Last year we had a taste of finding a better way when, just months in office, Mayor Olivia Chow struck the “New Deal” with the province to provide Toronto with up to $1.2 billion in provincial operating supports over three years. This welcome and unexpected level of collaboration was critical to stabilizing the Toronto’s operating budget and averting a crisis.
With that big win, the mayor set high expectations for a new and creative playbook, moving off of Toronto’s rocky trail of perennial budget crises with some innovative fixes that could set us on a stable and sustainable financial footing. But that optimism has proven short lived. Instead, City Hall is reaching for the property tax lever and raising the rate another 6.9 per cent; instead of advancing, a stall.
The public, while wary, understood that a tax increase was probably unavoidable last year — even at 9.5 per cent. But this year, the reception may well be cooler.
The “New Deal” was supposed to be Toronto’s first step to turning the page, finally tackling longstanding systemic budget challenges — tens of billions of dollars of unfunded pressures loom over the coming decade. From crumbling infrastructure, unaffordable housing, chronic congestion, increasingly unreliable transit — just to name a few of Toronto’s current woes — it’s clear we need a budget reset capable of boosting our slow-growth economy and with it, our collective living standard.
We need a high-growth strategy that encourages investment and business expansion, keeps our most talented young people here, while adding a lot more good paying jobs. That’s the way to propel revenue generation to pay for much needed new infrastructure and high-quality public services for a surging population that currently is growing faster than our economy. Collectively today, we’re getting poorer, not richer.
A tax hike is the slow growth thing to do.
To get started, Toronto needs to take expenditure management and structural budget reform seriously. Toronto needs a system, like a treasury board, that enables it to make decisions on how best to prioritize scarce resources.
We’re all feeling an erosion in the quality of public services, while underfunded infrastructure is shortchanging our living standards. Taxpayers alone can no longer be expected to carry the mounting burden of sustaining the high-quality public services residents expect.
The good news is there are some tools in the budget toolbox that aren’t being used.
Leveraging public assets through new ownership and delivery models is a big idea that has been embraced by jurisdictions around the world — a transformational fix that the city has historically resisted. Our publicly owned and operated assets in the form of land, transit, housing and energy contain huge untapped value for us there for the taking. It’s a golden city-building opportunity.
Looking to the next decade, the city will be hard pressed to avoid continuing to erode service quality as it manages and maintains its many assets. Consider: the city’s infrastructure deficit ballooned to $26 billion last year, including both essential maintenance and new investments necessary to support our growing population.
Effective asset management is essential for smart city-building. What matters most is not who owns the asset, but how well it creates value, generates revenue and supports the city’s long-term objectives.
Toronto has done it before. The sale of Toronto District Heating in the 1990s, to a pension fund created EnWave, the highly successful utility that uses deep lake water cooling for the downtown core.
By looking for strategic opportunities we can find creative, mutually beneficial partnerships enabling Toronto to recycle and reinvest in critical infrastructure, unlocking the fiscal headroom so desperately needed to properly fund our core services.
Cities with diverse political values — from Hong Kong to Copenhagen — are successfully adopting models that integrate private sector expertise and funding while safeguarding the public interest while improving service quality.
Hong Kong’s Mass Transit Railway sold a majority stake in its subway system, unlocking commercial and residential development opportunities along transit lines. The results: $1 billion USD annually from fares, real estate, advertising and other sources.
Paris’ Metro, Europe’s third largest rapid transit system, is publicly owned but privately operated. Its global operations generate revenue that is reinvested into city infrastructure.
In Copenhagen, pension funds invested in the city’s port leveraged private sector efficiency for public good. By using public assets strategically, they turned fiscal challenges into economic prosperity and infrastructure resilience. City Hall needs to round-up potential private sector partners with the capacity and know-how to generate maximum value for the public good.
This year’s budget was a missed opportunity. Budget 2026 must recapture the creative energy of last year’s New Deal.
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Giles Gherson
President and Chief Executive Officer, Toronto Region Board of Trade
Giles Gherson is the President and Chief Executive Officer of the Toronto Region Board of Trade. He leads the Board’s efforts to advocate on behalf of our members and enhance the business competitiveness of our region.
Prior to joining the Board in 2022, Giles spent over 25 years in the private and public sector in progressively senior roles. He spent 15 years with the Province of Ontario, where he held multiple influential Deputy Minister roles – most extensively and recently as Deputy Minister, Economic Development.
To learn more about Giles, click here.