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In Downturn, City Hall More Like Santa Than Scrooge
This is the third in a three-part series exploring the effects of the global economic downturn on Toronto. Two weeks ago, economist Walid Hejazi gave an overview of what we’re in for as the slowdown worsens. Last week, community activist John Campey explained how Toronto’s most vulnerable residents might fare in the crisis. Today, the view from City Hall.
Photo by Joey DeVilla.
What a difference a year makes.
In January 2008, Toronto adopted a new economic strategy, the “Agenda for Prosperity,” to enable the city to, in the words of Mayor David Miller, “fuel necessary growth in Toronto’s economy, improve the health and vitality of our community, and position Toronto as a leading global city of the 21st century.” Which was all well and good. But that, as they say, was then. And this is a very different and much more uncertain now.
Despite the challenges that have since arisen, says Randy McLean, manager of economic policy with the city’s Economic Development, Culture and Tourism Division, Toronto’s economic strategy will be able to guide the city through the storm and out the other end as strong as ever. Probably.
“Nobody—at least nobody that I knew—anticipated the conditions that we’re experiencing right now,” McLean said in an interview with Torontoist. “But everybody knew that the downturn [was] essentially coming at some point in time.”
That expectation is reflected in the strategy’s recommendations, he says, such as a call for Toronto to reduce its reliance on the United States economy by encouraging more global investment, and for the city “to be on the leading edge, to make better use of design, innovation, and creativity,” which would in theory give the city’s workers a competitive edge over cheaper labour in other parts of the world.
But even the best strategy has a hard time adjusting when the unthinkable rears its head. When asked how a partial or complete auto industry collapse would affect the city’s economic plan, McLean responded cautiously. “You don’t have another industry to backfill that space in a short time period. The strategy is still a good strategy, but it would be a significant shock if [the auto industry were] disrupted to any significant extent.”
Not only would a complete or even partial collapse of the auto industry put tens of thousands of factory employees out of work, but many large sectors that service car companies would be hit as well, including advertising, financial services, legal services, and others. “The impact is not just in the manufacturing of vehicles,” said McLean, “but it’s in all of the ancillary or support services that make the whole industry run. A lot of those types of higher-level services are located in the city of Toronto.” As a result of that interconnectivity, according to one provincial report, more than five hundred thousand jobs would be lost in Ontario if the Big Three automakers were to go under (a scenario that, as of today, looks marginally less likely).
With the direction of the economy as far from certain as it has been in decades, the city is busy preparing for the worst—and what comes after. McLean believes the city should focus on building “productive infrastructure,” such as public transit, which will allow Toronto to hit the ground running when the pace of the world economy picks up. Mayor Miller seems to agree. With the city’s 2009 capital budget already in the can, Miller is pushing hard for the upcoming federal budget to include $368 million for the much-touted Transit City program, which would replace several major transit routes with light rail service reaching out to the suburbs.
The final word from McLean: now is the time for more government spending, not massive cutbacks. “The public sector, meaning the federal, provincial, and city governments, want to be in this game investing in building things now—creating jobs in the short term that will help support more jobs in the longer term.” Spending like Santa in a time of crisis. Keynes would be proud.
Bottom photo by Patrick Kennedy.