The start of a new era: The Drummond Report and the environment and cleantech sector
Prepare for a major shake-up of the provincial government
Yesterday afternoon, the province released the much-anticipated report by Don Drummond. The province had commissioned the former TD economist to chair a “Commission on the Reform of Public Services” to give it a road map to address the worsening balance between revenues and expenditures.
The report is a 500+ page behemoth that pokes into every corner of government spending and makes very practical (and potentially politically unpopular) recommendations for what the province should do to address this issue. As could be expected, the bulk of the recommendations touch on major areas of government expenditure such as health and education. Environment, with its $360 million annual budget, is just a small part of the overall $125 billion picture. The report does offer interesting ideas for the province to consider with respect to policies that affect the environment and cleantech sector. Ontario companies should be aware of the following:
· There is a strong message about full-cost pricing for water and environmental programs, with the report directly calling for “…full cost recovery and user-pay models for environmental programs and services.” While user pay is a good starting point, companies should be cautious that this does not become a backdoor means of taxation as opposed to real-cost pricing.
· The report stresses in several areas that the province should coordinate policies and administration with other levels of government, which should be a good thing for companies frustrated with multiple levels of reporting on toxics, for example. A message about coordinating the environmental assessment process with other levels could be challenging for the province, given the differences between both approaches.
· The energy sector comes in for particular scrutiny, with Drummond recommending that the province scrap the rebate on electricity bills to consumers, farmers and small business (which costs the province more than $1-billion each year) and that it “…review all other energy subsidy programs against measures of value for money and achievement of specific policy goals.” The FIT program for clean energy is specifically named, with the report strongly recommending that the subsidy be decreased over time to reduce possible dependency. We believe that the Ministry of Energy has this in hand.
· The significant challenges that face the Brownfields sector merited scant attention from Drummond. The report did call for “…greater emphasis on prevention and the polluter-pay principle for contaminated sites using appropriate financial tools, such as financial assurance.” Those in the field, however, will note that a site often becomes a Brownfield when the company operating a facility goes bankrupt or disappears, rendering polluter-pay a nice concept with little practical merit.
Overall, the report does open a new phase in dialogue between the environment and cleantech sector and government. It has a strong message of transformation and “we need to move beyond business as usual” that, if we engage properly with government, could result in a much more productive operating environment for our businesses that also delivers the environmental protection that Ontarians expect.
ONEIA will continue its ongoing dialogue with the Province and ensure that the concerns of environment and cleantech companies are considered in key policy decisions. Watch in the coming weeks for an announcement of our 12th annual Environment Industry Day (EID) (expected in early May) and our Advocacy Committee will continue to work on the issues raised by the report (a complete copy of the report is available for download at http://www.fin.gov.on.ca/en/reformcommission/chapters/report.pdf).
And if you are an ONEIA member and would like to help craft our strategy to engage the new minority government, come out to an Advocacy Committee meeting! To receive more information, please contact Marjan in our office at email@example.com
Alex Gill is the Executive Director of ONEIA and can be reached at firstname.lastname@example.org or through LinkedIn.