What makes municipal amalgamation work?

By Ainslie Pierrynowski (AIMS on Campus Student Fellow) 

In October 2017, five communities on Prince Edward Island’s South Shore took the first steps toward potential amalgamation. Their goal: to pool the towns’ resources together, reflecting an existing political push for “fewer but larger communities” in the province. These words may ring familiar for many communities across Atlantic Canada. Municipalities in Atlantic Canada often grapple with depopulation, rising administrative and service delivery costs, and seemingly inefficient, overly decentralized, or redundant forms of local governance. Amalgamation is frequently invoked as a possible solution to these difficulties. This idea has spread throughout the region, from the much-studied 1996 merger that created the Halifax Regional Municipality (HRM), to the formation of the Regional Municipality of Tracadie-Shelia in 2014, on to talk of a potential amalgamation of Labrador City and Wabush, as of 2017. Nonetheless, several voices have questioned whether amalgamation has truly made the region’s communities better off. Indeed, a closer look at amalgamation in Atlantic Canada reveals that while it can be a powerful way to address the area’s demographic and economic challenges, amalgamation does not necessarily lower costs and produce more effective governance in and of itself. Rather, several key considerations must be taken into account for successful amalgamation to occur.

To begin, how the initial stages of the amalgamation process—research, economic analysis, and consultations—are carried out can influence whether amalgamation ultimately proves beneficial for residents. In particular, former AIMS President Brian Lee Crowley points out that relatively few municipal services have substantial economies of scale, a term referring to situations where the per unit cost of production decreases as the size of one’s operation increases. It is true that some public services, such as policing in the HRM, can benefit from increased economies of scale post-amalgamation. Yet, failure to distinguish between which services may see greater economies of scale and which services may experience few or no cost-saving effects can distort financial projections with regard to amalgamation can produce unexpected, costly challenges for newly amalgamated municipalities.

The governance structure of amalgamated municipalities also matters. Rather than rendering service delivery more efficient, single-tier, centralized governments overseeing large municipalities may find it difficult to determine which services residents want and what they are willing to pay for. In contrast, local government structures focused on smaller communities have an advantage in this area because residents, as Crowley notes, “cannot vote themselves benefits at the expense of other taxpayers” elsewhere in the municipality. Instead, the smaller scale of such municipalities means that residents, generally speaking, solely request the services which they want and are able to pay for.

That is not to say that small municipalities are always the answer, nor that amalgamation should be taken off the table. In fact, given regional demographic trends, many small communities in Atlantic Canada have ageing, shrinking populations—and thus a declining tax base—which makes it difficult to afford public services. Instead, successful amalgamation requires a careful balance between the coordinated regional economic development afforded by centralized, unified municipal governance structures, as with the HRM’s public-private development partnership, and the key role of municipal governments in addressing specialized, community-level needs and concerns. This balance can vary due to how much power the Mayor and executive have relative to the council, whether councillors are elected or appointed by the Mayor, whether elected public officials are voted in by ward or at-large, the population distribution and rural-urban make-up of a given municipality, and whether municipal services are delivered by regional agencies or at the local level. Indeed, amalgamated municipalities seeking to reconcile regional and local concerns might adopt a two-tiered political system with provisions for local, small-scale governance like that initially proposed for the amalgamated City of Toronto—although this approach requires a clear delineation of the powers and responsibilities of each component of the municipal government, to avoid confusion and political deadlock.

Overall, Atlantic Canada’s demographic challenges and the growing political and economic importance of cities globally suggest that the amalgamation debate will continue to occupy a central place in the region’s political discourse. It is crucial to remember, however, that the decision to amalgamate is a complex one with a variety of potential outcomes. It is an option which entails significant preliminary economic analysis on a case-by-case basis. Additionally, the choice to amalgamate is merely the first step in a long process that can produce many, diverse forms of local governance, each with multiple, important implications for the futures of the residents therein. As more and more communities in Atlantic Canada opt for amalgamation, we would do well to bear these considerations in mind.






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