Program Review: The Government of Canada's experience eliminating the deficit, 1994-99: a Canadian case study

Following ten years of spending increases on public services, the UK is set for a period of fiscal constraint to control a rising budget deficit. The sharp contraction in GDP and the falling inflation of recent years means that the Government's nominal spending plans now represent a much larger share of economy than was initially planned.

As part of the response, all political parties are committed to reducing projected public expenditure as a share of GDP. Planning and delivering high quality public services under these conditions poses particular challenges and opportunities for government.

As part of its research programme, the Institute is committed to learning from the experiences of other countries, and in this case increasing understanding of previous examples of large-scale fiscal consolidations, whether they occurred here or abroad. Canada in the mid-1990s provides an outstanding example of the sustainable elimination of a budget deficit through expenditure control.

Following a seminar by Jocelyne Bourgon and Marcel Massé at the Institute in May 2009, there has been considerable interest in the UK's policy making circles as to how exactly Canada achieved this feat.

In this paper, published jointly by the Institute and CIGI in Canada, the distinguished career civil servant Jocelyne Bourgon provides a comprehensive insider's account of large-scale strategic transformation in response to a fiscal crisis.

It covers not only the political and economic dimensions but also tracks the strategic choices made by senior public managers and cabinet ministers. It identifies some of the most important features of a programme designed to eliminate a sizable deficit including many of the lessons learned from previous unsuccessful budget cutting exercises.

There are some clear differences between Canada and the UK, such as the distinction between the roles of the federal and provincial governments. And the Canadian case by no means answers the many political choices that will confront politicians in the years to come.

But overall, the two countries share relatively similar political and governmental institutions. This account of how these institutions were focused on the difficult task of consolidating public expenditure is likely to be required reading for all those involved in the formulation of such policies in the UK.