Editorial: Nail down costs in merger study

After years of fruitless debate, local government reform in Greater Victoria is finally on the table. In seven of the eight municipalities that held referendums last November, a majority of voters gave approval to study amalgamation.

Of course, approval to study and approval to proceed are not the same thing. And Sooke, Metchosin, Colwood, View Royal and Highlands chose not to canvass their residents. So this is by no means a done deal.

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Nevertheless, the mayors of Victoria and Saanich have suggested a way forward.

They would like to see guidelines drawn up for a study, with input from all of the region’s municipalities. They would then ask the provincial government to lead the project. Their objective is to have a proposal ready for the 2018 municipal elections.

On balance, that sounds right. Yet to succeed, the study must reconcile two separate and conflicting desires.

On the one hand, voters can’t understand why we have seven different police forces, 13 separate fire departments and swaths of overlapping bureaucracy. Common sense dictates that when it comes to service delivery, some form of consolidation should be possible. This is basically a management challenge.

On the other hand, voters also want to protect the unique identity of their neighbourhoods. They see district councils, despite all the duplication they bring, as a way to preserve local character. This is more of a governance challenge.

Each of these objectives demands its own solution. This editorial will focus on service amalgamation. Next Sunday’s will look at governance options.

Fortunately, there is a wide body of experience to start from. A number of Canadian cities, including Toronto and Montreal, have consolidated municipal services.

On the positive side of the ledger, integrating police, fire and emergency departments can be accomplished without affecting quality. There are usually historical rivalries to contend with, but a strong command structure can overcome those.

Administrative overhead, in the form of payroll services, human resources, legal advice and so on, can also be merged without harming the front line.

On the negative side of the ledger, however, cost savings are far more difficult to achieve. Many jurisdictions have found that amalgamations bring a levelling-up, not a levelling down, of salaries and other expenses.

In Toronto, for example, where seven municipalities merged, salaries were harmonized at the highest level paid by any of the districts. The impact was an immediate 18 per cent increase in the overall budget.

Similarly, when the B.C. government consolidated health-care delivery into five regional authorities, pay scales for senior managers jumped, in some cases by 100 per cent or more. The province had to step in and impose a ceiling on executive salaries and benefits.

The lesson to be learned here is that savings will not be found unless strict rules are laid down in advance. In the midst of reorganization, cost control takes second place unless it is imposed with the firmest of hands.

A Victoria-based group called Amalgamation Yes has produced draft guidelines for the study. On the matter of cost savings, the group says: “The study must … recommend changes to achieve … efficiency, effectiveness and accountability.”

The group should be commended for making a start. But wording this vague will not do the job.

Specific monetary targets should be set, such as a 30 per cent reduction in the salary bill for councillors, a 20 per cent reduction in management, a ceiling on executive compensation, and so on. Otherwise, four years from now, we will end up with an even more costly operation.

In short, service delivery can be merged with limited threat to effectiveness. But cost control must be carved in granite, or we won’t see a nickel of savings.

How a new model of municipal government might achieve these objectives, and more, is the subject of next Sunday’s editorial.

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