05/04/2006

2006 OSUM Conference, Leamington, Ontario. Thursday, May 4, 2006.
President of the Association of Municipalities of Ontario 
2006 OSUM Conference
Thursday, May 4, 2006
Leamington, Ontario

(Check Against Delivery)

Hello and thanks for inviting me to speak to you today on behalf of AMO.

I have enjoyed my visit to the Tomato Capital of Canada. And I look forward to meeting many of you before the end of this conference.

Meetings like these are important to all of us, and your attendance here today shows how seriously you take the issues concerning small urban municipalities. It also shows how committed you are to improving the lives of ratepayers in your communities.

AMO takes seriously the theme of this conference: “Investing in Diversity.” We know that investments now in technology, science and manufacturing pay off down the road. We know that preparing for the future now helps us take advantage of future opportunities.

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 to stop. 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 and a support team of actuaries and pension benefit 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 rate increase this year.

Frankly, Bill 206 has changed AMO’s role as advocacy group to one of representative. And to do the right job as representative, it is going to need to 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.  Unlike the employee reps, who have pension experts supporting them 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 an horizontal imbalance and in yesterday’s budget set out a framework that they want to pursue with the provinces and territories in re-dressing 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 – as you know municipal governments subsidize various social and community health programs. And those taxes also pay for some federal services, such as homeland security elements, pandemic strategies.

We have yet to a significant 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 the service itself has generally increased. We are currently seeing this in the public health situation even though the province will eventually move from 50% to 75% cost share. The fact is 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. Yesterday, the federal government set out in a broad way their framework for dealing with the F-P 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 Premier is expected to provide his comprehensive proposal for dealing with the imbalance, I can assure you that your interests will be well represented.

In the meantime, we work on some other steps.

Small urban municipalities received some good news this year from the Province - in the funding of roads and bridges.

The $400 million in the form of one-time grants that will go towards roads and bridges in municipalities outside the Greater Toronto Area is welcomed. Anything is welcomed as we have a great deal of catching up to do in not only capital/maintenance elements, but also investing in asset management. However, it must be pointed out that this is a one-time investment.

Yesterday, the federal government committed to continuing the existing infrastructure programs and $5.5 billion in new funding for these programs nation-wide.

However, in Ontario we still face an annualized province-wide infrastructure deficit of about $5 billion dollars.  No matter how you cut it, we still have a huge, systemic and chronic infrastructure gap that needs to be addressed.

Consider the numbers – a $5 billion dollar a year infrastructure deficit along with a $3.2 billion and growing municipal subsidy of provincial social and community health programs along with a lot of other provincial and federal costs, such as court security, prisoner transport and immigration related services.

No one says this fiscal situation 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. This is why we have to move forward on straightening out the fiscal imbalance situation.

To the Premier’s credit, his Government recognizes that we can agree to disagree on some issues without undermining our efforts to work together in common cause.

While we were battling OMERS Bill, the Premier announced that the Province would finally being to pick up its share of the land ambulance funding. This will see the Province allocating $50 million in new funding for municipalities for 2006 and a total of $300 million over the next three years.

These announcements are all positive news that I know will be welcomed by municipalities across Ontario. We believe this commitment on behalf of the Premier demonstrates a true partnership. It’s a partnership that will benefit every property taxpayer in the Province.

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 OW 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.

We know that many manufacturers in small urban municipalities are also hampered by high electricity costs. This month, we learned 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.

Your ability to invest in diversity will be influenced by your ability 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 large developers 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.

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 and legislative processes. Innovative waste diversion, infrastructure and product stewardship is not possible without Provincial leadership.

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.

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 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 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 are matters that we raise during our monthly MOU meetings with Cabinet Ministers.

A number of MPP’s are here at this conference and many Ministers will be at our Annual Conference in August. We urge you to make them aware of your concerns. Impress upon them that Investing in Diversity means investing in your future. It means looking ahead to new energy alternatives, affordable housing, and multiculturalism among other initiatives.

A wise man once said: “the present is a temporary condition.”

How very true. However, the present also lays the foundation for a solid future.

By Investing in Diversity now and working together with all three orders of government, we can all succeed. The future of our country lies in the prosperity of communities like Leamington and in small urban municipalities across Canada.

That’s because your concerns are our concerns and when you prosper, everyone prospers.

Next year, when the next AMO President addresses your conference in Midland, I hope you will be starting to see the benefits of more multi-level co-operation and outcomes that truly contribute to municipal fiscal sustainability. I hope you will already be prospering thanks to the Investments in Diversity that you make today. And I look forward to seeing you at the AMO annual conference, where many of the matters I have touched upon today, will be fully developed and will help you in the future.

Thank You.