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“Cut to the Bone” Budget Cutting and Reallocation. Andrew Graham School of Policy Studies Queen’s University SPS 827 2014. Structure of this Session. The N ew R eality. Swing into deficit era – all Canadian governments affected - PowerPoint PPT Presentation
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What are the current challenges you face as a public sector manager?
Survey in UK of public sector managers by the Institute on Leadership and Management, 2010
• All direct program spending reviewed - 25% each year
• Treasury Board and its Secretariat set terms of reference:
Comprehensiveness – assessment of mandate, departmental objectives, program effectiveness, efficiency and alignment to government priorities
Reallocation proposals – options for program reductions or eliminations to reallocate to government priorities and support overall spending control
Reinvestment proposals – options to better support government priorities
• Departments review the relevance and performance of their spending, identify lowest performing/priority 5% of programs, seek outside expert advice and report to the Treasury Board
• Privy Council Office identifies review departments every year and assesses, with Treasury Board and the Department of Finance, the departmental proposals
Strategic Review Process – Centrally Driven
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Strategic Reviews – Scope and Key Elements
Departmental Strategic Reviews to answer specific questions in key areas:
Government Priority, Federal Role, Relevance (i.e. continued program need)
Performance (effectiveness, efficiency, value for money)
Management Performance
Departmental Strategic Reviews to be conducted using the following key elements
Analytical Framework: The department’s Program Activity Architecture
Information Sources: Evaluations, Audits, Management Accountability Framework assessments, Auditor General Reports, and other reports
Reporting Requirements: Outlined in the Terms of Reference
Steering Committee: A departmental steering committee to be established with ex officio membership from TBS
External Advice: Expert outside advice to be involved on each Review to ensure neutrality and credibility
Strategic Reviews –Conditions for Success
Sufficient time for deliberative process
Ministerial engagement throughout the Review process
Clear and strategic alignment of programs and results (value of a strong Program Activity Architecture)
Comprehensive assessment of all programs (100%)-not focussing only on 5%
Early involvement of senior management team – policy, communications, and corporate services
Multiple lines of evidence – evaluations, audits, benchmarking, international comparisons
Overview portion of the Strategic Review should tell a compelling departmental story
Arm’s length expert advice as effective challenge to proposals and alternatives
• In 2009, the third year of the Strategic Review Process, 20 federal organizations (including departments, agencies and Crown corporations) undertook strategic reviews of 100 percent of their direct program spending.
• In total, almost $26 billion, or approximately 23 percent, of all government program spending was examined.
• Savings of $287 million were redirected to Budget 2010 priorities
• Savings were redirected to fund new initiatives, both within departments and to broader spending priorities in Budget 2009
• Moving from ¼ of all departments to whole of government • Now, savings will be directed to deficit reduction• Targetting total of $11 billion by 2016
The first reviews generated savings but also demonstrated a need to improve the quality of results information …
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Managers must approach budget cutting with care, so as not to
harm the organization's capacity to achieve its purposes. The
toughest question they face is how to reduce the budget without compromising the organization's
mission.
In an organization with low trust levels, complex
programming and relatively poor information, the best
approach may be across-the-board cuts.
From Treasury Board of Canada Guide on Costing http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?section=text&id=12251