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IMFG Perspectives – Approaching an Inflection Point in Ontario’s Provincial-Municipal Relations

Authors: Michael Fenn, André Côté – In Ontario, the history of provincial-municipal relations has progressed from the Baldwin Act of 1849 and the Great Depression years, to the postwar boom and the tumultuous amalgamations and Local Services Realignment of the 1990s. At different points in Ontario’s history, the pressures of managing growth, economic restructuring, social and demographic change, environmental sustainability, or shifting public expectations of government have led to reforms in provincial-municipal arrangements. And as pressures on provincial-municipal arrangements build, periods of fiscal constraint – like the one that the Government of Ontario is currently facing – have been a catalyst for change.

Three major trends are pushing us towards another such inflection point:
• The first is a growing recognition of the role cities and metropolitan regions play as centres of growth and national prosperity, along with the need to reform intergovernmental arrangements, devolve responsibilities, and differentiate the treatment of large urban areas from that of small, rural municipalities.
• The second is increasing complexity in Ontario’s provincial-municipal relations, with a tangled web of actors, responsibilities, service standards, and funding arrangements that create difficulties of coordination and governance for both orders of government.
• The third is the emergence of threats to the fiscal health of Ontario municipalities, which have widely varying financial capacities, infrastructure deficits, workforce compensation pressures, and limits on the flexibility and diversity of local revenue sources.

This issue of IMFG Perspectives, based upon a full-length report in the IMFG Papers series, proposes that – as in the past – provincial-municipal arrangements need to adapt to changing circumstances. This adaptation will require a shift in how the two orders of government understand their roles and the nature of their relationships. With little fiscal room to manoeuvre, the Province needs to embrace the role of “enabler” – setting the policy objectives and providing oversight and supports, but enabling municipal partners to identify local solutions by providing tools and flexibility. At the same time, local governments will have to recognize their role increasingly as fully accountable “partners.” Rather than petitioning Queen’s Park for funding and provincial fixes for local issues, municipalities should focus on engaging the Province and working cooperatively to address shared challenges.

As the Smith Committee on Taxation stated in 1967, “Healthy intergovernmental relations in a federal system can be achieved only through continuous and unremitting effort, on the part of all, to adjust to changing circumstances.” This is as true today as it was nearly 50 years ago.

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