Paths to Prosperity - A New Deal

7/30/2019 Paths to Prosperity - A New Deal

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PATHS TO PROSPERITYA N E W D E A L F O R T H E P U B L I C S E C T O R

A n O n t a r i o P C C a u c u s W h i t e P a p e r

D e c e m b e r 2 0 1 2


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The years immediately ollowing the next election must be a time o major change or Ontario, a timwhen we all work together to get our province back on its eet and creating jobs again. To achievethat goal, we must rethink how we run government so that it provides the services we need at a prwe can aord. Ontarios $14.4-billion deicit tel ls us that we are a long way rom that position now.Without urgent action, the services we truly care about are at risk.

Thats why we are proposing a New Deal or the public sector. By ocusing on the core services thamatter most to taxpayers, we believe we can create a leaner public service that delivers more valueless money. Our New Deal will have a clear direction that sets goals, measures outcomes, and therewards the individuals who help us achieve those outcomes. We will value individuals innovation,hard work and delivery o top quality customer service. What we wont do is give perormancebonuses to 98 per cent o managers, just or showing up.

Ontarios civil service has not been producing the results the public needs, but the problem is notthe civil servants themselves. It is political leadership that has no vision or government other than make it bigger.

The Ontario PC Caucus believes that is not a pragmatic or aordable approach. Our goal is clear. Wneed a smaller government that ocuses on the things that government can do best. We will do lesbut do those things better.

This wi ll require getting government out o businesses where it doesnt belong. For example, whentoo many Ontarians are waiting to get vital health care services, do we really need a governmentagency borrowing money to oer online gambling to compete with PokerStars?

Diicult decisions will have to be made to bring the size o the public sector in line with taxpayersability to pay, but it is also a long overdue opportunity to renew and reocus our provincial civi l servi

We are conident that we will emerge rom this process with an eicient and eective civi l service towhich people will be proud to belong.

This Paths to Prosperity white paper presents our bold, new vision or transormational change in thpublic sector, and provides speciic reorms or eedback and consultation.

The Premiers job is to provide the best publ ic services and highest qual ity o lie that our economycan sustain. A successul public sector relies on private sector growth. Thats why I am so stronglyocused on creating new jobs and putting an end to the debt and government overspending that arholding our economy back.

Those are my priorit ies and they come rom the values o common sense and prudence that have lodeined our province. I believe that its time to get government working or you again, and thats whwill deliver.

Tim Hudak

Leader o the Oicial Opposition


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Government and business have never been a good combination. Goodgovernment should be about creating a rst class ramework or lie in its

jurisdiction. Good business is concerned with creating employment, opportunityand success. That is acilitated when government ocuses on developingadvantageous taxation, regulatory and inrastructure policies. When this allhappens in a planned and synchronized way, business prospers, people areemployed, tax revenues are generated and the essential services governmentprovides are never in doubt.

Governments that do well set their priorities in concert with the various sectors o society. Goodgovernments dont attempt to compete with or actually become part o those sectors themselves.

Basically, governments have no business being in business. Governments exist to govern. Goodbusinesses exist to employ a workorce and leverage it to create prosperity. At the same time, nothing

prevents a government rom being more innovative, more business-like or more responsive to consumertaxpayer) needs.

While we see a bloated public sector, we also see a core o intelligent, experienced workers who can assistn transorming our province into what it should be the leader in Conederation again. Working with ourpartners in the Ontario civil service, we can reorm outmoded processes and eliminate dated policies. Wecan update inormation and communication technology and programming, all aimed at conserving preciousax dollars and oering a positive experience to those interacting with government.

With these acts in mind, I envision an Ontario where government vacates the space best let to businesspeople. It shouldnt be the job o government bureaucrats to determine whether Sudoku scratch cards

are more protable than online poker. I government operates businesses and must use its considerableegislative power to create monopolistic conditions in which to unction and thrive, why not imagine whatcould happen i the private sector were oered an opportunity in the businesses dominated and controlledby an inecient bureaucratic structure.

To that end, the Ontario PC Caucus is putting orth ideas that will address some o Ontarios considerabledebt and, at the same time, oer a more competitive and enjoyable experience in the areas it now controlsexclusively. Think about the reduction in annual interest costs and those new dollars being used to providevital health and education services while research and market-driven rms compete or your business byoering better priced products and a wider choice simply because buyers needs and wants are at the root

o the entire process.

hope that this document oers not just ood or thought, but a new vision o how good things could beagain in an Ontario where government governs and business puts everyone to work or the good o us all.Please let us know what you think by contacting my oce through email at [email protected] by phone at 416-325-1415 (Queens Park).

Ontario PC Critic or Finance

Peter ShurmanM E M B E R O F P R O V I N C I A L P A R L I A M E N T ,

T H O R N H I L L


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Introduction

An Across the Board Wage Freeze

A Top to Bottom Program Review

Time to Fix Ontarios Broken Arbi trat ion System

A Smal ler Cabinet or a Smal ler Government

Competition Encourages Eiciency and Quality o Service

Creating a Twenty-First Century Civil Service

Open Government

Getting Value rom Government Businesses

Conclusion

C O N T E N T S

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PATHS TO PROSPER I TY

INTRODUCTION

Three numbers tel l us that the need to act is urgent.The irst is $14.4 billion. Thats the dierence betweenwhat the provincial government spends every year andwhat it takes in. The second number is $260 billion.

Thats how much accumulated debt government hasplaced on taxpayers, hal o that in the last nine yearsalone. When independent economist Don Drummondexamined the provinces books, he predicted this debtigure would increase to $411 billion within ive yearsunless spending is curbed.

In any normal enterprise, those numbers would have seto alarm bells and led to action long ago, but thats notwhat has happened in Ontario. Rather than respondto those alarm bells, the current government has hitthe snooze button.

How did we get into this mess?

Only a ew years ago, Ontario had a brie period obudget surplus and a government wondering how tospend that money. The big spending soon becamea habit, leaving government in a vulnerable positionwhen the recession hit. Other governments increasedspending to combat the recession, then cut it back.Ontario increased spending, then kept on increasing it.Even this year, ater our consecutive years o historicbudget deicits, the current government continued to

We believe that the number one thing we can do to create jobs and kickstart

business expansion is to get a grip on government spending.introduce hundreds o millions o dollars worth o newprograms despite having to borrow money to pay orthe programs it already had.

Thats got to stop.

Despite various tax increases, the current governmentisnt gaining ground on the deicit. Simple arithmetic tellsus government cant eliminate its deicit i it spends allthe new money it takes in. That approach to budgetingis like a dog chasing its tail.

At least the dog keeps up with the tail. The currentgovernment cant manage that, predicting that thisyears deici t will be larger than last years.

To eliminate the deicit, the next Ontario governmentmust substantially increase revenues, make big cutsto spending, or both. On the revenue side, we havea plan to bring in more money, but we wont do it byraising taxes. That would damage Ontarios still ragileeconomy. Instead, we will do it with policies that getpeople back to work and boost economic growth.When the unemployed are working and paying incometaxes again, and when businesses are expanding andmaking strong proits, this leads to more revenue orthe government.

Ontario Debt Levels

(Public debt as a percentage of the economy)

2003 2012 2017

Source: Ontario Ministry of Finance, Ontario Economic Outlook and Fiscal Review, 2012, page 104; and,

Commision on the Reform of Ontarios Public Services, 2012, page 74.

51%39%28%


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Unortunately, Ontarios budget problem is too bigto be ixed by growth alone. To balance the budget,government spending must be cut. Just slowing therate at which spending increases will leave a balancedbudget as a distant hope, not a real goal.

Ontario does not have the luxury o time to address theproblem. Lack o any meaningul spending restraintdespite years o deicits has let our province in a weakposition. We are vulnerable to another recession or a

Nowhere has the

combination of poor

public policy and swings

in the business cycle

done more damage than

in Ontario.Source: Canadian Federation o Independent Business,

Restoring Canadas Fiscal Fitness, 2011

We know that a wage reeze unaccompanied bystructural change ails to address governmentsundamental spending problem. The currentgovernments approach will provide only temporary,short-term relie. In order to balance the budget beore

March 31, 2018 the current governments plan totalgovernment spending must actually be reduced.

Thats why we are proposing a complete programreview. We dont intend to balance the books by makingsweeping, across-the-board cuts. Instead, we willmake a thoughtul and realistic assessment o programsand eliminate those with the lowest priority, and the

jobs that come with them. Thats the rational way toaddress the problem.

We will also re-examine every business that governmentis in, to determine i there is still a need or governmentownership, or real value or the public. O particularinterest are governments gambling and liquorbusinesses.

Beore the next election, we will put orward acomprehensive and integrated plan to balance thebudget and reduce taxes. This Paths to Prosperitywhite paper presents our vision or transormationalchange in the public sector, and provides speciicreorms or eedback and consultation.

credit rating downgrade that will push our $11-billionannual interest charge even higher, taking away moneywe need or health and education. We cant aord toput these services at risk.

To put the challenge in context, every other provincewith a deicit will be back to a balanced budget overthe next three years. There is no reason Ontario cantdo the same.

To balance the books, Ontarios next government willhave to make diicult decisions about which programs

oer the public the most value, and how much we canreally aord. Is it really worth borrowing $4.5 billionover the next our years to give you a temporary, 10 percent rebate on your hydro bills? Do we really need tospend $85 million subsidizing the purchase o electriccars in Ontario?

Our irst step to balance the budget would be a two-year wage reeze or the entire public sector, everyonein, no exceptions. That will save government $2 billionannually.


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Total Government Spending

Source: Based on Budget 2012 figures, Ontario Ministry of Finance

SALARIES AND BENEFITSFOR GOVERNMENT

EMPLOYEES

INTEREST ON THEPUBLIC DEBT

EVERYTHINGELSE

8.4%50.4%

41.2%

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AN ACROSS THE BOARD WAGE FREEZE

Ontario needs some time to restructure government and bring spending in line

with revenues. Thats why we are calling or a two-year wage reeze to save$2 billion a year. It is not business-as-usual in Ontario, and we cant aordbusiness-as-usual salary increases.

Despite the deicit, the current government hasailed to impose a hiring reeze, let alone a reeze onwages. While preaching the virtues o a wage reeze,government gave 98 per cent o its managers bonuspay, a $36-million cost.

The act is that government employee salaries andbeneits account or 50 cents o every dollar we spend.

We cant cut the deicit without putting a temporarybrake on those costs. We will also need to make dowith ewer government employees.

We believe there is also an issue o airness. Whileunions in the private sector struggled through therecession, government unions lived in a dierentuniverse. Private sector workers aced economicreality and saw stagnant wages and big job losses.

Those in the government sector saw steady raises anda big expansion o jobs. In the last ew years, Ontarioseconomy lost 300,000 manuacturing jobs and added300,000 government jobs.

Private sector workers have been paying or raises inthe government sector while suering themselves.We think its time or a little balance.

Some have argued that a legislated wage reeze violatesthe constitutional right to collective bargaining. I so,that would mean that governments lack the ability tocontrol their spending, even when their situation is asdiicult as the one in Ontario.

We dont believe that is either reasonable or the intento the Charter, and recent judicial decisions rom the

Supreme Court o Canada have delivered a clear rulingon the legitimacy o a public sector wage reeze whengovernment is acing a iscal crisis.

Theres no doubt that Ontario is in serious inancialtrouble. Our deicit and debt igures tell us that.Currently, Ontarios third largest expenditure is interestpayments on accumulated debt. I the status quoremains, Ontario will be acing a $411-billion debt inive years. Todays spending is simply unsustainable.

We believe that the most basic responsibility ogovernment is prudent control over how your moneyis spent. We dont believe the Charter was intendedto prevent that.

Had that control been exercised over the last ew


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PATH 1

Freeze the annual compensation o all employees in the public sector or

two years.

Cover all Ontario broader public sector employees, without exception, as

deined in the Public Sector Salary Disclosure Act. Members o Provincial

Parliament should also be included in the reeze. For the period o the

reeze, the government should eliminate perormance bonuses as well as

experience-related increases in union collective agreements.

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years, we wouldntbe in the position weare in today, but wecant change history.We must address the

spending problem theOntario governmenthas, and a wagereeze is a necessaryirst step. We believeit must be immediateand all inclusive. Thatsthe only air way toproceed. Its not rightto single out somegroups just becausetheir contracts areup, nor is it easible todeal with 4,000 unioncontracts one at atime.

Public Sector Jobs in Ontario

Source: Statistics Canada, Labour Force Survey, CANSIM Table 282-0089

Jobs(Thousands)

1 , 0 0 0

2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2

1 , 0 5 0

1 , 1 0 0

1 , 1 5 0

1 , 2 0 0

1 , 2 5 0

1 , 3 0 0

1 , 3 5 0

1 , 4 0 0


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In determining which programs have value, we will

draw inspiration rom the actions taken by other

recent and successul program reviews, such as

one implemented by British Prime Minister David

Cameron.

Less than one month ater taking ofce, Prime

Minister Cameron launched a comprehensive

program review called The Spending Review

Framework, which eventually led to 20 per cent

reductions, on average, in departmental budgets

over our years. Every departmental budget was

orced to justiy its programs against the ollowing

criteria:

Is the activity essential to meet governmentpriorities?

Does the government need to und this activity?

Does the activity provide substantial economicvalue?

Can the activity be targeted to those most inneed?

How can the activity be provided at lower cost?

How can the activity be provided moreeectively?

Can the activity be provided by a non-stateprovider or by citizens, wholly or in partnership?

Can non-state providers be paid to carry out theactivity according to the results they achieve?

Can local bodies, as opposed to centralgovernment, provide the activity?

The Spending Review Framework

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A TOP TO BOTTOM PROGRAM REVIEW

Its time or the Ontario government to set priorities, and the tool to do it is a

thorough and hard-nosed review o government operations. Tough decisionshave to be made about what Ontarios smaller civil service will do.

The top prior ity or the Ontario PC Caucus, and thepublic, is rontline health care. Even there, we willcareully examine spending to control costs. One studyby Boston Consulting Group and Bridgepoint Healthestimated the savings possible rom better local co-ordination o health care could be in the range o $4billion to $6 billion a year. In a previous white paper,Paths to Prosperity: Patient-Centred Health Care, weput orward a plan to achieve this target.

Setting priorities means that relatively less importantareas will ace cuts. It doesnt mean actuallyincreasing spending in 16 o 24 ministries, as thecurrent governments most recent budget did. Andthat despite a recommendation rom the governmentsown eiciency expert, Don Drummond, that spendingshould only increase in our ministries.

Our program review will be led by cabinet and involveboth senior public servants and outside experts. Butlets be clear, this is not a plan to study, it is a plan to act.

Common sense would suggest that a governmentalready borrowing to deliver programs shouldnt addnew ones paid or with even more borrowed money.

And yet, the most recent budget promised spendingon home repair tax credits, tuition rebates, welareincreases and a new und to pick winners and losersamong private businesses in southwestern Ontario.

This is spending we were living without only a year ago.In total, these new programs will cost taxpayers $2.5billion over the next our years. We propose eliminatingthem to reduce the deicit.

The recent Drummond Commission report oered

literally billions o dollars in cost-saving ideas. The vastmajority o those have not been taken up. Drummondswork will certainly help shape our plan to reducegovernment spending.

Weve already identiied a lot o bureaucracy we thinkis unnecessary. Ontario can live without Local HealthIntegration Networks, the administration costs oCommunity Care Access Centres, the Ontario Power

Authority and Waste Diversion Ontario. From a reviewo its perormance, it appears the Ministry o Economic


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PATH 2

We propose a rigorous program review that will examine every provincial

expense and transer payment. Unlike the blue ribbon panel headed by

economist Don Drummond, our program review would actively integrate

the work o elected oicials and senior public servants. This will lead

to a budget that actually reduces spending; decreases the size o the

government workorce; gets out o activities the government no longer

needs to be involved in; and introduces innovative service delivery models.

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Development and Innovation exists primarily to handout individual grants to private, or-proit companies.

Government spends too much time on things that dontmatter to taxpayers. Did you know our province still hasthe Ontario Film Review Board? This provincial agencyreports to the Ministry o Consumer Services, has 19paid board members and might have made sense whenit was created in 1911. But are the movies suitableor Michigan or Saskatchewan really not suitable or

Ontarians?

Our plan to reduce Ontarios 386,251 regulations byone-third over three years will help cut the cost ogovernment by reocusing civil servants on things thatreally matter. It will mean ewer people doing uselessthings on the public tab.

Heres an example. The ironically-named Service Ontariorecently told an Ottawa restaurant that it couldnt usethe name Union Local 613 because the bureaucratsthought the public might not understand that the

restaurant was a restaurant. Its time someone wokeup and smelled the coee.

There is no shortage o ideas or reducing governmentspending, but every decision has to be made in abigger context than whether a particular program isgood or bad in isolation. The real question is, can weaord the program? In many cases, the answer willhave to be no.

The decisions that are made have to be part o acomprehensive and integrated plan. As Drummondrecommends, the government should create a ormaldocument outlining its vision and path toward abalanced budget, as Prime Minister Brian Mulroney didin 1984 and Prime Minister Jean Chrtien did in 1994.

We believe that kind o priority setting in itsel will makethe civil service more eective by making clear whatthe governments objectives are. Its tough to do agood job when policies are reversed on a whim andbig spending plans come out o the blue.


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TIME TO FIX ONTARIOS BROKENARBITRATION SYSTEM

A mandatory wage reeze or government employees is only the irst steptowards reining in ballooning public service salary costs. While a wage reezeis necessary, it provides only a temporary solution to a permanent problem.

The underly ing problem is an arbit rat ion system thatalmost guarantees that government workers salarieswill go up every year, even i government has to borrowmoney rom oreign lenders to cover the raises.

Heres how it works. When negotiations break downbetween government and one o its many unions, thetwo sides go to an unelected arbitrator to settle thedispute. While the rules that guide arbitrators do makesome reerence to considering governments ability topay, arbitrators dont eel compelled to do so or theyuse the governments ability to increase taxes to justiyits ability to pay.

increase. The arbitrator typically doesnt side with theemployer and choose zero. Instead, he or she eitherpicks some number in the middle or awards what theprevious public sector union got.

This is a recipe or ever-increasing salaries. Manyireighters now make six igures and teachers areclosing in on that amount. These are important jobs,but pay needs to be kept in balance with what othersearn, and what taxpayers can aord to pay.

Private sector unions use arbitration too, but thesituation there is very dierent. When they make wagedemands, private sector workers need to think abouthow much their companies can aord, because theyneed to compete and stay in business. There is nosuch brake in the government sector.

The Ontar io PC Caucus brought orward legislat ioncalled theAbility to Pay Actthat would have addressed

these issues in a comprehensive way. Unortunately, thatlegislation came to a grinding halt with the prorogationo the Legislature. Thats too bad, because citiesrom Mississauga to Owen Sound to Thunder Baysupported it. They realized that government cantcontrol its spending in the long run without a betterarbitration system.

When the economy is growing robustly, governmentcan aord wage increases. When times are tough, itcannot. Thats the same reality that aects every otheremployer and worker. We need new rules that bringthe government sector in line with the private sector.

Historically, many

arbitrators have taken

the position that

governments have

an infinite ability to

pay simply by

raising taxes or

running deficits.Source: Emergency Services Steering Committee o

LUMCO, MARCO and OAPSB, April 2011

Even ater the current government pleaded to controlsalary costs, arbitrators still chose to do it their way.One arbitrator said he reused to be a minion ogovernment. Another said that without wage reezelegislation, the budget was o no binding orce oreect on him.

This is a good situation or government unions, not sogood or taxpayers. Say government comes to thetable and asks or a wage reeze, because thats all itcan aord, and the union asks or a three per cent pay


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PATH 4

Taxpayers deserve to know why theyre being asked to pay more or

government compensation costs. No arbitrator should consider that the

ability to tax gives government an ininite ability to pay. For all public

sector cases, independent arbitrators should be required to issue written

decisions within tight timelines that explain their reasoning. These

decisions should be made public in a central online location.

To ensure arbitration decisions relect local economic and budgetary

conditions, independent arbitrators should be required to compare the pay

and beneits o government workers with those in the private sector in the

same geographical area, not to other government workers in other partso the province. Factors like the local unemployment rate, changes in the

employers tax base or the iscal mandate o the province should also be

taken into account.

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PATH 5

In order to reduce the number

o government ministers making

spending decisions, reduce the

number o provincial ministriesrom 24 to 16, representing a

one-third reduction. Individual

ministers cabinet pay would be

tied to accomplishing budgetary

and economic targets, such

as reducing spending and the

provincial regulatory burden.

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A SMALLER CABINET FOR A SMALLERGOVERNMENT

Leadership starts at the top. We needa smaller, more ocused civil service,and that means a smaller, more ocusedcabinet too. Right now, governmentis wasting money on too many minorministries.

We are proposing a one-third reduction in the numbero government ministries, and a system o strongparliamentary secretaries to ensure ministers can

ocus on the big picture and parliamentary secretarieson oversight and eiciency. Like ministers, theseparliamentary secretaries should have clearly deinedroles and be responsible or answering questions duringQuestion Period. This will mean both ewer people incharge o spending decisions, and more people incharge o watching how dollars are spent. Its a vitallevel o oversight that is missing now.

When you have a large cabinet it also leads to puttingtoo many priorities on the table. The larger the group,the more good ideas come orward or time andenergy. The governments ocus needs to be on job

creation and reining in spending.

Our plan would eliminate, combine or realign severalcurrent ministries to achieve savings and increaseindividual accountability.

As we proposed in a previous white paper,An Agendafor Growth, the Deputy Premier will be appointedthe minister responsible or reducing Ontariosoverregulation. One o the above ministers would alsohave responsibility or Francophone Aairs and anotherwould be responsible or the Womens Directorate.

The Ministry o Finance should incorporatethe Ministry o Inrastructure

A new Ministry o Economic Growth should beresponsible or Energy, Economic Development,Innovation, Culture and Tourism

The Ministry o Northern Development and Minesshould be enhanced with a stronger role thatincorporates the Ministry o Natural Resources

and has a primary ocus on jobs and investmentThe Ministry o Health should include Long-TermCare, Childrens Mental Health and Sport

The Ministry o Community and Social Servicesshould include Children and Youth Services

The Ministry o Municipal Aairs and Housingshould be responsible or all Intergovernmental

Aairs

The Attorney General should be responsible orAboriginal Aairs

The Ministry o Government Services shouldinclude Consumer Services

The Ministry o Agriculture, Food and Rural Aairs

The Ministry o Training, Colleges, Universities andApprenticeships

The Ministry o Education

The Ministry o Citizenship and Immigration

The Ministry o Community Saety andCorrectional Services

The Ministry o the Environment

The Ministry o Transportation

The Ministry o Labour

One proposal for anOntario PC cabinet includes:

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COMPETITION ENCOURAGESEFFICIENCY AND QUALITY OF SERVICE

When it comes to providing services or taxpayers, government needs thebest quality at the best price. Its the same approach any o us would take,even when it comes to a small project like adding a backyard deck. It really

just makes sense or government to consider price and quality when spendingbillions o taxpayer dollars on government services.

People gather inormation about price and qualityby seeking competitive bids. What type o work isthe contractor oering to do, and at what price?Unortunately, government too oten ails to ask thosetwo basic questions. Rather than seeking competitive

bids that can oer taxpayers a better price, betterservice, or both, it simply goes with its own workers.

Thats why we see things like maintenance workers orthe Toronto District School Board charging taxpayers$143 to install a pencil sharpener and $3,000 to putin an electrical outlet.

When any group has a monopoly on providing aservice, price rises and quality goes down. The cureis competition. We think there should be more o itwhen it comes to providing government services.

The issue is not just cost, its also service. Its nocoincidence that you ind the best customer servicein the most competitive sectors o the economy. Whyshould taxpayers accept lower service rom governmentthan they would expect at a ast ood chain?

Were not talking about contracting out the jobs opolice oicers and hospital nurses, o course. Heresour test: I you can ind the service in the phone book,why automatically hire a unionized government worker todo it? We believe that things like building maintenanceand IT support should be open to competition.

Private sector service delivery is already happening insome areas. For example, GO Train contracts out orservices, using private sector employees at Bombardier,although GO Bus doesnt. At the municipal level, the cityo Ottawa contracts out most o its garbage collection,but lets its own employees bid and keep part o thebusiness so it knows what the real price should be.

The simple introduction o competit ion leads to atransormation in service delivery. Several casestudies have shown that this type o competition cannet taxpayers signiicant savings. A report prepared

by international consulting agency Deloitte ound ittranslated into savings between 10 and 30 per cent.Experience in the United Kingdom, Florida and Phoenix,

Arizona shows similar results.

We believe that government must get the bestdeal or taxpayers, and the way to do it is throughmore competition. In some cases, this might meancontracting out in more sensible ways to create a levelplaying ield. For example, the provincial governmentsinrastructure department called Inrastructure Ontario groups many small projects together so that in eectthey are one massive project. While acknowledgingeconomies o scale can exist when projects are nearthe same worksite, this bundling can also have theeect o narrowing competition or these projects tolarge, global companies or consortia, shutting out local,mid-sized Ontario companies. We need to ind waysto increase competition, not limit it. We would ensureair, open and transparent selection o sub-contractorsso that local irms and trade unions can compete ona level playing ield. Our approach will provide bettervalue or taxpayers and airer treatment or Ontariocompanies and workers.

Recommendation 3-5:

Do not hang onto public

assets or public service

delivery when better

options exist. Consider

privatizing assets and

moving to the private

delivery of serviceswherever feasible.

Source: Drummond Commission on the

Reorm o Ontarios Public Services, 2012


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PATH 6

Government should take advantage o areas where strong competition

already exists to open more services to competitive bids that oer better

service at a better price.

Managed competition is a term used to describe the opening up o public service delivery

to market-based competition.

Former Indiana Governor Mitch Daniels signifcantly reduced spending by contracting out

to the private sector commercial services like janitorial and ood services. As one example,

Indiana taxpayers saved 30 per cent per meal at its state correctional acilities.

When Seattle, Washington, examined managed competition it ound that, Even when it

does not lead to privatization, gathering data about private-sector costs may provide lower-

cost benchmarks or governmental departments to strive or in providing services.

Managed competition isnt outsourcing, and public sector unions oten win procurementcontracts. For example, over a 12-year period, the City o Charlotte, North Carolina,

awarded more than 8 out o 10 contracts to city employees.

Prime targets or the introduction o competitive bidding in Ontario include:

Maintenance o government auto feets and buildings

Inormation Technology

Permit inspections

Public transportation

Food services

Managed Competition

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CREATING A TWENTY-FIRST CENTURYCIVIL SERVICE

There is a new reality in Ontario, and government must adapt. The years oconstantly expanding programs, paid or with debt, have to be put behind us.What Ontario needs now is a civil service that can help shape a smaller, moreocused government that is eective in providing the health care, educationand inrastructure Ontario needs to prosper.

We need a civil service that does ewer things, butdoes them better. Above all, we need a civil servicethat puts customer service irst, and remembers thatit is working or the public, not vice versa.

Ontarios civil servants want work that is meaningu l.Unortunately, years o weak political leadership haveundermined the work o the civil service. Politicianshave made major policy decisions on a whim and thedirection o government policy can change overnight.No one thinks to consult the civil service.

When we talk about a New Deal or the public sector,we envision a civil service that once again attracts thebest and the brightest, and respects the experienceand knowledge they bring to the job. We envision astrong, proessional civil service that can develop andimplement bold, innovative and transormational ideas.We envision a civil service that works side by side with

political leadership to build a province unrivalled in itsconidence and prosperity.

Finally, we envision a civil service where hard work andexcellence are recognized and rewarded. I a young

nurse with all the latest training applies her resh ideasto get a patient back on his eet aster than anyoneelse thought possible, then we should recognize thiswith pay not based solely on seniority. The same goesor the teacher perorming minor miracles in helpingsomeone who always struggled to read learn the joyo a book.

Clear goal setting must come rom the top. We willprovide that direction. We will also lessen the burdeno useless rules that keep good people rom doingtheir job well. People must spend their time ocusingon results, not on process.


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PATH 8

PATH 7

Every Ontarian should have a right to apply and compete or a government

job opening. Today, the vast majority o civil service positions are never

posted publicly because o a closed-shop arrangement with unions. This

practice prevents new people and new ideas rom coming into the civil

service.

In our earlier paper on labour reorms we suggested an end to compulsory

union membership and dues. We believe this is especially applicable to

people like managers, program supervisors and senior policy advisors in

the Ontario civil service. We need to give them the opportunity to bargain

individually or their compensation, i they choose not to be represented by

a union.

Measure productivity and service quality, just like the private sector does,

and reward people with outstanding perormance accordingly. Once the

pay reeze is over, we propose a tightly managed system o perormance

pay that encourages employees to exceed expectations.

Senior policy advisors and policy analysts, inancial analysts,education ofcers, program supervisors, auditors, scientists, public health

laboratory co-ordinators, mediators, arbitrators, veterinarians,pharmacists, racing judges and stewards, psychiatric patient advocates,

chaplains, clinical co-ordinators, media relations and communications ofcers,

children and youth advocates, administrative co-ordinators,informationtechnology managers and specialists, inspectorsand investigators, labour market specialists, senior economic

oicers, economists, transportation enorcement supervisors,intergovernmental aairs specialists, epidemiologists, arts grantingofficersand many others.

Did you know these are unionized positions in Ontarios Public Service?

- 18 -


Source: Association o Management, Administrative and Proessional Crown Employees o Ontario (AMAPCEO),

website, Who we are, 2012.


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Aggressively expand the amount o government data made available to

the public online, both to promote transparency and accountability, and

to engage citizens in rigorously evaluating value-or-money and inding

eiciencies.

- 19 -


OPEN GOVERNMENT

In the era o Google and Wikipedia, people want and expect to be able to access

government inormation in a way that is easy to nd and understand, and they wantit now. Mail-based Freedom o Inormation requests are literally rom another era.

We believe that better government starts with moreopenness. Politicians have too oten tried to cover theirinappropriate actions with a cloak o conidentiality.

The ailure to provide ull documentation on the currentgovernments decision to cancel two gas power plantsis only the latest example o a troubling trend o secrecy.

Our approach is simple. Unless there is a real andcompelling issue o cabinet or legal conidentiality,

we will release all government documentation. Wewont wait or people to ask or expect them to have togo through the hoops o access to inormation laws.Government must become open by deault.

We will pass the Ontario PC Caucus Truth in GovernmentActto mandate the public sharing o inormation aboutcontracts or goods or services, grants, travel costs andexpenses. All inormation will be posted online, andeveryone will have the chance to help stop governmentoverspending.

Better government is the responsibility o everyone,

not just politicians and civil servants. By making moreinormation available to the public, we will enablepeople to participate in government by giving themthe data required to develop their own ideas orimproving government. Corporations dont sit on theirstorehouses o data. They are constantly looking orways to leverage this inormation in new and productiveways. Government shouldnt be any dierent.

In the District o Columbia, or example, the DC DataCatalog provides access to 498 datasets rom multiplegovernment agencies. Users can access data overthe Internet and process it in ways to request betterservice or their tax dollars. This isnt just about gettingmore inormation rom government, but providing it togovernment in a way that is useable as well. In 2009,

Open Government and Open Data are conceptsthat government shouldpushdata out, making it easilyaccessible, rather than having to search or it andpullitout. This transparency strengthens accountability andmakes government more responsive to taxpayers.

FixMyStreet.com in the United Kingdom allows peopleto use iPhone and Android apps to submit complaintsabout grafti, potholes and a number o other publicnuisances. These reports are then summarized online,and government reports on which are new problemsor recently fxed ones. You can even sign up or alertsabout problems in your local area.

In addition to enabling more government initiativesthat openly share data, the Ontario PC Caucus wouldimplement theTruth in Government Act, which would:

Expand the scope o Freedom o Inormationaccess

Provide ull disclosure o all goods or servicescontracts over $10,000

Provide ull disclosure o all travel and hospitalityexpenses

Provide ull disclosure o all grants over $10,000

Provide ull disclosure o all position reclassicationsor government workers

Sunlight Is The Best Disinfectant

1

2

3

4

5

a citizen competition using DC Data Catalog led to anapplication that combined the iPhones camera andGPS mapping device with a acebook app to reportpotholes and broken parking meters.

Government should be the leader in openness, accessand service not the last rontier.


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GETTING VALUE FROM GOVERNMENTBUSINESSES

To paraphrase a popular bank slogan, Ontarians are richer than they think.Unortunately, much o that wealth is tied up in government-run businessesat a time when the province is desperately short o money needed to build thesubways, highways, bridges and sewers required or economic growth.

To paraphrase a popular bank slogan, Ontarians arericher than they think. Unortunately, much o thatwealth is tied up in government-run businesses at atime when the province is desperately short o moneyneeded to build the subways, highways, bridges andsewers required or economic growth.

Combined, Ontarios gambling, booze and electr icitybusinesses alone are worth tens o billions o dollars.While those businesses do pay taxpayers a dividend,outside analyses have suggested that they arent aswell run as they should be. We have already suggestedin another Ontario PC Caucus white paper Pathsto Prosperity: Affordable Energy that the powergeneration and transmission businesses would beneitrom outside management expertise and partial privateownership by major Canadian pension unds. Webelieve its time to rethink governments role in thealcohol and gaming businesses too.

As a principle, we believe that government shouldstick to doing things that only government can do. Itsdiicult to argue that selling wine bottles and lotterytickets alls under that heading.

Take the Liquor Control Board o Ontario, which wasestablished in 1927, the same year Charles Lindberghlew the irst solo light across the Atlantic Ocean. Thename tells you a lot about the philosophy behind thisgovernment monopoly. Why does the sale o beer,wine and spirits in Ontario need to be run by a controlboard, when people in neighbouring Michigan, New

York and Quebec can buy the same products in cornerstores or grocery stores? In act, in whatever directionyou leave Ontario, consumers have more choices inwhere they can buy alcohol.

Some argue that only the government can prevent thesale o alcohol to minors. We do think thats important,but its a job already being done by the private sectorin thousands o restaurants, bars, resorts and arenasacross the province.

As a monopoly, the LCBO hasnt had to be smartabout the way it runs its business. Provincial auditor

Jim McCarter recently noted that the LCBO actuallygoes to some suppliers and asks them toraise theirwholesale prices to make them conorm to an LCBOormula. What real company would do that?

The LCBO is also planning to add 70 new stores over

the next two years at a cost o $100 million. We believethis government money would be better spent on MRIscans and lie-saving medications than new shel spaceor vodka bottles.

Competition is just the tonic the alcohol retail industryrequires. Ontario wineries have long wanted theopportunity to reach their customers directly throughstores in urban areas. Corner store operators andgrocery store chains have long requested the abilityto sell alcohol, as their counterparts do in many otherplaces. These are options the Ontario government

Most large retailers

use their buying power

to negotiate with

suppliers to drive down

costs. We found that

the LCBO does not

negotiate discounts forhigh-volume purchases

to reduce its costs.Source: Ontario Ombudsman Andre Marin,

in Canadian Press, June 21, 2011


21/28- 21 -


should seriously consider, not dismiss out o hand.

More choice and competition in alcohol retailing wouldbe air to both consumers and Ontarios award-winningwineries and rapidly growing crat brewers. Both

are entitled to a system with a level playing ield thatencourages variety and selection o product.

The province should consider all options or increasingchoice and competition, ranging rom the sale, partialsale or greater private ranchising o the LCBO butnot to create a new private sector monopoly. Theprovince should also end the Beer Store monopolyand allow sales in corner or grocery stores. Our goalis to get better value and service or consumers, andultimately or taxpayers. Competition and choice arethe ways to achieve that goal.

The case or change in gambling is even stronger. Webelieve that government must regulate the industry,but it certainly doesnt need to run its day-to-dayoperations. The track record o the Ontario Lotteryand Gaming Corporation is a sorry one. Casino proitshave dropped rom $800 million in 2001 to just $100million in 2011. The company itsel says it requires $1billion in public money to reresh its outdated products.

And this is ater pouring hundreds o millions o dollarsinto its struggling resort casino in Windsor, moneythat could have gone towards highways or hospitals.

We dont need government bureaucrats iguring outhow to compete in online gambling. It may make senseto regulate existing online sites, but not to build a brandnew one. Lets be honest with ourselves, who is goingto visit a government online site when they already playon Bodog, Bet365 and PokerStars? These establishedbusinesses excel in customer service precisely becausethey already ace tough international competition.Does anyone think the OLGC can compete with them?

Neither do we need unionized government employeesserving drinks in casinos or spinning roulette wheels.What we do need is to disengage government romthe daily business o gambling. It is time or thegovernment to become the responsible, respected

and tough regulator and not the operator trying tobully communities into accepting new casinos. Thegovernment should move to wind down the OLGC,and privatize its lotteries, casino assets and slotsoperations.

All these changes would take place under strictgovernment regulation that ensures an honest gamewith honest players. Our approach would take adeclining and poorly run asset and turn it into cash orthe kinds o subway, highway and sewer projects thatonly government can do.

Putting an immediate end to the OLGCs empire buildingplan or 29 new casinos across the province could alsocreate an opportunity or Ontarios horse racing industry.One option would be to give racetrack operators airst crack at buying existing slots operations at airmarket value, which could save their industry whilestill providing a good return to taxpayers.

We realize that political parties and governments havemused about getting out o the gambling and alcoholbusinesses beore. We think its time or action. Wedont believe that government needs to play a dominant

role in these businesses in the irst place, but the mostimportant point is that taxpayers need to get their moneyout o these businesses so it can be put to better use.

Transit expansion alone will cost billions o dol lars inthe next ew years. I government doesnt do that

job, no one wi ll. I government gets out o liquor andgambling, you can be sure those products will still beavailable to the public.


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The proceeds o signiicant asset sales must be used or strategic

purposes. The government should establish an Inrastructure Trust where

the proceeds o asset sales will be deposited and used to und regional

inrastructure priorities and pay down debt.

In jurisdictions around the world, the sale and distribution o beverage

alcohol is managed responsibly through government regulation, rather thanowning and running alcohol-retailing outlets. The province should examine

all options to increase competition and choice, including the sale, partial

sale or greater private ranchising o this non-core asset but not to create

a new private sector monopoly. This could raise signiicant unds to be

used to build economically critical inrastructure. The province should also

end the Beer Store monopoly and allow sales in corner or grocery stores.

Gambling is a legitimate activity, but the government o Ontario should

not be in the business o actively promoting it to help balance the budget.

There is an inherent contradiction in the government being the regulator

and also the day-to-day operator. We should move to wind down the

Ontario Lottery and Gaming Corporation, getting government out o the

gambling business. Government would become the tough regulator, not

the operator trying to bully communities into accepting new casinos. The

government should also end its oolish expansion into online gaming.

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23/28- 23 -


CONCLUSION

Its time or a new attitude towardsgovernment in Ontario. We dontundervalue the importance ogovernment, but we dont measure itssuccess by the number o employees,the amount o money spent or thenumber o programs delivered.

ahead wont be easy, and what must be done will notalways be popular. Thats why we are making ourproposals public well beore the next election. Ontarioneeds a serious, adult debate about its uture.

By the time o the next election, Ontario will have lostat least 18 months to indecision, months during whichthe jobs crisis was not addressed, annual governmentspending increased and the public debt continued togrow. This dithering and delay is not a path we cancontinue to ollow.

We believe that Ontario can once again have a vibrantand expanding private sector and a civil service thatis a model o excellence. We just need a governmentwith vision, a clear plan and the willingness to makethe tough decisions to get us there.

We need to lit the burden o deicit and debt that isholding our province back. Our New Deal or the publicsector will take us a long way towards that goal. Its notan easy goal, but we believe its one worth ighting or.

Ontarios debt has

been gathering speed

like a rock plunging

down a hill.Source: Kelly McParland, National Post,

November 26, 2012

The Virtuous Circle

ECONOMIC GROWTH

LEADS TO

BALANCED BUDGETS

BALANCED BUDGETS

LEAD TO ECONOMIC

GROWTH

Thats the old way o thinking, the kind o irresponsibleapproach that has gotten Ontario into the mess thatit is in today. Even now, when asked what it hasaccomplished, the current government routinely citestotal spending igures.

We believe the most important measure o governmentsuccess is the results its spending produces, not thespending igure itsel. To get results, you need to havewell-deined priorities, clear goals and a rational waysto measure progress.

We believe that the path to prosperity or Ontarioinvolves solid private sector growth and job creation,combined with a signiicant restructuring o governmentto get it reocused on its core tasks. Ontario will succeedwhen both the private sector and government aredoing their jobs well.

That means paring back the size o government toallow growth to catch up to spending and bring theprovinces books into balance.

We are conident that goal is achievable, but the task


24/28- 24 -


PATH 1

PATH 2

PATH 3

PATH 4

Freeze the annual compensation o all employees in the public sector or twoyears.

Cover all Ontario broader public sector employees, without exception, asdeined in the Public Sector Salary Disclosure Act. Members o Provincial

Parliament should also be included in the reeze. For the period o the reeze,the government should eliminate perormance bonuses as well as experience-related increases in union collective agreements.

We propose a rigorous program review that will examine every provincial expenseand transer payment. Unlike the blue ribbon panel headed by economist DonDrummond, our program review would actively integrate the work o electedoicials and senior public servants. This will lead to a budget that actuallyreduces spending; decreases the size o the government workorce; gets out

o activities the government no longer needs to be involved in; and introducesinnovative service delivery models.

Taxpayers deserve to know why theyre being asked to pay more or governmentcompensation costs. No arbitrator should consider that the ability to tax givesgovernment an ininite ability to pay. For all public sector cases, independentarbitrators should be required to issue written decisions within tight timelinesthat explain their reasoning. These decisions should be made public in a centralonline location.

To ensure arbitration decisions relect local economic and budgetary conditions,independent arbitrators should be required to compare the pay and beneits ogovernment workers with those in the private sector in the same geographicalarea, not to other government workers in other parts o the province. Factors likethe local unemployment rate, changes in the employers tax base or the iscalmandate o the province should also be taken into account.

PATHS TO PROSPERITYA N E W D E A L F O R T H E P U B L I C S E C T O R


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PATH 5

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In order to reduce the number o government ministers making spendingdecisions, reduce the number o provincial ministries rom 24 to 16, representinga one-third reduction. Individual ministers cabinet pay would be tied toaccomplishing budgetary and economic targets, such as reducing spending andthe provincial regulatory burden.

Government should take advantage o areas where strong competition alreadyexists to open more services to competitive bids that oer better service at a

better price.

Measure productivity and service quality, just like the private sector does, andreward people with outstanding perormance accordingly. Once the pay reeze isover, we propose a tightly managed system o perormance pay that encouragesemployees to exceed expectations.

In our earlier paper on labour reorms we suggested an end to compulsory unionmembership and dues. We believe this is especially applicable to people likemanagers, program supervisors and senior policy advisors in the Ontario civilservice. We need to give them the opportunity to bargain individually or theircompensation, i they choose not to be represented by a union.

Every Ontarian should have a right to apply and compete or a government jobopening. Today, the vast majority o civil service positions are never postedpublicly because o a closed-shop arrangement with unions. This practiceprevents new people and new ideas rom coming into the civil service.

Aggressively expand the amount o government data made available to the publiconline, both to promote transparency and accountability, and to engage citizensin rigorously evaluating value-or-money and inding eiciencies.


26/28- 26 -


PATH 11

PATH 12

PATH 13

Gambling is a legitimate activity, but the government o Ontario should not bein the business o actively promoting it to help balance the budget. There is aninherent contradiction in the government being the regulator and also the day-to-day operator. We should move to wind down the Ontario Lottery and GamingCorporation, getting government out o the gambling business. Governmentwould become the tough regulator, not the operator trying to bully communitiesinto accepting new casinos. The government should also end its oolishexpansion into online gaming.

In jurisdictions around the world, the sale and distribution o beverage alcoholis managed responsibly through government regulation, rather than owningand running alcohol-retailing outlets. The province should examine all optionsto increase competition and choice, including the sale, partial sale or greaterprivate ranchising o this non-core asset but not to create a new private sectormonopoly. This could raise signiicant unds to be used to build economicallycritical inrastructure. The province should also end the Beer Store monopolyand allow sales in corner or grocery stores.

The proceeds o signiicant asset sales must be used or strategic purposes.The government should establish an Inrastructure Trust where the proceeds oasset sales will be deposited and used to und regional inrastructure prioritiesand pay down debt.


27/28- 27 -


Please let us know what you think bycontacting us at:

[email protected]

416-325-1415 (Queens Park)

RM 450, Main Legislative BuildingQueens Park, Toronto ONM7A 1A8

email:

phone:

mail:


28/28

Documents

Paths to Prosperity - A New Deal