There was a time in our history when governments lived within their means. A Canadian study (IBM Corporation using Globescan data), shows that peoples’ trust in government was relatively high in 1968 at approximately 60% or “C+.” There were no annual deficits and no accumulated debt.
The world has changed
The world has changed. Annual government operating deficits are routine and virtually all levels of government are in debt. Coincidentally, public trust in government across Canada has plummeted to less than 30% (IBM 2009 presentation). In other words, trust is now at an “F.”
Milton Friedman, one of America’s most respected economist, statistician and the recipient of the Nobel Memorial Prize in Economic Sciences, wisely observed that we spend our own money on ourselves very carefully. We spend other people’s money less carefully. Deficits and debt happen because politicians lack courage to say “no” and live within their means. Their carelessness not only jeopardizes the long-term financial health of the community, but also saddles the next generation with a debt they do not deserve.
Unfortunately, it also models a dangerous practice where families see their governments as being reckless with their finances causing them to think it is justifiable to be so with their own. According to BMO’s annual debt report, average household debt has risen from $72,045 last year to $76,140 in 2014 (an increase of 6%).
Today, governments struggle to achieve a balanced budget while making scant progress toward debt elimination. Therefore, interest payments are a millstone around governments’ necks, just as household debt deprives citizens of the full use of their financial resources.
Governments are prone to set targets but fail to establish consequences when their targets are not achieved. Accountability without consequences is not accountability.
What is accountability?
Governments also are prone to believe that accountability occurs only at the election cycle which, under new legislation for municipalities, is every four years.
Accountability should not occur only in the voting booth. Governments can implement more frequent accountabilities within the four-year election cycle.
Trust in government can be improved by setting frequent targets during the election cycle and then demonstrating that these targets are achieved.
We want to reduce debt…right?
A proposed policy for the new Council specifies debt reduction with incremental targets. Not only should the city’s annual budget be balanced, but the accumulated debt should be reduced within the budget.
Achieving these targets requires teamwork from Council members and I will propose assigning monitoring responsibility on specific areas of the budget to specific councillors.
The proposal expects each councillor to monitor the financial status of their assigned area of responsibility and provide a quarterly report to their colleagues. After reviewing these progress reports, Council can choose to adjust budget allocations for each area in order to address problems in meeting targets.
Failure to meet targets requires consequences. The team approach remains the overarching principle and, therefore, consequences would be applied equally.
Commitment and accountability
My proposal is very simple. We have an annual city budget with public expectations that we will operate our services within it. If we fail in our task, we accept responsibility by personally contributing to our failure. In other words, we put some of our pay at risk (voluntarily), as a consequence for our failed leadership beginning with the year when the newly-elected Council acquires budgetary control.
We don’t need any bylaws or policies to achieve this. We can demonstrate our accountability by placing a portion of our salary into a trust fund that will be returned to us after the audited financial report concludes that annual expenditures were within the city’s income. If not, our trust fund is the first dollar toward paying the deficit.
I will work with Council to set appropriate targets and establish which areas councillors will have responsibility for.
This is how we demonstrate our commitment in being community leaders and good stewards of our community’s money. This is how we show that we do not intend to be loose with other people’s money. This is how we ensure that accountability occurs throughout the election cycle.