Canadian Municipalities Embrace AI and Data Analytics to Advance Service Delivery and Overcome Barriers

2025 MNP Municipal Report: Canadian Local Governments Embrace AI and Analytics for Progress

Local governments across Canada are improving how they use data and artificial intelligence (AI) to serve their communities more effectively. By focusing on resources, data accessibility, and internal skills development, municipalities are working towards consistent progress nationwide.

The latest MNP Municipal Report, created with Leger, shows that 23% of Canadian municipalities currently use AI, with over half exploring or planning its adoption. This trend is driven by the need for efficient service delivery, better decision-making, and stronger community engagement.

Top Priorities for Local Governments in 2025

Municipalities continue to prioritize core areas such as cyber security, customer service, and technology updates. However, AI, data analytics, and smart city projects have gained significant importance this year. Key priorities include:

• Cyber security and privacy (78%)
• Citizen experience and service delivery (65%)
• Technology modernization (63%)
• Artificial intelligence (48%, more than double from 2024)
• Smart cities and digital infrastructure (47%, up 12% from 2023)

Data-driven decision-making is gaining momentum, but municipalities need more than new tools—they require new approaches to delivering programs and services that leverage their data effectively.

Challenges Slowing Progress

Despite clear priorities, municipalities face several barriers:

• Insufficient resources (50%)
• Complex decision-making and outdated processes (44%, doubled since 2023)
• Legacy technology systems (43%)
• Lack of subject matter expertise (36%)

While resource constraints have eased somewhat, issues related to legacy policies and risk aversion are growing challenges. Nearly a third of municipalities lack formal AI guidelines, and about half rely mostly on Excel for analytics, limiting deeper insights and predictive capabilities.

Cyber security remains a concern. Although 83% feel prepared to handle data privacy and cyber threats, fewer than 35% consider themselves very prepared. Training in cyber security is a top internal need for about 75% of municipalities, highlighting the importance of building capacity alongside technology investments.

Current Uses of AI in Municipalities

Municipalities using AI focus on practical, citizen-centered applications, such as:

• Customer service chatbots and engagement tools
• Public safety and environmental monitoring
• Human resources functions like scheduling and recruitment

Self-service platforms, including mobile apps and online portals for taxes, permits, and issue reporting, are also priorities. These tools reduce administrative workloads and improve citizen convenience.

Supporting Municipal Success

Municipalities don’t need a complete overhaul but require clear guidance, confidence, and resources to advance. MNP continues to provide relevant insights that help local governments address challenges and seize opportunities effectively.

Whether adopting new technologies, improving service delivery, or building internal capacity, every community benefits from a practical, data-driven approach to decision-making.

Download the full report here: MNP Municipal Report

About MNP LLP

MNP is one of Canada’s leading professional services firms, serving individuals, businesses, and organizations since 1958. With a focus on strong relationships, MNP offers accounting, consulting, tax, and digital services tailored to local needs. Learn more at www.mnp.ca.