It Takes Three: Making Space for Cities in Canadian Federalism

The COVID-19 pandemic and the economic crisis it has produced have highlighted pre-existing cracks in Canada’s federal structure, particularly in relation to Canada’s cities. On the one hand, Canadian cities are on the front lines addressing and dealing with the impacts of Canada’s major policy challenges – not only COVID-19, but also climate change, the opioid crisis, homelessness, housing unaffordability, and insufficient transit development. On the other hand, cities remain “little siblings” in Canadian federalism: the federal government and the provinces and territories dominate the political and policy conversation, the powers and responsibilities of cities are subject to unilateral provincial change, and provinces maintain a strong presence in municipal affairs through oversight and regulations. Cities face four specific challenges because of this situation:

1. Paternalism: Cities have a semblance of authority in several policy areas, but often little actual power to make changes unilaterally.

2. Constrained finances: Cities have inadequate revenue sources and insufficient fiscal flexibility to meet their responsibilities.

3. Poor coordination: Unclear and overlapping jurisdiction between orders of government leads to poorly coordinated programs and disputes over responsibility.

4. Fragmentation: A lack of appropriate regional governance structures in much of Canada prevents necessary coordination among cities in a metropolitan region.

How can these imbalances be addressed? This report recommends two fundamental steps.