While Tory and Wynne battle over taxes and tolls, infrastructure will cost you more
You may have heard of the recent kerfuffle in my hometown of Toronto over the issue of road tolls. It’s a local story, to be sure, but one that speaks to a broader problem. And it’s not going away. Indeed, it’s getting worse.
The score is basically this: Toronto has a gigantic backlog – more than $30 billion worth of projects that city council has agreed to build or is responsible for maintaining. None are funded, and existing sources of revenue are either tapped out or too politically controversial to raise or enact.
Mayor John Tory and his allies on council proposed a toll on two major highways linking downtown to the suburbs. The toll would have raised $300 million a year or so, the city claimed, and would have been used only to address the backlog.
But the city needed provincial approval to enact such a toll.
Ontario’s premier, Kathleen Wynne, was quick to publicly support the plan, saying she’d respect the will of local democracy if council voted in favour, which it quickly did. Private assurances of a similar nature were apparently made by Wynne to Tory as well, even before he’d publicly committed himself to the request.
Last week, however, the premier, having apparently looked at her horrific poll numbers and after receiving an earful from her caucus, threw Tory under the proverbial bus. Tolls were off the table, she said, and Ontario municipalities would instead receive more of the existing provincial gas tax.
This is key: they would get more of an existing, unaltered tax. It will not be increased or supplemented with new funds.
“I know that people are having a hard time keeping up with the rising cost of living,” the premier said. “I hear it from people everywhere I go.”
The situation, thus, is this: Toronto urgently needs cash – lots of it – but can’t or won’t raise it, fearing public anger. The province, meanwhile, spiked Toronto’s other option, again because people have told her they’re tapped out. This is the same province, meanwhile, that is rolling out an unpopular cap and trade system to fund its own gigantic backlog of unfunded projects that it can’t build through traditional, existing means.
Hmmm. It’s almost like both the Toronto and Ontario governments allowed foreseeable problems to become almost impossible to effectively and quickly solve.
They can’t simply ramp up taxes to whatever level is required; there’s a point at which the public just refuses to pay any more, and both Ontario and Toronto seem convinced they’ve hit that level already (there’s no way to find out without trying, but no one seems to have an appetite to do that).
They can’t call on Ottawa; the federal Liberals have their own priorities and challenges, which is why they recently refused requests by the provinces to ramp up health-care transfers. Indeed, the feds also have a long list of items they’re committed to buy, mainly military equipment, which adds up to tens of billions of bucks. And all of these levels of government are either losing money or at best kinda, sorta, maybe breaking even.
This is not a problem that’s limited to Toronto or Ontario. Most major cities are in a similar situation, different only in scale, as Toronto. Ontario’s backlog of unpaid bills is hardly unique. Quantifying the exact size of the infrastructure deficit in Canada is hard, as definitions and methodologies vary study by study, but it’s well over $100 billion by any measure.
More bad news: it’s not like our governments have been banking the cash they haven’t been spending on roads, bridges and transit, waiting for a rainy day. Cities and provinces routinely fail to balance their budgets even when avoiding doing the heavy capital spending they keep committing to. And this is before the baby boom generation hits their dotage years and health-care consumption ramps up.
This isn’t politics. This isn’t ideology. This is math. And the solutions, while simple in the abstract, will be brutal in reality.
What are those solutions? Maybe private funds and foreign investment can help, but in the main, it’s going to come down to either taxing more or governments dramatically cutting expenses while holding the line on revenues, freeing up money to build the bridges and repair the sewers.
My own personal bias is always for smaller government before higher taxes, but it doesn’t really even matter for our purposes here. It’s one or the other. But our governments refuse to admit this and let the public in on just how bad things really are.
Let’s look at Premier Wynne again. The extra slice of gas taxes she’s giving Mayor Tory as a consolation prize is not new money, but existing revenue. But recall — Ontario also can’t fund its infrastructure commitments, and it’s even less able to now. Peter just robbed Paul and applauded his own ingenuity. We’re still equally screwed.
Sooner or later, Canadians are going to have to make a choice between giving governments much more money or expecting much less service from them. I know which I’d choose, but it’s not just up to me. It’s up to all of us. Canadians, both voters and elected officials, can’t pretend otherwise much longer.
But you just know they’re going to try.
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