Startup hedge funds, private equity funds and venture capital funds in Canada are struggling to raise money.MARK BLINCH
No major cuts are detailed in the Conservative government's 2011 budget, but make no mistake: They're coming.
As governments around the world move to aggressively cut costs - France is scaling back pension benefits while the U.K. is imposing deep cuts to its military - Canada's plan to balance appears remarkably harmless.
Yet the overall numbers supporting the government's plan to balance the books will inevitably force hard decisions in Ottawa.
The 2011 budget announces a new wave of "Strategic and Operating Reviews" that aim to shave five per cent across the board in departmental spending, or $4-billion a year.
That's on top of similar reviews that are already taking place and will save nearly $2-billion annually by 2014, including scaling back the growth in defence spending by $1-billion a year.
This latest round of cuts will see the creation of a new sub-committee of cabinet where ministers will oversee the exercise.
By fall, each department will be required to submit two proposals: one that would see its budget cut by five per cent and another that would see a 10 per cent cut. The cabinet committee will go over the plans and the results will be announced in the 2012 budget. The goal is for the government-wide cuts to average five per cent, meaning some could be cut more, others less.
Former finance officials Peter DeVries and Don Drummond say the processes will clearly force hard decisions. They also both expressed concern that across-the-board cuts have a history of leading to long-term problems of rust-out and staffing issues and that it would be preferable to simply cut entire programs rather than trimming everywhere.
"I thought there should have been more detail," said Mr. DeVries, who was in charge of fiscal policy in the department and expected to see more information about cuts in the budget.
For his part, Mr. Drummond said the Conservatives appear to be delaying the hardest cuts because of the possibility of an imminent election.
"In the political environment, I suspect they don't want to talk about it," said Mr. Drummond. "I suspect they're wanting to push the limit as to how much a department can absorb in a relatively publically invisible fashion."
Later Tuesday, the three federal opposition parties announced they will all vote against Mr. Flaherty's proposed budget, making it likely that a spring election will be called and that none of the budget's provisions will be enacted.
For months, opposition MPs have called cabinet ministers and government officials before Parliamentary committees in an attempt to find out the details as to what exactly is being cut under these reviews.
When Parliamentary Budget Officer Kevin Page asked for the information, he was told in writing by Treasury Board President Stockwell Day that it was a cabinet confidence. Mr. Day has maintained that those details would come in the budget.
The 2011 budget includes 16 pages on the 13 departments that most recently went through the exercise, identifying $1.6-billion over two years. But the details are slim. The pages merely offer generalities like finding "efficiencies in the delivery of programs" and efforts to "eliminate duplication."
A government official said individual department will be able to provide further detail in the future.