TORONTO – Ontario’s governing Liberals — or whichever party succeeds them — should work with the private sector to deliver public services at less cost, former Liberal finance minister Dwight Duncan said Thursday.
The cash-strapped Liberals are running an $11.3-billion deficit and have doubled the debt to $272 billion since they took office in 2003.
Duncan, who was treasurer from 2007 to 2013 when the province racked up record deficits, said all three parties will be compelled to look at more efficient ways to provide services.
Ontario has a “staggering” debt, insufficient infrastructure, gridlock in the Toronto area and an aging population that will drive up health-care costs, he said.
But this isn’t the “same old tired mantra of privatization,” said Duncan, who left politics last year for the private sector.
“The idea is to save money while delivering the same services and being able to apply the savings to those priority areas, whatever priority areas the government of the day identifies,” he said.
Many countries have saved money by working with private companies on prison management, health and administrative services, according to an Ontario Chamber of Commerce report that Duncan helped put together. But the province is lagging behind, it said.
Teranet, a private company that has a licence to provide electronic land registration services, is a success story, Duncan said. The Ontario government got $1 billion and 50 years of royalty payments in the deal and still controls fee increases, the report said.
But other deals were massive failures, such as Ontario’s Ornge air ambulance service, a not-for-profit entity that ended up under police investigation for financial irregularities. The auditor general rapped the Liberals on the knuckles for failing to oversee Ornge, despite giving it hundreds of millions of dollars.
“I concur Ornge did not work out that well and there are bad deals done,” Duncan said.
“There’ve been bad deals done in other areas on the whole privatization file. But that doesn’t mean you shouldn’t proceed.”
Controversies like Ornge can be avoided by opening up all contracts to public scrutiny and requiring companies to report any information that’s not commercially sensitive, said Josh Hjartarson of the chamber of commerce.
But the government must also ensure it has the right tools and skills to effectively manage the partnership, he said.
“Part of the lesson here (with Ornge) is that you can’t just take a public service, cut and lift it and place it out there in the realm to do its own thing,” Hjartarson said.
“What you actually need to do is what we call ‘re-engineer’ the retained organization.”
Private sector involvement isn’t appropriate for all government services, Duncan said. But health-care billing, issuing drivers’ licences and outpatient medical procedures are some areas that could benefit.
There are concerns that private entities will find ways to squeeze as much profit as they can from providing those services, such as paying workers less for the same work.
The cost savings won’t come from wages, but from improving business processes with better technology, said Hjartarson.
Contracts can also include a “windfall” provision, he said. If the private partner starts making too much money, the government can collect some of those gains.
Duncan said he tried to encourage contracting out of some government services when he was finance minister, such as the family responsibility office which collects money from deadbeat parents and spouses.
But he couldn’t always convince his colleagues to do it, he said. Some weren’t comfortable with the idea or didn’t think it was a good deal.
With good reason, said veteran New Democrat Gilles Bisson. Ontario’s history is littered with privatization schemes gone wrong, from the electricity system to electronic health records.
“Clearly what we don’t need to do is what he’s suggesting,” he said.
“And he’s not one to be preaching to Ontarians about how to better spend taxpayers’ dollars, because it seems to me he didn’t do a good job.”
The Liberals say they already operate a lean government, with the lowest spending program per capita among the provinces.
Finance Minister Charles Sousa has also asked for advice on ways of getting more value out of key public assets such as the Liquor Control Board of Ontario, Ontario Power Generation and Hydro One.
Duncan also mused about squeezing more returns out of them when he held the job. It’s a question all governments will have to ask themselves, he said.
“You’ve got literally billions of dollars tied up in the balance sheet of those organizations,” he said. “So you might be getting an eight per cent return from the LCBO but should you be getting a 10 per cent return?”