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Paul Martin has declared that a new deal for Canada's cities is in the works. His statement comes at the end of a decade of dawning recognition that cities are the agents of growth, the source of innovation and creativity and potent agents of social health.

Cities are also, disastrously, at the wrong end of a constitutional anomaly, having little political power or ability to raise the taxes they need to pay for the services they must provide. Cities are creatures of the province when the opposite should be true: Provinces, urban hinterlands, should be creatures of the cities.

Traditionally, cities have been responsible for hard services such as snow clearing, garbage collection, firefighting etc. Over the past several years, they have also become the dumping ground for social services that provincial governments want to offload. Cities are now supplicants, petitioning the provinces for money to cover deficits they can't avoid.

Not only do the services themselves suffer (education, public health and transit), but crucial long-term planning and public investment in both hard and soft infrastructure have been all but abandoned. Real economies that could have been achieved have been ignored.

The result is that low-density development has been unchecked, creating unaffordable costs, both monetary and social.

Niagara-on-the-Lake, Ont., for instance, found that for every tax dollar it gained in low-density development, the cost of delivering services to such communities was $1.40. The 1996 Golden Report concluded that the difference in annual costs of a reasonably compact Toronto and one at current densities was about $1-billion.

There are other problems. Low-density development acts as a centrifuge, separating the city's many and varied groups into segregated parts. That is hardly conducive to building a cohesive and tolerant society.

Low-density development raises our dependence on cars while, at the same time, rendering large segments of the population immobile: those below driving age, the old, and people who either cannot afford or do not wish to own an automobile. Low-density development cannot support public transit.

If the costs of automobile-induced pollution and consequent health-care expenditures are added, the costs are unsustainable.

Provincial governments have funded the highways and trunk-line sewers that create relatively cheap land and make low-density development possible. Those who eventually live there don't pay the full costs of such services. Meanwhile, serviced land and brownfields within the city are underused.

The question is: Will the new deal for cities simply perpetuate bad habits or will it make it easier to continue building cities that are unaffordable and socially harmful?

One positive sign is the farsighted and enlightened Canadian Fund for Innovation that was established while Mr. Martin was finance minister. The fund, a measure of immense national importance, has triggered significant initiatives in biomedical research, propelling Canada to the leading edge in this field. It puts Canada at the forefront of the revolution in life sciences, which is of even greater magnitude, and arguably of greater impact on the well-being and prosperity of society, than the revolution in information technology.

Winning financing for research activities under the CFI depends on applicants being able to demonstrate the importance of the proposed work, their ability to carry out the research and the capacity to manage the funds provided by the CFI.

Most cities' official plans now have well-intentioned preambles or mission statements to promote so-called smart growth and compact development. At times, they even have pious statements about improving the private-public transportation ratio in favour of transit.

But as long as no actual linkage is made between land use and transportation, and while infrastructure funding is not key to these planning aims, such statements have little effect.

What if the new deal for cities were to be based on the same principles as those of the CFI? Undoubtedly, the result would be creative and innovative proposals, producing a rich variety of development shaped by local conditions and circumstance, but achieving national aims.

As our cities go, so goes Canada. Federal government goals to ensure a national effort at improving our quality of life, of rendering our cities affordable, healthy and competitive, would then have a real chance of being met.

It is time not only to fund our cities adequately, but also to see to it that the funds are effectively invested, propelling Canada once again to the forefront of urban excellence.

Jack Diamond, of Diamond Schmitt Architects Inc., is a member of Toronto Mayor David Miller's advisory team.