Drummond commission could mean big changes ahead in infrastructure

The Report by the Drummond Commission released last week has recommendations that could have effects reaching far into the future for the work of consulting engineers.

The Ontario government set up the Commission on the Reform of Public Services almost a year ago and on February 15, Don Drummond, a former bank economist, delivered, saying “There’s pain in every single chapter.”

Drummond was told to find ways of reducing its deficit by making “long-term, fundamental changes to the way government delivers services.”  He has done this partly by looking at areas of duplication and programs that can be redesigned.  Drummond was not allowed to make any recommendations that would involve increased taxes.

Among the recommendations for the infrastructure and real estate sectors, the commission’s report recommends that the province implement full cost pricing for water and wastewater services. It notes that the average capital investment in municipal water and wastewater services “chronically lags what is actually needed by $1.5 billion per year.” It says that the government needs to look at Alternative Financing and Procurement (AFP) as a more useful tool in this sector, which presumably means more privatization. The commission says that full-cost pricing in water and wastewater services encourages conservation — “an area in which Canada desperately lags the world’s best.” It also says, “the electricity sector already operates on a cost recovery model; so too should water and wastewater services.”

The commission also recommended reviewing the Ontario Clean Water Agency “to evaluate the merits of restructuring it as a for-profit, wholly owned government entity.”

For transportation the report suggests that the situation in the Greater Toronto and Hamilton Area is especially problematic. Gridlock already costs an estimated $6 billion annually in lost productivity and yet the area is expected to see a huge influx of people which will put more strain on the infrastructure. The region already has the longest round-trip commute times in North America.

“Public transit must surely be part of the solution,” says the report. However, it notes that the current plans for public transit made under a scheme outlined as “The Big Move” lacks financial commitment.  “Overcoming [a] massive funding gap is the elephant in the transit room,” says the report.

For solutions, the report recommends that the province undertakes a national transit strategy with the federal government and other provinces. Such an approach would consider the ways different jurisdictions are raising funds for transit, such as congestion charges, road tolling and regional gas taxes.  The commission also advocates more open dialogue with the public about how to fund the province’s transit needs.

On the topic of real estate, the report notes that most of the province’s considerable holdings are “old” with an average age of 46. The government holds properties estimated at $14 billion, including office buildings, jails, courts, hospitals, etc. making it the largest owner of realty in the province.

In order to reduce the considerable costs of operating and maintaining these buildings, the commission wants the province to find ways of more efficiently using the space it currently owns. It also says that the ministries that use the buildings should pay market prices.

The commission’s recommendations also affect the electricity sector, in particular the government’s green energy initiatives. The commission recommends eliminating the Ontario Clean Energy Benefit and reviewing the Feed-in-Tariff program, making adjustments such as lowering the initial prices offered in FIT contracts to “discourage any reliance on public subsidies.”

The section of the report dealing with the environment and natural resources notes that the respective provincial ministries have taken on greatly expanded responsibilities and yet their financial resources and staffing levels have not kept pace.

The report says “transformational changes are essential to improve how government operates in this area.” It recommends moving towards full cost recovery and user pay models in the area of environmental programs, and “where the beneficiary can be identified, the cost burden of providing these services should be placed on the beneficiary’s shoulders rather than the public’s.”

The report specifically mentions the shortfall that exists in the area of water permits and suggests more industries, including construction, mining and energy should pay to obtain permits to withdraw water from our lakes, rivers etc, whereas presently only high consumers such as soft-drink producers and cement manufacturers pay for the privilege.

The commission also repeated calls for reducing the overlap and duplications in the area of environmental assessments and approvals. It notes how often multiple jurisdictions that can be involved in approvals — agencies and ministries of both the federal and provincial governments, as well as the municipalities and conservation authorities. The commission therefore recommends reforming the environmental approvals process and streamlining the environmental assessment process.

Another recommendation was to “rationalize and consolidate the entities and agencies involved in land use planning and resources.”