Economic Development News & Insight

logo-horizontal

The Higher ED Blog: Municipal amalgamation was messy, but de-amalgamation is not the answer

Michelle Madden / April 25, 2016

Tags: , , , ,

The Higher ED Blog: Municipal amalgamation was messy, but de-amalgamation is not the answer

For the last couple weeks, news outlets have been reporting that Peel Region may be on its way to a break up. Mississauga wants to secede from the region, undoing the amalgamation of Mississauga, Brampton, and the rural area around Caledon in 1974. Mississauga’s motivation for leaving the region is that it has about half of Peel’s population and half the votes, but pays 60% of the costs. The city’s mayor, Bonnie Crombie, argues that as Ontario’s third largest city, single tier governance is overdue for Mississauga.  This isn’t a new conversation—former Mississauga Mayor Hazel McCallion was against amalgamation from the start and continued to fight it decades later–but things are heating up again now that Mississauga council has decided to conduct an independent study on the impact of leaving the region.

Peel’s struggle is not unique in Ontario. Amalgamation-related tensions have existed in this province for decades. There were two major waves of amalgamations: the first happened in the decades after World War II (including Peel Region) and the second came in the 1990s under a Progressive Conservative government led by Mike Harris (the latter wave reducing the number of municipalities by more than 40%, from 815 to 447). Some of the early second wave amalgamations were semi-voluntary, but others were dictated by the province after negotiations stalled.

Few, if any, municipalities were happy about the restructuring at the time and the assumed benefits have still not materialized. The most common argument for amalgamation was that it would reduce government waste and bring economies of scale. Those assumptions have since been disproven, with recent reports showing that municipal governments employ more people, and have higher costs than pre-amalgamation. Unsurprisingly then, Mississauga could set a precedent followed by other dissatisfied municipalities.

Impact of amalgamation on economic development

It seems that Ontario municipalities have never been happy with amalgamation, and recent research is only adding fuel to the fire, but absent from this discussion is what amalgamation has meant for economic development. Many reports have examined the repercussions of amalgamation on municipal costs and governance, but few have examined how it impacted economic development. One of those rare papers can be found in the archives of our journal, Papers in Canadian Economic Development. Originally published in 2005, Aileen Murray’s paper explores the topic via a case study of Chatham-Kent, where she worked until 2009.

The City of Chatham and the municipalities of the County of Kent were amalgamated in 1998. Like in other municipalities, the primary goal was to reduce the size of government but the promotion of economic development was identified as a similarly important. Chatham-Kent was forced together by the province so you might expect a particularly high level of dysfunction, but Aileen came to a different conclusion.

The Chatham-Kent case study

Before amalgamation, economic development was largely ad-hoc with no structured departments except in the City of Chatham (which had 2 staff). There were five BIAs, five Chambers of Commerce and three area business committees representing various geographic areas of the municipality. A Community Futures Development Corporation provided services to entrepreneurs. Tourism was managed by City of Chatham and Chatham-Kent Tourist Bureau. Major economic development efforts were rare, as these groups cooperated very little and did not take on much individually either. Only Chatham and Wallaceburg had the most basic economic development tool: a community profile.

After amalgamation, a new economic development department was built: Chatham-Kent Economic Development Services (CKEDS). It had a director, administrator, and four sector specialists in manufacturing, agriculture, service/commercial, and tourism (though tourism is no longer part of the mandate). In addition to the support provided by the sector specialists, CKEDS also took on a stronger role supporting entrepreneurs by operating a new Enterprise Centre, funded by the province, with six satellite offices across the municipality.

There were certainly growing pains for the new municipality and economic development department. Staffing was a challenge in the early years, as the new department retained some people who worked in the realm of economic development pre-amalgamation but lost others, and the chaos of restructuring resulted in staff turnover and extended unfilled vacancies. One of the major frustrations for early staff members was the slow implementation of an IT network that would bring together all of the databases of the former municipalities. Until it was ready, responding to even small inquiries from site selectors or investors was time consuming. The new municipality was also required to review and update all of the bylaws of the former municipalities. It was a two year, painstaking process. Engagement with economic development stakeholders and the public proved to be difficult as well. The amalgamated structure expected many groups and communities with different priorities and located across 2,500 square kilometers to cooperate for perhaps the first time ever.

On the flip side, amalgamation brought many benefits. The new economic development department, and the larger municipal resources behind it, had a greater capacity to take on and coordinate economic development initiatives. Working with groups across Chatham-Kent was challenging, but it also allowed for greater coordination and a deeper pool of funds. In one classic example, a pre-amalgamation dispute between Chatham Township and the City of Chatham resulted in the City refusing to provide water or sewer services to businesses just outside their boundaries. Post-amalgamation, the new municipality has greatly expanded water and sewer infrastructure beyond the urban areas, resulting in a significant number of new greenhouse and manufacturing facilities and several expansions. The restructuring also had positive repercussions for investment marketing. Obviously, the amalgamation reduced competition and duplication between smaller communities within Chatham-Kent, but it also combined their assets and resources enabling them to make a stronger impression on investors.  As mentioned in the previous paragraph, finding data was challenging at first, but once the new IT network was ready, economic development staff had superior access to data on utilities, road networks, land ownership and availability, and tax information.  Similarly, the bylaw review was a significant chore at the time but allowed the new municipality to modernize and harmonize many regulations related to development, and to reduce red tape as well. Perhaps the most significant outcome of amalgamation for economic development in Chatham-Kent was that it provided the opportunity and resources to conduct strategic planning exercises. Strategic plans were created for all the major departments and through the process, economic development staff were consulted on the impact of other departments’ visions and policies on their activities. The economic development strategy was completed in 2001 and led to large initiatives including the development of a new central industrial park and preservation of other lands for future service/commercial needs.

Was amalgamation good for economic development in Chatham-Kent?

In Chatham-Kent, amalgamation was a good opportunity to develop a cohesive and strategic plan for economic development, hire specialized staff, modernize business and development practices, and command a greater marketing presence. While there were challenges, Aileen’s conclusion was that amalgamation resulted in stronger support for the business community.

Arguably, de-amalgamation would provide a similar opportunity to refresh economic development services as the new, albeit smaller, municipalities would need to re-think their strategic direction and policies. While many reports conclude that amalgamation was not the boon it was sold as, de-amalgamation is not necessarily the best response for the provincial economy as a whole.  Firstly, it would create a new round of administrative and governmental chaos. Second, major cities would likely do well, but the smaller communities they leave behind would be inversely affected. In the case of Peel, Mississauga is large enough to stand on its own for economic development investment and marketing and secession would increase their budget, but Brampton and Caledon would suffer financially. Brampton is accusing Mississauga of a cut-and-run just as Brampton desperately needs major infrastructure investment to keep up with its astounding growth.

Peel is currently working with a facilitator to discuss regional reform, though the task force meetings started a day after the Mississauga vote. Toronto Star columnist Royson James has made a great case for avoiding a messy divorce, with excellent points related to the delivery of social services and regional equalization. Then again, a poll conducted last week found that more than half of Mississauga’s residents favor a split. The province created a mess but also has a role to play in preventing a future one. As James’ article summarizes, before Mississauga can secede it needs approval from residents of Caledon and Brampton, then permission from the province. Even if the province agrees, there is no precedent for a lower tier municipality leaving an upper tier one, and the Municipal Act doesn’t provide any guidance. Other Ontario cities are sure to be watching this case very closely.

The system is clearly designed to make secession as hard as possible, but if Queen’s Park eventually decides to accommodate Mississauga, it should also be prepared to develop mechanisms to accommodate the communities left behind.  Hopefully, instead, Canada’s great tradition of equalization will prevail without more upheaval.

 

About the authors

Michelle Madden is the editor of Higher ED. She is also the Outreach Manager for the Economic Development Program and a graduate of the LED master’s program.  She has authored many Higher ED articles sharing information relevant to economic development practitioners, and has written several on behalf of students. She has published several of her own blogs on economicdevelopment.org as well. Follow her on Twitter at @michelle_mad.

Aileen Murray is the president of Mellor Murray Consulting, specializing in economic development, strategic planning, tourism, workforce development and marketing. Aileen served as the head of Middlesex County Economic Development for five years. She worked with Chatham-Kent Economic Development Services for a decade, culminating as the Acting Director. She has a Bachelor of Commerce from the University of Windsor and an economic development certificate from the University of Waterloo. She received professional Economic Development Certification from the Economic Development Association of Canada in 2003 and Fellowship in 2005.

About the series

Higher ED: Insights for the Next Economy is a platform for students, guest speakers, staff and faculty of the University of Waterloo’s professional and graduate economic development programs to share knowledge with the field at large. The series takes works destined for an academic audience and reworks them into a fresh, easy-to-digest blog article.

Established in 1988, the Local Economic Development program is the only master’s program in Canada devoted solely to local economic development. It offers a balance between theory and practice by combining coursework, a major research paper, an internship, and weekly seminars featuring guest speakers. Students are prepared for careers in local, community, or regional economic development.

The Economic Development Program is a nationally-accredited provider of professional training. It delivers certification programs and seminars that offer a deep understanding of the Canadian context in a convenient block format. Peer learning is combined with informative lectures and practical case studies to provide dynamic instruction that is beneficial for junior and senior-level practitioners.

Comments are closed.