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.


Dan James's picture
Dan James on April 14, 2003 - 18:29 Permalink

You’re right Peter — Provincial government does run quite well. I have seen that. However; My post had more to do with federal departments than provincial. I also agree with you that we can’t toss the baby out with the bath water. Just because one part of a system is potentially crappy doesn’t mean the entire system is flawed.

The system overall does work amazingly well. I was just identifying a small part that I have had direct experience with and believe it needs some careful thought.

Alan's picture
Alan on April 14, 2003 - 19:04 Permalink

I would point out two problems with Peter’s argument. PEI is one of the provinces which has understaffed the Auditor General’s office for some time. We may wish it could do the job we wished it could do but that does not mean it can. Further, while many government branches run amazingly well, others do not and blanket “feel good” statements about great people working hard do not address the problems AG reports do point out about spending or investment practices: practices which Dan’s comments can be taken as an example. End of budget spending is a reality and a problem which does not deserve the slag as being Reformist. One reason there is not enough money for new French schools is that remaining budgets are being blow in essentially a mindless splurg. PEI is not alone in this at all — unfortunately it likely happens everywhere — but to wish it away is a poor way to address fiscal waste.

Justin's picture
Justin on April 15, 2003 - 01:03 Permalink

It’s easy enough to agree the funds are well spent, and to understand that if the coin ain’t spent the finance minister will understand it’s no longer needed, so a splurge at fiscal end is a necessary evil.

All well and good, but ain’t the amount of government administration itself a form of waste? Something’s wrong: the number of days you “work for the government” increases every decade. In our grandparents time the entire tax burden for the year would take a day or two to cover and governments had shameful riches. Now we’re fighting keep deficits in control, a multi-billion dollar debt *ahem* in check and they still need to find more tax dollars (hopefully without gouging the lower income folks).

We’re a fairly well run welfare state but we do still have health plans. We might as well have no govermnent spending on health care. That’s one way to make it cost less. Sounds radical, but I bet for every dollar spent on health-care worker wages, equipement and supplies, we must spend another (or more) on govermnent wages. Whatever it is we spend on govermnent wages can be truncated from the heath bill and let some insurance company charge the “Health Tax”.

When I’m boss of the world, that’s how its going to be :) Bwahahaha