April 23, 2010

In “Water works wrangle,” in today’s National Post, I discuss recent allegations concerning the public-sector management of Hamilton’s water and wastewater system. If true, some of the allegations (such as those concerning the choice of costly or unnecessary technology) could have serious financial and planning implications. Others (such as the provision of free massages for staff) could raise questions about management’s judgement.

The Hamilton Police Service investigated one issue (the sale of scrap metal for $10,000 cash, which was used in part for a staff barbeque) and concluded that no theft or Criminal Code offences had occurred. The city is currently investigating the other matters.

Although none of the allegations of wrongdoing has been proven, it would be prudent to wait until all investigations are complete before dismissing them and rewarding the system and its managers. Yet in March, the federal and provincial governments announced $200 million in grants for upgrades to Hamilton’s wastewater system. Such grants are premature, given the unresolved questions about the upgrades and the management structure overseeing them.

A second premature reward was announced on Monday: Jim Harnum, senior director of environment and sustainable development for Hamilton and the target of several of the allegations, will be leaving Hamilton and taking a job as director of water treatment and supply for Toronto.

Lou Di Gironimo, general manager of publicly owned and operated Toronto Water, defends making the hiring decision before investigations into the allegations have been completed. Allegations, he says, are allegations. Several have already been resolved. And Mr. Harnum is a “bright light” in his field – someone of whom Hamilton councillors and managers speak very highly.

Mr. Harnum may have been unfairly accused and may the best candidate for the job. But a careful and responsible hiring process should consider all relevant information – information that, in the case of Hamilton, is not yet available.

The advocates of publicly owned, financed, and operated water and wastewater systems often cite accountability as one of the public sector’s greatest attributes. Accountability requires information. (As the Wikipedia entry on accountability explains: “Accountability can not exist without proper accounting practices, in other words absence of accounting means absence of accountability.”) And it requires consequences. Accountable institutions and individuals are answerable for their actions – they are punished and rewarded as appropriate.

It would of course be inappropriate to punish any of the players in Hamilton before all is known. But it is likewise inappropriate to reward them in the absence of a full accounting. Federal and provincial grant makers and the city of Toronto have bypassed elementary accountability mechanisms. It was imprudent to do so.