Thursday, March 4, 2010

Budget Day in Ottawa

Budget Day used to be a long day for me. We’d listen to the budget speech while a staff member wrote it down in short-hand. While this was going on, another staff member 0110flaherty614 would type up a rough draft, which I’d go through and assign particular points affecting our business to an analyst who would crunch the numbers.

By the time I left the office late that night, I’d have a preliminary assessment of the effect the budget measures on our firm. The next morning, we’d arrive bright and early to review the newspapers and our accounting firm’s analysis and finalize our analyses before distributing it to the executive committee.

What a difference retirement makes: now I watch the budget speech purely for fun and perhaps to get some material for this blog.

This afternoon, I believe we’ll get a fair indication of where the Tory government is heading in its plan to reduce the deficit in the short term—elimination of the deficit is unlikely for some three to five years.

The recent recession notwithstanding, Prime Minister Stephen Harper has dug himself a deep hole with his loose-purse fiscal policy since taking office in 2006. Sure we needed to spend billions to keep the economy from sliding into a 1930s-like depression, but even prior to that, the Tories had expanded spending and government beyond what we could have been reasonably considered conservative and prudent. This is especially so when one considers that PM Harper’s belt-loosening came on the heels of Paul Martin’s Liberals shoveling money out the door as quickly as they could.

I understand there are certain political imperatives and constraints placed on a minority government. I also get the concern in the 2006-2008 term that the larder should be picked clean lest the Grits regain power in 2008 and consolidate it with a huge increase in spending on social programs, such as a national, universal childcare program.

Leave the cupboard bare and thus constrain fiscal policy options available to the Liberals. A good strategy, Chrétienesque in its cunning, but one that has been derailed by the recent financial crisis and resulting recession.

All that’s in the past now, and it’s time to make tough decisions to get the country back on its fiscal feet. Part of that is to take a run at the widening gap between public service and crown corporation remuneration and that available in the private sector.

Employee-related costs are such a significant portion of total government expenditures, it’s hard to see how we can continue to allow those who work for governments to receive higher salaries and benefits than those who work in the private sector. Public sector pensions should also be trimmed back to levels more in line with those in the private sector. And what about sick-day benefits? Lots of room to trim there.

The PM has set the table in yesterday’s throne speech when he froze salaries of MPs, etc. Today we might get a sense of whether he intends to go for the full monty and freeze (and/or roll back) public sector salaries and benefits.

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