Canada can achieve a balance between government spending and services by focusing on efficiency, effectiveness, and evaluation
A common point of contention among political parties in Canada centres on government spending. How much should it be? Should it increase or decrease?
Those on the right clamour for fiscal prudence: governments are too wasteful and should be spending less both now and in the future because what the government spends has to be paid for, and there are only two ways to do it.
One is from tax revenue, and most of us feel that we are already giving up more than enough of our hard-earned income in taxes. Finding anyone else to pay the tax is difficult. There’s a common belief that taxing something leads to less of it, while subsidies encourage more of whatever is being supported.
The second way is by borrowing. It is easy for governments to go into debt. Savers and investors are eager to buy bonds from stable countries like Canada. Of course, the interest that must be paid on those bonds is the first charge on any future tax revenue, burdening citizens into the future.
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On the other hand, say those on the left, a civilized society like Canada needs and depends upon a certain level of government services. In the 21st century, we want more than the basics of peace, order and good government, which we already take for granted.
We also expect enough well-maintained infrastructure to keep us all safe, a public education system sufficient to allow us all to become the knowledge workers that today’s economy needs, and, it goes without saying, adequate available healthcare.
Especially in healthcare, but also in other areas, the demand is for increased services, not cutbacks. Many of us know people who lack access to a family doctor or who endure long wait times while suffering from illness or pain. This highlights the need for expanded services rather than reductions, as the current system struggles to meet the needs of all citizens.
Do we have to choose between deteriorating public services or a future burdened with ever higher taxes and government debt?
There is a solution. We can maintain a degree of fiscal prudence and make available the government services we want and need by applying the three E’s to how our government operates: efficiency, effectiveness and evaluation.
Efficiency and its close cousin, productivity, mean getting the maximum output from the minimum input. In the private sector, controlling costs and remaining competitive ensures efficiency.
In the public sector, no such constraint exists. Incentives don’t always encourage cost-saving or productivity. Often, if a department doesn’t use its entire budget, it risks receiving less funding the following year. Also, having more employees can sometimes lead to higher pay grades for managers. Changing these practices could make government operations more efficient, allowing them to deliver more services at a lower cost.
Effectiveness answers the question: Are you achieving your intended goals? Activities are undertaken with specific objectives in mind, such as completing a bridge on time and within budget or reducing the number of patients on medical wait lists. While government projects are designed to produce these results, systems to measure the outcomes of such actions are rarely implemented. Very seldom, however, are systems put into place to determine the results of any actions.
This brings us to the third “E”: evaluation. When initiating any activity, it’s crucial to clearly define the desired outcome in measurable terms. An evaluation structure should then be established to assess whether and to what extent the goal was achieved. Effective evaluations not only measure the success of a project but also gauge its efficiency, ensuring that resources are used wisely and objectives are met. This process helps improve both the effectiveness and efficiency of government projects and initiatives.
Evaluations are often avoided because people fear the negative consequences of a poor outcome. Some consequences should follow. Otherwise, why, do the evaluation? However, rather than being punitive, any subsequent action should be considered an opportunity to learn what went wrong, how we can fix it, and how to be more efficient and effective in future projects.
Much of the political dysfunction we see today comes from divergent views on key issues. Those on the left and the right both make valid points about government spending. As shown here, a middle ground exists where both sides can come closer to their desired objectives.
Societies thrive when politicians and others move away from extreme positions and seek common ground that provides the greatest benefits. By focusing on shared goals and finding compromises, they can create policies that better serve the collective interests of the population.
This approach fosters co-operation, reduces polarization, and leads to more effective and inclusive solutions that address the needs of a diverse society.
Dr. Roslyn Kunin is a respected Canadian economist known for her extensive work in economic forecasting, public policy, and labour market analysis. She has held various prominent roles, including serving as the regional director for the federal government’s Department of Employment and Immigration in British Columbia and Yukon and as an adjunct professor at the University of British Columbia. Dr. Kunin is also recognized for her contributions to economic development, particularly in Western Canada.
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