BC Premier Christy Clark’s recent announcement that her government
will create an auditor general for local government (AGLG) is a ray of good
news for British Columbians. After all, local governments across the province
spend nearly $10 billion of our hard-earned money annually with little real
Although municipal finances are currently audited, the audits only
determine if the finances are accurately reported – not whether taxpayers
received value for the money.
As Canadians have witnessed at the federal and provincial levels,
auditor generals across the country expose numerous government failures every
year – from cost overruns and governments failing to achieve their stated
objectives to governments simply spending our money unnecessarily.
There’s little doubt that a municipal auditor will expose similar
accounts of government waste at the local level. While the increased exposure
of government failure is important, the real question is what will be done
According to the Clark government, the AGLG’s role will be to conduct
performance audits to determine if taxpayers are getting value for money. Put
differently, the AGLG will investigate local government programs and
initiatives to assess whether they’re delivered efficiently and whether the
desired results were achieved.
But the AGLG, like its federal and provincial counterparts, will be
limited in that it will not “question the merits of policy decisions or
objectives of a local government.” In other words, the AGLG will not comment on
policy choices; only on the quality of their implementation. The AGLG will also
provide non-binding recommendations to the audited local governments through
publically released reports.
Without the ability to question the merits of policy decisions and the
authority to force municipalities to respond to audits with measurable plans to
overcome issues identified by the auditor general, British Columbians should be
wary of the proposed AGLG’s effectiveness.
Of course, the audits and public reports will receive significant attention,
especially in the media, putting increased pressure on politicians and
bureaucrats to deliver better value. But the experience from other levels of
government shows that increased exposure does not lead to significant
For instance, at the federal level, the auditor general highlighted
more than 300 cases of government waste between 1992 and 2006. These failures
amounted to an estimated cost of up to $125 billion. Importantly, the failures
occurred regardless of the party in power and many reoccurred despite previous
warnings by the auditor general.
The main lesson from the failures reported by the federal and
provincial auditor generals is that governments are not very effective vehicles
for delivering public programs.
The best way combat government waste is to minimize the tasks that are
undertaken in the public sector. Indeed, a government does not need to
undertake an activity to ensure that it will be done. Many public services such
as garbage collection, infrastructure development, and water and sanitation
services can be delivered more effectively by contracting out or ceding the
activity altogether to the private sector.
When governments contract out the provision of goods and services to
the private sector through competitive bidding, research often finds that there
are significant benefits in cost savings and quality. A review by Simon
Domberger and Stephen Rimmer of empirical studies on contracting out in public
sectors in North America, Europe and elsewhere, concluded that competitive
tendering and contracting usually leads to substantial cost savings – in the
order of 20%.
So while the proposed AGLG will likely highlight instances of
government waste that would otherwise have gone undetected, to ensure British
Columbians get better value for money, other reforms are needed. A good first
step is contracting out and increased use of the private sector.