TITLE:
Policy Instruments and Budgetary Processes: A Reflection on the Deficit Elimination Experience in the Canadian Provinces
AUTHORS:
Louis M. Imbeau
KEYWORDS:
Policy Instruments, Fiscal Policy, Public Deficit, Canada, Principal-Agent Theory, Convention Theory
JOURNAL NAME:
Open Journal of Political Science,
Vol.4 No.3,
July
30,
2014
ABSTRACT: Analyses of the deficit elimination experience in provincial governments
in Canada in the 1990s show that provincial authorities used similar sets of
policy measures to reach the goal of a balanced budget within a short period of
time. We look at these measures as policy instruments and we try to make sense
of their use through a theoretically informed reflection on the role of information
and trust in the budgetary process. The principal-agent theory shows how the
Premier and his team circumvented the problems caused by the information
monopoly of managers through the implementation of a top-down process for
setting budgetary targets and through the decentralisation of operational decision-making.
However, this theory is completely silent concerning the use of rhetorical
instruments. The convention theory suggests that regulatory and rhetorical
measures were combined to influence guardians of the treasury and program
advocates in their visions of the budget and thus changed the budgetary process
from an incremental process to a fiscal crisis process. The same policy
instruments take on a different meaning depending on the theoretical lens that
one uses. Their use fosters identical outcomes
(in this case, a balanced budget) through different paths. The knowledge
of the process through which the use of a given policy instrument might lead to
a given outcome is essential if we want to get a better grasp of the side effects
of the use of any policy instruments.