De-amalgamation in Ontario: Is it the answer?

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Appeared in the National Post

Study after study has found that the benefits of municipal amalgamation have failed to materialize. Costs generally increase after amalgamation, largely due a harmonization of costs and wages, and increases in service-efficiency remain elusive. The transitional costs after amalgamation are often quite high and, in some cases, reduce or even eliminate any anticipated immediate cost savings.

Mounting evidence suggests that amalgamation in Ontario has not led to more efficient service production or delivery. Municipal mergers reduce competition between municipalities, which weakens incentives for efficiency and responsiveness to local needs, while also reducing the choice for residents to find a community that best matches their ideal taxation and service rates. Since municipal mergers rarely result in boundaries that encompass entire metropolitan regions, externalities may still exist in transportation and land-use planning. And municipal amalgamations have sometimes forced rural residents to pay for urban services they do not have access to.

With so many negative aspects, it’s no surprise that local restructuring proposals have often been met with stiff resistance from local residents. It also comes as no surprise that many residents argue that their communities were better off prior to consolidation. In the wake of lingering resentment regarding amalgamation, de-amalgamation is often suggested as a solution.

We have seen the call for de-amalgamation emerge in many cities and towns across Ontario—including Toronto. Yet very rarely have we seen municipalities de-amalgamate—for good reason. There are significant costs to de-amalgamation, there is no guarantee a municipal government would be any more efficient after de-amalgamation than before and, finally, there is no guarantee there would be community consensus to move forward with such a plan.

Despite these concerns, de-amalgamation proposals continue to emerge in amalgamated communities. Some more vocal than others, but lingering concerns about the efficiency, cost and the nature of representation within amalgamated communities persist.

Taken together, the prospect of de-amalgamation raises two important questions, which we spotlight in our recent Fraser Institute study. First, is it possible to reverse a municipal amalgamation? And, second, if so, is it even desirable to de-amalgamate? Two examples are worth taking a look at: Montreal and Headingley, Manitoba, which seceded from Winnipeg. After provincially-imposed amalgamations, residents of both communities demanded institutional reforms.

In Montreal, a change in provincial governments led to a de-amalgamation referendum and communities within the newly amalgamated city were given the opportunity to leave. While many opted to stay, some did leave, forcing the creation of a new level of government to coordinate government activity on the island of Montreal.

In Headingley, community residents demanded they be allowed to secede from the amalgamated City of Winnipeg. After many years of trying, the province finally took up their case and legislated their removal from the City of Winnipeg, sparking bitter separation negotiations that nonetheless finally restored Headingley’s independence.

There is no reason why de-amalgamation cannot be pursued; nonetheless, it is not often desirable. Provincial governments have the ability to amalgamate municipalities and, therefore, also have the ability to separate them. While Headingley provides support for de-amalgamation proponents, Montreal should give us pause. Post-merger Headingley remains small, which is what the de-amalgamation proponents advocated. They are also a fiscally healthy community with a $30 million surplus in 2011.

Yet the Montreal example demonstrates that if de-amalgamation is not done correctly it’s very possible to further complicate the governance of a region and distract from much more important conversations about regional policy integration and planning. The key lesson from Montreal’s experience with de-amalgamation is that allowing certain areas to de-amalgamate and others to stay can create a fragmented patchwork of governance across the region.

If de-amalgamation were to be pursued in Toronto, the return of a two-tier structure would be the best option, but, of course, there’s always the possibility that the city’s governance structure could look very much like Montreal.

The difficulty in successfully implementing de-amalgamation means that amalgamation is something that cannot—and should not—be easily entered into. More care needs to be taken in finding the best institutional structure for our municipal governments.

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