Reading the mindset of the Toronto City Manager, Peter Wallace

The 2018 budget directions and schedule agenda item (item, video) of the May 11 meeting of the City of Toronto Budget Committee meeting was quite illuminating, in terms of the power dynamics at City Hall. Short story, the main locus of influence seems to lie with senior staff at the moment. So it behooves us to make some observations to anticipate where the staff intends to take the City.

First, the theme of this year’s budget in terms of direction is “Status Quo”, and the justification is that it’s the best we can do. The argument goes that major new funding sources have not been found, last year’s budget process tried to reduce costs as much as possible, and opening up the process to new initiatives would just be opening up a can of worms. In terms of schedule, somewhat shockingly, there is no provision to include standing committees in an annual review of service plans an priorities. Therefore after the direction document is approved by Council, the staff will make the bulk of decisions until the fall. At that point the budget will resurface in the Budget Committee, but by that time the bulk of the decisions will have been made. Enough will be malleable at the margins to allow the councillors space for the necessary drama required to support political engagement and theatre.

So it appears that the pre-season behind-the-scenes dynamics have concluded that staff, and not councillors, let alone the public, should be the main carriers of the budget priorities and creation process. This suppression of public input is troubling.

Some councillors tried to push back. Most lost, although an initiative by the Social Planning Toronto resulted in a direction to staff from the committee that the 2018 costs of 11 approved social development programs be reported directly to Council on May 24. Hopefully this will help to focus minds on the undischarged responsibilities of our government, though I’m skeptical.

Second, questioning by some of the councillors led to some candid responses from the City Manager about his mindset regarding the future.

Mr. Wallace begins with his position that Council has consistently supported an ‘affordable’ property tax policy, which is to say property tax increases need to be held at or under the rate of inflation. His second premise is that Council has consistently declined to ‘step away’ from ‘core businesses’ (ie services), and indeed (with a hint of disdain) tends to pile on more ambitious service programs at every opportunity. In the City Manager’s mind, this leaves outsourcing (to reduce labour costs, particularly collective agreements) and (implicitly) raising of user fees, as the main ways of balancing the budget.

For improving ‘value for money’ he views massive investment in technology and management, together with streamlining of ‘core businesses’ as two of the main tools available. He seems to be interpreting value for money as prioritization of services leading to cuts of lower priority services, as opposed to improvements to processes which deliver existing services. In the short run he says that Council’s request to reduce staff by 5% will distract him from development of a transformational strategy. In addition he claims that the organization is ‘to some extent’ exhausted.

Notably, Wallace says ‘you do not get major process reform unless you also undertake major program reform’ by which he means program cuts. This seems to put him at odds with Council and a large proportion of citizens.

His second major pillar to reform stems from his observation that currently ‘services are integrally linked into the community’, where local councillors are able to have a substantial influence on how those services are delivered. This makes it very hard in his view to superimpose the ‘rules of very large organizations’ for cost cutting. Those organizations that achieve value for money he says do so to a large extent by ‘taking discretion away from staff’, and by ‘taking discretion away from local administrators’. He is describing a highly centralized, streamlined, technocratic system as his vision for achieving value.

See in particular Mr. Wallace’s exchange with Councillor Di Ciano: video.

Exchange between City Manager Peter Wallace (left) and Councillor Justin Di Ciano

To summarize, Mr. Wallace’s vision of the future seems to be

  • ‘stepping away’ from some ‘core businesses’ (services)
  • outsourcing to save labour costs
  • massive investments in technology and management
  • strict centralization, with removal of discretion from staff
  • (implicitly) increase of user fees

Mr. Wallace also mentions that he has not yet been able to undertake transformation in the Toronto civil service except for Real Estate. This Real Estate transformation is wending its way to City Council, with the aim of implementing the change starting in January 2018. See the May 16 Executive Committee agenda item for a portal into documentation about this. It will be interesting and useful to watch this transformation for deeper insights into Mr. Wallace’s leadership and broader intentions.

Commentary

It’s really good that major organizational transformation will soon (finally!) on the table. But…

In my opinion, Mr. Wallace is making three fundamental errors:

  • Priorities: he has chosen to pursue increased funding for Toronto ahead of organizational transformation
  • Organizational vision: he is thinking of the Toronto civil service as a business organization, rather than a democratic institution
  • Organizational mission: he is confusing the meaning of ‘value’ as being cost-reduction rather than improvements in responsiveness and effectiveness.

Priorities

Support for Toronto’s initiative to raise revenue has mixed support. Fundamentally, the City must be credible in terms of fiscal management to raise substantial new revenue. There are two main barriers to this credibility:

  • The civil service has a strong reputation as having far too much “red tape”. In the above exchange with City Manager Wallace, Councillor Di Ciano indicated that he understood from the City Auditor General that this excess may run to 20–30%.
  • The City must be seen to make intelligent decisions. The recent decision to create an 8km $3.5B one-stop subway undermines credibility. A long history of partisan squabbling at City Council doesn’t help.

On the subject of the Scarborough Subway extension, it appears that Mayor Tory supports this initiative on the basis of support for corporate investments in Scarborough Town Centre, prioritized over support for providing transit for people who need it. This suggests that he is not the right person to lead this city into the future.

In any case, a major transformation project for Toronto civil service, to make the service more effective, would go a long way to removing legitimate objections to providing greater revenue to the City.

Organizational vision

Sometime in the 1980’s an approach to government called the New Public Management (NPM) became the predominant approach to civil service management. It has since been largely discredited, and in any case doesn’t take advantage of modern tools available to public organizations. NPM’s basic philosophy is to run government in a more business-like manner. This introduced government terminology such as ‘customer service’, and is one of the reasons user-fees have become the go-to method of raising revenue (increased sales), even though these are often regressive and exclusive. NPM appears to form the basis for the stance that Mr. Wallace takes.

Modern government instead involves a shift in philosophy from service delivery to citizen support:

  • digital platforms
  • open data
  • open government
  • collaborative management
  • collaborative citizen support
  • co-production

These approaches are emerging under names like New Public Service, New Public Governance, Digital Era Governance, and even Gov 2.0.

In particular modern governance implies increasing discretion (within defined guidelines and parameters) near the front lines, inclusive of citizen involvement, the opposite of Mr. Wallace’s vision.

Organizational mission

Equating value with cheap, as Mr. Wallace appears to do, is a mistake. Based on a vision of an inclusive, progressive, agile society, value should be viewed through a lens of effectiveness, responsiveness, and agility. The mission of government should be to protect citizens from negative aspects of the disruptors that we face, and to support an inclusive, dynamic, egalitarian spirit, through collaborative, community-based programs to improve our collective lives.

What is certain is that a transformation will be challenging, and will involve a great deal of discovery, problem-solving, and study.

Given that the City of Toronto as an organization is finally going to undertake a major transformation, we had better get involved in its planning as citizens, lest Toronto take a direction that will lose a historic opportunity for modernization.

Henrik Bechmann is the project lead of budgetpedia.ca. The opinions expressed here are his own.

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