THUNDER BAY, ON - March 18, 2010 - The Prime Minister has invested great trust and responsibility in Stockwell Day, having given him the role of Treasury Board Minister. His primary responsibility will be to get federal spending back under control. How this job is handled will dictate, to a great extent, how this government will be judged in the future for its fiscal management. The important outcome of the fiscal day of reckoning for the Harper government will rest in the hands of Minister Day.
What a daunting task he faces. Since taking office, in just five years, the Harper government has increased program spending by 42 per cent. That’s an average growth rate over 8 per cent per year – more than three times the combined inflation and population growth rate.
The federal government is projected in 2010-11 to spend just under $250,000,000,000 on programs. That’s just under $7,500 for each man, woman and child in Canada. This spending does not include the cost to service the debt every year, which amounts to in excess of $31 billion – and growing.
Of note is not just that the government spends a lot, but that so much of this spending is borrowed. Currently, the government is borrowing $134 million per day.
Minister Day has announced a review of spending that will underpin efforts to get spending back down, staring with next year’s budget. This is a laudable plan. It has included noteworthy beginnings. The prime minister, cabinet and MPs will have their salaries frozen for at least one year.
This is an important, positive, symbolic gesture, but it won’t much help to actually balance the budget. It does, though, give Mr. Day and the government the moral authority to take tough spending positions when they are faced with the inevitable requests for new programs, increased budgets for existing programs and the persistent request from public sector unions for more employees, more pay, more perks and protections for pensions.
The other good measure was the elimination of 245 appointees to boards, agencies and crown corporations. This announcement was marred by the fact that less than 30 of these roles were actually filled and costing money. This left the unfortunate impression of a government worried more about wanting to look like it is making reductions than actually making them.
Sending a similar message, the Tories initially had refused to support the opposition motion ending the sending of MP junk mail outside their ridings, which would save taxpayers a few million dollars per year. This would have seemed a natural place to start making more cuts. The Prime Minister now supports the measure. Better still, he is also calling for an end to the taxpayer-funded $1.75 per vote political subsidy costing taxpayers $25 million per year.
Cabinet and caucus will need to support Mr. Day’s efforts and all efforts to cut spending. But, they will only do this when they realize votes can be won by fiscal prudence instead of bought by spending taxpayer money. That may be a tough task for Mr. Day now that the Tories have gotten used to and seem to enjoy their photo-ops with big novelty cheques.
A critical element of executing on this program of austerity will be to bring the bureaucracy on side. The best way to do that is to change their compensation packages. Provide economic incentives across government for employees to find ways to reduce spending and reward them appropriately for doing so. A pat on the back won’t do it. Cash is king.
Mr. Day has a track record of supporting fiscal prudence. He may be the right person to get spending back under control. If he doesn’t, come judgment day, voters may remind the Harper government in terms they may not like.