What we need from the 2013 Federal Budget

PSAC renews its call for accountability and transparency

After months of mixed messages and secrecy, last year's federal budget confirmed that this government's austerity agenda would leave Canadians without services they need, place the environment and health and safety at risk and undermine the economy.

But what was most troubling about Federal Budget 2012 was what it didn't tell us. Though it said it would cut 6.9% from an operational budget of $75 billion, it didn't say enough about what that would mean for the services Canadians rely on.

In an unprecedented move, the government also eliminated information about personnel estimates and services from last year's Reports on Plans and Priorities: this can only have been intended to hide the impact of cuts on services.

The Parliamentary Budget Officer has taken the government to court over its unprecedented secrecy around strategic review cuts, saying that a lack of government co-operation is preventing him from properly analyzing the country's finances.

Good governance begins with transparency. We renew our call on the government to be transparent about what its budgets mean for services, workers, families, communities and the economy, and to be genuinely open to what all of us – especially those of us who rely on public services and those who provide them – have to say.

The government must stop the cuts and restore federal government services

Since the 2012 Federal Budget was tabled 19,770 of our members have been told they could lose their jobs. The government may not be revealing all the facts, but our members and other Canadians across the country say that the cuts are impacting both services and the economy.

More than 3,818 of our members at Human Resources and Skills Development Canada have been told they are affected and could lose their jobs. Cuts to Service Canada – which will amount to $276 million by this year – have meant longer wait times for employment insurance (EI) benefits and Old Age Security. Frontline services and EI processing centres have been shut down. Wait times are increasing. Recipients are being hurt, especially seasonal workers, many of whom are also PSAC members.

Veterans Affairs is closing nine district offices across the country, eliminating frontline services, including counseling. PEI is left without any office at all, except headquarters, forcing veterans to travel to New Brunswick. Many Veterans Affairs services have been handed off to already overtaxed Service Canada offices, but staff there do not have expertise in veterans' issues and cannot access veterans' files.

Citizenship and Immigration Canada has shut 19 of its offices across the country, putting frontline services out of reach for many people applying for temporary and permanent residency or to change their visa status.

Massive cuts to the First Nations and Inuit Health Branch – the hardest hit branch in Health Canada – have jeopardized Aboriginal peoples' health. Funding for health programming offered by all national Aboriginal organizations has been reduced by 40 per cent. This has impacted programs such as the Aboriginal Diabetes Initiative, the Maternal and Child Health program and the Youth Suicide Prevention Strategy.

Canadians who work and live along Canada's coasts say the government's decision to close search and rescue bases in St. John's, Quebec City and Kitsilano is putting lives at risk. The government ignored experts and survivors opposing the closures in all three locations. Polling shows that Conservatives are even ignoring their base: the latest closure at Kitsilano Coast Guard Station was opposed by 79% of voters in Conservative cabinet minister John Duncan's riding.1

The government is also ignoring voters opposing its decision to shut down the Experimental Lakes Area, a freshwater ecosystem research facility in northern Ontario run by the Department of Fisheries and Oceans. Polling has shown that three-quarters of Canadians, including 60 per cent of Conservative voters, oppose the closure.2 Research conducted there was instrumental in understanding the effects of acid rain.

The Department of Defence, expected to be targeted for more cuts in the upcoming budget, plans to privatize many operations despite warnings by senior officials that military readiness would be adversely affected. The department lost $1.1 billion, or 7.4% of its operating budget last year. Workers who directly support units and troops are being cut, such as those who operate weapons simulators, vehicle technicians who train military mechanics, clerks, secretaries, food services and kitchen staff, radiation safety personnel, weapons technicians, ammunition technicians, heavy truck mechanics, defence scientists, laboratory assistants and drivers.

The government backed down, partially, on cuts to seasons along some canals and waterways but tourism agencies and small businesses are warning that cuts to seasons in Canada's other historic sites and national parks are hurting communities surrounding those too. The loss of interpreters at historic sites means students and tourists aren't getting the same learning experience when they visit.3

In the Prairies, the government has shut down the PFRA Community Pasture program, abandoning decades of conservation stewardship over millions of acres of some of the last remaining sensitive prairie grasslands and transferring responsibility to provincial governments. The Saskatchewan government says it wants to sell the land at market rates to ranchers who graze livestock on the pastures, threatening the balanced use approach. It isn't clear that conservation and environmental protection will be assured.

The government says it will cut another $98 million from the Canadian Revenue Agency's budget in the coming year, resulting in a direct loss of frontline services to the public and small businesses. The last budget cut 400 auditors from criminal investigations, special enforcement and voluntary disclosure programs. The government also plans to outsource the storage of Canadians' confidential tax records to a private third party provider, raising serious privacy concerns.

It is clear that all Canadians are being affected by these and many other cuts, and that they are especially devastating for the most vulnerable in our country – the unemployed and seniors who rely on timely access to benefits just to get by. We renew our call on the government to reverse these cuts and rebuild the federal government services Canadians rely on.

The government must stop pursuing costly and unaccountable Public Private Partnerships

The government created PPP Canada Inc. to encourage P3s at all levels of government for infrastructure development and service delivery. The 2012 federal budget promised to consider them for all federal corporate assets, including Crown corporations, especially those that the government believes compete with the private sector. In addition to making provincial and municipal investment contingent on using P3s, PPP Canada is pushing other federal departments to implement P3s, including the Public Health Agency of Canada, Public Works and Government Services Canada, Indian and Northern Affairs Canada, and Library and Archives Canada and is exploring opportunities for others.

PSAC calls on the government to abandon its pursuit of P3s because they are costly and unaccountable. P3 consortiums borrow money from international investment banks at higher interest rates than governments do, meaning that over the average 25-to-30-year span of a P3 contract, the public pays much more than if the government borrowed the money directly to finance traditional design/build contracts.4 The long-term outcomes of this kind of privatized, hidden debt erodes government's flexibility to provide public services as public money increasingly goes to paying private providers, guaranteeing private profits and institutionalizing private for-profit monopolies.5  P3s also make public accountability impossible because the details of private-sector contracts become the property of the contractor: the public isn't allowed to view the books of their P3 partner even though it is ultimately responsible for the costs.

In November, the government elaborated on a 2012 budget promise to implement social impact bonds, (also known as social financing, impact investing, and social ventures capital) as a form of public private partnership for social services.6 Emulating the failing “Big Society” program in the United Kingdom, the plan would replace frontline public sector workers with volunteers, retired workers and low-wage subsidized private sector workers funded by private institutions.7 This would substitute secure public funding with private sources of finance, and mean profits – not quality services – become the goal. Like P3s, there is no evidence that direct public funding and service delivery isn't more effective. And given that social impact bond funders and service providers tend to pick easily achievable targets, leaving the more difficult problems for public sector social providers, it is very difficult to measure their success.

The government must strengthen, not weaken regulatory oversight and enforcement

Deregulation, the weakening, elimination and lack of enforcement of regulations has the effect of privatizing the government's responsibility for keeping Canadians safe.  We depend on regulations to protect our water, food, health and consumer goods. They ensure the safety of the roads we drive on and the environment we live in. They keep financial institutions, telecom companies and other businesses in check.

Recent budgets have included measures to increase competitiveness and reduce “red tape.” As a result, federal inspectors in all sectors have seen their numbers and enforcement powers diminished.8 Many of their responsibilities have been transferred to individuals and businesses that sell goods and services or extract Canada's natural resources.

The 2012 federal budget and the government's Red Tape Reduction Action plan only make the problem worse. The recent food safety recall at XL Foods should not have come as a surprise: in order to “cut red tape” for the former operators of XL and increase production capacity, food safety officers had been directed to ignore contaminated carcasses.9

The government claims it is “cutting red tape” for travellers and business crossing the US Canada border too. The Canada Border Service Agency completed a comprehensive internal review of the NEXUS program in 2012 that highlighted gaps and suggested improvements. Despite internal expertise, CBSA chose to contract out government policy making and has a Request for Proposals to private industry to develop a “trusted traveller vision” that involves assessing the NEXUS, CANPASS and Automated Border Clearance programs, as well as the CBSA's Integrated Primary Inspection Line support tool.10

Canadians believe the government should do much more to protect the environment and public health and safety, not less. The government needs to abandon the Red Tape Reduction Action Plan.

The government needs to make more responsible spending choices

The PSAC is calling on this government to be more responsible about its spending choices, and to ensure their choices benefit all Canadians. Corporate tax cuts were supposed to lead to reinvestment of profits and the creation of private sector jobs. Instead corporations are hoarding massive cash reserves that are a direct result of corporate tax cuts. Bank of Canada Governor Mark Carney recently referred to this more than half a trillion dollars as ‘dead money' and stated that the job of Corporations “is to put money to work and if they can't think of what to do with it, they should give it back to their shareholders.”11 A recent RBC estimate placed the ‘dead money' at 32% of GDP, compared to only a 9% cash reserve in the United States.12

The government can also save Billions by spending less on consultants, contractors and temporary staffing agency contracts. Growing evidence suggests that this costs more and undermines federal public service staffing policies and practices.13 There are clear guidelines for staffing government jobs on a temporary basis when required. The current trend lacks transparency and is wasteful.

The government needs to stop cutting jobs and undermining the economy

Austerity isn't working for Canadians: it is clear that cuts will not lead to economic growth. The government has warned that more cuts are planned in the 2013 Federal Budget. That means taking away services Canadians need, and slowing the economy even more, and that makes no sense. The majority of Canadians are worried about their jobs, their pensions and infrastructure badly in need of repair.

As noted Nobel prize-winning economist Paul Krugman says, “an economy is not like a household. A family can decide to spend less and try to earn more. But in the economy as a whole, spending and earning go together: my spending is your income; your spending is my income. If everyone tries to slash spending at the same time, incomes will fall – and unemployment will soar.”14

The Parliamentary Budget Officer estimates spending cuts will reduce Canada's GDP by 0.6 per cent this year, 0.9 per cent next year and more than one per cent in 2015. Given that Canada has just experienced the weakest two quarters of economic growth since the 2008-09 recession, now is time for the federal government to help restart the economy by creating jobs and restoring and rebuilding the programs and services Canadians need.15

1 - “Poll shows cuts to Canadian Coast Guard could cost Conservative cabinet minister John Duncan his seat in Vancouver Island North”, December 6, 2012
2 - Max Paris, “Experimental Lakes allies say poll a wakeup call for Tories”, CBC News, October 18, 2012.
3 - “Parks Canada cuts hurting tourism, visitors say”, CBC News, March 15, 2013.
4 - Craig McInnis, “P3 financing wins favour by limiting political risk”, Vancouver Sun, October 28, 2009.
See also Barrie McKenna, “The hidden price of public-private partnerships”, Globe and Mail, October 14, 2012.
5 - Dexter Whitfield, “Global Auction of Public Assets”, Nottingham, UK: Spokesman Books, 2010, p.36.
6 - “The Government is Taking Action to Address Local Challenges”, Government of Canada, news release, November 8, 2012.
7 - “Ottawa Courts Private Sector Funding for New Approach to Social Policy”, The Canadian Press, November 8, 2012.
8 - “Government Spins Food Safety”, Food Safety First, news release, November 4, 2010
9 - Laura Kane, “Inspectors Told to Ignore Contaminated Carcasses”, Toronto Star, November 29, 2012.
10 - Don Butler, “Canada Border Services Agency seeks vision for trusted traveler programs”, Ottawa Citizen, February 18, 2013.
11 - Kevin Carmichael, Richard Blackwell and Greg Keenan, “Free Up ‘Dead money' Carney exhorts Corporate Canada”, Globe and Mail, August 23, 2012.
12 - John Lorinc, “Dead money There are good reasons for hoarding cash”, Canadian Business, February 12, 2013.
13 - David Macdonald, “The Shadow Public Service: The swelling ranks of federal government outsourced workers”, March 3, 2011
14 - Paul Krugman, “The Big Fail”, New York Times, January 6, 2013.
15 - Louise Egan, “Analysis: Experts see risks from Canada's fixation on balanced budget”, Reuters, March 12, 2013