Mayor's Speech - Ottawa Business Journal Breakfast
(November 7, 2007)
Good morning everyone and welcome to the sixth Mayor’s breakfast sponsored by the Ottawa Business Journal. Today I want to talk to you about a BUSINESS-LIKE APPROACH to Ottawa’s municipal government.
During the budget directions setting Council instructed staff to find $100 Million in annual efficiencies and $88 Million in annual revenue increases or service cuts by 2010.
It will take $ 188M in annual savings and revenue increases to deliver a “zero means zero” budget over the next three years.
As a former private sector CEO I understand fully the implications and magnitude of this task.
City managers are taking this assignment very seriously and they have been working hard to find these savings and provide council with a viable budget for a zero tax increase in 2008, 2009 and 2010.
I am convinced that city management will fulfill the $100M in operational efficiencies however I believe we can find much more if we dramatically change the way we operate the back office of the City of Ottawa.
Today, I want to talk about SMART MANAGEMENT.
This time last year I was in the final days of my election campaign and the vision I was offering resonated with the voters of Ottawa
That vision was about WASTE MANAGEMENT, TRANSPORTATION and PUBLIC SAFETY, and introducing a business model that was fiscally responsible and not fed by a constant addiction to perpetual tax increases.
Last November’s municipal election saw the most voters ever cast ballots in Ottawa, and elected me to lead City council.
I take that as a strong mandate from the citizens of Ottawa to put this City on a firm business-like footing.
The first big issue we dealt with was the 2007 Budget.
And I am pleased to say that despite doomsday predictions that it was “impossible”, my colleagues on council came together to deliver the first “Zero means Zero” budget.
This, I remind you, was the first time in living memory that a City of Ottawa council unanimously passed the budget.
In a recent Decima survey, 89% of residents said they would recommend Ottawa to their family and friends as a great place to live.
But a disturbing statistic from that same survey showed that satisfaction with city services has dropped from 80% in 2004 down to 64% last year.
Central to the dissatisfaction was the belief that there were problems with the decision making process at City Hall.
Let me assure you that things are changing.
In a few short months, working together, we have changed the nature of important debates.
We have gone from the Carp dump planning to triple in size to embracing the idea of converting waste to energy and increasing diversion efforts.
Landfill is no longer the only viable option.
We’ve created a climate that has resulted in council approving the environmentally sound green-box program that the previous council had been unable to agree upon and we are also focusing on environmentally sound solutions to the bigger problem of commercial waste
We pressed the re-set button on the MASS TRANSIT file
Council acted on the Mayor's Task Force on Transportation and supported an EA on a downtown tunnel because we all agree that there is no fix for East/West or North/South without solving the bottleneck in the core
On increasing PUBLIC SAFETY;
Chief White is committed to taking back the streets and you are now seeing police officers walking the beat in the downtown core.
We cancelled the crack pipe program -- that supported a debilitating addiction, and the Chief of Police, the Minister of Municipal Affairs and I are working hard to bring a 48 bed residential drug treatment centre to Ottawa
We are planning to add 38 new paramedics in 2008 bringing the total number up to 416 to improve response times
The fire department continues to deliver outstanding service levels while maintaining the same staffing compliment of 990 fulltime and 400 volunteer firefighters that we had pre-amalgamation.
And all of this excellent public safety service is delivered to citizens at an approximate cost of one dollar per resident per day!
While I believe our public safety services represent good value for money, I don’t believe the same can be said for all city services – a thought echoed by citizens in the recent Satisfaction Survey – where only 35% of respondents indicated they are satisfied in the area of “accountability for spending decisions”, and just 40% are satisfied that this City “acts in a fiscally responsible manner.
At the first Mayor’s breakfast I spoke of the compelling need for a fundamental TRANSFORMATION in how the Corporation of the City of Ottawa OPERATES and how council GOVERNS.
City Manager Kent Kirkpatrick responded to the TRANSFORMATION agenda by creating a new Business Transformation Services division.
Under Steve Finnamore’s leadership they are responsible for introducing operational change across the organization and will be bringing forward a transformation report as part of the 2008 budget process.
They have already acted decisively in initiating the TRANSFORMATION of the city’s communications function to embrace the potential of web 2.0 as a better way of delivering information and services.
At that Mayor’s breakfast 6 months ago I introduced my agenda based on what I called a 1000 DAYS OF TRANSFORMATION designed to fundamentally reshape the city’s way of “doing business”.
Today we enter into a new phase of the agenda because if we want SMART GROWTH, it requires SMART MANAGEMENT
SMART MANAGEMENT will address a transformation in “how we do business”, and how we can DO BUSINESS BETTER – without negative impact on essential services provided to the public.
For example our general administrative overhead is over $134 Million per year and represents about 7.3% of our operating budget.
Reducing this administration overhead to 5% of total expenditures through smart management could save taxpayers a minimum of $42 Million per year.
To achieve these savings we will require a greater reliance on technology.
If business can recognize a 20-30 per cent return on investment and productivity increases through the use of technology, then so can municipal government.
And Ottawa is in a unique position to achieve those results,
* We are the best educated city in Canada.
* And we are a home to innovation. We are, for example, home to Cognos, the world leader in business intelligence software.
The people and skills are close at hand, we should be the most business intelligent city in the world.
We already have a strong core IT infrastructure and Chief Information Officer Janet Harris-Campbell and her department just received recognition from G-TEC for their innovative use of technology.
If Canadians are expected to do $16 billion in retail sales “on-line” by 2009 then why do people have to drive to city hall for many services?
If businesses can collaborate on documents simultaneously around the globe, why do we insist on multiple hard copies of documents for every city submission?
These are the reality of doing business in the 21st century.
Today I am announcing two SMART MANAGEMENT INITIATIVES in this area.
The first is the formation of the MAYORS TASKFORCE ON E-GOVERNMENT AND SMART MANAGEMENT, which will harness the resources of Ottawa’s leading technology community to recommend how we best adapt a Business 2.0 model in the City of Ottawa
I will be announcing the members and their mandate in the New Year.
I believe that the savings and increased efficiencies generated by this task force will by far exceed the efficiency targets set by Council.
Second, I will present the task force recommendations to Council to adopt for consideration as City policy.
Ultimately SMART MANAGEMENT is not about “what we do” but “how we do it”, and it calls for us, as business managers, to look long and hard at what services we choose to deliver ourselves and what would be more efficiently or effectively delivered by others on our behalf.
A key principle of successful municipalities in the 21st century, will be to fully understand their “core services areas” – and focus on excellence in those areas.
I will NOT at this point address the fundamental issue of whether the services the city currently provides are the ones that we should continue to provide or whether we have overstepped our mandate by committing to areas that are outside of the core expectations of our citizens.
City Manager Kent Kirkpatrick is addressing these kinds of issues as his staff responds to council’s budget direction to develop a “0” tax increase option.
Today I will address the internal parts of Ottawa municipal government that are perceived by our Citizens to be excessive to our needs or in a word, wasteful.
They are not “core service areas” but are “support competencies” and can be an operational distraction handled more effectively by outside organizations, whose primary focus is the delivery of those services.
For example, we provide good waste pick-up service to our citizens– primarily through cost effective contracts with specialist suppliers.
So why, for example, do we own our parking meters?
The city currently maintains over 3,700 on-street parking meters with an annual cost to operate the system of approximately $5 million dollars.
The City of Hamilton entered into a partnership with Parksmart and increased net revenues 122% the first year while cutting the number of illegally parked vehicles by over 50%.
I believe the citizens of Ottawa do not spend too much time worrying about who manages the parking meters.
If we were to follow Hamilton’s example we could potentially save $3 million a year with this one initiative alone.
In an effort to improve operating efficiencies and achieve savings, Sudbury combined electricity, water and wastewater charges into one bill resulting in a savings of over $250,000 per year.
If Ottawa identified a service delivery agency that would consolidate all our municipal bills we could potentially save in excess of $1 million dollars a year.
These are just two brief examples of the opportunities available to us to explore.
Also in support of the SMART MANAGEMENT goal and TRANSFORMATION process, I will take the following short-term initiatives:
First, I will be introducing a series of motions to direct the City Manager and his staff to identify outside delivery opportunities across all departments to save a minimum of $42 Million.
Second, I will introduce a motion at council to ask that all future new spending initiatives brought forward for council consideration include a fully costed comparison between delivery of the service “internally” and “externally”.
Third, I will ask for the Auditor General’s assistance with the costing model to make sure that the comparison includes ALL associated expenses such as amortized long term benefits, facilities and support costs and management overhead so that we look at an apples-to-apples comparison.
As part of the 2008 budget process I will also introduce a motion that will ask managers to identify outside service provider opportunities across all city departments to be implemented in this year’s budget to assist council in achieving a zero tax increase for 2008.
This can of course include the opportunities outlined in my remarks, but I am expecting much more than this from staff.
If contracted services can be “best practices” for trash pick-up, it can be best practices in many other areas. It is just SMART MANAGEMENT.
I believe that there are even more opportunities for savings this year within the line-by-line review of the budget that my council colleagues and I will begin next week.
We should not limit ourselves to the options presented by staff but use that opportunity to ensure that every taxpayer dollar is used effectively .
I also look forward to working with council through important and very fundamental discussions such as, do we have to own a Hydro company to assure dependable delivery of electricity in Ottawa?
The utility is already heavily regulated for the benefit of Ottawa citizens.
But that conversation and others are ahead of us.
Finally, let me make a few comments about external pressures that every municipality must deal with.
The funding model for cities is broken and we lack the ability to deal with infrastructure renewal and social services costs through property taxes.
I believe we have a ally in rectifying this problem with the new Provincial Minister of Municipal Affairs and Housing.
Jim Watson called me immediately after his appointment last Tuesday and I will be meeting with him shortly. I anticipate a friendly ear and will be reporting back to you on how receptive and helpful Jim is.
We are at the beginning of this journey, not the end, and the SMART MANAGEMENT initiatives I have discussed today will be the next milestones on that journey.
The plans I have outlined set targets for reducing general administration expenses and to ensure that we are prudent with your tax dollars.
SMART MANAGEMENT coupled with uploading of some social services over the next three years should result in Ottawa being a financially sustainable City for years to come.
I want to end this morning by making a point I have made many times before.
While I believe we can run the city in a business-like fashion, the city is not a business.
It is an extension of our homes and a reflection of who we are and who we want to be, so not all decisions are just about money.
Sometimes we just want to be smart.
In many ways the city is like the common area of a condominium.
Condominium owners instruct their board to manage infrastructure services prudently so that their quality of life and property value is maintained and that there is a sound financial foundation to support important investments in beautification, recreation and the amenities that make living there special.
The taxpayers of Ottawa have instructed council and city staff in the same way – get our financial house in order so that we can afford to maintain Ottawa as a GREAT, COMPASSIONATE, LIVABLE home for all its citizens.
Thank-you
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