At the time this article was written Sue
Olsen represented Edmonton Norwood in the Alberta Legislative Assembly. This is
an edited version of a paper delivered to the 36th Canadian Regional
Conference in Regina in July 1997.
To understand the rationale behind the
introduction of delegated legislation and regulation in Alberta, it is
important to understand how the government established priorities within the
climate of fiscal crisis that existed in 1993.
According to a former Alberta Provincial
treasurer, Lou Hyndman, cost-cutting and elimination of the deficit is one
specific objective of the Alberta Government but the long-term vision is wider.
"It is to permanently change the relationship between Albertans and their
government and to fundamentally restructure the traditional activities of
Fundamental to reducing the size and
presence of government was a re-evaluation of government involvement in
business. "Is the program or service a core requirement? Does the service
provide a common/public good? Should the province be responsible for the
service? Should the service be the responsibility of the private sector,
municipalities, the federal government or a not-for-profit organization"?1
As a result of answering these questions,
some programs and activities were terminated while others are being contracted
out or privatized. The "Third Option", as it is called, is the creation
of Delegated Administrative Organizations, or DAOs.
A Delegated Administrative Organization is
an arms-length, self-funded, legal entity established for the purpose of
administering a comprehensive management/ regulatory/enforcement program for the
delivery of a service or set of programs traditionally delivered by government.
The DAO is administered by representatives
of stakeholders within an activity or program area and usually also has
representatives from government and the public. While the DAO is responsible
for the delivery of the program, the government theoretically retains control
over standards, legislation, regulations and policy and how they are enforced.
According to the government, the advantages
of a DAO are:
ensure that those individuals most directly receiving benefits assume the cost
empower groups or industry sectors to regulate themselves and resolve their own
reduce the cost to government of enforcing current legislation.
the past three years, the following major DAOs have been established:
Petroleum Tank Management Association of Alberta (PTMAA) to regulate petroleum
storage tanks to prevent leakage and promote public safety.
Alberta Boiler Safety Association (ABSA) to regulate the manufacture and use of
pressure boilers and pressure vessels.
Alberta Elevating Devices and Amusement Rides Safety Association to regulate
the installation and use of amusement rides, elevators, escalators, dumb
waiters, lifts and hoists.
Tire Recycling Management Association to regulate the recycling of used tires.
Alberta Conservation Association to manage the funds for the enhancement of
fish and wildlife habitat and operates the "Report a Poacher"
Safety Codes Council and the Occupational Health and Safety Council also
operate as DAOs.
There are also plans to establish DAOs to
manage the Forest Resource Improvement Program and employment pension units.
Some of the DAOs were welcomed by the
stakeholders. Certainly the Alberta Fish and Game Association was pleased that
the Alberta Conservation Association enables them to allocate funds, and the
Alberta Forest Products Association looks forward to managing the Forest
Resource Improvement Program. However, not everyone is happy with these or
other DAOs that have been set up.
The establishment of the DAO not only marks
a fundamental change in the delivery of government programs, but it changes the
traditional accountability model that has existed between government and the
people in our province. As the Auditor General of Alberta said:
"Accountability is an obligation to answer for the execution of one’s
responsibilities".2 By their very nature, delegated authorities
are not directly accountable to the electorate. Yet, as the Auditor General has
pointed out "Accountability is necessary when responsibility is assigned
or delegated ... an effective accountability framework is required when central
control is reduced or eliminated".3
The Government Organization Act of 1994 is
the enabling legislation that permits the delegation of authority in Alberta.
Section 9 states "... a Minister may in writing delegate any power, duty,
or function, conferred or imposed on him by this Act or any other Act or
regulation to any person".
Strong legislation and regulations could
provide for this accountability but they are not evident in the DAO model being
adopted in Alberta.
The Labour Statutes Delegation, prescribes
the terms and conditions of delegation of ministerial responsibilities by the
Ministry of Labour, the most prominent ministry in which responsibilities have
been delegated to DAOs. However, it is a companion piece of proposed
legislation, the Delegated Administration Act of 1994, never passed into law,
but living on in practice, that set out the detailed framework for the
establishment of the DAO.
Some of the drawbacks to delegated
Minister can enter into a contract or administrative agreement to delegate a
particular responsibility to a private sector corporation through a simple
order-in-council, without requiring debate or the consent of the Legislative
is no specification of the programs and services that could be delegated to
private sector corporations. For example, a recent piece of legislation allows
the Minister of Environmental Protection to delegate "any of the
Minister’s duties or functions ... other than a power to make regulations and a
power to delegate".4
is no appeal mechanism for a person affected by a DAO decision or action. Any
review is at the sole discretion of the Minister.
government is not liable for any action taken by a DAO that causes injury or
raise revenues to fund their operations through fees and assessment levies,
approved by the Minister, without any approval or accountability to the
Legislative Assembly. There may be no incentive for stringent efficiency and
do not fall under the scope of the Financial Administration Act, therefore they
are not directly accountable to the Legislative Assembly or the Auditor General
for their activities. This means that the Auditor General cannot initiate an
investigation of the financial affairs of a DAO on his own accord.
a DAO must submit an annual report and audited financial statement to the
Minister, there is no requirement for timely tabling in the Legislative
government could find it increasingly difficult to monitor the DAOs
effectively, particularly as it relates to appeals and audits, when it no
longer has the expertise in that area within the government.
of a DAO stakeholder group could limit competition and lead to a private sector
monopoly that lacks incentives to control costs and maintain standards.
is a potential to build up bureaucracies within the private sector through
excessive use of delegated legislation. This could result in the transfer of
red tape, regulation and delay to the private sector, rather than leading to
the streamlining of administration that the government desires.
These fears are not without basis. The
proliferation of quasi-autonomous non-governmental organizations or QUANGOs in
Britain is particularly instructive in this regard. A May 1994 study by the British
research organization, Charter 88, found 5,521 QUANGOs in Britain, spending
$46.6 billion in taxpayer dollars on an annual basis, with only 2% of these
QUANGOs subject to the British Open Code of Practice.
A Framework for the Use of Delegated
I believe wholeheartedly that citizens do
not want their government to become a business. We still need a government that
sets priorities for the province in health care, education, social services,
protection of our children and protection of our environment. These are the
fundamental duties of government in a parliamentary system.
If delegation of government programs occurs,
we need a process or framework to address the potential pitfalls of Delegated
Legislation, to ensure that an effective legislative oversight function is
established and maintained. The Institute of Chartered Accountants of Alberta
had the following to say in this regard: "Privatization of non-essential
services has begun. This process must be methodical and well planned. Orderly approaches
are required to achieve effective results".5
would envision the following elements as part of an effective accountability
framework to guide the use of delegated legislation and regulation in Alberta:
of a delegated administration profile to assess whether a particular program,
service or activity is a candidate for delegation to an NGO or private sector
corporation. The profile would examine such issues as market strength,
political resistance, cost efficiency, quality of service, impact on employees,
legal barriers, risk, resources, and monitoring and control.
detailed cost-benefit analysis outlining the cost savings and benefits that
could be achieved by delegating the program or activity to the private sector,
and providing a clear rationale as to how delivery could be improved through
many cases, we should have a full public tender process, for programs that are
to be delegated, to encourage competition and prevent the creation of centres
of private sector monopoly. A request for proposal (RFP), circulated to
prospective bidders would set out clearly stated performance standards and
allow for effective follow-up monitoring by the government and the legislature.
a successful bidder had been selected from the competitive bid process, the
subsequent administrative agreement between the government and the delegated
authority would establish the terms and conditions for the delegation, the
financial and performance requirements, and follow-up monitoring procedures.
Annual reports, business plans and regular audits of DAOs would be reviewed by
the Standing Committee on Law and Regulations, and representatives from the
Board of Directors of the DAO would be able to appear before the Committee to
account for the organization’s activities in meeting the requirements of the
How we respond to the challenges of
delegated legislation and regulation and how we preserve an effective
accountability framework within our parliamentary system, is critical to the
course of democratic government in the future. Former Premier of Alberta, Peter
Lougheed, once said that the parliamentary system "is the most effective
system of democratic action that we know today in the modern world".6
We must work hard to ensure that delegated legislation and regulation does not
undermine that system.
1. Ronald D. Kneebone and Kenneth J.
McKenzie, "The Process of Institutional Reform in Alberta", in
Christopher J. Bruce, Ronald D. Kneebone and Kenneth J. McKenzie, A Government
Reinvented: A Study of Alberta’s Deficit Elimination Program, (Oxford
University Press: Toronto, 1997), p. 205.
2. Auditor General of Alberta, Annual Report
of the Auditor General 1993-94. October 14, 1994, p. 3
3. Ibid., p. 10.
4. Legislative Assembly of Alberta, Bill 22:
Environmental Protection and Enhancement Amendment Act, May 1997.
5. Chartered Accountants of Alberta,
"Staying the Fiscal Course: A Submission to the Provincial
Treasurer," February 1994, p. 10.
6. Alberta Hansard, March 27, 1972, pp.