Where Do We Go From Here?
By John Brodhead, Executive Director, Evergreen CityWorks
Following Metrolinx’s release of its investment strategy on May 27th, the reaction was fast, furious, and for the most part, quite predictable. Premier Wynne and Minister Glen Murray thanked Metrolinx for its work and said they would consult and take action (whatever action might look like) within 12 months. Tim Hudak and the Fords predicted economic and social apocalypse if these taxes/fees came to be. Advocates quickly went to the wall supporting revenue tools. Andrea Horwath’s reaction was quite muted – something which we will come back to.
The biggest surprise of the week may have been federal Finance Minister Jim Flaherty wading into the mix late in the week – sending a letter to Ontario Finance Minister Charles Sousa (which was oh-so-surprisingly leaked to the media) indicating that Ontario could not impose a regional HST tax increase under the current Ontario-Canada HST agreement. This was an interesting move, as even his letter to Minister Sousa notes that Ontario has every right to change the HST level on a province-wide basis. I will let others muse on what the intent of this engagement really was. See Martin Cohn’s piece in the Star for some insight on this.
So where does this issue go from here? I think there are a couple of scenarios that could play out.
1. The Premier works out an arrangement with the NDP to get their support.
Just like the last two budget conversations, there is always room to negotiate. The lack of any real corporate tax/fee may leave room for this to be added to get the NDP’s support? The NDP members in Toronto will be under increasing pressure from stakeholders to find a way forward.
The biggest sticking point (no surprise) is the HST increase. As it is near-impossible to implement on a regional basis (actually due to collection, not Minister Flaherty), the NDP’s strong Northern members will be loath to accept a tax increase that appears to pay for Toronto transit – even if they get some road and bridge improvements out of it.
And a province-wide HST increase also gives the PC’s a nice talking point outside the GTHA – that the Liberals (and NDP) raised your taxes in order to solve a Toronto issue.
So one could imagine an agreement with the NDP that adds a corporate revenue piece to the agreement, leaves the HST and parking tax to the future, and moves in a phased-in fashion on some combination of gas tax, payroll tax, and development charges. This would leave Metrolinx well short of the $2 billion a year needed, but would allow the Premier to break the logjam a leave a legacy of a dedicated revenue stream.
2. Premier Wynne moves unilaterally (without NDP agreement) but puts the tools in the 2014 budget, challenging the NDP to bring down the government on the budget.
This is the high-stakes poker scenario. The Liberals decide that wrapping this difficult move in a broader, electorate-friendly budget offers the best chance at making the NDP blink – I can already hear Andrea Horwath at the post-budget scrum: ‘we don’t like adding new taxes on already stretched families, but we like that they accepted unrelated proposals X and Y… no one wants an election so we will abstain from voting for or against this budget.’
This option depends wholly on the relative strength of the Liberals and NDP in the polls. As we saw with the most recent budget where the Premier and the Liberals went in with good numbers, a couple of gives to the NDP and there was no way there would be an election.
One twist on this scenario would be if the Premier’s numbers were strong in the fall, and she made this move as part of a Fall Economic Statement (also a potential confidence motion). This would clearly be Plan B if there is no movement on #1 above.
3. Premier Wynne can’t get the NDP onside, decides #2 is too risky, and punts the issue, either to a future government, or more boldly, to the public via a referendum.
Premier McGuinty used the referendum tool on the issue of democratic reform, for those who recall the 2007 vote on a complicated new voting system that was chosen by a Citizen’s Panel. Premier Wynne could say that the Ontario Parliament is deadlocked on the issue, and that citizens need to decide. It would be a regional referendum, so only voters in the GTHA would be asked (unless the province-wide HST increase is being proposed).
Most folks I talk to hate this idea. They look at the polling #’s and think new revenue tools would get soundly rejected. And they might be right. But there are a couple of things that make me think otherwise. One, anti-tax areas around North America have voted for tax increases for dedicated transit investments. Most recently, Los Angeles county, Salt Lake City and Denver.
As well, I am not convinced that losing a referendum is the worst thing in the world. If you are Premier, you can say you tried and that the public has spoken. And if you are a supporter, you can use the opportunity to have a real debate on the issue. And worst case – you lose, and you learn and try again. Like Seattle did in 1995 – before repositioning and winning a second referendum a year later. Now Toronto does not have the best history on this, having voted down a Yonge Subway line three times between 1910 and 1950 before finally voting in favour.
However, I think it this referendum can be won. If you ran a strong campaign that clearly articulates the benefits of the increases to people in their areas, you have a chance. The Forum poll last week showed that while there was very low support of particular revenue tools (for example, 25% for a gas tax increase), there was 49% support for paying $500 per family per year to tackle the transportation challenges of the GTHA (Metrolinx’s analysis shows the average cost per family of its proposal is $477 a year per family).
If you look at the strong advocates for the revenue streams – from the Toronto Region Board of Trade to CivicAction to the Ontario Chamber of Commerce, environmental and health organizations, labour, and more, you could see the foundation for a strong, powerful ‘Yes campaign.’ Obviously #’s 1 or 2 above would be preferable to rolling the dice in a referendum, but I would pick a referendum over years and years of more discussion and consultation as we watch one of the world’s up and coming regions fall further and further behind.