The chaos in Ontario’s registry for electronic health records provides yet another sad tale of how Canadians don’t get value for their public services. It leaves one wearily asking for what seems the thousandth time: when are Canadians ever going to demand (let alone, receive) more from their governments than a steady diet of programs with high costs and low returns?
This is an important question to ask. To put it baldly: gross inefficiency in the government sector undermines the ability of the private sector to create provincial and national wealth. Through a rising cost burden unmatched by commensurate increments in value-added, it weaves a subtle web of disincentives to work, save, and invest.
More at Canadian Business Online:
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The Special Report recently released by the Office of the Auditor General of Ontario pulls back the curtain on a startling disregard for taxpayer’s money. But an important issue in the report hasn’t attracted much media coverage — even though it goes more directly to the heart of the problem than what has been reported and discussed so far.
And that is the issue of aligning costs with results. Specifically, in hiring legions of consultants at per diem rates of $1,500 (or thereabouts), the civil servants in charge made little attempt to track progress toward deliverables and tie payment to those deliverables.
Some of the gory details on what the Auditor General's report found in this regard:
"… policies and procedures for approving and monitoring payments to consultants were inadequate. For instance, consultant invoices were routinely paid on the basis of the number of hours billed. Although we were advised that progress on work was monitored in informal ways, there was little evidence — or documentation to show — that payments had been related to the completion of project deliverables."
“ … over 20% of the invoices paid for transition expenditures by the eHealth Ontario agency from October 2008 to June 2009 were not properly approved or were paid without proper documentation being obtained to ensure that contract deliverables had been completed.”
“… in our test of 280 invoices … staff could not locate 22 of the 280 invoices …. [of those located] the majority of the documents supporting invoice payments consisted of timesheets.”
“One consultant had been charging and was being paid $1,500 per day [yet his] contract was for $1,300 per day … staff noticed the overpayment … But management … continued to pay the higher rate to the consultant until the contract ended … total overpayment was $45,750.”
The gaping flaw here, of course, is the lack of incentive to complete work in a timely manner. No wonder the development of an electronic system for health records is so far behind schedule! If a consultant is getting paid for the time they log instead of results produced, the incentive will be to delay deliverables.
The Auditor General’s report was also concerned that there wasn’t “sufficient technical knowledge in-house to effectively oversee and manage the work of … consultants.” As well, it expressed concern over inadequate processes for transferring consultants’ knowledge to internal staff — which would entrench “the organization’s future dependency on consultants and the risk that consultants will hold the organization to ransom ….”
That most government services are high cost and low yield shouldn’t be surprising. As noted in "A taxpayer’s rant":
“We can’t count on managers in the public service to hold the line. They are administering ‘other people’s money’ and don’t have quite the same interest in judiciously handling the funds the same way the original owners would.”
An international study, Public Sector Efficiency: An International Comparison, measured the efficiency of the public sectors in 24 countries. It found that Canada’s public sector could achieve the same level of services using only 75% of current resources. In other words, approximately 25% of public spending was wasteful.
Here’s a thought. Instead of bringing in the Harmonized Sales Tax (HST) and a host of other levies and taxes, why doesn’t the Ontario government take a chopper to the waste in its civil service? Come to think of it, another thing it can do is let the private sector and competitive markets do more of the work that the bureaucrats now do so poorly.
Editor's note: Government spending Health care needs an electronic facelift From the editor: A compelling case for a flat tax
