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Press release: The city contract: A first step in the right direction

Press release

The city contract:  A first step in the right direction

Montreal, January 30, 2003 – The Board of Trade of Metropolitan Montreal considers the signing earlier today of the first “city contract” between the city of Montreal and the Quebec government to be a good first step in the right direction.


“Since March 7, 2002, when André Boisclair, Minister of Municipal Affairs and the Metropolis, first spoke, at the Board of Trade, about the concept of a “city contract,” much work has been done to bring it into existence.  The conclusion of negotiations between the city of Montreal and the Quebec government solidifies a new and very special relationship between these two levels of government.  This is a first step in the right direction insofar as it reflects the acknowledgment by the provincial government of “the key importance of our region – whose heart is the new city of Montreal – to all of Quebec,” declared Benoit Labonté, permanent president of the Board of Trade.


“When the time comes to assess the content of the city contract, it is nevertheless important to bear in mind that the economy of Greater Montreal faces major challenges, beginning with the improvement of its per capita GDP, which is in last place among the 26 North American cities studied last fall by the Montreal Metropolitan Community.  Under these circumstances, it is no surprise that the state of Montreal's financial health calls for major efforts,” he added.


Contribution of the Quebec government

“In its final version, the city contract has the primary merit of tackling the unfounded liability.  Any long-term process to improve the municipal fiscal framework must inevitably deal with this problem, which seriously undermines the future of Montreal.  This thus goes a long way to improving the city's financial situation.”


Another positive element of the contract is the transfer to the city of the responsibility for managing government programs, particularly those related to housing.  “In addition to shifting the administration of programs closer to the people they are designed to serve, these measures promote the more efficient and consistent administration of actions taken on the Island of Montreal,” stressed Labonté.


Contribution of the city of Montreal

For the 7,000 members of the Board of Trade, it is clear that no administration, either public or private, can be competitive without sound, effective management.   On the other hand, the efforts resulting from the city's commitment to shrinking its expenses by $525 million over the next five years must not lower the quality of services offered.  “To be considered successful, this streamlining process will have to be carried out without reducing the quality of services delivered to either corporate or private citizens,” warned Labonté.  “Lowering quality of life by offering second-rate services would in no way contribute to the economic development of a first-class metropolis.”


“So, as positive as it may be, the first step represented by this contract must be followed by others.  In fact, as it was signed today, the city contract does not fulfill all of the commitments made by the Quebec government at the conclusion of the Sommet de Montréal last June, particularly with regard to ‘improving the city's tax structure' and ‘diversifying its revenue sources.'  Despite an apparently spectacular amount of new money, not a single dollar included in the agreement will provide a long-term answer to the lack of diversity in the revenue sources of the city of Montreal.  As well intentioned as it may be, the approach chosen to reduce the actuarial deficit will do nothing over the long term to increase the city's autonomy.  We must ask ourselves how the city will fare when this contract expires in 2007 and it continues to face expenses that grow faster than its revenues.


The Board of Trade has no doubt that obtaining increased, predictable, recurring revenues must be the number one priority of the municipal and provincial governments.  There is, in fact, an urgent need to find a long-term solution to the city's rigid financial framework and its hyperdependence on property taxes – without increasing the fiscal burden on its citizens.  In its pre-budget submission to the Quebec government during the period when this contract was being negotiated, the Board of Trade made the following suggestions, which could be implemented rapidly and within the existing revenue base: 

  • Quebec government exemption of municipalities from paying QST ($70 million annually)
  • payment of compensation in the place of property taxes corresponding to 100% of local taxes on the land value of all buildings owned by the Quebec government (between $15 and $20 million annually).

Considering the energy invested by the Quebec government in restructuring municipalities to face the challenges and realities of the new millennium and considering the major role that, granted sufficient resources, Greater Montreal could play as an engine of economic development and its position on the international stage, Montreal owes it to itself to immediately make its demands heard in Quebec City and take the necessary next steps to pursuing the ambitious, modern vision Montrealers have of their city,” declared Labonté.  “In return, on the eve of the election campaign, we urge the leaders of the three parties to commit firmly to pursuing the work begun by this city contract, particularly with regard to diversifying the city's revenue sources.”


The Board of Trade of Metropolitan Montreal has more than 7 000 members. Its mission is to be the leading group representing the interests of the Greater Montreal business community.  Its objectives are to maintain, at all times, relevance to its membership, credibility towards the public and influence towards government and decision-makers.


Isabelle Hudon
Vice-president, Strategies and communications
Board of Trade of Metropolitan Montreal
Tel.: (514) 871-4000, ext. 4010


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