By Fred Morley
(Originally published in the March 2014 issue of the Nova Scotia Business Journal)
The federal government’s expenditure control efforts should yield a balanced budget in 2015. Indeed expectations are that the next budget will see a $6.4-billion surplus, a first for the current federal government.
A big part of expenditure control has been the reduction in the numbers of federal employees from coast to coast and overseas. The regional implications of these measures are very different. Cutting government employment levels from the hot economy and insatiable labour market of Alberta from 2012 to 2013 by 893 people has a very different impact on local spending power and local small business than cutting 823 jobs in Nova Scotia over the same period. Most likely the Alberta cuts, and perhaps even some of the Nova Scotia reductions, are soaked up quickly by Alberta’s fast growth. But expenditure reductions are necessary to achieve budget goals and how local economies adjust is collateral damage.
What the federal government does control is the regional balance of expenditure reductions related to people. About a year ago, the Treasury Board made a commitment to protect existing regional shares of federal jobs. A February 2013 press release quotes Tony Clement, president of the Treasury Board, as saying: “Our Government has said from the beginning that it would ensure that each province and territory is treated fairly. We said the regional representation of federal jobs would remain unchanged, and we are being true to our word.”
Indeed, under the commitment, the Atlantic region share of federal employment is expected to rise slightly between 2012 and 2015 from 12.4 per cent to 12.6 per cent. So how are we doing so far?
Well it’s difficult to tell. Statistics Canada’s series on federal employment by province and municipality was discontinued in 2012 for budget reasons. However the Treasury Board’s own figures on non-military and RCMP employment give a hint of the pattern. From 2010 to 2013, Newfoundland, Nova Scotia, Prince Edward Island, and New Brunswick have seen cuts of 12.7 per cent, 10.6 per cent, 4.9 per cent and 8.3 per cent. This compares to reductions of 5.7 per cent in the capital region (Ottawa-Hull). This is likely accounted for by the fact that most cuts to date have come from early retirements and the Atlantic region has the oldest public sector profile in Canada while the National Capital Region (NCR) has the youngest.
For the federal government to keep to its promise of regional balance, attention must now turn to the NCR — most future cuts should come at the centre. Nova Scotia and most places outside of Ottawa have pretty much seen the last of the pain.
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at email@example.com.