Ford government’s ServiceOntario move to Staples will cost $11.7M, exceeding initial estimate: FAO

The Financial Accountability Office of Ontario (FAO) released a report on Wednesday concluding that the Ford government’s decision to move nine ServiceOntario centres into Staples Canada stores will cost $11.7 million, more than $1 million than the province’s initial estimate.

In 2024, as first reported by CityNews, some privately run ServiceOntario outlets were shut down with little notice and moved into Staples and Walmart locations as part of a sole-sourced, three-year, taxpayer-funded deal. Previously, the nine ServiceOntario centres had been privately operated and relocated following their existing agreements’ expiry.

Six ServiceOntario centres were moved on Feb. 1, 2024, followed by the remaining three on May 9, 2024, Sept. 12, 2024, and Dec. 4, 2024. Each centre will operate until Jan. 31, 2027.

On Wednesday, the FAO found that the cost estimate of $11.7 million is $1.5 million higher than the government’s original assessment of $10.2 million.

“The FAO estimates that the cost to relocate and operate the nine ServiceOntario centres in Staples Canada stores will total $11.7 million over the duration of the Staples Canada agreement to Jan. 31, 2027,” the FAO said. “This is comprised of $1.7 million in one-time set-up costs in 2023-24 and 2024-25 and $10 million in labour and overhead costs over the duration of the agreement.”

The financial watchdog attributed the higher cost estimate to using the actual operating hours of ServiceOntario locations within Staples Canada stores, which increased by 47.7 per cent compared to the original locations. In contrast, the province’s cost estimate was based on an anticipated 30 per cent increase in operating hours.

“However, this will be partially offset by a 30 per cent reduction in the number of service desks,” the FAO noted.

The province’s financial watchdog compared the total cost of the agreement against two scenarios: retaining the original ServiceOntario locations based on the terms of their previous contracts and retaining the original operators with expanded service levels and a revised compensation structure starting in 2025.

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The FAO concluded it would have cost more if the Ford government renewed its agreements with the nine original ServiceOntario centres with expanded service levels. However, operators tell 680 NewsRadio that they were never asked to do this.

The FAO estimated that retaining the original ServiceOntario operators with the previous hours of operation, number of service desks and compensation structure would have cost the province $10.9 million. This means the $11.7 million cost of the Staples Canada agreement would result in an additional fee of $0.8 million.

Ontario minister defends government’s actions

A spokesperson for Todd McCarthy, the minister of public and business service delivery, said the government is sticking to its claim that the move saves taxpayers money despite the FAO finding that it costs taxpayers $800,000.

“With more than $1.2 million in cost-savings and 50 per cent more hours of service, nearly one-third of transactions are taking place during the extended hours,” the statement reads. “It is clear that this new approach to deliver more convenience and access is working.”

Staples Canada was expected to receive compensation from the government for “one-time set-up costs” related to the relocation of ServiceOntario centres and the ongoing operating expenses, factoring in the number of service desks and staffing costs at each location.

McCarthy said last year that the move was partly about saving taxpayer money—initially projected at $900,000 over three years, mainly through not paying leasing costs.

In its report, the FAO indicated that the purpose was to “examine the financial impact” of the province’s plan to relocate the nine ServiceOntario centres into Staples Canada stores.