Statement by Mayor Rob Ford
Mayor Ford's remarks to the Economic Club of Canada.
June 5, 2012
Building on our Foundation, Creating a Stronger Toronto
Good afternoon everyone, it's a real pleasure to be here at the Economic Club of Canada to talk about how we're going to create a stronger Toronto.
Toronto has taken great strides forward since December 2010. We’ve turned the tide on out-of-control spending and are working more efficiently than ever before. There is still room for improvement – and we will continue our disciplined efforts to improve efficiency as we close the gap between projected spending and revenue growth.
The good news is, Toronto is now closer to achieving a sustainable fiscal foundation than at any other time since amalgamation. We balanced this year's operating budget using about $100 million in one-time funding from a prior year surplus. At the end of our first quarter, we are already projecting a $90 million positive variance for the current year – much of which is sustainable savings. That means our current year actual will be very close to balanced without one-time draws. Folks, that's amazing.
Today, I'd like to talk about two things. First, let me tell you some of what we've done to rebuild our fiscal foundation in Toronto. Second, I'd like to talk about one exciting initiative that will help us build on this foundation to create a Toronto where people from around the world will aspire to live, invest & thrive.
It's been a very busy 18 months since I was sworn in as Mayor. In that time, we've focused on four priorities: Reducing the Size and Cost of Government; Ensuring Customer Service; Improving Transparency & Accountability; and Improving Transportation. We've achieved many things our critics said were impossible.
This April, we re-negotiated our relationship with the city's unionized employees. We spoke honestly and frankly with union leaders – and we bargained hard to achieve negotiated agreements that were fair and reasonable for both employees and taxpayers. At the end of the day, we saved over $150 million and we won increased management flexibility that will let city managers improve customer service while reducing costs. And, all of this with NO labour disruptions.
Beginning this August, a private contractor will begin collecting garbage from all homes west of Yonge Street. Our critics said we could never save money. But, I'm happy to say Toronto will save $11.5 million every year for the next seven years under our new contract with Green For Life.
Last year, the public lost confidence in the management of Toronto Community Housing Corporation – Canada's largest social housing provider with over 160,000 tenants. I've been to many of these buildings and met thousands of residents. I am sad to say – the City of Toronto is a terrible landlord. But that is changing.
We took action. We replaced the board of directors with a new action-oriented board led by an outstanding Chairman – Bud Purves. Two weeks ago, TCHC hired Eugene Jones as its new CEO. Gene has led social housing change in Indianapolis, Kansas City and Detroit. We're making tough decisions to eliminate the backlog of critical repairs to housing stock – and I continue to hope the province will support us in this important work.
We designated the Toronto Transit Commission as an essential service and hired an exciting new CEO – Andy Byford – who is refocusing our transit system on operational excellence. Andy has a long road ahead of him, but we're already seeing improvements.
And… both TCHC and the TTC are working better with the City than ever before. That’s important because Toronto subsidizes these agencies with hundreds of millions of dollars every year.
Last year, we launched the most comprehensive service review process the city has ever seen. It's already achieved hundreds of millions of dollars in efficiency savings and become a model for other governments across Canada and around the world. Our focus on fiscal discipline is beginning to change the corporate culture at the City. In 2012, we will spend less money than we did in 2011. That's unprecedented.
We are reducing the size and cost of government in a way that few residents will ever notice. They are noticing, though, that their taxes have not been going up like they used to.
While we were pushing managers hard to find savings for 2012, they began saving money in 2011. Much of last year's operating variance was due to efficiency savings. Managers everywhere are starting to say – "Hey, maybe I don't need three of these!"
At the same time we were reducing City spending, we also reduced the cost of living for Toronto taxpayers. We eliminated the $60 Personal Vehicle Tax on January 1, 2011 – putting $64 million back into taxpayers' pockets. We had a 0% property tax change in 2011 – and actually reduced some non-residential tax rates. In 2012, we held the line at 2.5% – that's less than inflation. And, for 2013, we will target a tax increase of less than 2%. Also, beginning in 2013, we will introduce a multi-year operating budget that will make it easier to manage the city more effectively from year to year.
Ladies and Gentlemen, we are on the right track. But, don’t just take my word for it. In May, Moody's bond rating agency confirmed the city's AA1 credit rating – after downgrading the province's rating just weeks before. Moody's likes what we're doing – maintaining strict fiscal discipline.
However, they also warned that our credit rating could be downgraded if we start to do what many Councillors want us to do: ignore fiscal prudence and begin spending, spending, spending and borrowing, borrowing, borrowing. We can't afford to slide backwards like that. We've worked hard for the past 18 months to rebuild our fiscal foundation. We must protect what we've achieved.
And, we can begin looking forward to an exciting new Toronto built on this sustainable fiscal foundation.
Moving forward, we must create a new business model for the City. We know our expenses go up every year. We've proven we can slow this growth by being very disciplined about cost control. But, we cannot stop it completely. So, we will need new ways to increase our revenues each year to cover this cost.
In the past, we've increased our tax rates to do this. But that is simply not sustainable. No business expects to earn more revenue each year simply by raising its prices. Smart businesses look to grow revenues by selling more of their products and services at the same price. The city needs to do the same thing.
Property tax is the single biggest chunk of revenue we earn. In essence, Toronto is in the property business and property tax is the price people and businesses pay to locate in Toronto.
Every year, our tax base grows as the city attracts new businesses and residents who pay property taxes to the city. This Assessment Growth is part of the solution to growing Toronto's revenues.
To sell more products, most businesses devote significant resources to marketing and sales. The City, however, has never had a plan to grow its assessment base. Instead, we receive a year-end report showing how much our assessment base has grown. We are entirely reactive. It's time to become proactive.
Toronto needs a plan to grow its assessment base strategically, so it can contribute more to the wealth and wellbeing of our city.
We also need to get serious about attracting more jobs to our city. Toronto's unemployment rate is consistently higher than the national average – and higher than surrounding cities. In 2011, the national unemployment rate averaged 7.5%. In Toronto, our unemployment was 9.5% -- even higher for our young people. That 2 percent gap is equivalent to about 50,000 jobs. I would like to see this gap closed within five years.
Higher unemployment means people find it harder to live here. It drives up our social services costs and hurts families.
We need a plan to proactively grow our assessment base in a way that encourages job creation.
Ladies and Gentleman, the next major piece of work I plan to advance is an Economic Development Strategy for the City of Toronto.
There are 189 construction cranes in the skies of Toronto. That's more than any other city in North America. In fact it's more than New York and Mexico City combined. That's an amazing "skyline of opportunity." However, almost all of those cranes are building residential units – because people love living in our city.
I want to continue seeing cranes in our skies. But, I want more and more of those cranes to be building commercial space –because commercial space means permanent jobs for city residents. And, it means Assessment Growth that will help us pay our bills.
Right after I was elected, my transition team began talking with City managers about developing this strategy. It would not just guide the city's economic development division – but would also shape a master strategy for the city as a whole. Since then, we've been working with Councillor Michael Thompson – the Chair of our Economic Development Committee – the City Manager and our General Manager of Economic Development.
A draft Economic Development plan was presented to Committee in February – and further staff work is currently underway. I hosted my first Economic Roundtable in April and heard directly from local business leaders about what the city should do.
I expect our Economic Development Strategy should be ready for Council approval this Fall. This Strategy will help shape our Assessment Growth and encourage job creation in Toronto. It will help the City pay its bills – and help create an environment that enables our businesses and residents to thrive.
We will establish aggressive – but achievable – targets for assessment growth and job creation. We'll break these targets down by industry and market segment and assign objectives to city divisions and our agencies. And, we will get all our resources pulling in the same direction.
I'm not ready to talk about how we will achieve these targets because the plan is still being finalized. But, here are some thoughts on five major areas we need to improve.
1. First – We must make our Development Process better.
It takes too long and involves too much red tape to plan and build new commercial space in Toronto. This must improve.
Our Economic Development and Planning activities must be better integrated.
Our new Official Plan and Harmonized Zoning Bylaw should promote investment and job creation – rather than just regulating and controlling growth.
We must prioritize job-creating development that shapes an environment that business and residents desire.
2. Second – We must make Toronto more cost competitive.
It costs too much to develop and operate commercial space in Toronto.
Right now, our commercial property taxes in Toronto are too high. One business owner told me he would pay $600,000 per year less if he moved his 100 person office to Mississauga. Toronto is losing out like this every month.
That needs to change. Businesses that move outside Toronto pay nothing to maintain our city services.
3. Third – We must be better at marketing and sales.
We must attract new businesses that will create jobs and bring in new money to the city’s economy. We have to understand what they want, and find innovative new ways to provide it.
We need to improve our customer service and make it easy for new businesses to do what we want them to do.
We need dedicated and skilled people who can create strong deals and close the sale.
Existing businesses must also be encouraged to expand in Toronto.
4. Fourth – We must align everything the City does to support our strategy.
We need to attract talented residents who will attract employers. These talented workers are drawn to an affordable, attractive lifestyle. Everything we do from culture and recreation to community infrastructure and solid waste should help make Toronto attractive and affordable.
5. Fifth – We need to make it easier to move around Toronto.
Transportation plays a critical role in our city strategy. We need roads, highways, airports, shipping ports and rail yards that make it easy and affordable to move goods in a "Just in Time" economy.
We also need to make it easier for employees to get to and from work, and customers to reach businesses.
I will host my first Transportation Roundtable in the Fall to kick start this strategic planning process.
There will be many other things we must do. But, let me conclude by saying – Toronto should be the city where people and businesses, from around the world, MOST want to live, invest and thrive. That's what I want for Toronto.
To get there, we need a plan. Today, we have multiple City divisions and dozens of agencies that are all trying to do good work. But, too often they seem to be working independently. This needs to change.
We need a unified strategy. It's time for Council to develop a new 10-year strategy for the City of Toronto. It should start with the new Economic Development strategy we’re working on now. It should also include a revised Official Plan and Harmonized Zoning Bylaw – because Economic Development and Planning should be two sides of the same coin.
We’ve done a great deal of work already in rebuilding our crumbling fiscal foundation. Now, it's time to prepare a plan to maintain our sustainable foundation – and to build on it, the city we all want.
It’s an exciting opportunity. It will be a lot of work.
But, I’m used to working hard. And I’m excited about moving forward.