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Getting Government Right – Program Review

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The proposed reductions in program spending in the 1995 budget were largely the result of the program review. Ministers in every government department put their departments under the microscope. In particular they applied six tests to everything their departments did:

1.Does it serve the public interest?

2.Is government involvement necessary?

3.Is it an appropriate federal role?

4.What is the scope for public sector/private sector partnerships?

5.What is the scope for increased efficiency?

6.Is it affordable?

The program review led to a significant structural change in the federal government’s involvement in the Canadian economy. Major reforms included:

•Dramatic changes in the federal government’s involvement in large parts of Canada’s transportation system.

•A complete change to the federal government’s approach to agriculture, including a move away from an emphasis on income support to income stabilization.

•A massive reduction in the federal government’s involvement in the business sector, including a proposed 60 percent cut in subsidies to businesses.

•A change in the way in which departments delivered services to Canadians, including an increased focus on efficiency.

A significant source of savings was the move away from federal transfers based on federal-provincial cost-sharing programs to a block-grant approach in which the amount transferred by the federal government to the provinces did not depend on provincial spending. This decentralization of power both contained spending and allowed for experimentation and innovation.

Northern Light: Lessons for America from Canada's Fiscal Fix

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