“This is a jobs and growth budget,” Mr. Flaherty told reporters last week, noting that it now runs more than $256-billion a year. “We’re talking about relatively small spending reductions, certainly nothing more than moderate spending reductions in a budget of that size.”
Mr. Flaherty told reporters that there won’t be “intimate” details about the expected cuts to the federal public service. “We never have all the intricacies in the budget. The budget would have to be a 1,000 pages if we did that. There will be enough information that it will be comprehensible,” Mr. Flaherty told reporters last week.
“We’re seeing all of these very secretive attempts to get around what should be transparent and normal allocations of where the expenditures are taking place,” said NDP MP Peter Julian (Burnaby-New Westminster, B.C.), his party’s finance critic. “We’re teetering on what is a profound economic malaise, and if the government moves to implement significant cuts, that will I think put us over the brink.”
Former assistant deputy minister, and professor of public administration at University of Victoria David Good said the context this budget is being delivered in makes it a “really significant” one. Its backdrop is the stimulus fund, the financial troubles in the U.S. and Europe, and a one per cent contraction in Canadian growth, from three to two per cent, he noted.
Prof. Good said that with so few details in the budget, the government’s challenge will be to prove the cuts are real and sustainable, and not just “two-year wonders.”
Prof. Good also said that the public service and the government will need some flexibility in the coming months and years to determine exactly how the cuts will affect departments and programs. This precludes putting many details in the budget.
“The senior bureaucrats will need a general mandate to pursue over the next five years,” he said.
University of Ottawa public management professor Gilles Paquet said this is normal.
“To ask the budget to be extraordinarily precise to the sub-department level, I think is simply unreasonable,” he said.
Prof. Paquet said that the budget would likely contain the timing of cutting initiatives and broadly which departments or sectors would be affected, but more than this would be ‘madness.’
“The government cannot operate in Macy’s windows,” he said.
Prof. Good agreed, saying that in the preparation of the budget, many financial details don’t get passed up the chain of command from line departments to Finance.
Through the strategic and operating review announced in last year’s budget, the government has been looking for $4-billion to $8-billion in cuts to the public service’s $80-billion operating budget over the next four years. Sixty-seven departments and agencies were asked to come up with ways to cut five to 10 per cent out of their operating budgets.
With no public information on the cuts, speculation on how deep they will be has yo-yoed in recent weeks, with some pundits suggesting the cuts could be closer to the $8-billion mark, some saying it will exceed that, and others saying the indicators point to just a $5-billion cut.
Mr. Flaherty has said that budget cuts will be more moderate, and that Canada is in a much better financial situation than countries in Europe currently undergoing austerity.
Mr. Julian said that to compare Canada to countries in crisis is extreme.
“They use extreme examples of crises that some European countries are experiencing, and that’s their litmus test; those are draconian and whatever we do is moderate. The real litmus test is does it worsen our economic situation? And does it make it harder for Canadian families to access the services that they need?” he said.
The New Democrats and the Liberals have both said that the secrecy surrounding the budget, and its anticipated lack of details is unusual.
In the House Government Operations Committee last week, Liberal MP John McCallum (Markham-Unionville, Ont.) introduced a motion stating that the committee was “deeply concerned” that the details of the billions in cuts will apparently not be in the annual reports on plans and priorities. The majority Conservatives on the committee defeated the motion.
Mr. McCallum has also regularly pointed out that the Liberals listed details and explanations of cuts during their 2005 expenditure review in an appendix to that year’s budget.
When governments cut, it’s usual that they are less forthcoming about details, said Prof. Good.
“We’ve had a government that has generally been spending a fair amount. When you are spending you are much more open. The stimulus budget was one of the most open budgets of all times,” he said. “This will be the first time we’ve had anything of a contracting nature, and by nature that tends to be less open than others.”
Mr. Julian spoke with Mr. Flaherty in mid-February about the budget and he said it was “frank and cordial.” The NDP discussed a new job growth strategy, improving front line health services, protecting Old Age Security and prioritizing First Nations education.
While “understandably, he wouldn’t be divulging his cards” at the meeting, Mr. Julian said that Mr. Flaherty was particularly receptive to improving First Nations education.
Prime Minister Stephen Harper (Calgary Southwest, Alta.) was in Iqaluit, Nunavut, two weeks ago to announce $27-million for adult education in the north.
Prof. Good also noted that Aboriginal Affairs is a hard department to cut, and was the only department not to get chopped during the Liberals’ 1995 program review.
On the whole, Prof. Good said he expects the cuts to be “fairly significant” to the operations side of government, the “bread and butter” of public service.
In the absence of information on the cuts, the Canadian Association of Professional Employees, a union representing around 14,000 public servants has produced a study indicating that the government cuts could mean the loss of 116,000 private and public sector jobs.
The union study predicts about 55,000 of those jobs would come directly from the public service, and that the cuts will result in a loss of $10-billion in GDP to the Canadian economy.
“Any reduction in government expenditures will necessarily have a negative effect on the economy as a whole. Tens of thousands of Canadians will suddenly lose their jobs, and their spending power will be greatly reduced,” said CAPE president Claude Poirier.
Foreign Affairs Ministers John Baird (Ottawa West-Nepean, Ont.) said last week that the job losses to the public sector will be “like nothing” and that estimates that tens of thousands of public servants will be axed are grossly exaggerated.
Prof. Paquet said that on a macroeconomic level, the cuts shouldn’t be that bad, as even at the $8-billion mark, they would represent a fraction of one per cent of national GDP.
“It is unreasonable to believe that the cuts that they have in mind, even in the worst scenario, would have anything like an impact on generating a recession in Canada. Those who say this are simply insane,” he said.
Prof. Good noted that while the cuts won’t be on the level of the ones in the 1990s, which cut 45,000 public servants and $17-billion in government expenditures, including transfers to provinces and people, these ones are much more focused on one aspect of government—operations.
He also noted that the government has been good at managing the public’s expectations and preparing Canadians for the upcoming cuts.
The results of a Nanos Research poll, released Feb. 28, indicate that 59 per cent of Canadians agree or somewhat agree with the idea of government cuts in the range of $4-billion to $8-billion.
In light of numbers released by TD Economics that the federal deficit is falling faster than expected this year, it is unknown whether this support will hold.
TD reports that in December 2011, three-quarters through the fiscal year, the deficit was $17.7-billion, and is on-track to come in around $26-billion. This is $5-billion less than the government’s most recent deficit prediction.
But Prof. Good said to “be careful” of the numbers, saying that Canada’s lower growth rate will have an effect on the country’s financial health in the long run.
“Things may look a bit better now but there are some pressures in the out years which need to be handled,” he said.
Prof. Paquet said the government needs a financial cushion in case there is a repeat of the 2008 financial crisis in the next few years.
Prof. Paquet added that the government should look at cutting dozens of advisory boards, as was recently done in Quebec, and grants and contributions to outside agencies that aren’t very effective. He also said the time was right to cut back on military spending without too much pain.
Prof. Good said that portfolios such as Environment, Fisheries and Oceans, and cultural institutions are vulnerable.
The CBC is reportedly facing a 10 per cent cut in the next budget.
Also expected in the next budget are details of the Conservatives’ intentions towards Old Age Security, and cuts to MPs’ pensions.
“Getting it right will be important. I suspect there may be some small bonfires across the country,” said Prof. Good. “Whether they ever materialize and turn into flames spreading larger, we’ll have to see.”
Original Article
Source: hill times
Author: Jessica Bruno
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