10 ways Ontario can save half a billion dollars a year

TheGlobeandMail.com – Opinion
June 18, 2018.   JEFF BARYSHNIK

Ontario is No 1. Unfortunately, I’m referring to its ranking as the most indebted sub-national government in the world. Regardless of how you voted on June 7, we can all agree that Ontario has a spending problem. After 25 minutes of skimming through the provincial Auditor-General’s report for 2017 and making some conservative – with a lower-case “c” – assumptions, I found 10 ways that Ontario easily can save half a billion dollars a year, without firing anyone:

1. $170-million saved each year by cutting office space usage per government employee to a master-bedroom-sized 180 square feet a person. Such a reduction simply would “comply with the 2012 Office Accommodation Standard … set by the Ministry of Infrastructure”. (All figures and quotations are from the A-G’s report unless noted otherwise.)

2. $19-million saved each year by no longer operating and maintaining 812 vacant goverment-owned buildings totalling more than five million square feet. The A-G’s report shows almost $19-million in annual operating costs for these vacant buildings. This figure does not include any value from the one-time sale of these buildings which, if I assume a sale at only $100 a foot, would generate another half a billion dollars of proceeds. (5.05 million square feet x $100 a foot equals $505-million.)

3. $59-million of opportunity cost saved each year by leasing out the government’s 812 vacant buildings, if I assume forgone occupancy of 90 per cent and forgone rent of $13 net per foot (that is, 5.05 million square feet times 90-per-cent occupancy times $13 net per foot equals $59-million). The sale option above makes the most sense, but this analysis quantifies the hidden annual opportunity cost.

4. $37-million saved each year by relocating government offices from pricey downtown digs to more affordable and commutable uptown markets. In arriving at this figure, I assume that half of the 7.5 million square feet of space leased by the government is in city cores and that the annual rent savings would exceed $10 net per foot. (7.5 million square feet times 50 per cent downtown allocation times $10 net per foot equals $37.5-million.)

5. $53-million of opportunity cost saved each year by bringing 6,300 vacant social housing units that are “unused because of poor condition of repair” back online; we can use the proceeds from the above sale or releasing of five million vacant square feet of office space to repair these desperately needed vacant apartments. Given that subsidized tenants pay 30 per cent of their income under governmental rent subsidy rules, that’s another $53-million opportunity cost saved, if I assume that each new tenant earns only the minimum wage in a full-time position. ($14 an hour times 40 hours a week times 50 weeks a year times 30 per cent of income times 6,300 new tenants equals $53-million.)

6. $90-million saved each year by scrapping the Jobs and Prosperity Fund (JPF) “corporate welfare” program, so termed by the Ontario PC Party website. I calculated this figure using the information from the Government of Ontario website listing of JPF recipients for 2017 only, and scaled down those recipients’ benefits by the number of years applicable to their grant. The Ontario PC Party suggests that the actual figure, including related programs, is orders of magnitude higher than $90-million a year. I also note that the vast majority of recipients are foreign corporations, through their Ontario subsidiaries.

7. $30-million saved each year by reducing subsidies paid to gas generators. “One program that the [Ontario Electricity Board] Panel has recommended for years [is] that the [Independent Electricity System Operator] scale back [what it] continues to pay gas generators [which is] an average of about $30 million more per year than [is] necessary.”

8. $30-million saved each year by connecting newcomers with federally funded subsidies. Last year, “about $30 million in Ministry funded newcomer services were provided to individuals [who were] also eligible for [equivalent] services funded by the federal government.” Those same services would continue to be provided in the same manner; Ontario simply should stop paying for services for which a federal subsidy already exists.

9. $17-million saved each year by building additional hospital facilities for stem cell transplants. The A-G “estimated the costs for out-of-country [stem cell] transplants to be … about $34 million more [during 2015-17] than it would have cost here had the capacity existed” for those 63 patients. For the next four years, the A-G estimates that Ontario will spend another $70-million, or $17.5-million a year, to send these Ontario patients to mostly U.S. stem cell facilities at a cost of more than half a million dollars per patient.

10. $16-million saved each year by scrapping all taxpayer-funded political advertisements. The AG found that “over 30% [of the $53.7-million Government of Ontario marketing outlay] was for advertisements we believe had as their primary goal to foster a positive impression of the govern[ing] party.” (30 per cent times $53.7-million equals $16.1 million.)

The incoming administration proposes to conduct a “line-by-line audit of government spending to bring an end to the culture of waste and mismanagement.” If I can find $521-million of annual savings between the couch cushions in under half an hour, then a professional line-item audit of non-public information easily will find billions more in annual savings. Pretty soon, we’re talking real money.

Jeff Baryshnik is the president of Republic Funds, a Toronto-based real estate private equity firm with more than $100-million of assets under management. Republic Funds advises affiliated U.S. partnerships that buy and improve affordable housing in the United States.

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