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As Canadian cities continue to expand and evolve, pressures begin to mount.

Mississauga’s legendary mayor, the late Hazel McCallion, put it succinctly: “In Canada, the federal government has all the money, the provinces all the power, and the municipalities all the problems.”

Besides carrying most of the infrastructure funding, municipalities nationwide continue to face pressures surrounding a myriad of issues including housing affordability, homelessness, transit, and public safety. These are issues that affect the lives of residents and business owners, yet the financial resources and legislative abilities provided to municipalities – which fall under provincial jurisdiction as outlined in the Constitution Act, 1867 – remain limited.

A policy – entitled Equitable Tax Distribution Policy to Assist Canadian Municipalities - presented by the Cambridge Chamber of Commerce at the Canadian Chamber of Commerce AGM earlier this fall aims to change this by calling for a formal review between Federal, Provincial/Territorial governments to find a way to create a fairer distribution plan to better assist municipalities to ensure local needs are met that can promote business confidence and economic prosperity.

Advocating for businesses

“Advocating for businesses to help them achieve success is an important part of what the Chamber and its network does,” says Cambridge Chamber President and CEO Greg Durocher. “The tax distribution system we have has been in place for years and doesn’t cut it anymore. It needs to be addressed because having a fairer plan will help make communities better which in turn will assist businesses.”

The Chamber policy - first approved by Chamber network delegates in 2023 and became part of the Canadian Chamber policy ‘playbook’ - has now been redrafted and updated with the following recommendations urging the Government of Canada to:

• Engage provincial/territorial and municipal governments to consult on a framework to identify and address the social, economic, and physical infrastructure needs of municipalities.
• Formally review federal funding mechanisms— such as transfer payments and the federal fuel charge — with the goal of improving how the federal government assists provincial/territorial governments enhance the programs and services they currently provide to municipalities — such as social services or funding for transit/roads — in hopes of strengthening their physical and social infrastructure needs to help set the stage in communities for a more robust and vibrant economic path in which businesses can flourish. This formal review could include tax point transfers to provinces.
• Ensure potential solutions are not funded through the creation of any new additional federal or provincial/territorial government taxes.

Currently, 3,573 municipalities across Canada’s 10 provinces and three territories are responsible for the construction, operations, and maintenance of nearly 60% of the country’s public infrastructure yet receive only 12 cents of every tax dollar to cover these costs. They are ‘community builders’ who cannot run deficits and have a lack of revenue-generating tools – other than property taxes and user fees which are regressive - to collect revenue to pay for these services. It’s a system that hasn’t changed much in the last 20 years.

There are additional potential revenue options for municipalities, such as development charges which do not often cover the full costs of urban growth and these new developments, or they could receive a share of fuel, sales, and income taxes, which are not provided by all provinces/territories. 

Communities facing crisis

However, the pressures municipalities face continues to grow, especially around housing affordability which 60% of Canadians in major cities polled by Leger in December 2024 indicated was the biggest or second biggest issue facing their municipality.

The CMHC has estimated that Canada needs 3.5 million more housing units by 2030 in addition to those currently under construction to restore affordability. Other key concerns outlined in that same poll included homelessness, poverty, and mental health issues (37%), property taxes and spending (23%), traffic congestion (19%) and public safety (13%). 

Many cities and smaller communities now continue to face a looming crisis in deferred maintenance and construction of critical infrastructure, both physical and social. According to a 2024 report by the University of Toronto’s ‘School of Cities’ – which is a multidisciplinary hub for urban research, education, and engagement - eight years into the Federal government’s Investing in Canada Plan, Canada’s infrastructure deficit is estimated at a minimum of $150B, and up to a trillion dollars. 

Review a good first step

Increasing debt and budget deficits are challenges facing the Federal government and many provincial governments. According to the Fraser Institute, the combined federal and provincial net debt since 2007/2008 has nearly doubled from $1.18 trillion to a projected $2.18 trillion in 2023/24. As well, while most provinces ran operating surpluses in 2021/22 or 2022/23, many of those same governments projected a return to deficits in 2023/24 and subsequent years.

While calls continue for an overhaul of our current tax system, which has not been reviewed since 1967, from various groups including the Canadian Chamber of Commerce, formally reviewing the current tax distribution plan could be seen as the first step towards a much larger review to perhaps determine how the Federal government can work with the Provincial/Territorial governments to better assist municipalities. 

Policies approved by Chamber network delegates at the Ontario Chamber and Canadian Chamber AGMs become part of the official ‘playbooks’ of both organizations as they lobby the provincial and federal governments to institute regulations and decisions critical to creating a favourable environment for business success. These additional policies listed below were co-sponsored by the Cambridge Chamber and received the support of delegates at both AGMs:

Canadian Chamber of Commerce AGM

Streamlining administration for Canadian doctors 

Recognizing that family physicians and specialists across Canada are increasingly concerned with rising administrative responsibilities and the departures of practitioners from the profession, we co-sponsored a policy recommending all levels of government work collaboratively to reduce by 10% all administrative responsibilities for Canadian physicians.

The policy also recommended the re-introduction of Bill C-72, the Connected Care for Canadians Act, or that similar legislation be tabled to improve health information technology interoperability and streamline access to electronic medical records, thereby reducing the administrative burden on physicians and reducing departures from their work. (The Cambridge Chamber co-sponsored a similar policy at the Ontario Chamber of Commerce AGM).

Ontario Chamber of Commerce AGM

Create and implement a provincial strategy to address homelessness, mental health, and addiction

Most communities across Ontario continue to deal with unprecedented social issues like vagrancy, crime, and nuisance behaviours. We recognize these issues – which impact businesses - are further exacerbated due to the escalating opioid crisis, shortage in social services supports, and a lack of housing that is affordable to many struggling with addictions.

This policy, which we co-sponsored, outlined seven recommendations for the Provincial Government. Among them was the creation and funding of a provincial strategy to end chronic homelessness, building on the recommendations of the AMO Municipalities Under Pressure Report, 2025, focusing on an initial 5,700 new housing and low barriers to support spaces to be developed by municipalities. As well, the resolution recommended the Province prioritize funding, program, and policy changes to better support those with complex mental health conditions that may pose a risk to themselves and others. 

Ontario government assistance on land assembly 

The Ontario government has formally requested that Ontario municipalities assemble large parcels of land for future economic development opportunities. With that in mind, we co-sponsored this policy calling for the Province to continue to financially assist Ontario municipalities with the purchase of land for major industrial and economic development projects. A September 2024 report drafted for Region of Waterloo Council consideration estimated that over the last three years, $4 billion in potential investment and more than 14,000 jobs from businesses considering local investment were lost due to employment land shortages in our area.