Slow growth: The language has changed, but what about policies?

Posted on 4 December 2013 | 4 Comments

A number of years ago, with help from two friends, I published a pair of academic articles on the subject of slow urban growth, a topic that had previously received almost no attention, either by academics or in the “real world”. The articles were novel because they a challenged conventional wisdom, in which it was taken for granted that slow urban population growth was undesirable. This view was so entrenched that, for the most part, both academics and practitioners stated it as fact without bothering to argue the case.

In my articles — you can read them by clicking here and here. — I argued that neither slow growth nor rapid growth is inherently good or bad, but that they are different in ways that our decision-makers need to appreciate. On the surface, it looks as if the articles may have had a modest influence, at least in Winnipeg, because today slow growth is often spoken of simply as a fact, not as a blight to be eradicated. But policy doesn’t change as easily as language.

In the articles about slow growth, I argued that our cities can’t be governed intelligently if leaders don’t understand how rates of population growth change the game in such important policy areas as housing, economic development, infrastructure and even immigration. Although in some ways governance has improved since then, in others policy remains mired in the ways of the past. So now is a good time to take another look at the research. Let’s look at those four policy areas, and see what’s changed and what hasn’t.

Housing
A major advantage of slow growth is that it keeps housing prices down. Everyone knows that, however much we may complain about rents in Winnipeg, both rental and purchase cost more yet in such growth magnets as Toronto and Vancouver. Finding housing is a struggle everywhere for low income earners, but it is a much greater struggle in Vancouver than here — so much so that, as I have argued elsewhere, gentrification remains a non-issue in Winnipeg.

Vancouver’s Mayor Gregor Robertson has courageously declared a policy of ending homelessness, and has made serious progress toward that goal. In a rapidly growing city, everyone understands that the elimination of homelessness is a long shot, but in Winnipeg it would be a much less daunting venture.

Infrastructure and services
Of all the slow growth arguments I’ve advanced over the years, this is the one that has received the most public attention and the least policy response. Some readers, listeners and viewers may well be tired of hearing me argue that Winnipeg city council pursues a de facto policy of allowing developers to locate new development almost anywhere they wish, and accepting an obligation to extend all of its services — from roads and sewers to snow removal and mosquito control — to the far-flung new neighbourhoods.

As a result, we’re spending so much money on infrastructure and services that we can’t even afford to maintain our streets, let alone pursue more ambitious policy objectives –- for example the abolition of homelessness.

Economic development
In my other two policy areas, governance has become smarter than it was when I published the first of my two slow growth articles. It has long been the habit of slow-growth cities to imagine they can magically accelerate growth by chasing smokestacks and glass towers – using taxpayer giveaways to lure national or international corporations. Those policies were usually disastrously misconceived, for many reasons, not the least of which were that the cost of subsidies reduced or even wiped out any possible gains and that the companies that were lured by subsidies often took their first opportunity to look for better subsidies elsewhere.

For slow growth cities everywhere, these policies were always a race to the bottom and often self-defeating –- a reality that has been increasingly recognized in recent years. Since the early 2000s, Winnipeg’s decision-makers have pursued a line of policy that is both more moderate and more promising, emphasizing the identification of existing areas of economic strength, building upon them, and seeking opportunities for the export of local production, in preference to luring producers from elsewhere to locate mega-projects here.

A particularly successful economic development initiative, for both Winnipeg and Manitoba as a whole — one any self-respecting smokestack chaser would sniff at — has been the promotion of immigration, which takes us to our next topic.

Immigration
In my original slow-growth article, I argued that, while cities like Vancouver were struggling to deal with a massive influx of immigrants, Winnipeg offered ideal circumstances for a policy of encouraging more immigration. Those conditions included labour shortages and an inexpensive housing stock that stood to benefit from hard-working immigrants looking for “fixer-uppers”. I don’t know if anyone was paying attention to what I was saying, but in fact government has recognized these realities.

The provincial government, in close consultation with community groups, and in co-operation with the federal government, developed the so-called provincial nominee program, whereby many thousands of immigrants have come to Winnipeg to fill available jobs. The program was so successful that it was recognized around the world as a model, because it met both social and economic objectives, by offering good jobs and a place in the community to immigrants while simultaneously addressing critical labour shortages. It remains to be seen whether recent changes in federal-provincial arrangements for immigration, forced upon the provinces by the federal government, will undermine these successes.

At the best of times, smart policy-making is a challenge in an arena where federal, provincial and local governments have to co-ordinate their activities in a complex economic and technological environment. It’s encouraging that the political discourse in Winnipeg has recognized the salience of urban growth rates, and responded to that recognition in some areas. At the same time, it’s disheartening that in other areas policy remains trapped in its old ways, and that backsliding is an ever-present danger.

This entry was posted in Economic policy, Political economy, Social policy, Urban growth and development, What's wrong with the way our communities are governed, Winnipeg politics, Winnipeg: Growth and development. Bookmark the permalink.

4 responses to “Slow growth: The language has changed, but what about policies?”

  1. Metro | 4 December 2013 at 8:09 pm | Reply

    I think you have to watch growth . One thing that should never be done, regardless of growth, is stopping the investment in infrastructure. 2 cases come to mind, the Montreal metro, which has grown nicely over 50 years and the Toronto subway which stalled for nearly 40 years and is not servicing itself . they now find themselves embroiled in the LRT vs Subway argument.

    Some things just have to be part of of the program regardless. You just keep doing them and eventually it will pay off.

    Did you know the Spadina / York subway will replace 2000 daily buses. Thats 540000 per year. Compute over 50 years. Staggering.

    Just my 2 cents on a tangent.

  2. Christopher Wilcott | 5 December 2013 at 7:22 pm | Reply

    Dr. Leo,
    I do agree that housing prices are heavily impacted by economic conditions; however, I do feel that in a lot of cases, there are other variables at play. For example, Edmonton has had a very high economic growth rate since the start of the great recession yet home prices are still relatively comparable to Winnipeg’s. According to recent figures put out by the Canadian Real Estate Association, the average home price in Edmonton is around $332,000 compared to Winnipeg’s $271,000. (http://www.crea.ca/content/national-average-price-map) Edmonton has had the highest year over year GDP growth in Canada for a few years now. According to the Conference Board of Canada, in 2011, the GDP growth rate for Edmonton was 6.3% and was predicted to be 4.6% in 2012 as compared to Winnipeg’s rates of 1.3% in 2011 and a predicted 2% in 2012. (http://www.conferenceboard.ca/press/newsrelease/12-09-18/strong_economic_growth_in_western_canadian_cities_expected_for_years_to_come.aspx) If GDP / economic growth is the primary determinate of property values, Edmonton’s property would, in theory, be much higher than Winnipeg’s. This leads me to believe that other variables have a much stronger impact on property values than GDP growth.
    I would posit that there are three other variables that have a substantial impact on property values in addition to GDP growth: geographic and policy barriers, commute times, and international influence. In Winnipeg and Edmonton, these three variables are almost non-existent in terms of their impact on property values; however, they are quite strong in Vancouver and Toronto.
    In Vancouver, the city is hemmed in by geography and policy which result in a scarcity of land that is open to development. With the mountains to the north, the ocean to the east, and the U.S. border to the south, the only place for the city to grow is eastward, this is where policy comes into play – the farmland in the Fraser Valley is protected by the B.C. government’s Agricultural Land Reserve. Metro Vancouver has a perfect storm of geographical and policy constraints that result in a very small amount of land that is developable creating a limited supply despite increasing demand.
    In the Toronto case, while there are recent policy restrictions, The Places to Grow Act comes to mind, I would argue that the price differential between places like Edmonton, Winnipeg, and Toronto have more to do with the commute time premium. Toronto is a much larger city than either Edmonton or Winnipeg and commute times can be quite long as the employment base is quite centralized. In the G.T.A. the highest land values are at the core and gradually decrease the farther one moves out. There are some exceptions to this but on the whole, I feel this is the reality in Toronto. In my mind, those who want a shorter commute pay a premium for that privilege. In Winnipeg and Edmonton, commute times are still relatively short as compared to Toronto so the commute time premium is not a factor in either prairie city.3 Hamilton which is very close to Toronto has much lower property values than Toronto because it is just outside the commutershed.
    The final variable that I would argue has an impact on property values is that of the respective cities’ place in the international hierarchy of places. Both Toronto and Vancouver have inflated property values because there is a strong trend of international buyers bidding up property values.4 This is a non-factor in the cases of Edmonton or Winnipeg as neither city places very high on the list of ‘world-class’ cities.
    Predictably, as Vancouver is impacted by all three variables, it has the highest housing prices in the nation. Toronto is impacted by two of these variables and has second highest property values in Canada despite the fact that the city is the economic heart of the nation.
    In summary, while the state of the economy does have an impact on property prices, there are other variables at play regardless of a city’s status as a slow or speedy growth municipality. Since the great recession started, both Toronto and Vancouver have had lower GDP growth rates than Edmonton and yet, their respective property values are still much higher. If this differential was merely a matter of a city’s size, then Montreal’s property values would be much higher than they are. I also think it’s worth mentioning that Vancouver and Toronto both have milder climates than the prairie cities and that also likely have an impact on property values. In the end, it all boils down to supply and demand and how economics, policy, and geography interact together.
    Respectfully,
    Chris Wilcott – Edmonton

  3. Christopher Leo | 5 December 2013 at 7:34 pm | Reply

    Hello Chris (Wilcott),
    In my studies, I was looking at population growth, not economic growth. I think the correlation between population growth and home prices is much stronger than any correlation between economic growth an housing prices. In fact — although I don’t have time to go back to these papers now — I seem to remember making that same point myself in one of them.

    Thanks for taking the trouble to look at a dimension of the growth issue that my work didn’t deal with, and offering a thoughtful discussion.
    Chris Leo

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