The Government Isn’t a Corporation

Ottawa’s record spending to fight the economic impact of COVID has reanimated the debate on whether the prime minister should function like a CEO.


By Jane Allt and Angela Poirier

November 10, 2020

In a recent Financial Post column, Diane Francis writes that the newly minted federal Conservative Party leader, Erin O’Toole, “Believes a prime minister of Canada should act like the CEO of a G7 country, not a glad-hander who hands out other people’s money.”

Francis criticizes the Trudeau government for increasing taxes, driving out investment and overspending on COVID-19 stimulus. According to O’Toole, government’s priority “should be to help the country recover from the pandemic by growing the economy.”

We have news. Government is not a business, and elected members may want to think about joining the private sector if they have aspirations of becoming CEOs.

Before comparing any minister of the crown with a CEO, consider these significant differences. Prime ministers may exert some control over the ministers who sit at the cabinet table. But unlike a typical organizational structure headed by a CEO, in the government hierarchy those ministers have no direct authority over the people working in the organization. In public administration, this role falls to deputy ministers, who are governed by legislation and bound by collective agreements pertaining to the civil service. And those civil servants are guided by principles that demand non-partisanship. In the private sector, leaders often welcome blind loyalty to the organization, product or service they provide. However, bureaucrats are the sober second thought politicians need to hear, especially when partisan behaviour may not be in the public interest.

On the governance front, elected leaders are also accountable to the public — which they are reminded of every election cycle. They are not beholden to “shareholders” and are duty-bound to consider the needs of all — not just the supporters of the party in power.

We explore the long-held rallying cry that government should be run like a business in our book “How Government Really Works — A Field Guide to Bureaucracies in Canada.” We think anyone who holds that belief could learn a thing or two if they stayed up one night and gave it a read.

Consider that the private sector, for a variety of reasons, is simply not a viable option for many programs and services operated by governments. These reasons include a lack of profitability and the intangible nature of long-term benefits associated with some programs, or where the fixed costs of providing services are too high. There’s also the potential for corruption, overconsumption or limiting supply for public goods meant to be enjoyed by all. The risk or lack of opportunity for profit would turn many a CEO away from wanting to lead an organization with these challenges.

Keep in mind that governments are bound by notions of universal access to essential services, as well as social and moral duties and laws that go beyond the bottom-line mentality of the private sector. There is an ongoing need to balance competing interests and preserve the rights of citizens. At the end of the day, government is a money-losing enterprise. No CEO would stand for this nor would they keep their job if their organization didn’t recognize a profit year after year.

As former bureaucrats, we’ve lived through the push for government to be more like the private sector and found ourselves defending the nature of public service, including the need for checks and balances as well as due diligence.

With the backdrop of COVID-19, Nikole Hannah-Jones, Pulitzer Prize-winning reporter covering racial injustice for The New York Times, made this stark observation in her Twitter feed: “I never want to hear that government should be run like a business. This crisis has laid bare the dangers of gutting our public institutions and services, of depending on companies dedicated to profit rather than government mandated to work for the common good. Death is the result.”

As former bureaucrats, we’ve lived through the push for government to be more like the private sector and found ourselves defending the nature of public service, including the need for checks and balances as well as due diligence. These bureaucratic processes, by their nature, can lead to slower responses, which can be mislabeled as inefficiencies or ineffectiveness, but they are essential to a fair and just society. The bottom line is that most traditional business management assumptions simply don’t work well in government.

The phrase “what’s old is new again” is especially appropriate to describe private-sector planning trends that some grab onto with hopes of encouraging governments to run like businesses. These fads come and go just like fast fashion. And because government is generally a late adopter, it tends to get sucked into planning trends long after they have fallen out of favour in the business world.

In What Is Government Good At?: A Canadian Answer, author and academic Donald J. Savoie writes about the public sector reforms borrowed heavily from the private sector concluding that: “They were all introduced with the promise of finally fixing government. None have lived up to the expectations.” They’ve also had unintended consequences, with Savoie noting that: “Various public sector reforms have made government less capable of delivering programs and services by bringing new problems and a wide array of new activities to government operations.”

Both government and business have a role in society, but one is simply not like the other.  And as for O’Toole’s desire to grow the economy, what’s wrong with giving individuals much needed support in the face of severe job losses arising from COVID-19? Without individual spending, economies would be bust.

Jane Allt and Angela Poirier are former public servants and consultants with the government of Nova Scotia. They’ve recently published the book How Government Really Works — A Field Guide to Bureaucracies in Canada.