Just before
Easter, the Minister of Finance and her officials laid out 65 pages of cuts to
government expenditures. This was the result of a process known as "zero
based budgeting" (ZBB), a process which requires justification for every
individual expense. There is nothing inherently wrong with ZBB. Processes like
this one have their place as long as their limitations are understood.
Anyone with
a basic understanding of how government functions will recognize that it takes
a great deal of work to perform ZBB on an $8 billion operation. While
periodically necessary, if it is ill-timed it accomplishes little more than
giving licence to the folks in the Treasury Board to "be busy being
busy".
But it does
give the public the appearance that the Minister has her "sleeves rolled
up" — another euphemism for action with little purpose — and Bennett wants
to create the impression that she is assiduously tackling the deficit.
Amidst all
this hurly-burly $65 million in savings is being sought as government attempts
to achieve a cost reduction target of $283 million — without causing
significant layoffs.
Examples of
the Minister’s ZBB achievements include "a $13,000 reduction to the supply
budget in the endangered species and biodiversity department and $5,000 less to
the Supreme Court for property, furnishings and equipment".
It all
sounds like good stuff. So why not just get on board?
The first
problem is obvious.
It is
difficult to find $65 million in $5,000 — or even $15,000 — tranches. Just do
the math on the number of cuts needed to hit that mark. Equally problematic is
that many of the savings are merely perceived. They are costs that will
reappear next year. The permanent kind are the ones the government badly needs.
An example
of “temporary” savings is the cut in the budget for furnishings and equipment
at the Supreme Court. Like a worn nail that won’t stay down, it will need to be
hammered again and again. Expenditures on things like equipment, meetings
materials, phones, stationary, travel — the normal requirements of running
programs and services — are not saved but only temporarily delayed.
ZBB is most
effective when it is conducted within a stable operating business environment.
The
government has gone through great pains to demonstrate that it is removing
layers of management from the public service, especially at the Director level
— ostensibly to re-align responsibilities and to reduce duplication.
It would
make far more sense if ZBB is conducted following the paring of senior staff
and the completion of Departmental changes. At that stage, managers, directors
or ADMs, having assumed larger roles, would be knowledgeable enough to make
assessments about their enlarged responsibilities and the expenditure
reductions that can reasonably be afforded — a process that should be above
just pleasing the Finance Minister.
ZBB would
make even more sense if it is conducted after the really big decisions on
fiscal reform having been taken — presumptuous as that may seem.
The goal of
cutting $283 million from operations this year — not nearly enough, given the
high risk to achieving forecast revenues — is all about crafting illusion.
In the same
way that you can’t make an omelette without breaking eggs, the real deficit — over
$2 billion, which the Budget papered over with a bet on the price of oil —
can’t be resolved with a bunch of nips and tucks. Our problem is chronic
overspending on a massive scale.
Real and
lasting savings can only be achieved with a serious paring of government
programs — and, ultimately, the people who operate them. Government has clearly
stated that significant staff reductions have been taken off the table. Yet,
when the cost of labour represents about 46% of operating costs, how can ZBB be
much more than a charade?
In addition,
the deficit can't be tackled only by the "core" public service. The
process has to include a terribly inefficient healthcare system simply because
it represents 36% of government spending. The process has to include other sectors
of public spending too.
When the
government gets around to making some of the big decisions to cure overspending
— the surgery having been performed — then ZBB should follow.
Politicians
like Bennett are elected to make those decisions — not to bamboozle us with a
charade.
Zero Based
Budgeting? The Minister of Finance, like many of her officials, is just busy
being busy.
