The Innovation Journal: The Public Sector Innovation Journal, 5(2), 2000, article 1d2.

 

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


Previous: Chapter 1 Top: Table of Contents Next: Chapter 3

Chapter 2:

Planning, Financial Management, Accountability and Administration (1)

 

Eleanor Glor

Good planning, financial management and administration were crucial to successful innovation in the Blakeney government. This chapter discusses the primary management challenges the government faced, how it dealt with them, and its measure of success. The processes employed by the government in managing its change agenda are also examined.

A Plan

The NDP's election platform outlined nearly 150 changes the government was committed to making, a number of them fundamental in nature. Because of the many new and significant initiatives introduced by the government immediately after its election, planning was essential to create and coordinate novel plans and programs. Effective planning was supported by both a precedent for planning and the will to plan. The concept of central planning had been introduced to Canadian government early in the CCF government of Tommy Douglas (1944-61) when it created the Economic Advisory and Planning Board. (2) The Douglas government introduced a second planning body when it created the first Budget Bureau (Treasury Board staff) operation in 1946-48. (3) Under the Thatcher government (1964-71) the former was dismantled and the role of the Budget Bureau was severely truncated.

Added to this Douglas era historical precedent was a much more important factor: the will to plan. Blakeney was an effective and committed planner. During 20 years of experience in the Douglas and Lloyd governments, he had worked as a civil servant with both the Crown corporation and government sectors, and he had been minister in charge of four major Crown corporations and government departments. Noted for his excellent memory, Allan Blakeney was an unusually well informed Premier; he was also an activist Premier. Fully committed to the 1971 party platform, The New Deal for People, he requested and received regular updates on the activities of central agencies and line departments (a list of departments is provided in Appendix I) and on progress in accomplishing The New Deal. Wes Bolstad, Cabinet Secretary and Clerk of the Executive Council from 1973 until 1979, attended these meetings, said "Blakeney had remarkable impact on all the major planning activities of the government, including the annual Cabinet conference on planning and budgeting and the periodic Cabinet retreats. He not only put the structure and processes in place, he actively participated in them." (Personal interview, April 26, 1993)

Given need, precedent and will, planning in the government was less centralized and more distributed than might have been expected. It occurred in a number of centres, led for the most part by standing and ad hoc committees of Cabinet, rather than by individual ministers. These cabinet committees included the Planning Committee (whose staff arm was the Planning Bureau), the Treasury Board (Budget Bureau), special Cabinet committees (secretariats), and the Cabinet Committee on Crown Corporations (Crown Investments Corporation-CIC). Individual ministers and their research and planning branches also planned many innovations. Planning was focussed initially in the Planning Committee; later it was decentralized considerably, to the special committees and departments. This approach had the advantages of guaranteeing a good deal of planning occurred, assuring one area did not become overburdened or dominant, and allowing the government a number of choices of planning centre. (4)

One of the chief advantages of this planning system was its capacity to maintain a broad government-wide alignment, rather than a narrow departmental- or policy-specific orientation. It also solved problems of lack of variety of input, as described by Thompson (1965-66, 1976). Despite the implementation of 126 policy innovations, in the longer term, the government's planning function did not continue to generate a politically acceptable package of new ideas which could maintain the innovative momentum of the government's early years. Was this the responsibility of central planners, or of the political party in power? While Blakeney looked to his planners to perform this role (Gruending, 1990, p. 91), as do most governments which have been in power for some time, the Saskatchewan government would have been better off to return to a grassroots political policy development process like the one used to develop The New Deal for People to perform this function.

Financial and Administrative Management and Accountability

Planning was an indispensable activity, but effective financial and administrative management were also essential to successful innovation.

Financial Innovations

The government's first priority was financial management. The primary agency with a mandate for financial and administrative management was the Treasury Board, (5) chaired by the Minister of Finance. Blakeney had been Provincial Treasurer in the Woodrow Lloyd government, was his own Treasurer during most of the first year and for his first budget, and continued to be keenly interested and involved in financial issues throughout his government. He had a strong relationship with his Deputy Minister of Finance and relied heavily upon him to accomplish tasks. Finance staff were considered "doers," who got jobs done fast and successfully.

The finance department was responsible for all aspects of financial planning and control. Its structure was expanded and its capability improved during the years of the Blakeney government. Through a reorganization in 1972 the Department of Finance was split into four branches, Budget Bureau, Tax and Fiscal Policy, Investment and Financial Services, and Management Improvement, thereby providing the government with much better debt and administrative management, and tax policy development capacity than it previously had. Treasury Board processes were also streamlined at this time.

An important aspect of this reorganization is what it did not do. During this period of time, Canadian governments were breaking up traditional finance departments at both the federal and provincial government levels. The federal government, for example, separated its financial planning from its budget preparation functions in the early 1970s with the creation of the departments of Finance and Treasury Board Secretariat. The most serious break was the separation of the spending from the revenue and taxation junctions. Senior Finance staff in Saskatchewan -Beatty/Wallace/Douglas/Costello- believed that it was essential to keep "both sides of the budget" under one Minister, within one organization, and under one Cabinet Committee. In the early 1980s, Mike Costello counted seven federal deputy minister-level positions that were under one in Saskatchewan, the Deputy Minister of Finance-the position he then held. (6)

Saskatchewan was the first Canadian government to introduce program budgeting in 1946; it was subsequently adopted elsewhere in Canada. (7) In early 1973, Saskatchewan introduced a performance measurement system, one of the family of output-oriented, performance measurement budgeting systems, adopted by governments during the 1960s and 1970s. Saskatchewan was an early adopter, being the third Canadian jurisdiction to introduce a program-based system, after Ontario (in 1968) and Canada (1969) (Gow, 1991, p. 23), but added a customer-driven perspective to it (chapter 1).

In 1977-78 changes were introduced to revitalize and streamline the ongoing and annual Treasury Board review process. As a result of either a Finance Department or deputy ministers' retreat where Premier Blakeney indicated that the management of the system was becoming too centralized and cumbersome, Finance undertook a full review. Mike Costello, as Deputy Minister Murray Wallace's assistant, undertook the evaluation. Prior year Treasury Board agendas and minutes were analyzed and the report concluded that, indeed, too much of Treasury Board Ministers' time was being wasted on issues of low financial and/or strategic interest. The result was a new system that streamlined decision making such that Ministers' time was used only for significant matters. At the other end of the spectrum, lowest-level decisions were delegated to the Secretary of the Treasury Board or decentralized to line Deputies.(8)

The most vital central budget planning and control processes were the annual fall Cabinet Planning Conference, which set the overall parameters for the next budget; thorough review of budget proposals by Treasury Board; and the January budget wrap-up session. The budget wrap-up was a key-and tense-two-day meeting where the full Cabinet, with support from the Deputy Minister of Finance, Director of the Budget Bureau, and Chief Planning Officer, reviewed the budget and assured it balanced. Senior Budget Bureau and Tax and Fiscal Policy staff appeared as needed. Both the fall Planning Conference and the Budget Conference always started with an overview of fiscal revenue and tax options Finance staff to set the stage for the budget deliberations.

The Budget Bureau was a powerful budget, policy analysis and control agency, that helped Saskatchewan ensure budgets balanced under CCF and subsequent NDP governments (Johnson, 1955). It functioned as the central information-gathering and -distributing agent for the government. Many governments (e.g. federal, B.C.) subsequently adopted a similar model, but usually without the policy analysis function.

The Saskatchewan reforms were validated in early 1978, around the same time as the Treasury Board process review. Peter Phyrr was invited to come to Regina for two days of meetings with staff and a presentation to Finance and deputy ministers. He was the founder/author of Zero Based Budgeting in the U.S. During his visit he looked at PMIS, the Budget Bureau, Treasury Board, and so on. Subsequent to his visit, he issued a very positive report saying he could make no suggestions on how to improve the Saskatchewan system, despite the fact that his model was sweeping the world.

The Blakeney government's main fiscal objective was a balanced (Consolidated Fund) budget, over the term of the government. This it achieved (Table 1). To do so, both expenditures and revenues were managed, through the introduction of tax planning, investment management and performance measurement.

Table 1: Long Term Fiscal Accounting: Financial Balance Sheet (Actual),
Government of Saskatchewan, 1972-82
($ millions)

Fiscal Year

Consolidated Fund Expenditures

Consol. Fund & Heritage Fund Expend.

Consol. Fund Revenues

Consol. Fund & Heritage Revenues

Consol. Fund Budgetary Surplus (Deficit)

Consol. Fund & Heritage Fund Surplus (Deficit)

1972

565

565

575

575

10

10

1973*

629

629

660

660

31

31

1974

787

787

822

822

35

35

1975

966

966

989

989

23

23

1976

1,187

1,187

1,308

1,308

121

121

1977

1,385

1,385

1,433

1,433

48

48

1978

1,503

1,535

1,460

1,571

(43)

36

1979

1,676

1,732

1,613

1,808

(63)

76

1980

1,846

1,919

1,784

2,030

(62)

111

1981

2,059

2,184

2,067

2,417

8

233

1982

2,408

2,524

2,416

2,664

8

140

Total government surplus (deficit), 1972-82

186

864

* Net budget figures are given for 1972 and 1973, gross budget figures thereafter. The government moved to gross budgeting in 1973-74.

Sources:

  • For 1972-75, Province of Saskatchewan. Budget Speech. March 8, 1979.
  • For 1976-77, Province of Saskatchewan. Budget Speech. March 5, 1981, p. 60.
  • For 1982, Province of Saskatchewan, Budget Speech, March 1983, pp. 17, 19, 26.

A second financial priority was thus tax planning. The major tax changes during these years were in resource taxes, where a new taxation regime, the profit sensitive royalty, was introduced (Glor, 1997). Revenues increased markedly as a result of the combination of tax increases, enhanced activity in the resource sector, and additional investment in and returns from Crown corporations. Provincial government revenues from potash, for example, increased from $5M in 1972-73 to $53M in 1974-75 (Laux and Molot, 1978, p. 842). Saskatchewan also maximized revenues by actively seeking federal/provincial cost-sharing. Saskatchewan was, for example, the first province to secure cost-sharing for day care under the Canada Assistance Plan. (9)

Tax and Fiscal Policy Branch, while small-five to ten people-was at the leading edge in a number of areas. For revenue and tax analysis purposes the branch built from scratch a personal income tax simulation model to analyze various provincial income tax options and project revenues. (10) This model was also used in fiscal debates with the federal Department of Finance on revenue projections, tax change implications and other federal-provincial fiscal issues, including equalization. Although Premier Blakeney did not support the introduction of Established Program Financing (E.P.F.) in 1977, Tax and Fiscal staff played a critical role in the 1975 and 1976 negotiations, ultimately designing, with Ontario and Alberta, the all-provinces consensus proposal of 1976. In a sense, Saskatchewan was seen by the smaller, other have-not provinces as the one that could best go toe-to-toe technically with Ottawa on equalization and fiscal transfer battles that were waged in the 1970's.

Managing debts and investments effectively was a third priority. (11) Following near bankruptcy in the 1930s and rescuing loans from the federal government in 1937, Saskatchewan had reduced its per capita liabilities, from the highest among provinces in Canada in 1943 to the third lowest by 1971; it was the second lowest in 1982, after Alberta and before British Columbia. Saskatchewan had become the third most indebted province again by 1992, while Alberta and B.C. remained the lowest Saskatchewan suffered the largest increase in liability among provinces from 1982 to 1992. (Table 2)

Table 2: Liabilities Minus Assets, Federal Government, Provinces and Territories-Per Capita

Govt

Liabilities minus assets per capita

Year 1971

Year 1982

Change in liability 1971 to 1982

Year 1992

Increase in liability 1982 to 1992

$

Rank

$

Rank

$

Rank

$

Rank

Canada

854

11

3,888

11

-

14,851

11

10,963

11

Nfld

668

10

2,955

10

-

6,129

10

3,174

5

PEI

649

9

1,088

5

-

2,446

3

1,358

1

Nova Scotia

393

7

1,674

9

-

5,768

9

4,094

8

New Brunswick

530

8

1,521

8

-

4,453

5

2,932

4

Quebec

295

6

1,380

6

-

5,248

7

3,868

7

Ontario

174

5

1,516

7

-

4,000

4

2,484

3

Man

(48)

4

929

4

-

4,766

6

3,837

6

Sask

(148)

3

(1,191)

2

+ 2nd

5,358

8

6,549

10

Alta

(230)

2

(5,735)

1

+ 1st

(1,261)

1

4,474

9

B.C.

(373)

1

(677)

3

-

882

2

1,559

2

Yukon

1,167

(1,000)

(5,300)

(4,300)

NWT

765

(1,449)

(2,435)

(986)

Source: Statistics Canada. 1994. Public Sector Assets and Liabilities, Historical Overview, March. Cat.68-508, Table 1.4, 1.8

Because of its poor financial record, the Government of Saskatchewan historically had been unable to borrow in public markets and had borrowed money through private placements only. As a result the province only had an informal credit rating in 1971. During the Blakeney years the province received a formal, and excellent, credit rating which grew from AA to AA+ and AA1. (12) The province was not only able to borrow in the New York public markets for the first time, but at good rates.

Like other governments, beginning in the late 1960s, and coming into its own during the Blakeney government, debt for the crown corporations and lending to cover the costs of the early months of the fiscal year for the government were actively managed. At a time when the federal government was relying almost entirely on Canada Savings Bonds to raise funds, the Government of Saskatchewan was using its loan entitlements under the Canada Pension Plan, then topping these up with loans from the public markets. For the first time the financial markets in New York were prepared to lend Saskatchewan money. Saskatchewan also borrowed money in the Canadian bond market and the Euro-US bond market. While international borrowing was not unusual, Saskatchewan arranged two Swiss franc bond issues in 1982 that were swapped to US dollars. These were the first currency swap (derivative) transactions by anyone in Canada, government or private sector and among the first by anyone in any market.

As Saskatchewan began to borrow in the public markets to cover debt for the crown corporations and costs of the early months of the fiscal year for the Consolidated Fund, Saskatchewan developed its capability in actively managing its investment and debt management. This capability began to develop beginning in the late 1960s, but came into its own during the Blakeney government. Saskatchewan developed a reputation in Canadian financial circles for this capability: By the late 1970s Morley Mickeljohn, head of the section, had become a guru in public finance in Canada-a recognized expert in borrowing and accessing public markets. The federal government was behind in this area, as it relied primarily on Canada Savings Bonds to finance its borrowing. Today Canadian governments generally use public bond markets as one source of financing.

Excellence in investment and debt management was shown on two levels: public bond market players-investment bankers, institutional bond investors and rating agencies-had great respect for Mickeljohn and his team in executing and managing bond issues. As a result, borrowing costs and credit rating were always better than the fundamentals might have suggested. Secondly, Tom Lane, Rob Douglas and Mickeljohn's administrative staff were at the forefront at building debt management/liability management computer-based systems in the 1970s. Also, it is important to note the benefits of the system of consolidated borrowing. All corporations and agencies of government-including municipalities, borrowed through the Department of Finance. This allowed Finance to capture and sustain the benefits of one borrowing program and one well-protected name in the market place.

A fourth financial priority was dealing with unfunded liabilities, at a time when no other government was doing so. The Saskatchewan government confronted its unfunded commitments under the Workers' Compensation Fund and the public service, teachers' and utilities' pension funds by moving the entire provincial public sector to a money accumulation plan rather than the traditional defined benefit plan. Its unfunded liability under the Workers' Compensation Fund was addressed by increasing rates charged employers; changing the basis of compensation from specific payments for specific injuries, as insurance companies provided, to payment for lost income; and limiting the commitment to widows and widowers without dependents who remarried to two years instead of lifetime compensation. This latter change, which represented a significant loss to spouses, especially widows, was adopted by all provinces within a few years. A court action in 1999 in Saskatchewan sought to reverse this action.

The unfunded liabilities of the largest pension plans, those of the public service, teachers, Saskatchewan Power and Saskatchewan Telecommunications-the crown corporations with the largest numbers of employees, were dealt with by adopting a new, fully funded plan for all new employees after a certain date. The move from a defined benefit to a money accumulation plan was the most significant, as it shifted the future liability from the government to employees. Since the Public Employees' Pension Plan (PEPP) was introduced October 1, 1977, it has worked out well for employees, since the market has so far performed well.

The pension plan had two unique characteristics. First, both employee and employer contributions were deposited in a fund which was invested in the money markets, with all interest going to the fund. The Government of Canada adopted this innovation for the Canada Pension Plan in 1998, effective 2000. Under the NDP this fund was managed by the government's investment managers in the Department of Finance and did very well; under the Conservatives it was privatized and did not do as well as expected. Second, all the public sector pension funds were converted from defined-benefit to money-purchase plans. The advantage to the government was that the fund was pay-as-you-go and so, although the government's contribution had to be paid out front, its commitment was known, fulfilled, and limited. It was a huge step that has had a significant impact on Saskatchewan's long-term balance sheet and fiscal health. No other provincial government has done this or even tried to do it. (13)

Administrative Innovations

Administrative reform was also a priority. The government created a management improvement unit within the Department of Finance during the early 1970s, headed initially by Dave Bock, later by Keith Saddlemeyer. (14) The mandate of the Bureau of Management Improvement (BMI) was to develop and introduce administrative reform in the Saskatchewan. With a dozen professionals, it promoted and supported the PMIS system, reviewed departmental reorganizations, offered administrative advice to departments and advised the government on collective bargaining. Functioning as in-house management consultants, much as Consulting and Audit Canada does for the Govenment of Canada today. It was operating in a Regina environment where very few private consultants were available. BMI did operational audits and management audits although not full comprehensive audits. Staff of BMI were also available when departments got into trouble or when senior staff needed a break.

BMI's collective bargaining unit was an innovation not done in other governments at that time. A three-person unit, acting as staff to the Cabinet Committee on Collective Bargaining, provided advice and information on collective bargaining within the whole public sector. If the hospitals were bargaining with their nurses, for example, the collective bargaining unit would be providing information to the cabinet committee on this sector. By the end of the 1970s this Committee and its staff set collective bargaining mandates for hospitals, universities, etc. This function was not only effective, but largely invisible to the outside players.

PMIS was the other innovation introduced by BMI, as explained in chapter 1. A half dozen staff were assigned to work with specific departments to encourage and to help them convert their budgets to the PMIS. By 1976, PMIS was absorbing increasing amounts of management, staff and central agency energy. The system proved to be complex and cumbersome to use, hampered by the slow turnaround times of the Saskatchewan Computer computers. Thus, despite the good service offered by the unit, which took care of all the computer-related activities, departments and Budget Bureau analysts became frustrated with the inefficiency of the system. Although most departments eventually adopted PMIS, once its chief proponent, Murray Wallace, left Finance in 1979, the impetus declined. PMIS eventually became moribund, as did the other program-based management systems adopted by Canada and Ontario.

Accountability

The move to gross rather than net budgeting in 1973-74 provided a much more complete public presentation of both expenditures and revenues. Previously hidden details were given on all revenues, from the federal government (for agriculture, crop insurance, natural resources, municipalities and RCMP protection) and from payments from teachers for group life insurance, and from the public service for group life insurance and superannuation.

Saskatchewan was an early innovator in expanding the comprehensiveness of the disclosure of the financial dealings of government. In 1973 the Saskatchewan government had created the Energy and Resource Development Fund (ERDF), that received a substantial portion of new oil royalties, in the order of 60%, in a manner similar to that employed by Alberta and Saskatchewan when they later created their heritage funds. At the same time, this diverted the funds from the Consolidated Fund and legislative perusal. The ERDF was not shown in Budget documents, was not consolidated with the Consolidated Fund, but appeared in Public Accounts. The funds were in effect under Cabinet control. When the ERDF was turned into the Heritage Fund in 1978, the government introduced Legislative control and combined Heritage Fund and Consolidated Fund financial statements.

The Budget Speech and Estimates for the first time reported tax expenditures. The government also provided more information on the province and its programs, and increased considerably the level of openness concerning Crown corporation practices. The Select Committee on Crown Corporations of the Legislature reviewed CIC annually; the Provincial Auditor audited the CIC consolidated statement and had the right to audit and demand the working papers of individual Crown corporations. Crown corporation borrowing was made public and reports on individual Crown corporations, CIC and the Heritage Fund were produced. This information was useful in negotiating loans in the New York markets. Even more radically, the Heritage Fund structure required the Legislature to vote all budgetary expenditures out of the fund; in Alberta, huge capital projects were being funded without legislature scrutiny - a hot issue of the day. The Saskatchewan Liquor Board, another source of substantial revenues, remained outside of the Crown Investments Corporation and legislative scrutiny, however.

Financial Outcomes

The overall financial picture changed from recession to boom in the course of the government. Although the Blakeney government came into power in recession, within a few years the economy improved substantially, due to increases in oil prices (the price of oil quadrupled in 1973-74), improvements in crops and agricultural prices, and increased demand for potash.

The Consolidated Fund (15) budget and revenues increased fourfold from 1971 to 1982 in current dollars. The government's expenditures increased in current dollars from 1971-72 to 1981-82 from $.582 billion to $2.524 billion, including Heritage Fund expenditures. Revenue increased from $.592 to $2.664 billion. (16) (Province of Saskatchewan, Public Accounts and Annual Report, Saskatchewan Health Services Plans, 1972 and 1983). (17) The gross debt increased from $.709 to $3.316 billion, all of it self-liquidating debt, largely due to Crown Corporation borrowing, which would be repaid by the agencies involved. None of it was for government operations. (Province of Saskatchewan, 1982). In constant dollars (real dollars) the value of Saskatchewan government expenditures increased 85% from 1972-81, when both Consolidated Fund and Heritage Fund expenditures are taken into account. This made available substantially more expenditure resources than the government had begun with, in a recession-bound 1971-72.

The character of the government's revenues also changed during that time. While federal transfer payments had represented 22% of provincial revenues in 1971-72, by 1982-83 they only represented 14%. In 1982 the Heritage Fund, which received all resource revenues, received and expended about $800M. Total equity in the Heritage Fund was about $1.477B by 1983 (Government of Saskatchewan, 1982, p. 71). Increased economic activity combined with higher taxes meant a combination of more jobs, a buoyant economy, and growing government revenues.

According to Statistics Canada's equalized basis for analysing provincial expenditures Saskatchewan moved from having the lowest per capita expenditures in the country to having the third highest. Revenues moved from the lowest per capita to second highest (Table 3). (18) Although programs grew, all revenues were not dedicated to ongoing government operations. The Heritage Fund was created to receive about half of non-renewable resource revenues, and was used to support the economic development of the province through investment in Crown corporations. In 1971-72 the only provinces not in deficit were Saskatchewan and British Columbia, in 1981-82 the only ones were Saskatchewan, B.C. and Alberta.

Table 3a: Actual Federal and Provincial Government Expenditures, Revenues, and Rank, 1971-72

Govt

Expenditures
000,000

Per Capita

Rank

Revenue
000,000

Per Capita

Rank

Surplus (Deficit)
000,000

Canada

18,375

852

6

17,050

791

7

(1325)

Nfld

551

1056

3

435

868

4

(116)

PEI

99

884

5

98

875

3

(1)

N.S.

566

717

11

555

703

12

(11)

N. B.

515

811

9

504

794

6

(11)

Que

5027

834

7

4663

774

8

-364

Ont

6404

831

8

5628

731

10

-776

Man

714

723

10

710

719

11

(4)

Sask

614

663

13

637

688

13

23

Alta

1516

931

4

1366

839

5

-150

B.C.

1520

696

12

1665

762

9

145

Yukon

26

1444

2

25

1389

2

(1)

NWT

91

2600

1

77

2200

1

(14)

Prov. Total

17,638

818

759

16,362

-1260

Table 3b: Actual Federal and Provincial Government Expenditures, Revenues, and Rank, 1981-82

Govt

Expenditures

Per Capita

Rank

Revenue

Per Capita

Rank

Surplus (Deficit)

Canada

79,381

3261

5

67,442

2770

9

(11,939)

Nfld

1,701

2995

8

1632

2873

8

(69)

PEI

368

2992

9

367

2984

6

(2)

N.S.

2598

3067

7

2,179

2573

12

(420)

N. B.

1,959

2815

12

1,818

2612

11

(141)

Que

21,482

3337

4

19,419

3016

5

(2,063)

Ont

21,175

2455

13

19,584

2271

13

(1,591)

Man

2,938

2864

11

2690

2622

10

(248)

Sask

3,017

3117

6

3,134

3238

4

117

Alta

8,933

3992

3

11,269

5670

3

2,336

B.C.

8,015

2921

10

8,055

2935

7

40

Yukon

375

8152

1

401

8717

1

26

NWT

72,707

2987

70,699

2904

(2,007)

Source: Statistics Canada. Public Finance, Historical Data, 1965-66 to 1991-92. Catalogue no. 68-512.

Thus, program expansion, though not all of the economic development activities (see below), was able to occur within the NDP's conservative, balanced budget fiscal policy. The Canadian economy, by comparison, was also booming during these years, but the Canadian government was running yearly, growing deficits (Statistics Canada, 1993, p. 182.).

Saskatchewan was fortunate during the mid 1970s in having a growing economy and good prospects, as did many Canadian provinces at that time. None had anything like the boom that occurred in Alberta. What is most striking about Table 3b, however, is not how large the Saskatchewan revenues grew to be, at $3238 per capita, but rather how large those of Alberta were in 1981-82. Revenues per capita among Saskatchewan and all other provinces were within $700 per capita of each other while Alberta's were $2400 per capita higher than Saskatchewan's. Although Saskatchewan expenditures grew more than average, all provinces experienced substantial growth in expenditures during this period. It should be remembered, too, that the amounts of money involved in this expansion were relatively small by government standards, and that Saskatchewan had begun its period of growth with a program deficit, i.e. the Thatcher Liberal government had restrained government growth for ten years.

Nonetheless, the Saskatchewan government's net value (liabilities minus assets) grew during the Blakeney years, from a positive balance of $148 to $1191 per capita; unfortunately by 1992 it had declined by $6549 per capita. Compared to other provinces, the assets per capita of the Alberta government grew most from 1971 to 1982, and those of Saskatchewan second most; they declined more than those of any other province from 1982 to 1992 (Table 2), to a level even higher than that of the federal government (Saskatchewan gross debt 76% of GDP, federal government 70% in 1992) (Table 4).

Table 4: Canadian and Saskatchewan Indebtedness, 1943, 1971, 1982, 1992

1943

1971

1982

1992

Federal Debt (1)

Net (Liabilities minus assets) $ millions

6,183

18,361

97,711

420,951

Canadian Population

11,795,000 (3)

21,523,000

25,126,000

28,345,000

Per Capita Net Liabilities $

524

854

3,888

14,815

GDP $ millions

8,513

88,300

352,963

684,478

% of GDP

73

21

28

61

Gross Liabilities $ millions

8,815

39,291

145,463

476,610

% of GDP

104

44

41

70

Guaranteed Debt $ millions

Not available

Not available

10,453

26,566

Saskatchewan Debt (1)

Liabilities minus Assets $ millions

209.9 (4)

(137)

(1,176)

5,379

Sask population

838,000 (3)

926,000

987,000

1,004,000

Liabilities minus Assets Per Capita $

250

(148)

(1,191)

5,358

Rank (among provinces)

highest

lowest

lowest

highest

GDP $ millions (2)

Not available

3,450

13,633

18,982

Net Liabilities as % of GDP

Not available

4

9

28

Gross Liabilities $ millions

Not available

742

4,007

14,366

% of GDP

Not available

22

29

76

Guaranteed Debt

Not available

Not available

10,453

26,566

(1) Statistics Canada. 1994. Public Sector Assets and Liabilities, Historical Overview, March. Cat.68-508. Uses net debt, the excess of liabilities over financial assets. Assets are cash on hand and on deposit, receivables, advances, securities, other financial assets. Liabilities are bank over-drafts, payables, advances, treasury bills, short-term paper, bonds and debentures, other securities, deposits, other liabilities. Excess of liabilities over assets (or excess of financial assets over liabilities ): this consists of the accumulated deficit or surplus at the end of the immediately preceding period, adjusted to reflect the current surplus or deficit, changes in the classification of entities and changes in accounting practices and policies. Guaranteed debt is the borrowing issued by agencies outside government (e.g. government business enterprises) and guaranteed by a government.

(2) Statistics Canada, Provincial Economic Accounts, catalogue no. 13-213. 1982 and 1992 figures developed using an adjusted means of reporting GDP compared to 1971. Using earlier methodology would have produced a GDP of $14,760 for 1982. The 1982 figure given is $2,058M less than the preliminary estimate included in the March 1983 Saskatchewan Budget Address.

(3) Statistics Canada. 1992. Post-Censal Annual Estimates of Population by Marital Status, Age, Sex and Components of Growth for Canada, Provinces and Territories. June 1. Cat. No. 91-210 Annual, Vol. 10.

(4) Source: C. M. Fines. 1945. Budget Speech. Regina: Thos. H. McConica, King's Printer. Consists of $183.4 net debt, $8.5M paid down, and $18M contingent liability. Figures not available from Statistics Canada.

Conclusion

The rare combination of power, a desire to reveal the workings of government, and a desire to serve line departments produced a forceful financial and administrative capacity for the Government of Saskatchewan. Because of its centralizing impact, the Department of Finance was not always popular with departments, but it was the most effective and powerful central agency of the Blakeney government.

The Blakeney government developed a planning, financial and management capacity that contributed an important element to its successful innovation. As a consequence it was able to be financially responsible, administratively competent and administratively innovative. Saskatchewan built a management sophistication well beyond what would have been expected, given its population size, economy and location. This was achieved by adopting modern management approaches and tools and developing a culture of excellence and professionalism within the public service. Today this new management approaches have come to be called New Public Management among academics. The political impetus behind administrative reform was very different in the Blakeney government than it is today with NPM, however.

Appendix I: Central and Line Departments of the Government of Saskatchewan, 1981

Central Agencies

  • Department of Executive Council
  • Department of Finance
  • Public Service Commission
  • Department of Revenue, Supply & Services
  • Department of Intergovernmental Affairs
  • Department of Government Services

Line Agencies

  • Department of Agriculture
  • Department of Attorney General
  • Department of Consumer Affairs
  • Department of Continuing Education
  • Department of Cooperation and Cooperative Development
  • Department of Culture and Youth
  • Department of Education
  • Department of the Environment
  • Department of Health
  • Department of Highways & Transportation
  • Department of Industry and Commerce
  • Department of Labour
  • Department of Mineral Resources
  • Department of Northern Saskatchewan
  • Department of Rural Affairs
  • Department of Social Services
  • Department of Telephones
  • Department of Tourism & Renewable Resources
  • Department of Urban Affairs

Note: Central agencies are those which provide support services to the government or other departments; line departments are those which deliver programs.

Notes

1. Thanks to Mike Costello and others who do not wish to be named for sharing their recollections of this period.

2. Composed of Ministers of the government, a chair who was a civil servant, and a secretary, it organized an annual Cabinet Planning Conference, which reviewed the state of the economy, identified guidelines for the next budget, and provided the government with economic advice when asked to. The staff of the Board reported directly to the Premier (Cadbury, 1971, pp. 51-64).

3. The Budget Bureau did program evaluation and management analysis, and introduced the notion that a budget is the financial expression of a plan. In practice, much of the most important planning in the Douglas, Lloyd (1961-64) and Blakeney governments was done in the Budget Bureau.

4. The Premier described as creative redundancy his practice of sometimes assigning people in different agencies to work on the same issue at the same time. Although this did not happen often, civil servants were usually annoyed by it, because the most important currency in government for civil servants, especially those in policy areas, is responsibility for issues.

5. Treasury Board had existed prior to the Douglas government to address a very restricted range of issues but its role was greatly expanded during the CCF government, under the guidance of Clarence Fines, Provincial Treasurer. Membership was very senior, including the Provincial Treasurer, the Premier, and three senior Cabinet ministers; its mandate was to function as the administrative affairs and finance committee of Cabinet, including full review of budgets.

6. Private email correspondence from Mike Costello to the author dated April 15, 1999.

7. Program budgeting was introduced first in the 1930s in the U.S. Bureau of the Budget, under Donald Stone. Program budgeting with performance measurement elements was introduced by Robert MacNamara initially at the Ford Motor Company, then later at the U.S. Department of Defense in 1963 and the whole U.S. government in 1968. The Government of Canada introduced the Policy and Program-Based System (PPBS) government-wide in 1969.

8. Thanks to Mike Costello for sharing his recollections of this review.

9. See discussion of agreements later in this chapter under Federal-Provincial.

10. The Planning Bureau in Executive Council built a macroeconomic model of the province's economy, but it did not function well, due to data constraints. The only good models at the time were for Canada as a whole.

11. The public servants of the province also benefited from this strategy because the Department of Finance was in charge of investing the vested Public Service Superannuation Plan. The Devine government later devolved this function to the private sector.

12. Budget Speech, 1982, p. 32. The federal government, by comparison, typically has an AAA rating and the banks, at least in 1999 had a rating from Canadian Bond Rating Service of A-1 (high) and long-term A- plus (high). Dominion Bond Rating Service had reduced the banks' rates below this level. The Globe and Mail, March 12, 1999, p. B3.

13. To Mike Costello and myself. The importance of Wes Robbins' crusade to transfer all public sector pension funds from defined-benefit to money-purchase plans cannot be overstated. He personally drove this, demonstrating his genuine fiscal conservatism, and that of the Premier.

14. David Bock went on to become head of the Public Service Commission and the Saskatchewan Liquor Control Board and to work with Atomic Energy of Canada. Keith Saddlemeyer later became head of the public service pension fund.

15. The Consolidated Fund is the mechanism through which governments receive and dispense funds for government operations. Crown corporations and loans to agencies outside government are usually funded outside the Consolidated Fund.

16. These expenditure and revenue figures sum both Consolidated Fund and Heritage Fund amounts, and are adjusted for overlaps.

17. These figures have been adjusted to use gross budgeting in both cases.

18. Dollar figures are different than those reported elsewhere in this chapter because Statistics Canada has attempted to use the same basis for all provinces.


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Last updated: December 6 2013