Ah, Boxing Day. A time to look at the excesses of the past year and begin drawing up some resolutions of the coming one. Federal Finance Minister Jim Flaherty has resolved to make Ottawa trimmer in 2010, which is a good thing. If the federal government were a person, it would be a prime candidate to be a contestant on The Biggest Loser.
The federal government is beyond huge. It's morbidly obese. What's more, its waistline is out of control.
In 2009, revenues were down $16.1-billion, thanks to the recession, while program expenses were up a staggering $17.4-billion, thanks largely to increased payouts to the elderly, major transfers to provinces, the auto bailout and other stimulus spending. Just the increase in federal spending this year -- the increase alone -- is greater than the entire annual spending of all but the four largest provinces.
Little wonder, then, that this fiscal year Ottawa will show a$56-billion deficit, and earlier this month the national debt climbed north of $500-billion again. Only two years ago, the debt had fallen to $458-billion, its lowest, inflation-adjusted level in a generation. However, over the next three years, all the debt repayment managed since 1997 will be wiped out and federal indebtedness is likely to hit nearly $550-billion before the federal budget is balanced again. At that time, according to the Canadian Taxpayers Federation, Ottawa will owe the equivalent of $16,000 for every man, woman and child in the country.
When the Liberals left office in early 2006, program spending stood at $175-billion, a figure which was itself an increase of almost 60% from its low-point following Liberal finance minister Paul Martin's austerity budget of 1995. In the four years since the Tories took office, that figure has grown again by nearly a third to over $230-billion, almost half of that coming before the current recession hit. In other words, Ottawa is now spending double what it did just 14 years ago. The big cuts of the 1990s have long ago been eroded, and then some.
Ottawa's flood of red ink in recent years has been caused as much by Tory efforts to buy their way to a majority by bribing middle-class voters with their own money as it has been by federal bailouts for General Motors and Chrysler. Sure, rebuilding our Armed Forces after more than a decade of wilful neglect by the Liberals has been expensive, as has funding our mission in Afghanistan. Together, those two efforts have cost about $75-billion since 2006. Still, the Tories have made almost no efforts to control non-military spending, either.
Consider that the federal government and its Crown corporations, federal agencies, the military, RCMP and criminal justice system employ over 425,000 people, up 11% just from 2005 and up nearly 40% from the lows in the 1990s.
And each of these employees is increasingly expensive. According to census research conducted by the Canadian Federation of Independent Businesses, the average federal civil servant now earns almost a quarter more each year than a comparable employee in the private sector. Where once civil servants accepted less pay in return for better pensions and benefits, now federal employees have both -- better pay and better retirement income.
It's true senior private-sector executives are better compensated on average than the highest-paid federal bureaucrats. But most workers -- public or private -- are not executives, and in the middle pay ranges, the average private-sector administrator makes just over $55,000 a year while his or her federal counterpart makes around $68,000.
If Ottawa is to get leaner, as Mr. Flaherty has promised it soon will, then it is going to have to shed tens of thousands of high-priced workers. Mr. Flaherty spent much of the week before Christmas promising not to increase federal spending next year (a good thing), nor to lower taxes (a bad thing). But most importantly, he promised not to replace most retiring federal workers. Ottawa needs to come to grips with its overspending and the best and fastest way to do that is to jettison tens of thousands of federal positions each year.