The public is currently unaware of the depth of the province’s fiscal challenge, so Ontarians are unprepared for the severity of the restraint needed to balance the budget by 2017–18. Raising public awareness of this challenge must be done early, clearly and consistently. This process began with the 2011 Budget, which emphasized in a general fashion that significant reforms would be necessary to contain program spending growth to 1.4 per cent per year through 2017–18. Next, the Auditor General noted that “many of the assumptions underlying its estimates for program expenses (that is, expenses excluding interest on the public debt and reserves) were optimistic and aggressive rather than cautious.” The government's November Speech from the Throne and subsequent Ontario Economic Outlook and Fiscal Review continued the message that difficult decisions would be required on the fiscal front. The Commission’s report sets out in greater detail the fiscal challenge and provides both broad parameters and 362 specific recommendations for what actions will be needed. The 2012 Budget should set out as much detail of the restraint as feasible.
In any organization, a major transformation can succeed only if it is clearly led from the top. The provincial Budget is the organizing document for any future changes in all corners of the broader public sector (BPS) in Ontario, simply because the Budget is where the government’s priorities and plans all come together in one place. It is through the Budget that the government makes its trade-offs among competing claims on the public purse; spells out its spending priorities; sets its targets for each ministry and agency; allocates the funds available to each; and makes provision for the revenues that will cover all spending. Once the Budget is crafted, the task of ensuring that the spending targets turn into firm action falls to the Premier’s Office and Cabinet Office. It must be clear to all that the Premier’s Office is giving full moral and organizational support to the effort, and when prodding is necessary to keep the process moving, only the Premier’s Office has the clout to push the transformation forward. There will be difficult days — even weeks or months — along the way, and it is essential that the public understand both what is being done and how it contributes to the ultimate goal. To this end, the communications effort should be led by the Premier’s Office.
Given the importance of both the budget process and the long-term management of the reform process, we deal with each in some detail.
The budget process itself needs some reforms. The annual budget — along with the fiscal update that precedes it — can be a powerful educational tool both for Ontarians in general and for the officials who work in the public sector. The general public can learn more about the nature of the fiscal challenges facing their government and the often difficult trade-offs that must be made in deciding both the right mix of taxes and spending, and the right priorities for spending on programs. The public service can learn about the choices that must be made and their role in helping Cabinet make those choices and implement any decisions made. Transparency, clarity, the use of reserves and a long-term perspective are all virtues in budget-making. At the moment, there is too little of all four. Below are recommendations that would strengthen the fiscal planning process.
Transformative Processes and Structures
In Chapter 1, The Need for Strong Fiscal Action, we made the case for immediate bold action by the government to address the fiscal challenge. The remainder of this report deals with the substance of reforms — a broad array of transformational measures that represents the Commission’s best advice on the type of aggressive actions that are necessary. The report does not, however, lay out a specific implementation plan or schedule for these initiatives. The expertise of government officials and external advisers — who know their own ground far more intimately than we do — will be required to translate our recommendations into a more detailed, step-by-step plan for implementation.
The history of fiscal transformations provides important lessons and demonstrates that there are three critical ingredients to successful reforms:
We recommend throughout this document the sorts of communications that will be needed. Here, we complement that advice with some thoughts on the internal processes the government will need to carry out this enormous task.
The Commission understands that the package of reforms recommended in this report amount to a heroic challenge. To the fullest extent possible, we think ministers and their officials should be given a great deal of discretion in deciding how to implement reform in a manner that meets their objectives for their ministries and agencies. At the same time, there are several government-wide issues that many ministers and ministries will face in common; some that ripple through our report are:
Ministers and their officials can learn from each other and provide support to their colleagues by coming together on such questions as they arise.
While all elements of the Ontario Public Service and BPSshould have a certain degree of discretion, the critical importance of the transformation we propose means that a vigilant watch must be maintained on the individual reforms and how they are coming together.
It is with all this in mind that we recommend some internal processes to guide this work.
Any transformational process, especially one that involves major expenditure management, must be led from the top. In the case of the Ontario government, this means that the centre of government — the Premier’s Office and Cabinet Office — must be directly involved and provide strong leadership to the process for as long as it takes to return the provincial budget to balance. A steering committee should be established, with representation from the Premier’s Office, Cabinet Office and Ministry of Finance. This committee, supported by a secretariat within Cabinet Office, would be the focal point for the government-wide work necessary to develop implementation proposals for specific reforms and for cross-cutting measures addressing themes that touch on multiple sectors. Once reform processes are underway, this committee would also monitor both the overall reform exercise and progress on individual initiatives.
The steering committee would direct ministers and their ministries to develop proposals and implementation plans, and provide a schedule for reporting these proposals to Cabinet. The steering committee would also guide a number of working groups created to conduct research and analysis of the major cross-cutting issues: labour and compensation; overlap and duplication; new delivery models; and optimization of assets. These groups would be a resource both to the steering committee and to ministries as they develop specific transformation proposals that have implications for other ministries, as many of them will. The steering committee could also commission independent research to inform the working groups on key areas of analysis.
Ministries will bring forward their transformation proposals and plans to a Premier’s results table on strategic reform for its consideration and input prior to formal Cabinet consideration. The results table would be chaired by the Premier and composed of a mix of senior Cabinet ministers and independent experts with experience in cost-cutting and transformational change within their organizations (either public or private). It would be the main forum for both championing and contesting reform proposals. The results table would be directly supported by the steering committee, so there would automatically be direct involvement by senior staff from the Premier’s Office and Cabinet Office, and senior officials from the Ministry of Finance.
Proposals that are more routine and not “transformational” in scale can proceed through the normal channel of Treasury Board and on to Cabinet. The steering committee should continue to monitor the progress of these initiatives, in order to have a comprehensive view of the status of overall reform.
To support the Premier’s results table and Treasury Board, a technical spending review mechanism should be established to review all reform or savings proposals from individual ministries and the annual results-based plan submissions. This technical group would comprise the necessary expertise from one or more private consulting firms that are contracted via a competitive procurement process. It would provide a third-party review and critique of proposals and submissions, ensuring accuracy and adherence to the principles of reform.
Finally, we would recommend that this structure and the associated processes stay in place for at least several years given the breadth, depth and likely length of the reforms. Some parts of it, or at least modifications to it, should become permanent features. For example, we heard so much evidence of confusing overlap and duplication in work across ministries (e.g., economic development programs, social services, and training and employment services) that we recommend that cross-cutting working groups or subcommittees of Cabinet become a permanent feature to deal with these issues.