Presentation by:Bruce Manion FCMA

Manitoba ChapterFebruary 28th, 2012

Allocating Resources to Results: Facts or Myths

Justin Bieber and the Cost of Cigarettes

or

OUTLINE

• What Are we Talking About?• But First, Some Numbers• Where We’ve Been and Where We Are Now• Key Drivers and Considerations• A Concrete Example• The Bieber and the Butts• Why is this so hard?• ‘Strategic’ Resource Reviews• Wrap-Up

DISCLAIMER

WHAT ARE WE TALKING ABOUT?

"What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated."- John E. Jones, Professor and Expert in employee feedback and surveys

"It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality."- Harold S. Geneen, CEO of ITT

"In God we trust, all others bring data."- W. Edwards Deming, Quality Management Guru and Statistician

WHAT ARE WE TALKING ABOUT?

``We expected that by then (2001) most managers would be trying to manage for results and that many would have good systems in place. We found some progress in a few areas, but managing for results was clearly not yet the norm in the departments we audited.``

`` The main barrier is less a technical than a cultural problem: there is little pressure at any level to make more performance information available. Public servants detect this, and moreover, are not inclined to produce information that could embarrass their ministers. The accountability battery thus never gets charged up. ``

- L. Denis Desautels, FCA, Auditor General of Canada (1991-2001)

WHAT ARE WE TALKING ABOUT?

Assess gaps in meeting emerging

trends or conditionsand formulate

strategies to address them

Implement and manage new

strategies

Monitor performance against objectives and

use results to inform future plans

and decisions

Monitor and assess external and internal

environment (Political, fiscal, economic,

social, technological, organizational drivers

BUT FIRST, SOME NUMBERS

2011-12 ExpendituresTransfer payments to individuals

Elderly benefitsEmployment InsuranceChildren’s benefitsTotal Transfer payments to individuals

Major Transfers to other levels of govt.

Health and other transfer programsFiscal Arrangements Alternative Payments for standing programs Canada’s Cities & CommunitiesOtherTotal Transfers to other levels of govt.

Direct Program Spending

Subsidies and other transfers Dept’al and Crown Corporation operating expenses Capital amortizationTotal Direct Program Spending

Total Program Expenditures

Public Debt Charges

TOTAL EXPENDITURES

$

38.019.513.170.6

38.716.9

- 3.1 2.0 3.858.2

37.377.6 4.7

119.6

248.4

33.0

281.4

%

13% 7% 5%25%

14% 6%-1% 1% 1%21%

13%28% 2%

43%

88%

12%

100%

2011-12 RevenuesIncome Tax

Personal income taxCorporate income tax Non-resident income tax Total Income Tax

Excise Taxes/Duties

Goods and Services TaxCustoms import dutiesOther excises taxes/dutiesTotal Excises Taxes/Duties

Total Tax Revenues

Employment Insurance PremiumsOther revenues

TOTAL BUDGETARY REVENUES

$

119.9 32.5 5.4157.8

30.1 3.811.044.8

202.7

18.9 27.6

249.1

%

48%13% 2%63%

12% 2% 4%18%

81%

8%11%

100%

Source: June 2011 Federal Budget (in $ billions)

Federal Revenues and Expenditures

BUT FIRST, SOME NUMBERS

Federal Expenditures

($70.6 B)($37.3 B)

($77.6 B) ($33.0 B)

($58.2 B)

BUT FIRST, SOME NUMBERS

(Billions $) 2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2015

2014-2015

2015-2016

BudgetaryRevenues

242.4 233.1 218.6 235.6 249.1 264.4 281.2 298.6 309.2

Program Spending 199.5 207.9 244.8 240.8 248.4 247.3 252.0 257.7 256.6

Public DebtCharges

33.3 31.0 29.4 30.9 33.0 36.5 38.6 39.4 39.4

Total Expenses 232.8 238.8 274.2 271.7 281.4 283.8 290.7 297.1 305.0

Surplus / (Deficit) 9.6 (5.8) (55.6) (36.2) (32.2) (19.4) (9.4) (0.3) 4.2

Other Income 0.2 2.2

Federal Debt 457.6 463.7 519.1 553.1 585.4 604.8 614.2 614.5 610.3

Evolution of Federal Resources

WHERE WE’VE BEEN AND WHERE WE ARE NOW

• Not New in the Federal Govt• Mostly focused on inputs/outputs, activities and

cost factors until mid-90’s• Major Reform initiatives targeting Planning and

Performance Reporting in late-90’s to present date

• MRRS and the Canada Performance Report

• The Estimates – A Work in Progress

KEY DRIVERS AND CONSIDERATIONS

• No ‘bottom line’• Managing ``at the margins``• Different motivations and horizons• Lack of good information vs. data• Apples to oranges to grapefruits• Are we good, lucky or a bit of both? • The impact of the media and social media• Reduced deference / questioning of leaders

A CONCRETE EXAMPLE

$58.2 B in Transfers to Other Levels of Government

• $38.7 B - Health & Other Social Programs

• $16.9 B - Fiscal Arrangements• $2.0 B - Canada’s Cities &

Communities• $0.7 B - Other• $26.9 B - Health Transfer (CHT)

• $11.5 B - Social Transfer (CST)• $0.25 B – Wait Times Reduction • $1 B - CHT Transfer to

Prov. of Manitoba

A CONCRETE EXAMPLE

A CONCRETE EXAMPLE

Table 2. Summary of Expenditures for Social Affairs (in $billions)

Note: Due to rounding, numbers may not sum exactly to totals.

Outcome Areas2010–11Planned Spending

2010–11Actual Spending

Healthy Canadians 31.8 32.6

A diverse society that promotes linguistic duality and social inclusion

9.1 9.4

A safe and secure Canada 12.6 11.2

A vibrant Canadian culture and heritage

3.1 3.4

Total for Social Affairs 56.5 56.6

Source = Canada’s Performance Report 2010-11

A CONCRETE EXAMPLE

Source = Canada’s Performance Report 2010-11

A CONCRETE EXAMPLE

Source = Canada’s Performance Report 2010-11

A CONCRETE EXAMPLE

Source = Canada’s Performance Report 2010-11

A CONCRETE EXAMPLE

Source = Manitoba Health - Annual Report 2010-11

A CONCRETE EXAMPLE

Source = Manitoba Health - Annual Report 2010-11

The Following Section provides information on key performance measures for 2010-11. This is the 6th year in which all Government of Manitoba depts. have included a Performance Measurement Section, in a standardized format, in their Annual Reports.

What is being measured (W) and using what indicator (I)?

Why is it important to measure this?

W = Manitobans’ access to cardiac surgery I = Median wait times for cardiac bypass surgery by level of urgency

Timely access to surgical services is important

W = Manitobans’ access to radiation therapy for cancer I = Median wait times for patients to commence radiation therapy

Timely access to treatment services is important

``THE BIEBER AND THE BUTTS``

One of the most significant demographic health concerns is the increase in smoking rates among young women under the age of 25.

How can we get younger women to stop or, better yet, to not take up smoking?

It pays to advertise! Get them while they’re still young!

Get an ‘opinion leader’ for the younger female demographic to come out against smoking saying it’s not ‘COOL’

``THE BIEBER AND THE BUTTS``

+ $10 Million =

Plan A:

Plan B: Double the price of cigarettes!!!

``THE BIEBER AND THE BUTTS``

The American Plan A in the 1980’sWarning: The Surgeon General Has Determined that

Cigarette Smoking is Dangerous to Your Health

``WHY IS THIS SO HARD?``

• Annual Resource Cycle is a marginal exercise• Attribution difficulties• Highly complex ecosystem of programs and

results• Evaluation cycle not aligned with decision

cycle• Too much data, not enough insights• Lack of focus in reward systems

STRATEGIC RESOURCE REVIEWS

• Began in 2007-08• Part of the new Expenditure Management System

in 2007• Aim is to better manage and control government

spending• Based on a cyclical review over 4 years of all

program and operational spending (100%)• Could be used to identify reallocation opportunities

from low priority to higher priority activities

BACKGROUND FOR FEDERAL STRATEGIC REVIEWS

STRATEGIC RESOURCE REVIEWS

FEDERAL STRATEGIC REVIEWS – What are they?• A 100% ‘in good faith’ review of an organization’s direct

spending• 3 key parameters:

• Increase efficiencies/effectiveness• Focus on core roles• Meet evolving priorities of Canadians

• To be completed by all federal organizations who receive annual appropriations

• Includes all operating, program and statutory program delivery costs

STRATEGIC RESOURCE REVIEWS

FEDERAL STRATEGIC REVIEWS – What are they?• Must identify at least the bottom 5% of resources

associated with lowest priority / performing programs or activities

• Done on the same timeline each year to align with the Resource Approval and Budgeting cycles

• Results of each round are presented in the annual Federal Budget

• Results of an organization’s SR are also incorporated into their RPP and DPR for future years

STRATEGIC RESOURCE REVIEWS

2008– 09 2009– 10 2010– 11 2011– 12 2012– 13 2013– 14 2014– 15

2007 Round 199 311 386 395 403 403 403 2,5002008 Round 349 449 586 598 604 604 3,1902009 Round 152 248 287 288 288 1,2622010 Round 194 271 569 525 1,560

Subtotal 199 660 987 1,423 1,559 1,864 1,820 8,511

DND 525 1,000 1,000 2,526

Total Savings 199 660 987 1,423 2,084 2,864 2,820 11,037

Source: June 6 2011 Budget DocumentsThe 4 rounds of Strategic Review covered 98% of total direct spending

Total(millions of dollars)

Federal Strategic Reviews – What have they achieved?

STRATEGIC RESOURCE REVIEWS

• Glassco Commission (1963)• Lambert Commission (1979)• Nielsen Task Force (1985)• Program Reviews 1 and 2 (1994 & 1996)• Corporate and Administrative Shared Services (2004)• Expenditure Review Committee (2005)• Strategic Reviews (2007, 2008, 2009, 2010…)• Admin Services Review (Budget 2010)• Strategic and Operating Review (Budget 2011)

Federal Resource Reviews – Past and Present

STRATEGIC RESOURCE REVIEWS

2011-12 2012-13 2013-14 2014-15

Strategic Reviews - Rounds 1 to 4 1,423 1,559 1,864 1,820

Containing the Administrative Costs of Govt 900 1,800 1,800 2,000

DND Savings 525 1,000 1,000

Strategic and Operating Review 1,000 2,000 4,000

Total 2,323 4,884 6,664 8,820

Note: Excludes impact of Admin Services Review and savings above 5% for SOR

IMPACT OF CURRENT RESOURCE REVIEWS(millions of dollars)

Food for Thought

WRAP-UP

• A very complex issue• Results are hard to pin down in the

Public Sector – it doesn’t mean that we should not try!

• Unlikely to ever achieve a perfect ‘Resources-to-Results’ allocation regime

• Lots of different models and approaches• A Work in Progress - Stay tuned….

QUESTIONS?