POLITICS – Municipal governments should do less and spend less

The surest way to trim the bloated costs of municipal services is to privatize them. Competition drives costs down and quality up

Research Associate
Frontier Centre for Public Policy

Municipal spending in British Columbia is rising far too fast. According to a report from the Canadian Federation of Independent Business, the cost of running municipal governments – even after accounting for price inflation and population growth – rose by an average of 28 per cent across the province from 2006 to 2016.

Matthew Lau.

The business federation gave numerous suggestions on how cities could save taxpayers’ money. For example, by reining in out-of-control public sector wages, distributing documents digitally to save paper costs and leasing out city facilities when they’re not being used.

These are fine ideas on how to save taxpayers’ money by running municipal services more like businesses.

However, the best way to cut government waste isn’t by having the government do better, but rather by having the government do less. The surest way to conform the bloated costs of municipal services to more efficient private sector standards is to have these services delivered by private businesses instead of the municipal government.

There are two ways to privatize services. The first is to privatize production while maintaining public provision. An example of this is the contracting out of garbage collection.

According to research from the C.D. Howe Institute, “Ontario cities with fully contracted-out garbage services have the lowest operating costs” because “competition through contracting drives costs down.”

Not only does business competition reduce costs, it also improves the quality of services.

After Toronto contracted out a section of the city’s garbage collection in August 2012, the complaint rate in that area fell by 28 per cent in the next few years, compared to a nine per cent increase in the rate of complaints in the parts of the city where garbage collection wasn’t contracted out. In addition to the better service, taxpayers saved $11.1 million a year.

Contracting out services like garbage collection is an example of private production of a publicly provided service. Even though a private business produces the service, government still decides the service should be provided.

The second way to privatize a service is simply private provision. This means getting government out of the picture completely. Government-run swimming pools, golf courses, skating rinks and even libraries are examples of municipally-provided services that should be considered for this kind of privatization.

Residents in all Canadian cities rely on private provision for food, clothing, and most other goods and services. The government doesn’t own or run grocery stores, restaurants or clothing stores. Just about everybody agrees that the production of food and clothing is best left to the private sector.

What’s true for food and clothing – and computers, automobiles and so on – is also true for swimming pools, golf courses, skating rinks and libraries. There’s no reason these services should be provided by government instead of private businesses.

Similar to contracting out government services, private provision means lower costs and better services for consumers and taxpayers. Competition drives costs down and quality up.

The added benefit of private provision is that goods and services will only be provided if people demand it, and these goods and services will be paid for only by the people who consume them. People who don’t swim shouldn’t be forced to pay, through taxes, for swimming pools. In neighbourhoods where residents are disinterested in swimming, there probably shouldn’t be a pool.

Getting the best value for taxpayers and ensuring the best use of resources doesn’t just mean the municipal government should do better. In many cases, it means the municipal government should do less.

Matthew Lau is a research associate with the Frontier Centre for Public Policy.

© Troy Media


6 Comments on POLITICS – Municipal governments should do less and spend less

  1. Is Mr. Lay naval gazing?
    Perhaps we should show him life driving the Coquhilla Highway post highway maintenance privatization where accidents are up, ploughing snow is down, highways closures up, gravel size / well, up as well. This shining example not enough ? – cite the Island Highway on Vancouver island… where in the winter private contractors provide gravel is the size of golf balls and creating a furor of broken windshields.
    Mr lau’s garbage pickup story has me wondering about his information sources – perhaps he should glance up from his navel.

  2. Tony Brumell // October 29, 2018 at 12:35 PM // Reply

    The opening manouver to privatisation of everything.Street cleaning and snow removal would be next Hint: no money no service. Can water privatisation be far off. or selling off the dirt ministries. Forestry, agriculture ,mines and environment ?? What happens when the company goes belly up ? or goes public and is bought out by a foreign gov’t ? There is no end to the damage that can /will be done if we go down that road.This would make Trump happy .then he could start buying up his biggest trading partner.
    When we sell off these issues we lose control of it all.

  3. Yeah, right. Costs never go down when services are privatized, and getting good value for your tax dollar never happens. Look at what happened in hospitals, they are dirty, and cost us as much as directly employing cleaners once did. Shoddy road maintenance is another example, when MOH took care of the roads, they were in fine shape all year round, now they are a crap shoot year round.

    ” Government-run swimming pools, golf courses, skating rinks and even libraries are examples of municipally-provided services that should be considered for this kind of privatization.”

    These services wouldn’t exist in the private system. The operators would be looking for profits, therefore prices that would be far higher, and then use would go down, and these things would disappear.

    . It must be nice to be young, fresh out of school. and have all the answers that have been proven not to work already.

  4. If Matthew new what goes down in Kamloops with some of the procurement policies our leadership came up with he would have a fit!
    There are a few selected contractors making out lavishly basically just doing civic work. Interested taxpayers should look into the current set-up on landscaping services where one well positioned outfit does project after project without having to bid against others.

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