Cost Effective Service Delivery is Critical

The City of Calgary is currently in the midst of a Zero-Based Review (ZBR) Program. This program brings in a third party auditor to go over the finances of our business units line by line. At the conclusion of the review recommendations are made on how greater efficiencies could be found. A number of these reviews have been completed and The City hopes to have reviews completed for 80% of city services by 2020.

In June of 2016 the Priorities and Finance Committee reviewed the Calgary Transit ZBR recommendations. The auditors found that $9.2 million in benefits could be found from Calgary Transit operations. $5.3 million was from cost savings and $3.9 million from revenues. You can find the cover report for the ZBR recommendations here:

The recommendations from the auditor covered a wide range of Calgary Transit operations. One recommendation relating to service delivery models has garnered quite a bit of public attention. According to the auditor recommendations:

“Janitorial and Outdoor Maintenance: The consultant recommends that The City increase the use of external contractors to achieve annual efficiency savings of $2.7 million.” Pg. 5

This is a recommendation that I am very supportive of. I have often said that The City needs to keep an open mind about which services could be contracted out to the private sector, especially when contracting out could lead to greater cost-efficiency.

Contracting out these roles could result in the elimination of public jobs. I want to be clear on one thing – I have a great deal of respect for our Calgary Transit employees. These are folks that show a deep commitment to Calgary and work every day to offer the highest quality services possible. A decision that leads to potential job loss is not something that anyone can take lightly. It has real impacts on the lives of our fellow Calgarians.

With all of that being said, The City needs to be responsible stewards of public dollars. We need to keep options like contracting out positions open to continue offering high quality services in a cost effective manner. Job loss at the public sector level could result in higher demand for these same employees in the private sector.

The Calgary transit union has commented on this recommendation recently. They feel that a plan to save $2.7 million could put CTrain users at risk and offer a lower quality service (you can see their more expanded comments in this Calgary Herald article –

The union points out that some of their members have already left for other positions and that some work has already been outsourced to contractors. They suggest that contractors may not know about safety issues at stations and that service levels will be reduced.

The union has taken forward a lobby campaign in attempt to save these jobs. Their ads are currently running on the radio and they have started a website – The union is asking that City Council dip into our “rainy-day” fund (the Fiscal Stability Reserve) and save these jobs.

Before I share my position on this issue, I want to commend the Amalgamated Transit Union 583 for fighting for the jobs of their members. This is exactly the role that the union should be fulfilling. With that in mind, Council has to make decisions that are in the best interests of Calgarians.

I have a few issues with the suggestions being raised by the union:

  • Contractors may not be aware of safety issues. I feel this is something that can be addressed. Basic safety education or orientation would be a component of a contract. The contract would include clauses that would commit contractors to respect basic safety standards. If these standards are not met, the contractor is not renewed or loses the job.
  • Contract workers lack the training and drive that unionized workers have. I’m not convinced there is evidence that would support this claim. I believe that we get a higher quality of service by keeping the contracts competitive. If a contractor does not show that drive or competency to do the job, they aren’t awarded the contract.
  • Council should dip into the “rainy-day” fund to save these jobs. This is something I absolutely cannot support. What kind of message would it send if Council were to subsidize a city service that could be provided more cost-effectively if contracted out?

As many Calgarians are aware, The City negotiates contracts with union employees over a 4 year cycle. The last round of negotiations was made when Calgary was in a very different economic situation. This has led to public sector employees receiving healthy raises while many other Calgarians were seeing their salaries frozen or even facing layoffs.

The public sector needs to be prepared to do their part. I’m not suggesting that a union should step aside and not fight for protection of their jobs. What I am suggesting is that Council needs to be prepared to respond to the hardships facing Calgarians and make some necessary cuts in our spending. If Council is going to be dipping into their “rainy-day” fund further, we need to be considering more tax relief for businesses outside of the downtown core that have seen increase to their taxes as a result of dropping property values downtown. If the union wants to protect these jobs, they need to find a way to offer a cost-competitive service that offsets the $2.7 million in savings we would realize by contracting these jobs out.

The implementation plan for the ZBR recommendations will be coming back to committee in the second quarter of 2017.