Dan James, Old-Year Money, and the War in Iraq

Dan James commented recently about the practice of spending so-called “old year money” during the run-up to the end of the government fiscal year (which is March 31 for both the federal and provincial governments).

Dan’s comments are pretty standard Reform Partyesque griping about “government waste:”

I have come to understand that Christmas comes twice a year in Canada (December 25 & March 31). What once was urban legend to me has been confirmed as cold hard truth. The government does in fact waste money on unnecessary things bought in a spending spree at the end of March… The system forces reasonable people to perpetually waste our money.

I’m certainly not going to argue that old-year money spending doesn’t happen. I just tried to order a desk chair, and was told by my dealer that it would take an extra week or two because of the flood of office furniture orders from government.

But I think there are four solid arguments why Dan’s got it wrong about what this means, and what the “solution” should be:

First, having worked closely with the provincial government for the past 8 years, I can tell you, first-hand, that there’s not a lot of excess fat in the system. Budgets are tight. Tighter than they’ve ever been. The sterotype of the public service swimming in money just isn’t true. As a result, decision makers have to watch money more carefully than ever, and spend on essentials before anything else. That means that they don’t go out and buy computers and desk chairs at the beginning of the year, because they might need to buy gauze pads or soil test supplies or road signs before the year is out. If they’ve managed wisely, and, more importantly, if no unforseen events come up over the year, they might be able to replace old equipment, office furniture and other “frills” at the end of the year. That’s a more responsible approach to spending, I think.

Second, there are three levels of oversight in place to ensure that spending is not irresponsible: the internal “chain of command,” the Office of the Auditor General, and the annual review of revenue and expenditures [815KB PDF] in the Legislative Assembly. For many years there was $400 set aside in the budget of the Department of Economic Development to cover travel expenses associated with our contract with the province; each year in the Legislative Assembly this line item would be raised by the opposition and explained by the Minister. These checks and balances help keep people honest.

Third, public servants, as a rule, are people of great integrity. This is not universally true, of course. But I can honestly say that there’s much more awareness inside the public service that it’s the public tax dollars that are being spent than the public realizes.

And finally, a notion best illustrated by this quote from last week’s The New Yorker magazine:

The military is not like a corporation that can be streamlined. It is the most inefficient machine known to man. It’s the redundancy that saves lives.

The speaker is a “former [Air Force] planner” speaking to Seymour Hersh about the tensions between Donald Rumsfeld and the military over the “efficiency” of the war in Iraq.

While I don’t suggest that direct parallels be drawn between the military and the public service, the larger message of this statement is that sometimes looking only at what’s most efficient, or quickest, or cheapest, isn’t the best way to run a system.

In other words, it’s easy for Dan to sit outside government and spot what he sees as egregious waste, and to suggest that the system needs to be changed so that it “rewards diligent managers for carefully managing our money.” But to look at old-year money in isolation rather than as part of a system that, by and large, works very well as a way to run a little society like ours, is to ignore the richness and complexity in the system.