Federal budget cuts expected to focus on bureaucracy
Published Wednesday, March 28, 2012 10:02PM EDT
Last Updated Saturday, May 19, 2012 7:52AM EDT
Finance Minister Jim Flaherty will cut public spending by up to $6 billion in Thursday's budget, CTV News has learned.
CTV News has also learned the $1,000 small-business hiring credit will be extended, immigration admission will be tied more closely to labour shortages and billions in research dollars will be overhauled in the budget.
Flaherty has said his cuts will target the bureaucracy, not services for Canadians.
"The majority of the spending review reductions relate to back-office operations in government. They don't relate to service delivery by government," he told reporters Wednesday.
He said his austerity program would be modest compared to former finance minister Paul Martin's budgets for the Liberals during the 1990s.
Flaherty had asked all federal departments to find budget savings scenarios of between five and 10 per cent, for possible spending cuts totaling between $4 billion to $8 billion.
Michael Wilson, a finance minister for seven years under Brian Mulroney, says there are plenty of redundant government jobs that can be cut.
"I've heard it put this way, ‘There's probably three people doing what two people could do in Ottawa,'' he said on CTV's Power Play Wednesday.
He added that this year's budget was the first true "majority budget" under the Conservatives, saying last year's was a "cleanup."
The House of Commons announced its own belt-tightening plan the day before the budget, with the all-party committee that oversees MP's budgets agreeing to cut spending by 6.9 per cent over the next three years.
The spending cuts will save $30.3 million. The cuts include a reduction in MP office budgets of under two per cent and a 7.5 per cent reduction to opposition party leaders' offices.
Flaherty's budget is expected to only outline the broad strokes, with few details about the exact programs and services that will be lost.
The exact measures will only roll out over the next few months, but will likely include changes to Old Age Security, thousands of government job cuts, reforms to MP pensions and changes to immigration and regulatory review processes that are meant to stimulate the economy.
As the first federal budget since the Conservatives achieved majority status, it's expected to speak volumes about Prime Minister Stephen Harper's vision for the future and his plans for a leaner and more business-like government.
The depth of the spending cuts may come as a surprise to some economists who earlier this week projected the deficit for the current fiscal year would be lower than previously thought, meaning the government is on better financial footing than expected.
An analysis on Monday from the Royal Bank showed the deficit could come in between $20 and 25 billion for the year -- well below the $31 billion estimated last fall.
RBC Chief Economist Craig Wright said the numbers showed Ottawa is ahead of schedule on its deficit-reduction plan, and if the pace continues, the deficit could be eliminated as much as two years earlier than the 2016-17 target year.
As a result, Wright predicted the budget cuts Thursday would fall around $4 billion -- the very low end of the $4- to $8-billion range the feds had outlined earlier.
While Flaherty has for weeks said his fiscal blueprint should not be viewed as an "austerity budget," he has had his number crunchers going through the $80-billion discretionary spending fund for months, searching for potential savings.
Some experts have estimated those cuts will translate to 60,000 public sector job losses, though sources told The Canadian Press attrition will cover most of the losses. Other estimated have put the number closer to 30,000.
In recent days, the Prime Minister's Office has repeated the mantra that the budget will be about creating jobs, growth and prosperity, more than it will be about slashing spending.
"If you concentrate on the savings, you're going to miss most of what the budget is about," Flaherty said recently.
Wilson said that what Flaherty really means is, the story will be about changing the structure of government.
"You can't just do a little bit of tinkering at the edges on the revenue side or the spending side," he said.
"There are things that must be done that are going to fundamentally change what government does in Ottawa."
The Prime Minister's Office says the budget will focus on four priority areas: innovation, responsible resource development, investments in training and infrastructure, and supporting families and communities.
With files from The Canadian Press