Class of March 24

1
Class of March 24

• Anticipating the final exam
• Anticipating the Ontario budget
• Student presentation on Ontario Internship
  Program and federal government Management Trainee
  Program (How do they work? What are the benefits
  to the individual and the public service?)
• Alternative Service Delivery
• Highway 407 case

2
Anticipating the Ontario Budget The Ask

• Cdn Fed of Ind. Business increase small
  business tax exemption threshold, dont increase
  minimum wage
• Cdn Manufacturers and Exporters cut corporate
  tax rate for manufacturers to 8
• Association of Municipalities of Ontario
  predictable municipal funding, more
  infrastructure investment
• Co-operative Housing Fedn of Canada -- 700 M to
  match federal housing stimulus (renovation,
  retrofit), 500M for new units
• Ontario Real Estate Association expand support
  for low and moderate income first time home buyers

3
The Ask, continued

• Childrens Mental Health Ontario 3 additional
  funding for childrens mental health centres
• Community Living Toronto 2 base increase for
  09-10, .50 increase in minimum wage
• Ontario Environmental Industry Association
  streamline approvals process for new
  environmental technology
• Ontario Confederation of University Faculty
  Associations -- 1 B in new money for
  post-secondary education
• UTSC funding for UTSC North Campus (part of
  bigger U of T proposal)

4
Alternative Service Delivery

• Public sector restructuring by sharing governance
  functions with individuals, community groups,
  private sector
• Spectrum of Organizational Forms
• Department
• Service Agency (Canada Revenue Agency, Parks
  Canada, Food Inspection Agency, Canada Border
  Services Agency, Service Canada?)

5
Alternative Service Delivery

• Crown Corporation (LCBO)
• Government as Investor (loan guarantees, e.g.
  example US Govt. to JP Morgan Chase to buy Bear
  Stearns, BoA to buy Merrill-Lynch, preferred
  shares in Citigroup, BoA)
• Public-Private Partnership (procurement of IT in
  Ontario and BC, shared costs and rewards)
• Privatization, usually accompanied by regulation
  and time limits (Highway 407)

6
Service Agencies

• Clear mandate and charter
• Full costing of activities
• Business plan, access to capital on business
  criteria
• Flexible staffing
• Entrepreneurial culture
• Federal-provincial cooperation

7
Crown Corporations

• Traditional vehicle for economic/policy
  intervention
• Government sole shareholder
• Minister ultimate decision-maker, board advisory
  and sometimes patronage
• Some evidence of recent choices of president and
  board members and president based on experience
  and expertise
• Capital from government borrowing
• Sask. Crown Investments Corporation
• Liquor Control Board of Ontario

8
Other Examples of ASD

• ServiceOntario kiosks IBM builds and maintains
  for a 1 transaction fee
• Nav Canada non-profit corporation involving
  major stakeholders in air navigation system
• Airport authorities non-profit corporations
  involving major stakeholders in airport
• Canada Post retail outlets franchising to
  improve service and break through bad climate of
  labour relations

9
Government as Investor

• Bailouts (recessions, one-industry towns)
• Investment funds (Canada Pension Plan Investment
  Fund, Norwegian state oil fund, sovereign funds
  of other nations now investing in US banks)
• US rules for bank investments
• -- limit dividends on common shares
• -- control executive bonuses
• Blakeney rules
• Be suspicious of bailouts
• Entrepreneur must have a stake
• Loan guarantee cash
• Monitor performance closely
• Use progress payments

10
Highway 407 Case

• Based on Mylvaganam and Borins, If you Build
  It. Business, Government, and Ontarios
  Electronic Toll Highway
• (see www.407etrbook.com)

11
Reasons for Development

• Reduce traffic congestion in 905 suburbs
• Support construction industry during early 90s
  recession
• Rae NDP government running deficits, finance
  through road tolls
• Use large contracts for quick delivery,
  supervised by small Crown corporation
• Develop leading edge tolling technology
  (transponder plus video-imaging) in an urban
  setting

12
Outcome

• Highway completed and opened in 1997, 6 months
  behind schedule, 80M over budget of 1 billion
  gt not bad!
• Traffic growth faster than anticipated and
  tolling technology works
• Harris Government wants to privatize something
  big before 1999 election ideology and money (but
  not the LCBO)

13
Highway 407 Privatization

• Government received 3.1 billion for a 99 year
  lease just before June 1999 election
• Successful concessionaire an Australian-Spanish
  consortium
• Rapid toll increases starting in fall 1999
• McGuinty promises to roll back tolls in 2003
  campaign
• McGuinty Government challenges toll increases in
  court concessionaire goes to court to restore
  plate denial for unpaid tolls

14
Outcome

• Courts uphold right of concessionaire to set
  tolls and require government to restore plate
  denial
• Out-of-court settlement announced 5 pm Friday
  March 31, 2006, Ontario drops appeals and
  concessionaire agrees to frequent user benefits
  program

15
Completing 407 East

• From Brock Rd to join Hwy 35/115
• Who will supply the capital? (government has an
  advantage over private sector)
• Who will supply the technology? (407 already has
  the technology, inefficient to introduce
  different technology, 407east will increase
  usage of 407 central and west)

16
Lessons Learned

• There were alternatives to privatization (public
  ownership or phased privatization)
• Canada lost an opportunity to have a firm
  developing leading-edge transportation tolling
  technology
• Transparency needed for major contracts

17
Class of March 31

• Student presentation on Ontario budget of March
  26
• Careers in the public service (continued)
• Public service human resource management issues
• Concluding comments