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Road to balanced books cuts directly through federal public service

OTTAWA - The Conservative government's march toward balanced budgets cuts directly through the federal public service.

Of all the line items in the balance sheet of spending and squeezing, one clearly overshadows the rest — $7.4 billion in savings estimated over six years from cutting public-service compensation.

The measure is subject to contract talks with more than a dozen public-sector unions.

"The government's overarching goal in these negotiations is to reach agreements on total public service compensation that are fair and reasonable to employees and to taxpayers," says the budget document.

By comparison, the budget estimates only $1.8 billion in savings from various other measures.

The public service will also shoulder a two-year freeze in government spending announced last fall, representing savings of $1.6 billion. That's likely to translate into the loss of more positions and programs inside government: salaries account for well over half of departmental spending.

The freeze will apply across government, making for a potentially difficult situation for departments already adjusting to several years of spending reductions. National Defence, for one, has lost $2.1 billion in operational funding since 2010.

Any initiatives that will require extra staff and spending will have to be funded from within existing operating budgets.

Often the loss of programs isn't clear to the public until much later — for example, the closure of many national parks during the winter and the loss of certain passenger train routes was never signalled in any budget document.

At the core of the compensation plan proposal is a change to the health benefits available to retired bureaucrats. Under the proposal, the government will go from paying 75 per cent of the costs of the health plan to sharing the costs equally with pensioners.

Employees would also not be eligible to participate in the program until they've worked for the government for six years, versus the current threshold of two years.

Current retirees would not be affected by the changes.

The Finance Department says the change will provide major savings to the government, but won't be a huge burden to the average public-service retiree — increasing the cost of annual payments to $550 from $261.

Treasury Board President Tony Clement, whose department oversees contracts with public-sector unions, has also signalled his intent to change the disability and sick-leave system for bureaucrats.

The potential savings in decreasing the number of yearly sick days and other measures was not booked in this budget, and the Parliamentary Budget Officer has questioned the government's numbers in estimating its sick-day liability.

But Clement has indicated he is ready to go head-to-head with the unions over the changes. The Conservatives have made labour one of their political punching bags, advocating for greater financial reporting of spending by unions, among other things.

The Canadian Press


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