The Toronto Amalgamation: Looking Back, Moving Ahead
(Speech by Roda McInnis Contractor, Director, Amalgamation Office, City of Toronto Delivered at Greater Toronto Area (GTA) Forum)
September 14, 2000
On January 1st, 1998, the new City of Toronto was born. The decision of the provincial government to amalgamate seven municipalities was highly controversial and opposed by a large majority of residents. Nearly three years later, a large majority of residents, when surveyed, indicate that they are satisfied with the new amalgamated government. Rather than debate endlessly whether the amalgamation decision was a good one or a bad one, the challenge is to seize the opportunities that amalgamation presents. It is a chance to re-invent a city, taking what is best from the past and melding it with the new opportunities that the 21st century unveils.
Province's Reasons for Amalgamation
The Province of Ontario offered several official reasons for amalgamating the seven municipalities to create a single city of 2.4 million people. They wanted to reduce the number of elected officials. They wanted to eliminate duplication. They wanted to reduce costs. They wanted to streamline and improve efficiency. They wanted to improve accountability. The province was likely also driven by political and ideological considerations. This reflected their view of the role of government relative to the actions and decisions of the former inner city. The simultaneous realignment of provincial-municipal responsibilities may also have been a factor. The final picture as to whether the official provincial goals have been met has not yet emerged. The city continues to deal with integration of its organization, services, operations, systems and policies.
Some immediate provincial goals have been met. Toronto has gone from 106 elected officials in the former municipalities to 58 in the new city, consisting of 57 councillors and the Mayor. The province has directed that this be further reduced after the November 2000 municipal election to 44 councillors.
With respect to eliminating duplication, the new city has integrated the management structures of the seven previous organizations. This caused a 34% reduction in management in the amalgamating functions. We have gone from 52 departments and 206 divisions, to 6 departments and 37 divisions. We have gone from six fire departments and six fire chiefs, to one. We have gone from six property tax and six water billing systems, to one each. There are many examples of this type of consolidation within the new city. Certain efficiency gains have occurred, a primary area being through the integration of technological systems. However, the most significant gains can only be achieved through reviewing and streamlining all business practices and processes including examining alternative methods of service delivery. This is a multi-year, long-term undertaking which is at various stages of conception and implementation within the current organization. It is accompanied by large labour relations issues.
With respect to cost savings as a result of amalgamation, we need firstly to remember that amalgamating programs made up only 27% of the new city's overall gross operating budget of $6.1 billion at the beginning of 1998. The remainder of the budget involved previously amalgamated services under the former Metro government. These included big ticket items such as social services, police and public transit. As a result of amalgamation-related streamlining initiatives from 1998 to 2000, the city has achieved annual savings of $136 million per year. So far, this translates into cumulative amalgamation savings of $301 million as of 2000. On the other side of the ledger, one-time transition costs as of the end of 2000 are estimated at $246 million. Provincial assistance was provided in the form of a one-time $50 million grant and a $200 million loan. The overall picture on savings and costs is not yet complete. Costs are still to be determined in certain areas, particularly with respect to wage harmonization and further service harmonization. Funding repayment of the provincial loan still has to be determined.
With respect to improved accountability, amalgamation has removed ambiguity and confusion surrounding the responsibilities of the six lower tier municipalities and the upper tier municipality of Metro Toronto. There is no longer confusion for those seeking services or doing business with the new city as to which of the seven municipalities to contact. There is no confusion as to whether one city provides a service which another does not. Once services, by-laws and programs are fully integrated and harmonized, this change will be even more apparent.
The issue of accountability extends to relations between the city and the province. In many areas, notwithstanding recent provincial actions to separate responsibilities between the province and municipalities, these responsibilities continue to be entangled in provincial legislation, policy, regulation and cost-sharing. These include major areas such as social services, public health, and police.
Toronto Amalgamation Goals
So far we have addressed the provincial government's goals for amalgamation. These are not necessarily the only ones by which an amalgamation should be judged. As Andrew Sancton points out in his recent book, Merger Mania, Philadelphia's consolidation of municipalities and the county government in the last century was driven by law and order issues. New York City's amalgamation in 1898 was driven by concerns with respect to economic competition from cities to the west, particularly Chicago. Many major mergers in the private sector are not driven primarily by cost cutting goals. They are about maintaining or expanding market share and expanding into new markets.
Why do I make these public and private sector comparisons? Public debate in Toronto has tended to focus on whether the province's goals for amalgamation have been met. We have not, however, adequately explored what should be the new city's goals in seizing the opportunities that amalgamation presents.
In a way, none of us can afford to have this amalgamation fail. Toronto is vital to us, to Ontario, to Canada. Given the networked global environment, the exponential rate of change, the fiercely competitive international marketplace of city-regions, we need a set of 'made in Toronto' goals to evaluate the success of amalgamation.
These goals, while not necessarily excluding a number of the provincial objectives, should be ones that rebalance the scorecard. Some of the key goals by which I would judge the success of amalgamation include:
- a city that continues to improve its quality of life, including social, economic, environmental and physical
- a city that can embrace the marginalized in our society - the old, the very young, the poor and minorities
- a city that develops creative and innovative ways to ensure that citizens feel a sense of community and a sense of engagement with their civic government notwithstanding the larger size of the governmental and administrative structures
- a city in which every resident, wherever they reside within the city, has equal access to a core set of municipal services, at a defined standard, and where differences in services relate to explicit socio-economic or geographic considerations rather than historic precedent or financial capacity
- a city that leverages its size so as to take full advantage of its diversified commercial and industrial economy, well-established infrastructure and skilled workforce to attract, support and retain 21st century industries and jobs
- a city that actively embraces the opportunities for attracting international artists, architects, scientists, researchers and academics to help build and sustain this new city, physically, intellectually and spiritually
- a city that actively seeks to strengthen the greater Toronto region, recognizing the dependencies, interdependencies and synergies between Toronto and its immediate neighbours
- a city that embraces a broader horizon, so that it is not only a large city within Ontario or Canada, but a continental city operating confidently on an international stage, implementing best practices from across the world and serving as a benchmark to other cities.
These are some of the significant goals by which the amalgamation of Toronto should be judged.
While it could be argued that some if not all of these types of goals could have been accomplished without amalgamation, the sheer size, scope and scale of the opportunities are enhanced within the larger city framework. Size counts. The new city commands more attention not only in terms of media coverage but also in terms of the types of actions it takes, the precedents it sets, the financial, economic and political impact that it carries. The question is whether one can maximize the advantages resulting from the new city, while at the same time creatively addressing its disadvantages.
Notwithstanding the city's large size, the new city government needs to be nimble, not unwieldy, flexible, not rule-bound. It needs to be able to recognize and respond to legitimate differences within this "city of neighbourhoods." The city government needs to embrace effective means, including the use of technology, to allow for immediate, direct and meaningful discourse with citizens. It needs to facilitate opportunities for true citizen participation in the provision of services to communities. It needs to introduce ways to ensure that its monopolistic position is offset by competitive elements that encourage efficiency. Finally, it needs to ensure that all parts of the city benefit from economic revitalization and growth, not only the downtown core.
Beyond the province's goals and our goals for the new city, what have we learned from the process of amalgamation? What lessons can help others? There are many issues surrounding the Toronto amalgamation regarding the pace, nature and process of change from which we can learn. These lessons can be examined within three broad phases of the amalgamation.
The first phase, the pre-amalgamation transition phase, began upon passage of the provincial legislation in April, 1997 and the appointment of a six-member transition team. It ended nine months later at the end of December 1997.
The second phase, the post-amalgamation transition phase, began when the new city formally came into being on January 1, 1998. It encompasses the first three-year term of Council. This phase will draw to a close with the second municipal election for the new city on November 13, 2000.
The third phase, which is just beginning, is the transformation or city-building phase. This phase is multi-year and multi-dimensional, touching on all aspects of city life.
Here are, briefly, some of the lessons learned in each of these three phases
First Phase Pre-Amalgamation Transition
In April 1997, the province appointed the Toronto Transition Team, comprised of former and sitting municipal politicians, to plan and carry out certain pre-amalgamation tasks. Given the size, scale and complexity of Toronto's amalgamation, this nine-month lead time was wholly inadequate. Feedback from merger experts indicates that a consolidation of this size needed at least a two-year lead time. It also requires a broad range of expertise to lay the proper groundwork.
The politicized nature of the pre-amalgamation transition process made the creation of a new institution that much more difficult. It resulted in a competitive environment, pitting one municipality against another and creating an atmosphere of winners and losers. It hindered cooperation and building positively on the richness of the different cultures and historic experiences of the former municipalities, respecting and drawing on the best from each.
Once an amalgamation decision is made, non-partisan, balanced leadership is essential. This leadership must recognize the importance of objective data collection, analysis, evaluation and strategies based on clearly articulated principles and goals in building a credible new organization. Within the limited time frame, a transition team must be very focused and realistic as to what it should and can accomplish. It needs to be clear as to what are its immediate tasks as opposed to what should be left for the new council to decide. Not only do priorities need to be selected from a large number of tasks, they must be the right priorities. This includes immediately recruiting the top senior management level. (In Toronto's case, this only occurred near the end of this pre-amalgamation transition phase.) It includes working closely with the new management team to develop a preliminary organizational structure, to establish a detailed implementation plan and to integrate key financial, human resources and communications systems.
The development of a detailed implementation plan, assisted by those experienced in carrying out large business consolidations as well as managing large public sector organizations, can help considerably to ease the transition to formal amalgamation. In the absence of these kinds of conditions, such as was the case in Toronto, the task of the new municipal government, both politically and administratively, was made that much more difficult come January 1, 1998.
Second Phase Post-Amalgamation Transition
The second phase of amalgamation, encompassing the three-year first term of Council, is just now drawing to a close. This period was characterized by a wide range of integration initiatives covering all aspects of the municipal government. It included setting up governance structures, organizational structuring, harmonization of services, consolidation of operations, technological integration of systems, and establishment of unified human resources programs and policies.
These changes were occurring in a very difficult financial environment which cannot be ignored in reviewing the first three years of amalgamation. Several major constraints have driven the financial agenda. First was the provincial imperative that savings must be achieved through amalgamation and that they must be achieved rapidly. Second was the political promise of the Mayor, supported by Toronto Council, of a multi-year property tax freeze. Third has been the on-going provincial exercise of realigning provincial and municipal responsibilities, which has resulted in an annual shortfall of $252 million for the new city. (The large majority of amalgamation savings has gone towards offsetting the costs of this downloading.) Fourth has been the introduction of a new property tax reassessment system by the province resulting in major tax shifts for certain sectors in Toronto and necessitating the introduction of transitional policies limiting the amount of annual increases. The result has been to further limit the financial flexibility of the city.
The combination of these factors, three of which are not directly related to amalgamation, has made the task of amalgamation that much more difficult. The fact that the city must rely on property tax, a relatively static tax, as its main source of on-going revenue further exacerbates the problem. While provincial and federal governments have found their diversified tax revenue sources greatly increase from a booming Toronto economy, municipal revenues have remained relatively static. It is these financial factors that make the achievement of the city building goals alluded to earlier that much more difficult.
There have been several iterations to the city's governance structure during this post-amalgamation transition phase, with a preliminary structure refined and adjusted after eighteen months of experience. Nearly three years later, the governance model is still evolving. Sudden decisions by the province, such as the reduction of council from 57 to 44 councillors based on federal/provincial riding boundaries in the next municipal election, make seeking a degree of stability in the governance model more difficult. At the same time, it reinforces the need for Council and the administration to be nimble in addressing unforeseen change and meeting these challenges head-on.
As a result of the decision to reduce Council size, Council and staff have had to immediately address issues related to ward boundary changes, changes to standing committee structures, changes to community council boundaries and physical reconfiguration of City Hall space. These types of unforeseen actions affect the city's ability to plan its time, resources and determine priorities.
The harmonization of municipal services, particularly those with major cost impact, such as garbage collection, snow removal and recreation fees, began in the second year of amalgamation. This too has not been easy, given the constrained budgetary environment and the need for trade-offs in increasing service in one area against reduction of service or increased user fees in another. There is the continuing pressure, characteristic of amalgamations in general, to move to the highest level of service resulting, of course, in an overall increase in costs. The city continues to experience growing pains around the whole issue of service harmonization and will continue to do so over the next several years.
It is important in any amalgamation, particularly one as large, complex, public and controversial as Toronto's, to manage expectations and communicate these effectively. These include the expectations of the public, elected officials, the media and other levels of government. Once the new council held its first meeting in January 1998, there appeared to be the sense in some quarters that amalgamation was a done deal, that the integration of thousands of programs, services, systems, structures, policies and procedures would happen overnight, painlessly, at minimal cost and with huge savings.
Even for those whose objectives might be to reduce the size of municipal government and rapidly eliminate or privatize services, there needs to be a realization that the absence of deliberate, well-conceived planning and realistic implementation can lead to major systems breakdowns. Given the essential nature of a number of the public services that Toronto provides to a population of 2.4 million, this is not a matter to be taken lightly.
There needs to be a significant investment in time and money in undertaking major change. Organizations are run by human beings. Change happens for better or worse through the thoughtfulness of the people who lead, manage and implement these changes as well as those who are the recipients of change. It cannot happen overnight. It takes skill and experience. We cannot expect people who have done a very different type of job to suddenly become organizational change gurus. There is a need to train, mentor and use outside experience as a way of building capacity internally.
Notwithstanding all these challenges, the first three years of amalgamation, while difficult, have been mitigated by several factors. As previously noted, many large services were already consolidated, including police, public transit, ambulance and social services. These services were largely untouched by consolidation requirements. However, most of them have been significantly affected by other legislative and financial changes introduced by the province during this period of time.
From a governance point of view, the leadership style of the first Mayor has proved to be highly popular with residents, according to polling data. In addition, all members of the first Council of the new city in 1998, with one exception, had been members of the former councils and brought with them a wealth of municipal experience, although all still needed to learn to play on a more complex stage. The creation of community councils, while a far cry from the responsibilities of the former councils, has worked to address local planning, transportation and other issues, allowing the large council and its functional standing committees to focus on city-wide issues.
From an internal administration point of view, while major changes have occurred at the management and non-union levels, there has been more limited change at the unionized, front-line levels. During the first three-year transition period, significant time has been spent on union local affiliations being sorted out by the membership and first collective agreements being drawn up. The major task of designing and integrating services at the front-line and harmonizing jobs is still in the initial stages.
Third Phase City Building
As we enter the third phase of amalgamation, the transformation and city-building phase, the challenges are even greater. Some of these city-building activities have already begun. A series of strategies and directions for the future of the city has been highlighted in a new strategic plan, a new official plan and economic development, environmental, social and infrastructure plans. This third phase will be the most critical for setting the direction for the long-term health and well-being of the city. It will set the stage for determining how well Toronto and its government perform within a local, continental and global context.
What is ahead? During the next several years, we must resolve the financial issues that currently face the city. This cannot be done alone. We must engage the provincial and federal levels of government, other municipalities and other sectors. The solutions cannot be quick one-time, one-off remedies driven by crisis or expediency. These financial solutions must be long-term and within a framework based on mutual respect and understanding. They must be centered on common underlying goals. They must exhibit a clear willingness to work together at both the political and administrative levels to address specific problems. At its crudest level, it means a willingness to share power - and to share the public stage.
The clock on amalgamation cannot and will not be turned back. However, what the province expected from amalgamation and what actually will and should happen are two different things. We cannot control the future but we can strive to put in place those elements that will best meet our objectives. However, goals are but words without the fundamental tools to act on them. The city needs the legislative flexibility and financial capacity to effectively carry forward its agenda.
Toronto has come a long way since the province first announced its intention in the fall of 1996 to amalgamate the seven municipalities. Much has been accomplished. Much remains to be done. The city has moved on a number of fronts in a remarkably short period of time. It has been by no means easy nor will it be in the future.
In concluding, I would say this to all those who wish to participate in, influence or guide the transformation of the new city. I believe there are three elements underlying true leadership. These are imagination, passion and will. It is these three ingredients that will determine how well we collectively succeed in building the new City of Toronto.
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