Economic proposal lacks wider view - WP editorial

IF MORE federal money is allocated to big cities, will the resulting improved economic activity pull the fortunes of smaller communities upward in their wake?

That is the contention of the Conference Board of Canada in its recent report, Canada’s Hub Cities: A Driving Force of the National Economy. The board, an economic research centre, makes convincing arguments in its concise, 19-page document that explores what it calls convergence – the situation where economic development of smaller communities eventually converges with the higher economic development level of a hub city.

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One of the most powerful suggestions, especially when considered in the context of Canada’s ever-growing rural-urban divide, is that economic development is not a zero sum game. Growth in one area does not come at the expense of another, according to studies on convergence at the international level.

Growth and its possibilities may be infinite, but federal funding isn’t. The conference board suggests that certain hub cities receive a higher percentage of federal funds than smaller communities. It suggests a 60-40 split as an option.

In the case of government plans to distribute gas tax revenue, such a plan would eliminate the per capita distribution proposed by the Conservatives. Instead, a greater portion of the total would be distributed to major cities.

It’s less fair, the board admits, but probably more economically effective.

And while the board says greater urban investment will help outlying communities expand their economies, it admits not all will achieve convergence with their more vibrant and sometimes distant hub city. These communities will need help to “downsize with dignity,” says the report, noting the dearth of research on how such a defeat might be managed.

It would be easy to see this report as another challenge to the image and inherent value of small towns and rural communities, but that simplifies a complicated issue.

The board’s argument, based on economics, doesn’t take into account the other roles played by smaller communities or the social and cultural effects the changes could have. People will continue to live in rural areas, by choice or by necessity imposed by job requirements. They will need and quite legitimately demand a certain level of service wherever they live. Those services and their infrastructure cost money.

Today’s smaller centres and municipalities are already being asked to fulfil roles beyond the traditional, as rural populations shrink and infrastructure expenses grow. Reducing their available funding seems unreasonable, to put it mildly.

The ability of smaller municipalities to provide various services would shrink, and that would surely accelerate the trend toward urbanization. That may bolster urban economies but the costs to rural areas could be far too high.