1998 April Report of the Auditor General of Canada

April 1998 Report—Chapter 1

Exhibit 1.3—Some Key Differences between Program Review and Other Expenditure Reduction Initiatives

• A strong political resolve. There was an atmosphere of crisis and, because the credibility of the government was clearly at stake, there was a strong resolve at the political level to achieve the three percent of GDP deficit target and the required expenditure reductions. Global fiscal parameters were clearly understood; the need to reduce the deficit provided focus.
• A strategic perspective. The six questions provided a clear, logical and easy-to-understand framework for the review of programs, their prioritization and strategic and selective decision making about expenditure reductions, instead of across-the-board cuts. Guided by the clear objective and the conceptual framework, central agencies and, within central agencies, branches or divisions were able to work more closely together.
• Clear goal and vision prompting innovation. Expenditure reduction decisions were expressed in terms of overall expenditures, or "base reference levels", rather than focussing on reducing positions, person-years or payroll costs. Expenditure reduction targets and the three-year horizon provided by the Department of Finance gave a clear idea of the magnitude of the total effort required by ministers and their officials. This prompted them to rethink, to redesign programs and services and to be more innovative.
• The direct involvement of ministers. Program Review was not a centrally driven process. Collectively as well as individually, ministers were directly involved and Program Review decisions were approved by Cabinet or, in a number of cases, the Prime Minister.
• A special management structure was created. A special structure was established to manage the process. Two committees were formed: the Co-ordinating Group of Ministers (CGM) chaired by the Minister of Public Service Renewal, and the Steering Committee of Deputy Ministers (SCDM) chaired by the Clerk of the Privy Council and Head of the Public Service. A Secretariat was created to support the two committees. The committees reviewed the plans proposed by departments and provided guidance and advice. The committees sent a clear message, at the outset, that the fiscal targets had to be met and that if plans came short of that, departments would have to go back and revisit. This was seen as a test of the resolve of the government; people at the centre realized that giving in would have jeopardized Program Review. Some of the discussions with departments nevertheless lasted until the presentation of the 1995 Budget.
• The process respected differences between departments. Individual ministers and departmental officials were given the responsibility to propose where, specifically, in their portfolio, programs and services expenditure reductions could occur within the boundaries set by the fiscal targets. Departmental officials had the flexibility to decide where revenues could be generated or how expenditure reductions would be implemented.
• Effective communications. Within government the process was open and transparent, sending a message to departmental officials that the new approach was different and that it was not only about expenditure reductions; there were no "surprises".
• A reasonable time frame for implementation. Departments were given three years for implementing Program Review I and Program Review II decisions, with assurance of stability in funding during this period.
• Decisions were not revisited. Decisions flowing from Program Review I were firm and, as a rule, they were not revisited.