Urban Renaissance Institute

Lawrence Solomon
National Post
December 11, 2003

Canada’s conservatives have voted overwhelmingly to create a new Conservative Party of Canada. They now need to decide on a leader but even more, they need to decide whether to contest Canada’s urbanized ridings, home to an overwhelming number of voters.

To many conservatives, contesting the cities seems suicidal: The Liberals have sure appeal on gun control, gay rights, immigration and other social issues that sway urban voters. Yet abandoning the cities is a sure formula for replaying the last century of dominant Liberal rule. Eighty per cent of Canadians live in our cities and suburbs, a proportion that has been steadily growing. Each new census adds urban ridings and reduces the number of rural ones, shifting the political calculus ever away from our rural past. The conservatives’ traditional strategy of contesting the rural areas, and capitalizing on regional discontent here and there to cobble together a victory, becomes less credible with each passing year. Worse, this strategy relegates the party to incoherence and opportunism – hardly the invigorated and unambiguous platform that a new party needs to inspire the next generation of Canadians.

Conservatives can take heart. Canada’s cities are winnable. The Liberals have been coupling their overt pro-urban social policies with covert anti-urban economic policies – in effect, the Liberals have been overtaxing urbanites to subsidize small town and rural residents. By attacking the Liberals’ anti-urban economic policies, Conservatives can remake themselves as protectors of the urban economy, and of urbanites’ pocketbooks. By also attacking the harm that the Liberals’ anti-urban policies do to the environment – urbanites are unwittingly forced to subsidize the exploitation of our natural resources for the benefit of American consumers – Conservatives can split the vote of urban Canadians who vote Liberal on social grounds. If Liberals lose their social sheen, and must campaign chiefly on economic grounds, Urban Canada is in play.

Taxes on urbanites tend to be hidden, providing shock value when urban Canadians learn of them. For example, the federal CRTC, which regulates phone companies, forces urbanites to pay a hidden surtax on their phone services – in recent years, it has reached $1-billion a year – to reduce the long-distance charges of rural Canadians. Similarly, urban consumers are kept in the dark over the discriminatory costs they bear in air travel, mail service, banking and other federally regulated goods and services. Statistics Canada provides another measure of how urbanites get shortchanged through our political process: The average rural resident receives 50% more in welfare, employment insurance, old age security and other government transfers than he pays in taxes, it reports. The gap between taxes paid and cash transfers grows for the average resident of small towns – those with populations less than 30,000. Most of the cost of carrying our unsustainable rural and small-town economy is borne by the residents of the large urban and suburban centres, whose sizeable middle-class and affluent populations, with their correspondingly high tax brackets, pay a whopping two-and-a-half times as much in taxes as they receive in transfers.

Urban residents aren’t alone in bearing an unfair share of the costs of carrying the country. Urban businesses also bear discriminatory charges, undermining their competitiveness and their ability to create jobs. Canada’s income tax rate for large corporations, and capital taxes that are widely considered to be among the most destructive taxes that we levy, are specifically designed to hit urban businesses. Rural businesses, meanwhile, particularly the extractive industries that inflict most of the environmental damage, get tax credits and direct government handouts.

An urban platform for the Conservative Party of Canada would signal that it sees itself as a party of the future, one that stands for a level playing field for all Canadian industries and equal rights for all Canadian citizens. An urban platform welcoming of an advanced, information-based society would also allow it to champion the free market values it espouses with integrity, and without needing to defend a host of regional development grants and other decidedly un-free market subsidies to inefficient resource industries. Not that this platform wouldn’t have risks – subsidy-dependent rural ridings that traditionally vote conservative may well switch to another party. But as the Ontario Tories learned to their dismay in their recent election, playing to a rural vote can be a quick route to political ruin. The status quo, in reality, represents much greater risks. And much smaller rewards.

Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institutes, divisions of Energy Probe Research Foundation. E-mail: LawrenceSolomon@nextcity.com.

Related article:

Martin’s 19th-century Cabinet