02/15/2012


The much anticipated Drummond Report was released today. The report spans over 500 pages with 362 recommendations across a range of areas where the Commission believes the government has an opportunity to address the deficit. The Commission has put forth key recommendations based on limiting provincial spending growth to 0.8% annually through to 2017-18.

There are many recommendations throughout the report that relate to municipal governments. Some of the recommendations reflect work that AMO and its membership have been promoting – matters such as POA fine collection enhancements, changes to the labour negotiation/arbitration process, long range infrastructure planning/asset management, and making sense of the land use planning system. The Commission is also recommending altering the upload agreement and the Ontario Municipal Partnership Fund. The Commission is clear that when it speaks about consolidation of programs, the efficiency in administration is the goal and that accountability is not about excessive rules and reports, but about outcomes.

At this point, what the government may or may not do with the recommendations is not known. But the Finance Minister has asked for reaction and input and AMO will do just that. Our analysis of all of the recommendations is underway in order to have the necessary discussions with the government before the provincial budget is completed.

Key Elements of the Commission’s Report

Infrastructure

The Commission made several recommendations related to municipal infrastructure management and funding. These are: better use of detailed long term asset management practices in broader public sector organizations to better manage assets; a strategic asset management plan targeted at the municipal sector that looks at funding options, and private sector involvement. The report also asks whether stable and predictable funding from the province for infrastructure will contribute to more effective and efficient infrastructure management. The Commission also commented positively on the use of alternative financing and procurement methods and recommends full cost recovery for municipal water and wastewater services be implemented.

Transportation

The Commission recommends better coordination and rationalization of public transit networks in the Greater Toronto and Hamilton Areas to better integrate Go Transit/Metrolinx services with municipal transit. The objective is to reduce overlap and duplication through rationalized routes, coordinated fares and common purchasing. The report seeks “honest discussions” regarding revenue solutions such as tolling or congestion charges. Increasing efficient delivery of transportation in the area serviced by the Ontario Northland Transportation Commission was also discussed. Finally, the Commission also recommended that the Ontario Government work with the Federal Government to pursue a national transit strategy.

Environment

The Commission reviewed the organizations involved in environmental protection and planning in Ontario and recommended that: the roles of planning agencies such as municipalities, Conservation Authorities, provincial ministries and the federal government be reviewed and rationalized. It also noted that streamlining the Environmental Assessment process between the federal and provincial governments should be pursued. It further states that full cost recovery for water taking charges be used to ensure adequate funding for environmental protection is maintained. The Commission also recommended that Ontario Clean Water Agency be reviewed with a view to transforming it into a for-profit government entity to improve its competitiveness and ability to attract qualified personnel.

Law enforcement and the administration of justice

The Commission calls for the review of core responsibilities of police to eliminate their use for non-core duties including an examination of alternative models of police service delivery and calls for improvements to the collection of unpaid Provincial Offences Act fines.

Labour Relations

As a principle the report stated that “the labour relations system in Ontario should be balanced, effective and transparent”. A number of the report’s recommendations propose changes to the current interest arbitration system include: the establishment of an independent tribunal or commission to create, maintain and manage a roster or panel of arbitrators; establish time limits on the process; and develop specific and well-defined objective criteria that arbitrators would be required to account for in formulating their awards/decisions.

The report further recommended that the government facilitate a voluntary movement to centralized bargaining for municipalities- particularly in relation to police and firefighter bargaining. It was noted that, “The benefit of this voluntary approach of centralization for municipal bargaining is that municipalities might not be completely “centralized,” but rather become “more centralized” in bargaining. The larger municipalities, or some groups of them, will tend to bargain together, and, likewise, the smaller municipalities will bargain together but separate from the larger ones.”

Finance - the upload and OMPF

Of note in particular from the Commission’s report is the following two paragraphs describing provincial-municipal fiscal relations:

“Between 2010 and 2018, provincial support is projected to grow by 5.2 per cent per year. Such a rate of growth is simply unaffordable. It significantly exceeds the 0.8 per cent annual growth target for total program spending identified in this report. A portion of the projected growth comes from the remaining $500 million of uploading. Excluding that, support would grow by 3.5 per cent per year — a rate of growth that is still far in excess of our 0.8 per cent annual growth target. The projected 3.5 per cent annual growth in the absence of the remaining uploads can be attributed mainly to increased costs associated with uploads that have already been completed — the uploads of ODB and ODSP. As a result of factors such as increased caseloads, the costs to the province (and by extension, the effective savings to municipalities) of these already completed uploads continue to increase.

The Commission supports the general notion of the upload — these matters are better financed by the broader, more diverse provincial revenue base. And we realize that any change in the upload simply shifts the fiscal problem in the province from one jurisdiction to another; it does not solve it. Most of the province’s municipalities are also struggling with their budgets.”


The Commission recommends extending the period of the final $500 million of upload by another two years, so it is not complete until 2020.

The report recommends that,“beginning in 2013, the Ontario Municipal Partnership Fund (OMPF) declines to the planned $500 million by 2016”. The Commission suggests a $25 million decrease occur in each of the next four years beginning in 2013. AMO is concerned with this recommendation as OMPF is more than just a social programs grant. Equalization to rural and northern communities is an essential component of this Fund.Further analysis of the numbers used by Mr. Drummond is needed to get a better understanding of this recommendation.

The report also notes the province and municipalities must work together to establish an accountability framework that would track how municipalities are investing the “benefits” realized as a result of the uploads.

Relations with the Federal Government on Housing

Diminishing federal funding and the challenges posed by funding for short term programs in the area of social and affordable housing as a key pressure and risk. It is recommended that Ontario negotiate with the federal government to commit to a housing framework for Canada that includes long-term federal funding and encourages its housing partners, including municipal governments, to work with the federal government to secure this commitment.

Health

The Commission outlines numerous recommendations that focus on the key objectives of “achieving efficiencies” while “enhancing care”. This includes a 20 year plan to transform the current system moving towards a focus on health promotion and a transfer of health care management to a regional authority, most notably, the Local Health Integration Networks (LHINs).

The transformation begins with a 2.5% cap on health care spending through to 2017 -2018. This translates in to a cost reduction per person on health care by a total of 5.7% or 0.8% through to 2017-18. In total 105 recommendations on health care were put forward by the Commission. Many of the recommendations touch on the complex interfaces between municipalities and the health care system. For municipalities there are a number of potential implications related to funding and governance.

Local Health Integration Networks (LHINs)

The Commission recommends an expanded role and function for the LHINs at the same time as contemplating the need to reduce the number of LHINs and to better align boundaries. The recommendations as stated, would see the LHINs having greater authority and mechanisms to ensure efficiencies through consolidation, integration and alignment of health services within regions. Included, is a vision of representative bodies of specific health services, for example, long term care, being established to interface with the LHINs. The Commission also recommends that public health come under the LHIN umbrella and that all public health costs (the municipal 25%) be uploaded.

The Commission, does not speak to addressing governance or funding issues in relation to the expanded role and authority of the LHINs. In the event of the recommendations being implemented, this would be of great interest to municipalities and to ensure that a direct interface with municipal governments continue as long as they are funding and service delivery partners.

Long Term Care

A number of recommendations related to the growing costs and pressures on long term care homes. It recommendations a move to a focus on primary care and expanded home care services in an effort to divert funding away from more costly interventions that do not always provide the best health outcomes. The Commission also, however recommends to “resist the natural temptation to build many more long-term care facilities for an aging population until the government can assess what can be done by emphasizing to a greater extent the use of home-based care that is supported by community services.” While focused on the future, the recommendations do not contemplate current and near term pressures on long term care and how to address these.

Other areas of interest related to health. On the heels of the recently released report by Commissioners Francis Lankin and Munir Sheikh on reforming Ontario’s social assistance system, the report recommends moving away from targeting the Ontario Drug Benefit (ODB) to seniors and others in receipt of assistance towards a benefit available based on income. This would likely mean providing ODB to Ontario’s low income earners based on a certain income level.

The Commission also recommends not letting concerns about successor rights stop (health care and service) amalgamations that make sense and are critical to successful reform. Recognizing the challenges with transforming a system that includes union agreements, the Commission argues this should not be a stumbling block in achieving the proposed transformation of health in the province.

Full Day Kindergarten

The Commission recommends, foremost, the cancellation of the Full Day Kindergarten Program, given the cost to implement the program in its entirety. If full day kindergarten is cancelled, it is recommended that existing school space appropriately be used for child care. In the absence of the government accepting this recommendation, the Commission recommends reducing costs through changing the staffing model and delaying implementation out to 2017-18 rather than 2014-15.

Addressing school closures and capital asset pressures, the Commission recommends the government amend the Education Act to give power to the minister to order the sale of closed schools or other unused properties, recognizing unmet need for space across the broader public sector.

Social Programs

Over the past ten years, spending on social programs has grown on average 6.0 per cent per year. This includes both Ontario Works and the Ontario Disability Support Program (which has been growing by 5% per annually over the same period). In an effort to slow expenditure growth, the Commission provides numerous recommendations that focus on consolidating and streamlining service delivery across governments that will lead to efficiencies and reducing barriers to exiting social assistance-a concern that is referred to as the “welfare wall”. Many of the recommendations are not new in discussions on social policy, though implementation considerations will be of interest to municipalities. It should be noted the recommendations do not exactly reflect recent recommendations put forth in the second report on the social assistance review by Commissioners Lankin and Sheikh.

The Commission recommends moving aggressively towards a fully integrated benefits system that simplifies client access, improves client outcomes and improves fiscal sustainability through greater program effectiveness and reduced administrative costs. What this includes is a contemplation of a single benefit, a range of case management from automation to intense client focused, and streamlining and coordinating the number of employment services available to clients with Employment Ontario as lead. The Commission supports the recently released Mowat Report of Employment Insurance.

The Commission advocates for the federal government to establish a national income support program for people with disabilities.

The recommendations point to a potential shift in the municipal role on several fronts, such as the provision and oversight of employment supports, and areas of administration like provision of benefits. The recommendations offer a complex disentanglement of provincial and municipal responsibilities including moving to provincial administration in several areas including issuing of benefits. The Commission also recommends that any savings realized through a more streamlined and efficient approach be reinvested by increasing asset limits and raising basic needs and shelter amounts.