enhancing the competitiveness and and attractiveness … · enhancing the competitiveness and...

Enhancing the Competitiveness and

Attractiveness of Canada and its Cities

Submission to Canada’s Competition Policy Review Panel

The City of Calgary’s Perspective on how Canada can become a Destination for Talent, Capital and Innovation

Our competitive edge depends on our cities. If Canada’s

cities are to play a leading role in the national prosperity

agenda, they need the fiscal capacity to provide the

services, programs, and infrastructure that will attract

talent and investment.

Conference Board of Canada


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1. Introduction 2

2. Competitive and Attractive Cities 4

3. Investing in Cities 3.1. Infrastructure Investments 5 3.1.1. Revenues that Grow with the Economy

3.1.2. Establishment of a Fully-Funded National Transit Strategy

3.1.3. A Realignment of Roles and Responsibilities

3.2 Quality of Life Investments

3.2.1. Investments in Crime and Public Safety

3.2.2. Investments in Affordable Housing

3.2.3. Investments in Arts and Culture

3.2.4. Investments in the Labour Force

4. Conclusion 13

Table of contents


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1 Introduction

Calgary has become an attractive and desired location for many individuals and businesses from around the world; it has truly become an engine of growth in Canada.

The purpose of this document is to present The City of Calgary’s perspective on what the Government of Canada can do to help Canada become more attractive and competitive in

the global economy. Specifically, this document will address key initiatives such as providing sustainable, predictable funding for municipal infrastructure, the establishment of a fully funded National Transit Strategy; creating partnerships for affordable housing; offering approaches to deal with labour market pressures; addressing crime and safety, and funding for community arts and culture.

The City of Calgary strongly believes that the Government of Canada should make a significant investment in helping cities become more attractive and competitive. Over the past decade, Calgary has been one of the fastest growing cities in North America, seeing its population jump from just over 790,000 in 1997 to just over one million in 2007. In 2007 alone, The City of Calgary issued $5.6 billion worth of building permits (the highest in Canada for a second year in a row). This rapid growth demonstrates the fact that Calgary has become an attractive and desired location for many individuals and businesses from around the world; it has truly become an engine of growth in Canada. In fact, a recent study by The Conference Board of Canada ranked Calgary number one in terms of overall attractiveness among 27 North American Census Metropolitan Areas (CMAs). But to sustain this ranking, Calgary requires the assistance of other orders of government, particularly the federal government. As such, The City of Calgary has called upon the Government of Canada to adopt and enhance key public policies and programs that would assist it and other large Canadian cities deal with the existing and emerging issues they face.


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While responding to growth pressures is one of the major challenges a city like Calgary is facing, it also has to remain competitive in attracting both individuals and investment. That is why The City of Calgary, in partnership with Calgary Economic Development, recently released a comprehensive, ten year economic development strategy. The aim of this strategy is to provide Calgary with a blueprint to help it become a key destination for human and monetary capital.

The reality is that Calgary and other large Canadian cities no longer compete amongst themselves. The emergence of the information age has produced an economic environment that is global in scope. Thus, Canadian cities require the tools that will allow them to compete with their global counterparts to attract individuals and investment. After all, economically buoyant cities provide the fire that keeps the Canadian economy burning. Participation and cooperation by all orders of government are essential to keep these flames from flickering.

The Competition Policy Review Panel’s Consultation Paper, “Sharpening Canada’s Competitive Edge,” asks several important questions about how best to enhance Canada’s competitiveness. While many of these questions focus on foreign investment, investment policies and competition laws, The City of Calgary believes that some of these questions have important implications for cities. For example, questions such as, “…what mix of policy changes would be required to make Canada the preferred point of entry to, and location in, the North American market for the high-value activities of non-North American business entities? And, what other priorities and policy issues should governments address? The priorities and public policy issues raised in this document provide, in our opinion, some meaningful solutions to enhance the competitiveness and attractiveness of Canada and its big cities.

The reality is that Calgary and other large Canadian cities no longer compete amongst themselves. The emergence of the information age has produced an economic environment that is global in scope.


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2 Competitive and Attractive Cities

One of the primary goals of the Competition Policy Review Panel is “to maximize Canada’s attractiveness as a destination for talent, capital and

innovation.” The City of Calgary believes that the Panel’s recommendations in this area will have a profound effect on how well Canadian cities can adapt to the new global order.

Several studies have suggested that the first place to start is by making federal investments in cities. For example, Enid Slack and Richard Bird have written that there are three compelling reasons as to why the federal government needs to invest in cities. First, over 80% of the Canadian population lives in cities (or CMAs). Second, cities face serious challenges if they want to maintain their economic competitiveness in North America, and the world. Third, many federal policies have an impact on cities. Mayors of big cities have become more vocal because they want to ensure that they have the necessary resources to meet their budgetary requirements and provide a quality of life that makes their cities attractive to people in Canada and around the globe.

According to Tom Courchene, the emergence of the knowledge based economy has led to the economic, political and democratic ascendance of Canada’s big cities. He goes on to declare that knowledge and human capital are increasingly important drivers of well-being and are at the cutting-edge of competitiveness. Indeed, it is in cities where nations often find the dense clusters of human capital that drive economic activity, trade and innovation for the entire country. But in order for Canada to reach its potential in the knowledge based economy, our cities must reach their potential through greater federal investments.

Over the past two years, The Conference Board of Canada has released numerous studies concluding that a greater federal investment is required in cities. As Anne Golden has put it, “Cities and city-regions worldwide are at the core of national prosperity agendas, attracting public and private investment to make them more livable, more competitive and more sustainable.” This, in our view, requires a greater investment by the federal government.

In terms of where new investment in Canada’s big cities should be directed, we recommend starting with the two key pillars that make cities both competitive and attractive: (1) infrastructure and (2) quality of life. Globally competitive cities and prosperous nations focus on reinforcing each of these pillars. Now, more than ever, Canada and its cities must do the same.


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3 Investing in Cities

3.1 Infrastructure Investments

In November 2007, the Federation of Canadian Municipalities (FCM) released a study which revealed that Canadian municipalities are collectively facing a $123 billion infrastructure deficit. The City of Calgary estimates that its own infrastructure deficit is currently at $8.4 billion. The magnitude and velocity by which Calgary has grown over the past decade has put considerable pressure on The City’s infrastructure. However, because Calgary and other Canadian cities have only the property tax as their primary source of revenue, they have been unable to keep up with the demands for infrastructure.

As a result, Calgary has supported various advocacy efforts advanced by the FCM’s Big City Mayors’ Caucus (BCMC) which are directed at the Government of Canada. The City of Calgary stands behind the three key recommendations made in the BCMC’s primary advocacy document, Our Cities Our Future. These recommendations called upon the Government of Canada to: (1) provide cities with access to revenues that grow with the economy; (2) establish a fully-funded national transit strategy; and (3) realign roles and responsibilities among all orders of government. The City of Calgary

estimates that its own infrastructure deficit is currently at $8.4 billion.


3.1.1. Revenues that Grow with the Economy

Canadian cities have one primary source of revenue to finance their operations: the property tax. Several studies have shown that Canada lags other countries in providing cities with access to revenues that grow with the economy. For example, a study by the OECD reveals the property tax accounts for 92.7 percent of total local revenues in Canada, whereas in the United States it accounts for 72.8 percent. As such, The City of Calgary, as a member of the BCMC, has asked the federal government to provide cities with access to long-term predictable sources of revenue that grow with the economy. Specifically, the BCMC called upon the Government of Canada to share the equivalent of one cent (approximately $5 billion) of the Goods and Service Tax (GST) with all cities and communities in Canada in order to help them deal with the increasing infrastructure deficit.

Several studies have shown that Canada lags other countries in providing cities with access to revenues that grow with the economy.


3.1.2. Establishment of a Fully-Funded National Transit Strategy

As Canada’s big cities continue to attract more and more people, roads are becoming congested resulting in poor air quality. Increasing congestion also makes it difficult for goods and people to move efficiently throughout a city. Consequently, many Canadians have turned to public transit as a viable alternative to driving. However, as demand for public transit increases, so too does the demand on city budgets. As a result of these factors, in 2007 the BCMC released a proposal calling on the federal government to establish a National Transit Strategy, which would include dedicated funding of $2 billion per year, more integrated land use planning, and research on best practices. Although the Government of Canada has announced it is proceeding with a National Transit Strategy, it very clearly indicated that it will not be providing any funding commitments to support it.

There is strong evidence which indicates that an investment in public transit is an investment in the environment. In Calgary, for example, our light rail transit system is powered by wind generation. This, coupled with other forms of public transit, reduces the net annual production of greenhouse gases by 176,000 tonnes annually in Calgary.

3.1.3. A Realignment of Roles and Responsibilities

The 1990’s saw governments at all levels and of all political stripes cut funding for public services, including transfer payments to cities. This resulted in cities having to take on more and more responsibilities, in areas such as affordable housing and homelessness, but without the corresponding resources to deal with these increased expenditures. It is important today that all orders of government sit down at the table to identify clear roles, responsibilities and resources in terms of dealing with key public policy issues. That is why The City of Calgary believes that a realignment of roles and responsibilities with corresponding, sufficient financial resources will assist it in focusing its efforts on maintaining and enhancing its infrastructure.

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Affordable housing, homelessness, crime, and public safety are front-line issues that negatively impact the quality of life in cities.

3.2 Quality of Life Investments

While investments in infrastructure are crucial for enhancing a nation’s economic competitiveness, what makes a city—and a country—more attractive in the knowledge based economy are investments in policies and programs that enhance a city’s quality of life. Affordable housing, homelessness, crime, and public safety are front-line issues that negatively impact the quality of life in cities. However, local governments lack the fiscal capacity and legislative ability to effect meaningful change which improves the quality of life in our communities. Quality of life issues transcend city boundaries and must be addressed by all three orders of government. The City of Calgary believes that investments in the following quality of life issues will help Calgary and Canada become a key destination for talent and innovation.


3.2.1. Investments in Crime and Public Safety

While Calgary’s population growth has attracted many of the best and the brightest individuals, it has also attracted those who are less desirable. This has led to an increase in violent, drug-related and gang-related criminal activity. One of the key factors in making Canada a destination for talent and innovation is to have safe communities. Although Calgary is generally a safe city, all orders of government need to ensure that violent criminals are kept off our streets. That is why The City of Calgary has called upon the federal government to amend the Criminal Code of Canada to deal with the problem of the “catch and release” of criminals. The Government of Canada introduced the Tackling Violent Crime Act in October 2007, which effectively deals with the catch and release issue. The City would like to see this Act quickly pass both Houses of Parliament. In addition, Calgary has requested that the Government of Canada honour its 2006 budget commitment to increase its financial support for local policing in Canada’s big cities. This commitment would provide funding for an additional 75 to 100 new officers for Calgary.One of the key factors in

making Canada a destination for talent and innovation is to have safe communities.


3.2.2 Investments in Affordable Housing

Housing plays a fundamental role in the well-being of individuals, families and communities. The availability of safe and appropriate affordable housing benefits the entire community. Housing affordability in a city, including the availability of housing options for all income groups, is essential for a dynamic economy. Recent growth trends in international and inter-provincial migration have increased demand for both market and non-market rental housing and home ownership in Calgary. Presently, Calgary does not have enough affordable housing to meet the need of its growing population. Factors such as rapid population growth, increasing land values, stagnant construction of new affordable rental units, and a rise in the number of individuals working in the retail and service sector, have all contributed to the growing disparity between the supply of, and demand for, affordable housing in Calgary.

The inability for many Calgarians to find affordable accommodations has led to a significant increase in Calgary’s homeless population. One of the difficulties in building affordable housing in Calgary is the lack of available land. As a result, The City of Calgary has asked the Government of Canada to amend Canada’s Income Tax Act to provide a tax benefit to those individuals and businesses who donate land for the purpose of building affordable housing. This type of tax benefit could be modeled on Canada’s Ecological Gifts Program, whereby the Government of Canada provides a tax credit to private and corporate landowners who donate land for ecological purposes.

The FCM and BCMC recently released their National Action Plan on Housing. The purpose of this plan is to advocate for a long-term funding framework for eliminating chronic homelessness and significantly reducing the housing need problem that confronts over one million Canadians. The persistent uncertainty around federal and provincial funding for affordable housing is compounded further by the upcoming expiry of all federal social housing funding programs by March 2009. The plan identifies a mix of program options and mechanisms to address the growing problems, including a more flexible approach which can be customized at the local level. The estimated gross cost of implementing the local strategies outlined in the plan is $3.35 billion annually. The plan does not consider how the costs will be allocated across the different orders of government, but outlines and assigns areas of responsibility for which the provincial and federal government hold the majority share. As such, The City of Calgary recommends that the Government of Canada endorse the plan.


3.2.3. Investments in Arts and Culture

Perhaps one of the most significant, yet largely overlooked factors of what makes cities a destination for talent and innovation is their mix of arts and culture. World class cities such as London, Paris, New York and Barcelona have an eclectic arts and culture scene. Richard Florida, among others, has commented on the fact that investments in arts and culture help cities attract the talent that makes them rise from good to great. Given their importance to cities, we are calling on the federal government to provide a greater investment in arts and culture in Calgary. Whether it is through galleries, theatres, or recreational facilities, investments in arts and culture are crucial ingredients for making Canada a destination for talent and innovation. Canada would indeed benefit by having national cultural institutions dispersed in major cities throughout the country.

Given their importance to cities, we are calling on the federal government to provide a greater investment in arts and culture in Calgary.


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It is projected that economic expansion in Calgary and Alberta will be limited by a lack of labour in the coming years.

3.2.4 Investments in the Labour Force

Calgary, like many other big cities in Canada, is facing a significant labour shortage. It is projected that economic expansion in Calgary and Alberta will be limited by a lack of labour in the coming years. It is projected that there will be an increased share of people in the 65 and older cohort by 2031. Baby boomers, currently aged 41 to 60, will be the major contributors to this shift. It is also estimated that the relative share of the younger population, aged 15-34, will shrink significantly.

Despite these trends, an active labour force with strong job creation and relatively low unemployment rates should draw migrants to Calgary. However, The City of Calgary requires assistance in this area from the federal government. Such assistance must focus on immigration related issues, such as enhancing skills certification and credential recognition programs, skills training programs, language training programs, and temporary foreign workers programs.

Moreover, Canada’s Aboriginal population provides great potential for helping reduce the labour shortages faced by our cities. Canada must take action to eliminate employment and cultural barriers faced by Aboriginal peoples so that they can become a key source of talent for our labour force.

The City of Calgary also believes that having access to appropriate child care programs will help, in particular, stay-at-home parents re-enter the workforce. There is a significant need in Canada for a national early learning and child care program that is federally funded.


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4 Conclusion

The primary objective of this document is to provide the Competition Policy Review Panel with ideas and solutions that will enhance Canada’s competitiveness.

It attempts to draw to the Panel’s attention the importance that cities play in the prosperity of our nation. We have provided answers to some of the questions addressed in the consultation paper to demonstrate that the review and eventual recommendations put forward by the Panel will have an impact on how Canada and its cities will adapt to the rapid changes brought about by the new global order.

Of course, the public policy issues facing Calgary today are issues of national importance. Infrastructure, public transit, public safety and affordable housing are perpetual issues that are typically felt most significantly in big cities. As a city, Calgary has enjoyed tremendous economic prosperity for more than a decade. We are ever-mindful that the future prosperity of our city and our country will be determined by our ability to attract business and skilled workers. This will require a cooperative and collaborative approach from all orders of government.

We believe that there is a role for the federal government in our cities. The competitiveness and health of our cities is in the national interest. The ideas and solutions advanced in this document clearly identify how Canada can become a country that is first in terms of a destination for talent, capital and innovation. Unfortunately, however, national governments in Canada have been reluctant to deal with issues that directly affect cities, even though over 80% of the Canadian population now resides in urban areas. Several studies have shown that cities are the engines of economic growth in Canada. Economically buoyant and sustainable cities create the fabric to build economically prosperous nations. But these engines need fuel. Investments in our cities, particularly in infrastructure and quality of life issues, can only help Canada become a leading destination in the knowledge based economy. As an engine of growth in Canada, Calgary sincerely hopes that the Competition Policy Review Panel seriously considers the solutions put forward in this document.

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