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Fiscal Sustainability and the Future of Public Spending

A Shifting Gears Progress Report

This Shifting Gears progress report examines how well governments in Canada and across the OECD are doing in returning to fiscally sustainable positions. It points out that while Canadian governments are in better shape than many of their peers, complacency must be avoided.

This report from the Mowat Centre and the School of Public Policy & Governance at the University of Toronto, supported by KPMG, is intended to help facilitate informed, strategic, long-term decision-making in Canada. This report is part of the Shifting Gears series.

Executive Summary

This Shifting Gears progress report examines how well governments in Canada and across the OECD are doing in returning to fiscally sustainable positions. It points out that while Canadian governments are in better shape than many of their peers, complacency must be avoided.

Many governments have moved forward with short-term and transformative efforts to raise revenue and cut expenses. This follow up to our 2010 report, Shifting Gears: Paths to Fiscal Sustainability in Canada, identifies which initiatives are working and which hold the most promise to facilitate a return to balanced budgets, both globally and in Canada.

Governments around the world are reducing their footprints and introducing measures to increase revenue. Short-term efforts are usually unsuccessful in putting public finances on fiscally sustainable paths. Even aggressive across-the-board cuts usually fail to change the basic structure of traditional administrative and policy processes. Without change to basic architecture, budgets are prone to rebound.

Instead, Canadian governments should begin to fundamentally revisit how they deliver public services. The models they rely on are creaking under the weight of public expectations, entrenched stakeholder interest, and shrinking fiscal capacity. Old business models should be questioned.

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Supply chain management, back-office consolidation, and procurement are among the day-to-day processes that governments must continue to improve. This ongoing work constitutes business as usual. Governments need to consider how they can do more.

Governments must think carefully about incentives, governance, accountability, transparency, and measurement grounded in evidence. These are five lenses through which governments can assess potential reform initiatives.

Governments should approach their review exercises by clearly defining objectives and redefining how they deliver public services to meet those objectives from the perspective of the citizen.

In order to successfully deliver on a transformative agenda, governments require a clear understanding of what levers they possess to initiate change that will contribute to long-term sustainability.

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Authors

Jennifer Gold, Josh Hjartarson & Matthew Mendelsohn

Release Date

November 23, 2011

ISBN

978-1-927350-10-2

Mowat Publication

44

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