Private sector participation would lead to reduced government expenditures and improved service quality
The past 15 months haven’t been kind to Newfoundland and Labrador. Like its resource-producing cousins to the west, the province has been walloped by the precipitous drop in oil prices. If that wasn’t bad enough, it also faces two additional challenges: burdensome debt serving costs (11.6 cents of every dollar in revenue) and an aging population.
To right its fiscal course, the provincial government has increased taxes and committed to “right-sizing” the public sector. And while the latest budget was ultimately quiet on the matter, Premier Paul Davis has recently raised the politically touchy issue of partnering with the private sector to deliver public services, which supposedly more progressive countries than our own have been doing for years.
Norway, for example, allows private firms to operate publicly-funded hospitals, while Sweden permits private operators to manage publicly-funded schools.
Newfoundland and Labrador could start by allowing private operators to participate in its registry system, which would lead to reduced government expenditures while improve service quality. Four Canadian provinces with governments of various partisan stripes have already reformed their registries.
Saddled with $22.7 billion in debt and desperate to improve its fiscal situation, Alberta reformed its registry system in the early 1990s: private operators now deliver all services except for land title registrations. The move allowed the province to offload delivery costs to the private sector, which has created opportunities for small business owners, all while allowing the government to keep most of the revenues.
Contrary to what critics predicted, fees didn’t skyrocket and service standards didn’t plummet. Registry fees in the province are comparable to - and, in many cases, lower than - those in other provincial jurisdictions. Albertans also arguably have the most convenient registries services in the country. There is one office offering motor vehicle registry services for every 18,318 Albertans. In Newfoundland and Labrador, the ratio is one office for every 65,875 residents.
Ontario has also profited from such innovations. Challenged by the colossal task of modernizing the province’s antiquated land registry, the NDP government of Bob Rae partnered with Teranet, a company specializing in electronic land registrations. The move allowed Ontario to share the risk inherent in such a costly undertaking (by one estimate transferring the cost of research and development to the private sector saved Ontario at least $300 million), as well as to benefit from its private sector partner’s technological expertise. The deal also protected consumers by allowing the government to control fees for the most common services.
In addition to benefiting from a pioneering system that greatly simplified searching and registering land titles, the province has profited handsomely from Teranet’s success. Ontario will receive a steady stream of revenue in the form of royalty payments beginning again in 2016, and has collected nearly $2 billion from selling its half-share in the company, reaping the windfall when the company converted (briefly) to an income trust, and again when it extended the company’s exclusive licences to provide registration and writs services.
Manitoba has entered into a similar agreement with Teranet to update and administer its land and personal property registries, while Saskatchewan has contracted out the province’s land titles, personal property, and corporate registries to Information Services Corporation (ISC), a former Crown corporation. Like the Ontario and Manitoba deals, Saskatchewan has freed itself of costly technology maintenance and development costs while retaining the right to control fees.
Furthermore, by privatizing the formerly public corporation, Saskatchewan has enabled ISC to grow beyond the province’s borders, selling its products and services around the world. In so doing, it created more jobs in the province and generated greater value for its shareholders, which include the provincial government and ordinary Saskatchewanians.
The lessons from these experiences are clear: partnering with the private sector provides consumers with more convenient, higher-quality registry services at comparable prices while at the same time cutting costs for government. While obviously not a panacea for all that ails Newfoundland and Labrador, reforming registry service delivery would certainly be a step in the right direction.
With a sagging economy bringing in less revenue for the foreseeable future, the province needs to save every dollar it can. And with more and more Newfoundlanders and Labradorians reaching retirement age, and demand for essential services such as health care increasing as a result, the government will need to spend these dollars as wisely as possible.
By Meredith McDonald (guest opinion)
Meredith McDonald is a Research Fellow at the Atlantic Institute for Market Studies. She is author of The Road Ahead: Options for Reforming Registry Service Delivery available at www.AIMS.ca.
2015 Distributed by Troy Media