Investing for a productive state

Public value is broader than dollars and cents. It comes down to the return societies gain from resources entrusted to the government. The thing is: the way we measure that value is often disconnected from outcomes achieved.

Consider a government-led vaccination program. Improved population health will be just as important a measure as number of doses administered. That’s the difference between outcomes and inputs — and it highlights the need for a clearer understanding of what constitutes value in the public sector.

Clarifying the very definition of value helps us link financial inputs with tangible outcomes in areas like human capital, social wellbeing, economic health and productive growth. That connection empowers governments to allocate resources strategically, in targeted areas more likely to drive the best possible outcomes.

That’s particularly beneficial in complicated times. Canada is wrestling with a near daily cascade of geopolitical and macroeconomic disruption. In this environment, the International Monetary Fund (IMF) reports that governments facing tight fiscal constraints can increase economic growth by improving the efficiency and allocation of public spending.¹ The same report shows closing efficiency gaps could generate 30% to 40% more output and welfare per unit of public money spent, particularly through investment in research and development.

Imagine the potential upsides governments can foster by applying that thinking at scale. In many ways, leaders here are already thinking bigger about the link between input and outcomes. Canada’s Major Projects Office is doubling down on massive nation-building projects, the kind that diversify industries, open up new trade opportunities, create jobs, protect the environment and connect our economy while upholding the rights of Indigenous Peoples. 

That certainly indicates a shift in how public money has typically been managed. But expanding this momentum will require a meaningful transition in mindsets across government and public service. It’s time for more governments to embrace an investment mindset, and treat public money as strategic capital. Getting there begins by reframing public money management from:

1. Expenditures to investments, treating every outlay as a long-term investment in public value
2. Fiscal year to a multi-annual perspective, integrating multi-year budgeting with extended investment planning
3. Compliance to performance, embedding measurement, evaluation and learning within the entire public investment planning cycle
4. Siloed to seamless, eliminating friction points so ministries and departments can address long-term priorities and performance measures through shared processes

Moving in this direction doesn’t abandon old disciplines but rather, extends them. Placing value at the centre of fiscal decision making helps governments build resilience, stimulate productivity and expand fiscal spending over time. Crucially: when governments in Canada combine the rigour of traditional fiscal management (think auditability, transparency, accountability) with an expanded capacity to measure and deliver impact: society wins.