Canada generally stacks up well compared to other countries in quality of life, incomes and happiness.

But when it comes to good government, Canada is just average, and slipping, according to a new report.

Among the key reasons: the Senate expenses scandal, weakened environmental laws, and a lack of commitment to "evidence-based decision-making," says a global ranking of sustainable governance released on Thursday by Germany's Bertelsmann Foundation.

Story continues below advertisement

"The word I use is 'middling,'" remarked Andrew Sharpe, executive director of the Ottawa-based Centre for the Study of Living Standards, which compiled the Canadian scores and analyzed the country's policies.

Canada placed 20th out of 41 developed countries in overall policy performance, 17th in the quality of its democracy and 10th in governance.

The worst score was on environmental policies, where Canada ranked 38th out of 41 countries, including ones as diverse as Croatia and the United States.

"Environmental policy is the area that has most tarnished the government's reputation for sustainable governance, both domestically and internationally," according to a 43-page report that accompanies the ranking. It cited the streamlining of energy projects, weakened environmental assessments and diluted species and habitat protection.

The country also scored in 26th in access to information, where the report found a "reluctance on the part of political and bureaucratic officials to release information that puts the government in a bad light."

Canada fell further behind in all three categories – policy, democracy and governance – compared to Bertelsmann's previous report in 2011. Canada ranks much higher in its economic (7th), and social policies (7th).

The report traces Canada's slide in the overall rankings directly to the Conservative government's majority election win in May, 2011.

Story continues below advertisement

"A strong case can be made that the quality of governance provided by the government of Canada deteriorated somewhat from May 2011 to May 2013," the report said. "While the government has constructed high quality governance structures and implemented effective polices in many areas over many decades, the actions of the Conservative government since winning a majority … have jeopardized this situation."

The report highlighted several developments that have damaged Canada's record, including the $90,000 payment by Nigel Wright, the Prime Minister's former chief of staff, to now-suspended Senator Mike Duffy. The report said the scandal "had a significant negative impact on the government's record for probity."

It also took the government to task for "open hostility" to now-departed Parliamentary Budget Officer Kevin Page as well as the 2011 replacement of the mandatory long-form census with a less reliable voluntary survey that provoked the resignation of Canada's top statistician.

"Good governance requires evidence-based decision-making and [that] requires high quality data," the report pointed out.

Even though the crime rate has been declining in Canada for several years, the government continues to push a "tough-on-crime agenda," the report added.

On economic policy, Canada generally ranks high. But the report said weak labour productivity, particularly compared to the United States, and rising inequality are key challenges.