Katz’s Powerless City Summit

Commentary, Environment, Frontier Centre

It came and went, then promptly vanished from the radar screen. One more historical footnote in Winnipeg’s periodic efforts to “find itself” and reverse its relentless slide down the rankings of Canadian cities, Sam Katz’s city summit showcased a few good ideas. But the causes of our relative decline lie beyond the scope of city government.

Remember Glen Murray’s “New Deal”? That effort created real, sustained buzz and—for a few tantalizing moments—even put Winnipeg at the forefront of urban thinking on municipal finance, with its plan to slash property taxes, eliminate business and amusement taxes and emphasize user fees. Sadly, the buzz ended when the province of Manitoba, which holds the key to all Winnipeg reform, chose not to play with the concept of dramatic reform.

The summit created an expensive cameo for Mr. Katz, but ignored the reality that the Mayor has limited power. Merely the lead cheerleader, he can do little to restructure government. The hammer for reform lies in the Legislature, the only vehicle for a comprehensive rewrite of the City of Winnipeg Act. Katz chose a cozy, “by invitation only” format—a mistake in an extraordinarily tribal community with hierarchies of “ins” and “outs,” where political connections to elected officials shape valuable spending decisions and regulatory permissions.

Still, in a place terminally beset with in-the-box thinking, any airing of new ideas deserves good marks. Two stood out in this summit. Guest speaker Rudolph Guiliani’s push for more effective policing, a perennial local policy failure, is obvious. As a
new Frontier Charticle shows, Winnipeg has among the highest per capita police strengths in Canada, but a dismal crime-clearance rate compared to other cities. The adoption of performance measurement, with the vaunted COMPSTAT software system that highlights hot crime spots and links pay bonuses to extinguishing them, is long overdue.

The second idea came from Toronto consultant, Joe Berridge. He ventured bravely into Manitoba’s perennial intellectual dead zone—rethinking and modernizing public services. “Huge, lethargic, monopolistic organizations like city governments are on the wane,” he said. He suggested outsourcing, and bringing private investment and modern management techniques into traditional structures.

Such talk is like ancient Greek to the ossified structures that riddle Manitoba’s public sector landscape. Bureaucratic incentives remain tied to maximizing internal budgets and staffing. As many prematurely retired civil servants will tell you, only a fool will promote outsourcing, tendering, and more efficient outside delivery if it results in a smaller staff, and reduced career and salary prospects. The answer lies in fundamental root-and-branch overhauls of how government is structured to operate—again, the prerogative of our provincial government.

Consider Mayor Katz’s recent musings about the escalating costs of the new water plant, and contracting out future sewer and water upgrades. As outlined
in a new Frontier policy paper, Frequently Asked Questions About Water/Wastewater Privatization”, U.S. cities have a 30-year track record of outsourcing these facilities to commercial operators. Typical savings over internal delivery range up to 40%, with safety, water quality and pay all improved. Nine out of ten cities using this model renew their contracts with commercial suppliers, and satisfaction rates are high. Unfortunately, Mr. Katz faces a long slog walking into the wall of perverse incentives that rewards government managers for locking services into the costly, public monopoly model.

To make Winnipeg a winner again, we first need to focus on the causes of decline, not the symptoms. Much of the slide is due to factors beyond its control, a complicated mish-mash of provincial and federal policy dysfunctions. A plainly uncompetitive tax environment has hollowed out the high-value tax base attached to the many corporate headquarters once located here. Grow the city with a policy thrust that attracts capital and jobs with smarter taxation, not milking federal subsidies. This requires modernization and efficiency in major policy envelopes like healthcare, education and core government departments. Ending “power at cost”, a smart environmental move, would also create a major revenue stream, allowing us to eliminate payroll taxes and sharply reduce income and corporate taxes. Embrace, don’t fight the end of equalization – the mother’s milk of outdated policy models—by proposing a debt swap with the feds to reduce interest payments in exchange for slashed subsidies.

More easily, modernize the City of Winnipeg Act. Change incentives so management gets rewarded for maximizing service quality and efficient stewardship of scarce resources, not spending and internal staffing. Tie police pay to measured crime reduction. Expose transit, water and most other services to competition, allowing in-house employees to run their areas as business units, minus the typical bureaucratic overheads, plus incentives like profit-sharing. Move out the old blood at City Hall with term limits, and install a firewall between councillors and operations to get them out of staffing issues and property dispositions. This would end the insider-outsider culture at City Hall that makes a sophisticated city operate like a parochial small town.

A final no-brainer. The future of downtowns everywhere entails an innovative housing policy. Kill rent control, and billions will be invested in new and refitted living spaces.

These solutions target the root causes of Winnipeg’s relative decline, all beyond the scope of the Katz summit. Is there a provincial leader to do the job? Hugh? Jon? Gary?