TILMA: Saskatoon Mayor Don Atchison submission to Standing Committee on the Economy; stakeholder consultations may not include public, non-profits

Page 149 - July 16, 2007,
City of Prince Albert, City Council Agenda

At its July 16, 2007, meeting Prince Albert city council considered the following report from city manager Roman Martiuk: TILMA Impact Study (RPT#CM-07-11).

Prepared for the city’s executive committee, the July 4, 2007, report recommended: “That City Council authorizes funding of not more than $5,000 to conduct a TILMA Impact Study with the eleven other cities in Saskatchewan.”

The report notes that the City of Regina declined to participate and that the City of Saskatoon will be paying Regina’s share of the overall cost estimated at approximately $60,000.

The report also includes (as an attachment) a copy of Saskatoon Mayor Don Atchison’s submission to the recent Standing Committee on the Economy hearings on the state of internal trade in the Province of Saskatchewan. The May 30, 2007, letter (reprinted below) was written on behalf of Saskatoon city council and outlines the purpose and strategy of the City Mayors’ Study.

The study process will include consultations with “key stakeholders in each community who would be directly affected…”

These stakeholders, using business subsides as an example, would likely include organizations like SREDA, the Riversdale Business Improvement District, the Partnership and The Saskatoon Home Builders’ Association along with a “number of community and business associations…”

What is not clear is whether the general public and all community associations will be invited to participate.

Furthermore, with respect to business subsidies, it appears that the focus will only be on those “to for-profit corporations”.

Business subsidies to non-profit corporations are currently exempt from TILMA, but Article 17 of the agreement requires a ministerial committee to “review annually the exceptions listed ... with a view to reducing their scope.”

The exceptions in TILMA will shrink over time and are by no means safe. The Conference Board of Canada’s impact assessment for the BC Government confirms this stating “TILMA is considered to be an improvement… since future negotiations can focus on the removal of the exceptions from the explicit exclusion list.”

British Columbia’s Minister of Economic Development Colin Hansen has stated many times that “TILMA is designed to eliminate subsidies.”

The City of Saskatoon provides cash grants to over 60 non-profit organizations annually. At its May 28, 2007, meeting Saskatoon city council approved the Social Services Component of the 2007 Assistance to Community Groups Cash Grants Program totaling $876,368 for 2007. As the exceptions in TILMA are removed this program could be put at risk. It appears that the City Mayors’ Study might not take this into consideration.

Assistance to Community Groups: Cash Grant 2007 - Social Services
City of Saskatoon - City Council Agenda - May 28, 2007

In his letter Atchison states that the report will “include areas where exclusions or other special provisions are recommended to make TILMA palatable to local citizens, should the decision be made to include cities in TILMA.”

Successfully negotiating significant changes to TILMA seem to be remote, though.

According to the official TILMA website the trade agreement focuses on two key goals:

- No obstacles: governments measures will not restrict or impair trade, investment or labour mobility between the two provinces.

- Non-discrimination: there will be no preferential treatment of a province’s people, investments and goods, except for justified actual cost-of-service differences.

In a speech to the BC Business Council and Canada West Foundation on December 13, 2006, BC Premier Gordon Campbell made it clear that Saskatchewan and Ontario were welcome to join TILMA provided that no changes were made to the agreement.

This was confirmed on June 6, 2007, when Shawn Robbins, the Director of Internal Trade in the Trade Policy Section of the Alberta Department of International and Intergovernmental Relations and Alberta’s chief negotiator for on TILMA, made a PowerPoint presentation to the Halifax-based right-wing think tank Atlantic Institute for Market Studies (AIMS). On the subject of accession the presentation states that: “Parties must accept its terms” and “Exceptions must be comparable to Alberta’s and B.C.’s.”

From June 6, 2007, TILMA presentation by
Shawn Robbins to AIMS

As long as Article 17 of TILMA remains it would seem that no exception is truly safe.

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City of Prince Albert
Report Title: TILMA Impact Study (RPT#CM-07-11)
Date: July 4, 2007
Prepared By: Roman Martiuk, City Manager
Prepared For: Executive Committee

Recommendation:

That City Council authorizes funding of not more than $5,000 to conduct a TILMA Impact Study with the eleven other cities in Saskatchewan.

JUSTIFICATION FOR INCAMERA:

N/A

BACKGROUND:

The potential impacts of the BC-Alberta Trade, Investment and Labour Mobility Agreement were discussed at the City Mayors and Managers meeting in North Battleford this past May. The development of an independent study was agreed upon by the City Mayors Caucus in order that the potential effects may be better understood prior to taking a position.

The City of Saskatoon’s City Solicitor is working with a consultant to develop a study that will provide the necessary information to the eleven participating cities across the province.

FINANCIAL IMPLICATIONS:

The study is estimated at approximately $60,000. Regina has declined, however, Saskatoon will be paying Regina’s share bringing their total contribution to two thirds of the overall cost. The remaining ten cities will be responsible for contributing the remaining third based on their population. Prince Albert accounts for roughly 6% population of that group therefore costs will be in the $3,600 to $5,000, dependant upon the final cost of the study.

ATTACHMENTS:

Correspondence from Mayor J. Sadlowski dated May 14, 2007.
Correspondence from Mayor D. Atchison dated May 30, 2007.

Respectfully Submitted,

Roman Martiuk
City Manager

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Page 1 of May 30, 2007, submission by
Saskatoon Mayor Don Atchison to
Standing Committee on the Economy

May 30, 2007


Standing Committee on the Economy
c/o Viktor Kaczkowski, Clerk
Room 239, Legislative Building
Regina, SK S4S 0B3

Dear Standing Committee on the Economy:

Saskatoon City Council, at its meeting held on May 28, 2007, agreed to proceed with an in-depth impact study, together with 11 other Saskatchewan cities, on the potential effect of the BC-Alberta Trade, Investment and Labour Mobility Agreement on Saskatoon and the other participating cities. City Council has asked that I provide a written submission on their behalf to the Committee, to explain what we are doing and why.

Background

As you are aware, the Province on April 25, 2007 released a number of reports including the following:

1. A report by the Conference Board of Canada dated December 22, 2006 entitled “Assessing the Impact of Saskatchewan Joining the BC-Alberta Trade, Investment and Labour Mobility Agreement”;

2. A report by Professor Eric Howe of the Department of Economics, University of Saskatchewan dated January, 2007 entitled “The Economic Impact of the Trade, Investment and Labour Mobility Agreement (TILMA) on Saskatchewan; and

3. A report by John F. Helliwell, Professor, University of British Columbia entitled “Review of Conference Board of Canada’s Report – Assessing the Impact of Saskatchewan Joining the BC-Alberta Trade, Investment and Labour Mobility Agreement”.

Each of these reports refers to the potential effect of TILMA on Saskatchewan municipalities.

The Conference Board of Canada report, at pages 32-33 states:

“…it [TILMA] would potentially reduce the regulatory and legislative independence of municipal…government bodies, by binding their legislation according to the rules of the agreement. This could be disadvantageous in certain circumstances, where specific local concerns could come into play.”

The report by Professor Howe, at page 6 states:

“The disadvantageous of signing TILMA is reduced sovereignty. TILMA will restrict some abilities of…local governments to enact certain laws and requires that some regulations be standardized across the signing provinces.”

The report by Professor Helliwell, at page 4 states:

“In general, the combination of unrestricted private access to the dispute mechanisms combined with a commitment to neutrality of treatment, would make almost any…municipal programme subject to attack…

In general it would appear to be more efficient (and certainly easier to forecast the consequences) to try to identify cases where existing policies and regulations and rules are thwarting opportunities, and then harmonize as required…”

Our staff have made various enquiries, the result of which is that it is our understanding that no studies exist in either Alberta or British Columbia which provide a detailed analysis of how TILMA will impact municipalities. Nor do studies exist which analyze alternative methods to TILMA of implementing internal trade at the local level, such amending municipal legislation.

The City Mayors’ Study

The purpose of the City Mayors’ Study is not to look at TILMA’s overall impact on Saskatchewan. The study’s exclusive purpose is to examine the potential effects of TILMA on the existing jurisdiction of the 12 individual participating cities and to provide recommendations and comments, and potential alternative implementation strategies, on each aspect of TILMA where it affects a City’s jurisdiction.

The study is intended to be quite detailed and consists of three steps. The first step is to identify, with the assistance of a trade expert, as many of the known direct impacts on City jurisdiction as possible with as many specific examples as possible, so that the impact is easy for people to understand.

The second step is to take this information out to key stakeholders in each community, who would be directly affected by each impact. The goal would be to obtain feedback from them as to whether each jurisdictional change created by TILMA would be acceptable, unacceptable, acceptable with adjustments, etc. (I have attached, as an example of this process, how Saskatoon would deal with the business subsidy issue, to give the Committee a clearer understanding of the task we have set ourselves.) In addition, we would be looking to the various stakeholders to tell us if there was anything which cities do which they believe affects internal trade, and which we had not included in our examples. This is to make sure we are not missing anything.

The third step would be to prepare a report which could serve as a basis both for discussions and/or resolutions in each city, and for discussions with the Province (which we assume would be the Department of Government Relations) on the City jurisdictional issues which have been identified.

We would expect the report to include:

(a) those municipal impacts of TILMA which were acceptable to most cities;

(b) any municipal impacts of TILMA which were unacceptable to most cities; and

(c) an analysis of whether, at the municipal level, inclusion of cities in the comprehensive TILMA is the only option, or whether it is reasonable to look at excluding municipalities from TILMA itself while implementing the TILMA goals through amendments to The Cities Act. This last aspect will depend at least in part on whether regulations by cities are found to have much effect on internal trade. The less cities affect trade, the more likely it is that the areas where there is an impact could possibly be dealt with by statutory prohibitions rather than a comprehensive agreement such as TILMA. To this end, a legislative drafting expert will be included on the study team, to determine if, and/or how, an amendment to The Cities Act could be used, rather than TILMA, to achieve the same result, for each identified impact. This will tell us if this is a realistic alternative or not. It will also increase understanding of the impacts by our citizens. A draft amendment to The Cities Act, will have the excellent effect of making any proposed change to a City’s jurisdiction clear to everyone, even if it is never used.

Finally, the report would include areas where exclusions or other special provisions are recommended to make TILMA palatable to local citizens, should the decision be made to include cities in TILMA. Again, these would be the outcome from the feedback from stakeholders.

Summary

As you can see, the study we have undertaken is quite ambitious in scope. As a result, and particularly because of the desire for extensive feedback from local stakeholders, we do not expect the study to be complete before year end.

We understand that you have asked for final comments by the end of June and that we will miss that deadline. Unfortunately we did not receive the information which made this study imperative until after April 25, 2007, and we believe that the issue of internal trade as it affects cities is an important one for our communities.

We thank you for your time and consideration.

Sincerely,

Donald J. Atchison
Mayor

Attachment

cc:

The Honourable Harry Van Mulligan, Minister of Government Relations
The Honourable Lorne Calvert, Premier
Mr. Brad Wall, Leader of Opposition
Mr. David Karwacki, Liberal Leader
Saskatoon MLAs
Saskatoon Council Members
Saskatchewan City Mayors


Business Subsidies Example

As the project is just beginning, all of the details have not been finalized. However, the following is an illustrative example of how one segment of the project might unfold in Saskatoon.

The TILMA principle on business subsidies is to prohibit signatory provinces (and cities) “…from using business subsidies to provide an advantage to an enterprise that results in material injury to a competing enterprise of the other Party; or entice or assist the relocation of an enterprise from the other Party; or distort investment decisions”. (Conference Board of Canada Report dated December 22, 2006, page 15) There are exceptions listed in the Agreement.

In the first stage, Saskatoon (along with the other 11 participating cities) would compile a complete list of the types of business subsidies (to for-profit corporations) which are currently provided in each City. Saskatoon’s list would include:

- economic development incentives for new businesses including tax abatements, cash contributions to matters such as primary sewage treatment and, at least potentially, provision of land at less than market value, or the clean-up of contaminated land at the City’s cost.

- economic development incentives (including all of the above as well as other incentives such as waiving fees for building permits) for specific purposes such as the Municipal Enterprise Zone (to encourage the location of businesses in the inner city) and downtown housing incentives (to encourage investments which, for example, convert warehouses to residential housing).

- tax increment financing programs (just approved by the Province in the latest Cities Act amendments), and affordable housing subsidies to for-profit corporations.

The trade expert on the team would advise as to:

(a) whether any or all of the business subsidies listed contravened TILMA;

(b) whether any or all of the business subsidies listed could be arguably included in the TILMA exemptions;

(c) whether any or all of the business subsidies listed could be defended before a trade tribunal as being within a TILMA “legitimate objective”;

(d) whether we were missing anything that he/she could identify as being potentially challenged as a business subsidy; and

(e) how an exception to TILMA to protect subsidies such as the Municipal Enterprise Zone and downtown housing subsidies might be worded, if such an exception was desirable or necessary.

The legislative drafting expert would draft amendments to The Cities Act which would prohibit all business subsidies equivalent to the effect of TILMA. He/she would also advise whether it would be possible to allow some subsidies in the Act and not others.

In addition, the legislative drafting expert would identify remedies available to a complainant under The Cities Act, compared to their remedies under TILMA should the City contravene the business subsidy prohibition.

In stage two, the City would take this information out to the key stakeholders for comments. We would want comments, for example, from SREDA on the overall issue of business incentives, from the Riversdale BID and Community Association on the impact on them if the Municipal Enterprise Zone was eliminated, and from the Partnership and housing developers on the impact of the removal of the downtown housing incentives. A number of community and business associations in areas likely to benefit from TIFFs would also have comments. The Saskatoon Home Builders, and other affected organizations, would be consulted if affordable housing incentives were affected.

The intent is to learn what people can support and what not. If there are areas which they cannot support, are adjustments possible? Also, how important are different aspects to them.

Finally, efforts would be made to identify any new issues or concerns regarding the City’s impact on internal trade, which we had missed.

In the third stage, all of this information will be correlated with that of the other participating cities, differences identified, and various options and/or recommendations provided. In turn, the business subsidy aspect of the study would be included in the overall options and/or recommendations of the report.