Hard questions about civic spending

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This article was published 08/11/2022 (1361 days ago), so information in it may no longer be current.

IMAGINE the Greek goddess Metis lightly touching the new mayor and each of the newly elected members of city council on the forehead. As you might recall if you studied Greek in grade school, Metis governed prudence and insight.

Imagine further this light tap led all to accept the need to raise property taxes to finance our future, something I have advocated. But if council does raise taxes, should I trust them with this additional money?

Casual observation suggests taxpayers need to be vigilant. Aside from the past scandal of building inspectors spending much of the workday performing personal errands, the unfolding — or I should say unravelling — saga of the cost overruns of the new police headquarters should make us all wary of how government spends our money.

This suspicion of spending may be natural. After all, we Winnipeggers and Manitobans have a reputation of being bargain-savvy, but maybe this is just a polite way of saying we are cheapskates.

A more profound issue lurks below this facile description, however. Aside from a general idea that property taxes and occasional cash infusions from federal and provincial governments fund our roads, civic services and a range of infrastructure, few of us have much of idea whether we are getting value-for-money for this spending.

This uncertainty makes us understandably reluctant about tax increases. We need some assurance money will be well spent.

Value-for-money analysis is the typical way to test whether we are spending wisely. It is much more than financial auditing of spending revenue. Most governments offer stupefying fiscal minutiae in their annual budgets. Rather, value-for-money studies attempt to assess the full cost of any spending and whether benefits exceed the costs incurred.

I can illustrate this. In 1988, when I first started as a private management consultant, my company received one of six value-for-money audits contracted by the newly elected Filmon government. The minister of finance charged us with examining spending in the arts and culture sector.

No doubt, like all newly elected governments, one goal of these six studies was to root out the profligacy of the previous regime and to clean house. But the adage “be careful what you wish for” applied.

As we interviewed management of some of Manitoba’s iconic cultural institutions, such as the Centennial Concert Hall and the Manitoba Museum, a grave issue emerged. Much of the cultural infrastructure constructed in the late 1960s, possibly as part of Canada’s centenary, had not accounted for the cost of major maintenance these buildings required after 20 years.

Value-for-money seeks to assess two components: costs and results. The cost component (the buck) looks at total cost over the life-cycle of a project. The projected cost of the Manitoba Museum, then still called the Museum of Man and Nature, included an annual payment to a maintenance fund, but given the fiscal crisis we uncovered, it was insufficient.

Taxpayers deserved to have a full cost of these project presented to make a proper assessment.

The second component (the bang) of a value-for-money audit measures the results of spending. Applied to civic operations, value-for-money studies examine typical questions such as:Is it more cost-effective to build roads to a higher standard with the prospect of lower maintenance costs, or should we repair streets more frequently and allocate the construction cost savings from a lower standard of road to other projects?

How much is a police officer worth? Will hiring an additional 10 police officers at, say, $1.5 million, make our city any safer? How to we measure “safer?”

How can we measure an increase in the quality of life from the grants given to arts and cultural organizations?

Have the government investments to return the Winnipeg Jets home resulted in the projected economic impacts used in part to justify this spending?

Winnipeg performs some value-for-money analyses, but these tend to be buried deep in reports that few see. Value-for-money studies ask hard, and sometimes quite sensitive, questions. But if Winnipeg citizens and the new council want our city to play in the major leagues, we need to ask them and then use the answers to make better choices.

Gregory Mason is an associate professor of economics at the University of Manitoba.