Light in the Tunnel

Commentary, Municipal Government, Frontier Centre

Winnipeg residents generally view their municipal governance as a mysterious process characterized by high costs and a lack of responsiveness. However, there is hope.

Throughout the year, a quiet revolution has been building steam down at City Hall. An unlikely engine for change, the Province of Manitoba, has provided the intellectual impetus.

The province’s best kept secret over the last decade is a successful, but low profile program called Special Operating Agencies (SOAs). It is modeled on a British concept pioneered during the 1980s. So far, it has converted sixteen services employing 600 civil servants into business units. They operate with considerable freedom from traditional bureaucratic systems that bog down service and raise the costs of many government functions.

SOAs are different because they reconfigure the relationship between the delivery of government services and the protocols that normally entangle it in red tape. Most important, they focus on results instead of the process that generates them. Rather than accommodating complicated processes, SOAs focus on providing a valuable service to "customers" (even internal ones). They free bottom-line managers from internal red tape ¾ complicated, chains of command and paper intensive accounting systems.

The key to their successful operation is transparency, which in plain language means making costs visible. Managers factor real operating costs into their budgets so they can make informed choices. Their government status no longer provides "free" inputs like the capital cost of their facilities, access to under priced loans, or centrally provided items like stationery. In SOAs, employees become aware of the real costs and this information lets them make rational decisions and allocate resources efficiently.

Now, if a government department requisitions supplies, they do not just silently arrive on the doorstep. An invoice accompanies them because the supply operation is an SOA. If the managers do not like the price, they can purchase the item directly from a local store. That puts enormous pressure on the SOA to streamline its own costs to keep its prices competitive.

Civil servants, when aware of costs, will automatically stop wasting resources because using the more expensive alternative drains their budgets. Province of Manitoba estimates show savings of almost $20 million a year from the SOA experiment. So far, it has been extended to only 12% of the government’s operations.

As usual in such cultural transformations, a small vanguard of visionaries lead the charge. The new City Auditor, Gail Stephens, is a veteran of the government’s SOA initiatives. As part of a high-sounding program called "Reshaping our Civic Government" that City Council passed last March, Ms. Stephens wrote a report that summarizes Alternate Service Delivery (ASD) options for the City of Winnipeg.

The report moves far beyond the SOA model. It puts on the table several cutting edge alternatives like employee takeovers, user fees, service phase-outs, a variety of partnership arrangements with public or private sector work units, outright privatization, and contracting out. These have the potential to restore the health of Winnipeg’s finances. Ms. Stephens also reviews the success of cities like Phoenix, Indianapolis, Cleveland and others in implementing a variety of ASD models.

SOAs now lie at the heart of the debate, mainly because the province has been successful with them. John Wilkins, who oversaw their installation across several departments and agencies, just wrapped up a two-month stint at the City where he was involved in identifying SOA candidates. He will return occasionally for training sessions to prepare its staff.

Three weeks ago, City Council asked the province to amend the City of Winnipeg Act to provide for the application of SOAs to some of its functions. It also recommended that the legislation take effect January 1, 1998.

Major hurdles remain. However, the City is now moving to re-invent itself.