--> Gill Blog: In Toronto Congestion leads to Decentralization

Gill Blog

Wednesday, June 15, 2005

In Toronto Congestion leads to Decentralization

As global economic factors transform North American economies from production-oriented societies to ones that are more knowledge-intensive, one phenomenon becomes increasingly noticeable: the flight of people and resources to large urban centers. In turn, this can create so much pressure on one of these areas, that before long, the trend starts to reverse to ease the pressure.

A perfect example of this can be seen in Toronto. Until 1976, Toronto was a moderately-sized city that served as the financial capital of Canada. Permanent change began when a seperatist government was elected in the Province of Quebec, which caused a flood of multi-nationals who had for years called Montreal home to flee that city for Toronto. Changing immigration policies in the 1970's also contributed to population growth.

The next exogenous factor affecting growth came about in late 1984 when China and the United Kingdom signed the Sino-British Joint Declaration, an agreement that would set the wheels in motion to transfer control of the territory to China in 1997. Fearing a clampdown on free market trade, many Hong Kong residents began packing their bags and moving to Canada - a commonwealth country with close proximity to the free markets of the United States.

Today, Toronto has become a city bursting at the seams, with scant ability to pay for the infrastructure projects that can adequately keep pace with its dizzying growth. It now has to deal with a number of problems that could be crippling if not addressed. Although property taxes are much higher in the city than in surrounding areas, the city still seems plagued with pot-holed roads, as well as an incomplete mass transit system. The city is faced with a looming crisis in waste management, and to top it off, summer smog is making this city in the north seem more like Los Angeles.

Commuting has become a nightmare, as real estate prices in the city core force workers to live in suburbs that can impose a 3-4 hour daily commute - a situation that places more pressure on people to create a reasonable work-lifestyle balance.

It seems almost predictable then that a report published by the Canadian Urban Institute indicated that a Toronto is now facing stiff competition by neighboring communities who are luring companies away from the city. Although a disproportionate property tax burden is the main driving factor, there are other contributing factors as pointed out by the Globe and Mail:
A large chunk of the higher tax bill is due to the province's education tax, which is set at a higher rate for businesses in Toronto than it is for those elsewhere. The report calls on the province to level the playing field across the GTA.

But the study, which was funded by the Toronto Office Coalition, an association of owners and tenants in high-end offices in the city, also cites other factors. It says traffic congestion, and the lengthy process required to get a new building approved, are also driving away new development in Toronto.

In the end, it always comes back to the same question: how long is this sustainable before people start realizing that fundamental change in organizational configuration is required to allow things to move forward?