Paying for Bad Government Choices

Who knew Global Affairs Canada was running a gambling operation with our money?

Who picks up the tab when budgetary bets go horribly wrong? Taxpayers, of course. Duh.

Let’s explore the sad story behind one particular three billion dollar lottery ticket that unnamed Global Affairs Canada (GAC) employees bought a few years back.

According to GAC’s Project Browser tool, between 2008 and 2022 Canada committed $3,065,000,000 to the Global Fund to Fight AIDS, Tuberculosis and Malaria. Which on the face of it is great. No one here is cheering for Team Malaria, right? But we should ask a couple of questions:

1. Is the scale of the support appropriate given financial constraints back home?

2. Was that money well spent?

I’m not going to even try to answer the first question: that’s something for Canadians to talk about as a society. For context though, GAC’s total annual budget for foreign aid funding seems to be in the neighborhood of $16B (of which around $2B goes to United Nations agencies). $16B would represent roughly 4% of total annual federal government expenditures - at least at pre-COVID spending levels.

However I do have a lot to say about question two. First of all, the Global Fund to Fight AIDS, Tuberculosis and Malaria has been dogged by serious accusations of corruption and lack of transparency for more than a decade. That means there’s a good chance a substantial proportion of our money ended up moving through private Caribbean bank accounts on its way to cozy dachas in Sochi.

But I’m going to ignore that for now because we can’t be 100% sure the funny business is still happening. And because if we cancelled all government programs that were at risk of misuse we’d have to lay off the entire federal civil service. Which would be a very bad thing, because…um. [Make sure you add strong arguments to support the statement before publishing - Ed]

Instead, I’ll focus on measuring the impact of our investment. What were the goals GAC set for its Global Fund contribution? Their own website fills us in:

"The expected results are defined by the “Global Fund Strategy 2017-2022”. This strategy includes the following targets, to be achieved by 2020: (1) 90% of persons living with HIV (PLHIV) know their status, 90% PLHIV who know their status and receiving treatment; and 90% of people on treatment have suppressed viral loads; (2) a 20% and 35% decline in TB incidence rate and TB deaths respectively, compared with 2015; and (3) at least a 40% reduction in malaria mortality rates and malaria case incidence, compared with 2015."

The GAC planners obviously felt that spending $3B over five years or so was reasonable as long as, between 2015 and 2020, it contributed to a 35% decline in TB deaths, a 40% decline in malaria deaths, and the 90%-90%-90% formula for people with HIV. And I’ll admit that it’s a compelling argument.

The thing is though, that no one could have known whether we’d actually achieve those results. The decision therefore was a gamble. And the table stakes were $3B belonging to Canadian taxpayers.

Should nameless, unelected planners have that much power over our money? Assuming that they’re genuine domain experts, then sure. Who else is better? But:

With great power comes great responsibility. (Nietzsche? Kant? Aristotle? Nope. Peter Parker’s uncle)

Claiming to possess domain expertise isn’t free: if you break it, you own it. So if death rates happily fell during the program years then the planners should be rewarded for their service to humanity. But if they didn’t fall, or if they didn’t fall as much as predicted then, at the very least, people should lose their jobs.

Fortunately, with the hindsight allowed us by historical data, we can easily see how things worked out. Unfortunately, it looks like the fine folk at GAC stepped on (another) rake.

Our World in Data numbers give us a pretty good picture of how things played out in the real world. Tragically, Malaria killed 562,000 people in 2015 and 627,000 in 2020. That’s a jump of 11.6% as opposed to the 40% decline that was expected. There were 1.27 million tuberculosis victims in 2015 against 1.18 million in 2019 (the latest year for which data was available). That’s a drop, but only 7% - not even close to the required 35%.

I couldn’t quickly find the precise HIV data mentioned in the program expectations, but I did see that HIV deaths dropped by 16% between 2015 and 2019. So that’s a win.

But it’s clear that the conditions underlying the GAC wager were not met. The government gambled more than $3B of taxpayer funds and lost the bet. To date, they have yet to apologize, assure us that they’re busy reassessing their future commitments, or publicize their plans for the individuals who so carelessly lost our money.

For that matter, were those individuals even GAC employees? It’s likely that the decision was made by representatives of the uber-expensive contract consulting firm, McKinsey. I hope to look more deeply into that angle in a future post.