This arrangement seems pretty reasonable to me. If neither the Oak Bay PD nor Saanich / Victoria are unhappy, and the Oak Bay residents are happy to pay for what they are getting, who is put out?
In a general sense, I think that centres of excellence / specialists are a logical thing to have. If an extremely complicated criminal investigation is needed / if a particularly complicated medical surgery is needed / if a very specific point of law needs to be challenged before the courts etc… bring in the big guns. For most of the day to day operations, use the generalists who can handle 90% of the issues that come up.
It just seems like a good allocation of specialized and limited resources.