Senator Arnot: Yes.

Senator Arnot: I agree with that observation, Senator Forest, and I think this is the purpose of the inquiry. We need to have a new governance model and a new direct relationship between municipalities and the federal government.

Thank you for that question, and thank you for your support.

Hon. David M. Arnot: Honourable senators, I rise today to speak in support of Senator Simons’ inquiry into the challenges and opportunities of Canadian municipalities. I thank Senator Simons for giving this chamber the opportunity to reflect on this timely and critical topic. I add my voice to those of our colleagues, using my home province of Saskatchewan as a lens to frame my observations.

As with other jurisdictions, legislation compels municipalities in Saskatchewan to provide good government, services and facilities, all while fostering economic, social and environmental well-being and ensuring public safety. These purposes seem straightforward and unobjectionable. Why do we need this inquiry?

Over the course of the summer, I reached out, met with and listened to municipal leaders. These leaders are true champions for their communities, they are committed and they are driven to serve the public. They are pursuing large projects like new public libraries, event centres and partnerships to promote post-secondary education.

Like all other municipalities in Canada, Saskatchewan’s communities are also facing real, hard truths. In addition to the kinds of projects that could be considered jewels, they are creating — partnering — to offer warming shelters in parks, rapid access programs, overdose outreach teams and counselling for children, youth, and caregivers. They are responding to the significant social, safety and economic challenges related to mental health and addictions; toxic and contaminated drug supplies; domestic violence and sexually transmitted and blood‑borne infections.

Municipal governments are increasingly taking on responsibility for long-standing social challenges, many of which are exacerbated by the rising costs of shelter, food and fuel. They are having to replace aging infrastructure that is more costly than ever to repair and replace. Municipalities are responding to these hard realities with and without the support of federal and provincial governments.

His Worship Mayor Charlie Clark, the Mayor of Saskatoon, observed that:

We currently have a patchwork of funding programs that provide very little predictability or ability to plan. Cities are being called more and more to step outside our spheres of control to meet the needs of our communities, as we take on more responsibilities being downloaded onto us.

Federal-provincial and federal-territorial partnerships have been a long-standing pathway to achieve social and infrastructure objectives. For example, the Investing in Canada Plan is a 12‑year, $188-billion investment strategy that started in 2016. However, the Parliamentary Budget Officer reported that this program has likely:

. . . contributed to increase municipal capital spending, but not provincial capital spending. . . . funding from the federal government probably displaced provincial investments . . . .

Municipal leaders are acting within — and sometimes beyond — the constraints of their mandate and resources. They are making hard choices for two reasons. One, they cannot operate with a deficit, and two, their ability to tax residents was not designed for and cannot keep pace with current realities.

Municipalities are at the forefront of service provision and their costs to operate and respond to their residents is increasing. Citizens are dealing with year-over-year cost of living increases and a consumer price index that has seen an almost 4% increase in the last twelve months. Municipalities are responding to these price increases — gas and fuel costs, for instance — and declining housing availability, which in turn amplifies addictions, mental health concerns and homelessness. The Federation of Canadian Municipalities has, for example, long called for federal investment in programs that address both housing and chronic homelessness, particularly for our most vulnerable populations.

In my home community of Saskatoon, 550 people are known to be experiencing homelessness, an increase of 15% since 2018. This is believed to be a very conservative estimate. Of those, 83% identify as Indigenous and 49% said they experience chronic homelessness. Saskatchewan reported a 14.8% increase in housing starts between September 2022 and September 2023, a 1.6% year-over-year comparison.

While this is a welcome shift, the current inventory level of housing in Saskatchewan is exceptionally low. Just weeks ago, the Saskatchewan Realtors Association reported that housing inventory is the lowest it has been since 2009. The Saskatchewan Housing Continuum Network projected a need for more than 100,000 housing units by 2030 based on expected population growth over the next eight years.

To be clear, municipal leaders are builders. They are proud of their people, their community and their province. What they want is better relationships with and between their province and the federal government so that communities and people can succeed.

His Worship Mayor Charlie Clark told me that he supports:

. . . [the] exploration of a new funding and governance model for cities that will reflect the urban reality of Canada, today. [that] so much of what determines the well-being of our country — the health of our citizens, our climate, our economy, our democracy — plays out on the streets of our cities. [because, as he observes, cities] have the least flexibility in terms of revenue and jurisdictional authority to be able to address these challenges and meet the needs of our citizens. [And further,] the urgency of addressing these issues, especially in terms of having tools to address aging infrastructure needs, responding to the climate challenge, building a new era of urban truth and reconciliation, and stopping the growing crisis of homelessness and addictions.

These sentiments were echoed in a letter to me from Her Worship Sandra Masters, Mayor of Regina. She further amplified the relationship between climate change, infrastructure and resources:

Climate adaption continues to be a focus of the City of Regina as we work towards becoming a renewable, net‑zero community by 2050. Rebuilding and retrofitting infrastructure to meet net-zero requirements is no small feat and requires substantial funding. Furthermore, infrastructure renewal directly impacts our capacity to address other municipal issues of infrastructure. We value federal programs such as the Canada Community-Building Fund and the Investing in Canada Infrastructure Program and would welcome direct access to alternate flexible funding programs . . . .

 — from the federal government.

The need for funding and revenue streams is common to all Canadian municipalities. Cities, towns and villages across Canada are responsible for 60% of the infrastructure in Canada.

In my province, the Saskatchewan Urban Municipalities Association, or SUMA, has stated that projects, including critical infrastructure projects, are going over budget because of the cost of construction and labour shortages. Projects are being cancelled, and there is increased rescoping and phasing in taking place.

For example, bids for road and sidewalk improvements are 30% higher than they were in 2021, just two years ago. There has been at least a 6% increase in construction costs, as well. Urban municipalities are looking for — and use — federal infrastructure grants to meet their obligations.

Ms. Randy Goulden, President of SUMA, told me that her home community, the city of Yorkton, with a population of 25,000 people, is facing significant challenges with its water system. It has been denied funding on several occasions by infrastructure programs. President Goulden believes that longer funding time frames are needed to address the looming infrastructure gaps in urban municipalities. Together, the cities of Saskatoon and Regina represent over 40% of the Saskatchewan population of 1.1 million people.

However, the social and resource-related issues are not unique to urban settings. More than 30% of Saskatchewan’s population lives in rural areas. Mr. Ray Orb, President of the Saskatchewan Association of Rural Municipalities, told me that the needs of the people he serves are somewhat different. There is a focus on land, water and transportation, which enable jobs that are connected to Saskatchewan’s agricultural economy.

The drought crisis from this past summer, for example, is increasing demands to get water where it is needed. A lack of infrastructure means that that is not happening, and 70% of the available fresh water in Saskatchewan cannot be accessed for agricultural purposes as a result.

Federal programs that offer even two-thirds funding that could help with such challenges are often out of reach for rural municipalities. The one-third financial contribution required of rural municipalities is not fiscally possible because of their limited tax bases. Of all the things that would help rural municipalities, it was not programs or money that Mr. Orb highlighted. He called for better communication and better consultation, as well as direct involvement by municipalities in the federal-provincial discussions that affect them.

Colleagues, I believe our country is ready for direct dialogue. Indeed, Canada needs it. As I was told by municipal leadership:

Canada will only thrive if our cities and communities can thrive. [That it] is time to build a financing and governance model that enables that to happen . . . .

 — in a modern era.

What are the solutions? It has been argued, convincingly, that the constitutional doctrine that municipalities are “creatures of the provinces” is a legal fiction. That is, the real and prominent place in the Canadian state that municipalities hold must be recognized. I believe it is our role, as senators, to consider the practicalities as well as the legalities in this inquiry. This inquiry recognizes the real, practical importance of municipalities to the fabric of our country.

Of course, the provinces are rightly protective of their authority. It is also true that the federal government has the ability and the tools — if not the obligation — to work with provinces and municipalities. Relationships are the lifeblood of our municipalities. Good relationships ensure success. Local leaders know this.

In a municipality, no matter if you are the mayor, the reeve or a councillor, you cannot avoid questions about taxes, services or roads in the grocery store checkout line. In other words, accountability between residents and the civic leadership is part of the day-to-day; it is baked in.

Canadians should expect no less of our federal, provincial and municipal relationships. I have said many times that the health and well-being of communities is directly related to the health and well-being of all communities that comprise the whole. Canadians want and deserve healthy communities and healthy municipalities.

These acute issues need identification and solutions. I support the inquiry, and I look forward to its report.

Thank you.

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