I asked AI, if amalgamation saves money in Canada. The answer was no.
Questions by Sasha Izard
March 21, 2026
Today, I asked Google AI two questions. The first question that I asked was:
“Which municipalities amalgamated in Canada in the last 30 years?”
Which municipalities amalgamated in Canada in the last 30 years? – Google Search
I then asked a follow-up question that you can view by scrolling down in the same link.
I asked: “Of the municipalities in Canada that amalgamated in the last 30 years, did any of them save money by amalgamating?”
AI responded:
The short answer is no. While amalgamations are almost always marketed as a way to save money and “find efficiencies,” multiple studies by groups like the Fraser Institute and various independent academics have found that these savings almost never actually happen. [1, 2, 3, 4]
In fact, in many cases, costs increased after the merger. [5, 6]
Why expected savings didn’t happen
- Wage Harmonization: When a low-paying rural municipality merges with a high-paying city, unions typically negotiate to bring everyone up to the highest pay scale. This “levelling up” usually wipes out any savings from having fewer managers.
- Service Level Creep: People in the former rural areas often start demanding the same level of service (e.g., more frequent snow plowing or transit) that their new urban neighbours receive.
- Transition Costs: Setting up new computer systems, re-branding, and consolidating offices is incredibly expensive. In Toronto, the transition alone cost $275 million, significantly higher than the original estimates.
- Growth in Staff: While there are fewer politicians (mayors and councillors), the complexity of managing a “megacity” often leads to a massive increase in middle management and specialized staff. [3, 7, 8, 9, 10, 11]
Real-world examples of the financial impact
Toronto (1998): Originally projected to save $300 million annually, the city’s operating budget actually grew from $5 billion in 1997 to over $8 billion by 2008. The city had to hire 3,500 more employees in its first decade.
Halifax (1996): Research shows that residential property taxes rose by up to 30% in some suburban and rural areas after the merger, and user fees increased significantly.
Sudbury (2001): A study by the Northern Policy Institute found a “distinct upward spike” in household expenditures for fire services and garbage collection immediately following amalgamation.
Hamilton (2001): While there were small initial savings of $20 million in the first year, they were largely offset by long-term debt and rising labour costs. [6, 11, 12, 13, 14]
Experts from Western University and other institutions now generally agree that if a government wants to save money, it is better off using shared-service agreements (where two towns share one fire truck or one IT department) rather than a full legal merger. [10, 15, 16]
[1] https://www.fraserinstitute.org
[6] https://www.thesudburystar.com
[8] https://www.canadianconsultingengineer.com
[9] https://www.fraserinstitute.org
[10] https://www.cbc.ca
[11] https://idjs.ca
[12] https://metropolitics.org
[13] https://www.amalgamationyes.ca
[14] https://www.ctf.ca
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See also:
Index of Articles and Other Resources on Amalgamation. – CRD Watch Homepage
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Appendix: Screenshots of AI’s response to my question.
CRD Watch Homepage 
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