It has been argued that we live in an era of ‘glocalization’, in which the knowledge-based economy found in cities is of increasing importance to the vitality of national economies.  Despite their increasing economic importance, cities remain creations of the provinces with no constitutional independence and limited powers.  To quote Courchene “The dilemma for Canadian Federalism is obvious.  In spite of their enhanced importance, cities are “constitutionless”: They are creatures of their respective provinces.  Yet as their role increases, one would expect them, among other things, to dispatch “ambassadors” to their sister international cities in other nations and to engage in a range of activities that used to be the preserve of nation states.”[i] Indeed, a debate has occurred in recent years in which arguments in favour of providing municipalities with more powers has been put forward, with the hopes that these new municipal powers would bolster the knowledge-based economy’s competitiveness in Canada.[ii] To quote a former Mayor of Toronto, John Sewell “There was a shared sense that the restructuring of the municipal governance regime in Toronto, be it through a charter or otherwise, is a necessary reaction to the pressures brought on by globalisation in general and Toronto’s position in the global competition among cities in particular.”[iii] In fact, some proposals have even suggested creating a Province of Toronto or making municipalities another constitutionally based order of government.[iv]

This essay will argue that constitutional reform to provide municipalities with more power and autonomy is unnecessary and would in fact destabilize the federation, hurting global competitiveness.  In addition, through comparative analysis, this essay will show that the degree of autonomy that municipalities have does not appear to be a major factor affecting the knowledge based economy or a nation’s economic growth.

More effective and realistic non-constitutional recommendations to maintain the development of the knowledge-based economy will be proposed as a viable alternative to major constitutional reforms.  These will include maintaining the federal and provincial roles in funding research and educational centres without a major municipal role, as well as maintaining effective regional governance.  Furthermore, it will be suggested that the municipalities must article their demands in a more sophisticated manner in order to gain funding from higher orders of government if they wish to develop the knowledge-based economy.

Addressing Constitutional Reform

If past experience has taught us anything it is that constitutional reform can be divisive and unworkable.  The Meech Lake Accord and the Charlottetown Accord represent the most recent attempts to reform the constitution.

The Meech Lake Accord was an attempt to gain support for the constitution in Quebec by creating a number of amendments to appease the province after it failed to sign on to the 1982 constitution.[v] Unfortunately the demands of western Canada, eastern Canada, and natives, among other interest groups, were ignored.[vi] The Accord met resistance from many of the interest groups that were not included, which helped ensure its defeat in 1990.[vii] In response to this rejection of the Meech Lake Accord separatism in Quebec grew tremendously, destabilizing the country.[viii]

In the early 1990s the Mulroney government created the Charlottetown Accord in a second attempt to deal with the constitutional demands of Quebec.[ix] This time, however, a larger array of interests were represented in the Accord.  These interests included the provinces, natives, territorial leaders, women, and cultural minorities.[x] Ultimately a public referendum that was held in 1992 defeated the Charlottetown Accord.[xi] Many believed that the Charlottetown Accord had gone too far in appeasing the demands of various interest groups, while a majority of Quebecois, natives, and Western Canadians felt that the Accord had not gone far enough to meet their demands.[xii] As with the defeat of the Meech Lake Accord, the defeat of the Charlottetown Accord fostered separatism in Quebec and destabilized the country.[xiii]

Subsequent to these political disasters the federal government dealt with many of the demands emanating from interested parties using non-constitutional methods instead.  The list of achievements using such methods includes the Calgary Declaration,[xiv] a new amending formula,[xv] and the Social Union Framework Agreement.[xvi] This strategy was far more successful at meeting demands and saw a decline of separatism in Quebec,[xvii] followed by more stability in the country.

The problem with even attempting to meet the demands of interested parties via constitutional reform is that it entrenches winners and losers constitutionally.  Thus the demand for public input and the inclusion of various interests is high because the stakes are high.  In fact, the stakes can become so high that interests are less willing to compromise and more likely to feel that their demands have not been adequately met, or that the demands of others have been acceded to too much.  Non-constitutional methods of reform do not have this problem and thus face less opposition, making them far more likely to succeed.

Constitutional reforms are also highly multilateral by their very nature.  They must suit a multitude of parties and affect a multitude of parties.  Non-constitutional methods of reform can be carried through in a bilateral fashion, tailoring itself to an individual actor’s needs without being watered down in more complex negotiations.  It also allows other actors to remain unaffected and uninvolved, forgoing possible opposition.

Clearly a constitutional answer to the demands of municipalities in Canada is not an appropriate one.  Municipalities would be required to compete with many other demands that may run counter to theirs.  Even if municipalities could successfully negotiate their demands into a constitutional proposal, it is extremely unlikely that any such proposal would be passed or accepted by the public, due to the amount of competing demands it would entail.  Additionally, a failure or a passage would potentially result in increased political instability in the country, which would likely hurt the economy, countering a justification for increased municipal autonomy.  Given the ‘non-constitutional’ strategy that the federal government has adopted regarding demands for constitutional reform, it is also highly unlikely that any new constitutional proposals will be created in the foreseeable future.

Non-constitutional methods of reform may be bilateral and more flexible to meet the unique needs of individual municipalities without compromising said needs with the needs of other interested groups.  Non-constitutional reforms can also be highly institutionalized and secure, as evidenced by the early provincial Equalization program’s functionality and durability prior to its inclusion in the constitution,[xviii] as well as by the disuse of the federal powers of disallowance and reservation without constitutional reform.[xix] Indeed the currentt independence of municipalities also attests to the durability of non-constitutional reforms.  Although they owe their existence to the province, the democratic elections of local politicians and our history of local government have conferred a legitimacy and authority to municipal government that has mitigated provincial control to a degree, despite their technically-unlimited constitutional authority over them.[xx]

Thus efforts to meet the demands of municipalities must utilize non-constitutional methods of reform, in part due to the pitfalls of constitutional reform and in part due to the advantages of non-constitutional reform.

Addressing Decentralization and Economic Growth

Some have suggested that cities require more autonomy and power as they become increasingly vital to the national economy.[xxi] However, a comparative analysis of municipal centralization in the United Kingdom and municipal de-centralization in France will show that this is not a major factor affecting national economies or the knowledge based sector.

Up until the1980s the United Kingdom had strong municipal governance.[xxii] Indeed, the government of London was actively intervening in its economy to support business during the early 1980s.[xxiii] This interventionist policy went against the ideology of the national government, which perceived it as supporting doomed businesses.[xxiv] In response the national government hoped to increase economic productivity by centralizing municipal power in the hands of the central government.[xxv] Beginning in 1986, a series of reforms were enacted that saw municipal independence quashed.[xxvi] Municipal policy was subsequently guided primarily by the national government,[xxvii] as the following quote illustrates, “…the capacity of local authorities to steer was reduced through national government guidance, and they were compelled to enter in to new institutional interactions, most notably partnerships.”[xxviii] In 2000 the Local Government Act restored some of the autonomy that was lost.[xxix] However, the national government has retained a high degree of control over municipal policy[xxx] and municipal independence remains relatively limited.[xxxi]

France, on the other hand, pursued large scale decentralization beginning with the 1982 Decentralization Acts.[xxxii] These reforms gave the French municipalities more independence and economic power,[xxxiii] including the ability to give loans and tax concessions to businesses.[xxxiv] Indeed, municipalities in France gained a high degree of financial power as illustrated in the following quote, “the financial autonomy of French local authorities seems to be extensive, effective, strongly supported by the decentralization, and guaranteed by the political influence that local politicians have within national elected representative bodies”.[xxxv] Municipalities were also granted increased control over early education, local development planning, cultural policy, social services, and environmental policy.[xxxvi]

One would have expected the French economy to perform significantly better than the economies of Canada and the United Kingdom if the decentralization of authority to cities fostered growth in  knowledge based economies, and if cities in actuality drive the national economy.  However, this has not been the case.

Table 1. Comparative GDP Growth of France, Canada, and the UK[xxxvii]

Improving and Maintaining the Condition of the Knowledge Based Economy

As has been illustrated, constitutional reform is not an appropriate method to use to address the condition of our knowledge-based economy.  Nor is large-scale carte blanche decentralization of power to municipalities, be it financial or otherwise.  There are, however, some key steps that can be taken in Canada to enhance the development of our knowledge-based economy.

First, the municipalities must articulate their proposals for enhancing the knowledge-based economy and go beyond simply requesting more autonomy and resources.  The City of Toronto’s One Cent Now campaign is one example that demonstrates how the city struggles to articulate its demands clearly..  The campaign is seeking 1 cent of the federal GST tax to pay for general municipal services and infrastructure.[xxxviii] To quote Mayor Miller, “One cent of the GST will mean approximately $410 million for Toronto infrastructure, roads, bridges, expressways and the other structural and program supports required to maintain Canada’s largest city.”[xxxix] The justification for this request is that assuming cities drive the national economy, when cities lose, the nation loses as well.[xl]

The Federation of Canadian Municipalities is also requesting additional financial resources from higher levels of government to fund infrastructure that it deems vital to the national economy.[xli] The FCM lists as top priorities an Active Cities and Communities Fund for ‘sports’ infrastructure, and a Climate Change Adaptation Fund to study climate change’s impact on infrastructure.[xlii]

The problem with these requests is that they lack explicit mention of the knowledge-based economy along with very specific proposals about how to enhance it.  There is no doubt that the One Cent Now campaign would use the additional funds for general spending.  Yet general infrastructure spending alone is not adequate to develop the knowledge-based economy.[xliii] In fact, localities such as Cambridge,[xliv] Hyderabad,[xlv] and Silicon Valley[xlvi] all have significant infrastructure issues and yet excel in the knowledge-based economy.  In addition, Canadian cities are currently in relatively good condition to compete in the knowledge-based economy due to the quality of their infrastructure and social environments.[xlvii]

Municipalities must articulate specific proposals for building the advanced education, cultural and research centres that facilitate the creation and development of knowledge-based clusters.[xlviii] For instance, advanced educational centres create the local labour force and networks that these clusters require.[xlix] Government-funded research and cultural centres also build networks and create jobs in these clusters.  Educational, cultural and research centres incubate entrepreneurs who create their own businesses in the locality.[l] Government facilities, too, provide an important function by employing the knowledge-based sector in the locality when business cannot during economic downturns.[li] As these knowledge-based clusters grow, they can sustain and reinforce themselves, while still benefiting from government funded facilities.[lii] Unfortunately municipal proposals appear to lack such examples of the well-articulated demands that may actually benefit the knowledge-based economy and secure funding from higher levels of government.

Another major problem with the city-centric view is that it ignores the importance of the resource-based rural economies, as well as their infrastructure problems.[liii] This sector is an essential component to the success of the knowledge-based economy for several reasons. First, the resource sector requires engineers, environmental scientists, geographers, and geologists, among many other knowledge-based professions. Thus, this creates demand for more skilled workers and jobs. Second, many of the technologies and tools used in resource extraction must be invented in the knowledge-based sector. Major projects such as carbon sequestration must necessarily involve knowledge-based expertise.      The. Indeed, resource extraction is becoming increasingly high-tech, which bodes well for the knowledge-based economy. If our cities were assisted at the expense of rural and resource-based sectors, there is no doubt that the knowledge-based economy would be negatively impacted in the process because they are so integrally linked to one another.

Thus regional governance is vital to building the knowledge-based economy, as opposed to increasing the autonomy of municipalities alone.  Only a regional government has the perspective necessary to develop the broad and diverse base of the knowledge-based economy.[liv] Furthermore,  only a regional government has the means and perspective needed to develop the regional infrastructure that connects clusters to markets and each other.[lv]

Both the federal and provincial governments are involved in research and development policy, although the federal government reigns supreme in terms of total dollars spent.[lvi] The federal government has also involved itself in the funding of advanced education to foster the knowledge-based economy,[lvii] along with the provinces.[lviii] Fortunately this has not led to significant conflict between the orders of government in recent times[lix] given that federal and provincial policies on the knowledge-based economy are generally congruent.[lx]

One of the conclusions that can be made is thus the federal and provincial governments should retain their preeminent roles in the development of the knowledge-based economy. The lack of conflict between their respective roles, as well as the experience each order of government has in funding and developing the knowledge-based economy justifies the continuation of their current roles.  This justification becomes even more evident when contrasted with poorly articulated municipal demands, municipal parochialism, and a lack of experience in developing and funding the knowledge-based economy.

Conclusion

In conclusion, multilateral constitutional methods of dealing with urban demands are not practical and would only serve to destabilize the country, hurting global competitiveness.  Non-constitutional and bilateral methods of dealing with urban demands are more practical, and may be effective and durable.

Although cities are important to national economies, there is no clear correlation between the level of urban autonomy, or lack thereof, and national economic prosperity.  However, government support for advanced educational, cultural, and research centres has been shown to foster the development of knowledge-based economic clusters and should thus be encouraged. Since these clusters require regional level planning, increased municipal roles may in fact hamper their development.  Indeed, poorly articulated municipal demands, a lack of expertise in developing the sector, and parochialism in relation to the rural resource based economy do not inspire confidence for the expansion of municipal roles in developing the knowledge-based sector.  If municipalities wish to gain a greater role in developing this sector they must first articulate their demands in a more sophisticated manner, create more sophisticated plans, and gain valuable experience.  Lacking this, higher orders of government have no reason to entrust municipalities with additional financial or political powers to develop the knowledge-based sector. At the end of the day, the result is that municipalities appear to be exploiting an economic argument to gain funding and power for generalized purposes as opposed to clear economic purposes.

[lx] Herman Bakvis, “The Knowledge Economy and Post-Secondary Education: Federalism in Search of a Metaphor”, in Herman Bakvis and Grace Skogstad ed. Canadian Federalism 2^nd ed. (Don Mills: Oxford University Press, 2008)

by Patrick Baud

Associate Director of Research,
University of Toronto Model Parliament

There are eight vacancies in the Senate; there will be four more by year’s end. If last December’s appointments to the red chamber are any indication, Harper will likely pick prominent Canadians who will tow the party line when it counts. Gone are the days when the Prime Minister could think of choosing a partisan member of an opposition party, as Paul Martin did when he appointed prominent Progressive Conservative Hugh Segal in 2005. Suggestions that Harper might appoint a Liberal equivalent to Segal, such as key Ignatieff strategist Warren Kinsella, are bunk. Instead of shaking our heads at the shortsighted partisanship at play here, those interested in the future of Parliament should give some thought about how we might revitalize the Senate to harness its tremendous capacity to do good work, while keeping it from being a plum patronage appointment.

Populists, both conservative and progressive, have suggested that electing Senators or allowing provincial legislatures to nominate them, would make the Senate more democratic. While this would allow the Senate to more fully take on its intended role to represent ethnocultural, linguistic, regional and linguistic “sectional interests” in the words of Sir John A. MacDonald, it would have some negative unintended consequences. The Senate would quite likely become more partisan and unless the balance of power were strictly defined through constitutional reform, conflicts between the House of Commons and the Senate would bog down the legislative process as in the United States.

Instead, it might be possible for the Senate to better represent “sectional interests” without introducing complex appointment or electoral formulas. Instead of lambasting Senators for being lazy or taking advantage of Canadians, we should ask more of our Senators. They have the time and expertise to do the research that MPs cannot because their budgets are too small and list of responsibilities too broad. They can scrutinize legislation proposed in the Commons and ensure that it is constitutional and in the public interest.

Senators ought to become more prominent in Canadian public life because they can bring a voice of experience and reason to the impassioned debates that shape our country. To do so, they must have public respect and legitimacy among politicians that fellows of the Royal Society or members of the Order of Canada have among their peers. Moreover, the public ought to regard these distinguished men and women not as a Canadian aristocracy, but as a great national resource, a repository of wisdom on Canadian public life.

While they may differ on policy questions, they should be unified in their faith in what Canada can be. They should have additional responsibilities to keep the government responsible to its election promises and to ensure the constitutionality of legislation. They should carefully examine and reflect upon the reports of the officers of Parliament and have the power to request further inquiries on matters of concern to them.

Such changes will not be easy, nor will they be popular with those who have a vested interest in keeping the Senate the way it is. Those who oppose any reform will soon find their position to be untenable as more parties and pundits come to realize that the Senate is meaningless unless it can effectively fulfill its role.

There are currently four independent or non-aligned Senators. While their influence on Senate business may not be significant, they play an interesting role since they are free from being whipped into voting the party line since they have none. In Britain, there are over two hundred independent (or “crossbench”) members of the House of Lords and fourteen non-aligned members. These members, most of whom are life peers (the British equivalent of Senators, appointed by Queen on advice of the Prime Minister), play an important role in advancing debate on issues that are not in the field of vision of any political party. They are also prominent in many Lords committees.

So valued are crossbenchers in Britain that in a paper published in June under the auspices of the British think tank Demos’ project on Progressive Conservatism, Jonty Olliff-Cooper argues for the creation of “Commons’ Senators” to “create a strong independent voice in the primary chamber of Parliament, rather than relegating that function solely to the Lords”.

The principal difference between the Senate and the British House of Lords is in size (there is one lord for every 83,000 Britons for a total of 740, one Senator for every 320,000 Canadians for a total of 105) and composition (the Lords includes many ex officio members drawn from the Church of England and British nobility). That said, some Senators have recently suggested that removing political parties from the Senate would make it easier for it to conduct its work.

How such a proposal would be implemented is unclear, but it would be a uniquely Canadian solution to how upper houses function. The Northwest Territories and Nunavut already have nonpartisan legislatures. If we want our Senators to do their best, we ought to consider the idea carefully.