How to Really Cut Waste at City Hall

3 principles that should guide any efforts to make government work better.

State capacity

I’m a big believer in the need for a strong public administration. More than ever, we need state capacity at all levels of government to deliver what people need to get ahead.

No government is perfect. I’m not an apologist for the way many governments are currently run.

I have seen first hand that there is inefficiency within bureaucracies (in both the public and private sectors).

But finding those inefficiencies is a whole other matter. I don’t know many people working inside a bureaucracy who will put up their hand to say “here is a cheaper way of doing this, that doesn’t require me”.

How we currently do spending reviews

So how do we go about minimizing waste in government?

I have seen a number of strategic review processes in government. The latest from my local City Hall is an “Agile Government Working Group”.

Objective focused cuts

Some review efforts start with a focus on core objectives. That approach, in my mind, is a little naïve. Governments, by definition, are responsible for a wide range of services and end up on the hook for much of what the private sector does not provide.

Cutting services that are not a core priority can leave a significant hole in society.

For example, in the 1990s, the federal government in Canada eliminated its deficit by cancelling spending in certain areas that it didn’t consider part of its core mandate. One area it cut was affordable housing, arguing that this was a provincial responsibility. The feds downloaded the responsibility, but expected provinces and territories to fill the funding gap. No surprisingly, that didn’t happen.

The housing and homelessness crisis that Canada is facing today is in no small part because so few affordable homes have been built over the past three decades.

Target based cuts

Other review processes target a number, say 5%, for cuts. Intuitively, it makes sense that any bureaucracy could cut a modest amount of that size.

The challenge is that choosing a number most often leads to uniform cuts across the board. Each department is asked to go off and find savings.

So they start with travel, training and stationary. And then they start cutting program budgets to make up the rest, often without adjusting headcount. With this approach, we save a bit of money, but the quality of our public services generally deteriorate.

A better way to do spending reviews

These efforts are well intentioned, but ultimately fail to achieve meaningful change because they are not grounded in the principles required for a successful review.

Rather than take a “what we are spending on” approach and ask insiders to identify cuts, I’d start with a “how we are spending” and take an outside-in approach.

Rather than amputating entire programs, I’d be more looking to see whether we can make all of our existing business lines operate a little — or in some cases a lot — more effectively.

To reduce government inefficiency, I’d propose that any review process be based around three principles.

1. Redesign processes around the customer

One way that government tends to fall short on efficiency is around the processes they have built up over the years and simply failed to modernize.

Government processes get built around meeting internal requirements, some of which are needed and some are not. Once established, those processes calcify very quickly.

Governments also often fail to put the customer at the centre of their processes.

Customer-centric processes are generally more efficient. That’s a by-product of competitive markets.

I recently shared the story of my 18 day epic adventure to book a room at my local community centre. Just one example of how my local City Hall has failed to modernize, or put the customer at the centre of its processes.

Insiders have a very hard time changing these processes. Reform requires outsiders looking in and demanding better.

We could create major efficiencies at City Hall simply by looking at processes from the perspective of the resident, business or partner, and redesigning those processes to be client-centric.

2. Sunlight is the best detergent

Governments can get away with inefficiency when no one can see what is actually happening.

But when governments make their business transparent for all to see, it becomes a lot harder to hide the waste. When governments open their books, someone — and bless them — will take the time to poke around the data to see if there is a story worth telling.

Most of the budgets and financial documents I’ve seen from local governments are written to provide little real transparency. If you can’t open your budget and easily find out how much your city is spending on fixing potholes, then that budget almost certainly fails the transparency test.

If cities are serious about cutting waste, they will open up the books and let the general public poke around and find those areas of inefficiency.

Few city halls, however, have the courage to be transparent, and let external eyes uncover the warts and blemishes.

3. Benchmark against peers

Closely related to transparency is benchmarking. How does spending in my city compare to other similar cities?

Ontario municipalities used to benchmark themselves against one another, but it is unclear if that process is still happening. The challenge is that individual cities tend to stop participating when they see themselves at the bottom of the list.

The Canadian Home Builders Association has taken it upon itself to create a Municipal Benchmarking study for housing related matters across the country. Kudos to the Association for doing this, but it should not have to fall on a third party to commission this sort of work.

Cities that genuinely want to reform would commission a benchmarking study themselves, and publish it as a way to light a fire under everyone’s feet.

City Hall can do better

Our City Halls can all run more efficiently. It’s just hard for outsiders — including elected officials — to know where those efficiencies are possible.

Bureaucrats have few incentives to identify where cuts make most sense. It means a loss in headcount, and the corresponding loss in status, or upsetting the processes that have been built to protect the bureaucracy from potential embarrassment.

For City Hall reformers who are prepared to do what has to be done, I’d suggest designing any review process around the 3 principles above — customer-centricity processes, transparency and benchmarking against peers.