Op-Eds 2011

Hints of a warming trend in Mulroney-Harper relations

Special to National Post | December 8, 2011
Say what you will about Brian Mulroney, but it’s hard to ignore his legacy as prime minister. Even Stephen Harper, the man with an edge, has returned to acknowledging the tributes and substantive accomplishments that have come Mulroney’s way.

There was a time when Harper told his ministers to avoid Mulroney because of the Karlheinz Schreiber fiasco. But this week Harper sent two cabinet ministers, an M.P. and a Senator to a ceremony and private dinner where Mulroney was given the Grand Cordon of the Order of the Rising Sun, the highest honour the Emperor of Japan can give to a foreigner.

The honour was in recognition of Mulroney’s leadership in issuing the formal apology given to Japanese Canadians who were forcibly interned and had their assets confiscated during the Second World War.

Mulroney had proposed an apology while opposition leader, but Trudeau rejected the initiative. On September 22, 1988, with a contingent of Japanese Canadians who had been interned in the gallery, Prime Minister Mulroney stood in the House of Commons to apologize for our wartime atrocities.

At a private dinner of twenty on Monday evening at the residence of the Japanese Ambassador, Ed Broadbent described the apology as his most emotional moment as a parliamentarian. Bev Oda, the first Japanese-Canadian cabinet minister, officially represented the Harper government at the dinner where she poignantly spoke of her personal relationships with some of the interned. What was most important to them, she described, was the honour that was restored to those who had been senselessly victimized by the Canadian government.

Finance Minister Jim Flaherty attended, as did Derek Burney, who was a counsellor in our Japanese embassy early in his career before serving as Mulroney’s Chief of Staff, and later as our ambassador to the U.S.. Senator David Tkachuk and Burlington MP Mike Wallace were there to represent the Canada-Japan Inter-Parliamentary Group, suggesting that trade was also a topic of the evening’s discussion.

When being photographed at the dinner, complete with sash and Imperial badges that signified the honour, Mulroney quipped “this is first time I am wearing more jewelry than Mila!”

Perhaps Stephen Harper will attend the next honour that comes Mulroney’s way, just as he did in 2006 when Mulroney was recognized as Canada’s Greenest Prime minister; and when the government of Ukraine awarded Mulroney with the Order of King Yaraslav for supporting Ukranian independence in opposition to communist tyranny.

Perchance the 25th anniversaries of the Free Trade Agreement and the release of Nelson Mandela, and the inevitable recognition that comes Mulroney’s way, will be moments when Mulroney and Harper are seen together? It’s easy to imagine that such a reunion would produce a picture that gets front-page, above-the-fold treatment across the country.

The ice was broken before, when Laureen Harper attended an event in Montreal that marked the 25th anniversary of the swearing-in of Mulroney’s first government. What remains is an end to the personal estrangement between the current and our 18th prime ministers. How reconciliation impacts on Harper’s political prospects is unclear, but there is no doubt that it would be welcomed in Quebec and in the old Progressive Conservative clan.

If Harper is looking for a speech to mark these occasions he could dust off the remarks he delivered when Mulroney was honoured by the Government of Ukraine with its highest honour.

“He is the first Prime Minister who defended free trade. At the time he was vilified for the free trade deal. But history will remember him as the leader who set Canada on a path to unprecedented economic growth and prosperity.

He is also the Prime Minister who took action on acid rain and invested billions of dollars in environmental research. His environmental initiatives won him no credit from the left or right, at the time. But now he’s remembered as Canada’s greenest Prime Minister, by no less than the current leader of federal Green Party.

And this is the Prime Minister who came to power in 1984, five years before the fall of the Berlin Wall, determined to restore Canada’s reputation as a reliable ally in the struggle against communist tyranny… Under his leadership, Canada took a stand. We stood against oppression in Ukraine and elsewhere… We stood with the brave people of Ukraine, of the Baltic republics, and the other captive nations of Central and Eastern Europe. Today they are free people living in free nations. And they are grateful to the strong Western leaders who stood firm against the communists and their apologists. Leaders like Ronald Reagan, Margaret Thatcher, John-Paul the Second, and Brian Mulroney.”

While Harper might not again put Mulroney in the same category as the Pope, there is no doubt there is much he could say about the Mulroney legacy that is worthy of celebration.

Please mind the debt, Mayor Watson
Bob Plamondon, Ottawa Citizen, 01 Dec 2011: A.15

For the second year running, Mayor Jim Watson has delivered on his promise to hold the tax rate increase below 2.5 per cent. On top of that, it looks like the city will come in below the 2011 budget by $5.7 million. That should be enough for homeowners to give him two thumbs up, especially since the 2.39-per-cent tax hike for 2012 is below Ottawa's inflation rate of 2.6 per cent.

The mayor's budget was so popular that it flew through council committees with rubber-stamp-like efficiency. Community consultations were perfunctory affairs. And Wednesday, council approved the mayor's budget with no substantive amendments.

It's hard to argue with success, but that doesn't mean taxpayers should ignore what's in the budget. To go beyond the political spin, I reviewed the nearly thousand-page budget document to prepare this fact-based analysis.

With city spending rising in 2012 by $95.5 million, or 3.6 per cent, it's easy to see why this budget did not stir up much controversy, especially among city staff. Despite the reduction of 47 full-time-equivalent positions, most of the spending increase is for wages and benefits, which are going up by $54.2 million, or 4.4 per cent. Part of this increase is attributable to higher pension plan contributions. (The TSX being down 10 per cent this year is no burden to those with fully indexed defined benefit pension plans fully protected by the property taxpayer.)

Within specific budget areas we see variable increases, such as fire services up 6.3 per cent; paramedic services up 4.4 per cent; forestry up seven per cent; and information technology up 9.8 per cent. One of the more modest areas of growth is for elected officials, which rose only 1.3 per cent. In terms of new spending initiatives, Watson allocated $6 million to what he calls "Council Priorities," a hodgepodge of special projects in areas such as forestry, parks and planning.

Despite tough economic times, the city curiously established a $500,000 initiative for staff recruitment, and $250,000 for leadership training. You would think with the high pay and cash-for-life benefits that the city would be inundated with applications from would-be job hunters.

Offsetting the $95.5 million in additional spending are increases to user fees and service charges of $21.4 million (5.4 per cent); taxes from new properties of $20.8 million; and projected productivity savings from an initiative called "Service Ottawa" of $9 million. Ingraining efficiency targets in the budget is a good way of encouraging innovation while also forcing managers to reconsider low value-added services. And the province is kicking in an additional $12.8 million for shared-cost programs.

Watson is bravely holding firm on finding route efficiencies at OC Transpo. In his budget speech he observed that Ottawa's capacity standard on buses is almost 20 per cent lower than the Toronto standard. Nonetheless, the cost of transit to the property taxpayer, net of a fare increase of 2.5 per cent, is going up by 4.1 per cent.

Perhaps the biggest shift in thinking for the 2012 budget is the city's willingness to take on debt. Despite record low interest rates, the city will be paying $3.8 million more in borrowing costs in 2012 because of escalating debt.

Watson, always known to be cautious about borrowing money, has become a debt convert, boasting in his budget speech that the city's 10-year, $75-million bond "sold out in the blink of an eye" at a 2.87-percent interest rate. Over the coming four years the city's debt-servicing charges are expected to increase by 25 per cent. Ottawa's top-tier credit rating will not be in jeopardy, but taxpayers can expect a bigger chunk of future 2.5-per-cent tax increases will be devoted to debt servicing.

The centrepiece of the city's capital program is a $340-million initiative called "Ottawa on the Move." Funds are to be spent over three years on resurfacing, road reconstruction, sidewalk improvements, cycling infrastructure and rehabilitation of structures. Watson may be right that spending on capital, rather than on operations, is a wise course to follow, but I would still like to know how accumulating cheap debt today fits into the long-term debt model when the bills for the $2.1-billion light-rail project come due.

It's worth noting that the City of Toronto recently endorsed the Watson approach to budgeting. But to get to 2.5 per cent, Mayor Rob Ford had to reduce spending and increase transit fares by 10 per cent. Toronto faced a bigger challenge because last year it used reserves to hold the line on taxes, something Ottawa wisely avoided.

Overall let's give Watson high marks for keeping the tax increase below the inflation rate, with an asterisk around increasing spending by $95 million. I don't mind higher capital spending and borrowing, provided that there is a corresponding offset in operating costs to keep the tax increase below the rate of inflation. This will be Watson's challenge for next year's budget.

Bob Plamondon is a public policy consultant who has advised the city on financial and performance issues.
The John A. Macdonald Parkway?; Not everyone can see the wisdom of renaming the street in front of Parliament after the great PM, but there is an alternative
Bob Plamondon, Ottawa Citizen,  10 Oct 2011: A.9.

About 18 months ago, a national debate was launched in these pages on the renaming of the street in front of Parliament Hill in honour of our first and greatest prime minister. Two former prime ministers - John Turner and Brian Mulroney - and some of the country's most notable historians - Andrew Cohen, Richard Gwyn, Jack Granatstein - quickly came on board before the esteemed editors of the Ottawa Citizen concluded, "The street belongs to Macdonald."

After a committee of Ottawa City Council voted to launch consultations, opposition was heard from those who never want to change our historical markers. We were reminded that Col. John By had a hand in the naming of Wellington Street (although there was no street in front of what is now Parliament Hill when Col. By laid out the city).

I am also loath to alter the markings of our ancestors, unless, of course, there is a compelling reason to do so. The bottom line is that there is a payoff to invoking our relationship with Macdonald that we don't get from the Iron Duke. That's because Macdonald is as relevant to the challenges we face as a nation today as he was 144 years ago at the time of Confederation.

I still believe that the best way to honour Macdonald is to place him at the foot of Parliament Hill, where parliamentarians and Canadians alike can be forever inspired by his vision and skill. Despite the best efforts of Councillor Peter Hume and a number of his colleagues, the renaming is unlikely to make the agenda of the current administration. As much as I would like them to follow in the footsteps of a predecessor council that turned Maria Street into Laurier Avenue, the focus of the current council is elsewhere.

Regardless of their decision, the national debate featuring Macdonald and Wellington has allowed us to get know both of these giants a little better. Meanwhile, the brilliance of Macdonald is being introduced to a new generation of Canadians. The CBC recently produced an exceptionally good movie titled John A: Birth of a Country. Richard Gwyn's much anticipated second volume on Macdonald has also just been released.

In the course of the debate on the street renaming, many thoughtful alternatives to Wellington Street were proposed to me directly and on social media.

Some suggested that Macdonald should not be recognized without a link to his sidekick, Sir George-Etienne Cartier. I have resisted the Cartier linkage (as we have done with Ottawa's airport and a major bridge) to focus on the entirety of Macdonald's career. Macdonald died in office, 18 years after Cartier's passing and there are strong reasons to recognize our first prime minister in his own right.

Whatever the options, there is a risk of damning Macdonald with faint praise if the tribute is not significantly grand.

Giving regard to the legitimate opposition by archivists who want to preserve Wellington Street as it is today, as well as the complexity of making a change that involves navigating multiple orders of government, I propose that we rename the Ottawa River Parkway the Sir John A. Macdonald Parkway.

It is an elegant and prominent route that delivers visitors directly into the parliamentary precinct. It is beautifully maintained by the NCC and patrolled by one of Sir John's great creations, the RCMP. There are many scenic lookouts, and even a beach.

There are no addresses to change on the parkway. Being a relatively recent addition to our national infrastructure, it has limited historical significance as a promenade. While new, the route into our nation's capital was no doubt well used in the days around Confederation.

Having spoken with many federal officials, as well as some of the opponents of the Wellington renaming, I believe the parkway by the Ottawa River could be named for Macdonald with widespread enthusiasm and pride.

In 2015 we will commemorate the 200th anniversary of Macdonald's birth. It would be a wonderful tribute to walk, bike or drive up Sir John A. Macdonald Parkway to launch this capital tribute. He is the man who made us.

Bob Plamondon is the author of Blue Thunder: The Truth about Conservatives from Macdonald to Harper.




The not-so-magic number
Bob Plamondon, Ottawa Citizen, 19 Sep 2011: A.11

Many politicians determined to maintain popularity and hold power follow a strategy that's affectionately named for the main character in the classic children's story, The Three Bears. For the politically savvy Goldilocks inspires most decisions where policies are never too hard, never too soft, but fall somewhere in the inoffensive middle where criticism and opposition is least likely to find fertile ground.

For Ottawa City Council, Goldilocks has given them the 2.5-percent solution.

That's what they tell us we can expect for property tax increases for the next four years. Transit fares for 2011 went up a similar 2.5 per cent. And staff recently recommended that taxi fares rise by, you guessed it, 2.5 per cent.

But is 2.5 per cent a good number?

It's certainly better than what was achieved by the previous council, when property taxes went up on average by an annual rate of 3.5 per cent. That rate was far too hot for most taxpayers.

While these tax increases were disappointing, the previous council had determined in a moment of clarity what the appropriate rate increase should be. In 2007, council unanimously passed a target tax-rate increase that was part of a comprehensive and coherent fiscal framework. The tax increase was based on what taxpayers could afford to pay, defined to be no greater than the rate of inflation as determined by the Consumer Price Index for Ottawa. While they never met their target, the intent was to protect those on fixed incomes, or at least those with incomes indexed to inflation.

As many seniors know, their monthly cheques have not been rising by 2.5 per cent. For 2010, the federal superannuation increased by only 0.5 per cent. For 2011, Canada Pension Plan benefits increased by 1.7 per cent. On July 1, 2011, Old Age Security Benefits increased by 1.3 per cent.

Is it really such a big deal if the property-tax increase runs above inflation by a mere one per cent? Let's take the case of a recent retiree paying $4,000 in property taxes. If property taxes go up 2.5 per cent a year for say 20 years, the tax bill would rise to $6,394. If property taxes increased with inflation at 1.5 per cent the tax bill would be $5,307. In the 20th year, the 2.5 per cent solution leaves the taxpayer with $1,087 less to spend on everything else. Of course it's much worse if a senior's income is not fully indexed to inflation.

When campaigning for the top job, Jim Watson wisely indicated that property taxes would increase by no more than 2.5 per cent. That gave him the opportunity to come in under this mark should finances permit. Of course in making his commitment he took the risk of what might ensue should inflation exceed 2.5 per cent.

For 2011, council landed on a property tax increase 2.45 per cent, but that was after reaping the benefits from a $24-million provincial upload. That upload was largely spent on providing additional services and capital improvements. In other words, council could have limited the tax increase to the rate of inflation, or better yet to zero, had they not opened up the purse strings.

Inflation aside, we need to ask if 2.5 per cent is the right increase to cover expected cost increases at City Hall over this term of council. With close to half of all city spending dedicated to wages and benefits, it is worrying that the long-range financial transit plan tabled by the city treasurer in July estimated the inflationary impact on wages for capital works to be 3.1 per cent. If we don't want to dip into reserves, wage increases at 3.1 per cent would put a major dent in the city's ability to maintain services. It looks to me that the city needs to stiffen its resolve at the bargaining table.

The good news for Goldilocks is that taxi cab drivers have given us a happy ending for their part of the story. At community and protective services committee last week, they declined the 2.5-per-cent increase proposed by staff. Cab drivers, in this instance, demonstrated they understand the affordability issue.

The bottom line is that taxpayers have to live within their means and so should the city. Whether it is taxi fares or property taxes, the city's first point of reference should be the CPI or less. While 2.5 per cent might seem not too high, or too low, if it's more than inflation, Goldilocks might not be so happy in 20 years time when the tax man cometh.

Bob Plamondon is a public policy consultant.

Credit: Bob Plamondon; Ottawa Citizen

Ottawa is cursed with tall buildings
Bob Plamondon, Ottawa Citizen,  22 Aug 2011: A.9.

Among the many architectural and design sins that have doomed our nation's capital, the push by our municipal and federal governments in the late 1960s and early 1970s to abandon height restrictions in the downtown core ranks at the top of the list.

With the exception of former mayor Charlotte Whitton, short-sighted municipal officials of that era on both sides of the river did little to sustain what had been their sacred legacy to preserve: the undisputed and majestic prominence of the Parliament Buildings and Peace Tower.

When the disputed Place de Ville development went before the Ontario Municipal Board, Whitton argued that the historical significance of Ottawa transcended politics and private interests. But the majority on council, as well as developer Robert Campeau, thought the city needed a modern look and an illuminated skyline. While Whitton's battles with Campeau were ferocious, he had too many friends in high places for the outcome of the conflict to be in doubt.

As a result of 1970s thinking, when entering Ottawa today from almost any direction, the dominant presentation is one of glass and concrete. To get a good glimpse of the Parliament Buildings you need to be along the banks of the Ottawa River, or on Wellington Street (which I affectionately call Sir John A. Macdonald Boulevard).

Contrast the Ottawa/Gatineau experience with Washington D.C., where the prominence of their key monuments and buildings remains unobstructed, just as it was 100 years ago. Their boulevards, buildings and monuments exude the city's historic character, reminding visitors and residents alike of the import of being a nation's capital. When making her pitch, Charlotte Whitton used to say, "If you want to see how to do it right, take a look at Washington."

So eager was Ottawa council for a skyscraper that they approved a zoning amendment to allow Place de Ville to proceed at the same time they were conducting a study on what building heights should be permitted. While the matter was being contested before the Ontario Municipal Board, the feds were openly salivating about becoming tenants of this grand edifice. When Campeau was questioned about the requirement to pierce the 150-foot limit he blamed his bankers, whom he insisted had demanded greater density and a stronger cash flow to support the loan.

So eager was the Trudeau government to promote a chic skyline and a federal presence on the Quebec side of the border that it awarded the contract for the $160 million Les Terrasses de la Chaudiere office complex to Campeau's company without having issued a competitive tender.

The decisions of municipal governments, and the acquiescence of the federal government, permitted a succession of monstrosities to not only pierce but dwarf the city's 150-foot limit. Place Bell (308 feet), Place de Ville (367 feet), Place du Portage (331 feet), Terrasses de la Chaudiere (406 feet) were just the beginning of the deluge. Unfortunately the precedents established in the 1970s have survived, which successive governments have only seen fit to follow.

Today we are adding to the blight of office towers in the downtown core with a series of residential condominiums. Few proposals, if any, meet the zoning regulations. But then a dance ensues where a developer reluctantly feigns to sacrifice on the design and is given a variance in exchange for some modest or illusory short-term community benefit.

The city plays this game because it likes intensification; where tax dollars roll in without having to invest in infrastructure and where servicing costs are low. But intensification can be achieved with buildings that are six to 12 storeys, without upsetting or destroying communities and without having to go through the re-zoning charade.

The fixation on tall buildings has now extended beyond the downtown core. The 32-storey Metropole blights the Westboro landscape. The proposal for a 35-storey condo project at Dow's Lake is a prime example of development on steroids. I might like the view from the penthouse on the 35th floor if I lived there, but it hard to imagine it will be anything but an eyesore from the street.

Councillor Peter Hume proposed a simple and sensible suggestion in the last election to ending the horsetrading that goes on every time a developer wants to build a monument to themselves and their bottom line. He argued that the best way to avoid mistakes is to grant no zoning amendments on height. Hume suggested the Official Plan should sensibly "pre-zone" and fix height restrictions, such as five-storey height limits for traditional main streets and 10 storeys for arterial main streets. Whether council accepts this view is up for debate.

As to Place de Ville and Place Bell, as these buildings deteriorate, let's hope future generations will have the good sense to see them demolished and then replaced by more interesting structures that do not denigrate the skyline and obscure Parliament Hill from view and prominence.

Bob Plamondon is a public policy consultant.


Surviving scandals nothing new to Tory leaders


National Post | March 14, 2011
What makes a Canadian political scandal? Before Adscam, Shawinigate and the Munsinger Affair, you have to go back — way back — almost to the days of Confederation itself. The granddaddy of domestic imbroglios is the Pacific Scandal, a tale of big bad businessmen, suspect campaign contributions and accusations of foreign interference in Canadian affairs. The scandal drove prime minister John A. Macdonald to despair and his government from office, all over the building of the transcontinental railroad.

The second Canadian federal election took place in 1872. Facing possible defeat, Sir John A. Macdonald and his Quebec lieutenant Georges-Étienne Cartier feared their railroad project would flounder under the Liberals, and with it their vision for a Canada that spanned a continent. They cast about for a Canadian-led team to manage the railroad project, but no single company was capable of assuming so huge an undertaking.

Enter Sir Hugh Allan, who represented the Canadian Pacific Railway Company. Allan lobbied to preside over the railroad consortium, and in the heat of negotiations with Cartier, offered “financial assistance” to help fund the Tory election campaign. But like many political donations of the day — or, we have learned, days since — the cash came with strings attached that the unsavoury Allan schemed to pull in his favour over the course of contract negotiations.

After the sum of $25,000 was deposited into a bank account for Macdonald’s use in the 1872 election campaign, the prime minister desperately sought more to secure victory. He pressed Allan’s solicitor, John Abbott (a future prime minister himself): “I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today.”

The Conservatives won the vote, but just barely. The 99 Tories would need to rely on a few of the six independents to maintain power in the 200-seat legislature. And despite Allan’s timely infusion of funds, Macdonald’s ally Cartier was defeated.

Not long after the election results were confirmed, rumours began to swirl that huge cash contributions from the railway companies had found their way into Conservative party coffers. On April 2, 1873, Lucius Seth Huntington, the Liberal member from Shefford, Que., rose in Parliament to demand an inquiry into the granting of the charter to the Canadian Pacific Railway Company and financial contributions to the Conservative party from Sir Hugh Allan sourced in Canada — and the United States. The Conservative forces defeated the Liberal motion, but proposed in its place a five-member committee of Parliament to look into the matter.

The press leaped on the story, dubbing it the “Pacific Scandal.” On July 18, the Toronto Globe and the Montreal Herald reported the contents of Macdonald’s desperate telegram to Abbott. The publication caused a huge outcry – and political peril for the embattled prime minister.

Macdonald was dumbfounded: How did these telegrams find their way into the hands of the press? “It is one of those overwhelming misfortunes that they say every man must meet once in his life. At first it fairly staggered me,” he said.

In fact, the telegrams had been stolen from Abbott’s office, a la Wikileaks, and sold to Montreal Liberals.

A depressed and despairing Macdonald turned to a familiar but unfortunate source of comfort: The bottle. When he disappeared for a few days to collect himself, rumours again swirled, this time that he had committed suicide. Macdonald reassured his friends in telegram messages that the rumours were greatly exaggerated. “It is an infamous falsehood,” he wrote. “I never was better in my life.”

Throughout the scandal, Macdonald steadfastly maintained his innocence. The Canadian Pacific Railway had been promised nothing in the way of government contracts, he was certain. Macdonald believed he could avoid scandal because the money was used for political ends and not for personal gain. He told his friends not to worry too much about Allan getting rich because, “Where he is going his gold coins would melt.”

To Macdonald’s horror, it turned out that American financiers had indeed been the supporters of Allan’s scheme. The opposition did not accept the government’s attempt to diminish the scandal and refused to attend the Parliamentary committee.

Fearing the loss of a confidence vote, Macdonald secured a temporary prorogation of the House of Commons from governor-general Lord Dufferin. Months later, just as Parliament was about to reconvene, Lord Dufferin wrote to Macdonald, in tone and language the prime minister had not expected: “In acting as you have, I am all convinced that you have only followed a traditional practice … but as minister of justice and the official guardian and protector of the laws, your responsibilities are exceptional and your personal connection with what has passed cannot but fatally affect your position as minister.”

The next day, Macdonald met his Cabinet to discuss the controversy and consider the question of resignation. Although some of his members were wavering, Macdonald remained confident and thought he could defend the government in Parliament. At 2:30 a.m., at the conclusion of a five-hour speech in the House of Commons, Macdonald made an impassioned plea for his government based on its past accomplishments:

“I have fought the Battle of Confederation, the battle of Union, the battle of the Dominion of Canada. I throw myself upon the House. I throw myself upon this country, I throw myself upon posterity, and I believe that, notwithstanding the many failings of my life, I shall have the voice of this country in this House rallying around me … I know … that there does not exist in this country a man who has given more of his time, more of his heart, more of his wealth, or more of his intellect and power, such as they may be, for the good of this Dominion of Canada.”

It was a rousing speech, but the defections were enough to undo Macdonald’s working majority. After meeting with the governor-general, Macdonald resigned on Nov. 5, 1873.

Alexander Mackenzie, the leader of the opposition Liberals, formed a government and seized the opportunity to capitalize on the Tory demise by going to the people on Jan. 22, 1874 in the first Canadian election to use a secret ballot. With the Pacific Scandal fresh in voters’ minds, 129 Liberals were elected, compared with 65 Conservatives and 12 independents.

In the aftermath, Macdonald resigned as party leader, saying, “My fighting days are over … I will never be a member of any administration again.” His offer was refused by the Tory caucus.

But Macdonald knew that politics comes with its ups and downs. “When fortune empties her chamberpot on your head, smile and say, ‘We are going to have a summer shower.’” Despite the setback, Macdonald returned as prime minister in 1878, an office he held until his death in 1891. Apparently there can be life after scandal, even one as great as this.
How to do budgeting better
Bob Plamondon, Ottawa Citizen, Ottawa, Ont] 09 Mar 2011: A.13.

When it comes to city finances, most residents care only about what they pay in property taxes. But where else in their lives do they hand over $3,000 or $4,000 without questioning how the bill was put together? So today I look at what's right and what's wrong about how the city prepares its budget.

I hold the view that government finances need be no more complicated than a household budget. But the city's budget document is such a Byzantine maze that experienced finance professionals struggle to grasp its entirety. For the 2011 budget we are given the 2.45-percent property tax increase, 919 pages of detailed schedules, but not much analysis in between. For those familiar with how a business reports to its shareholders, this is the equivalent of tabling divisional cost accounting reports without providing a summary operating statement or balance sheet. Councillors work with the information they are given, but they need much better high-level financial information to discharge their stewardship responsibilities.

The capital budget is particularly bereft of analysis. I would not be comfortable, for example, approving the city's $622-million 2011 capital budget until I saw the models on how the proposed light rail project will impact city finances. I would insist on seeing the business case for the light-rail project, and an analysis on whether using gas tax revenues and development charges to fund the associated debt will squeeze out other important capital projects. That does not mean the light-rail project should be put in jeopardy, but having clear insight on its long-term financial impact will help us to make better decisions today on capital spending and borrowing.

Other governments produce a "fiscal outlook" with each budget -a set of long-term projections on a range of operating and capital budget accounts to show where they are headed -while the city produces only short-term and confusing continuity schedules.

The city generally does a good job at making budget estimates, but there are areas where it struggles. A low estimate on revenue from building permits last year resulted in a $5-million surplus in that account. The staff estimate for supplementary taxes for 2010 was low by $11 million. A better estimate would have given us a 2.9-per-cent property tax increase last year, rather than 3.9 per cent. Staff are inclined to be conservative when making estimates, but this puts slack into the budget, which often gets absorbed by deficiencies in other areas. Better that the slack be taken out of the budget to ensure the pressure remains on city management to meet departmental and branch budgets.

It may seem counter-intuitive, but budget time is the worst time of the year to make important budget decisions. In this high-pitch period, there is simply not enough time and evidence before councillors to review the city's base budget. Council tends to focus on budget pressures and options, while essentially piling one budget on top of the other where everything done in the past is accepted as a given.

There are two changes that the mayor could initiate to get at the city's base budget. First, he could request a monthly operating statement with variances computed from a seasonally adjusted budget. By exploring the variances monthly, he can reveal those areas where savings opportunities might be captured on a timely basis.

Second, the mayor can undertake a detailed review of every city branch over his four-year term. This modified form of zero-based budgeting would put every dollar spent under the microscope by examining service levels, performance indicators, efficiency measures, contracting out opportunities, as well as asking the basic question of whether the city should be providing the service in the first place. Branch reviews usually involve an external component, as was done recently when the American Public Transit Association looked at OC Transpo operations. Every branch and service should be reviewed at least once every four years.

To his credit, Mayor Jim Watson has made some improvements to the budgeting process. First, the budget was built around an upper limit on property taxes. While 2.5 per cent exceeds inflation, the target in the city's fiscal framework, the mayor recognizes that there is a limit to what taxpayers can afford.

Another positive about the 2011 budget is that there is clear political accountability.

In prior years, staff produced the initial estimates before the mayor and council took up the challenge function in full public view. This year the mayor did his review in private, arguably a more productive environment, but he still had to defend his decisions with council and the public.

Another twist this year is that the budget was presented jointly by the mayor and city manager. The city manager has not only accepted an efficiency target of $18 million, but he has also allocated it to specific city branches. This gives branch directors a lower envelope to manage from the beginning of the fiscal year.

On the general matter of public oversight, higher orders of government face budget scrutiny from an official opposition, think tanks, bank economists and even a parliamentary budget officer. It would be useful to property taxpayers, as well as for the mayor and councillors who are not accountants and economists, to have external independent guidance as we grapple with the city's fiscal framework and long-range financial plan.

If the city needs an expert committee to advise on cycling, then why not one on city finances? That way, even if taxpayers don't want to comb through a 919-page budget, they will know there are checks and balances in the system to help protect their long-term financial interests.

Bob Plamondon is a public policy consultant who has advised the city on financial and performance issues.

Without new programs, Watson could have gotten to zero
Bob Plamondon, Ottawa Citizen, 05 Mar 2011: B.7
In the first of a two-part review of the City of Ottawa's 2011 budget, Bob Plamondon looks at how the mayor has met his budgetary election promises.

Jim Watson has delivered on his key year-one election promise by bringing in a property tax increase of 2.45 per cent, well below the average increase over the past four years of about 3.5 per cent.

What the mayor wants us to know about his budget is presumably contained in the city's eight-page pamphlet titled Draft Budget at a Glance. While accurate, this is far from the complete picture. To understand how the mayor fulfilled his election commitments, we need to comb through 919 pages of figures and schedules, something few of us have the time, inclination or expertise to undertake. So here is my one-page take on the city's 2011 operating budget.

Under the mayor's plan, net operating spending at City Hall will rise by $78.7 million, or 3.4 per cent. This spending increase would have been 4.5 per cent had it not been for the $24.2 million in costs absorbed by the provincial government for the Ontario Disability Support Program.

City staff will not suffer under the mayor's budget. He has identified only 20 staff positions that would not be filled from the city's hiring plan: a minuscule percentage of the 14,543 full time positions at City Hall. The budget for wages, benefits and overtime in 2011 is rising by $66 million, or 5.4 per cent. Even after the $18-million efficiency target given to city management there will be 345 new full-time hires planned for City Hall, an increase of 2.4 per cent. The rising wage bill reflects not only the new hires, but also a projected average increase in wage settlements of 2.75 per cent, plus a $10-million bump in pension contributions. There will also be pay grade increases, such as $715,000 for staff working in long-term care homes. Given the current level of inflation and general economic uncertainty, city staff should be thanking property taxpayers.

The budget to run city facilities is rising by $11.5 million over the 2010 forecast, a 12.6-per-cent increase. We know that hydro rates are rising but this increase does seem spectacular and deserves an explanation, which is not clearly provided in the budget materials.

Beyond pressures for staff costs and facilities there is $20.8 million for new programs and initiatives, most of which were included in the mayor's election platform:

-. $10 million for housing and poverty;

-. $2 million for economic development;

-. $1.5 million for forest maintenance and the emerald ash borer problem, resulting in a 19.5-per-cent increase in the forestry budget;

-. An 11.7-per-cent increase for public health, including $450,000 for a brain injury prevention strategy and youth suicide programming.

It is worth noting that without the new programs and services, the property tax rate could almost have been frozen in 2011.

Pressures from a growing city and various user fee changes means that property taxpayers will pay 6.7 per cent more for fire services, 9.4 per cent more for paramedic service and 9.9 per cent more for parks and recreation. There is even an additional $175,000 to cover the rising costs of material and supplies for the Nepean Equestrian Park.

There are natural offsets to some budget pressures, including about $25 million in taxes that the city rakes in from new homes and buildings. The city also gets some breaks, such as $1.8 million from the rising price of our recycled materials.

But, overall, new revenues and provincial uploads do not offset generally rising costs plus the new programs added by the mayor in 2011. Beyond imposing restrictive budget targets on the Police Services and the Ottawa Public Library, the mayor needed about $26 million in "budget changes" to get to a 2.45-per-cent property tax increase.

Under the heading "living within our means" the city's communication team highlights $2.6 million in measures most likely to generate public applause:

-. a 10-per-cent cut in the budget for the mayor's office, for $80,000;

-. no increase in councillors' office budgets with a savings of $245,000;

-. $300,000 cut in discretionary travel and conferences;

-. $1 million in legal and consulting services; and,

-. $1 million in communications services.

But other than the $7.2 million in cuts to OC Transpo service levels (i. e. bus routes), many substantive and controversial changes are found only in the bowels of the budget:

-. $8.6 million dip into reserve funds to bridge finance OC Transpo "service optimization";

-. $3.8 million to reflect a tighter estimate for "staff vacancies," the gap period when staff positions are not filled;

-. $1.3 million from the snow removal provision (reserves will be used if necessary to clear the snow);

-. $835,000 to maintain new parks (which means a reduction in overall service standards across all parks); and,

-. deferral of a $450,000 increase in community agency funding.

The bottom line on the 2011 operating budget is a significant investment in new programs and services, targeted budget reductions, and nothing that will upset labour peace at City Hall. Much of this was made possible by the province absorbing $24.2 million in costs, something the mayor helped to deliver while he was at Queen's Park.

Whether taxpayers realize it or not, this budget is very much what they voted for last Oct. 25.

Bob Plamondon is a public policy consultant who has advised the city on financial and performance issues for the past seven years.



A Watson Party majority; Ottawans didn't just elect a new mayor and council, they elected a powerful government capable of transforming the city

Bob Plamondon, Ottawa Citizen 28 Feb 2011: A.9.


On Oct. 25, the citizens of Ottawa shook up City Hall by electing a new mayor and 10 new councillors. But perhaps without realizing it, they did far more than give the council chambers new blood: the voters elected a government.

While there were no political parties on the ballot, the "Watson Party" earned a solid majority government, without much opposition. While it's not an official government, if it looks like a government, acts like a government and talks like a government, then it's a government.

Like in most governments the mayor has a cabinet, only it's not called a cabinet but the finance and economic development committee. Chaired by the mayor, and populated with committee chairs and a few others, nothing important will happen at City Hall that does not go through this powerful executive committee of council.

Like any other government the "Watson Party" sets and controls the agenda. What used to takes hours and days to hammer out around the council table now takes seconds and minutes. Meetings are not only brief and businesslike, but dissent and criticism is in short supply. We no longer see rancour, division and the revisiting of issues at council. And issues don't come before council unless outcomes have been determined.

It is unlikely in this new regime that we will see staff on the firing line receiving barbs and harangues from outraged councillors trying to score political points in the media. Whatever dirty linen there is at City Hall is not going to be aired in public.

Perhaps the most significant change is that the mayor and his office have clear command and control of the budget. By holding the purse strings, the mayor has the ultimate tool to keep council members and city management under his wing. We now have a government where the buck truly stops with the mayor.

Today, Mayor Jim Watson speaks for the majority on council and is the undisputed CEO of the City of Ottawa. To this, all I can say to our new mayor is, "well done." Most citizens want the mayor to lead, and they want to hold the mayor accountable for results.

By forming a de facto government, Watson is able to establish a vision, develop a coherent strategic plan, set priorities and then execute on his plan with the full support of the city's management team. Our city manager, who on paper reports to council, can implement the mayor's agenda with confidence and purpose.

While this new form of government may cut short debate at the council table and offend some procedural purists, I say let's judge the mayor not on process but on outcomes. I will not miss the pointless debates and unending acrimony that reflected poorly on the city in the past.

So far the mayor has used the strength of his government to significant effect. By that I don't refer to savings he achieved on the swearing-in ceremony or by his fuming over the cost of official pictures. With a $3 billion operating and capital budget, the city spends more than $8 million every day of the year so highlighting symbolic changes matters little.

But on the big picture items there is some cause to be impressed with what the Watson government has delivered so far. The draft budget respected the mayor's campaign promise to keep tax increases below 2.5 per cent, although he was helped by $24.2 million in uploading by the provincial government without which taxes would have risen close to five per cent. On the spending side the Watson government, with funding from the provincial upload, was able to make a substantial investment in social housing, one of his key campaign promises. He took on the police services and brought them within his 2.5-per-cent universe without a shot being fired. And he has launched a courageous plan to constrain projected cost increases at OC Transpo by daring to tamper with poorly used bus routes.

There is not much in the 2011 city budget that will give rise to citizen complaint, but holding to the proposed OC Transpo route changes will be Watson's first test of leadership later this year. If he wants to sustain his 2.5-per-cent tax promise going forward, his next test will come when facing city unions at the bargaining table. Wages and benefits consume more than one-half of the city budget so any effort to keep taxes down means that the mayor will need to be a tough negotiator.

Beyond controlling costs, a strong mayor with an eye for detail can hold staff accountable for how well they meet citizen needs. I propose the mayor use his political capital and give City Hall a much-needed public report card, similar to what is in place in New York City. They have a comprehensive online performance management system that, to use a Watson expression, "holds some feet to the fire."

Whether it is paying attention to the reliability of garbage pick up, the time spent to fill in a pothole, or the cost of maintaining a city bus, Watson could transform the workings of our city government in the same way that Rudy Giuliani reinvented New York City.

Watson is in a strong position to make city government not only more affordable, as he has promised, but more effective, as he is able. Let's encourage him to use the government he was given to take on the challenge with unfettered enthusiasm.

Bob Plamondon is a public policy consultant who has advised the city on financial and performance issues for the past seven years. This week he will be analysing and reporting on the city's 2011 budget for the Citizen.
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