ServiceOntario move to Staples Canada stores cost $1.5M more than gov expected, but savings could come with time: FAO report

A ServiceOntario location is seen in this undated image.

The price tag to move nine ServiceOntario locations to Staples Canada stores last year exceeded the province’s estimate by $1.5 million -- including more than $1 million in one-time set-up costs -- but savings could materialize with time, according to a new report.

The Financial Accountability Office of Ontario (FAO) released its findings Wednesday morning a year after the Ford government announced the plan to close the privately-owned locations and expand operating hours.

Originally, the province had pegged the cost of the three-year contact at $10.2 million, but the FAO says that was an underestimate and the deal will total $11.7 million in spending, with $10 million going to labour and overhead costs and a single payment of $1.7 million to retrofit stores to accommodate the kiosks. The latter cost remained mostly a mystery until the release of Wednesday’s report, despite questions from the media for transparency on the cost.

Ford justified the move at the time by saying residents were struggling to access ServiceOntario locations within their existing service hours. As a result of the move, service levels will expand by increasing operating hours by nearly 50 per cent, which will be partially offset by a 30 per cent reduction in the number of service desks, according to the report.

To determine the net financial impact to the province, the FAO estimated the cost of keeping the original ServiceOntario in tact under two different scenarios: the first being if the original operators were retained based on the terms of their previous agreements, and the second being if the original operators expanded their service levels and initiated a revised compensation structure that goes into effect this year.

Under the first scenario, the province would have paid $10.9 million to keep the original operators in place, with the hours of operation, number of service desks, and compensation structure unchanged, the FAO said. In that case, the province’s new plan costs $800,000 more. The province previously estimated its Staples Agreement would save $900,000 over the course of the deal, according to the report.

However, in the second scenario, which factors in expanded service levels, hours, and additional services at the previous locations, the province would have spent $12.9 million, meaning the province will save actually save $1.2 million over the three-year life of the agreement.

The Province did not provide an estimate using the assumptions of the second scenario, the FAO said.

In a statement to CTV News Toronto, a spokesperson for Todd McCarthy, minister of public and business service delivery, said the report “confirms” the value of the government’s partnership with Staples.

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

The three-year pilot program is scheduled to end on Jan. 31, 2027