Senate expense scandals just one small example of government's failure to manage our money

Allegations of expense scandals in the Senate have shocked many Canadians and rightfully so. Although unsettling, such antics are not an isolated case; they are part of a larger institutional problem with government.

A systemic problem quickly emerges as one flips through the catalogue of reports from the Office of the Auditor General of Canada, an independent federal body charged with reporting to Parliament on the performance of various government programs and initiatives.

Our recent study reviewed Auditor General reports from 1988 to 2013 and found 614 cases of federal government failure ranging from expense scandals to wasteful spending, misrepresentation, incompetence, and other program failures. We peg a conservative cost estimate of these failures at between $158 billion and $197 billion. That dwarfs the now infamous $90,000 cheque and totals up to nearly one-third of the federal government's debt in 2012/13.

While the senate scandal has received much media attention, we came across multiple Auditor General reports that uncovered government officials abusing their privilege to claim expenses. In one report, the Auditor General found an RCMP employee using a government credit card to pay for a gym membership and a Border Services employee using a government credit card to pay for home expenses like electricity.

In a separate report, the Auditor General found Foreign Affairs officials inappropriately receiving housing benefits for hospitality expenses. One official received over $32,000 in benefits even though the property was not used for hospitality over a four-year period. In yet another report, a former Correctional Investigator received improper and questionable payments totaling $325,000 over six years including claims for $7,000 worth of personal trips and $5,000 for entertaining friends and relatives.

As frustrating as these expense scandals are, they pale in comparison to the misuse of taxpayer money that takes place on a larger scale.

A prime example is a $125 million project to modernize a major Canadian Coast Guard icebreaker. Not only did the project end up costing $74 million more than planned but the Auditor General concluded the entire modernization was a major capital expenditure not based on a demonstrated need.

In another example, the Department of National Defence took eight years to develop a $174 million satellite communications system but later determined that the system already in place was both sufficient and cheaper to operate.

Perhaps more shocking than such cases of unnecessary spending is when the government loses track of taxpayer money altogether. Although hard to believe, the Auditor General revealed earlier this year that the government does not know where $3.1 billion intended for enhancing security and preventing terrorism had been allocated.

And then there are the problems with the government's management of sensitive taxpayer information. In 2007, the Auditor General found that 6.4 million Social Insurance Numbers (SINs) had no supporting documentation and 2.9 million more SINs existed for Canadians over the age of 30 than actual people in that age group. These discrepancies have raised important concerns about potential misuse and fraud in the over $140 billion government programs that rely on the SIN system.

There is no simple solution to the problems identified by the Auditor General; government failure is an institutional problem because politicians, bureaucrats, and special interest groups are often rewarded for behaving in ways that work against the public interest.

But some helpful steps can be taken. First, we can scale back the activities the government is involved in to focus only on those where it provides value. Second, to improve the delivery of those activities, government can rely more on harnessing the strengths of the private sector through outright privatization, public-private partnerships, and the outsourcing of publicly-financed goods and services. Finally, we can expand the resources and authority of the Auditor General, giving it the ability to require mandatory audit compliance.

When viewed in the context of overall government failure, the alleged senate expense scandal is a drop in the bucket. The fact is the list of government failures in Canada is long and growing. Without reforming what government does and how it goes about doing it, we'll soon be reading about the next boondoggle.