It’s crunch time. The next federal and Ontario budgets will start eliminating deficits. This, in turn, will shape the agenda in Ottawa and Queen’s Park for years to come.
According to conventional wisdom, there are three ways to balance a budget: cut spending, raise taxes, or some combination of both. Lately, however, there’s talk of a fourth option: transforming government.
We can shed some light on this term by comparing deficit reduction in Ottawa and Ontario.
Last week in Davos Prime Minister Stephen Harper outlined his plan to get spending under control. Deficit reduction, he says, is linked to a larger set of issues, including changing demographics and weakening demand from our key markets in the United States.
An aging population will increase the cost of social programs, such as health care and Old Age Security, at the same time that it shrinks the work force whose taxes pay for these programs. Finally, sluggish growth in the U.S. means our biggest markets are shrinking.
Harper’s plan is to reduce the cost of social programs, re-focus immigration on rebuilding the labour force, and treat energy and other natural resources as strategic assets to find new markets in Asia.
The Prime Minister calls his plan transformational, by which he seems to mean it will result in a smaller, leaner and more business-oriented government that can help Canadians position themselves in a highly competitive, global economy.
However, critics reply that there is nothing new or transformative in this approach. They say it has been with us at least since Margaret Thatcher and Ronald Reagan, and is really about shedding key social and environmental responsibilities in order to balance the budget and support business.
We’ll come back to this, but first let’s look at what’s going on in Ontario.
Economist Don Drummond is advising Ontario on how to balance its budget by 2017-2018. When Drummond’s report is released next month, a tidal wave of cost-cutting will almost certainly follow. Some ministries are expected to lose up to 30 per cent of their budget over the next few years.
Still, Drummond argues he’s not just telling government to hack off its limbs to save the body. He insists that his plan is transformational. What does he mean?
More than 80% of Ontario’s budget goes directly into services, such as health, education, community services and transportation. This gives Drummond a big operational space in which to argue for a genuine re-thinking of government.
In a nutshell, Drummond is calling for better alignment between the province, municipalities, not-for-profits and business, all of whom are involved in designing and delivering public services.
Studies agree that these players are poorly coordinated at almost every level and that better coordination would improve efficiency and effectiveness, which, in turn, would reduce costs and increase productivity.
So, in layman’s terms, alignment is about better coordination; and, at bottom, transformation Ontario-style is about a new partnership in the delivery of public services.
But there’s a hitch. Real alignment takes time and hard work. There will be a steep learning curve. Unfortunately, the pressure for rapid progress on the deficit will be huge, making it very tough for deputy ministers who want to change how government does business.
Indeed, it is a fair question whether senior bureaucrats will have enough breathing space to do anything beyond simply coping with the fallout from the budget.
There is a second shoe to drop. The Commission for the Review of Social Assistance, co-chaired by Frances Lankin and Munir Sheikh, was struck in January 2011 and tasked with investigating the question of how to design and deliver social assistance programs more holistically.
When Lankin and Sheikh report in June they will likely have much to say about the need for alignment. The question now is whether their report will fall on deaf ears or whether the cuts will give it real traction.
This brings us back to the feds. I think Harper is right that Ottawa is moving into a new policy environment that requires real change. I think he is also right that such change must address key issues in a comprehensive way, rather than solving them piecemeal.
However, the criticism that Harper’s smaller, leaner, pro-business solution involves a shedding of key social and environmental responsibilities is worrying. Is there an alternative?
If so, it cannot follow the same path as Ontario. Most federal programs are little more than transfers of money to individuals, organizations and provinces. But cutting a cheque leaves little room for the kind of alignment now being discussed in Toronto.
So let me conclude with a question: What would a more “progressive” approach to transformational change look like at the federal level? It is a question that certainly needs answering, but one which I must leave for another day.
Original Article
Source: iPolitics
Author: Don Lenihan
According to conventional wisdom, there are three ways to balance a budget: cut spending, raise taxes, or some combination of both. Lately, however, there’s talk of a fourth option: transforming government.
We can shed some light on this term by comparing deficit reduction in Ottawa and Ontario.
Last week in Davos Prime Minister Stephen Harper outlined his plan to get spending under control. Deficit reduction, he says, is linked to a larger set of issues, including changing demographics and weakening demand from our key markets in the United States.
An aging population will increase the cost of social programs, such as health care and Old Age Security, at the same time that it shrinks the work force whose taxes pay for these programs. Finally, sluggish growth in the U.S. means our biggest markets are shrinking.
Harper’s plan is to reduce the cost of social programs, re-focus immigration on rebuilding the labour force, and treat energy and other natural resources as strategic assets to find new markets in Asia.
The Prime Minister calls his plan transformational, by which he seems to mean it will result in a smaller, leaner and more business-oriented government that can help Canadians position themselves in a highly competitive, global economy.
However, critics reply that there is nothing new or transformative in this approach. They say it has been with us at least since Margaret Thatcher and Ronald Reagan, and is really about shedding key social and environmental responsibilities in order to balance the budget and support business.
We’ll come back to this, but first let’s look at what’s going on in Ontario.
Economist Don Drummond is advising Ontario on how to balance its budget by 2017-2018. When Drummond’s report is released next month, a tidal wave of cost-cutting will almost certainly follow. Some ministries are expected to lose up to 30 per cent of their budget over the next few years.
Still, Drummond argues he’s not just telling government to hack off its limbs to save the body. He insists that his plan is transformational. What does he mean?
More than 80% of Ontario’s budget goes directly into services, such as health, education, community services and transportation. This gives Drummond a big operational space in which to argue for a genuine re-thinking of government.
In a nutshell, Drummond is calling for better alignment between the province, municipalities, not-for-profits and business, all of whom are involved in designing and delivering public services.
Studies agree that these players are poorly coordinated at almost every level and that better coordination would improve efficiency and effectiveness, which, in turn, would reduce costs and increase productivity.
So, in layman’s terms, alignment is about better coordination; and, at bottom, transformation Ontario-style is about a new partnership in the delivery of public services.
But there’s a hitch. Real alignment takes time and hard work. There will be a steep learning curve. Unfortunately, the pressure for rapid progress on the deficit will be huge, making it very tough for deputy ministers who want to change how government does business.
Indeed, it is a fair question whether senior bureaucrats will have enough breathing space to do anything beyond simply coping with the fallout from the budget.
There is a second shoe to drop. The Commission for the Review of Social Assistance, co-chaired by Frances Lankin and Munir Sheikh, was struck in January 2011 and tasked with investigating the question of how to design and deliver social assistance programs more holistically.
When Lankin and Sheikh report in June they will likely have much to say about the need for alignment. The question now is whether their report will fall on deaf ears or whether the cuts will give it real traction.
This brings us back to the feds. I think Harper is right that Ottawa is moving into a new policy environment that requires real change. I think he is also right that such change must address key issues in a comprehensive way, rather than solving them piecemeal.
However, the criticism that Harper’s smaller, leaner, pro-business solution involves a shedding of key social and environmental responsibilities is worrying. Is there an alternative?
If so, it cannot follow the same path as Ontario. Most federal programs are little more than transfers of money to individuals, organizations and provinces. But cutting a cheque leaves little room for the kind of alignment now being discussed in Toronto.
So let me conclude with a question: What would a more “progressive” approach to transformational change look like at the federal level? It is a question that certainly needs answering, but one which I must leave for another day.
Original Article
Source: iPolitics
Author: Don Lenihan
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