04/27/2006

2006 NOMA Conference, Travelodge Hotel, Thunder Bay, Ontario. April 27, 2006.
President of the Association of Municipalities of Ontario 
2006 NOMA Conference
April 27, 2006
Travelodge Hotel
Thunder Bay, Ontario

Check Against Delivery 

Thank you for inviting me to speak to you today on behalf of AMO. I am very happy to be back in beautiful Northwestern Ontario.

Spring is a time of renewal, and I hope that the new season will bring some long-needed prosperity to your region.

AMO takes seriously the theme of this conference: “Northwestern Ontario - Meeting the Challenge.”  We know that the north is facing a declining population - unlike any other part of the province. This means that you face unique challenges that require unique solutions.

Meeting the Challenge means that investing today in new technology, new industry, and infrastructure will pay off down the road. These types of investments help to sustain and diversify economies and communities. And they allow municipal leaders to do the job they were elected to do.

The North, perhaps more than anywhere else, best understands its place in the global economy. You know what that means on a daily basis. And you also know that it means looking beyond traditional perspectives, to find new ways of doing things.

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, and are particularly felt in the North.  I want to thank your Chair, Michael Power 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.

You are facing very tough times. You know it; we know it; and we are working to ensure that the whole province knows it and that you have the tools to make a difference.

AMO’s long-standing position is that we can best address these challenges by making structural changes to how provincial and municipal services are financed. The Province has acknowledged the need for this. However, in practice, the financial assistance that municipalities have received has been short term or project based.

For instance, Northwestern Ontario received some good news in the recent Provincial Budget. While we welcome the $400 million dollars for investment in roads and bridges, it is one-time and we still are facing an annual province-wide deficit of about $5 billion in infrastructure.  And I wouldn’t be surprised if some of that has to go to the upgrading of some of the 5 thousand kilometers of provincial roads and bridges that were downloaded to us during the 90’s. No matter how you cut it, we still have a huge, systemic and chronic infrastructure gap.

The obvious need for the Province to step in and provide this funding along with the continuation of the incremental re-sharing of public health speaks to the fact that the downloading strategy of the previous government was not viable and must be fixed. Clearly, the wheels on the downloading are not only flat, but they are beginning to fall off.
     
We also know that forestry is vital to Ontario’s north and the industry is badly in need of support.

Back in February, the Province announced some help for the industry. A total of $220 million in new funding was allocated for roads and stumpage fees. While this was a good starting point, there is still a long way to go before this important industry is back on solid ground.  But I want to congratulate municipal leaders from Northwestern Ontario for their leadership in moving this critical need forward and the success achieved thus far. I know the role that AMO played was also helpful.

No doubt, the government representatives will speak about that industry and the government’s strategy to support it. You will also hear about all that has been done for municipalities.

Queen’s Park feels that it has done a great deal for us.

But we need more than $400 million in one-time funding. We need more than the eventual 75% uploading of public health. We need more than a 2006 deferral of social assistance rate increase.

The province could and should build on and extend its 2-cent a litre gas tax for transit to municipalities that have a much different type of transit system – roads and highways in your neck of the woods.

And we need to get the federal government to make a 20- year commitment if not a permanent arrangement for its current 5-year gas tax agreement.

Consider the numbers – a $5 billion a year infrastructure deficit along with a $3.2 billion and growing municipal subsidy of provincial social and community health programs.

No one says this is sustainable – at least not without significant property tax increases and we know that this isn’t doable, nor is it reasonable to expect the most regressive form of taxation, property taxes, to do all of this.

Let me turn to the province’s planning reform. This is one area where the role of council is being reinforced and the role of the OMB is being changed. This plan was near the top of our agenda and AMO will be appearing at a Committee to lend support to most of the proposed changes. So we congratulate the government for reinforcing the primary decision-making role of councils, the need for complete applications and the scooping of appeals.

Source water protection falls into the ‘somewhat of a challenge’ list.  No one will argue that we need to protect our sources of water – and that economically it makes sense to prevent rather than treat. 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. We do get to be in charge of implementation - 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 on 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 in the past 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 needs to be done with great care.

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.

So, I’d ask that you help us keep the Premier focused on the big picture.

In AMO’s mind, that means two things:

First, a commitment from the Province to work with us on a plan that over time commits to an effective upload of the costs of the many health and social services that are undermining the effectiveness of the municipal property tax dollar. That’s a dollar that was meant to support property services. Property tax dollars are not income redistribution tax dollars. If we do not get a re-examination of the Provincial-Municipal fiscal relationship, we will soon run out of chairs on the deck of a sinking boat.

And…

Second, we need an effective Municipal Act that provides municipalities with greater authority to get on with the job of governing. This means more revenue sharing and more diverse sources of revenue. We also 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. The Municipal Act is proceeding and AMO is providing all the input that it can on your behalf. The ball is now in the Province’s hands and we will have to wait and see what happens.

Remember the role of council, particularly if we see any snippets of the now defunct Bill 123 that places the Provincial Ombudsman in the business of municipal government. The Provincial Auditor has also made noises about having jurisdiction with the MUSH sector. When you compare the orders of government – well, who do you think is the most accessible and most accountable?  Do we really need the added oversight of these provincial entities and at what cost?

AMO also had plenty to say recently about the OMERS Bill 206, as you well know.

We fought this legislation because we knew that it would be costly to our taxpayers. We also knew going in that it would be almost impossible to stop the Bill. However, we had to try.

At the very least, we wanted to make sure that Ontarians understood what the Province was doing – that it was mandating supplemental pension plans for emergency services; that property taxpayers would see them paying more in taxes without receiving any increased benefit in terms of improved service delivery.

Our campaign had great success in that regard, thanks to your help.

However, I don’t want you to think that the OMERS fight is characteristic of our overall relationship with the Province. For the most part, the relationship is positive and strong. To the Premier’s credit, the Government recognizes that we can agree to disagree on some issues without undermining our efforts to work together in common cause.

The amount of dialogue is healthy and it is an important component of getting to a shared vision for municipal government in Ontario.

In that regard, we were encouraged by the Province’s promise to finally pick up its full 50 per cent share of land ambulance funding.

This pledge included $50 million in new funding for 2006 and a total of $300 million over the next three years. The fact that it corrects an ongoing fiscal shortfall is important. And the fact that it corrects a fundamental relationship problem is vital. The land ambulance funding announcement is an example of what happens when you make enough noise: the Government listens.

So we must not let up on the need to fix the $3.2 billion subsidy that we make to the province. As I previously mentioned, we are on the hook in 2007 for added social services costs as a result of the rate increase for OW recipients. 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. It’s time the Province stopped taking advantage of this social services arrangement and assumed the costs itself.

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.

I don’t need to explain further the burden that downloaded program and service costs are placing on Northern municipalities.

Pickle Lake is the most visible reminder of how bad things are in some areas. Here’s a community that is in such dire straights, the Mayor tried to hand the keys over to the Provincial Government.   “Take over this town,” he said, “because we can’t make it work under this system any longer.”

The fact is, Ontario continues to be the only Province in Canada that relies 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 has been quite vocal about the Federal-Provincial fiscal imbalance. And he recently made a commitment to pursue tri-level talks on Federal/ Provincial/ Municipal fiscal issues. AMO is lending active support to these efforts. This commitment includes working toward relieving municipalities of downloaded costs. We need the Premier to follow through on this promise.

At a conference earlier this month, former Premier Bob Rae joked that “He’s been poor and he’s been rich – and rich is better.” His point was that only economically strong and prosperous economies can afford the luxury of looking after those in need.

That is certainly the case in Ontario.

Today, many of your communities are experiencing the perfect storm of a declining or stagnant local economy and rising social service costs. Since 1998, these are the conditions that we have all warned about.

The fact is you are facing challenges that can have long term implications for the prosperity of your communities and the opportunities to invest, diversify and prosper.  Why does it seem easier to get into these predicaments than it does to get out of them?  Competing demands are never easy but they do demand a vision, a plan and real outcomes.

According to the Ontario Forestry Association, more than 35-hundred forestry jobs have been lost in Northern Ontario over the past three years.

One of the main reasons for the industry’s troubles is high electricity costs. This 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 paper mill’s operating costs, it is clear that Ontario needs a viable plan of action to address the challenges in Northern communities.  

It is incredible that your industries are suffering due to high power costs considering the surplus of electricity in parts of Northern Ontario. Why can’t this surplus be used more effectively? These are questions that need to be answered.

We do applaud the Province for its budget announcement concerning the Atikokan generating station. Instead of closing the plant, transforming it to a new biotech energy research center is a good example of Meeting the Challenges. But more needs to be done in this regard.

Meeting the Challenges is about controlling your own destiny. 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 to introduce more permissive powers for municipalities. That is also why AMO is developing service programs that will help you stretch your tax dollars even further. Pat Vanini will spend a few minutes shortly updating you on 2 programs that can offer you savings.

Meeting the Challenges also means working together. All three levels of government must take an interest in the concerns of the North. You may not have as many votes here as Southern Ontario, but that doesn’t mean that your concerns, or your role in our economy, are any less important.

And in fact, your concerns – if taken seriously by Ottawa and Queen’s Park – could benefit everyone. As you know, the forestry industry has a province-wide footprint, affecting not only the North, but nearly 200 communities in southern Ontario as well.

It’s been said that, ‘To be happy at home is the ultimate goal of all ambition.’

I believe that sums up the motives of this conference and your leadership.

Northerners love their home. And yes… there are challenges that come with making this part of the world your home. You know that. There always have been challenges here even though at times, the magnitude changes. But your resolve to do something about them never wavers. You are a feisty group, a well-respected group and AMO values you.

The world and your local economies are changing – so shall the solutions that help you find new ways to prosper.

We hope that AMO’s Rural and Northern Plan Task Force can do just that – provide workable, realistic, doable ideas where all orders of government and others can come together. I remain optimistic that this time next year, when the next AMO president is invited to NOMA - that we can stand together and say, hey world…look North. This is where good things happen.

Thank You.