All’s fair in love and war
JOHN LILY (1578): EUPHUES: THE ANATOMY OF WIT
The surreal paradox of government is that nothing is what it seems and perception is reality. Change, risk, and ambiguity are constant companions. When the stakes are steep, the rules of fair play are suspended. No prisoners are taken. Much is excused, despite bad behaviour. The price is deemed worth paying for a just cause. In times of protracted austerity, all is fair in politics and budgets.
Restructuring was a panacea for coping with the economic and budgetary pressures of the New Public Management era. Governments streamlined and strengthened public services systematically. They generated flexible institutional arrangements that were more adaptable to economic and fiscal downturns. Canada, for example, steered its way to a decade of prosperity and balanced budgets under the banner of Program Review and Alternative Service Delivery.
By the turn of the millennium, governments were relinquishing hegemony in service and control. Reform was evolving from transformation to collaboration, featuring networked government. Progress depended upon placing the people most affected at the centre of decision making and service delivery. And a capable public service grounded itself in the principles of good governance.
Austerity has returned with a vengeance. The fiscal and budgetary residue of global economic crises fans the flames of expenditure management. Governments are searching for the right mix of program cuts, investments, and improvements. Many opt for crude, short-term wage reduction and public service downsizing. Few develop systemic capacity for institutional self-examination and innovation.
How are public programs and spending reviewed in a period of austerity and sluggish growth? Consolidation episodes reveal the dilemmas of simultaneously managing deficits and fueling priorities, reducing costs and raising revenues, increasing efficiency and improving service, and boosting productivity and building capacity. The challenge is to learn ‘what works well, where and why’, reconcile the contradictions of setting, and adapt strategies for comparative advantage.
Harvard’s Robert Behn observes: “Today, the budgetary process makes no one happy; instead it just makes almost everyone livid and resentful …. The rewards for cutback leadership are few, while the political punishment can be severe.”
In a new IPAC case pack entitled Hacking and Slashing: The Challenges of Reducing and Reallocating Budgets, Andrew Graham profiles seven common budgeting issues:
- Across-the-board cuts fail to target lower-priority programming and differentiate impact.
- Doing more with less stereotypes efficiency with unrealistic political and anti-taxation rhetoric.
- Reallocation of funds depends upon informed decisions on surpluses, gaps, and redundancies.
- Hollowed-out programs do not sustain savings against unchanged expectations and transition costs.
- Resistance to change protects political and special interests in service level and delivery.
- Managing the process means having a humane and fair human resource management strategy.
- Consolidation and centralization require upfront investment to achieve economies of scale.
In tough times, less is more; that is, making things right by focusing on the critical few rather than on the trivial many. Activist budgets invest in doing the right things right. The object is to turn things around after a period of neglect and/or to leapfrog to an innovative future.
The fledgling Liberal Government faced a minefield of election promises, emergent priorities, and unanticipated fiscal realities in its March 2016 Budget. The Prime Minister and Cabinet were forced to make deft trade-offs, knowing that they could not satisfy everyone and that they had to play the long game for political survival. The balancing act of overdue enrichments and deficit financing garnered surprising support, both from middle-class Canadians and Bay Street.
Innovative middle managers
Political leaders assume that the public service is taking care of the business of government. Managers need to move beyond simply reacting with budget practices that identify lower priorities, efficient work routines, and strategic investments. They must also master strategic people management alongside sound financial management. This means implementing and communicating critical changes.
Innovation is a valued competency. If middle managers obsess about efficiencies, there is little slack for learning and innovation. They need to chase variety, uncertainty, and conflict to generate innovation. This means consulting, multi-tasking, and stretching resources to explore new possibilities and capabilities. Innovation remains core to performance while managing for stability and consistency.
Middle managers can be more than prudent budget managers. They must shift from guardians and gatekeepers for decision makers to connectors and facilitators of innovation. Unleashing innovation in mainstream budgeting helps align expectations and sustain enabling relationships.
JOHN WILKINS IS ASSOCIATE DIRECTOR: PUBLIC MANAGEMENT WITH THE SCHULICH SCHOOL OF BUSINESS, YORK UNIVERSITY (JWILKINS@SCHULICH.YORKU.CA). HE WAS A CAREER PUBLIC SERVICE MANAGER IN CANADA AND A COMMONWEALTH DIPLOMAT.