Individual interacting with a smart kiosk in a park setting

Three AI considerations for Canadian municipalities

Authors

11 minute read 28 Jul 2026
Related topics
Government & Public Sector
AI
Consulting

How Canadian municipalities can use AI to improve services, boost productivity and build trust responsibly.

In brief
  • Across Canada, municipalities are beginning to use AI to improve experiences for residents and employees.
  • Any city looking to tap into that potential needs a strategic roadmap that connects smart use cases with a people-first approach and strong governance framework.
  • Integrating these three pillars empowers municipalities to pilot and scale AI responsibly, and make a lasting positive impact. 

How EY can help

  • Public sector modernization

    Sustainable transformation starts with a shift in mindset, culture and operations. EY's is committed to helping governments transform and achieve their modernization ambitions by placing humans at the centre, leveraging technology at speed and enabling innovation at scale.

    Read more

Better looks different from one municipality to the next. Faster, easier resident services. Improved employee experiences. More effective team output. Lower costs. Stronger outcomes. For cities across Canada, AI can provide a springboard to progress those goals if the municipality has the right foundation to adopt and deploy AI effectively. 

 

That comes down to targeting the right use case, embracing a people-first approach and reinforcing governance guardrails to build trust. Getting these pieces right can help Canadian municipalities turn AI’s possibilities into sustainable value. 

 

Canadian municipalities have a significant opportunity to pilot and scale AI for better outcomes

Canadian governments, including municipalities, are wrestling with some of the same factors that challenge the private sector. Technology is evolving at an incredible pace. With that shift comes new expectations from residents, who increasingly expect public services to match the seamless customer experiences they encounter in other parts of their lives. At the same time, geopolitical tension, macroeconomic disruption and a host of other disruptors are squeezing the labour force, increasing volatility and making it harder to simply “get the job done”. 

 

Fiscal pressures exacerbate these factors for municipalities. On the one hand, resident expectations are changing, technology is advancing and these macro factors complicate service delivery. On the other hand, municipalities typically have limited revenue opportunities, despite growing cost pressures (like inflation and resident demands) and competing investment priorities. 

 

AI can help mitigate these challenges by delivering high quality services at the same, or lower, cost. Emerging tools hold the potential to simplify, accelerate and improve resident services across functional areas. The thing is: key barriers are holding teams at the municipal, provincial and federal government levels back from embracing this opportunity. Within Canada’s public sector, a persistent gap exists between AI ambition and successful deployment. A new EY Canada report shows 63% of public-sector leaders agree AI could significantly improve services. Even so, only 26% have deployed any AI tools at all. Across governments, broad AI implementation is lagging:

  • About 66% of survey respondents remain at the planning or early development stages
  • Only 20 to 25% of AI proof of concepts actually evolve to scaled use

That stall poses a real risk. The adoption gap limits Canadian governments from making full use of AI to simultaneously improve service efficiency while mitigating shortfalls in available skillsets, labour and budgets. The lack of progress (or AI roll outs that fail to deliver for residents) can also chip away at another critical driver: resident trust.

 

To that end, the second annual EY AI Sentiment Study shows AI adoption is accelerating quicky and well ahead of confidence. For example, over two-thirds of Canadian respondents worry about systems getting hacked or breached; less than half trust governments or companies to protect personal data used by their AI systems.  

 

Some will view this as a challenge. For Canadian governments — and municipalities in particular — it’s actually an opportunity. Cities across the country are proving it. Gaining inspiration from what’s working and developing a strategic local approach is the first step to carving out an AI advantage at the municipal level. Importantly? Cities should start now.

Smart electric vehicle charging with mobile app control at home
1

Chapter 1

Canadian municipalities succeed by choosing AI use cases wisely

Cities across Canada are adopting AI to make daily life better for residents. Ingenuity is thriving across municipalities.

Consider the city of Surrey, British Columbia. Leadership have reduced municipal workloads by piloting a Development Inquiry Assistant. The AI-powered chatbot is available 24 hours a day, works in multiple languages and immediately answers questions about construction, renovation permitting and zoning. Result? Since 2024, the bot has answered about 460 requests a month. This has a positive knock-on effect for municipal employees and residents alike. Both groups are gaining always-on insight to keep projects moving quickly and efficiently.1

Edmonton has embraced a similar approach. The city deployed an online tool capable of assessing whether housing permit submissions meet all zoning parameters. The platform automatically approves requests. Because the solution confirms requirements have been met, the process frees an employee up to focus on other aspects of the job, and resident interactions. This capability is saving over 67,000 days of manual efforts and an estimated $5.3 million annually.2 It’s also significantly improving service delivery; submissions can be assigned for review in as little as one calendar day.

On the other side of the country, Laval, Quebec incorporated an AI-powered virtual assistant to generate transcripts, file data, facilitate processing requests and file that information automatically to the right person. Since launch in 2020, the assistant has answered more than 250,000 calls spanning more than 250 topics every single year.3

From location to location, the innovation is remarkable. Municipalities in Canada are using AI to improve traffic flow on congested boulevards, map and prioritize accessibility inequities on city streets, and more. Each of these focused use cases began by targeting a specific problem and then aligning AI to address that need. They reinforce the link between improved service quality and operational efficiency with ROI. Municipalities are getting more from their service delivery dollars by taking this approach.

At this early stage, we recommend considering key questions to narrow the focus and prioritize the use case most likely to generate fast progress. From there, municipalities will be better positioned to channel a single pilot into stakeholder buy-in and additional traction.

Make AI progress at the municipal level by asking:

  1. Where are we facing the greatest pressure(s)?
  2. Do we already have access to AI capabilities or software that can be used differently to tackle these opportunities?
  3. Where could AI create the greatest public value?
  4. What data is available?
  5. Where are municipal staff spending their time, particularly on repetitive, large volume work?
  6. If you could eliminate one burden from municipal staff tomorrow, what would it be?
Bike-share users checking a mobile app
2

Chapter 2

AI strategy should be people-led, tech-powered and fully integrated

Municipalities must clearly roadmap human and AI impacts to make sustainable progress

In Canada, municipalities are increasingly focused on enhancing operational efficiency over the next three to five years. Research shows they plan to do that primarily by automating processes, providing real-time access to data and strengthening data quality management.4

Adopting AI and other automation tools can certainly help fuel that progress. Municipalities that go this route will want to embrace it as a chance to improve experience for all people — residents and employees alike. It takes both to deliver a successful and sustainable AI strategy. 

Across sectors, EY research shows AI usage at work is widespread (88%) but only 28% of organizations have positioned employees to achieve transformative business impact from AI. That’s because really turning AI into a competitive advantage requires organizations to empower people with toolsets, skillsets and mindsets that help them evolve alongside the technology.

That rings equally true in the private and public sector, including at the municipal level. Especially within Canadian cities, where teams may be particularly stretched in the face of ballooning resident demands and fiscal pressures, a thoughtful AI pilot or deployment can offer an immediate reduction in manual labour, or the need for employees to carry out repetitive tasks that chip away at strategic work. Still, they must be enabled to succeed in this environment. AI success is bigger than simply rolling out a new solution or program; it must be done thoughtfully in order to work. 

For example, Burlington, Ontario has used an AI-powered platform to digitize zoning bylaw rules for industrial-commercial buildings. Municipal employees worked together across functions to identify and build the solution. It was a collaborative approach to innovation, jointly identifying and building solutions. 

And that diversity of thought ensured the platform addressed challenges comprehensively. For example, Burlington’s solution automatically evaluates proposed designs against relevant rules. It also checks requirements like heights, floor area ratios, setbacks, landscaping and parking. Applicants then instantly receive a compliance report. Beyond the clear upsides for project proponents, city staff save time, have fewer exchanges with applicants and can operate with greater transparency throughout the development process.

Interestingly, Burlington used a low-code strategy to accomplish this. Drawing on Microsoft Power Platform and Microsoft Copilot Studio in this way enabled the city to cut the building-permit approval process down by 33%. The AI-powered digital assistant was developed and deployed in eight weeks — and reduced approval timelines from 15 to between five and seven weeks.5

Municipalities that have access to modern digital and AI-enabled technologies have significant opportunities to enhance service delivery, improve operational efficiency, and support evidence-based decision-making. Realizing these benefits, however, requires more than access to technology; it depends on organizational readiness, a culture that encourages innovation, a clear understanding of the potential value, and a willingness to adapt processes and ways of working. 

Make AI progress at the municipal level by asking:

  1. Do we have the right skills, behaviours, capabilities, resources and learning in place to enable people to innovate together?
  2. How do we make AI innovation a meaningful part of our culture across the municipality?
  3. What is our strategy for communicating wins and building internal engagement so people are increasingly willing to explore AI’s potential?
  4. What longer term learning, upskilling and reskilling will people need to maintain AI innovation a meaningful part of our culture?
People using a tablet in a smart city
3

Chapter 3

Responsible AI and good governance are foundational

Creating an AI advantage requires municipalities to think about risk from the get-go

Like all governments, municipalities collect and handle huge volumes of personal resident data and sensitive information. As cities progress from AI pilots to full-on deployment, that data will become even more important. AI outcomes are only as good as the data it relies on. It’s up to municipalities to protect and preserve that data so that residents feel safe sharing it in the first place.

That can be difficult with a population where trust remains fragile. In 2026, the EY AI Sentiment Survey shows:

  • Seventy one percent of Canadians worry about AI systems being hacked or breached, making security the top concern related to AI adoption. 
  • Only 39% trust companies to protect their data when it is used by AI. 
  • Beyond cybersecurity, two thirds worry organizations won’t be accountable for AI driven harm, 59% fear AI decisions may conflict with personal values, and 72% say human oversight remains essential, even when AI systems perform accurately.

Those expectations don’t diminish when interacting with the public sector. In fact, deficient digital capacity and cybersecurity are among the top risks that government and the public sector face in Canada today. What’s more, this threat is expected to accelerate as artificial intelligence and quantum computing technologies mature. 

From a municipal perspective, cities will need to think through priorities like data privacy and ethics, as well as the risks with far-reaching potential impacts (for example, AI hallucinations and bias). These risks shouldn’t hold Canadian municipalities back from exploring, piloting and scaling strategic AI use cases. But they must absolutely inform the approach. At EY, we’ve built a responsible AI framework that helps public and private sector organizations establish governance by design. The principles include:

  1. Accountability
  2. Data protection
  3. Reliability
  4. Security
  5. Transparency
  6. Explainability
  7. Fairness
  8. Compliance 
  9. Sustainability

By addressing these priorities at the very beginning of the AI journey, municipalities can map out clear policies and guardrails to go beyond simply complying with regulations and actually build resident trust. 

Make AI progress at the municipal level by asking:

  1. Do we have a clear and understandable policy, code of conduct or other process in place that our people can follow when considering, developing or using AI? 
  2. Where do we have specific trust gaps that we must close — either with employees or residents — in order to build trust in AI? 
  3. As we scale AI use over time, who will be responsible for regularly assessing those guiding principles to account for changes (whether within technologies or in the population) and adapt accordingly?

Co-author: Zoran Grabovac – Senior Manager, Business Transformation, GPS


Summary 

Canadian municipalities can realize significant benefits from AI. That could include a newfound ability to provide higher quality services for residents, work more efficiently to manage fiscal pressures, improve productivity and enhance employee experiences.

To achieve AI’s potential, municipalities should start by identifying valuable use cases and creating a culture of innovation; one based on people-focused design and clear, understandable governance. This foundation sets the stage for building AI momentum, and scaling it right across municipal operations.

About this article

Authors

Related topics
Government & Public Sector
AI
Consulting

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.