The latest uproar was triggered when the Parliamentary Budget Office released a report last month which concluded that spending cuts are hitting front line services for Canadians while overhead — or the “internal services” costs of the bureaucracy — rose over the past three years.
Page’s findings are the opposite of what Finance minister Jim Flaherty said in the 2012 budget when he promised that 70 per cent of the spending cuts would be from operations, particularly the “back office,” and programs to Canadians would remain largely untouched.
The PBO report seems to have hit a nerve. Treasury Board President Tony Clement rejected the PBO’s findings and his top bureaucrat, Treasury Board Secretary Yaprak Baltacioglu, fired off a letter to Page dismissing his calculation that internal services costs grew eight per cent over the first half this fiscal year. Instead, Baltacioglu said the department calculates internal services costs dropped six per cent in that period. She didn’t dispute, however, the three-year increase.
So there’s the standoff. PBO and Treasury Board claim they used identical data — from Public Accounts and the Central Financial Management System — but they don’t know how each other ended up with such different numbers and conclusions. Both claim they want to sit down and discuss methodology but a meeting has yet to happen.
Baltacioglu suggested the PBO collaborate more with Treasury Board on its numbers and proposed that Page should vet his reports with the department before releasing them, as do all other agencies that table reports with Parliament.
“I believe sharing draft reports and methodology used by the PBO could lead to better products for both Parliamentarians and the public,” she wrote.
But the PBO maintains it has been collaborating with Treasury Board officials for two years now and has had at least 20 meetings with department executives to go over its numbers, calculations and methodology. So far, all sides have agreed on the numbers, although they may not see eye-to-eye on how those numbers are interpreted.
The PBO says it reviewed all its reports that use the Estimates with Treasury Board for feedback before releasing them. Treasury Board says it needs more time to review the reports and understand the methodology.
Page replied in a letter that the PBO’s definition of “internal services” came from the Financial Administration Act and his office went over the methodology with Treasury Board staff, who suggested changes that PBO incorporated. By that definition, overhead or ‘internal services’ include communications, human resources, information technology, real property and financial management.
“We are uncertain how Treasury Board officials are able to calculate a year over year decrease which in itself differs from figures previously shared with my staff,” wrote Page.
Baltacioglu’s letter came in response to the PBO’s Jan 24 report on the spending trends of the first half of the current fiscal year, which found overall spending declined $800 million, or about 0.6 per cent. Direct program spending fell four per cent, largely because of the elimination of 11,000 public service jobs.
That same report, however, found overhead or internal services spending have climbed since 2010, suggesting “the focus of restraint exercises has instead been on reduced spending to front line services.”
An increase in overhead costs is a worrisome trend because the government promised efficiency savings by modernizing internal services, which could then be directed to front-line services and programs for Canadians. The creation of Shared Services Canada is supposed to generate big savings on internal technology costs, as are two new projects to modernize the systems for public servants’ pay and pensions.
The exchange between Page and Baltacioglu over numbers and methodology is spilling into the political arena, with MPs questioning the discrepancies which are based on the same data Parliament relies on. It also raises questions about the reliability of the numbers churned out by the government’s financial systems and whether the operational reductions promised in the budgets are targets rather than firm plans.
“It’s ridiculous disputing numbers like this... and is a sad testimony to where we are,” said Liberal MP John McCallum. “It really puts Parliament in the soup when the government and PBO can’t agree on basic numbers for a commonly defined category.”
“And I hate to say who I believe. I think both Page and the Treasury Board secretary are honest, so how can two honest people have such staggering discrepancies on numbers for common issue? It puts into question the whole data base and set of numbers Parliament depends on.”
The government has never been forthcoming about the nature and details of the budget cuts so it’s unclear whether the 70 per cent cut in operations came from public servants, based on their departmental reviews, or was a target set by the government.
PBO argues many of these questions could be resolved if the government weren’t so secretive and just turned over departments’ reduction plans so parliamentarians could see how the efficiency savings will be achieved by 2015-16.
It wouldn’t be the first time the public service has promised big savings that never materialized. The Liberals booked $2.5 billion in efficiency savings from procurement reforms in 2005 that were largely written off and other projects such as Government of Canada Marketplace that were supposed to transform operations flopped.
Departments were encouraged to find their savings in operations and Treasury Board officials say departments will reach their targets because the money is being taken out of their budgets off the top.
Treasury Board also maintains the PBO underestimates operational efficiencies, which include more than internal services. The $10 billion spent on internal services support public servants doing their jobs, such as running the phones and computers on their desks, while “back office” operations also include the systems that support, manage or process the programs delivered to Canadians.
Treasury Board said departments are saving money by streamlining and re-engineering systems to deliver programs and services to Canadians more cheaply. It pointed to the streamlined programs like the Veterans Independence Program which will now start sending veterans upfront payments to pay for services such as housekeeping to cut paperwork and the transaction costs of sending in receipts and sending payments
Original Article
Source: canada.com
Author: KATHRYN MAY
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