Canada’s cities need to plan for the post-COVID reality

Canadian Economics

This op-ed by Pedro Antunes was originally published in The Hill Times on October 20, 2021.

Cities need to regain their status as the drivers of economic growth. To accelerate that, they’ll need to remain attractive to both old and young.

Canada’s major cities need to start planning ahead. City revenues will be hit by post-pandemic structural changes. Greening the economy will require heavy investments at the municipal level while aging boomers will put growing pressure on access to health care, transport, and other services. Municipal leaders need to work with federal and provincial governments to ensure stable and growing revenue sources. They similarly need to invest in infrastructure and technology that will meet the growing needs of an aging population.

What does this mean for municipalities?

While municipal finances fared relatively well through the pandemic, the medium-term outlook is concerning. Federal support programs will soon end, economic growth will continue to rebound over the next year and a half, but once excess funds are exhausted, Canada’s cities face a major shakeup.

One important change will be the lasting effects of telework. Surveys of employees and employers suggest that the post-pandemic office worker will continue to work from home somewhere between 15 and 25 per cent of the time. Apply that to some three million extra teleworkers, typically using from 130 to 200 square feet of space, and between 12 and 32 per cent of office space will go empty in the post-pandemic world.

Not only will commercial real estate be impacted, but so will thousands of small businesses that cater to downtown office workers. There’s budding evidence that this restructuring has already started as the number of small businesses is dropping from peak levels reached in 2020. If downtown businesses struggle, so will municipal finances. Municipalities will have to be flexible to meet the challenges ahead—greening our economy and catering to an aging demography with limited resources. Canada’s aging population will drive up demand for many municipal services, who need to prepare to address their needs.

Assuming a robust recovery in immigration, the Conference Board of Canada forecasts Canada’s population to grow by 0.9 per cent annually over the next decade (from 2021 to 2030). Baby boomers are pushing population growth of those aged 65 and up to 2.9 per cent annually over the same period. Healthier living and improved health care means that Canadians are living longer, pushing the growth in the 80-and-over cohort to four per cent annually. Canada’s aging demography isn’t coming, it’s already here.

An older population provides both challenges and opportunities. Cities will need to deliver on affordable housing (for both young and old), ensure that transportation is accessible, provide health and long-term care services, and ensure that neighbourhoods are safe. Conversely, aging Canadians are living longer, they can contribute to the economy and vibrancy of cities by remaining in the workforce longer, volunteering, and of course, by spending on goods and services.

What tools are available to make this a reality?

Technology and tech infrastructure can play a key role in delivering services to seniors and enabling individuals to stay in the workforce longer. Previous research from the Conference Board of Canada showed that improvements to workplace access would allow 550,000 Canadians with disabilities, many of them older Canadians, to participate more fully in the workforce, increasing national GDP by $16.8-billion annually by 2030. Encouraging businesses to invest in accessibility and the recent adoption of telework could be an important factor contributing to this win-win outcome. Telehealth can help with more effective and cheaper delivery of health-care services and other technology, such as improved real-time route information for public transport, can help with mobility for older Canadians. Affordable housing is a pressing challenge—and while there is no quick fix, encouraging multigenerational, dense development can help over the longer term.

The pandemic will result in lasting structural changes for Canada’s cities. The boom in telework will soften demand for office space and affect many businesses, especially service providers in the downtown cores of our largest cities. Cities need to regain their status as the drivers of economic growth. To accelerate that, they’ll need to remain attractive to both old and young. Adapting to a predictably changing demography is a challenge that can be met with planning, technology, and other infrastructure. Those investments can help cities pull our country out of the pandemic and regain their former vibrancy.