This analysis of the Blue-Ribbon Panel on Alberta’s Finances: Report and Recommendations (McKinnon report) includes a description of the construction of the panel- its membership, its mandate, process, and its members’ experience and predispositions. In the second part of the paper, I describe how the construction of the panel predetermined its recommendations. And finally, using textual analysis, I examine the basic assumptions used by the Report’s authors to construct their interpretation of how to improve the provincial government’s fiscal standing.
Composition of Panel
On 7 May, three weeks after the election of the UCP, Premier Kenney and Travis Toews, Treasury Board President and Minister of Finance announced the formation of the Blue-Ribbon panel. As most commentators quickly realized, the conclusions of the report were foreordained based on the panel’s composition. Janice MacKinnon, although a former NDP Saskatchewan Finance Minister, had burnished her credentials and reputation as a formidable advocate of fiscal probity. Her co-chair, Mike Percy, was a well-known academic, former Liberal Party finance critic (1993-1997), an advocate of lower government spending, and Sun media columnist. His allegiance to these causes gave Percy credibility with Premier Ralph Klein’s Tories who engaged Percy in various positions including chair of an economic summit and as a key resource on public sector hiring. Percy, as Dean of the Alberta Business School joined the board of ATB Financial and also served on the boards of EPCOR and Tolko Industries. His role as chief fund raiser for the Alberta Business School campaign in the 2000s brought him into contact with many corporation heads and wealthy donors. Percy gave up his position on the ATB board after being appointed as Chief of Staff to Premier Jim Prentice further underlining Percy’s political sympathies.
Source: Government of Alberta.https://www.alberta.ca/release.cfm?xID=63853C1888231-BF35-0120-2BDE36778AFE0991
Dave Mowat, ATB’s former CEO was recruited by the NDP government to chair the royalty review in 2015-16. Mowat is the only panelist who could be labelled a businessperson having been a bank executive for his whole career, including employment at the federal Business Development Bank, VanCity Credit Union and the- provincially-owned ATB Financial. Mowat’s report on royalties in 2016 cemented his reputation as a trusted government insider who could deliver recommendations which were safe and would not disrupt Alberta’s single commodity economy.
Also on the committee was respected tax economist Bev Dahlby from the University of Calgary’s School of Public Policy. His academic reputation derived from his work developing the marginal cost of public funds, that is, how cost effective is a certain tax in raising public revenue. The choice was peculiar given that the panel’s mandate left the revenue structure out of the panel’s remit.
The two other members of the panel were experienced, retired public servants: – from British Columbia, Kim Henderson served as deputy of the executive council as well as a deputy of finance and treasury board The significance of Henderson’s presence is twofold: first, the Kenney government had emphasized that the per capita costs of Alberta public services were much higher than in British Columbia. Second, one of the key deputy appointments made by Kenney early in his mandate was a new deputy finance minister who served in the same position in British Columbia. The other former public servant was Jay Ramotar, a professional engineer who was a former deputy in Treasury Board as well as deputy health and deputy infrastructure minister. Ramotar would play a key role in the findings and recommendations respecting capital and health spending. Clearly both individuals have deep knowledge of budgetary processes, including program review, and human resources planning that will play a significant role in the UCP’s first budget.
What was missing from the panel’s composition? First, there were no accountants on the panel. In Klein’s selection of a Financial Review Commission upon taking office in 1992, five of the nine members were senior partners in major accounting firms. Second, and not surprising given the UCP’s strong business and anti-labour platform, there was no member of organized labour was chosen. The absence of a businessperson, an entrepreneur, for example, was equally surprising.
As with other government panels appointed in the hectic first months of the UCP mandate, this group was carefully chosen and tasked to deliver a message consistent with the UCP’s election pledges. As I demonstrate, the values and experiences of the panel members viz. government spending was “out of control” and should be “controlled,” fit nicely with the new government’s fiscal philosophy.
Mandate
Although this was not explicitly stated in the mandate letter, Minister Toews was essentially seeking guidance on the basic intellectual foundation for the new government’s first budget. The panel was to: assess “business as usual” scenarios; consider the risks associated with the fiscal plan (as any government would normally do when building a budget) ,and review the structure as well as analyzing the business investment climate. The mandate letter required that the budget balancing plan to be accomplished “without raising taxes” (Toews, 2019).
Process
Much like the process followed by the Williams’ Committee in 1992-93, there were no public consultations initiated by the Panel. This absence is notable because both Mike Percy and Dave Mowat were familiar with aspects of public consultations. Not only were there no “public consultations,” there was no public tendering of the contracts won by KPMG LLP or MNP LLP. Nor was there any indication who the Panel met with collectively or individually in their capacity as panel members. In short, the panel and presumably, the government, did not feel it necessary to seek out a diversity of views in searching for ideas to achieve fiscal sustainability.
Predispositions
I have already highlighted panel members’ expertise and experience. Now I focus on the predispositions of the Chair, Dr. Janice MacKinnnon. From the initial press conference announcing the review to the final press conference releasing the Panel’s report, it was evident that the Chair would be the dominating voice in the Report’s findings and recommendations. Evidence for this include Premier Kenney’s slip of the tongue when he referred to MacKinnon as “Minister MacKinnon” at the commencement of the review to her facility at both press conferences and Minister Toews acknowledging “the outstanding leadership of Dr. Janice MacKinnon” upon the release of the Report.
Soon after her appointment, media learned the Panel Chair’s fiscal philosophy was not that of a typical NDP finance minister. Instead, her 2003 public policy book and political memoire Minding the Public Purse and October 2017 School of Public Policy (SPP) paper “Putting the Alberta Budget on a New Trajectory” with Jack Mintz, offered readers a blueprint for managing fiscal problems. In the 2017 paper, key themes outlined would play a major role in the final Panel report. Themes common between the MacKinnon-Mintz paper and the Panel Report include: comparisons between Alberta and Ontario, Quebec and British Columbia; constitutionality of public sector wage restraint; the rising debt burden; program review and restructuring; and creating the proper investment climate by cutting business taxes and reducing “emphasis on more heavily taxing higher income earners.” Her collaboration with Jack Mintz, the founding Director of the University of Calgary’s School of Public Policy, internationally recognized taxation economist, former President of the C.D. Howe Institute, and former senior tax official in Finance Canada, underlines the establishment economic and political credentials brought to their paper and influence over the Report’s recommendations.
In section C of their paper, the thorny question of public sector compensation is addressed (MacKinnon and Mintz, 6-8). Foreshadowing the work of the Panel was a discussion around the legislative attempts by various provincial governments to restrain public sector salaries. These efforts are canvassed on pages 44 to 50 in the Blue-Ribbon Report. Another parallel between the 2017 paper and Panel Report is the focus on health care spending and health outcomes (MacKinnon and Mintz, 9-14). In their SPP paper, data was presented which showed health spending in Alberta was considerably higher than three cohort provinces and outcomes not any better and, in fact, often worse. In the Blue-Ribbon report similar information is presented on pages 24-33.
Textual Analysis of Blue-Ribbon Panel Report
In this final section, I examine one of the most basic questions underpinning an examination of a province’s finances. What should governments do? This was a question asked by the Klein administration in their attempt to wrestle with the 1990s deficits and rising public debt and, given the philosophical disposition of the current government, this question is surely on the minds of the Premier and Treasury Board President.
Donald Savoie, Canada’s foremost student of Canadian public administration, in his 2015 book What is Government Good At? observes:
Government is at its best when establishing circumstances for economic success, dealing with society’s wicked problems and pursuing an all-encompassing goal that enjoys broad public support. Government also remains the best-suited actor in society to ensure equality, fairness, and justice in delivering certain public services. Government is the only actor that should enjoy a monopoly on the legitimate use of violence in society. It is also the single actor that can establish a regulatory regime to promote the public interest.
However, government is no match for the private sector in managing economic success. (Savoie, 259).
Savoie’s overall thesis is that political and policy power has become centralized in the Prime Minister’s or Premier’s office and that cabinet members and deputy heads are mere eunuchs to un-elected officials- “courtiers” tasked with keeping government spokesmen and ministers “on message.” Homage is paid to management and political consultants (the “private sector”) and when major administrative errors are exposed, no person or persons can be found to account for the behaviour producing the errors. These symptoms are deep-seated and have evolved to the point where budgets define authority like credit or investment limits define power in banking and investment management enterprises. The system encourages individuals to act in their bureaucratic interest – that is, to seek enlargement of budgets and human resources through aligning “program goals with central messages listed in party platforms. These policies are designed centrally by the non-elected political “courtiers”. These courtiers are central to the success of the leader because it is the courtier’s energy, single-mindedness, devotion and loyalty which bring the leader to power in our winner-take-all electoral system.
Savoie’s diagnosis, formed over decades of interviews with politicians and senior officials in western democracies, suggests that attention to basic administrative matters has suffered over the past half century. Public administration has been subordinated to public policy. This predisposition has led to the undermining of support for government as a positive force in society. Layered on to weaknesses in public administration[1] is the loss of the government’s monopoly over policy advice.
Think tanks and industry lobby groups now provide a constant stream of advice from energy to fiscal policy. In short, policy-making has trumped public administration, meaning bureaucratic leaders rarely have any experience in creating and administering a public-facing program delivered to citizens. In short, they have no “hands-on experience” in designing and implementing programs, New leaders are process managers rather than program managers. These individuals circulate through central agencies that control and coordinate policy agendas and budgets. Individuals heading up departments have only a patina of knowledge in the operations of the department they are heading. In Alberta, this shift is associated with Jack Davis, the former Deputy Minister of Executive Council, known for his circulation of deputy heads through a range of departments, substituting process knowledge for technical and institutional memory and knowledge.
As power continued to concentrate within the Executive Council, the route for career progression was formulating alliances with both the permanent officials in the newly ordained Policy Coordination Office (PCO) within Executive Council but also deferring to the elected politician. The role of deputies became increasingly politicized (not just in Alberta) meaning deputies were less public administrators and policy advisors, but rather glorified executive assistants responding to the crisis of the day. This phenomenon coincided with the increase in stature of departmental Directors of Communications who spent considerable time with Ministers and staff protecting the Minister’s and government’s reputation.
Textual Analysis
According to Sage Research Methods, textual analysis is
a methodology that involves understanding language, symbols, and/or pictures present in texts to gain information regarding how people make sense of and communicate life and life experiences. Visual, written, or spoken messages provide cues to ways through which communication may be understood. Often the messages are understood as influenced by and reflective of larger social structures. For example, messages reflect and/or may challenge historical, cultural, political, ethical contexts for which they exist. Therefore, the analyst must understand the broader social structures that influence the messages present in the text under investigation (Emphasis added).[2]
First, I examine the thesis that the panel “knew” the answers to the questions posed by the Kenney government before it undertook the study. I explore whether the approach taken was one of a top-down, command and control approach to government “governance.” Second, I examine the respective mentions of government, business, and investment to determine whether the report’s authors have a bias to “neo-liberal” theories of government and markets or if the panel is relatively agnostic on the respective roles of government and business. Third, I examine the language used to define how the panel sees the optimal state for government and fiscal sustainability.
Table 1 selects key words which anchor the report’s findings and recommendations. The first question examined is whether “the fix was in” when the panel’s task was outlined and composition of the Committee established.
In a command and control governance structure, as government is, leadership is top-down and hierarchical. This report is number based and defensible by the science of numbers. The report’s numbers were built on information supplied by a credible, non-government source, the consulting and audit firm KPMG LLP.[3] The reliance on an outside source suggests the panel was not comfortable relying exclusively on internal government numbers.
Of particular note in the textual analysis is the frequency of mentions of “comparator” provinces. British Columbia (62) far outnumbers mentions of comparator provinces such as Ontario (6) and Quebec (39). Saskatchewan is mentioned 9 times mostly in the context of its move away from a command and control compliance structure in administering the Environmental Code. This mention is instructive as in the environment field, command and control is viewed as problematic: preference is given to a “results-based regulatory regime” (report, 63). Another favourable mention of Saskatchewan refers to ”reduced regulations and lowered income taxes to enhance the province’s competitiveness and create jobs and opportunities” (Report, 11).[4] Significantly, Saskatchewan’s per capita spending levels, which are close to those of Alberta, are not included in the study.[5]
One of the most frequently used words in the report is the work “should.” This is not a surprise given the government asked this blue-ribbon panel to make recommendations. However, “should” is a word associated with judgement, certainty and confidence. The meaning conveyed is that of wise, parental counsel to answer pressing questions of the moment. Indeed, the very name “Blue-Ribbon panel” connotes an authority whose advice is arguably best in class. Words such as results (34), legislate (17), efficiency and effectiveness (15), regulate (12), control (12), and accountability (13) all convey hierarchical notions. Other words which convey an alternative approach are given less weight: partner (8); consult (6) and cooperation (1) confirm a preference for top-down, a “father knows best” approach to governance. Furthermore, the top-down, empirical approach is consistent with the traditional thinking of government and business elites who are used to being in “command” and “control.”
Turning to relative mentions of the private sector versus government (294), the following word frequency suggest a clear primacy of capital (143) over labour (14) and competition (24) and market (24) over cooperation (1). The aspect of competition runs through the whole report in terms of both industry competitiveness but also results in the health and education fields.
Words such as investment/investors (92), business (60), competitiveness (24), industry (22) and entrepreneurial (7) confirm a message that business is central to solving the spending problem. Further, the core argument in the report is that the Alberta government’s comparables (59) relative to comparator provinces, are dismal.
|
Table 1- Textual Analysis Blue Ribbon Panel Report |
|||
|
Word |
Mentions in Report |
Word |
Mentions in Report |
|
Government |
294 |
Vision |
22 |
|
Spending |
172 |
Legislate/Legislation |
17 |
|
Revenue |
167 |
Efficiency/Effectiveness |
15 |
|
Capital |
143 |
Transform |
15 |
|
Should |
125 |
Labour |
14 |
|
Investment/Investors |
92 |
Accountable/Accountability |
13 |
|
Comparison |
89 |
Regulate/Regulation |
12 |
|
Debt |
80 |
Control |
12 |
|
Increase |
76 |
Sustainability |
11 |
|
B.C./ British Columbia |
62 |
Saskatchewan |
9 |
|
Business |
60 |
Partner |
8 |
|
Comparator/comparable |
59 |
Entrepreneurial |
7 |
|
Quebec |
39 |
Align |
6 |
|
Alternative |
35 |
Consult |
6 |
|
Results |
34 |
Ontario |
6 |
|
Deficit |
33 |
Decrease |
4 |
|
Innovation |
30 |
Wealth |
3 |
|
Competitiveness |
24 |
Rationalize |
2 |
|
Market |
24 |
Cooperation/Collaboration |
1 |
|
Industry |
22 |
Centralize or de-centralize |
0 |
Besides a bias toward top-down, numbers-based comparisons, what words are evident in guiding behaviour of the Kenney government in grappling with the fiscal condition? Notable are the frequent mentions of debt (80) and deficit (33). Words like alternative (35), results (34), innovation (30), vision (22), legislate (17), efficiency (15), transform (15), control (12) and align (6) suggest the panel is very supportive of “new ways” of doing business. The language of business seeking results, a vision, transformation, and innovation suggest an ambitious plan to restructure and rationalize government. As noted above, words like partner, consult and cooperate are infrequently used suggesting again a strong bias to top-down, centralized decision-making. A careful reading of Minding the Public Purse also confirms the centrality of cabinet unity and solidarity in the face of tough budgetary decisions which will be unpopular.
Summary
This limited, textual analysis argues the panel followed these assumptions in formulating its recommendations.
- Uncritical acceptance of the government’s mandate and prescription that spending was out of control.
- Agreement that if other like provinces, notably British Columbia, could deliver results at lower per capita costs than Alberta, Alberta should be able to do so without harming public services.
- Government must use its tools of legislating, regulating and controlling to achieve reductions- command and control.
- Consultation and cooperation are not necessary in reaching the Panel’s findings and recommendations.
- Business and market-based solutions are alternatives to delivering government programs. Vision, Innovation, transformation and results-oriented are preferred.
- Government leaders and managers are not innovative.
The 24 October budget will (did) command (legislate and regulate) many changes on the broader public sector. This sector will respond in a range of behaviours from outright defiance (e.g. labour action) to passive acceptance. Whether a centralized, top-down command structure will restore the province’s fiscal position is a questionable strategy in an uncertain world and in an environment in which Alberta’s political leaders believe Alberta’s economic contributions are being attacked daily. Critical to the success of the Report’s recommendations is the matter of attracting investment. If recent economic reports are any indication, Alberta’s investment climate has not markedly improved. Alberta’s over-reliance on energy investment is showing signs of cracking as large financial institutions and institutional investors begin to seriously consider the effects of the climate crisis on investment decisions. As investors become less comfortable with fossil fuel investments and more confident in renewable energy projects, this central expectation- that investment will return will become the most problematic.
Sources:
Boessenkool, Ken. February 2010. “Does Alberta have a Spending Problem?” SPP Research Papers, Volume 2, Issue 1. https://www.policyschool.ca/wp-content/uploads/2016/03/alberta-spending.pdf Accessed 7 October 2019.
Boessenkool, Ken and Ben Eisen. January 2012. “Public Sector Wage Growth in Alberta.” SPP Research Papers, Volume 5, Issue 1. https://www.policyschool.ca/wp-content/uploads/2016/03/boesenkool-public-wage-growth.pdf Accessed 7 October 2019.
Kenney, Jason. March -April 2019. Alberta Strong & Free. 2019 Election Platform of the United Conservative Party of Alberta https://www.albertastrongandfree.ca/wp-content/uploads/2019/04/Alberta-Strong-and-Free-Platform-1.pdf Accessed 7 October 2019.
Leach, Andrew. Climate Change Advisory Panel. 20 November 2015. Climate Leadership-Report to Minister. https://open.alberta.ca/dataset/212a6266-b8d3-4822-b208-9221da2a0966/resource/9f52cd8e-5477-45a6-a337-f2d64d091cf9/download/2015-climate-leadership-report-to-minister.pdf Accessed 7 October 2019.
MacKinnon, Janice. 2003.Minding the Public Purse: The Fiscal Crisis, Political Trade-offs, and Canada’s Future. Montreal and Kingston: McGill-Queen’s University Press.
MacKinnon, Janice.and Jack Mintz. October 2017. “Putting the Alberta Budget on a New Trajectory.” SPP Research Paper, Volume 10, Number 26.
Mowat, Dave. Royalty Review Advisory Panel. 29 January 2016. Alberta at a Crossroads. Https Accessed 7 October 2019.
Savoie, Donald J. 2015.What is Government Good At? Montreal and Kingston: McGill-Queen’s University Press.
Toews, Travis Hon. Letter to Janice MacKinnon. 7 May 2019.
Endnotes
[1] My 1979 master’s degree was in public administration. The current flavour de jour is masters in public policy, public management, or policy studies.
[2] https://methods.sagepub.com/reference/the-sage-encyclopedia-of-communication-research-methods/i14636.xml
[3] On every page of the KPMG report is found the following footnote-“This research and analysis was completed at the request of the Panel. KPMG’s role was to provide research and analysis but has not provided any recommendations or opinions. As such, the Panel is responsible for all recommendations and the Panel’s report, and the Government of Alberta is responsible for all decisions arising from the Panel’s report.”
[4] This approach took place during MacKinnon’s time in the cabinet of Roy Romanow.
[5] RBC Economics, Canadian Federal and Provincial Fiscal Tables, October 2019 http://www.rbc.com/economics/economic-reports/pdf/canadian-fiscal/prov_fiscal.pdf Accessed 15 October 2019. Page 10 shows expenses per capita. For 2018-19 Alberta’s expenses were $12,641 and Saskatchewan’s $12,107.