role of municipal govt
TRANSCRIPT
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THE ROLE OF
MUNICIPALGOVERNMENT
DAVID SEYMOUR
AUGUST 19, 2013
KEY POINTS
The Alberta Municipal Government Act sets out
what municipal governments can and cannot
do. However, in practice it rules out little besides
some niche activities and broad restraints on
taxing and borrowing.
Economic theory proposes much tighter
constraints on the role of government than do
the constitutional arrangements that surroundAlberta municipalities.
Voters are the ultimate restraint on government
andhavethelastsayondeningitsrole.
However,theyalsofaceacutedicultieswhen
holding government to account.
Given the lack of constitutional constraints,
an opportunity exists for municipal politicians
to apply restraints consistent with economic
theory.
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TARGET 102:
BY 2036, 100 PER
CENT OF CALGARIANS
REPORT THAT THEY
FEEL RESPECTED
AND SUPPORTED IN
THEIR PURSUITS OF
MEANING, PURPOSE
AND CONNECTEDNESS
Imagine Calgary, City of Calgary Plan
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Many debates over municipal policy could be easily resolved if the role of a municipality was
more widely agreed upon. Questions such as whether a municipality should regulate the
serving of shark n soup, run certain commercial enterprises, allow secondary suites and
increase taxes could better be answered if we understood whether such activities t within
the role of government.
In spite of this, it seems to anyone reading city documents that there is almost nothing that
the City of Calgary cannot do for its citizens. Its Societal Benets policy lists 13 wide ranging
goals that could be used to justify almost any conceivable activity.
THE ROLE OFMUNICIPALGOVERNMENT
1. Reduce community greenhouse emissions,air pollutants, and energy consumption(environmental)
2. Protect water resources (environmental)
3. Ensure land stewardship and protection
(environmental)
4. Reducewastetolandll(environmental)
5. Provide accessibility/availability (social)
6. Enableaordability(social)
7. Promote accommodation/acceptability (social)
8. Improve adequacy to meet need, suitability andsafety (social)
9. Create a city where citizens want to live, workand invest (economic)
10. Create a city that promotes a healthy, vibrant
economy by attracting and retaining businessesand helping them grow (economic)
11. Encourage sustainable communities (smartgrowth)
12. Reduce barriers to participation (smart growth)
13. Other (from Council-approved environmental,social, economic or smart growth policy)1
CITY OF CALGARY SOCIETAL BENEFITS
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6
INDEED, MANY OF
THE CONCERNS
THAT VOTERS HAVE
ABOUT THE CITY OF
CALGARY COULD BE
ALLAYED BY THE
CITY ADHERING
MORE CLOSELY TO ADISCIPLINED ROLE
OF GOVERNMENT
The Citys Imagine Calgary Document contains a
range of even more specic goals:
By 2036, 90 per cent of citizens agree that
Calgary is a city with soul, which is dened
as citizens having meaning and purpose in
life and experiencing ongoing feelings of
connectedness with some form of human,
historic or natural system.
By 2036, 100 per cent of Calgarians report
that they feel respected and supported in
their pursuits of meaning, purpose and
connectedness, and that they extend respect
and support to others who meet this need in
ways dierent from their own.
By 2036, 95 per cent of children aged two
to ve years exhibit high levels of emotional
well-being and age-appropriate levels
of attention span and impulse control,
as measured by the Ages and Stages
Questionnaire.
By 2036, the consumption of urban and
regionally-produced food by Calgarians
increases to 30 per cent.2
The Citys Transport and Municipal
Development Plans identify a range of objectives
that can best be described as tting Calgariansbehaviour to a plan rather than planning to
service their needs. For example, the Municipal
Development Plan calls for population densities
to reach 27 people per hectare (up from 20 in
2005), 50 per cent of new development to occur
within the 2005 urban footprint (5 per cent
leaving built area in 2005), and at least 35 per
cent of trips to be walking, cycling or transit (up
from 23 per cent in 2005).
At the same time, public opinion research
undertaken for the Manning Foundation
indicates that the public actually has quite
dierent priorities (see Figure A).
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CALGARY VOTER CONCERNS
On a scale where 0 is not at all concerned and 10 is very concerned
Manning Foundation Municipal Survey
Sample Size n=4,200 eligible Calgary resident voters (Avg 300 per Ward)
Method: Live telephone interviews and online interviews
Fielded in October 2012
Margin of Error +1.6% nineteen times out of twenty
Full Results: www.manningfoundation.org/our-work
FIGURE A
Ensuring adequate support for localculture and arts in Calgary
Ensuring adequate support forwalking and bike paths in the city
Making it easier for Calgarians to dealwith City Hall
The rate at which the city is growing
The adequacy and efficiency of C-Train service
The amount of crime, theft and graffitiin the city
The amount of property taxes chargedto property owners in Calgary
Making City Hall more accountable
The personal safety and security ofpassengers at C-Train stations after dark
The cost of living for average familiesin Calgary
Traffic congestion on Calgary roads
5.16
5.83
5.87
6.10
6.13
6.42
6.60
6.89
7.14
7.37
7.61
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8
Indeed, many of the concerns that voters have
about the City of Calgary could be allayed by
the City adhering more closely to a disciplined
role of government. Housing aordability, the
cost of government services, public safety and
trac congestion could all be addressed by
the city putting more emphasis on the things
governments are good at and refraining from
activities where private businesses and civil
society could do better.
Broadly speaking, governments can tax,
regulate and own. There are good arguments
for tax funding being appropriate for some
expenditure, such as a police force, but less
so for others, such as a golf course. Some
regulations, such as an anti-littering ordinance,
can improve peoples overall well-being.
Others, such as current taxi regulations, do
not. Government ownership is essential if
a government is to operate independently.For example, a council should own its
own chambers. Nevertheless, government
ownership has a poor track record generally,
demonstrated in reverse by the worldwide
success of privatization.
The role of government can be dened by a
set of rules for when government should and
should not engage in these three kinds of
activities. These rules may be derived from
three main sources. The rst is constitutional
and quasi-constitutional documents such as
the Canadian Constitution and the various
provincial municipal government acts. The
Canadian Constitution is silent on the role of
municipal governments, simply stating that all
municipal questions are up to the provinces. In
Alberta, the most important document is the
Municipal Government Act, which provides
little guidance on what the role of municipal
government should be. It empowers municipal
government in multiple and vague ways, leaving
few activities out of its scope.
The second is economic and political theory.
These provide several ideas regarding what
governments might and might not be good at
based on the concept of market failure.
The third and most important source of
restraint on government activity is the will of
the voters. The voter ultimately decides what
the role of government should be. However,
voters as a group face some systematic
challenges in restraining government. At itssimplest, the problem is that becoming an
informed voter is only useful if many other
voters do the same. Voters as a group face a
collective action problem when attempting
to inuence the course of government. This
problem is particularly acute when dealing with
small, organized interest groups.
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SOME REGULATIONS, SUCH
AS AN ANTI-LITTERING
ORDINANCE, CAN IMPROVE
PEOPLES OVERALL
WELL-BEING. OTHERS,
SUCH AS CURRENT TAXI
REGULATIONS, DO NOT
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THECONSTITU-TIONAL
APPROACHThe role of municipal government is barely
dened in any constitutional or quasi-
constitutional document. On the contrary,
the relevant documents eectively tell
municipalities that the role of municipal
government is whatever municipal government
denes it to be.
The Canadian Constitution does not
contemplate municipalities except for a brief
line in the Constitution Act, 1867. In each
Province the Legislature may exclusively make
Laws in relation to Municipal Institutions inthe Province.
For municipalities in Alberta, the Municipal
Government Act begins with a very wide
denition of the purpose of municipal
government:
(a) to provide good government;
(b) to provide services, facilities or other
things that, in the opinion of council, are
necessary or desirable for all or a part of
the municipality, and;
(c) to develop and maintain safe and viable
communities.
These purpose statements could encompass
almost any imaginable activity.
The Act goes on to say that a municipality may
pass bylaws for municipal purposes, and it gives
a long list of them. The list begins:
(a) the safety, health and welfare of people
and the protection of people and property;
(b) people, activities and things in, on or
near a public place or place that is open to
the public;
According to this section, any bylaw is legal as
long as it involves the safety, health or welfare
of people or occurs in or near a place that is
open to the public. There is some practical
restraint on the power to enforce bylaws, which
they can enforce with a maximum $10,000 ne
or one years imprisonment.
Those interpreting the Act are instructed to:
(a) give broad authority to councils and to
respect their right to govern municipalities
in whatever way the councils consider
appropriate, within the jurisdiction given
to them under this or any other enactment
.
The Act does enumerate limits on the power of
municipal governments; however, these almost
exclusively defer municipalities to provincial
oversight rather than state the rights of
citizens. For example, municipalities must have
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provincial oversight for involvement in mineral
rights, for-prot corporations, regulating
rearms and regulating the use of re in forest-
protection areas.
There are restrictions placed on revenue
gathering and borrowing that act as a practical
limit on spending. Taxes must be assessed
against property rather than income, sales or
other factors used by the federal and provincial
governments. Alberta municipalities have a
debt limit (set by regulation) of 1.5 times to two
times the municipalitys revenue, depending on
the municipality.
The Act also provides considerable scope for
municipalities to regulate land use. In this
regard, the purpose of the Act is:
to provide means whereby plans and
related matters may be prepared and
adopted:
(a) to achieve the orderly, economical and
benecialdevelopment,useoflandand
patterns of human settlement, and;
(b) to maintain and improve the quality
of the physical environment within which
patterns of human settlement are situated
in Alberta,
without infringing on the rights of
individuals for any public interest except to
the extent that is necessary for the overall
greater public interest.
The Act goes on to enable and, in many cases,
require municipalities to make land-use
regulations. As with the broader purpose and
powers given to municipalities under the Act,
these powers are quite open ended.
Land-use bylaws are mandatory for
municipalities with populations of more than
3,500. These must divide the municipalitys
territory into zones with permitted activities
and processes for gaining development permits.
For example, municipal development plans
must contain regulations to protect agricultural
land.
The Act extinguishes some of the usual
constraints that might limit government. For
example, the Act states that nothing in the land-
use regulation section entitles property owners
to consultation. In the case of subdivision and
development appeals boards, the Act exemptsthese quasi-judicial bodies from the usual
laws of evidence that are applied to judicial
proceedings.
Altogether, Albertas Municipal Government
Act places few restraints on municipal
government, eectively saying that the role of
government is whatever the government denes
it to be. In view of this, there is a case to be
made for municipal politicians setting their own
constraints.
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CONTRIBU-TIONS FROM
ECONOMICTHEORYEconomics is the study of putting scarce
resources to their best use. The role of
government is part of this study, which asks
whether government should control given
resources by owning them, spending them or
regulating their use. For example, there is a
question of whether governments should run
commercial enterprises. Empirical evidence
overwhelmingly shows that these are best left
outside of the role of government.
There are other considerations in public
policy, such as the distribution of welfare. It ispossible to imagine a very wealthy society with
great inequality, and many see that as unjust.
However, there are critical diculties with
municipal governments being involved in the
redistribution of wealth.
Without access to the wider tax and transfer
system used by the federal and provincial
governments, municipalities lack an important
tool for identifying and helping those in need of
redistribution. Furthermore, municipalities face
a geographical challenge in providing income
redistribution.
If municipalities are in charge of [social]
policies, they are under huge pressure
toreducetheirnancialcommitments
because, if they do not, there is always
the threat that wealthy individuals or
companies will simply go elsewhere. When
going elsewhere means only a move from
one municipality to another, the threat is
often (but not always) real.3
For this reason, this paper focuses on economic
eciency.
THERE ARE CRITICAL
DIFFICULTIES
WITH MUNICIPAL
GOVERNMENTS
BEING INVOLVED IN
THE REDISTRIBUTION
OF WEALTH
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The role of government can be broken down
into ownership, expenditure and regulatory
roles.
OWNERSHIP
The Municipal Government Act is silent
on government ownership and places
no constraints on it other than requiring
ministerial oversight of the ownership of for-
prot corporations. Nevertheless, there are
good reasons municipalities might choose torestrict their role in terms of ownership.
The City of Calgary is engaged in extensive
ownership, claiming $5.4 billion in nancial
assets and $13 billion in tangible assets. The
nancial assets are intangibles, with the
exceptions of $250 million in land inventory
and full ownership of Enmax, which is valued
at $2.2 billion. The tangible capital assets are
predominantly engineered structures, followed
by land, buildings and vehicles.
In functional terms, these assets include golf
courses, sailboats, parks, roads, sewers, trains,
rails, buses, machinery and a development
company.
Against this ownership, the City carries $3.4
billion of long-term debt as part of total
nancial liabilities of $5.3 billion. The interest
on these liabilities serves4 as a reminder that
there is a cost of ownership, which is any lost
opportunity to better use the same assets. If
the actual return on owning an asset is lower
than other possible returns, then value is being
lost. In order to achieve eciency, municipal
governments should not own assets that could
be better managed by other entities.
Over the past 30 years, governments in more
than 100 countries have privatized more than
$2 trillion worth of assets, providing a rich
history of what happens when the private rather
than the public sector manages the same assets.
The evidence has overwhelmingly shown that
private management is more ecient than
public management.
THE EVIDENCE HAS
OVERWHELMINGLY
SHOWN THAT PRIVATE
MANAGEMENT IS
MORE EFFICIENT
THAN PUBLICMANAGEMENT
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For example, in a meta-study of 38 studies of
privatization, Megginson and Netter (2001)
concluded, Research now supports the
proposition that privately owned rms are more
ecient and more protable than otherwise-
comparable state-owned rms.5
Further evidence is provided by Boardman
and Vining (2012), who studied 53 Canadian
privatizations spanning from 1974 to 2011 and
summarized that the overall impacts have been
largely positive, in many cases impressively
so. Key economic indicators such as capital
expenditures, dividends, tax revenues and sales
per employee tended to increase, while others
such as employment initially fell, only to rise
again over the long term.6
Megginson and Netter note that the gains
from privatization depend on the amount of
competition possible in the market in which therms or asset operates. Thus, gains for the kind
of network infrastructure that municipalities
own, such as roads and sewers, are likely to be
lower than for assets where private competition
is possible, such as recreation centres.
Nevertheless, overwhelming evidence suggests
that many of the assets that the City of Calgary
currently owns would be better managed by
the private sector. Outside of certain assets
such as City Hall, which are necessary for the
democratic process and should not be subject
to any one landlord, it is not clear why the
role of municipal government should include
ownership.
Municipal politicians eager to increase
economic eciency in Calgary should aim
to put assets into private ownership, as the
evidence on average and over the long term
suggests that the assets will be better managed.
In terms of prioritization, politicians should
rst apply the policy to assets that have clear
commercial competitors or the potential for
them. Such an order might be:
Golf courses
Recreation centres
Sailing assets
Snow removal and garbage services
Electricity generation
Transit services
Single-use network infrastructure, e.g.,
sewers, water and electricity distribution
Multiple-use network infrastructure, e.g.,
roads
Reducing the scope of government ownership
would not prevent the production of any of
these services. On the contrary, there is good
reason to believe that the cost and quality of
the services would improve if these assets were
transferred to private ownership.
Of course, not all privatization is good because
not all privatizations are created equal. In
particular, any privatization should be very
carefully considered so that it does not create
market power or invoke regulatory costs greater
than expected gains in eciency.
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16
was supposed to solve. Taxi regulations are an
acknowledged government failure where the
political mechanism creates worse problems
than the original market failure it was supposed
to x. By limiting the number of plates
available, the City simultaneously creates a
shortage of taxis and raises the value of plates.
In turn, these raised values give the plate
owners an incentive to lobby against expanding
the number of plates, and the shortage
continues to grow.
Similarly, land-use regulations can restrict the
supply of land that can be built upon, which
benets existing homeowners but is a cost to
new homebuyers and to the continued growth
of the city. If subject to proper regulatory
principles, most of the rationales for this
intervention would be quashed. The restriction
of land development is justied on the basis
of infrastructure costs and reported taste forcertain urban forms (types of buildings and
neighbourhoods). However, these objectives
could be better met by pricing infrastructure
correctly and allowing consumers to reveal
their preferences in the market. Subjecting
land-use regulation to sound regulatory
principles (see Figure B) would lead to the
rejection of much of the current planning.
These poor regulatory decisions have very
large distortionary eects, which suggests
that improving regulatory decisions would
be worthwhile. Taxi regulation, for example,
has led to a distortion where plates trade at
a reported $150,000 each. The total value of
these plates is over $200 million, representing
wealth inadvertently transferred from the
public to the plate holders since 1986 when the
number of plates was capped.
Similarly, the Demographia International
Housing Aordability Survey7 cites the median
Calgary House price as $358,400, or 4.3 times
the median household income. The Survey
also cites that a ratio of 3.0 is achievable in
properly regulated markets, even when they are
growing. This suggests that Calgary homes are
overvalued by a median of $108,000 each, or
approximately $40 billon across the city. These
gures are indicative only, but their magnitude
suggests that regulatory performance is a major
issue in Calgary.
Because circumstances vary, there is no general
rule for what is good regulation and what is badregulation. The task of identifying the role of
government with respect to regulation means
identifying which regulations are likely to
improve overall eciency by reducing market
failure and which are more likely to increase it.
Calgarys cut red-tape initiative is driven
by sta, business and public submissions
and focuses mainly on improving the
administration of bylaws rather than on the
bylaws themselves. There are several ways
this initiative could be expanded to be more
systematic.
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THIS SUGGESTS
THAT CALGARY
HOMES ARE
OVERVALUED
BY A MEDIAN OF$108,000 EACH, OR
APPROXIMATELY
$40 BILLION
ACROSS THE CITY
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The Standard Cost Model8, used in the
Netherlands and championed by the
Organisation for Economic Co-operation
and Development, involves calculating the
economy-wide cost of regulatory compliance
as a starting point for reducing the overall
regulatory burden in a measurable way. The
model quanties the compliance cost of existing
regulations and is a test for new ones.
Another systematic approach is regulatory
impact analysis. At present, the City of Calgary
states that the City Administration may apply
a series of tests during the development of a
bylaw including whether the bylaw is good for
the population as a whole and whether there
are any alternatives. An improvement to this
policy would be to formalize these tests and
include more-rigorous cost-benet analysis.
The mandatory publication of a regulatory
impact statement would accompany any newbylaw (see Figure B). The mayor and the city
manager should sign this statement. A specially
created ocer of regulatory quality might ask
and answer these questions.9
The mandatory publication of such a statement
would change the dynamics of making bylaws.
The process could be applied to the existing
stock of bylaws on a rolling basis with all bylaws
being reviewed at least every ve years.
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1. What is the problem to be solved, and is the bylaw necessary?
2. What alternative private, including common law, remedies exist?
3. What will the impact be on private property rights?
4. Whatwilltheeectsbeonthefreedomtocontract?
5. Who,ifanyone,islikelytobenetfromtheregulatorychange?
6. Whatistheestimatedcostofcompliancetothoseaected?
PROPOSED REGULATORY IMPACT QUESTIONNAIRE
FIGURE B
SIGNED:
Mayor
City Manager
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EXPENDITURE
In 2012, the City of Calgarys expenditures were
$2.96 billion, with transit, police and water and
resources being the largest expenditure items
at $438 million, $411 million and $383 million
respectively.
As with ownership and regulation, there
are some activities for which government
expenditure is more ecient than private sector
expenditure and others for which it is not.
Since the Municipal Government Act placesrestrictions on how municipalities can source
revenue but places almost no restrictions
on how they can spend it, there is scope for
municipal politicians to set their own limits on
the expenditure role of government.
The most helpful economic theory for
identifying useful expenditure is the public
good theory, which distinguishes public goods
from private goods. Public goods are goods
for which the beneciaries cannot be made to
pay at the point of consumption (they are non
excludable), and the consumption of which by
one person does not lessen what is available for
others (they are non rivalrous). Private goods
are the opposite in both ways.
The police service is an example of a public
good, because once the streets are safe, all
people benet, even tourists who do not
contribute to the municipality. What is more,
WHEREVER POSSIBLE,
MUNICIPALITIES
SHOULD ENSURE THATUSERS PAY THE COST
OF WHAT THEY USE
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one person enjoying a safe environment does
not make the city less safe for others to enjoy.
Conversely, a restaurant meal is a private good
because it is easy to identify the person who
benets and make that patron pay for it, and
once the person consumes the meal, it is not
available for others. Few goods are perfectly
public or perfectly private, but all of the goods
and services that the City of Calgary delivers
can be categorized as more like one or the
other.
Governments have an advantage when funding
public goods. Because they are able to force
people to pay taxes, they can overcome the
fact that it is dicult to charge people for a
particular service. However, governments have
no advantages when it comes to providing
private goods. Because a person or group
uses up private goods, governments run into
problems deciding who gets them, e.g., whoshould use space in a leisure centre?
An additional complication comes from the
way services are funded. While the power to
tax gives municipalities the ability to fund
public goods, taxes do not fund all municipal
services. In 2012, the City of Calgary sourced
$1.59 billion from taxes, and a further $124
million came from higher levels of government.
However, $1 billion came from user fees that
were collected for services such as transit, water
and sewer.
Wherever possible, municipalities should
ensure that users pay the cost of what they use.
Consumers are then more likely to utilize only
what they need, reducing waste. Once costs
and benets are aligned, municipal politicians
should ask if the municipality should be
providing the service.
Applying the public good test to Calgarys
current expenditure would likely reduce
the level of tax supported expenditure by a
considerable amount. The test would likely
classify expenditure areas (listed with their
2012 expenditure in thousands) as follows:
Police 410,926
Fire 246,003
Public Goods 656,929
Roads,tracandparking 355,081
Parks and recreation facilities 211,142
General government 264,647
Public works 176,992
Mixed Public-Private Goods 1,007,862
Public transit 438,405
Water services and resources 382,577
Waste and recycling services 111,034
Community and social development 55,567
Social housing 113,184
Societies and related authorities 68,593
Calgary Public Library Board 52,195
Real estate services 72,400
Private Goods 1,293,955
TOTAL 2,958,746
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These categories from the City of Calgary
nancial statements are far from a perfect split
of public and private goods. However, they give
an idea of how much tax-supported expenditure
could be reduced if councilors strictly adhered
to the principle of using the power to tax to
fund only true public goods. In 2012, such
goods consumed only $656 million compared
with the $1.5 billion collected in tax revenue.
These costs would not disappear, and most
would continue to be paid in some form. What
would change is that the public would have a
greater amount of choice about how much to
consume. For example, those who do not wish
to play golf would no longer see their property
taxes used to maintain City golf courses.
THE VOTERSCHALLENGEVoters are the ultimate arbiters of the role of
government, and it is to them that municipal
governments should look when dening the
role of government. However, as a group, voters
face a systematic problem when monitoring
government activity and holding government to
account.
Many voters would like to invest more time
in becoming informed about policy options
but nd that their eorts will only make a
dierence if a large number of other voters do
the same.10 The incentive for rational voters
is to economize on time spent monitoring
government activity and future policy options
and use their time for pursuits that are more
directly rewarding.
A classic example of this challenge, referred
to earlier, is the problem of taxi regulation.
Research in Winnipeg has shown that taxi
regulation transfers wealth from passengers
and drivers to licence owners.11 The majority
of people would be better o without this
regulation, but because there are only several
hundred taxi licences and more than 700,000
Winnipeggers, the amount transferred from
each passenger is very small compared with
INDIVIDUAL
LICENCE HOLDERS
HAVE A STRONGER
INCENTIVE TO
BECOME INFORMED
AND LOBBY THAN
DO VOTERS WHO DO
NOT HAVE A DIRECTINTEREST IN THE
INDUSTRY
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the amount transferred to each licence holder.
Individual licence holders have a stronger
incentive to become informed and lobby than
do voters who do not have a direct interest
in the industry.12 For this reason, this very
frustrating regulation continues, year after year,
in almost every Canadian jurisdiction.
As another example, much of the current land
use planning activity by the City is likely subject
to the same dynamics. The City boasts that
Imagine Calgary, which is used to link planning
activity to the will of the citizens, was the
largest community engagement exercise of its
type in the world. While the 18,000 participants
sounds impressive, they were in fact a self
selected sample of less than two per cent of
Calgarians, whose vision will now impose a
variety of regulatory costs on all residents.
Because of the challenge that voters as a groupface in restraining government activity, there is
a role for ethical leaders who believe in limited
government to refrain from policies that will
cost the majority at the expense of a more
politically active minority.
CONCLUSIONIn the absence of clear guidance from the
Constitution Act or the Municipal Government
Act, the City of Calgary has had great latitudeto choose its own denition of the role of
municipal government. This has led to a range
of ownership, regulatory and expenditure
functions, many of which are well outside what
economic theory suggests is the optimal role of
government.
Municipal politicians interested in optimizing
the cost and quality of services that Calgarians
receive should relentlessly question whether
each ownership, regulatory and expenditure
activity of the municipality is something that
the City should be engaged in or whether other
institutions could better serve Calgarians
needs.
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24
RECOMMENDATIONSPOLICY CURRENT STATUS DESCRIPTION BENEFIT
Ensure all spendingfunded according tobenetsmodel
Calgary currently has astrongbenets-orientatedfunding formula
Primaryprincipleisthatbeneciariesof a service pay the cost of it
Moreecientbecausepeople will not overconsume when they arepaying themselves
Introduce standard
cost model forregulation
City undertakes consultations
such as cut red tape initiativeto gauge regulatory burden
Scienticsurveysandcalculationsof
regulatory administration
Formal measurement
of regulatory burdenover time
Abandon ImagineCalgary targets
City rhetoric heavy withImagine Calgary targets
These targets should be abandoned,they were formed through a spuriousprocess and contemplate a wide rangeof goals that the City cannot hope toachieve
Allow city to focus on amore defensible role ofgovernment
Introducemandatoryregulatory impact
statements
Currently the Cityadministration (Animal andBylaw Services) produces a
report although there is noformal policy underlying this
A formal checklist of regulatoryconditionsissignedobythemayorand possibly a regulatory quality
ocer
Increased transparencyand an avenue forcitizens whose rights
have been improperlyviolated by regulationto challenge therelevant bylaws
Reform SocietalBenetsPolicyto market failureprinciple
Socialbenetspolicycurrently encompasses 13wide ranging goals includingother, that allow almostany conceivable activity to berelatedtoasocietalbenet
The policy should be reformedtoreectaprincipledroleofgovernment, acknowledging wheregovernmentcanmakeadierence,regulating market failures andproviding public goods, rather thanpromising a wide range of outcomes
Far better focus frommunicipal government,emphasizing activitieswhere governmenthas a competitiveadvantage
Implementregulatory
complianceocer
The Administration isresponsible for issuing a
report on new bylaws tocouncil,butnospecicindividual is responsible forthis
Aregulatorycomplianceocerwhoseprimaryjobitistosignoon
regulatory quality is responsible forissuing a report on the quality of anynew bylaw or plan
Higher accountabilityand more attention on
regulatory quality
Divest assetsexposed tocompetition
City currently owns a numberof assets that are exposedto competition or potentialcompetition
Assets where competition is actualor possible, such as golf courses,recreation centres, and sailingfacilities transferred to privateeconomy
Moreecientandcustomer responsiveservices, lower costs/risks for taxpayers
Redeneroleof governmentin MunicipalGovernmentAct (Provincialprerogative)
Municipal Government Actcurrently rules out almost noactivities,eectivelystatingthat the role of a municipalgovernment is whatever itscouncildenesittobe.Areview is underway
TheActshouldbereformedtoreecta principled role of government,acknowledging where governmentcanmakeadierence,regulatingmarket failures and providing publicgoods, rather than leaving the role tobedenedadhocbycouncils
Far better focus frommunicipal government,emphasizing activitieswhere governmenthas a competitiveadvantage
Divest singleuse networkinfrastructure
City currently owns networksfor water, sewer, rail, andelectricity distribution
Network assets where competition isnot possible but only one use appliestransferred to private economy
Moreecientandcustomer responsiveservices, lower costs/risks for taxpayers
Divest multi-use networkinfrastructure
City currently owns the streetnetwork
Network assets where competition isnot possible and multiple uses applytransferred to private economy
Moreecientandcustomer responsiveservices, lower costs/risks for taxpayers
MOREAMBITIOUSR
EFORM
LESSAMBIT
IOUSREFORM
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1. PolicyGoalsforAssessingSocietalBenets,CityofCalgary2012
2. Imagine Calgary cited in Nenshis Charade of Consultation Cory Morgan Ranting and Raving http://corymorgan.
com/nenshis-charade-of-consultation/
3. Sancton,A(2008)DrawingLines:DeningtheRolesofMunicipal,Provincial,andFederalGovernmentsinad-dressing urban social issues in Canada. Canada West Foundation, Calgary p4
4. It is sometimes argued that because the City can borrow at comparatively low interest rates, it makes sense for theCity to fund investments. However, the interest rates on an investment are determined by the riskiness of the invest-ment rather than the type of investor. Thus, the risk does not change because the City makes an investment; rather,the taxpayer absorbs more risk in order to keep the interest rate low.
5. Netter, J and Megginson, W From State to Market: A Survey of Empirical Studies on Privatization. Journal of Eco-nomic Literature, Vol. 39, No. 2, June 2001. Available at SSRN: http://dx.doi.org/10.2139/ssrn.26231
6. Boardman, A and Vining, A A Review and Assessment of Privatization in Canada SPP Research Papers The Schoolof Public Policy
7. Cox,WandPavletich,H(2013)9thAnnualDemographiaInternationalHousingAordabilitySurveyAvailableonline: http://www.demographia.com/dhi.pdf
8. See, for example, the Standard Cost Model Network for more detail on this model: http://ec.europa.eu/dgs/secre-tariat_general/admin_burden/eu_scm/eu_scm_en.htm
9. See Wilkinson, B (2004) Constraining Government Regulation New Zealand Business Roundtable for a more de-
tailed discussion of this topic.
10. See Caplan, B. (2006) The Myth of the Rational Voter for evidence of voter information levels. Caplan shows thatvoters sensibly hold low levels of information due to the incentive problems caused by the prisoners dilemma natureof becoming informed.
11. See Prentice et al. (2010) Taxi Fares and the Capitalization of Taxi Licenses. Available online at http://www.ctrf.ca/conferences/2010Toronto/2010Proceedings/53PrenticeMossmanvanSchijndelTaxiFares.pdf.
12. See Olsen, M. (1971) The Logic of Collective Action, p. 3, Where small groups with common interests are concerned,
then, there is however a surprising tendency for the exploitation of the great by the small.
NOTES
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26
ABOUT THE AUTHOR
DAVID SEYMOURleads the Foundations project to developmarket-oriented policy for municipal government. Seymour returns to Canada
after a year advising the minister responsible for implementing charter schools
in his native New Zealand. Previously, he served as the Senior Policy Analyst
at the Frontier Centre for Public Policy. He is the author of Birth of a Boom:
Saskatchewans Dawning Golden Age. Seymour holds degrees in electrical
engineering and philosophy from the University of Auckland.
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UPCOMING PAPERSThe Manning Foundation is building intellectual capital for municipal governance in ve streams of
public policy enquiry. Each stream will include a series of public policy papers designed to stimulate
new thought about the role of municipal government in society. Manning Foundation research papers
are placed in the public domain via the Foundations website and are available for review, debate,
criticism and support by Canadians regardless of their political aliation.
1. ORGANIC CITIES
An enquiry into how cities grow and what role government should play in regulating growth and
providing infrastructure, with the goals of economic eciency and liveability. Much of the debate
around municipal development is based around what urban forms are desirable, with sprawlers and
smart growthers alike arguing that land-use regulation and infrastructure provision should favour
their optimal urban form.
The Organic Cities project takes a dierent perspective: that what is important is not the urban form
that emerges, but the processes that are in place, particularly the role of government. On this view, it is
more important that the market is left free to serve consumer demand, with the important constraints
being property rights and the real costs of infrastructure provision rather than land-use regulations.
Upcoming papers include enquiries into the economics of consultation processes so in vogue at city
halls across the country and the eects of future advances in vehicle technology.
2. APPROPRIATE ACTIVITIES
An enquiry into the optimal role of government, with a positive analysis of what municipal government
currently does and a normative analysis of what roles government is best equipped to ll. These roles
broadly divide into an ownership role, a regulatory role, and an expenditure role each of which can
be over or under played. This stream builds on concepts such as market failure, public goods and
subsidiarity to identify which activities municipal government does or does not have a comparative
advantage over other levels of government.
Upcoming papers include enquiries into the proper role of municipal government as a regulator and as
a distributor of wealth.
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3. CITIZEN SOVEREIGNTY
An enquiry into how well citizens can hold government to account, including monitoring of its
activities and protecting their natural rights. This stream investigates standards of municipal
accounting and performance reporting, open government, public safety and intergenerational equity.
It considers concepts such as open government and open data, and property rights.
Future papers in this series include enquiries into the quality of performance reporting,
intergenerational equity with respect to municipal government and open data projects.
4. THE OPEN SOCIETY
Open societies share power among a range of dierent institutions, unlike closed societies where itis vested in just one. The Open Society is an enquiry into the role of dierent institutions in the city,
including the church, charities and associations. This stream has a historical element, it considers
how these dierent elements have interacted in the past and may do so in the future.
Upcoming papers include an account of the role of civil society in building Calgary.
5. MUNICIPAL ISSUE PAPERS
This stream covers basic elements of public policy, including an introduction to the role of
government at municipal level, briengs on areas of municipal policy and issue papers framed in
terms of values, facts and ideas of conservatism applied to municipal policy. Particularly salient policy
areas include public safety, mobility and aordability.
MANNING FOUNDATION FOR DEMOCRATIC EDUCATIONwww.manningfoundation.orginfo@manningfoundation.org403.536.8585514 11 Ave SWCalgary, AB T2R 0C8
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