Canadian Diaries: Part 2

This is the second part of my experience sharing about governance in Canada during an official visit this year. At the outset, a big thanks for the encouraging feedback to the first article. Those who wish to read the article; you can visit my blog as well. (The First Part )
In this part, I will be dealing more with governance. So brace yourself for some statistical bombardment.

One of the important governance characteristics in Canada is federalism and relative autonomy of the institutions. This stems necessarily out of fiscal independence.

We found that that for Toronto city income from their own savings is more than the grants from Provincial/Federal government. That’s true financial independence. States and Centre largely dictate Indian municipal institutions, because they grant substantial funds. For the municipal bodies in Canada, one-third income comes from Property tax. In Mumbai, it is less than 10%. It is low in Mumbai due lack of proper records and valuation. Also to put things in comparative sense, BMC has 10 times more population to cater to than Toronto. Toronto’s capital budget is whopping $110 Billion, while the budget is only $10 Billion for Mumbai. Development charges, i.e. appropriated during construction of a private project are coming up as the new source of revenue in most municipalities in Canada. In India, we need to provide affordable housing to all. Thus such moves would be unwise.

One notable feature of all the levels of governance in Canada is the amazing level of self-awareness. They have up to date and precise database and models to use that data for public policy. The stress is on having good quality data, which often is collected and/or corroborated by private entities. In India, quality of data is questionable to say the least. Municipal data is often old and thus unreliable. Even the critical data regarding IIP and GDP figures has been doing rounds of controversy lately.

The cities typically adopt 1-year operating budget, 2-year outlook and 10-year capital budget and plan accordingly. They must balance the budget i.e. the operating expenditure (like revenue expenditure in India) must be met through operating income alone. The Municipality can’t borrow for the same. Also, debt payment is through operating budget. This automatically ensures zero revenue deficit. And the borrowings are only for capital purposes. This indeed is a good provision to reduce what economists call Wasteful expenditure. Municipal bonds are issued and traded at national level. Public participation is also encouraged in budget process through the town hall meetings and citywide consultations.

One good part was availability of skilled manpower even down to municipal levels. The bureaucracy in Canada is different from India. There is no statutory civil service except Foreign Service. The hiring policies of government are analogous to the private sector. Thus there are no “Permanent” bureaucrats sitting over files. That makes the talent pool dynamic. The mayor can hire and fire anyone needed without prolonged legal proceedings. This means the employees have to work hard to keep their jobs and stay accountable to people (!) India has huge bureaucratic setup (to which I belong!). But Canada has more public service officer per thousand’ population than India does. So it’s not the size, but the attitude. The ‘Red Tape’ bureaucratic mentality in India is the obstacle to service delivery and development.

Western nations developed their governments on the liberal philosophies of Thomas Hobbes and John Locke. Thus the State is considered to be a necessary evil. Thus it needs to be kept minimal. In economic arena, it is believed that money is better off with people than government. The executive really has to fight tooth and nail to get money sanctioned from legislature. And the legislators are reluctant to increase any tax. Despite this, average family in Ontario pays around $40,000 in taxes. (In rupees, that comes to 20 Lakh!). Half of it goes to the federal level, around 35% at the provincial level and remaining at the municipal levels. The tax burden eats up almost half the family income; still people are willing to pay taxes because they can see their tax dollars being put to good use.

As pointed out in last article, focus of governance in Canada is more on quality and efficient service delivery. They go extra mile to make sure it happens. Construction work on road will have warning boards 10 miles before the actual site. The workers will repeatedly apologize for any inconvenience caused due to them. While the article was being published, Indian railways changed the pricing for Premium category towards the ‘Congestion pricing’ model. The decision was criticized as ‘against poor’. In Canada, user fee automatically gets inflation adjusted. It’s a routine matter and not a policy decision.

Canadian or rather American lifestyle is of exuberance. Use-and –throw-shopping styles generate excessive amount of garbage. But we never came across one place in Toronto that was dirty and stinky. The municipalities spend more than a third of their capital budget on solid waste management.

Another important aspect in municipal and presumably national governance too, is asset management. There is dedicated depreciation expenditure kept aside. The philosophy is to maintain the asset regularly, spending sufficiently high to extend its lifecycle considerably. Municipalities have to design asset management plans and set aside funds for that.

Western economies take urbanization very seriously and focus on urban governance. The idea that every city has its own soul is always kept in mind while planning. Thus fiscal prudence doesn’t come in way of cherishing beauty. There are curious depictions of human brain around the Toronto City hall.

We had a chance to meet the Member of Provincial Parliament (like State Legislature) of Ontario, Mr. Vick Dhillon. As the name suggests, he’s of Indian descent, migrated to Canada as a kid with parents and joined politics after student life. He was visibly proud of being a Canadian now. His experiences of working with community, helping Indian community assimilate in mainstream are noteworthy. The Canadian PM Justin Trudeau was famously quoted saying that he has more ‘Sikhs’ in his cabinet than his Indian counterpart! It shows the multiculturalism of Canada reflecting in its Polity.

An important aspect of governance in Canada is the importance of traditions and norms. In democracies, the rules and regulations are necessary to ensure fair and balance procedure. But the governance runs on the lines norms more than the procedures. GST bill was passed in Indian Parliament in the last session. There were many backchannel discussions, negotiations between ruling and opposition parties. Eventually Govt. was able to bring everyone board. These informal devices are much more established in Canada. The political parties have Provincial and Federal units, which do not need to have exact policy positions. They can and do differ on various matters. Such differences are resolved largely amicably. In some of the provinces, there are Regional Councils that are made up of several municipalities together. Ex: York Region Council. That’s an additional layer, additional bureaucracy and naturally additional areas of conflicts. But the impression we gathered showed to amicable resolutions through the norms.

Just like any other societies, Canada also faces problems of bad governance and malpractices. The legends of Toronto Mayor Rob Ford are too popular to be repeated here. (Those who don’t know, Google him along with John Stewart). The audit of Pan Am games held this year showed that expenditure had overshot the sanctioned amount by whopping $342 Million. The problems exist, just the magnitude and aftermath differs.

Being a vibrant democracy Canadians debate just like us. I saw the debate on changing the main fighter plane for Canadian Air Force. We also saw a protest in Montreal. Frankly, there were more police than protestors. Protestors were college students and they were behaving as if it’s a picnic.

Canadians seemed genuinely worried about a particular Presidential candidate in their southern neighbor. But they aren’t planning to construct a wall (As of now!) Canada has been wholeheartedly welcoming the refugees and from Syria too. It is easy to talk big. It was particularly heart warming to see different Municipalities and Provinces actually incorporating the needs of the migrants and keeping resources aside for them. They are coming up with ideas to bring the migrants to mainstream society and economy!

A beautiful example of cooperation among citizens is the underground pedestrian walkway in Toronto. The skyscrapers in busy Downtown area had their own undergrounds, which later were connected to each other. It serves an important purpose in winter when temperature outside drops to negative. The PATH as it is called connects 25 buildings, spans more than 30Kms and has whole array of shops from high-end suiting to barbers. They open at office time and close in the evening. So an executive working to meet deadline doesn’t even need to see the sunlight as long he/she wishes.

To sum it up, we have lot many things to learn from Canada ranging from solid waste handling to Asset management. The visit was indeed an eye opener in many perspectives. A significant part of our training was to learn about the Accrual Accounting in place of Cash Based Accounting. I haven’t talked about that here because it is very much technical and I wasn’t sure reader would be much interested in it.

In the last and concluding part, I’ll discuss my observations about the people, lifestyle and culture. See you here in next blog post!

Canadian Diaries (Part 1)

I recently got a chance to visit Canada as part of International attachment through the National Institute of Financial Management. This article is part of the series to share my experiences about governance system in Canada. At the outset I would like to thank NIFM, my academy National Institute of Communication Finance and the Government of India for giving us the opportunity.

At the York Region Council

We have a faint idea about Canada. Usually, it’s in connection with number of Punjabis there (!) Compared to its southern neighbor, Canada is peaceful, its not embroiled in continuous wars and plays a rather marginal role in global politics beyond the Pacific-Atlantic circle. Both our nations were under same colonial rulers (though under very different circumstances). We have similar governance structures and that was the core reason for our study tour, i.e. to get the feel of one of the leading government system in the western world.

The first impression of Canada being more than what we know was midair. Air Canada announcements were being carried out in both English and French. I did not know about a significant French speaking population in the Canada, and the history attached with it. Suddenly then the French sounding names of cities in Canada; Montreal, Quebec started make sense. French speaking population dominates half part of eastern Canada, north of Ottawa River.

I won’t discuss the history of French-English conflict in Canada here. But the Canadians have developed bilingual framework for governance. There are many posts in government for which ‘Professional fluency in both English and French’ is required. The difference in French and English dominated areas is evident in economy and administration as well. But they have managed to rise above that.

The next impression of Canada is that of vastness. The country is just huge. Being a developed economy, there are expansive roads, bridges, rail lines and the entire infrastructure. But the visitors keep having question, “Where are the people?”

            For an eye trained at Chatrapati Shivaji Terminus in Mumbai to witness the sea of humanity, Canada feels like an alien planet. To put it in perspective, entire Canadian population is 33 million. Extrapolate that to India, and you will not be able to fill Mumbai and Delhi, whose combined population is 40 million! Total India is 1250 Million!

Though the strategies of governance are different, the core principles remain. And there were more than a few things to learn during the attachment.

The orientation of governance in Canada is citizen centric. So the systems are designed taking into consideration ease of the citizens. At every level, ‘ease of doing business with the government’ is top priority. The receptionists are well trained; they direct you to appropriate officer. There are carry home leaflets about the works done at the office and about the local administration including Local transport. Airports have a simple machine with ‘emoji’ inspired buttons asking ‘How are you feeling today about the airport? The options vary from worse to excellent. They are regularly monitored to get a real time feedback. It’s simple and effective instrument. In India, we have a system of Citizen Charters, but not implemented well enough to bring ease for common man. We certainly need to improve that.

The difference in service delivery between India and Canada is stark. It has to do with the resource availability, population to be served and the difference of needs. It’s very easy to go to a developed country, be mesmerized, compare it with India and paint a bleak picture of home. We need to understand that India and Canada stand at different places in the time quadrant of governance. Canada has been evolving since Industrial revolution. India was ‘drained of its wealth’ for 150 years which became capital for development of colonial economies, which in turn improved the governance. All the nations in west adopted democracy as the need and offshoot to protect capitalism. We Indians adopted and have cherished democracy as a way of life. So the difference in performance is going to be there. Again, this can’t be the reason for the inadequacies or complacency. The point I want to make is that the comparison should be a studied one, not simplistic.

Governance caters to the demands raised by citizens, which are dominated by their income structure. In India, we need to provide significant social assistance to the population and rightfully so. In Canada, the thrust is more upon effective service delivery even if it means higher tax burden. An average taxpayer in Canada ends up paying 50% of his/her income as tax from Municipal to Federal level. That naturally generates expectations, which are voiced much stronger. To substantiate:

The government response to a rich farmer in New Brunswick, who pays 50% of income as tax; and the government response to poor farmer living out of government subsidies in Bilaspur is going to be different, no matter what. It also doesn’t mean, Canada doesn’t have corruption. We have also seen the governance improvement analogous to increasing income levels in India as well.

Despite high taxes, Canadians don’t seem to complain because they can see the tax dollars being put to good use. And they derive the comfort out of it. In the financial district of Toronto, more than 85% people come to work through public transport. It’s a choice than compulsion, because the public transport is particularly efficient. On the flip side, it is a hard life for the lower income families. The cost of living in Canada is significantly high, even for the essential services. Those families are provided help in form of direct assistance. We couldn’t interact any of them in person, so I won't comment on the quality of help given to them.

Indian governance system was designed by an alien government that wanted to put in place a  ‘Steel frame’ to keep the population in check and extract as much gains possible. Naturally such a system is based on ‘Mistrust’. That’s why we have More of Government and Less of Governance. The Prime Minister has been candid about this, and we are now working to improve it. Canadians have evolved the system from the colonial to citizen centric, and the government trusts the people. Naturally transacting with government is very simple. No one needs to produce ‘Attested copies’ at every juncture or provide ridiculous amount of documentation for Passport. Plus, the efficient and integrated use of technology reduces the procedure even more. The simple example of this trust is: Passengers need to buy the tickets to show at Bus/Metro stations. It is a single ticket that one can use for journey across different platforms. The passengers are asked to show the tickets at very rare occasions. The bus driver assumes that everyone is following the rule, which the people actually do. It doesn't mean there are no freeloaders. But the majority follows the rule. And there are severe penalties on breaking the law. We saw a signboard saying penalty for drunken driving is $10,000 (Rupee equivalent is 5 Lakh). I actually came across a person who was charged and had to pay the fine. The amount so high, you can actually buy a car. That's a great lesson that, Rule of Law emerges out of the people following rules themselves, not imposed upon.

One more amusing fact of Canada is Her Majesty the Queen! The British Monarch is the official head of the state, even today. Almost all the foreigners and certainly Indians do ask this question, why? The answer often is, “Because it’s been there for a long time”. The British heritage love towards tradition (that even our system has) percolates deep into Canadian system as well. Nonetheless, Canadians just love her. Whenever she travels to Canada, she gets a jubilant welcome.

Canadian system is quasi federal, just like India. The Governor-General is equivalent to the President and the Provincial Governor to the Governor of a State. But the structure is more federal in comparison to India. To substantiate: Canadian Provincial Premier (i.e. Chief Ministers) suggests the name of the person to be appointed as Governor, who is then appointed by the PM. In India Governor’s role is often a matter of friction between Centre and State, who is appointed by the President on the recommendations of the Union Govt. One prominent reason for this federalism seems to be the relative financial independence of Provinces to the States. That is not to say all is smooth. There are points of friction and conflict in federal and provincial government. But for the maturity of centuries old system can resolve those disputes amicably.

To sum it up, Canada has a wonderful system of governance which is Citizen Centric and responsive. I have tried to set the tone of my observations in this post, specially the comparison with India. In the next part I would discus more about financial administration of Canada and the municipal governance. The concluding part will have observations about the people and culture.

See you in the next blog!