Deficit reduction in Canada reminds me of that scene in Monty Python and the Holy Grail where King Arthur encounters a Black Knight who won’t let him pass.
As Arthur systematically hacks off his limbs, the Black Knight refuses to acknowledge that anything’s wrong. “It’s just a flesh wound,” he chirps after losing both arms. By the time Arthur is finished with him, he’s legless as well.
When Finance Minister Jim Flaherty delivers his new budget in the House of Commons March 4, he’ll have all his appendages, but little else. The federal government says it can reduce the deficit to nearly zero by fiscal 2014, from more than $50 billion in the year ending March 31.
But given its planned approach, a combination of spending restraint (holding annual federal spending growth to more like four per cent rather than the six per cent it has been running at in recent years), leaving transfer payments largely untouched, no new taxation, and heavy reliance on economic growth, we’ll see limbless knights dancing in the streets before the shortfall is eradicated.
You’d think cutting spending in an enterprise as vast and all-encompassing as the federal government would be easy, but no. Federal transfers, a mélange of equalization payments, health and social transfers, employment insurance, old age supplement payments and the like, are inviolable because it’s political suicide to touch them.
They make up 45 per cent of Ottawa’s current $236 billion a year in program spending. About 14 per cent goes to service our national debt, so we can’t do anything about that. And 11 per cent goes to international, immigration and defence programs, a tally unlikely to shrink even if our troops are repatriated from Afghanistan starting in 2011. Let’s not even think about Haiti.
Parliamentary budget officer Kevin Page, a realist unlike the spinmeisters in the Harper government, says Ottawa must save roughly $19 billion to balance the budget by 2014. But the longer you look at the federal government’s current program spending, the harder it is to see where savings of this order can be made.
There is one possibility. Stockwell Day, who was named president of the Treasury Board in the recent cabinet shuffle, is expected to be Flaherty’s hit man in reducing expenditures. Day can start close to home, with the Treasury Board secretariat, the board’s administrative arm and general manager of the government’s operations. The secretariat is spending nearly $8 billion a year, and it must have some limbs in need of trimming.
