municipalities.

AMO has also been quite vocal about the shortcomings of the Ontario Municipal Partnership Fund. I want to assure you that OMPF continues to be a focus for us – we know it is not sustainable. We know that municipal governments cannot do effective budgeting within this fiscal framework – a framework based on an old and untenable downloading.

OMPF money is targeted primarily to a handful of municipalities with high social program costs relative to the household incomes of their residents. There are problems with this formula, because it means some communities will receive lots of money, while others will get little.

This makes OMPF unfair and inequitable in our eyes.

We see OMPF as a band-aid solution created to dress the worst wounds that downloading created.

I have mentioned the rising price of electricity. We know that electricity rates will be going up again – perhaps by as much as 10 per cent in some areas. When you consider how much it costs to power a manufacturing plant, you can see how important it is for Ontario to develop a viable plan of action to address the problem of high electricity costs.

Finance Minister Dwight Duncan recently announced that the Province plans to provide up to $120 dollars to low-income families, to help them deal with rising electricity costs. We applaud this move and support any initiative that helps our most vulnerable citizens.

However, more needs to be done. We will continue to push the Province to develop further supports for social housing providers, senior and long-term care facilities, as well as for the individual citizens who need financial assistance to cope with rising energy costs and to make the necessary improvements to help conserve energy.

As you well know, Ontario is also in the midst of a waste disposal crisis. While municipalities have been assigned operational and financial responsibility for waste management, the Province has to take on the leading role in the environmental approvals, legislative processes and product stewardship. It also has to show leadership in helping innovative waste diversion, including energy from waste. Energy from waste would go some distance in helping with the supply of electricity and our waste crisis – this is a win-win.

Last fall, we prepared and submitted a strategy to integrate waste management, resource use and energy creation in Ontario.

We developed this waste strategy with the Association of Municipal Recycling Coordinators. We believe the Province should move forward to implement this strategy as soon as possible.

Municipalities must have the authority to make sound and meaningful planning decisions. You as elected officials need to be in charge of planning and development in your own communities. That’s why we’ve been working hard on planning and OMB reform.

The Government is working to pass this legislation, which embraces many of the municipal sectors concerns with the planning process.  

Gone will be the days when developers or applicants can ignore the wishes of council and appeal directly to the OMB.  AMO has made it crystal clear that planning decisions should be made only by democratically elected and accountable municipal governments and should only be overturned by a provincially appointed body in limited circumstances.

So we congratulate the government for reinforcing the primary decision-making role of councils, the need for complete applications and the scoping of appeals.

We are advised that changes to the Municipal Act are also progressing. I’ve been telling Minister Gerretsen and every MPP that it would be a very good thing if the Municipal Act could be passed by the time of the AMO Conference. We’ll see. The province and AMO agree about the need for more permissive legislation that would provide us broader authority to do what’s best for our communities.

We need an effective Municipal Act that provides municipalities with greater authority to get on with the job of governing. This means we need the government to stick to its interests, and let us deal with ours. The end to the micromanagement of municipal government is long overdue.

AMO is providing all the input that it can on the Municipal Act. The ball is now in the Province’s hands and we will have to wait and see what happens.

Source water protection is another area of challenge for municipalities. No one will argue that we need to protect our sources of water – and that economically it makes sense to undertake prevention rather than treatment. But the Government’s proposed legislation poses new challenges to municipal governments who aren’t really in charge of the front end of source water protection – the planning portion. However, we do get to be in charge of implementation or the back end, and when you are at the back end, well… you know the risks of that.

And elsewhere on the waterfront, we have concerns with the recommendations to the Province in the Swain Report. The government has heard a wide range of opinions here - from the principle of yet another regulatory body called the Ontario Water Board, to ‘consolidation’ of water systems. This would see systems that would become too expensive for users in a true full cost recovery system that includes both operations and capital consolidated with those with less expensive user fee systems. Amalgamations and pooling of service costs haven’t been popular concepts used for other reasons, so it will be interesting to see how the province responds to the Swain Report.

Let’s not kid ourselves. The public is very sensitive to utility rates right now. With recent electricity rate increases and higher gas bills, changes to the water and wastewater system in Ontario need to be done with great care. 

You can rest assured that water and wastewater, electricity and Provincial downloading costs and a myriad of other issues from policing costs to court security to even landlord tenant legislation are all matters that we raise during our monthly MOU meetings with Cabinet Ministers.

Along with Aussie Hunt, and Michael Power from NOMA, the North has a strong voice and direct input into our MOU talks. I also want to acknowledge the input that other officials, elected and staff, bring to AMO’s Board and many task forces.

While the MOU meets monthly, voices need to be heard all over this province. It is up to you to make the most of your meetings with your Provincial representatives, both at this conference and in your MPPs constituency office.

Let them know your concerns because we all benefit from working together.

We all know the old saying: “Home is Where the Heart Is.”

It may be a cliché, but it really is true. And I believe that this old saying sums up the motives of this conference and your leadership.

Northerners love their home. They want to stay here and prosper and watch their children prosper too. Yes, there are challenges. You know that. But there always have been and always will be. It’s part of the life you choose in living and prospering here.

However, your resolve to embrace these challenges never wavers. You are a solid and well-respected group and AMO values you.

Embracing the Challenge of life in the North is not easy. But it’s also not impossible. All it takes is effort, cooperation and thinking ahead.

AMO is here to help you in any way we can.

Thank You.