Stimulus, maybe

A big part of the Liberal Party's winning strategy in last year's Canadian Federal election was its promise to increase infrastructure spending in order to boost economic growth. Specific spending plans (and photo ops) are now starting to appear.  Today we learn from the Toronto Star that the Federal Government will give the Toronto Transit Commission $500 million for essential maintenance and repairs.  Sounds good, but there are a couple of caveats.

The TTC is perennially behind on maintenance, resulting in frequent delays. Just last week one of the newest streetcars in the fleet was derailed by debris on the tracks, causing an all-day shutdown on the city's busiest streetcar line (King Street, if you care). So the Federal money is welcome -- but will it really have the desired effect of stimulating the local economy?

Even as he holds out his hand for the Federal largesse, Mayor John Tory -- who is turning out to be all too similar to the late Rob Ford, only with more polish -- is forcing the TTC to cut 2.9 percent from its already-inadequate operating budget.  It's a much smaller amount than the promised Federal grant, just $20 million or so, but the point is this: to the extent that provinces and municipalities figure out ways to use the Federal money to do things that they would normally have to pay for themselves -- and keeping streetcar lines free of debris is surely such a thing -- then there won't be any real, net stimulus to the economy.  The Feds' scheme is supposed to see lower levels of government matching any new funds from the national treasury, but it's a sure bet that municipalities will find all sorts of creative ways around that.

The other caveat is more specific to Toronto.  The late Mayor Ford so successfully convinced the citizenry that the municipal government was a rats' nest of profligacy that no politician dare even think about raising taxes. Toronto's property taxes -- the main source of municipal revenues in Canada -- are far lower than in any of the surrounding regions.  Starved of money, the city is starting to fall apart.  Elsewhere in the Toronto Star today, we read that the city's principal school board, the TDSB, has a maintenance backlog estimated at $3.4 billion.  The city's social housing authority, TCHC is presiding over a similar deterioration in its buildings.

Toronto is, in the aggregate, by far the wealthiest city in Canada and very much the principal economic engine of the entire country.  Yet it stands to be the biggest recipient of Federal handouts, if only because it can spend so much money so quickly.  As Justin Trudeau and his ministers keep popping up for selfies with the voters at the launch of each infrastructure project, voters in less affluent parts of the country may start to wonder why they have to pay for things that Torontonians need but resist paying for.