A QUEST FOR BALANCE
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Notes for an Address by
Clerk of the Privy Council and Secretary to the Cabinet
April 25, 1997
Thank you for your invitation. I warmly welcome the opportunity to share some thoughts with you on the importance of public service.
Queen's University has had a strong presence in the development of the Canadian public service. It has produced some of the best public servants in our history. And -- thanks to the contribution of people like Donald Gow -- Queen's has, over the years, pushed back the frontiers of knowledge to the advantage of Canada, its governments and its citizens. It is fitting, therefore, that the University would wish to honour Donald Gow's memory and continue its contribution to public service through the Gow Lecture.
For the past 15 years, Canada has been engaged in a process of realigning the role of government. Some governments started earlier; others joined the effort more recently. But movement is under way toward the goal of balancing their budgets.
After so many years of effort and public debate about "less government":
- We are running the risk of losing sight of the importance of government in a well-performing civil society and of misunderstanding the importance of the role that government will be called upon to play in the future.
- We are running the risk of ignoring just how much change has taken place in the public sector and the potential it holds for the future.
- We are running the risk (and that would be the most serious consequence of all) of discouraging those who would otherwise want to pursue a career dedicated to the public interest.
We need to keep a sense of balance and perspective.
I will talk to you tonight as a practitioner -- one who has spent many years managing public sector organizations through a process of downsizing, change and re-engineering.
One who has the good fortune to start each day with the same sense of excitement, pride and admiration for the work done by the public servants of Canada that I had when I began 24 years ago -- and with the same feeling that there is no greater reward than the opportunity to make a difference in the life of one's country.
I. THE QUEST FOR BALANCE
1. Is the Pendulum Swinging Again?
As we come close to the end of the 20th century, democracy working together with a market economy stands as the uncontested model of societal organization.
Nobody knows how to run a successful economy other than through a market economic system. It is the most efficient way to use scarce resources and to ensure the pursuit of individual interests.
Democracy for its part has proven to be the best way to ensure social cohesion and the peaceful development of consensus. It is the most efficient way to ensure the pursuit of the collective interest.
There are other models to be sure:
- Some countries have had faster growth but without the quality of life, the protection of civil liberties provided by democratic institutions.
- Others had greater emphasis on the collective good but without the wealth generation or the economic growth that a market system provides.
Overall, the countries with the benefit of both systems have outperformed all others.
There are inherent tensions between democracy and a market economy. Both systems are rooted in very different beliefs:
- One is about the collective interest, the pursuit of egalitarian values reflected in an electoral system of one person, one vote.
- The other is about the individual interest, the survival of the fittest.
But the history of the 19th and 20th centuries has also taught us that there are great synergies between the two systems. They can be mutually supportive and mutually beneficial:
- The market economy and its supporting private sector institutions, providing wealth, growth, employment, rising real wages.
- Democracy and its supporting public sector institutions, providing the legal framework for a peaceful life in a civil society, the pooling of resources to meet collective needs and the environment that allows the market economy to flourish.
For countries, such as Canada, that are fortunate enough to have the benefit of both systems, it is not a matter of one sector triumphing over the other. It is a matter of balance.
In a magazine article, Henry Mintzberg points out that the conclusion reached in the West about the collapse of the Communist regimes of Eastern Europe was that "capitalism has triumphed." But he goes on to say:
"Capitalism did not triumph at all; balance did. We in the West have been living in balanced societies with strong private sectors, strong public sectors and great strength in the sectors in between." [Henry Mintzberg, "The Myth of Society Inc.," Report on Business Magazine, October 1996, p. 113].
Citizens decide where the balance lies at any given time. In societies like ours, the quest for balance is never over. The point of equilibrium is forever changing as circumstances evolve and new societal consensus emerge.
In Canada, we have seen the signs of this quest for balance, as the pendulum has swung between greater emphasis on collective needs and public interest at some times and greater emphasis on individual interests and the market economy at other times.
From World War II to the late 1970s, citizens asked progressively more of government and of the public sector -- from nation building, to managing macro-economic policies, to creating a social safety net, to expanding the regulatory regime in all sectors and all aspects of life.
Great results were achieved, but the dream did not materialize. No amount of regulation could protect citizens from every negative occurrence in their life. Governments and government intervention could not protect Canadians from the effects of economic recessions, could not create the jobs, could not simultaneously fight inflation and high interest rates. The role of government has its limits and the cost of government was exceeding Canadians' collective means. A new equilibrium was needed.
Through the 1980s and 1990s, citizens asked progressively more of the private sector. Less government; balanced budgets; freer trade domestically and internationally; modernized taxation regimes; reduced regulations were among the many measures needed to reap the benefits of a well-performing market economy. Great results were achieved, but once again the dream did not materialize.
During this period, Canada had one of the best growth records of the G-7 countries. But even the best sometimes is not good enough. An average economic growth of 1.3% through the 1990s means a drop in citizens' standard of living. Unemployment reached an average of 10.1% in the 1990s and it currently stands at about 17% for youth. The gap between young people and the rest of the labour force is excessively wide. Real per capita disposable income has declined each year since 1988.
The dream of constant growth, full employment, financial stability and rising real wages proved illusive.
There are signs that the pendulum is about to start swinging again -- in search of a new equilibrium and a new dream to fulfil.
Once again citizens will decide where the new equilibrium will lie in the years to come.
Wherever the new equilibrium lies, there will be a synergy between the best of democracy and the best of the market economy; a balance between the pursuit of individual and collective interests; a partnership between the public sector and the private sector.
This partnership will, to a large extent, determine how successful Canada will be as a society as we enter the new millennium.
2. The Role of the Public Sector
A lot has been said about the changing nature of the market economy in a global environment. The importance of the role of the public sector in a global environment is less well understood. I will, therefore, limit my remarks to that aspect.
In March 1996, Alice Rivlin, the chair of the OECD Ministerial Symposium on the Future of the Public Services, said in her closing statement that "the quality and effectiveness of 'governance' is crucial to national prosperity." [OECD. Public Management Service, Ministerial Symposium on the Future of Public Services, (Paris: Organisation for Economic Co-operation and Development, Public Management Service, 1996) p. 8].
I share that view.
And I would add that, in a global environment, it will increasingly be the case. As the new equilibrium takes shape, I believe that the public sector will be called upon to play a very key role. Let me tell you why.
(1) Private Investments
In the industrial age, many industries had a natural home base -- the result of the location of natural resource and easy access to capital, a labour force, and markets. While this will continue to be the case for some time for some industries, it is changing for many others.
Modern technology, world capital markets, and an inexpensive means of communications mean that more and more industries do not have a predetermined home base.
In this environment, a country's success will be achieved by creating economic and social conditions that are more attractive than those offered by other countries. A peaceful society with a modern infrastructure and a world-class work force -- a society that is prepared to invest in its people and in research and development -- will have an important comparative advantage.
In the future, a nation's comparative advantage will be created by what it does and the investments it makes. It will not be inherited. This calls for a key strategic role for government and the public sector.
(2) Knowledge and Skills
Knowledge and skills, and the ability to put knowledge and skills to work, will progressively stand out as one of the most important comparative advantages of nations. It will be key to productivity gains and to innovation in all sectors, old or new. More importantly, it will also be key to citizens' success and sense of security.
Unlike natural resources, which were given to some nations in greater abundance than to others, knowledge and skills and the ability to effectively use them do not just exist. Acquiring them takes time and sustained investment in education and training. There again the public sector will be called upon to play a key role. As we all know, no country has ever become even semi-literate without a publicly funded school system.
(3) Quality of Life
In a global environment, firms and countries alike will compete to retain and attract the human capital -- the brain power -- critical to their success and their future.
Some are of the view that all it takes to attract and retain talent is wages and salaries. I think this view underestimates the diversity of human needs.
Safe streets and neighbourhoods, clean air and water, good schools for children, world-class learning institutions, modern health care, and a peaceful society will all be significant factors in the competition for talent. There again the public sector contribution will be significant.
(4) Public Investment
The public sector has always played a role in making key investments in advance of market potential.
It once took the form of canals, railways, airports and roads. It then took the form of telecommunications, telephone services and satellites. These investments have contributed to Canada's competitiveness and will in the future:
- A recent example of public sector investment in advance of market potential is the Internet. It was developed by the U.S. Department of Defence and operated for almost 20 years before its market potential was realized.
- In Canada, it took 20 years of development in government labs and universities before Canola, now a $2 billion industry, became marketable.
So let me summarize. As Peter Drucker was quoted in a newspaper article: "We are learning very fast that the belief that a free market is all it takes to have a functioning society -- or even a functioning economy -- is pure delusion . . . . The market by itself does not produce democracy and does not even produce a healthy and growing economy." [Peter Schwartz and Kevin Kelly, "Relentless contrarian," The Ottawa Citizen, December 31, 1996, p. A11].
Whatever the new century may hold, whatever citizens decide about the proper equilibrium over the next period of time, we can be sure that government and public sector institutions will have a key role to play, one that holds the promise of a strong public -- private sector partnership.
II. THE EVOLVING PUBLIC SECTOR
By now you should all be convinced, I hope, of the importance of the role that the public sector will be called upon to play in the future. Let me now say a word about the state of the public sector.
Nothing less than a quiet revolution has been under way in the public sector in Canada over the last few years. The changes have been so vast, so fast, and so profound, that very few people, including experts, have a clear understanding of the reality today in the public service.
First, let's review some facts. Five years ago Canada was facing a serious fiscal problem both at the federal and provincial levels.
In 1992-93, the aggregate federal-provincial-territorial deficit had reached 9.6% of GDP. Today, seven provinces have balanced their budgets, and five of those are repaying their debt. The combined federal-provincial-territorial deficit has been cut by 50%.
At the federal level, the deficit stood at nearly 6% of GDP in 1993-94. Today, a zero cash requirement (the amount of new borrowing from financial markets) is in sight. By 1998-99, federal program expenditures (which includes all federal spending except interest payments) as a percentage of GDP will be at the lowest level since 1949-50.
There is room to debate the pace of reduction or the policy choices to bring about these results. But we should all agree that a remarkable turnaround is taking place in Canada.
For the first time, in a long time, there is light at the end of the tunnel; and if governments stay the course, it will mean that
- This generation of Canadians will not leave a legacy of growing debt to the next generation.
- Governments will have collectively taken the essential steps toward regaining their fiscal sovereignty and their capacity to invest in the future of the country.
- Citizens will have regained the ability to make choices about the kind of society they want for the future. And this will lead to a fascinating political and policy debate.
The magnitude of the transformations under way and the pace at which they are 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.
For most Canadians, the most visible sign of the changing role of government has been "less government," but a more careful look reveals that more profound changes are under way. They involve
(1) New relationships among governments
(2) New partnerships
(3) A different relationship between government and citizens
(4) A stronger policy capacity
(5) A renewed institution
Each one holds great promise for the future. Let me explain:
(1) New relationships 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 is lagging behind the reality of change in Canada. Many of the issues of concern to premiers during the Charlottetown negotiations only five years ago have either been resolved or are being addressed.
But no amount of streamlining or downsizing will ever replace the need for governments to work together to meet the needs of Canada and Canadians in the 21st century. While governments have a role to play in their own right, they must learn to set priorities together, and make decisions together.
In other words, the work on clarification of roles and on overlap and duplication is now giving way to a much more challenging phase -- the management of interdependence among governments to serve Canadians.
At the same time another major transformation is under way. All across the country, away from the limelight and the attention of the media, governments are coming together to provide integrated services to citizens. The concept of single window is becoming a reality in Canada. Examples can be found right across the country:
- In Prince Edward Island, the federal and provincial governments have entered into a knowledge-economy partnership agreement, which also involves the private sector and educational institutions.
- Through the Environmental Industry Virtual Office, federal and provincial governments and the private sector are using the Internet to provide, under one roof, virtual access to experts and information on the environmental industry. In Quebec, for example, the "office" has 18 partners including federal departments, agencies and Crown corporations; provincial departments and agencies; business associations; regional economic development groups; and the City of Montreal.
- In Ontario, the Toronto Harbour Remedial Action Plan (Toronto RAP) is a partnership of four federal departments, three provincial departments, over 20 regional and municipal governments, commissions and authorities, environmental organizations, businesses and citizens, all working to rehabilitate the Toronto waterfront.
- In Alberta, a pilot project in the dairy processing sector amalgamates federal, provincial and municipal dairy inspection services. An interagency working group, consisting of the federal and provincial governments and 17 regional health authorities, is exploring ways of working to rationalize the food inspection services in other agricultural sectors.
- The Canada Business Service Centre in British Columbia is a fully integrated partnership between the federal and provincial governments, providing a "seamless" one-stop service for business information from 27 federal and 18 provincial agencies.
This trend will continue to accelerate. Ultimately, it could bring together the federal, provincial and municipal governments in providing seamless services to Canadians.
(2) New partnerships
The approach to governance is also changing. For the public interest to be well served, government does not need to do it all. The pursuit of the public good is not the exclusive prerogative of governments. The private sector, not-for-profit organizations, the voluntary associations, and citizens all have a role to play.
Governments are learning fast and are entering into partnership arrangements with non-government organizations that allow partners to achieve results that would be well beyond their reach if they were acting on their own.
This is leading to an explosion of institutional models unknown even a few years ago. If your vision of the organization of government today is the traditional departmental model, look again:
- You should see government agencies providing services on behalf of several departments and several governments. The Food Inspection Agency and the upcoming revenue agency are two examples.
- You should see not-for-profit organizations as a form of private-public partnership. The Air Navigation System is a multiple public and private sector partnership. Forintek is a multiple partnership involving the Government of Canada, six provinces and 155 private companies. The Canadian Tourism Commission is a multiple public and private partnership.
- You should find virtual organizations -- a service agency without walls and without staff, one business plan, one budget, one report to Parliament on behalf of departments working together in a co-ordinated fashion.
This transformation is not without problems but the trend is here to stay. Flexibility, adaptability and efficiency need not be foreign to public sector services.
(3) A different relationship between government and citizens
The use of information technology is transforming the relationship between government and citizens.
This change will likely have the most profound impact on the role of governments in the years to come. Canada is at the leading edge of this transformation.
The use of information technology is allowing government to be present, relevant, and adapted to local needs everywhere in Canada:
- Human Resources Development Canada is delivering services electronically at about 5,000 kiosks in offices, shopping malls and even universities across the country. This networking is comparable to that of Canada's largest financial institution, which has about 4,700 automated teller machines.
Technology is changing the nature of the services provided. It is also putting citizens in control:
- Strategis is an electronic information network for businesses and enterprises. It was created only a year ago. It holds 665,000 electronic documents: 3 billion bytes of statistical data. There are 200,000 hits per day; and 8.5 million electronic documents have been retrieved to date. Access is growing on a monthly basis.
Technology is allowing government to provide services that could not be provided otherwise and is connecting Canadians and Canadian communities:
- SchoolNet will link all of Canada's 16,500 schools and 3,400 public libraries by 1998.
- TeleHealth and TeleLearning are already a reality in Canada in several remote communities.
(4) A stronger policy capacity
The role of the public service is not limited to service delivery. Providing high quality policy advice to ministers and government is just as important.
While this would justify a speech in its own right, in the context of our exchange tonight, I would simply note that the quality of the policy work currently under way in the Public Service of Canada is the best that has been produced over the last 15 years -- not because we are suddenly brighter, but because the focus is on medium to long term, because it is driven by an interdepartmental team bringing to bear the expertise of every department, and because it is valued. The importance of this work is recognized.
(5) A renewed institution
I said earlier that a "quiet revolution" is under way but that the public service is also facing a "quiet crisis." There is growing evidence that it could be increasingly difficult to retain, motivate and attract people essential to the public service over the coming decade. It is a matter that we are well aware of and that we are acting on. I have dealt with this in my annual report to Parliament, and while it is a subject of great importance, I will not expand further on this issue tonight.
So, let me now summarize the second part of my report:
- We are coming out of a phase which has seen important changes take place in the public sector in Canada.
- A phase during which governments have realigned their role, moved to balanced budgets and regained the capacity to invest in the future.
- A phase which has brought about less government but has also modernized government. A public sector that is different from the one we have known in the past is emerging.
My first conclusion is that, as we get closer to the new millennium, government will be called upon to play a crucial role.
My second is that the Public Service of Canada will be ready to face the challenges of its time. In a global environment, government and the public sector can successfully integrate global and local needs -- can reach citizens and be accessible like never before -- can connect citizens and communities. Government can contribute to collective needs and social cohesion in ways that were unthinkable just a few years back.
III. LOOKING AHEAD - A CAREER LIKE NO OTHER
My initial inclination, at this point, was to map out some of the key challenges that governments and the public sector will need to address over the coming years.
But, so late in the mandate and possibly close to an election, this could prove to be foolhardy. It is much better to leave it to elected officials and candidates to engage in a debate with Canadians over government priorities in the context of the upcoming national election.
Let me instead look 10 years ahead. There are men and women in this room who will be in the Public Service of Canada 10 years from now. I would like to talk to them for a minute and describe the world through their eyes.
- You will be confronted by challenges of great complexity, many of which cannot even be imagined today. You will often feel inadequate to the task and overwhelmed by the responsibilities, but humility and modesty will serve you well. The "arrogant" misjudge their true impact and the "incompetent" do not understand the consequences. Neither make good public servants.
- You will discover and celebrate the courage of ministers and the dedication of elected officials. Nothing of any significance can be done without the will of ministers. But any government is seriously handicapped unless it can count on a competent and professional public service.
- You will discover with excitement that you make a difference -- great policies, great initiatives are conceived by people just like you. They affect the quality of life of Canadians and the performance of Canada in the world.
- You will be given the opportunity to contribute to the limit of your own potential. You will work with men and women equally talented and equally committed. You will learn and be challenged more than you can imagine.
- Your role as a public servant will be looked upon with pride and respect. You will enjoy the trust and confidence of Canadians. No one, to be sure, will join the public service to become rich. But public servants will be provided with general conditions that will allow them to pursue a career dedicated to the public good while enjoying a decent standard of living and putting their children through university. The men and women serving before you will have worked relentlessly to hand you a modern and vibrant organization and to ensure that the scrutiny, criticism and deteriorating conditions of their time have been resolved.
- Like the men and women who served before you, you will be called upon to contribute to the social cohesion of Canada. Like your colleagues in other industrialized countries, you will worry about issues such as
- The ability of all citizens to share in the benefits of living in Canadian society
- Disparities in income, knowledge and skills
- Intergenerational tensions
- You will be asked to discover and shape initiatives that will give Canada an edge in the community of nations 10 or 20 years later:
- The importance of education, continuous learning, skill upgrading, R&D and information technologies is already predictable. The issue is what else? What lies beyond what we can already foresee?
- Like the men and women before you, you will be called upon to contribute to the national unity of Canada:
- Those serving before you will have helped to ensure that all Canadians celebrated the millennium, proud of their past, confident in their strength and optimistic about their future.
- From there, every day, you too will be called upon to contribute to national unity. After all, the glue that keeps countries together is the desire of its citizens to share a future together, and your work contributes to a better future.
One day -- after several years of a challenging and rewarding career you will write a speech on the importance of the role of government and of the public sector in a well-performing civil society.
And the quest will go on.
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