Parliament Hill, with its iconic Peace Tower, is the picture-postcard embodiment of Canadian government. But to see where the country is actually run, you must venture to places much less majestic, such as Place du Portage, a hulking grey mass just across the Ottawa River in Gatineau.
Nothing like its regal counterpart, Place du Portage's four concrete buildings contain a maze of drab offices that house thousands of public servants in several federal departments. But this is where government unfolds. And it was here that, this week, a series of meetings began that may send ripples through the bureaucracy for years to come.
Illustration by Jay Taylor for The Globe and Mail
On Tuesday, about 75 employees of Public Works and Government Services were summoned to a conference room and given some bad news. As the government looks to slash costs in the public service over the next five years, part of a plan Finance Minister Jim Flaherty unveiled in last week's budget, everything is under scrutiny.
First to go: perks. Rank-and-filers who enjoyed discount parking were told that was over. This upset some of those in the room; others breathed a sigh of relief. The news could have been a lot worse.
And there is little doubt that it soon will be. After a mass recalibration of the private sector that resulted in tens of thousands of layoffs, lost benefits and in some cases the destruction of pension plans, the pain is shifting to the sprawling public sector, which includes the three levels of government as well as health care, education and public enterprises. It encompasses almost 3.6 million workers, whose ranks have risen almost 30 per cent in the past decade. They represent more than 21 per cent of Canada's labour force of 16.8 million and earned $176.5-billion last year.
Ottawa is looking to cut its public-sector spending by $8-billion over the next five years. After dipping into its coffers to provide unprecedented stimulus to an ailing economy – $30-billion last year alone – it's time to pick up the tab.
With revenues falling and costs rising, the Stephen Harper government faced going $170-billion more into debt by 2015 if something serious wasn't done. Now, the federal payroll, which alone has swollen by 29,000 since Mr. Harper took office, is the target of belt-tightening not seen since the nineties when Paul Martin wielded the axe as finance minister for Jean Chrétien.
No longer wondering if cuts are coming, public-sector employees now are afraid of just how far they will go. The government has tried to play down its plans as mere nip and tuck, a bit of trimming here and there. But as anyone in that session at Place du Portage surely realized, you don't save $8-billion in the parking lot.
In fact, Queen's University public-policy specialist Tom Courchene thinks there will be an even bigger hit if the Conservatives win their majority. “I wouldn't be surprised,” he says, if they went “to the polls on this [budget] – and then the real cuts will come.”
Stockwell Day is the man holding the knife. Recently appointed Treasury Board President, the one-time auctioneer has been charged with stripping $17.5-billion from federal spending in the next five years, including the $8-billion from the public-service ranks.
It is not the first time he has been in this position. Twelve years ago, Mr. Day was the architect of cost-cutting in the government of Alberta premier Ralph Klein. As provincial treasurer, he used ballooning oil revenues and deep cuts to public spending to pull Alberta out of the red. The public-sector money he now must find includes $6.8-billion in cuts announced in the budget plus an additional $1.26-billion that was part a strategic review last year, which asked federal departments to chop 5 per cent from their budgets.
Groups such as the Canadian Federation of Independent Business, which pushes for tax cuts and smaller government, argue that public-sector wages are on average higher than in the private sector. A CFIB study last year stirred controversy in Ottawa by suggesting the gap ranges from 8 to 17 per cent, with federal wages proportionately higher than those for other levels of government. (However, the disparity has narrowed since the 1990s. A study by Statistics Canada in 1997 showed the average man working in the public sector earned 34 per cent more than in the private sector.) Yet, to avoid angering its unions and the millions of voters who may be affected by cutbacks – Mr. Harper doesn't have a majority, after all – the government has been treading carefully. Wage increases negotiated for next year will remain, although departments will simply have to find the money somewhere.
