Peter Wallace has been working in the public service for over thirty years. He joined the Ontario Public Service through the Ministry of Industry and Tourism and worked his way up the ranks. He served as Associate Secretary of Cabinet with responsibility for Policy in Cabinet Office, Deputy Minister of Energy, Deputy Minister of Finance and Secretary to Treasury Board. In 2011, he was named Secretary of Cabinet, head of the Ontario Public Service and Clerk of the Executive Council. He made the leap to city affairs in 2015. CGE Editor Patrice Dutil questioned him on his important position and the transition to city politics and leadership.

How is the CAO position different in comparison to Cabinet Secretary?

The positions have a lot of similarities. In both, I provide advice to elected officials and deliver on their policy direction. I work to ensure effective and efficient management, operation and organization of the public service and oversee the day-to-day operation of public services.

A key difference is that at the Province, I am carrying out the mandate of the government party and the Premier. At the City, I support the Mayor and 44 independent councillors who often have very different points of view.

Another difference is that most decision-making processes at the Province are centralized through Cabinet Office whereas the City is more decentralized. As a result, collaboration, civic engagement and consensus building become even greater parts of the role.

 

You have made the headlines by taking City Council to task for overpromising things and were applauded for it. What prompted you?

My view is that the path we’re on is not sustainable. It needs some correction. There are significant gaps between incoming revenues and capital and operating budgets. I am completely committed to working with the Mayor, Executive Committee, Budget Committee and broader Council to try to align Council’s expectations with the City’s funding and revenue limitations.

The City is developing a Long-Term Financial Direction to guide Council in making decisions which will help reinforce the City’s financial sustainability. The plan will provide consistency between short-term decision-making and long-term aspirations, and provide a framework for maintaining or enhancing the fiscal resilience of the City of Toronto and its agencies to support sustainable public services.

This will help us work through the gap as systematically, methodically, coherently and vigorously as possible and will help to avoid reliance on the land transfer tax and one-off Provincial funding requests. It will help the City prioritize and develop into a more mature government, controlling more of its own destiny.

 

How would you describe the differences in dealing with politicians?

I think this goes back to the party system that governs the Province and Federal government and the independent system at the City. Councillors often have different and conflicting priorities. On the whole, Council wants more public services and more and better outcomes. At the same time, there is a very real budget constraint. Council wants to keep residential tax increases to the rate of inflation, which given population and economic growth, effectively results in the public service getting smaller as a share of the overall economy every year. The core expectation is to deliver more for less – without significant disruption – and is one of the greatest challenges in working with elected officials.

 

How is your media strategy different from your predecessor’s?

I firmly believe that the role of civil servants is to provide advice to government and it is up to elected officials – in our case the Mayor and 44 Councillors – to communicate their priorities publicly and to the media. I will continue to clarify factual information to the media as required, however it is not a core requirement of my role to engage with the media on a regular basis.

 

 People often forget that the City of Toronto’s budget is larger than six of Canada’s provinces. This is big government. Are there processes done in the province that could be applied to a city the size of Toronto?

The Government of Canada and Provinces have many ways to show and easily understand their financial condition – for example, things like debt to GDP, debt targets or expense relative to GDP. At the City, we don’t have as effective a way to understand how we are doing financially.

The provinces and the federal government have a clear idea of where they have come from financially and where they are going. The past financial data is tracked clearly and integral to current decisions. Similarly, they also do a tremendous amount of forecasting of expense and revenue. Toronto tends to be much more focused on the current year and this a key reason that I am focused on building a long-term financial direction.

 

How is the budget process different in the City as compared to Ontario?

My vision is to bring more coherence to our budgeting and to our use of resources. We spend $12.5 billion (tax and rate supported services) a year operating as an organization. That is a lot of money being spent on the public’s behalf. We need to maximize the value and impact of that money. And we need to do that in conjunction with our political colleagues.

The City’s budget hits closer to home with most citizens. It is more transparent and often highly visible, particularly property tax and utilities. At the Province, funding is a step removed, through sales and income taxes. As a result, the public believes it should have a greater say – which is indeed the case – in Toronto’s budget.

Think of what happens theoretically if government stops operating for a short period. With the Government of Canada, I’m not sure anyone notices right away. The Government of Ontario, you notice a little bit more, especially around health. But if the Toronto government stopped operating, you would notice immediately. The work we do has a profound and immediate impact on our communities and the quality of life of our residents. It’s great to be able to work in a place that produces value for our citizens.

Another point to consider is that Toronto needs to balance its budget every year – we can carry debt but not a deficit. The Province of Ontario can carry a deficit and debt.

 

Tell me about the difference in risk-management methods? Could one order of government learn from the other in this task?

There is already an established framework at the Province. We are developing a risk management framework at the City.

At the City we have flagged for Council a number of key risks:

  • Process and Decision risk – expense outcomes are largely driven by agency decisions; a reliance on broad, future targets rather than specific service changes; and a reliance on decisions made by other governments.
  • Expense Momentum risk – cost escalations in both operating and capital budgets; a reluctance to change service or delivery models; labour, contract and debt cost escalation; and pressure from one-time bridging strategies
  • Revenue Stability and Equity risk – dependence on a potentially volatile land transfer tax; lack of appetite for alternative revenue options; and an over-reliance on user fees including TTC fares.

 

 What is your philosophy of leadership?

My job is to help set the framework. It’s my job to be thoughtful. It’s my job to give policy advice relentlessly on the things that truly matter like the use of money, like the use of human resources, like maintaining a fair, equitable, accessible workplace. Really, the fundamental values of the public service are not expressed in the head of the organization, they are expressed in the fabric and culture of the organization. The culture of the workplace should be a shared responsibility.

A leader needs to provide context and allow scope for the challenges of innovating in a fishbowl as we keep in mind demographic shifts, the increasing speed of change and the application of technologies and innovation to service delivery.

 

What is the biggest challenge facing the City’s bureaucracy?

The Toronto Public Service is being challenged to try to understand the difference between what we think we’re doing and what we’re actually doing. Are we as effective as we can be? Are the services and programs we provide as efficient as they can be? We need to look at what are we delivering. This is not just a question of revenue options but also are we doing the right things as well as we possibly can. There is ongoing pressure between very high expectations that deserve to be met and the reality that public resources are inherently constrained.

 

How do you manage it?

We need to constantly reflect and assess. From the flow of information to the application of technology, the sharing of information and open government to the breaking down of hierarchies and walls, we need to focus in on a client-centred approach, look at their needs and collaborate with other levels of government. In the past, citizens were forced to bend to fit the model of government. They had to have separate relationships with each level of government and decipher where to go for which service. Truthfully, this is still largely the model. And it makes no sense from the perspective of our residents – they do not really differentiate between levels of government. We need to collaborate on mechanisms to shift to client-centred government and abandon the model of the past.

As public servants, we owe an absolute obligation to be as efficient as possible. We need to offer our wisest advice and the best implementation of policy and direction. At the municipal level, we offer so many critical, vital services such as transportation, social services, shelters and waste collection. This is a place where what we do absolutely matters. We need to focus on the fine edge of how we can improve. And therein lies the challenge.