A recipe for fiscal trust: part I
The Trust Continuum
A fool and his money may be easily parted; residents and their tax dollars are notably not. Yet governments need to pay for their work. One of the key challenges faced by modern governments is how to build the trust necessary to allow them to raise taxes for necessary investments.
In a recent paper for the Institute on Municipal Finance & Governance at the Munk School of Global Affairs, University of Toronto, A Recipe for Fiscal Trust, we looked at this issue in the context of the infrastructure deficit faced by cities across Canada. Even with support from provincial and federal governments, municipalities are facing hundreds of billions of dollars to renew and replace their infrastructure. There’s no getting around it: cities will need to raise revenues through taxes, user fees, and possibly new revenue tools.
The prevailing narrative is that taxes are already too high; cost overruns and delays are the norm rather than the exception for large infrastructure projects; and the public is cynical about governments’ propensity to hide, rather than share, information about how decisions are made. So how can local governments build the level of trust necessary to pay for long-term infrastructure needs using new taxes, fees, or other revenue tools? In short, how can they build “fiscal trust”?
Part one of our article investigates the notion of trust. It disentangles conflicting definitions, and sets out a new “continuum of trust” to frame engagement efforts. In the second part of our paper, we will show that five ingredients are needed for building public trust in general and fiscal trust in particular: information; communications; engagement; credibility; and earmarking of funds. The main finding of our work is that no one of these works on its own: all of them need to become part of the culture of government.
Trust, or the lack of it, is a fundamental issue in the relationship between citizens and their governments. While many surveys note that trust in government has declined around the world, research on Canada in particular indicates that trust in the federal government has stayed reasonably stable over the past decade, with most recent surveys putting it at about 50 percent. Local governments fare better than their provincial or federal counterparts.
But just what are we talking about when we talk about trust? There is no consistent definition of trust, either in the academic literature or in public opinion polls. Polling questions span a number of different concepts, for example:
- confidence by people in the government – both politicians and public officials – to “do the right thing,” which implicitly includes spending money properly, rather than misappropriating or wasting it.
- citizen satisfaction with how things are run, that is, the effectiveness of government service delivery
- whether respondents felt they were getting what they identified as good value for their tax money
- whether government is operating “in the best interests of our society.”
- how well governments deliver specific tasks (such as garbage collection).
Trust, as it turns out, can mean many different things. Accordingly, any study of trust in government must start by disentangling these definitions and determining which of them, if any, apply here.
What is trust?
We distilled the literature into five kinds of trust:
- Trust between people, or interpersonal trust: the willingness of one party to be vulnerable to another in the expectation that the other party feels and will act the same way, outlined by Shoormen et al and later by Belanche Grancia et al.
- Process-based trust, rooted in repeated interactions and perceptions that government is fair, open, and responsive as defined by Caroline Tolbert and Karen Mossberger. Practically applied, process-based trust emerges when a convenor or host ensures a process in which the ground rules of an engagement process are clear, information is shared openly, and diverse perspectives are respected.
- Institutional trust, an expectation that institutions will act in the public’s best interest, which is examined by Bannister and Connolly. That is, performing in accordance with general expectations or acting appropriately and honestly on behalf of the public. This approach is strongly connected to fiduciary trust, which is built on an established professional, moral, and/or civic relationship as illustrated by Franks and Weck.
- Finally, mutual or outcomes-based trust arises when citizens trust government because they believe its policies and outcomes reflect their own preferences, or when decision-making matches their individual or social beliefs (assessed by Gershtenson and Plane and also by Franks and Weck). Outcomes-based trust will also result when a government demonstrates that it has fully considered the results of an authentic and credible process, and can explain its decisions in a transparent and defensible fashion.
The Trust Continuum
We propose that a good engagement process can be mapped onto the dimensions of trust identified above to build trust as a continuum, or by a set of mutually reinforcing steps. Trust built at one level sets the stage for the next, and if the chain is not broken, then repetition of this virtual cycle breeds greater trust in government overall, setting the stage for government action. Any break in the trust chain has repercussions in both directions. If a citizen trusts a public servant based on previous interactions, she may enter optimistically into a public process. But, if that process is flawed (if the rules are not clear, information is not shared, or the institutional participants are not transparent), trust in the person with whom the initial relationship was created will be damaged, as well as in the institution on behalf of which the process was held.
Thus, for example, if a process is well-run and transparent, this strengthens both trust in the people running the process and residents become more willing to trust the institution (while the institution becomes more willing to trust residents). However, if the institution does not clearly engage with what has been learned through the process, the result will be cynicism about the process (was it all for show?) and about the institution as well.
None of these steps, in isolation, will be a surprise to practitioners of public engagement. But the key, in our view, is positioning these steps as a continuum that must be incorporated by government as a consistent part of its practice. Moreover, observing these steps in one context – a planning process, for example – will not necessarily build trust in government in another context, say when it comes to a decision that needs to be made about policing or budgets.
In the second part, we therefore investigate the notion of why citizens trust their governments to do some things more than others, and focus on how the trust continuum works in combination with other factors to build fiscal trust in particular.