The question of job prospects for young people, the ease with which one can enjoy a night at the opera and the motivating qualities of business property taxes may not seem to have much to do with one another.

But according to the Toronto Community Foundation's annual report on the health of the city, these things and more all combine to make life in the city work or in their absence, lead the city to decline.

The Vital Signs report for 2006, the fifth the foundation has released since 2001, notes either a decline or stagnancy in almost every sector. While Toronto has marginally increased its employment for a second year in a row, by 0.6 per cent, that growth is well behind the Greater Toronto Area region as a whole. And Toronto has lost businesses over the past five years. A thousand have left the city since the foundation began reporting.

The report noted that while Toronto is increasing the amount of waste the city has diverted from landfill marginally, it has fallen short of its stated goal of removing 60 per cent, blaming the lagging multi-residential sector, which is only diverting 13 per cent of the household waste it produces.

Incomes are rising in Toronto's poorest neighbourhoods - at a higher rate than they're rising among the city's wealthiest - but Toronto continues to have more people living below the poverty line than others in the region.

And the report points toward a troubled education system. While Toronto's workforce is well educated, with more than 62 per cent having completed post-secondary education, the school system is weak.

Thirty six per cent of children are in low-income families, and English as a second language programs and other supports are scarce. And the Safe Schools Act saw 15,563 children suspended or expelled, including, according to the report, "hundreds" under the age of six.

Toronto Community Foundation president Anne Swarbrick was ill and did not attend the Wednesday morning launch of the report at the Bata Shoe Museum but, in notes read aloud by a colleague, said the city needed to take both the warnings and plaudits seriously.

"We firmly believe in Toronto's potential to be great," she said in the note. "It is for this reason that we believe it to be important to raise red flags to identify where action is required - and to point to our strengths that need to be sustained."

She said that for all Toronto's strengths, the city is hampered by its residents' inability to agree on its greatness.

"Toronto has all the makings of a great city, but we must recognize our unique strengths and muster the will and the courage to put strategic plans in place to make that greatness a reality."

Panelists at the meeting said that the city needed to concentrate on repairing its fiscal problems and enabling young people and newcomers to better participate.

"Toronto has found itself unprepared for the wider community it seeks to become," said Zanana Akande, a member of the board of directors. "It boasts and brags and should be serving. Our city's institutions continue to operate as they always have."