WESTON: Budget balance hard to find
While Finance Minister Jim Flaherty doesn’t appear to have a clue how his government will cut $4 billion and thousands of jobs from federal programs, he is certain the goal is "absolutely doable" and "we absolutely will do it" in the next four years.
Or maybe not.
Flaherty’s promise to lower the axe on federal program spending and the public service payroll is a cornerstone of his latest budget, freshly recycled from the March version and tabled Monday in Parliament.
The finance minister claims that achieving his expenditure reduction target will actually allow the government to eliminate the federal deficit by 2014-15, a year earlier than what he was predicting just a few months ago.
At a press conference Monday, Flaherty all but shrugged off the task.
'Not very ambitious'
It shouldn’t be difficult, he said, to lop $4 billion off an overall federal budget approaching $250 billion, about $80 billion of which will be run through a cabinet star chamber with a mandate to cut programs or even kill them entirely.
"In the private sector, this would be viewed as not very ambitious," Flaherty said.
Well, good luck with all that.
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As fiscally modest as the plan may seem, the history of axe-wielding Canadian governments in general — and Stephen Harper’s successive administrations in particular — suggests Flaherty’s latest pledge to rid the nation of bureaucratic waste is a lot easier said than done.
Truth is, far from the Conservative government’s ushering in an era of austerity over the past five years, federal spending and the bureaucracy have both grown at rates unmatched since the early Trudeau era almost 40 years ago.
Figures provided by the Finance Department show the Conservatives have increased spending on operations by a whopping 45 per cent since they took over control of the public purse from the Liberals in 2006.
In the same period, the wages of the average Canadian taxpayer footing all those soaring government costs have grown by only a fraction of that amount.
True, the Conservatives were confronted with a historic economic crash, and the resulting abnormal need for economic stimulus.
But even before the fiscal crisis in late 2008, the Conservatives ran amok with the public chequebook, driving up the cost of basic government programs and services by 22 per cent in three years.
It’s the same story with the bureaucracy.
Finance Department figures show the Conservative government now promising to shrink the public payroll has actually allowed the bureaucracy to balloon by almost 40,000 employees, an increase of 16 per cent in the past five years.
The average Canadian business should be so lucky.
Considering the Conservatives’ overall record, it should surprise no one that the Harper government’s annual fat-trimming efforts to date have had spectacularly unspectacular results.
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All of which helps to explain why Flaherty and his officials have been secretly studying the Liberals’ cost-cutting experiences in the mid-1990s, an exercise similarly aimed at balancing the country’s books after more than two decades of red ink.
Turns out that when then finance minister Paul Martin successfully put the country back in the black, it wasn’t just from cutting program spending and putting the boots to the bureaucracy.
On the contrary, much of the simple in-house government belt-tightening was a disaster.
At the Department of National Defence, for instance, so many key personnel snapped up buy-out packages that the military subsequently had to offer equally generous incentives for a lot of personnel to rejoin the forces.
Elsewhere in the bureaucracy, thousands of public servants pocketed fat severance packages to leave their jobs, only to walk out of one government department and straight into another.
By the time it was all over, taxpayers had shelled out an estimated $2 billion in golden handshakes that did nothing but enrich a lot of lucky public servants.
The reality of Martin’s budget balancing in the 1990s is that much of the major savings came from falling interest rates on the national debt, and cuts in transfers to the provinces for such things as education and health care.
No transfer cuts
By comparison, the current government has said it will not cut transfers to the provinces, and interest rates on the mounting national debt can only go up.
Despite the current finance minister’s public confidence the government will find $4 billion in cuts, Flaherty’s latest budget projections reflect a more cautious optimism.
Those figures show program cuts yielding only $1 billion in savings in 2012, $2 billion the year after that, and $4 billion annually thereafter.
The total savings expected this year: zero
In his budget speech Monday, Flaherty told the Commons: "This is a responsible, credible approach, one that is consistent with the careful fiscal management that has been the hallmark of this government’s approach to public finances."
He did not appear to blush.