Renewal
January 14, 2014

Blueprint 2020: Forging the future

There has been no shortage of change initiatives driven by federal Clerks of the Privy Council: Public Service (PS) 2000 under Paul Tellier and La Releve under Jocelyne Bourgon come to mind. The most recent, launched by the current Clerk, is Blueprint 2020.

There has been lots of chatter about why it is different, much of it centred on process: the Clerk has supported, and launched, social media platforms for gaining input. These platforms buttress the obligatory and traditional processes and reporting that will be coming from departments and communities.

The real question is: will any of this make a difference? Change initiatives led from within organizations are notoriously cautious. The fact of the matter is that they are institutionally driven and as such there remains an interest in ensuring that the change is marginal, to say the least.

Ask cynical old public servants about PS 2000 and La Releve. They will suggest that there was little long-term impact.

The promise of Blueprint 2020 seems greater. For one thing, there is the consultation process itself, which has in fact opened up input. For another, it is the ambition that seems to call for greater things.

Blueprint 2020 has set out a clear vision. The drivers of change are identified: complexity and interconnectedness, technological change, demographic shifts, growing demands for accountability and changing workforce expectations. This is the Clerk saying, “Look, this is happening around us, and we better take stock of it.”

From there, the Clerk drops the gloves on what the goal is. It is not just about better administrative procedures; it is about a future that he defines in the following clear terms: an open, networked environment, a whole-of-government approach, a modern workplace using modern technologies, and a confident, high performing workplace.

The Interim Report tells us there is broad support for the vision and puts forward five priority areas for action identified by respondents.

So let’s assume that from this process there comes a new, different and useful roadmap, a practical blueprint, that tells the federal government how to get from here to there: from today’s closed, silo-ed, old-fashioned workplace with unhappy, dispirited workers to the transformative future the Clerk and participants have identified.

Then two challenges will present themselves. First, will the transformation plan meet expectations? The Interim Report says there is “skepticism” about implementation.

Second, even with a plan, will the government of Canada, this hugely complex and multi-faceted organization, be able to transform itself in the next six years? Are its leaders – those who will inherit this Clerk’s mantle and the deputy heads who, after all, have mastered the system and are doing pretty well by it, thank you very much – interested in taking on the burden and the risk of such transformative change?

If they take up the mantle of transformation, then the federal public service could become a model for the world. If not, Blueprint 2020 will become just one more change initiative launched by the Clerk of the day.

Both the Fraser Institute and the Canadian Centre for Policy Alternatives are independent research institutes, albeit cut from different ideological cloths, the former to the right and the latter to the left in the political spectrum. Don Tapscott is an internationally known consultant and expert in technology and innovation and how they impact society and institutions.

Sean Speer and Charles Lammam of the Fraser Institute, Bruce Campbell of the Canadian Centre for Policy Alternatives, and Tapscott give us their visions for government, six years from now, in the year 2020.

— Toby Fyfe

 

The right scope and size
by Sean Speer and Charles Lammam

The Clerk of the Privy Council’s Blueprint 2020 exercise is a positive step in redefining the role and functions of the federal public service in Canada. It asks important questions about how the public service needs to evolve, what best practices it should adopt, and how the federal public service can come to represent a competitive advantage for the country. We laud the Clerk and the entire public service for this introspective initiative.

However, a key question omitted from the blueprint document is: what’s the right size and scope of the federal government in 2020?

The fact is, the resources dedicated to public services can be reduced without a necessary trade-off in economic and social outcomes. Indeed, a smaller, more focused, and well-managed public service would produce better outcomes for Canadians in 2020 and beyond. To achieve this end, the federal government should undertake a systematic review of its programs and services – using the Program Review experience of the 1990s as a model – to ensure that it delivers on its core functions in the most efficient way possible.

In his recent annual report to the Prime Minister on Canada’s public service, the Clerk stated: “to succeed, a leaner public service must be one that is continuously performing at peak productivity.” Blueprint 2020 is an opportunity to deliver on this worthwhile objective.

The case for a focused, well-managed public service is not ideological. There is considerable empirical research on the size of government and its impact on economic and social outcomes. Economists have measured the effect of the size of government on economic growth and social outcomes such as life expectancy, infant mortality, homicide rates, educational attainment, and student reading proficiency. They have also explored the connection between the size of government and the efficiency of public sector outcomes across a host of indicators.

In a recently published study by the Fraser Institute, Measuring Government in the 21st Century, Lakehead University Professor Livio Di Matteo makes a significant contribution to this literature. His research produced three important findings.

First, Professor Di Matteo finds there is a positive association between government spending and favourable social outcomes but that much of the relationship is for lower amounts of spending with a leveling off of incremental improvements as the public sector’s size exceeds a certain level. Specifically, he finds a positive correlation between government spending and social indicators like life expectancy and education attainment when the share of total spending goes from 20 percent to 35 percent of gross domestic product (GDP). But improvements in the performance indicators are generally limited once the size of government exceeds 35 percent. Thereafter, any improvements are small and require substantial incremental increases in the share of total government spending in the economy.

Second, he uncovers a ceiling after which the size of government starts to have a negative effect on economic growth. After controlling for confounding factors through regression analysis, he finds that annual per capita GDP growth is maximized at three percent when government spending consumes 26 percent of the economy. Economic growth rates start to decline when relative government spending exceeds this level. In other words, there is a hump-shaped relationship between the size of government and economic growth with the sweet spot being achieved at 26 percent of GDP.

The premise that underpins these two findings may be a bit counterintuitive. It seems self-evident that government programs and services contribute to social and economic well-being. More police officers keep our streets safer. New infrastructure helps to promote commerce and trade. Additional funding for education helps children learn and grow into productive adults. The research shows that certain levels of public services do indeed contribute to the economy and help to achieve positive social outcomes. That is not in doubt. The fundamental question is whether there is a point at which incremental public spending impedes economic growth and only achieves higher social outcomes at great marginal cost.

Finally, Di Matteo estimates the efficiency of public sectors in 34 advanced countries. Efficiency is measured by accounting for the resources used to deliver various outcomes; higher efficiency results when fewer inputs (smaller government) produce greater outputs (better economic, health, and social outcomes). While Canada ranks eighth among the countries in efficiency, there is certainly room for improvement. According to his calculations, if Canada’s public sectors (all levels of government) were as efficient as South Korea’s (the highest-ranking country), its total government expenditures would be 29 percent of GDP instead of the current 41 percent.

Implications for Blueprint 2020
Di Matteo’s findings mean there is room to improve the efficiency of Canada’s public sector and it can begin by using this exercise at the federal level to think about the government’s core responsibilities and eliminate those activities that do not contribute positively to economic growth.

The blueprint document refers to regular reviews of programs and services “to help the Government determine whether they are still required and whether adjustments are needed to ensure that they are effective, efficient, and focused on the needs of Canadians.” This is a good start but this type of review process implies tinkering on the margins rather than a more fundamental look at the right role and scope for the federal government.

The government should instead launch a process similar to the Program Review exercise of the 1990s to test the effectiveness of government organizations and their programs and services. Program Review was different than subsequent spending review exercises at the federal level in that its mandate involved asking questions about whether certain organizations and programs should be reformed, devolved to other levels of government or the private sector, or discontinued altogether. Departments applied six tests to all of their spending and activities in order to come to these decisions.

The exercise led to a significant structural change in the federal government’s involvement in the Canadian economy, including a 60 percent reduction in subsidies to businesses and divestitures of major Crown corporations such as airports and the air navigation system. These reforms produced considerable fiscal savings, reduced the size and scope of the federal government, and ultimately helped usher in a period of sustained economic growth and job creation.

This final point is worth emphasizing: Canada’s total government spending as a share of GDP fell from 53 percent in 1992 to 39 percent in 2007 and despite this 14 percentage point decline in the size of government the economy grew, the job market expanded, and poverty rates fell dramatically.

Professor Di Matteo’s findings, along with Canada’s own experience, tell us that an ambitious refocusing of the scope and size of government both federally and provincially can lead to improved services for Canadians and better economic outcomes. Blueprint 2020 should work towards that end.

 

Sean Speer is associate director of Fiscal Studies and Charles Lammam is resident scholar in Economic Policy at the Fraser Institute.

 

Whither Government in 2020?
by Bruce Campbell

The purpose of government is to provide the goods and services that we as a society agree should be provided collectively through our taxes.

The longstanding campaign to reduce tax levels has been successful. Since the mid-1990s, overall tax revenue in Canada has dropped from 36 percent to 31 percent of GDP. This represents a loss of an incredible $90 billion in revenue available to all levels of government this year alone. As a result, the size of government at all levels has shrunk.

This has been accomplished by separating taxes from the services governments provide, ignoring the services side of the equation, and arguing that tax cuts won’t affect public services.

My colleague, Hugh Mackenzie, in his 2009 study, Canada’s Quiet Bargain, calculates that for the median household, benefits from public services are equivalent to two-thirds of its market income. He concludes that when the cost of tax cuts in lost public services is taken into account, most Canadians have been losers from most of the tax cuts implemented over the past 15 years.

Fiscal measures have major redistributive impacts. For example, Mackenzie shows that the cuts to the capital gains tax have overwhelmingly benefited the richest one percent of households. Almost 90 percent of Canadians would have been better off if the federal government had not cut capital gains taxes and used the revenue instead to improve federal public services. The promised income splitting tax cut will also disproportionately benefit the most affluent families.

The vicious circle of tax cuts and public services deterioration explains in part the [Mayor Rob] “Ford Nation” phenomenon. Many of its supporters are low-income, precariously employed workers, who are alienated from government and who don’t perceive that they get much in the way of public services for their taxes. They are receptive to the tax-cut mantra, preferring the (false) promise of a few dollars in their pockets to spending on services that they don’t perceive benefit them. This unholy alliance between the richest one percent and the poor is troubling for the health of our democracy.

As daunting as it may seem, moving toward 2020, governments need to reconnect taxes and public services, to begin to rebuild fiscal capacity, and ensure that fiscal measures are equitably distributed.

Pure policy
A key function of the public service is to provide expert and impartial advice to policymakers. This capacity has been incrementally hollowed out over the years, whether through the reduction of in-house policy capacity or the elimination of arm’s-length policy research bodies funded by the federal government. Moreover, Statistics Canada’s ability to provide the data essential for sound, evidence-based policymaking has been weakened.

For governments whose propensity is to base policy much more on “gut feelings” linked to ideological preconceptions, the erosion of policy capacity has not been an unwelcome development.

It has also led to privatization of policy advice. Governments contract out, or otherwise seek policy advice from, outside consultants and corporate funded think tanks. This advice is more expensive, often of inferior quality and less than impartial, resulting in costly policy outcomes such as the F-35 and helicopter procurement fiascos.

The demise of public service policy capacity has also meant the loss of a vital filter between the politicians and pressure from business interests, giving legions of lobbyists greatly enhanced influence over policy decisions.

Many civil society voices have been silenced. Diversity of voice is essential to a healthy democracy. Government needs to listen to all voices, not just to business interests and the echo chamber of its own ideology.

Government by 2020 will hopefully have seen the folly of the current path and will be taking serious steps to rebuild this essential function of its public service. It needs protection from private pressure. It needs to be a countervailing influence, one that is capable of delivering sound policy advice that is essential to its “good government” mandate entrenched in Canada’s constitution.

Regulation
Another function essential to good governance is the ability to regulate: to protect Canadians’ health and safety, and their environment in their homes, their workplaces, and their communities.

Business over the years has crusaded for the reduction or elimination of regulations, which they see as a cost and a burden. Aided and abetted by lobbyists and allied think tanks, they have exerted a disproportionate influence on regulatory policy. A laissez faire attitude to regulation is embodied in the very term “red tape,” which implies that regulations are a burden on business rather than a legal mechanism to protect the public interest.

My recent report, The Lac-Mégantic Disaster: Where does the Buck Stop?, reveals a deeply flawed regulatory regime, which allows profit-seeking corporations to effectively regulate themselves. Railway industry lobbyists stalled the imposition of new regulations to handle the enormous increase in the transportation of oil by rail over the last five years. Budgets have been so constrained that regulators lacked sufficient resources to properly enforce regulations that do exist, seriously compromising transportation safety.

The accident has shaken public confidence, which needs to be restored. Government needs to take back regulatory authority ceded to corporations.

A culture of distrust
Another disturbing trend that needs to be addressed is the culture of distrust and disdain that has become endemic within government. Morale among public servants is at an all time low. Politicians’ use of terms like “bloated bureaucracy” or “dead weight” reinforce the perception that their work is not valued.

Obsessed with reducing red tape in the private sector, governments have burdened the public sector with new layers of sclerosis. Surveys show high levels of work frustration and stress, and falling levels of job satisfaction, motivation and organizational loyalty.

The culture of distrust is also reflected in the attack on public sector unions. The changes proposed in Bill C-4 will result in a more conflict-ridden relationship between politicians and the public service, and further compromise its impartiality.

Former Parliamentary Budget Office head, Kevin Page, has been blunt in his criticism of the highest echelons of the public service for being complicit and not speaking out against the government agenda. Page’s hope for change comes from below, from the generation now entering the public service.

A vision for 2020
Going forward, these negative trends need to be reversed. This does not mean returning to an imagined past that never really existed as such, and in any case is not an option.

In a transformed world, governments must cope with a new reality: new pressures, new constraints and new opportunities. That does not make them any less relevant. On the contrary, more than ever in the current domestic and global environment, no country can afford to be without a strong government of which an integral part is a strong public service.

It is time to discard the antediluvian claim that government is inherently unproductive and a drag on the economy. The mantra – taxes are bad, government is bad, less of both is better – is a recipe for failure. A strong and dynamic public sector is an essential source of wealth creation and critically important to a well functioning private sector.

How government advances the public good in the year 2020 and beyond, is the challenge of our times. What we do in the years leading up to 2020 will shape the well being of our society for generations to come.

 

Bruce Campbell is executive director of the Canadian Centre for Policy Alternatives.

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