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Flaherty defends $90,000-a-day advice on cutting public service

Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Sept. 20, 2011.

CHRIS WATTIE/REUTERS

"The more you spend, the more you save" is a favourite line in the retail business. Now federal Conservatives are borrowing liberally from that slogan to explain a multi-million contract for cost-cutting advice.

Parliament Hill was buzzing Tuesday over news that Ottawa hired management consulting firm Deloitte Inc. to advise the cabinet and senior officials on how to erase the federal deficit by 2014-15. The Aug. 15 contract is worth up to $19.8-million. Because it only runs until March 31, its cost works out to about $90,000 a day.

Finance Minister Jim Flaherty was undeterred by the optics of spending millions in an effort to cut billions, insisting the private-sector advice will be worth every penny.

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"The fact is that we feel we need to have outside advice. It isn't good, quite frankly, for a government to just look at itself. There's a lot of expertise in Canada on the subject of public-sector productivity, for example, and we look forward to having the advice of, in this case, Deloitte," he said.

Crunch time is approaching for all federal departments to produce internal plans to cut between five and 10 per cent of their total budgets. A cabinet committee led by Treasury Board President Tony Clement will wade through the proposals this fall and the results will be announced in the 2012 budget. The Strategic and Operating Review, as it is called, is central to the Conservative government's plan to erase the deficit by 2014-15.

According to a federal "Statement of Work" released this week by Treasury Board under Access to Information legislation, Deloitte will be very closely involved with the work of this cabinet committee.

"The contractor will provide a team of experts who will provide advice and guidance to the Committee based on private and public sector best practises," the document states.

Forecasters – including in a report Tuesday from the International Monetary Fund – are downgrading their estimates for growth in the Canadian economy for this year and next. That means Ottawa will have a harder time meeting its deficit target.

Mr. Flaherty has long maintained that a key source of savings will come from attrition in the public sector, meaning not every employee who leaves a department will be replaced.

Some departments released numbers in Parliament this week showing this is in fact occurring.

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For instance, in response to written questions from the Opposition, the government confirmed that in the last fiscal year, attrition saw the loss of 482 predominantly full-time employees at Agriculture Canada, 430 full and part-time employees at the Privy Council Office and 436 employees at Aboriginal Affairs. However the department of Public Safety provided more detail, noting that of 157 employees who left last year, 75 per cent of them went on to work for other federal organizations.

That suggests departmental boasts of attrition reductions are not necessarily a sign of smaller government, given the high degree of employee movement between departments. And in spite of the government-wide push to reduce spending, new hiring does still occur. In the case of Aboriginal Affairs, the department hired virtually the same number of workers that it lost.

NDP finance critic Peggy Nash is questioning the Deloitte contract and said Monday's IMF report should force the government to ease up on its cost-cutting plans.

"This government likes to pretend that they're prudent in terms of economic spending but this massive contract to an outside source to tell them to chop thousands of public sector jobs is – it seems wasteful and unnecessary," she said. "It's not the time to be chopping those jobs and ... going to some high-priced outside gunslinger in order to get those cuts done."

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