Canadian News

A bottom line for government

Ian Urquhart December 4 1978
Canadian News

A bottom line for government

Ian Urquhart December 4 1978

A bottom line for government

Canadian News

Ottawa

Like Monty Python’s 16-ton weight, the annual report of the auditor-general dropped on the floor of Parliament last week and the government side shook from the vibrations. In 746 pages, Auditor-General James J. Macdonell and his staff painstakingly documented their case that, in spite of past warnings from them, the government was dragging its feet in efforts to bring its spending under control and, in some cases, had done nothing at all. The auditor-general’s prose was often laborious and jargon-laden, but the main message came through loud and clear: “There is, in my opinion, widespread lack of due regard for economy and efficiency in the operations of the government and inadequate attention to determining whether programs costing many millions of dollars are accomplishing what Parliament intended.”

While last week’s report contained none of the horror stories that have characterized previous utterances from the auditor-general, such as the Bonaventure refit boondoggle or the Atomic Energy of Canada kickback scandal, its impact may be more far-reaching. Macdonell himself immodestly suggests it will be looked back upon as “Canada’s Proposition 13,” a reference to the antitax referendum in California. The reason is that, for the first time, the auditor-general’s staff tried out a new system which Macdonell calls “value-formoney auditing.” In the past, auditing the government’s accounts was basically “a tick-and-check routine,” says Macdonell. The auditor-general was meant only to confirm that spending had taken place in accordance with the letter of the law. Under the new system, the auditor-general now has extended his investigations to ensure that the spending has been undertaken with “due regard” for economy and efficiency and that satisfactory procedures have been established to measure the “effectiveness” of government programs. “It does for non-profit organizations what the bottom line does for businesses,” says Macdonell of the new system.

To initiate the new system, Macdonell set up a special 40-man team under the direction of Kenneth Belbeck, a Toronto management consultant loaned to the auditor-general for two years. Belbeck and his team blitzed a reluctant bureaucracy with special audits and studies that covered selected aspects of

management in 23 of the government’s 29 departments. Their findings, in brief:

• Of 13 major capital projects studied, only two demonstrated “reasonable regard for economy.” Of the other 11 singled out for criticism, most prominent were the lavish new Calgary airport, which started out with a price tag of $57.7 million and ended up costing $127.4 million, and the C.D. Howe building in Ottawa, a glass palace that has escalated from an original estimate of $57 million to the current estimate of $102 million when the last bill is paid. Ironically, the latter houses the office of the auditor-general, along with the department of industry, trade, and commerce.

• Of 16 systems set up by departments to evaluate the efficiency of the bureaucrats they employ, only two were “satisfactory.” The other 14 were little more than make-work projects that col-

lected dust on shelves and “rather than increasing productivity, may have led to a net waste of resources.”

• Of 23 spending programs studied, there were “few” where successful attempts were made to assess the “effectiveness” of the output. Some bureaucrats tried but failed because they viewed it as a “complex, esoteric and difficult, if not impossible” exercise.

Others did not even try. They just kept on spending the money.

The reason for the sorry performance, suggested Macdonell, is the absence of incentives for bureaucrats to do their jobs economically and efficiently. The incentives are all in the other direction: to spend money and build empires. To illustrate this conclusion, Macdonell produced a chart showing a 487-percent increase in government spending in the last 15 years.* “It appears,” he wrote, “that the public purse was gradually deemed virtually bottomless and that access to it was not unduly restricted for the ingenious.”

Macdonell has an effective weapon in the form of publicity. His report was, as always, a major embarrassment for the government and ammunition for the Opposition, particularly the Conservatives who have based their bid for power on a pledge to cut spending. Macdonell himself took some of the edge off the report in comments after its release in which he praised Robert Andras, president of the treasury board for two years until last week’s cabinet shuffle, for his efforts to bring spending under control and said there has been some progress. The government, for its part, tried to drown the auditor-general’s report by scheduling two other important announcements—the jet-fighter decision and Simon Reisman’s report on the auto pact—for the same day. But Macdonell’s message came through, nonetheless, and now the government has little choice but to follow up.

Ian Urquhart

*It should be noted that, in the same period, spending by the auditor-general’s own office increased 1,600 per cent.