The Politics of Public Money

On January 10, 2008 I had the pleasure of being on a panel with David Good from the University of Victoria who has just published a new book under the auspices of the IPAC Book Series in Public Management & Governance. It is entitled “The Politics of Public Money – Spenders, Guardians, Priority Setters, and Financial Watchdogs inside the Canadian Government.”

The session was co-sponsored by the Toronto Regional Group of IPAC and by the IPAC National Office and very well attended (over 80 registrants).

David’s book is a comprehensive review of the evolution of the budgeting process at the Federal level. The forces at play that he describes – the interaction between the four key players in the budget process – spenders, guardians, priority-setters and watchdogs – are also relevant to other levels of government and provide the “lay” reader with an appreciation and understanding of the forces at play. It is a good way to describe the modern budget framework that has evolved in Canada. As he also notes, there are a myriad of other forces both public and private that affect these four players and the dynamics of their interaction.

To quote David’s book: this framework “helped us to see the uneasy balance among the competing budgetary objectives – determining fiscal aggregates, allocating resources, and achieving efficiency in the management of expenditures. In terms of budget outcomes – controlling total expenditures, linking expenditures to priorities and ensuring efficiency in expenditure and avoiding financial mismanagement – we see that it is rare that the government can achieve simultaneously high scores in all three areas. Instead, as government focuses its limited attention and scarce resources on one, it gives less priority to another, sometimes with significant and undesirable consequences.”

The budgetary process is one in which scarce resources are allocated amongst a broad range of seemingly worthy programs and priorities. The dominance of one of the player (guardian versus spender) over another is determined in large part with the particular fiscal circumstance that the government finds itself in as well as the public mood or politics. The periods of relative success of guardians are those when the economic and fiscal circumstances of the government were such that priority-setters had no choice but to make fiscal considerations paramount. We see this at the federal level in the mid-1990’s and in provinces around that time and also later. The era of having acceptable deficits has ended and the public expectation was of a balanced budget. This was reflected in the retrenchment that one saw in governments of all political stripes across Canada.
The stresses at the provincial and municipal levels are greater in that they are more directly responsible for direct service delivery – health care, education, social services, etc.

The emergence of the financial watchdog – Auditors General – has greatly impacted the budgetary process and the public perception of that process. The new accounting rules promulgated by the Public Sector Accounting Board (PSAB) and enforced by Auditors General have changed budgeting in Canada and new upcoming rules will further change the budgeting process. I will comment more about this in a forthcoming post on my blog.

This book is a must read for anyone interested in the budgetary process in Canada and also for those who want to understand how to impact that process. Kudos David!!