Finally an overview of federal programs

Yan Plante is vice president at the PR agency TACTHe is a former Conservative strategist who advised former Prime Minister Stephen Harper in three electionsWith nearly 15 years of experience in politics, he was also chief of staff to former minister Denis Lebel.

It was under the radar, but the Trudeau administration’s latest budget includes an effective spending control tool: an exercise in “austerity in the context of stronger stimulus” and a “strategic policy review”.

Which, more concretely, means that Ottawa wants to find $9 billion in savings by 2026-2027… without hurting too much.

It was the government of Jean Chrétien that first laid the foundations for a revision of all federal programs. Budget 2003 argued that “sound financial management requires a constant review of the rationale of existing programs so that the government can transfer resources from lower priority areas to higher priority areas.” †

Stephen Harper’s administration followed in his footsteps by conducting two program reviews. A 2007 first, it focused primarily on finding inefficient spending to redistribute these resources to programs or new initiatives that delivered better results.

A second attempt followed the economic crisis of 2007-2008. The latter had caused significant deficits: the aim of the revision was therefore to permanently reduce expenditure in order to rebalance the budget. At the end of the fiscal year, annual recurring savings of $5.2 billion had been realized.

These assessments are not only necessary, they must also be permanent. Whether the goal is to cut costs or invest in better places, the basics remain essentially the same. This is why.

Everyone wants it

The Government of Canada is a massive administrative apparatus and is greatly in demand for financial support from individuals, organizations and companies.

I remember a meeting of the chiefs of staff of all the ministers of the Harper administration, in the context of the preparation of a federal budget, when my colleague from the Treasury Department informed us that if his boss agreed to all the demands of his colleague Ministers, we would have over $300 billion in new spending!

You read that right – yes, they were all demands from ministers of a Conservative government towards a balanced budget…

This is without counting the requests of the rest of the caucus, the opposition parties, the provinces, the municipalities, the various interest groups and many others. You see how easy it is to fall into the trap of the spending spiral.

So it is more than desirable to review the programs introduced over the years and new needs, otherwise they would just pile up and be renewed without questioning every deadline.

I witnessed the Harper administration’s two spending review exercises when I was chief of staff to the minister responsible for regional economic development and for transport and infrastructure.

I especially remember an economic development program for the textile industry that had been set up a few years earlier because of a specific crisis and for which millions of dollars had not been spent.

There were simply no more projects submitted by initiators, because the program no longer met the real needs of the day. It’s usually the opposite: An effective program often receives 10 times more applications than the funds can support.

This program may have accomplished its mission at some point in time and was obsolete. It was therefore preferable to abolish it and use its resources for more strategic purposes.

At Transport Canada, we were able to discover some pearls thanks to the exercise. For example, we realized that the department had long owned land that was now a working golf course. No one in the ministry’s senior management knew about it, and the thread running through the story was hard to trace. We decided to sell the land, along with a number of other assets that the government no longer needed, including some airplanes.

Of course it is not always that simple. Heartbreaking decisions have to be made. Some will lead to job losses within the department and reduce services to the population. This is especially true when the ultimate goal of the government is to cut spending to balance the budget and put more money back into taxpayers’ pockets. Regardless of where one stands on this issue, some cuts could hurt those who have benefited from the state’s services.

In my experience, the first 5% is easy to find and eliminate without really having any major effects. Money is sometimes spent absurdly in all departments – and anyone who bothered to analyze it would come to the same conclusion. The problem is that we don’t often give ourselves the time to do that.

Above the 5% threshold, things get considerably more complicated.

Pay attention to the symbols!

So the government has to be careful. Many decisions will have real-world implications for the provision of services to the public – and thus political implications. One of the things that hurt the Harper administration the most about its deficit-reduction plan was budget cuts that meant massive savings to the federal budget as a whole, but painted a strong symbolic image of the government’s coldness.

The best example that comes to mind was the closure of the Coast Guard base in Kitsilano, British Columbia. Critics vehemently – and rightly so – opposed this decision, while this station received about 300 distress calls a year related to maritime safety. Apparently it can be done differently. The financial savings amounted to less than $500,000 on a budget of $275 billion.

The political cost was huge: Stephen Harper’s conservatives were biting the dust in the province at the next election. Not only for this reason, but it was also an element that supported a negative story about our party. Every day this cup was in the public debate. And to close the story, Prime Minister Trudeau canceled the shutdown. Great political gain, at low financial costs.

Yet we had a whole process in which each minister had to present his budget cuts to a special cabinet committee. Different levels of political filter were present. It is inevitable that certain elements such as Kitsilano will pass through the sieve and can have serious political consequences, and sometimes unfortunately also for the population.

Some keys to success

For such an approach to succeed, government and politics must work closely together. It is essential that the secretaries of state themselves are closely involved in the process, as well as the staff of the senior ministers.

It may be appropriate to create a Cabinet Committee specifically dedicated to this spending and program review. In my time it was very useful.

The approach my former boss and I advocated in the government was to ask for 20% permanent cuts scenarios, even though we were among the departments that had to deliver 10% (some were given a lower target).

This allowed us to see the big picture of options and consequences, while gaining more perspective on less politically risky alternatives. Too often ministers have gone to the cabinet with a 10% scenario that contained politically indefensible proposals. As if they deliberately reduced less than their target, knowing that the other ministers would never have accepted the full proposal, or as if they had not really explored all possibilities. Their plans were rejected and they had to start over.

The caucus of MPs must also be involved in one way or another. An engaged caucus is more disciplined and offers fewer media leaks. In addition, it will be an additional political filter to avoid problematic situations.

Integrating the communication and issue management teams into the exercise is fundamental. Since there will definitely be “Kitsilanos” we need to limit them as much as possible and have a political eye in the process. And the better the government can predict the blows, the better prepared it is to announce its decisions. The communication plan is just as important as the decisions themselves.

Focusing first on the major cuts that will have a real impact on the financial framework is a good way forward. They actually help reach the target and deal less widespread damage. Strategically, it is often easier to displease fewer people a lot than to displease many people a little.

Deputy Prime Minister Freeland predicts that most of the cuts will not come until after the next election (6.5 of the 9 billion savings planned for 2025-2026). But apart from the precise amounts, their origin will have to be investigated above all.

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