Ford government should heed lessons of Harris amalgamation experiment

Printer-friendly version
Appeared in the Toronto Star, January 22, 2019
Ford government should heed lessons of Harris amalgamation experiment

The spectre of amalgamation once again looms over Ontario as the Ford government recently announced plans to review the governance, decision-making and service delivery in eight regional municipalities and Simcoe County, prompting speculation that the government wants to resume the amalgamations initiated by former premier Mike Harris in the 1990s and 2000s.

Some quick history. When the Harris PC government was elected in 1995, there were 850 municipalities in the province. Within five years, that number was nearly cut in half to 444, based on a premise that amalgamation would produce more efficient and less costly local governments. Taxpayers, it was argued, would benefit from lower costs and lower taxes.

But research on the province’s largest cities found these benefits did not materialize.

Fast-forward to today, and the Ford government’s review will focus on regional governance structures that have been in place for 40 years. Regional governments in Ontario form what already could be considered partial amalgamation. The services covered under the regions include arterial roads, transit, policing, sewer and water systems, waste disposal, region-wide land use planning, and health and social services. In some cases, the town or city within the region provides services to residents.

The review will spotlight two general areas—municipal governance and service delivery. Within the first set of questions, the advisory body will examine whether there are efficiencies in having two levels of government and whether this structure is appropriate in all cases. These are important and relevant questions that should yield some interesting results.

The question of service delivery, however, raises some concern. Whenever a government asks if there are duplications of activities or opportunities for cost savings, it raises fears that the real purpose of the review is to use amalgamation to reduce government.

As noted, studies on Ontario’s larger cities found no cost savings to amalgamation, and indeed, our research on smaller municipalities came to similar conclusions.

Specifically, 15 years after amalgamation, we found the exercise did not result in cost-savings or lower property taxes. Rather, we found significant increases in property taxes, compensation for municipal employees, and long-term debt in both amalgamated and unamalgamated communities, suggesting there was no tangible financial benefit from amalgamation.

In fact, many of the claims put forward by amalgamation advocates failed to materialize. In most of the municipalities we analyzed, the per-household municipal tax burden increased. We also found that spending on certain services and remuneration also increased significantly.

In conducting this research, we interviewed local politicians and administrators who said the urgency and speed of the amalgamations didn’t help. There was little provincial assistance at the time for the amalgamations.

Moreover, one of the reasons for the increased costs was that wages were harmonized upwards in this period (meaning many government workers received raises), which had a significant impact on the cost of service delivery. And many municipalities were fearful of forced consolidation, which resulted in expedient decisions about governance and servicing issues without the benefit of time or access to comparable information and best-practices.

Finally, our research revealed that, when rural areas were amalgamated with urban areas, residents began to demand more urban services, which further stretched municipal budgets in the years following consolidation. Subsequent policy “downloading”—that is, the transferring of responsibility for services from the provincial government to municipalities—and a change in provincial government in 2003 entrenched these institutional structures.

While it’s commendable that the government is reviewing municipal service delivery, let’s hope it will heed the lessons of the last amalgamation experiment and proceed with caution to ensure the best possible outcome and provide true cost-savings and better local governance.

Subscribe to the Fraser Institute

Get the latest news from the Fraser Institute on the latest research studies, news and events.