You are probably thinking that I am smoking some funny cigarettes or have been hitting the bottle. Taxpayers wanting to pay more taxes? Are you crazy?
But yes, a group of rich Germans have started a petition asking the government to implement a 5% wealth tax for two years. This money would be used to deal with the social and economic needs during this recovery period. Check out the full article on the BBC website.
Now do you think that the wealthy in Canada would make the same request?
Showing posts with label Budget. Show all posts
Showing posts with label Budget. Show all posts
Friday, October 23, 2009
Thursday, October 22, 2009
Fiscal Advice for Governments
The TD Bank reported today that the cumulative deficits of the Federal, Provincial and Territorial governments will add up to $90 Billion this year. And today, the government of Ontario announced a record-breaking projected deficit for this fiscal year of $24.7 Billion and projected deficits of $21.1B in 2010-11 and $19.4B in 2011-12.
These numbers are staggering and governments will not be able to return to balance in the next 5-10 years unless they take a different approach than has been done in the past. Past expenditure management initiatives have traditionally been "across the board" in nature with a strategic approach being an exception rather than the rule. But what is facing governments across Canada is quite different than in the past.
So what is a government to do today? Well here are some thoughts to assist in dealing with this situation to add to my previous blog....
1. Focus on the core activities of government - decide on what is the function of government.
2. Get out of activities that are not part of the core responsibilities of government. For example, is it a core function of government to issue cheques? Why can't that be done by the private sector under a stringent service level agreement?
3. Review remaining functions of government to ensure that they are being run as effectively and efficiently as possible. Implement a lean approach to these activities - there are lots of examples in the public sector of organizations that have implemented a lean approach to it processes resulting in higher productivity, quicker turn around times and increased through-put.
4. Ensure that the tax regime raises the funds required to deliver the services that society has decided is needed from government. It is a fallacy to believe that you can have gold plated level of government services with a very low tax rate.
5. Use evidence to make your decisions and set up measurable outcomes to track progress on your activities.
6. Don't spend your time on little nickel and dime amounts. Remember that it takes just as long to review a small program with very limited spending than it does to look at major expenditure areas.
7. Be careful of unintended consequences of your actions - take a systems approach when looking at spending as a reduction in one area may result in a new pressure in another area.
8. Continue to invest in your staff - put your money where your mouth is when you say that your staff are your best "resource". If you truly mean that, then they also need to continue to develop their skills and share experiences with peers across Canada.
This will not be easy and will require for government to act courageously (as Sir Humphrey would say) and look to the long term.
These numbers are staggering and governments will not be able to return to balance in the next 5-10 years unless they take a different approach than has been done in the past. Past expenditure management initiatives have traditionally been "across the board" in nature with a strategic approach being an exception rather than the rule. But what is facing governments across Canada is quite different than in the past.
So what is a government to do today? Well here are some thoughts to assist in dealing with this situation to add to my previous blog....
1. Focus on the core activities of government - decide on what is the function of government.
2. Get out of activities that are not part of the core responsibilities of government. For example, is it a core function of government to issue cheques? Why can't that be done by the private sector under a stringent service level agreement?
3. Review remaining functions of government to ensure that they are being run as effectively and efficiently as possible. Implement a lean approach to these activities - there are lots of examples in the public sector of organizations that have implemented a lean approach to it processes resulting in higher productivity, quicker turn around times and increased through-put.
4. Ensure that the tax regime raises the funds required to deliver the services that society has decided is needed from government. It is a fallacy to believe that you can have gold plated level of government services with a very low tax rate.
5. Use evidence to make your decisions and set up measurable outcomes to track progress on your activities.
6. Don't spend your time on little nickel and dime amounts. Remember that it takes just as long to review a small program with very limited spending than it does to look at major expenditure areas.
7. Be careful of unintended consequences of your actions - take a systems approach when looking at spending as a reduction in one area may result in a new pressure in another area.
8. Continue to invest in your staff - put your money where your mouth is when you say that your staff are your best "resource". If you truly mean that, then they also need to continue to develop their skills and share experiences with peers across Canada.
This will not be easy and will require for government to act courageously (as Sir Humphrey would say) and look to the long term.
Thursday, October 15, 2009
The Rising Tide of Red Ink
I was going to title this blog “Can we part the Modern Red Sea to reach the fiscal balance promised land?”, but apart that it is maybe too long for a blog title, I really couldn’t see who would play the part of Moses. Though there exist a good set of fiscal rules (aka: the 10 commandments) it seems that most have been discarded during these economic times.
Fiscal balance has gone out the window as stimulus spending by governments in Canada and around the world are the order of the day to try to get out of this made in Wall Street greed based recession. In the USA, there have been bank bailouts, auto bailouts, mortgage lender bailouts, Wall Street investment firm bailouts…it is a wonder that there are any pails left to bail out all the companies under water. In Canada, what was once a land full of fiscal surpluses has turned into a sea of red ink. The federal Government is projecting a deficit of over of $50 Billion. the Ontario government is updating its forecast in its upcoming Fall statement – the last official deficit number was $18.5 B this fiscal year. Watch for it to be easily north of $20 B. Alberta is swimming in red ink ($7 B deficit) instead of oil and gas revenues.
In the first battle against the deficit of the mid-1990’s, the Federal government substantially reduced transfers to provinces as one of their deficit reducing measures. Provincial governments, in turn, reduced spending on health care, education, infrastructure and “non-core” government activities. Many governments reduced the internal administrative and policy functions in their operations and outsourced or eliminated public service positions and froze the hiring of new staff. Municipal governments, in many cases, had their funding from the provincial government reduced and thus had to reduce services to their population or increase property taxes (the most regressive forms of taxation in my opinion, but the subject of a future blog).
We are all cognizant of the impact of these measures………deterioration of our infrastructure, increased wait times for health care, reductions in social supports to the most vulnerable in Canada, elimination of cultural grants, and the list goes on.
Well, I guess we are at that point again. Though governments are presently in a spend mode, you can be sure that the guardians of the public purse are developing strategies and options on how to return to fiscal balance. At the political level, some have ruled out tax increases and reductions in spending. Logically all that remains to achieve balance is economic growth. But how long and sustained must that economic growth be before balance is achieved, especially given the fiscal pressures for more investment in health care (aging boomers) and in education and in maintaining our infrastructure. And this does not include government support to help develop the nirvana of the new economy.
Others will want to cut "fat, waste and inefficiency" in government and in the broader public sector. But governments have been through these processes ever since the 1990's. Many times, governments just implement across the board reductions (while exempting health care & education) that yield little in terms of sustainable savings.
What we need in this country is a new way to look at what government spends the taxpayers money on. We need to take a systems approach to programs and policies; determine what is the exact role of government; and coordinate between the different orders of government by taking a "citizen-based" view. Let me give you a small example. In British Columbia, the Provincial Health Authority has implemented a program called imProve that is looking at the processes in the hospital to make sure that they are focused on the patient. They have been able to streamline processes throughout their hospitals resulting in better patient safety and better quality. At they same time they are able to deliver more services to more patients with the same level of resources.
The old approach to budget constraints will not work. Now is the time for new innovative and bold approaches. Within an efficient and citizen centred provision of services, Canadians must decide what they want from their government and be prepared to pay the appropriate level of tax to sustain those programs and services.
Fiscal balance has gone out the window as stimulus spending by governments in Canada and around the world are the order of the day to try to get out of this made in Wall Street greed based recession. In the USA, there have been bank bailouts, auto bailouts, mortgage lender bailouts, Wall Street investment firm bailouts…it is a wonder that there are any pails left to bail out all the companies under water. In Canada, what was once a land full of fiscal surpluses has turned into a sea of red ink. The federal Government is projecting a deficit of over of $50 Billion. the Ontario government is updating its forecast in its upcoming Fall statement – the last official deficit number was $18.5 B this fiscal year. Watch for it to be easily north of $20 B. Alberta is swimming in red ink ($7 B deficit) instead of oil and gas revenues.
In the first battle against the deficit of the mid-1990’s, the Federal government substantially reduced transfers to provinces as one of their deficit reducing measures. Provincial governments, in turn, reduced spending on health care, education, infrastructure and “non-core” government activities. Many governments reduced the internal administrative and policy functions in their operations and outsourced or eliminated public service positions and froze the hiring of new staff. Municipal governments, in many cases, had their funding from the provincial government reduced and thus had to reduce services to their population or increase property taxes (the most regressive forms of taxation in my opinion, but the subject of a future blog).
We are all cognizant of the impact of these measures………deterioration of our infrastructure, increased wait times for health care, reductions in social supports to the most vulnerable in Canada, elimination of cultural grants, and the list goes on.
Well, I guess we are at that point again. Though governments are presently in a spend mode, you can be sure that the guardians of the public purse are developing strategies and options on how to return to fiscal balance. At the political level, some have ruled out tax increases and reductions in spending. Logically all that remains to achieve balance is economic growth. But how long and sustained must that economic growth be before balance is achieved, especially given the fiscal pressures for more investment in health care (aging boomers) and in education and in maintaining our infrastructure. And this does not include government support to help develop the nirvana of the new economy.
Others will want to cut "fat, waste and inefficiency" in government and in the broader public sector. But governments have been through these processes ever since the 1990's. Many times, governments just implement across the board reductions (while exempting health care & education) that yield little in terms of sustainable savings.
What we need in this country is a new way to look at what government spends the taxpayers money on. We need to take a systems approach to programs and policies; determine what is the exact role of government; and coordinate between the different orders of government by taking a "citizen-based" view. Let me give you a small example. In British Columbia, the Provincial Health Authority has implemented a program called imProve that is looking at the processes in the hospital to make sure that they are focused on the patient. They have been able to streamline processes throughout their hospitals resulting in better patient safety and better quality. At they same time they are able to deliver more services to more patients with the same level of resources.
The old approach to budget constraints will not work. Now is the time for new innovative and bold approaches. Within an efficient and citizen centred provision of services, Canadians must decide what they want from their government and be prepared to pay the appropriate level of tax to sustain those programs and services.
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