Editor: In early January of 1966, I was hired by a Chatham company then known as Canadian Filters Ltd (later to be Fram, Bendix, Siemens, etc.) to a position associated with the testing lab, titled an “engineering assistant,” whose job it was to document and record all of the performance results of tests conducted in the lab, along with other duties.
I recorded the test data on pre-printed 8×5 cards which were stored in a specially sized two-drawer file cabinet. Day in and day out I dutifully recorded data, sometimes up to 10 or 12 tests a day.
After three or four months on the job I noticed something that I thought was peculiar. While I faithfully recorded this information to the best of my ability, no one ever came to me and asked to see any of it. Giving it one more month, I finally went to the VP of engineering and described to him my conundrum.
Giving it a moment or two of thought, he said to me “Truthfully I don’t know what it is used for either. It was being done that way when I joined the company. However, whoever set this up must have had a reason for doing it at the time, so just keep on recording it.”
Seriously! This is not a joke. That is exactly what he said, to the best of my recollection.
What is a joke is the budget process for the Municipality of Chatham-Kent and the fact that exactly the same philosophy is used in the budget’s creation and assessment by council.
In this past budgeting process, how many job roles, or work teams, or consulting contracts, or special administration projects or any other number of financial sinkholes were considered for elimination? I am quite certain that no examination of organizational charts, or project lists was done. People simply assumed that whatever was good for last year is good for this year – of course marked up for inflation and the increased cost of housing that person or team or consultants, what with energy, interest costs and the like all going up.
A serious budget is a zero base budget, starting with the assumption that every facet of the budget is zero and that justification will be required to restore it to the budget.
My career with that little Chatham company in 1966 grew by leaps and bounds over the years and with all the acquisitions so that in the final few years of my 29-year career with those companies, I was the North American director of the Siemens Corporate Network, which ultimately linked more than 1,000 Siemens facilities in Canada, USA, Mexico and Puerto Rico for telephone, fax, video conferencing and computer to computer communications.
Once a quarter I had to present a status update and budget update to my board of directors, comprised of the CEOs of the eight product groups that were Siemens AG in North America. One of the exhibits that formed a part of the budget review was something called a “bridge diagram.” This diagram showed, for a particular segment of the budget, a “bridge” connecting last year’s budget at this point to the outlook for the balance of the current budget Every new cost added to the budget showed the bridge rising over a gap, and every cost reduction showed the bridge arcing downwards. The goal was to meet the far side (current outlook) at the same level or lower. Any cost item that caused the failure of the bridge to end at the correct height warranted serious discussion and justification.
That was real budgeting.
What is not budgeting is throwing together the same-old same-old, wrapping it up in some bafflegab about inflation and then joining with council to create the annual theatre of nibbling away at the edges and then throwing up their hands and say that’s the best we can do.
The difference in the two scenarios is that when I was managing a budget for Siemens, it was a profit-making company, needing to offset all costs with income derived from selling goods and services, whereas the municipal budget is simply a whatever, financed by a pool of revenue that will not go dry; the taxpayers wallet.
David Goldsmith
Chatham
