Premier Notley signalled yesterday that the financial situation she inherited on Sunday afternoon when she became Premier was not "as advertised" either during the election campaign by the outgoing Wildrose Prentice Government or as documented in the Provincial budget. "We have already found a few skeletons in the closet" said Brian Mason, House Leader, "and this is before we have done a deep dive into the financial situation". Quite.
Some have dismissed this as "the NDP trying to lower the already high expectations". I dont think so. This new government is developing a habit of telling the truth. We had all better get used to it. It will be a new experience.
Almost all of our Universities and many colleges are in debt. You wouldn't know it from anything that was said either during the budget or by reading the financial statements associated with the Provincial budget. There are many other activities which are underfunded relative to their legal obligations - look at the whole range of disability measures and supports established by law and the available budget for them. Alberta has a substantial fiscal problem.
We are not delivering the level of service either required by law or expected by Albertan's, especially those lured here by the promise that Alberta would be a great place to "work, live and play". This was the basis of Prentice's "look in the mirror" comment. While inept politically, he was saying that the expectations of service we all have outstrip the ability of the Government to fund these services.
So how come we didn't know? More significantly, how come politicians on all sides of the house didn't know? What's missing from our system of government that leads our new Ministers and Premier to be so surprised?
Some clearly did know that things were not all that they seemed. Our financial public servants in treasury know what they are doing. I worked with them and they are very clear and very focused. Within many departments, the financial analysis and cost analysis are thorough and [generally] well done. Budgets are built carefully with a great deal of internal scrutiny. But we never get to see this detailed work. Published business plans pass through a political filter before being released and do not contain the detailed assumptions behind the financial analysis that leads to the budget. Nor do they contain a thoroughgoing risk analysis which looks at the risks of these assumptions.
Our Auditor General is a very decent man. Thorough, thoughtful and highly regarded in the audit community - we are lucky to have him. But his team can only look at so many things each year - in March 2015 he looked at school attendance in the Northland's school division (unacceptably low), at ESRD's oversight of certain activities and several other specific things. What he did not do was to report on the overall state of Alberta finances. Too political. But this is what we need.
In fact, I suggest we need three things to improve our collective knowledge of our current state on the financial side of Government:
- We need an independent office of budget responsibility. This would look at the budget proposals by government and assess these against the actual activities being proposed and see if the implicit assumptions make sense. Most governments now have an independent office of budget and I think the current state of affairs suggests we need one too. It would take the budget proposal, review it and offer an independent assessment of its reasonableness and risk. You can see the terms for such an office here - this is the UK office for budget responsibility.
- We need a whistleblower protection arrangement for public servants. When they know that what is being said in public (e.g. there will be no impact on front line services from budget reductions in education) they can blow the whistle and share their analysis through a system of whistleblowing (e.g. by reporting their concerns to the office of budget responsibility) and not fear consequences. Notice I am not suggesting they call David Staples or Paula Simons at the Edmonton Journal - but that a mechanism is established to enable truth telling. Take a look at the OECD's review of whistleblower protection arrangements - its here.
- Finally, we need to develop further the work on results based management started by Doug Horner as Minister of Finance. While this will take some time - the first round of this work showed just how far we have yet to go - we each need to know that we are getting the outcomes we are paying for. Too much of the funding in government is focused on process management and not enough focus is paid to outcomes. Budget development should begin with strategic intention (what are we seeking to achieve in the long-term?), then document the implications of this strategy in terms of outcomes (what specific things will we achieve when) and then show what is needed to achieve these outcomes (money, people, infrastructure, time, supports, etc.). We also need to know more about the risks of the plan - especially financial risk. Showing results based budgets and risks assessments will give us all a more honest view of the situation.
Public servants have lived through a difficult time since Lougheed passed the mantle to Getty. There has been an erosion of confidence and a culture of fear - heightened under some regimes (Redford, for example), but ever present. We have some very able and capable public servants. They live and work in a culture that has been agnostic to evidence, reluctant to hear analysis and relentless in prosecuting those who spoke truth to power. Fear not evidence and analysis have dominated their work for too long. We need to build a culture in which the work of public servants are valued not vilified, sought after not rejected out of hand.
I would also like to see Premier Notley and her small team spend time spelling out the situation to Albertans. Dont wait until you have "solved all of the problems". Go out and show us the situation - "sell the problem, not the solution". We can all then help with the solutions. Crowdsource solutions through collaborative, participative networks. You can do this in a way that our previous Governments could not.