Ottawa bears brunt of cuts
Department spending slashed; History centre chopped; Court, Hill building on hold
Kathryn May
The Ottawa Citizen
March 24, 2004
Members of the Liberal caucus sound the customary applause after Finance Minister Ralph Goodale, centre, delivered his budget yesterday. The budget contained a relatively modest $2.2 billion in new spending and tax relief and a vow of stricter controls over expenditures.
CREDIT: Tom Hanson, The Canadian Press
The nation's capital was hit hard by yesterday's federal budget, which called for a sweeping spending review to save $3 billion, scrap the history museum, defer the building of a new federal court and cut departmental spending on travel and consulting contracts.
The expenditure review is a key piece of the Liberals' plan to overhaul the way government is managed to improve accountability, openness and ethical conduct of bureaucrats and politicians alike.
It also takes direct aim at the national capital region, always popular in the rest of the country on the eve of an election. The capital is where departments are headquartered and have grown dramatically since the downsizing of the mid-1990s.
Finance Minister Ralph Goodale said the budget will strengthen financial management, critical to restoring Canadians' confidence in government and prevent "the kind of abuses that have so understandably angered Canadians.
"As a government, we not only accept our responsibility for what went wrong, but we also accept our responsibility to get it right," Mr. Goodale said.
"Quite apart from integrity and ethics, the government needs the courage and foresight to renovate and reshape its current spending patterns to better achieve both immediate and future priorities."
The Martin government is facing unprecedented pressure to clean up the spending mismanagement that has left it lurching from scandal to scandal.
Treasury Board President Reg Alcock said last night that new management reforms will clean up practices and reduce the risks of fiascos like the sponsorship scandal, but we "will never get a zero-error world."
Mr. Alcock leads the cabinet committee on expenditure review, which will examine every program and service in government in an effort to save at least $3 billion within four years.
This cash will be shifted to higher priority issues such as health care, learning, innovation and cities.
On top of that, the government is already saving $1 billion this year by cancelling the $90-million Canadian History Centre, foregoing VIA Rail's $700-million capital expansion, scrapping the $40 million-a-year sponsorship program and federal advertising, and killing the little-known National Unity Reserve, which will save more than $100 million over three years.
The big savings in yesterday's budget will come from the 10-per-cent cut to departmental spending on travel and professional services contracts.
The government spends nearly $7 billion a year on professional services, the army of for-hire consultants dubbed the "shadow public service." Many of these people live in the national capital region.
The departments have already lost the money, but Treasury Board is willing to consider other cuts if departments can make the case why they can't cut professional services and travel budgets.
An existing cap on the size of the public service, which is aimed at freezing the growth of the $25-billion wage bill, will continue.
At the same time, the government has deferred 10 Crown projects across the country, worth about $1.5 billion, that were approved by the Chretien government. They include several high-profile Ottawa projects, such as the $151-million federal court building, a $275-million parliamentary building at Bank and Wellington Streets and the purchase of a complex of buildings owned by JDS Uniphase as a would-be new headquarters for National Defence.
It is unknown how long these projects could be delayed. They will likely still go ahead, but they could face changes in scope or scale.
The spending review will virtually put everything bureaucrats do and how they do it under the microscope. All programs must meet seven tests from affordability to public interest.
Mr. Alcock will release details today about the spending review and his management overhaul. For the public service unions, the expenditure review is reminiscent of the massive program review of the 1990s, which led to 50,000 job cuts.
"The public service is always a handy target when heading into an election and it looks like it could be used as a political football," said Steve Hindle, president of the Professional Institute of the Public Service of Canada.
"It shows a lack of understanding of the role of the public service which is to ensure Canadians get the services and infrastructure they need for the private sector to generate wealth. Deteriorating public services hurts public good and private enterprise."
The cabinet committee leading the spending review is looking at all operations across government -- procurement, asset management corporate services, human resource systems, pay and benefits, legal services, grants and contributions and executives' compensation.
This "horizontal" review offers the biggest potential for savings, some of which could be put back into the public service to improve management.
But Mr. Goodale said yesterday the spending review is not about cutting like during the downsizing in the 1990s, but rather is aimed at modernizing the management of government.
"It is not about cutting. It is all about finding the money to do something new -- to implement our multi-year agenda for a new decade of achievement."
The cabinet committee is taking aim at $133 billion in total program spending, but expects to make its biggest savings among the $63 million spent on operations, capital spending, grants and contributions and other payments to departments and agencies.
The government is resurrecting an independent Office of the Comptroller General to bring more rigor and oversight to spending. The new comptroller general will be a deputy minister who reports to Treasury Board. The comptroller-general will oversee professionally accredited financial officers in departments who have the authority to sign off on all new spending initiatives before they go for cabinet approval.
They will report to the deputy ministers in each department.
The comptroller general was independent until the late 1980s when it was rolled into Treasury Board. Since then, the office has shrunk considerably, lost status and expertise.
The government is also expanding internal audit across government to ensure "sound risk analysis" is done on all departmental activities with the mandate to "delve into every corner of every portfolio, no matter how small or seemingly special," said Mr. Goodale.
The government also has high hopes to improve management by introducing "modern and real-time" information systems to track all spending across government.
The first step is to put all contracts worth more than $10,000 online -- except those dealing with sensitive security issues.
Mr. Alcock has long insisted technology is a key tool in revamping management practices. He argues the bureaucracy has to develop "faster response times" in updating and changing its programs. Reforms in the way it uses information and technology will also generate big savings, he said.
For the first time, Crown corporations will be required to publicly post all special five-year audits conducted by the auditor general. These new disclosure rules are among the changes expected from a major review of Crown corporations that Mr. Alcock announced immediately after Auditor General Sheila Fraser's scathing report into the sponsorship scandal.
