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Fate of Ontario’s budget hinges on plan to privatize ServiceOntario

Ontario Premier Dalton McGuinty holds a news conference at Queens Park on June 15, 2012.

Chris Young/The Canadian Press

The showdown over Ontario's budget bill has focused on a plan by the McGuinty government to create a one-stop online service for everything from birth certificates to licence-plate validation stickers and property title searches – and sell it to a private operator.

Premier Dalton McGuinty spent the weekend trying to salvage his budget bill after accusing New Democratic Party Leader Andrea Horwath of wavering on her pledge to prop up his minority Liberal government. The budget bill is scheduled to go to a vote on Wednesday.

The section of the omnibus budget bill that has drawn the most fire from the opposition NDP is the plan to outsource services to the private sector. But the government views ServiceOntario, which delivers birth, marriage and death certificates as well as driver's licence renewals, as key to generating a new source of revenue for the deficit-burdened province.

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According to sources, the government plans to expand the range of products available at ServiceOntario to include those offered by municipalities, such as voter registrations, as well as by universities and hospitals. More provincial services would also be available, including land-title searches, corporate searches and business incorporations.

The model for privatizing ServiceOntario is Teranet Inc., the province's electronic land-registry system that generated $1-billion in cash for its coffers in 2010 under a licensing deal with a pension fund.

The finance committee will resume clause-by-clause debate on the bill Monday morning. Ms. Horwath plans to hold a news conference before the hearings begin to respond to Mr. McGuinty's call to provide him with a written pledge to honour her commitment to support his government's budget. But he has retreated from his threat to call a snap election.

With ServiceOntario, the government wants the private sector to pick up the tab for building the e-commerce infrastructure needed to expand the service. When a consumer goes to a Service Ontario office, it costs five times as much as a transaction performed online, Finance Minister Dwight Duncan said in a speech last February, where he talked about the urgent need for the government to transform the way public services are delivered and eliminate the $15-billion deficit.

"Obviously, greater efficiencies can be gained by driving customers to a lower-cost, on-line channel," Mr. Duncan told the Economic Club of Canada.

A government source said it would cost hundreds of millions of dollars to build the infrastructure for an online system, something the province itself cannot afford. The government has not estimated how much revenue it could generate by privatizing ServiceOntario.

The NDP is no longer trying to block section 28 of the budget bill, which contains the privatization measures, a party insider said. Instead, the NDP will propose during clause-by-clause debate more oversight for the initiative, including having the provincial Auditor-General assess the fiscal impact.

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"There's a question as to whether they can accept our amendments on Section 28, which the NDP is not inclined to back down on," the insider said.

Ms. Horwath said in a statement that she is glad the Premier has "changed his tune" and is no longer making election threats.

"I am now more convinced than ever that we can avoid an election no one wants," she said.

Ms. Horwath plans to hold a news conference Monday morning, before clause-by-clause debate resumes on the budget bill.

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About the Author

Karen Howlett is a national reporter based in Toronto. She returned to the newsroom in 2013 after covering Ontario politics at The Globe’s Queen’s Park bureau for seven years. Prior to that, she worked in the paper’s Vancouver bureau and in The Report on Business, where she covered a variety of beats, including financial services and securities regulation. More

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