II

The Role of Government

Against the backdrop of the international trends discussed in last year's report, all governments in Canada are facing considerable pressure to adapt their roles to address contemporary needs within society's collective means. In response to pressure for change, governments have already made considerable progress. The profound realignment of roles under way will have major significance for all governments and for every citizen.

The magnitude and nature of the transformation under way and the period of time over which the transformation is occurring are unprecedented since World War II. Time will tell if the right decisions have been made and the right balance has been achieved, but it is already clear that an exceptional story about reinventing the role of government is being written in Canada today.

Regaining fiscal sovereignty

For the first time in a long while, Canada is on its way toward regaining its fiscal sovereignty. There is light at the end of the tunnel.

Five years ago, Canada was facing a serious fiscal problem at both the federal and provincial levels. In 1992­93, the aggregate federal-provincial-territorial deficit had reached 9.6 percent of gross domestic product (GDP). Today, seven provinces have balanced their budgets and five are repaying their debt. As a result, the combined provincial-territorial deficit has been cut by a full 50 percent since 1992­93.

At the federal level, the deficit amounted to 6 percent of GDP in 1993­94. In relation to GDP, the 1997­98 financial requirements (the amount of new borrowing from financial markets) will be the lowest since 1969­70 and the lowest of any central government in the seven leading industrialized democracies, the G-7 countries. By 1998­99, federal program expenditures (which include all federal spending except interest payments) as a percentage of GDP will be at the lowest level since 1949­50.

This turnaround was achieved without a major service or system breakdown and without the civil unrest that many other countries have experienced. These results are a tribute to the resolve of ministers and governments, who made difficult decisions. But also, and in no small way, they are a tribute to the creativity and the skill of federal and provincial public servants who put forward ambitious proposals and oversaw their careful implementation. This work continues to be carried out every day -- with patience, competence and rigour.

While the implications of these changes will take time to assess, if governments pursue their current course, it may mean that

• This generation of Canadians will not leave a legacy of growing debt for the next generation.

• Governments will have collectively regained their capacity to invest in the future of the country.

• Downsizing in the public sector will come to an end.

These impressive results were achieved over a very short period of time. To accomplish them, governments had to move away from the approach of "doing more with less" and recognize the need to make real choices and set clear priorities.

Recognizing that an effective public sector is an essential and critical part of a well-functioning society, governments will soon face two difficult questions:

1. What should government do, within society's means, to ensure a well-performing modern society?

2. As Canada prepares for the next millennium, what priorities should be pursued to contribute to the betterment of Canada and Canadians?

Program Review

A central thrust of the Government of Canada's renewal efforts has been Program Review, through which all programs and activities were examined to redefine the role of the government in the future, in accordance with Canada's collective means.

The outcome of Program Review has already been made public by the President of the Treasury Board in the House of Commons on March 7, 1996. That statement about the basic function of the government is important because it provides a focus for what the government does, and it establishes a benchmark against which all government activities can be assessed.

It affirms that the Government of Canada can best serve Canadians by concentrating its activities around five core roles:

1. Ensuring that Canada speaks with one voice in the community of nations on issues of concern to all Canadians. This role addresses the need to defend Canada's sovereignty in a global environment, and includes areas such as foreign policy, international trade, peacekeeping, immigration and defence.

2. Protecting and strengthening the efficiency of the Canadian economic union. The Canadian economic union is the base from which Canadian firms and industries learn to compete in the global economy. It is also the economic space where Canadians exchange goods and services, and where wealth and jobs are created. The role of the government includes setting framework laws that ensure the effective operation of the marketplace, such as bankruptcy, competition, and intellectual property laws, as well as sectors of regulatory activity, such as environmental or consumer protection.

3. Protecting and strengthening the Canadian social union and the solidarity of Canada. The social union contributes to the quality of life, security and safety of all citizens. It is the sharing community. It also contributes to attracting and retaining domestic and international investment, and it plays a key role in the creation of jobs. To those in need, it provides a system of mutual help, such as assistance to youth, to the elderly and to the unemployed, through transfer and equalization programs. It is therefore a contributor to a strengthened federation.

4. Managing the pooling of resources for the pursuit of collective goals where a single program or centre of expertise would be more efficient and where there is a limited need for diversity. This role recognizes the contribution of the Geological Survey of Canada, the Canadian Hydrographic Service, the Atmospheric Environment Service, and Statistics Canada, among others. It recognizes that there are occasions when citizens are best served by pooling resources.

5. Acting as the guardian of citizens' rights in a democratic society of parliamentary tradition, governed by the rules of law that protect and promote Canadian values and identity while celebrating our diversity. This role addresses a wide range of issues, from the government's fiduciary responsibility to Native people to official languages to law enforcement. Security of life and property is one of the hallmarks of Canada, and it contributes to the quality of life and the standard of living of Canadians.

Implementation is always the most difficult part of any reform. It requires courage, persistence and resolve. It is also the test that reveals the true quality of reform.

As decisions are implemented to their full conclusion, Canadians will discover the real extent of the reform that is under way. The most visible sign to date has been "less government." This results from the many difficult decisions that governments have made to reduce services in some areas and eliminate them in others, in order to realign the role of government to address contemporary needs within society's collective means.

A more careful look, however, reveals that while governments are making decisions to reduce the level of indebtedness and bring Canada closer to the goal of balanced budgets, they are at the same time contributing to a profound change in Canadian society. This change includes

• Forging a new relationship among governments

• Laying the basis for new partnerships with other sectors of society

• Strengthening the relationship between government and citizen

The reforms to date lay the basis for the changes to come.

Forging a new relationship among governments

The realignment of roles by all governments in Canada has substantially reduced the degree of overlap and duplication among governments that existed even a few years ago. Today, the public debate on overlap and duplication lags behind the reality of change in Canada. Many of the issues of concern to governments and to the public in the 1980s and early 1990s have either been resolved or are being addressed. The examples are many:

• The Government of Canada has refocussed its role in forestry, mining and energy from local works to research, much of it implemented through federal-provincial agreements.

• Some provinces have eliminated their overseas offices and are building instead on the Canadian network of posts and embassies abroad.

• Federal and provincial governments are pooling their resources in a new Canadian Tourism Commission to promote Canada abroad and co-ordinate domestic efforts.

• The Government of Canada has announced that it will not use its spending power to create new shared-cost programs in areas of exclusive provincial jurisdiction without the consent of a majority of the provinces.

• More recently the Government of Canada signed agreements with Alberta and New Brunswick to transfer responsibility to those provinces for design and delivery of labour market development measures for Employment Insurance clients.

As a result of the progress to date, the direction of reform is now starting to shift from a clarification of roles and responsibilities to the more complex but promising task of forging and defining a more modern partnership among governments.

As the earlier decisions on roles and responsibilities are being implemented, governments are discovering that no amount of streamlining or downsizing -- no definitions or statements of roles and responsibilities -- will ever replace the need for governments to work together to meet the needs of Canada and Canadians in the 21st century. The notion of airtight compartments is giving way to managing interdependence among governments to better serve citizens. Again, there are many early signs of progress.

• As for job creation, all governments understand the need to work together. No single government controls all the levers and all must work together to achieve the desired result of creating a favourable environment for jobs and growth -- the actions of one impact on all the others.

• Similarly, an efficient social union is not so much a matter of jurisdiction as a matter of portability of entitlements, mobility and mutual help -- privileges that extend to all citizens within a country. The issue is not whether each government has a role but how they will choose to work together.

Building on the progress to date, and providing there is a will and circumstances are favourable, the coming years could see the emergence of a new relationship among governments. The next challenge will be to set priorities and make decisions together. Over time, the approach to services to Canadians -- and their delivery -- could change dramatically.

Laying the basis for new partnerships

As governments have focussed on realigning the role of their public sectors, some conclusions about governance in a modern society have become clearer.

• Canadians need both a well-performing public sector and a well-performing private sector -- working together. While there is a need to redefine periodically the role of government, there are functions and activities that only government can perform. Similarly, some functions and activities are best left to individuals taking initiative in the pursuit of their legitimate interests.

• The pursuit of the public good is not the exclusive prerogative of government. Many groups, many stakeholders and indeed individual citizens contribute to the public good.

• For government to fulfil its role of looking after the public interest, it must find its proper place alongside others in society. It must rely on its partners. It must recognize, encourage, reward and guide their contribution to the public good. In other words, governments must learn about partnership.
  

Partnerships in pursuit of the public interest have great potential in the reform of the public sector

• Vis-à-vis clients and citizens, who want to have a say in the services government provides and are prepared to take on more responsibilities

• Among stakeholders, who can combine resources to bring about greater results than any one partner could accomplish alone

• Among governments, who can provide an integrated approach to service delivery through horizontal integration among departments and vertical integration among governments

Partnerships in pursuit of the public interest are not easy to forge -- they take time, they often require cultural change and they come with responsibilities -- but they can lead to results well beyond the reach of members acting alone.

There are already many examples of public sector partnership in pursuit of the public interest:

• The Air Navigation System has been established as a not-for-profit corporation, with multiple stakeholders providing financial support in return for input into the use of revenues, the setting of fees, long-term expenditures and service standards. In return, government has an efficient air navigation system that is safe and secure.

• Grocery manufacturers, through a private sector not-for-profit institution, preclear television advertising script, with the process audited by government to ensure conformity with preclearance guidelines. The turnaround time has been reduced from months to hours, satisfying business while continuing to provide consumers with the same degree of protection.

• Federal, provincial and municipal officials are working to optimize food inspection services. For example, in Alberta, the three levels of government have developed collective action plans to address food safety issues such as risk assessments and emergency preparedness. In addition, a pilot project in the dairy processing sector amalgamates federal and provincial dairy inspection services. The result is a streamlined system where a single federal or provincial employee conducts the inspection for both levels of government. Through this partnership, the integrity of the food safety program and the competitiveness of the food industry are maintained.

• Forintek Canada Corporation is a partnership involving the federal government, six provincial governments and 155 private companies in a not-for-profit corporation to undertake basic and applied research and development in wood products. By combining their efforts, the partners are able to bring together a critical mass of technical and scientific talent that generates significant economies and thus permits partners to draw benefits substantially in excess of their contributions. The partnership delivers "private services" (such as market-oriented research) to industry members and "public services" (such as public safety and environmental research) to government members.

Partnership arrangements recognize that government does not need to "do it all" for the public interest to be well served. While there are already many examples of public-private partnership, more and more diverse types of partnerships will emerge over the coming years as lessons are learned from the experiments currently under way in every government and every department.

Changing the relationship between government and citizen

As governments set new priorities, they are also changing the relationship between government and citizen.

One of the reasons that Canadians support governments as they take the necessary and difficult decisions to set priorities in order to live within society's collective means is that citizens anticipate getting better government and better quality service for the services that remain. They expect

• The benefits of new technology to offer them more responsive service, flexibility of access, greater autonomy to meet their needs and greater efficiency.

• Work to be organized around their needs (e.g., flexible hours, single-window service).

• Services designed to address the needs of citizens as whole persons. In one place, they want to get what they need in a manner suited to their circumstances, without concerning themselves with whom they must turn to. They hope to see government departments working together (horizontal integration) as well as different levels of government working together (vertical integration).

And finally, citizens expect

• Governments to help them connect to all communities to which they belong, whether these communities are on the other side of the world or right in their own backyard.

Summary

Today, there is a great deal of modernization and experimentation under way in government. This extends to the evolving relationship between levels of government, partnerships with other sectors, and the changing relationship between government and citizens. Over time, these efforts have the potential to change significantly the way governments serve Canadians. Taken together, these measures could also contribute to the renewal of the federation and the strengthening of Canadian unity.

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