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!