Services at breaking point, PS says
Programs strained by impact of five years of cuts and operating freezes
Canada’s public service has come through six years of restraint smaller and with fewer benefits, leaving some bureaucrats wondering — on the eve of Tuesday’s federal budget — how much more they can handle before the programs and services they deliver unravel.
Federal departments have been absorbing cuts and operating freezes since 2010. Last year, they faced a $13.9-billion reduction and are swallowing another $500-million cut this year. Over six years, departments have seen $45.8 billion cut from planned spending.
About 26,000 jobs have been cut, and the axe is poised to fall on as many as 8,900 more in the next several years.
Some managers say further operating freezes in Tuesday’s budget would be a significant blow to “program integrity.” That term refers to when operating funds are so squeezed that the ability to deliver programs on time or at the service levels expected is compromised.
They worry the balanced-budget legislation that Finance Minister Joe Oliver proposes could have public servants continually managing operating freezes — which means more job cuts as departments scramble to meet wage increases and inflation from existing budgets.
“The balanced-budget legislation … could well continue a string of budget measures, over the last few years, that puts the onus on the public service to reduce spending through public sector productivity measures,” said former assistant PBO Sahir Khan, now a visiting fellow with the Jean-Luc Pépin Research Chair at the University of Ottawa.
The legislation comes as the Conservatives return to surplus after seven years of deficits that added more than $150 billion to the national debt.
Oliver has explained that the legislation will allow governments to run deficits in cases of “extraordinary” events, such as a recession, war or natural disaster that reduces federal revenues by $3 billion. The finance minister would have to explain to a parliamentary committee how the government would return to balance.
The impact of cumulative steady cuts is already being felt. The Conservatives’ clashes with veterans over closed offices, for example, are a textbook case of public servants no longer having the capacity to provide programs and services at levels the public expects.
Veterans Affairs Minister Erin O’Toole recently announced the department would hire at least 200 employees, half of them case managers to help veterans get the services they need.
The impact of reductions is also surfacing in transportation safety and inspection, Coast Guard stations being closed, lineups at Service Canada offices, and complaints of a shortage of meat inspectors.
Andrew Graham, who teaches public sector financial management at Queen’s University in Kingston, said more across-theboard cuts will “seize up everything” and operating freezes create “the mentality to survive rather than deal with problems.”
He said the Conservatives’ unswerving commitment to balancing the budget is leading to a “scary” deterioration of services, especially critical infrastructure. The government is either “getting bad advice or getting good advice and ignoring what impact it could have,” he said.
The Conservatives promised in the 2012 restraint budget that the cuts would be “back office” and have no impact on front-line programs and services. But former parliamentary budget officer Kevin Page was stymied in his efforts to get information from departments on the nature of the cuts and impact on service, and his successor hasn’t had any more success.
Khan said cutting programs that aren’t working — along with the people and overhead that go with them — is a more effective way to reduce spending over the long term, but comes with political risks. As a result, governments around the world are resorting to measures like freezing operating budgets and reducing internal services.
But Khan said the plans and results of such measures are often hidden from Parliament and taxpayers. Efficiency savings can be hard to find and sustain, he said.
“If the savings are not realized due to poor planning or lack of experience, or both, it could lead to program integrity pressures that show up for citizens and businesses as service-level impacts,” said Khan. “Basically, you can impact a program without a direct cut by leaving a department without adequate operating funds to deliver it.”
Ian Lee, a business professor at Carleton University’s Sprott School of Business, said the government can’t keep relying on prolonged cuts, which suggests it may be getting ready for a “root and branch review” of which programs and services to keep and which could be outsourced. The services provided by Shared Services Canada, the government’s IT arm, could be prime targets for outsourcing.
The big question is whether the budget will take another run at public service pay and benefits.
The $44-billion annual wage bill is the single largest operating cost and has been a key piece of the Conservatives’ restraint strategy. The government overhauled the rules for collective bargaining, has whacked severance pay, health benefits and pensions, and is now targeting sick leave.
Lee says reforming sick-leave benefits has become such a central issue for Treasury Board President Tony Clement that it has to be highlighted in the budget.
“I am convinced this budget is unlike any other budget,” said Lee. “It will be the Conservative party’s equivalent of the Liberals Red Book, their campaign platform for the next four years for the economy and the reform of the public service.”