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The Equity Statement for Intentions Reporting

Because the most important answering is for intentions, we need a structure for authorities to report their intentions that shows the fairness trade-offs they are making in what they intend as outcomes, for whom. Nothing in existing standard forms of authorities’ reporting gives us the information we need to help us adequately assess intended action that affects the public in important ways. The following extract from the Citizen’s Guide introduces the idea of the equity statement as a means of stating authorities’ intentions. While developed for proposals in local, regional and federal issues, it applies as well to the intentions of nations.

The Equity Statement (EqS)

Programs and projects affecting the public can be initiated by authorities, such as an executive government intending policy change in levels of health care. Or they can be proposed by others who apply to the authority for approval, such as a municipal by-law amendment proposed by a property developer, or a corporation seeking a government subsidy or change in regulations.

We need a simple means of structuring proposals for public challenge before authorities’ decisions are taken. But it must be rigorous enough to tell the public what the proponents intend, for whom, and their reasoning. The proposal statement should the answer to the question of who would benefit from what an authority intends, and who would bear the costs and risks, and why. As well as political fairness issues, this includes safety and environmental protection. For example, what is often the case in "development" projects is that those who get the benefits don’t live where the impact occurs, and those who live there are the ones who pay.

We can call such an explanation statement an equity statement (EqS). The fairness issue of who would get what benefits and who would pay must be brought out and debated, not confined to back rooms of politicians, bureaucrats and corporate executives. The main purpose of the equity statement is to make visible, for public inspection, the fairness trade-offs implicit in any major proposal. Answering the "who" question helps us tell whether the only needs intended to be honoured are those of the proponents.

The purpose of the equity statement. For each significant proposal, for legislators' and public scrutiny, the proponents can reasonably be asked to draw up a statement that meets the answering standards proposed earlier, that is, to specifically state, in their view:

  • who would benefit, and why
  • how they would benefit, immediately and in the future
  • who would bear the costs and risks, and why
  • what the costs and risks would be, immediately and in the future
  • who would answer publicly, for what, and when, if the proposal succeeds

In city council development application approvals, for example, councillors can make it a rule not to decide contentious property development applications without a publicly-challenged equity statement. The statement would be audited and signed off by city staff for its fairness and completeness in setting out the proposal’s affect on the community and the environment. A summary equity statement would be backed up by information accessible by those wanting to examine the proponents’ reasoning in greater detail.

A corporate board can require the same. For example, a CEO may recommend that the corporation acquire another company. An equity statement for the proposal, rigorously examined by the board, should help bring out CEO ego-based motivation if that is a main element.

At the provincial, state or national level, making publicly visible the underlying policy intentions and reasoning is vital to citizen understanding. For example, focusing on the quality of the delivery of government services doesn’t address fairness policy -- the decision of whose needs the policy would honour and whose it would not. Confining the public’s attention to aspects of the delivery of the service diverts attention from the underlying issue of the fairness trade-offs intended. The equity statement goes to the bone on fairness policy by making visible who gains and who loses, and the reasoning for it.

To legislators having information overload, and therefore too little time to think, accurate statements of executive government’s intentions are more important than descriptions of past activity, or financial statements after the fact.

In regular decision-making in approving programs and resolving equity issues, governing bodies have a diligence obligation to be reasonably informed on the matters that come before them. They therefore need pertinent information in a succinct, useful form for the issue, whether it’s for a proposal to launch or stop a program or project, or make a major change where safety, fairness, community values or the environment are involved. The equity statement structures this information.

For elected representatives, the equity statement makes a succinct briefing document. It doesn’t replace existing means that politicians use to assess issues; it augments them. Using the statement meets an informing standard that citizens can reasonably expect to see met by governing bodies. Politicians can ask their civil servants to develop equity statements for important proposals identified through public consultation. And if an important proposal is already on the table, the proponents' equity statement for it can be set out for public consultation and reaction.

This isn’t a complicated idea. Bare-bones equity statements can be drafted on the back of an envelope. On big issues, citizens are entitled to reasonably complete equity statements that can be presented in half a page in a newspaper. Once elected representatives are satisfied that the equity statement has been challenged, and identifies the trade-offs fairly, and that no major effects are missing, it can be used for making decisions.

The scope of an equity statement can easily be extended to become an ongoing "one-stop" reporting document that includes reporting on all the answering standards introduced earlier. An expanded equity statement can make visible not only authorities’ outcome intentions and reasoning, but also their specific achievement objectives, their key performance standards, their actual performance results and their learning gained and applied. It can also be continued over a project or program life cycle, giving governing bodies and stakeholders the complete story for their control.

As the basis for legislators' scrutiny of programs of government departments, the statement can be broadened still further, to show for each program or project the authorities’ intended performance standards for each of fairness, efficiency and compliance with the law, and to report whether the standards have been met.

Applied to government programs and policies, equity statements combined across departments would clarify for parliamentarians the fairness issues and show serious policy gaps or overlaps. They would show whether policies that should be coherent are in fact coherent, show whether policies are at cross-purposes, and whether some people seem to gain consistently while others lose. In each case where joint government action is intended, the responsible or lead government (for example the federal government in health) would draft the equity statement for challenge by other government jurisdictions and by citizens’ groups.

If government ministers and civil servants say they are already producing what equity statements would show, they can produce the information that they claim is equivalent, and say why it is as useful as the information structured through equity statements.

Publicly-challenged equity statements could focus issues sensibly and help to structure public debate. Example issues are a governments’ intentions with respect to medicare, key provisions of intended international trade agreements, the existence of tobacco companies, or media corporations’ continued violence on TV.

In each case, successive rounds of public challenge increase the accuracy of the equity statement in setting out the fairness trade-offs in what is intended, and their relative weighting. Stakeholders can then decide for themselves whether what an authority intends is fair and in the public interest. The requirement to disclose longer-run benefits and costs and whose they are could help prevent short term or expediency-based decision-making.

Equity statements serve as a basis for holding both proponents and elected representatives fairly to account for what is ultimately decided. If a publicly-challenged equity statement points clearly to a certain course of action but the elected representatives decide something else, their constituents can ask them why they decided as they did. Requiring equity statements to be produced for public issues and to be accessible through the Internet would allow us to be better informed about trade-offs before making our views known to our elected representatives.

Most important, if the decision-making authorities won’t produce equity statements for public challenge, citizens’ groups and public interest organizations can produce their own and publicly ask the authorities to state publicly what they think is wrong with them.

The rule is that whoever proposes an action affecting the public in important ways attaches an equity statement to their proposal. This provides the basis for checking out the proposal with the public. If the issue is very important, challenge can include independent professional audit of the assertions and estimates in the equity statement. The statement can be divided into elements that are the responsibility of elected representatives (the fairness issues) and those that are the responsibility of management (efficiency and most compliance issues).

The equity statement isn’t rigid. As times change, the definitions of "fair," "benefit," "cost," and "risk" change, as do the stakeholders involved. But without such a statement and its validation, stakeholders can only guess whose needs are intended to be honoured and whose are not, and what the proponents and decision-makers in authority mean by key terms that they use. Moreover, having to present an equity statement to the public forces proponents to be up to date on the thinking and research that underpins or refutes their reasoning. Public interest organizations challenging the statements will be.

The main components of successful decisions are quality and acceptance. A good decision not accepted by stakeholders may have no effect, and an accepted decision could be wrong and harmful. The key to public acceptance of proposals is good understanding of the reasons for them. Unexplained reasons lead to suspicion of motives. Equity statements, validated through public challenge, can help produce better decision quality and acceptance.

Using the equity statement. An everyday decision about the use of land in a municipality can illustrate the use of equity statements.

It is reasonable to expect a property developer, filing a development application that will significantly affect a community, to demonstrate that the proposal is compatible with the intent of the official plan for the area; to state who would benefit and how; and to state who would bear what types of costs or risks from the development and why what is proposed is reasonable.

If the city is reluctant to ask the developer to state publicly what he or she wishes to bring about -- that is, to account to the community -- members of the community can take the initiative and draft the equity statement. But they need to draft it with as much fairness as they would demand from the developer. Then, the community representatives, councillor for the area and developer sit down to discuss the main elements of the statement and the weightings, and challenge it for benefits and costs left out.

The developer has the obligation to make clear in the equity statement what the property use is to achieve, and all parties involved assess the impacts on the community -- including how a good development idea can be improved upon through ideas volunteered by stakeholders.

City staff and the area councillor satisfy themselves on the fairness and completeness of the statement as a basis for the planning department's recommendation to council and for the councillors' vote on the application. If the application is important enough to call a public meeting, the equity statement serves as a basis for the community’s discussion.

The area councillor states his or her own position to the community, with the reasons. If, for example, the application is contrary to official plan intent, city staff and the councillor would advise the developer that an official plan amendment application is needed, not just a by-law amendment, let alone a minor variance application.

Based on benefits and costs that were subject to public challenge through the equity statement, residents and developer alike can judge the fairness of the staff recommendation and the ultimate voting by council members.

Another example is a provincial government ordering that a city close a number of schools for cost-saving purposes. This gets parents up in arms and pits them against each other as the local argument centers on which schools will close. But did any group representing parents and present and future school children publicly say to the executive government -- and to the city school board if it was apparently willing to carry out the government’s intention -- "You will close no schools until you give us validated evidence, in a usefully structured statement backed by reliable demographics, why your intention is in the public interest, and we have had a chance to challenge your statement and lay our assessment of it before the public." The group can then attach its own equity statement for the proposed closings and ask the government to state its view of the fairness and completeness of the group’s statement.

Equity statements are equally applicable to intentions to close hospitals or lay off employees.

At any level of government, when the executive is involved in the decision about a program or project, civil servants review the draft equity statement, make it as valid as they can, and sign off on the statement for fairness and completeness of the trade-offs involved -- to the extent they know them -- before the elected representatives deal with it.

The public control rule is simple: no publicly-challenged equity statement, no decision taken by the responsible governing body on the intended action.

Whether the proposal for a major change comes from government or the private sector, journalists can help by asking authorities for bare-bones equity statements and by asking those in authority -- city councillors, corporate boards or government ministers -- whether they think their equity statements are fair and complete as a basis for taking decisions. Journalists can identify the most important types of information that should be in the statements, seek to extract the missing information from he proponents and distill it to workable length for their readers. In cases of suspected patronage or conflicts of interest, reporters can have a field day with the "Who benefits?" questions.

Appendix 1 of the Citizen’s Guide is an example of how the equity statement can be used to show who would benefit and who would bear what costs and risks, both in the short and longer term, in a proposed international agreement -- in this case the mid-1990s Multilateral Agreement on Investment proposed by the OECD.