Public Management - Lecture 009

5 Pages
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Department
Management (MGS)
Course Code
MGSC03H3
Professor
Sandford Borins

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PUBLIC ENTERPRISE, ALTERNATIVE SERVICE DELIVERY, PRIVITIZATION 25 March 2014 Public Enterprise Flaherty resigned for several reasons. There was a health issue (rare skin disease, steroids) and he had burnout from a difficult job. At the age of 63, he earned more but worked less in private sector. There were disagreements between the PM over income-splitting. PM Harper chose Natural Resources Minister Joe Oliver to replace him because of his qualifications having a Harvard MBA, Merrill Lynch, Executive Director, Ontario Securities Commission, chief executive, Investment Dealers association of Canada. At the age of 73, he was a Harper loyalist. He was a potential rival, being Chretien’s finance minister, Paul Martin, Jason Kenney, Minister of Employment and Social Development, “keep your friends close and your enemies closer.” Redford resigned for several reasons. The conservatives have formed government since 1971. There were different factions, moderate conservatives versus market and religious fundamentalist and Redford was a moderate. The inciting incident was that he spent $45,000 of public money to attend Nelson Mandela funeral. The opposition from fundamentalist is one minister, one MLA resign, and riding associations demand a leadership review. Alternative Service Delivery Public sector restructuring by sharing governance functions with individuals, community groups, private sector. Spectrum of Organizational Forms: Department and Service Agency (IE: Canada Revenue Agency, Parks Canada, Food Inspection Agency, Canada Border Services Agency, Service Canada). Examples • Crown Corporation o Traditional vehicle for economic/policy intervention o Government sole shareholder o Minister ultimate decision-maker, board advisory and sometimes patronage o Some evidence of recent choices of president and board members based on experience and expertise o Capital from government borrowing o Saskatchewan Crown Investments Corporation o Example: LCBO, OLG, Hydro One • Service Agencies o Flexible staffing o Entrepreneurial culture o Federal-provincial cooperation o Clear mandate and charter o Full costing of activities o Business plan, access to capital on business criteria • Government as Investor (IE: Loan guarantees) o Bailouts (recessions, one-industry towns) o Investment funds (Canada Pension Plan Investment Fund, Norwegian state oil fund, sovereign funds of other nations) o US rules for bank investments  Limit dividends on common shares  Control executive compensation  Banks try to pay off government loans as soon as possible o Blakeney rules  Be suspicious of bailouts  Entrepreneur must have a stake  Loan guarantee = cash  Monitor performance closely  Use progress payments • Public-Private Partnership (IE: Hospitals, governmental buildings, infrastructure) • Privatization, usually accompanied by regulation and time limits (Highway 407) o www.407etrbook.com o Mylvaganam was chief of staff for Minister of Transport from 1990 to 1995 o Borins a Director of Ontario Transportation Capital Corporation from 1995 to 1998 o Reasons for development  Reduce traffic congestion in 905 suburbs  Support construction industry during early 90s recession  Rae NDP government running deficits, finance through road tolls – won’t increase deficit  Use large contract for quick delivery, supervised by small Crown corporation  Develop leading edge tolling technology (transponder plus video-imaging) in an urban setting o Outcome  Highway completed and opened in 1997, 6 months behind schedule, $80M over budget of $1 billion  Traffic growth faster than anticipated and tolling technology works  Harris Government wants to privatize something big before 1999 election; ideology and money (but not the LCBO) o Privatization  Government received $ 3.1 billion for a 99 year lease just before June 1999 election  Successful concessionaire an Australian-Spanish consortium  Rapid toll increases starting in fall 1999  McGuinty promises to roll back tolls in 2003 campaign  McGuinty Government challenges toll increases in court; concessionaire goes to court to restore license plate denial for unpaid tolls o Outcome  Courts uphold right of concessionaire to set tolls and require government to restore plate denial  Out-of-court settlement announced 5 pm Friday March 31, 2006, Ontario drops appeals and concessionaire agrees to frequent user benefits program, establish ombudsman o Completing 407 East  From Brock Rd to join Hwy 35/115  Will be owned and operated by the government, but 407 International will build the road  407 International will supply the technology and it will be interoperable with the rest of Highway 407 but the government will set the rates (pressure on 407 International to keep from increasing tolls on their part of highway 407) o Lessons Learned  There were alternatives to privatization (public ownership or phased privatization)  Canada lost an opportunity to have a firm developing leading-edge transportation tolling technology  Transparency needed for major contracts  Road tolling works and is a huge potential revenue source (London, Stockholm), and Metrolinx has begun a discussion on transportation financing in the GTA Political Management in Canada (p. 133 – 145) st Blakeney’s 1 experience in public sector as secretary Government Finance Officer and secretary to boards of several Crown corporations. Secretary served as secretary to board of directors for each corporation (prepare agendas and minutes of board meetings, see minutes phrased as instructions, source of information to boards on how other corporations were tackling specific issues, and what was going on in corporations). Treasurer acted as an adviser on accounting. GFO provided capital funds for all corporations, capital requirements were scrutinized, and profits transferred annually which reduced availability of self-generated funds for corporations. Operating decisions made by board and management of each separate corporations unless it has major impact on other corporations and agencies. GFO had little formal power dealing with individual corporations (just saw government as valuable link), smaller corporations welcomed help. Basic assumption that corporation general managers are valuable resource (prima donnas) who should not be needlessly harassed as long as they were playing fair with boards and government. If management was weak, assist by replacing managers or providing support for existing one. This management structure is composed of many strategic business units (individual Crown corporations) overseen by corporate office (GFO). Lessons from 1 stboss, provincial treasurer, Clarence Fines. Lessons applied in GFO to monitoring Crown corporations as Premier. Clarence Fines had great organization skills, insisted management (publi
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