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Comparing and competing would improve municipal services

Montreal, September 18, 2007 – Although the municipal administration just required budget cuts amounting to $100 million from its departments and boroughs, it is possible to believe that Montreal could do more and, most of all, better. Mayor Tremblay and officials in other cities could adopt two strategies that have helped reduce the cost of municipal services outside Quebec while enhancing their quality. In an Economic Note published by the Montreal Economic Institute, economist Mathieu Laberge explains that “good municipal governance includes systematic comparisons of efficiency as well as putting services up to competitive tender with the private sector.”

Two initiatives promote good governance in municipal services and require elected officials to give a fuller accounting: benchmarking and tendering of municipal services to private suppliers.

Promoting initiatives for better municipal management

Benchmarking, already used in Ontario and Nova Scotia, consists of gathering data for official comparisons of current practices in various cities with provincial or national standards to identify possible improvements in the delivery of municipal services.

The United Kingdom has also experimented with initiatives to make the delivery of municipal services more efficient. The first stage took the form of competitive compulsory tendering, guaranteeing equal commercial conditions for private and public suppliers. This model is thought to have helped generate average savings of 6.5% in the first wave of tendering and 9.1% in the renewal of initial contracts.

Later, the “best value” mechanism aimed to optimize delivery of municipal services by using the most efficient suppliers. This approach does not presume that municipal services must necessarily be provided by the local public administration if there exist other, more efficient mechanisms such as subcontracting.

It is important for Quebec to catch up on its accumulated delay in evaluating municipal efficiency, especially compared to Ontario, which has been working at it since the 1980s. Quebec’s municipal affairs department has gathered management indicators from municipalities since 2004 with the aim of improving performance but without integrating indicators from parties independent of municipal structures.

Obstacles can be overcome

An investigation conducted in 2005 among 217 Canadian municipalities found that nearly two-thirds of the municipalities surveyed had examined the possibility of using the private sector to provide services and 78% saw this as a way of reducing costs. The investigation also revealed the most frequent objections to using private suppliers: opposition from municipal employees (63% of municipalities), restrictive collective agreements or labour contracts (55%), a shortage of capable service providers (31%) and the absence of an adequate mechanism for monitoring the execution of contracts (27%).

Other studies show that all cities and towns facing these difficulties overcame fears by consulting municipal administrators and having them participate in the development of these projects.

The Economic Note titled Comparing and competing to improve municipal services was prepared by Mathieu Laberge, an economist with the Montreal Economic Institute and holder of a master’s degree in international economics and econometrics from the University of Nottingham.

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Information and interview requests: André Valiquette, Director of Communications, Montreal Economic Institute, Tel.: 514 273-0969 ext. 2225 / Cell: 514 574-0969 / E-mail: avaliquette@iedm.org

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