On October 3 all federal government departments and agencies were scheduled to submit a Deficit Reduction Action Plan (DRAP) to the Treasury Board Sub Committee on Strategic and Operational Reviews, including proposals for five and 10 percent budget cuts. This extensive government wide exercise is the first of its kind at the federal level since the mid 1990s when government spending at both the provincial and federal level was outstripping the economy’s ability to generate sufficient tax revenues to finance the generous entitlement programs of that era.
With an annual deficit of $36.2 billion, the federal government is looking once again to emulate earlier efforts to curb expenditures, although the context for the current exercise is very different than the one of almost 20 years ago. Last time there was a compelling narrative that the federal government had to cut its deficit to avoid third world status. Today, the environment for expenditure reduction is much different. First, while Canadians were keenly aware of the precarious nature of their public finances in the early 1990s, today they have little appreciation of the state of our public finances. The continuous news of the faltering U.S. economy and the relative job strength in the Canadian labour force, especially in comparison with the U.S., has persuaded Canadians that our current fiscal situation is not a matter of great concern at this time.
Second, the NDP is the official opposition in Parliament (and not the Reform party) and they will likely oppose all efforts to cut government spending and reduce the size of the federal workforce. In fact, most observers expect the NDP to vigorously attack the government’s overall approach to cost saving and to use tactics to force the government to debate its expenditure cutbacks before the tabling of the federal budget. Finally, over the first five years of the Harper government, the size of the federal public service has grown by 20 percent. One of the results of an aging workforce has been the rapid rise of relatively inexperienced managers into key executive positions. With more than 140,000 new employees in the system since 2001, the DRAP will find it difficult to find knowledgeable people who can identify with confidence the inefficiencies and other cost savings in the current expenditure envelope.
The current DRAP process is unleashing a cost-cutting exercise that is designed to eliminate the federal deficit by 2014. To achieve this ambitious goal that process will dominate the government’s agenda from October until February when it tables its annual budget. While it is unlikely that the public will be able to observe the high degree of drama and competition among ministers surrounding this exercise, it is certain that the provinces will be very cognizant of the deliberations since they will have painful memories of Program Review in 1995 when the federal government downloaded many responsibilities to the provinces as part of its cost cutting decisions.
Last month’s column looked at the work of the Parliamentary Budget Office and the useful tool that it has developed for analyzing government and individual departmental spending. The current DRAP will make it even more crucial for the opposition parties to be prepared to look at the $80 billion of annual federal discretionary spending that will be the primary target of the process.
Aside from raising taxes, the only way to balance the budget is to eliminate programs, cut the size of the workforce and find ways to maintain current service levels and efficiencies. Given the pending retirements of so many senior public servants, this is a good time for Parliament to initiate a conversation about the appropriate size of government in Canada given our long-term policy challenges, our imminent demographic changes due to our aging population and the powerful potential impact of technology in the delivery of government services.
The Prime Minister has promised that there will be a more civil tone in the House of Commons as the parties debate the nation’s business. While a majority government allows the government to implement its agenda, the many new members of Parliament need an issue that can demonstrate that Parliament can work as a forum for discussion and accountability. Why not start with a conversation about the appropriate size and role of the federal government as part of the DRAP exercise?
David Zussman holds the Jarislowsky Chair in Public Sector Management in the Graduate School of Public and International at the University of Ottawa (firstname.lastname@example.org).