Along with the powerful trend toward urbanization, immigration has added great potency to large cities. Canada, of course, has always been a country of immigrants. Our first prime minister, Sir John A. Macdonald, was from Scotland. But during the last quarter of the twentieth century, two big changes occurred. First, immigrants came from many different regions of the world other than Europe. They came from South America, Asia, Africa, the Caribbean, and the Arab world, and most of them were people of colour. Second, they moved from cities to cities. Unlike many previous waves of immigrants, they did not have the skills, experience, or interests that would make them successful in rural Canada. Nor did rural Canada have the concentrations of people like them to make life welcoming and familiar, the economic opportunities, or the programs and support networks to expedite successful settlement. While perhaps not sufficient, to a far greater degree such programs and supports are already features of big cities.

To put this in perspective, since 1991 over 3.2 million immigrants have arrived in Canada, the vast majority of whom have come from urbanized areas in Asia, the Middle East, Africa, the Caribbean, and Latin America. The Greater Toronto Area alone absorbs nearly half of Canada’s immigrants, and the percentage of foreign-born Canadians in the country’s three largest cities is growing at a much faster rate than Canada as a whole is growing. By the time Canada celebrates its sesquicentennial in 2017, up to 23 percent of Canadians will be visible minorities, with 75 percent of those living in one of Canada’s three largest cities. And by this same year, Canada will have, for the first time in its history, more citizens over the age of sixty-five than under fifteen years old. In short, our rapidly ageing population will be concentrated around the health-care and other services that cities provide, placing even heavier governance burdens on Canada’s largest metropolises.

Past governments were not oblivious to these trends, nor to the imbalancing effect that increased urbanization through immigration was having on the rest of the country, but they were puzzled about how to respond. To fill population holes, a succession of federal immigration ministers contemplated policies that would require newcomers to settle outside of the large urban regions for a period of three to five years, after which they could move. Such notions met protests from immigration advocates who said that even if such policies survived inevitable Charter challenges, social engineering of this kind wouldn’t work. The settlement trends are driven by positive attraction—i.e., people move to cities because that is where they find opportunity, wealth, education, friends, and even love. And the trends are further driven by readily available health care and publicly funded schooling. Forcing new arrivals to live away from where they were inclined to live would delay successful settlement and, in any event, it would be hugely expensive to create settlement programs on smaller scales across the country. Urban advocates simply asked, what is so wrong with large and larger cities

If Harper is of the view that the health of our cities is critical to the health of the nation, he will want to know how to best support them. While not a businessman by training, he is no doubt aware of the basic precept that investing in strength is the best strategy, and most economists would advise him that investing in city regions would produce the greatest returns. Returns, by the way, that can be invested in the many other objectives of government, including, if he chooses to continue the “Canadian way,” sending money to the non-urban parts of the country.

This brings Harper face to face with the so-called New Deal for Cities. There is a lot of confusion about what the New Deal actually is, and on particularly confusing days it seems to be not much other than more federal or provincial handouts for cities. It might be helpful, therefore, to parse this out a bit. If there is a New Deal, there must have been an Old Deal. The Old Deal was firmly in the grip of the constitution. Cities were the creatures of the provinces and they depended on provincial or, occasionally, federal money for big-ticket items, like transportation infrastructure. Under the Old Deal, there were good days and bad days. On the good days, the money arrived. When Prime Minister Pierre Trudeau created a ministry of municipal affairs, there was attention and money. Under the Davis government in Ontario, cities in the province generally had a friend at Queen’s Park (as they do today in Ontario Premier Dalton McGuinty). On the bad days, the money didn’t come, or came in small amounts with hard conditions. The prevailing moods of hostility (the Harris government in Ontario) or indifference (the Chrétien government in Ottawa) made for bad days during the Old Deal.

What good and bad days shared under the Old Deal is that the decisions weren’t made in the cities. It was what the other levels of government wanted that counted. The city in question lacked the decision-making power and the financial resources to do what it wanted (and its structure of governance often exacerbated the problems). For example, Toronto has known for some time that it wants to improve its waterfront, an area in rather ugly transition between its industrial past and a more appealing future. But it has neither the resources nor the powers to change it without the approval and participation of the federal and provincial governments. It has been unable to do what Vancouver has done so wonderfully to its False Creek and Coal Harbour areas and Montreal to its historic buildings.

This led urban advocates to insist that waiting for handouts, constantly being the supplicant, is no way to build great cities. What that takes is more money, more power, and governance systems that lead to effectiveness and accountability. Money, power, and governance. Most people agree that these are the component pieces of the New Deal, but there is a lot of debate on what should constitute each. A simple concept can help to clarify: control of destiny. What, within each of these categories, would contribute to greater control of destiny for our large urban regions At the end of the day, if reforms are just about being better supplicants, what Jane Jacobs has called “opportunistic beggary,” then we probably only need more charming mayors.

The powers that would yield greater control of destiny would be akin to the powers of a province. Some would include power over both the education and health-care systems. In Toronto, Montreal, and Vancouver, for example, the large immigrant populations put unique demands on the school system because of language and cultural issues that are fundamentally different than in the rest of Canada. Local control would provide more appropriate curricula. Similarly, these populations have different health-care requirements.

A province would be reluctant to cede this much power to an urban region because, in effect, it would create a province within a province. But a very interesting negotiation has just concluded between Toronto and Ontario over the new City of Toronto Act, which brought into focus the idea that where there wasn’t a clear provincial interest the city should have the power to act. The onus is now on the province to articulate the provincial interest in a persuasive way.

Money is the difficult issue. For control, the power of the purse is vital. To tax is to govern, and Canadian cities have limited access to taxes as revenue sources. There are various kinds of tax, some that grow with the economy, such as income and consumption (sales, liquor, tobacco, gasoline) taxes, and others, such as property tax, that are less growth-responsive. Compared with other jurisdictions, Canadian cities are overreliant on property taxes: such levies make up about 53 percent of their revenues, compared with 23 percent in the US and substantially less in Europe. US and European cities have access to a much broader array of tax instruments, including sales and income taxes. Provincial governments have traditionally not allowed Canadian cities the same tools, but being able to raise revenue gives a government more control over how it is spent.

The problem is that in our current environment, it is popular not to tax, and politicians of all stripes are drawn to popularity like bees to honey. So when premiers and mayors object to the “fiscal gap,” what they really want is simply more money from Ottawa. New Deal advocates, on the other hand, are proposing a redesign of Canada’s fiscal arrangements to better align the obligations of a level of government with its ability to raise the money it requires. In effect, given the current allocation of obligations, the federal government could tax less and the provinces and cities tax more. As the TD Bank put it in its seminal report, “A Choice Between Investing in Canada’s Cities or Disinvesting in Canada’s Future,” the federal government could do “less with less.” And as the federal government lowered its taxes, the provinces and cities would move into the “tax room” that had been created. Taxpayers would pay roughly the same amount, but their tax dollars—under such a form of asymmetrical and reduced federalism—would stay much closer to home.

There is a problem with this scenario—one that Harper had a good hand in creating. Canadian governments have become as tax averse as some Canadians, thanks to the anti-government, anti-tax crusades of Preston Manning’s Reform Party and its successor, the Canadian Alliance, and of their consultancies like the Fraser Institute and the National Citizens Coalition—all of which Harper has been associated with. The result is somewhat paradoxical: while to tax is to govern and both provincial and municipal governments consistently demand more powers and greater control, both also reject occupying the tax room that would be left open by a diminished federal government. Provincial and municipal governments are simply afraid that they’ll be seen as “tax and spenders.” So, when Harper lowers the gst by 1 percent, don’t expect any other government in Canada to say they’ll replace the attendant losses with alternative levies. (Even though the big federal surpluses that prompted Harper’s largesse were created by a chain reaction of downloading initiated by Paul Martin when he was the finance minister a decade ago, and the provinces and ultimately the cities are saddled with more obligations than they once had and that they cannot afford, few are willing to engage the issue.)