Role of Municipal Govt

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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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10

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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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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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


Divest multi-use networkinfrastructure

City currently owns the streetnetwork

Network assets where competition isnot possible and multiple uses applytransferred to private economy


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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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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Documents

Role of Municipal Govt