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Municipal auditor isn't cure for local government waste

Premier Christy Clark's recent announcement that her government will create an auditor general for local government is a ray of good news for British Columbians.

Premier Christy Clark's recent announcement that her government will create an auditor general for local government 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 scrutiny.

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 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 about it?

According to the Clark government, the municipal auditor's role will be to conduct performance audits to determine if taxpayers are getting value for money. Put differently, the auditor will investigate local government programs and initiatives to assess whether they're delivered efficiently and whether the desired results were achieved.

But the municipal auditor, 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 auditor will not comment on policy choices; only on the quality of their implementation. The auditor will also provide non-binding recommendations to the audited local governments through publicly 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 identified issues, British Columbians should be wary of the proposed auditor'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 corrective action.

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 effective vehicles for delivering public programs.

The best way to 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 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.

Niels Veldhuis(@nielsveldhuis on Twitter) and Charles Lammam(@charleslammam) are economists with the Fraser Institute.

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