The Innovation Journal: The Public Sector Innovation Journal, 5(2), 2000, article 1d1.

 

Is Innovation a Question of Will or Circumstance?

An Exploration of the Innovation Process Through the Lens of the Blakeney

Government in Saskatchewan, 1971-82

 

Edited by Eleanor D. Glor


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Chapter 1:

Changes in Central Management and Organizational Culture

 

D. Murray Wallace

This chapter is about the careful management of a major agenda for change. It speaks to changes in management practices from the perspective of a central agency bureaucrat, during a period of rapid economic and social development in Saskatchewan.

In the July 1970 issue of Saskatchewan Financial and Economic Position, an annual government financial review, then Provincial Treasurer, Honourable D. G. Stuart, noted that all economic indicators were worse in 1969 than 1968, and that 1970 did not look any better. The net value of all provincial output had shrunk by 3% with all sectors deteriorating at once. Worse yet, investment was off 15% from the year before and 6.4% below the 5 year average. Cash receipts from the sale of the major crop (wheat) were off 42% and the report summed it all up by saying "Thus 1969 was the worst year since 1955" (Government of Saskatchewan, 1970). 1970 was worse, with all the indicators declining, including a 50.7 % decrease in the net value of agricultural production-and this from record low levels!

When the Liberals left office in 1971, the Blakeney government inherited a positive net asset position of $ 54.0 million. They also inherited a largely demoralized and rusty public service. The lack of program initiatives and change in the preceding few years had left them unprepared for action, the way any enterprise left to languish would have been. And yet it was the public service, especially the upper echelons, that would have to be kick-started to life if the government policy agenda was to be developed into programs, and more importantly, delivered.

The new government had an ambitious agenda, containing dozens of major reforms, many of them very expensive looking. The key challenge was to set priorities, while at the same time recognizing the fiscal and economic realities of Saskatchewan in 1971.

Fortunately for the new government, the worm was about to turn. Almost immediately, and fortuitously the economy began to improve. Reporting on the performance of the economy in 1972, then Minister of Finance Elwood Cowley was able to report a significant gain in all sectors, with investment up 17% and housing up 36% (Government of Saskatchewan, 1973). Only agriculture lagged and in 1973 it's value in terms of production rose 70%! In fact, the net value of all goods produced that year rose 43% (Government of Saskatchewan, 1974). The agenda, and the funding to accomplish it were about to coincide happily.

While the new government set to work getting the various departments to sink their teeth into the program development challenges of the agenda, at the Department of Finance a different task was taking shape. There, the Deputy Minister, Garry Beatty, together with the new Premier Allan Blakeney were worried about how to create machinery capable of helping to implement, monitor and evaluate the new agenda-recognizing that almost every program implied radical and far reaching change to government administration.

At the same time there was a clear priority that while the agenda had to be accomplished, it had to be done in a fiscally responsible way. Understanding that social democratic governments always have the reputation of being big spenders, Blakeney was determined to balance the budget over his term of office.

There was also an awareness that the economic and fiscal position were improving and that the dollars would be available for much of what the government wanted to accomplish. Ironically, part of the challenge was to manage the financing of the change agenda-not just to afford what was programmed-but also to restrict spending to a pace that was affordable in the long term i.e. sustainable. This became a very tough part of the challenge as commodity and grain prices improved, swelling provincial coffers in the first half of the 1970s.

The Organizational Culture

Much of the corporate culture was inherited-partly the Saskatchewan tradition of excellence in public service since the mid-1940s-but some of it was new, like the government of the day. The quality and reputation of the central agencies and operating arms of Finance and Executive Council were well known inside public administration circles and the financial community in Canada, generally. (1)

In this culture there was an openness to new ideas, new people-and a quest to search widely for the best talent to bring to the team. The central agencies, especially the Budget Bureau of the Department of Finance, recruited across the country, seeking the brightest and best, and in the early years of the government many moved rapidly out and up to senior positions, including that of deputy minister.

An important feature of this recruitment was the non-partisan nature of the search. While the preference was for people who had not been politically active at all, some of the new recruits had in fact been involved in parties other than the NDP.

At the same time, there was an awareness at the higher levels of the bureaucracy (and by the politicians) of the need to reform the central machinery. When radical suggestions were brought forward, they were adopted wholeheartedly. These reforms are at the centre of the process of change management that went on in that period. The lack of resistance to this kind of overhaul was remarkable, and would be the envy of many private sector organizations.

Another key aspect of the culture was the clear separation of the role of the public servant and the political master. It was well understood by both the senior public service and the Cabinet. While there were obviously glaring examples of when this was not observed, generally it was followed meticulously. The Premier in particular monitored and enforced the separation. This enabled the public service to do its job unfettered by unwarranted meddling in administration-and for the most part prevented public servants from usurping the political rights of their Ministers. It also stopped them from making politics go native, in the Yes-Minister TV-program style

Imagine the context: a new government with an ambitious agenda for social and economic reform; the emerging economic and fiscal recovery (bonanza); a corporate culture, which although slightly in need of repair, encouraged excellence and change; but at the same time, a central agency system directed to control fiscal affairs in a way which made the province a sustainable entity.

This had the potential to lead to some interesting social dynamics. One group with their foot on the accelerator, one with their foot, from time to time, on the brake. The challenge was to synchronize the whole operation, and to keep the vehicle on the road! Clearly some adaptation of modern flexible, responsive management practices would be required.

Both the Douglas and Blakeney governments in the Department of Finance and especially the Budget Bureau explored and developed the theory and practice of managing government. These governments and staff believed that the effectiveness of policy implementation was pivotally affected by how well a government plans, budgets and motivates its staff. Blakeney was personally interested in and remained involved in management of the government.

Conscious attempts were made to create an environment of excellence. Wes Bolstad and Garry Beatty had been public servants in the Douglas and Lloyd governments and were familiar with the excellence which had developed there. (2) Later professors in the Faculty of Administration together at the University of Regina, they developed their thinking on these issues. Once they became key members of the Blakeney team, they sought out information about others' efforts, promoted excellence in public administration, and recommended and adopted means to create it. Their concerns were management structures, processes, effective machinery, and quality of people.(3)

In the Department of Finance, particularly in the Budget Bureau, a deliberate attempt was made to draw linkages with the excellent public servants of the past and to portray the current group as their heirs. Periodically one of this earlier group gave a talk or did a contract for the government, so links were maintained through personal contact as well. Employees were encouraged to participate in and contribute to the Institute of Public Administration. Overall, the culture was one of pride, high expectations for innovation, reference to past traditions of excellence, and élan for building a new government.

In line agencies too efforts were made to create excellence, serve the people of the province well, and develop a supportive culture for staff. Creative cultures of excellence underlay the many line agencies-one creative and another not so innovative line agency are described in this book.

Blakeney often reminded his ministers that they were members of the Executive Council, and his deputies that they worked for the government, not just their ministers. They were not just representatives of their departments: the Government and the good of the government came first.

Relations between officials and ministers were addressed directly. Premier Blakeney firmly believed in the traditional public administration distinction between the role of the Cabinet and that of the civil service. He had published and distributed to all new deputies two articles on the subject (Blakeney 1972, 1981) indicating the political level made policy and the civil service recommended options and carried out policy. In many ways, Blakeney functioned as the Chairman of the Board of corporate Saskatchewan: (4) the Cabinet was the senior Board of Directors, and the Deputy Ministers and Crown corporation heads were Presidents of their firms. At Cabinet Planning Conferences, the deputy ministers showed what they had done based on instructions issued by Cabinet, outlined their plans for the future, and sought feedback from Cabinet. Blakeney in turn gave deputies their visionary mission statements for their policy sector for the year, and they went away to implement them. This approach led to a coherent, shared sense of the objectives of the government. However, Blakeney emphasized that the government did not have a Chief Executive Officer, who coordinated all of the activities: this job belonged to the deputies. (5) A similar approach was taken with the Crown corporation sector: CIC functioned as the board of directors of the head office of a conglomerate made up of individual Crown corporations.

Other policies also reinforced the sense of common cause. The government's and Premier's principled approach to politics set a tone which reinforced the rational approach of bureaucrats. The strong leadership provided by the key central agencies, the Departments of Finance and Executive Council helped create a coherent approach. The Executive Development Program, a Wes Bolstad concept, which was headed by an experienced deputy minister, Mel Derrick, provided career advice and support to promising senior officials. Adopting the wheat sheaf as a common symbol for all provincial programs, rather than the previous practice of separate logos for each department, also helped to reinforce a common culture.

Beyond these explicit efforts, this small group of experienced, enthusiastic politicians and civil servants believed that working in the service of the public was a worthwhile, in fact, the most worthwhile calling. They considered themselves professional, career civil servants. In Saskatchewan the most able students at the universities aspired to work in the government, in the Budget Bureau. Moreover, the attitude was always one of can do. They did not know that they should not take a leadership role, that their province was too small to be important. In fact, they believed theirs was the best civil service in Canada. The Quebec service was respected, the federal service by-and-large was not. In a sense, this attitude was overbearing and arrogant, but it also meant they accomplished far more than should have been expected or possible. Only such an attitude permitted a small provincial government to take on the federal government, the oil, uranium and potash industries, and to wheel-and-deal in the New York financial markets.

This culture did have some weaknesses, however. Not everyone felt supported and completely on board, including many minorities, women, and those who did not accept the culture. First, the government's efforts to attract and keep minority groups generally were not particularly successful, and few native people worked in the government. Only in the Social Planning Secretariat, which was devoted to Indian and native issues, (6) was there a concentration of people with aboriginal backgrounds.

Secondly, women were not utilized and encouraged as effectively as they could have been. Four women were made deputy ministers or equivalent from 1971-82, the first appointed in 1972. (7) These appointments were notable rather than routine, however. At lower levels too, women tended to be appointed to more junior positions than men and to be promoted more slowly. While not satisfactory, the context at the time should be acknowledged. The federal government, for example, appointed its first female deputy minister in 1975 (8) and followed with eight others to October 1988 (Bourgault and Dion, 1991). The Saskatchewan government was therefore in the forefront of these appointments as well, although not heroic in its efforts. From 1971-82 the government did not have any women Members of the Legislative Assembly, so there was no direct political pressure within caucus and Cabinet for dealing with the situation.

Thirdly, the tension between the new culture and the old was a significant dynamic in the government. Some people did not agree with the politics of the government, both from left and right. When they could these people moved on to other work. Others felt overwhelmed by the aggressive, competitive, changing environment. This latter clash between cultures was exemplified by the relationship between the Budget Bureau and the line departments. Notable by their absence was the New Left or Waffle of the NDP.

Overall, efforts to create and support a culture of excellence were very successful in the central agencies and also successful in many line departments. Judged against the measures of success of implementing the new government's agenda, on a basis which was fiscally sustainable, it would be fair to conclude that the corporate culture of the time permitted and encouraged innovative solutions to tough problems.

As in all lasting administrative revolutions, most of the changes or innovations which occurred during this period came from the line; from Departments and agencies which were up against the customer, delivering the new agenda. What I will describe however, is some examples of innovation in the central agencies or inspired by the central agencies-primarily the Department of Finance.

Central Agency Innovations

One of the earliest reforms was the modification of the basis on which the province accounted for annual cash flows-revenues and expenditures. The government wanted to balance its budget over a political term-it did not want to be judged solely on the basis of its annual performance.

The annual inflow of revenues to the province in those days was very uneven with unpredictable cash flows arising from federal programs and resource revenues. If those were treated as recurring items-when they were not-it would threaten the sustainability model that was being pursued.

At the same time, a government might need to run annual cash flows in a way which helped to stimulate or to retract the economy. They needed a reporting tool that demonstrated clearly this approach-and that measured how they were managing over the entire economic or political cycle.

The solution was an accounting innovation known as Long Term Fiscal Accounting. The change was outlined in notes to the Department of Finance's Economic & Financial Position in 1973. (9)

This was new, and broke ground in the presentation of financial information to citizens. While it was not embraced by the media in their reporting on subsequent budgets or public accounts reviews, it worked well internally to set aside one-time revenues from current expenditures.

This was a major change at the time. It was introduced rapidly. It was presented in advance to, and accepted by, the bipartisan Public Accounts Committee of the Legislature. Long term fiscal accounting was practised until 1982-83, when it was discontinued as part of new amendments to the reporting package.

The second major change was a series of reforms to the processes of budget and program management. In Saskatchewan in 1971, the resource allocation process was not effective. A number of years of policies of retrenchment had left the Net Assets of the province in good shape, but had rendered the budgeting model incapable of sound resource allocation.

The focus on cost control at the expense of policy initiative had made the process arbitrary, cumbersome and in the end ineffective at its main task-the allocation of scarce resources. A personal anecdote will illustrate the point.

As a junior analyst joining the Budget Bureau in the summer of 1969, expecting to join this enlightened elite of dedicated professionals, what did I find? Analysts earnestly recalculating budgets on a mid-term basis to reduce expenditures by 5%. And by what enlightened process of review? Calculators locked in to a factor of .95, being run against each line of expenditure in the budget! It may have removed the 5%, but it was certainly the meat axe and not the scalpel. The worst impact of this approach was what it did to initiative in the line departments. Repeated, arbitrary reductions do not provide sound conditioning for innovativeness or risk taking.

The shortcomings of the entire process as it existed in 1971 are detailed in an earlier article on the subject in which the steps taken to reform the process are also outlined (Wallace, 1974). In summary, first, the entire approach to review was incremental-existing bad programs ranked ahead of good new ideas. Second, the focus was on inputs, not results. Third, decisions were made during a chronological review by the Treasury Board of all programs, removed from the context of competing programs. Fourth, line managers had no useful tool to plan or to measure progress.

The first step was to reform the process of budget and program review. While the need to establish the linkage between inputs and results was important, many of the outcomes of public policy are uncertain. The process of review should focus on preserving a fair cafeteria of choice among competing programs, rather than on attempting to quantify the unquantifiable.

In order to tackle the challenge, early in the process of reform the Cabinet and Treasury Board re-ordered the timing of their reviews, and the nature of the comparisons. The new approach created a fair competition among old and new for scarce resources, by ensuring that decisions on final allotments were deferred until all programs were reviewed, and the process of sorting and re-sorting was complete. In this way a proper context for resource allocation was maintained.

The iterative nature of the review process, where items were periodically re-ranked by the Cabinet Committee (Treasury Board) preserved the cafeteria approach. It removed much of the gamesmanship of some of the crafty veteran practitioners of earlier days who preferred to get issues decided (programs approved) in isolation from competition, or to offer up politically unpalatable cuts as the only option.

At the same time, the sanctity of the approach was guarded by the Premier, who steadfastly refused decisions with financial implications to be taken in other Cabinet Committees, by officials or Ministers who just wanted approval in principle. It was his consistent contention that all fiscal decisions needed a fiscal framework in which to make them, and that approval in principle limited our options too early in the process.

Having made the process more rational, attention swung to the information necessary to support it. The central and critical problem remained: there was no system of planning, management information or control to assist the line managers to accomplish the government goals, linking inputs to outcomes. The answer to this problem was contained in the most innovative and comprehensive reform of all; the development and implementation of a totally new system of program management-PMIS (Program-based Management Information System).

In the summer of 1972, the Department of Finance became aware of work done by Robert C. Casselman, at that time director of the Modernization Systems Unit of the Commonwealth of Massachusetts, on a program-based information system known as PMS. His thesis was that program managers in government are the ones who really understand program delivery, and that their support and commitment for any new system had to be assured. Rather than serve the needs of budget agencies, Casselman's system provided information for managers to plan and to operate their programs. Better yet, the system was developed by involving the program managers in all phases of the process.

After long consultations with officials in Massachusetts, the experiment was brought north to Saskatchewan. In August of 1972, Cabinet directed the Department of Finance to restructure the budgeting process and to develop a program-based management information system, based on the PMS model. (10)

Next Cabinet and the permanent heads of line agencies were introduced to the concept. In seminars with each group the expectations of the system were made clear. Reactions varied, ranging from enthusiasm to scepticism to disinterest. This response was not disappointing in that it was the same as the reaction to the initial attempt to introduce PMS in Massachusetts. They had learned that people would be convinced of the benefits of PMS as the process unfolded and the benefits became clear.

Then deputy ministers were invited to apply to have PMIS implemented in their organizations. Fifteen of the 37 agencies volunteered, including the Department of Social Services, Continuing Education, and Agriculture, accounting for nearly 25% of the total estimated gross expenditure of the government. A mix of programs was chosen, in the hope that a sample group would avoid criticism that the process could succeed only where problems were easily quantifiable and where activities were readily identified.

PMIS was implemented in a way which supported its original thesis: that the program manager was the expert and his needs were primary. Assurances were made and kept that the information would not be used as formal budget documents or reviewed by Treasury Board staff until departments specifically requested it. It was also made clear to Treasury Board and to Cabinet that the process would not be used as a tool for identifying marginal programs until all agencies were inventoried. The establishment of these ground rules was important in maintaining the integrity of the approach. Ultimately, all agencies went on the system, and the radical experiment became the accepted way to plan, budget and control. Like most program-based budgeting systems, however, it eventually died out, to be replaced by the old line-item budgeting system. This process is discussed further in the next chapter.

Looking back at this radical experiment in organizational sociology, the principles of making innovation stick contained in the process were sound. Business scholars, pop management gurus, and other observers of enterprise, increasingly have become obsessed with the need for modern organizations to embrace and thrive on change. They have commented on the need to have grass roots involvement and meaningful empowerment as preconditions to success. Without knowing it, other than from an examination of what had not worked in other jurisdictions, an approach was selected which made the reform part of the solution to a line manager's problems; not just another demand created by central agencies to satisfy their needs.

Who could imagine that nearly 20 years ago, a government bureaucracy would be using concepts that would make Tom Peters smile today? Saskatchewan emphasized the line knows best, voluntary commitment, assurance that the information would not be used at the centre to disembowel agencies or programs, total involvement by program managers in the process, and definable, results-oriented measures of success built into the package. There are many private sector organizations with which I have worked that would envy the pace and ease of the PMIS implementation.

Judged against the measures of success of implementing the new government's agenda, on a basis which was fiscally sustainable, it would be fair to conclude that the corporate culture of the time permitted and encouraged innovative solutions to tough problems.

Epilogue

As the years passed, the problems changed, but in Saskatchewan there was (and is) never a shortage of challenges. In my view, the ability of the political and public service leadership to sustain change slackened. Any organization or enterprise needs renewal of some kind to enable it to think through new challenges in a radical way. One person's reform agenda is another's status quo, and the Saskatchewan government was beginning to fail to recognize the need for further change.

Maybe as the reformers had become complacent. Perhaps they were stretched too thinly as the focus shifted from the narrower agenda of government proper to all government enterprise, including the Crown corporation sector.

Certainly there came a period when the natural healthy tension between elected officials and bureaucrats (especially in the central agencies) boiled over into nasty feuds. I recall one budget finalization session in the late 1970s in which the Cabinet was actually outnumbered by central agency bureaucrats in the room. This fact was pointed out by one of the ministers who then left the room until the number of staffers in attendance were cut back. This was simply a manifestation of the strongly held view that bureaucratic entrenchment was beginning to limit the government's effectiveness.

There is another central agency of the period which deserves mention here, the Planning Bureau of the Executive Council. In his book with Sandford Borins, Allan Blakeney describes in detail the economic forecasting and issue-specific work that was done by that group during the time of his government (Blakeney and Borins, 1992, pp. 105-109). A bright and capable group of analysts, the Planning Bureau produced a number of background pieces and working documents which guided the social policy of the first term of the government, from 1971-75.

At the same time, there was an unhealthy competition with the Department of Finance which limited their effectiveness, almost from the inception of the Planning Bureau. The competition was for the hearts and minds of the Cabinet, and usually deteriorated into arguments between the theoreticians and idealists with no practical ideas, and the closet conservatives and bean-counters--as each group characterized the other!

Because the Treasury Board held the purse strings, and because the Premier would not loosen the grip on his vision of fiscal responsibility, Finance usually won the influence battle. This process rendered the Planning Bureau less relevant over time, especially after 1975 as financial concerns increased and the policy agenda became less clear.

Whatever the reasons, the corporate culture had changed for the worse by 1980, in terms of ability to anticipate and to manage change. All of the reasons why would need a much more thorough examination than I can provide here. However, there were some key lessons learned from the most innovative period immediately after 1972. Some of these lessons are particularly germane now when the Government of Canada and many provinces are looking for ways to reform the public service in a quest for true excellence.

Conclusions

Based on this experience, the conditions precedent to the creation of a corporate culture in government which is capable of innovation (or the management of change) includes those described below.

Genuine respect and enthusiasm from politicians: Allan Blakeney liked and respected competent public servants and admired their calling. He was a cheerleader for the public service-and the entire leadership of the public service respected him. This cannot be faked, and the slightest evidence of lack of commitment or lack of respect for the public service sets back the cause significantly.

Risk, recognition and reward: Make it modern. Good private sector organizations spend time and money to create an environment in which people take risks to achieve great things, are recognized and celebrated for what they achieve, and share the rewards of "getting it right". Clearly it will take politicians with the courage, and a sophisticated public affairs strategy, to make this happen, to have it supported by the media, and ultimately the population at large.

Big change management issues: This should not be a problem in Canada in the 1990s. Fiscal issues, social policy concerns, Canadian competitiveness for the 21st Century, and a host of other issues create a critical need for innovations in governments in Canada. Once again, the political courage to grapple with them is a necessary precondition.

An acceptance of ongoing revolution in management: Bureaucracies, public or private become entrenched and self-protective, moving toward an unhealthy equilibrium. Processes of evolutionary change led by born again incumbents are rarely enough to shake the culture sufficiently to release the inherent power and innovative capacity of people in the organization who have the ideas, experience and capacity required to solve big change issues. Ongoing effectiveness demands radical approaches if real renewal is to take place.

Listen to the customer-a way of life: As popular as this obvious notion has become, it cannot be overstressed. In the early days of the Blakeney government, politicians used a number of devices to stay in touch with their customers, including an annual active listening tour by the Premier himself all around the province. In turn, the leaders in the public service listened to their new customers-the newly-elected government. This made the agenda for change less traumatic than it appeared from the outside, rooted as it was in what the customer (elector) wanted.

These conditions in Saskatchewan made possible the processes which assured the government's success in implementing innovation. The central agency contributions to this process are outlined in Table 1.

Some observers have noted that the successes of the Saskatchewan of the 1970s were a result of simpler times and lots of money to throw at problems. Perhaps. But it is striking to observe how many aspects of what is now regarded as modern management in the 1990s were being practised in Saskatchewan at that time. For those who were part of it, politicians or public servants, it was a great experience. Personally, there is hardly a day in working life that it is not possible to draw from the lessons learned in that period-lessons that I will never forget.

Notes

1. As a student articling to become a Chartered Accountant in Regina in the late 1960s, I was advised by a senior colleague that if I wanted challenge and the road to success, "Try the Budget Bureau. It's the best graduate school in the country". Since 1983, working in the private sector, I have learned that Saskatchewan Department of Finance officials, including people in the investment and debt management area, since the 1950s had a reputation for competence and innovativeness.

2. Grant Mitchell, Deputy Minister of the Environment and later Cabinet Secretary; and David Dombowsky, President of the Saskatchewan Economic Development Corporation (SEDCO) and later President of the Potash Corporation of Saskatchewan had also been senior public servants during the Douglas government.

3. The promoter personalities of Beatty and Murray Wallace and the supporter personality of Bolstad provided an effective combination for bringing these efforts to fruition.

4. Wags said he held court (he was a lawyer).

5. See also Blakeney and Borins, 1992, pp. 2-11 and 90-95.

6. At any one time, no more than four Natives were employed in the Social Planning Secretariat, of a total staff of 12. The use of a euphemistic title for the agency reflected the state of the issue in Saskatchewan at that time more than the intent of the government.

7. Arlene Hynd was appointed deputy minister of Consumer Affairs June 1, 1972, followed by Liz Dowdeswell in Culture and Youth in 1978, Lynne Pearson in Consumer Affairs (later Consumer and Commercial Affairs) in 1980, and Florence Wilkie as Cabinet Secretary (deputy minister equivalent) in 1980. As well, Marge Benson was appointed associate deputy minister of the Department of Agriculture.

8. Sylvia Ostrey to Consumer and Corporate Affairs.

9. "Recognizing that a government must balance its revenues and expenditures over the long run, it is also obvious that trying to manipulate figures in order to make cash revenues equal cash expenditures in any one year can lead to misleading information reported in the Public Accounts.

"The adoption of a long-term accounting concept enables the government to more accurately reflect a longer term approach to fiscal planning. Once it is recognized that governments plan programs over an extended economic cycle, it is apparent that deficits or surpluses should be reported over a period which coincides with that cycle. This does not mean that the traditional annual system of appropriation will vanish or that the annual statement reporting those cash revenues and expenditures will disappear. It merely means that this annual statement of cash flows is supplementary to the more important statement of income.

"In order to achieve this reporting breakthrough, two new statements are added to accurately portray the situation. One, a Statement of Budgetary Revenue and Expenditure, and secondly, a statement which will show the government's cumulative cash position at annual points during an extended economic period.

"The reason this is necessary to achieve fair reporting should be obvious. The large amounts of cash received from the federal government through the equalization formula have a substantial time lag inherent in them. This means that revenues will be artificially inflated or deflated some two years after they actually should have been reflected as revenue. In the past, Ministers of Finance and Provincial Treasurers have used a number of devices to smooth fluctuations in revenues and expenditures-these measures range from the deferment of revenues to the prepayment or postponement of expenditures. The adoption of long-term fiscal accounting recognizes the fluctuations in revenues and that government expenditure plans apply to a complete economic cycle-we now report our revenues and expenditures on that basis."
Government of Saskatchewan, Saskatchewan Financial & Economic Position, July, 1973.

10. Which Saskatchewan dubbed PMIS, to emphasize the information-providing aspects of the system, rather than having it misconstrued as a total management system.


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