Recommendations for 'painless' spending cuts?

Machjo · December 15, 2009

Just a few quick replies to this thread:

1. I don't think indiscriminate spending cuts are the answer. Any spending cut ought to be well planned, since some spending in key areas may be necessary and beneficial.

2. Someone brought up the fact that after the Chretien Liberals came to power, there was not much fat left to cut. I agree in part, but still think it's worth taking a look at whether they may have overlooked a few spots. After all, every penny counts.

3. As for selling off government property, it is debatable that that would lead to long-term spending cuts, since those are one-off events. Add to that that I'm sure it would be on a case by case basis based on hard evidence. More importantly, regardless of whether it's private or public sector, is whether it's receiving subsidies from the government.

My main purpose in starting this thread was not to start an ideological spat, but rather on whether anyone could come up with specific areas where we could cut spending, and provide logical arguments as to why, either based on logical argumentation or research findings, not ideological leanings.

Also, this thread was never intended to suggest that revenue increases may be necessary. That question, though a valid one, would be for another thread, where we could discuss possible sources of revenue increases.

Contineu on, folks, and please be civilized about it.

segnosaur · December 15, 2009

First learn to take off the blinders. If the government can make money from something that means more revenue and less taxes. I know that escapes you. But if the government needs 100 million to run and they make it all on crown corps they don't need your money. Get over it, you don't understand this simple concept.

As I pointed out before, there is a flaw in your argument.

While privatizing a profitable government-run business does decrease revenue, the money that the government earns from the privatization must be considered. If that money is used to pay down the debt (or at least prevent adding to it), it will cut down the amount of money the government needs to spend to service the debt in the future.

So, in a decade they will have less revenue, but they will also have fewer expenses. (As a result, the government wouldn't need the "100 million to run"; they can get by on a lot less.)

punked · December 16, 2009

As I pointed out before, there is a flaw in your argument.

While privatizing a profitable government-run business does decrease revenue, the money that the government earns from the privatization must be considered. If that money is used to pay down the debt (or at least prevent adding to it), it will cut down the amount of money the government needs to spend to service the debt in the future.

So, in a decade they will have less revenue, but they will also have fewer expenses. (As a result, the government wouldn't need the "100 million to run"; they can get by on a lot less.)

I would agree with that but if we are complicating things like that we also have too look at government services which must be provided. If in the future who ever buys Canada post can't deliver to Grise Fjord and the government has to subsidize it what is the point in the end?

M.Dancer · December 16, 2009

If in the future who ever buys Canada post can't deliver to Grise Fjord and the government has to subsidize it what is the point in the end?

Why would they have to subsidize anything? Let the residents pay the appropriate rates and be done with it. For the record, If we are going to sell canada post, we should do it quick, snail mail is a dying business.

BTW, did you know it is illegal to deliver a letter cheaper than the Canada Post standard letter rate? Evem Purolator charges more...

If we are stymied from Selling Canada post cause the residents of Fudge Pack Manitoba won't pay more for postcards, can we sell Purolator and allow other businesses to compete directly with Canada Post?

segnosaur · December 16, 2009

While privatizing a profitable government-run business does decrease revenue, the money that the government earns from the privatization must be considered. If that money is used to pay down the debt, it will cut down the amount of money the government needs to spend to service the debt in the future.

I would agree with that but if we are complicating things like that we also have too look at government services which must be provided. If in the future who ever buys Canada post can't deliver to Grise Fjord and the government has to subsidize it what is the point in the end?

First of all, your initial argument (at least the one I responded to) had nothing to do about "service". You were dealing simply with the revenue that the government-run business generates. (I should point out that I do think its questionable for any 'services' to actually turn a profit, since any profits may be due to a monopoly position rather than the ability of the people running the business. In that situation, the 'monopoly' is nothing more than a tax.)

Secondly, as others have pointed out, if Canada post was not around, we would still get service to remote communities through private companies; its just that the prices would better reflect the actual costs. Some may not consider that such a bad thing.

KeyStone · December 16, 2009

Privatize the TTC, the Beer store and the LCBO for starters. That will free up tens of Billions of dollars, these are black holes for our tax revenue. These three things have grown into huge bureaucracies of their own and it's bloated, decadent and wasteful.

Privatize Canada Post as well. Another massive mess.

Mr. Canada, you really haven't thought this through.

First of all, the LCBO and the Beer Store, fall under provincial jurisdiction, not federal.

More importantly, these make money. Having government hand it over to private enterprise would result in a one-time cash influx in exchange for a lifetime of lost revenue. Not a great money saver, IMHO.

Next, you list the TTC.

The TTC is run by the city of Toronto, not the Federal government.

Surprisingly, it operates with some of the lowest contributions of any federal/provincial/state of any major transit system in North America. Yes, it does lose a lot of money, but privatizing will basically hand over a monopoly to a private corporation. How do you think that will go?

Next. you list Canada Post.

The problem with privatization is that the goal of the private company is to make money. Therefore, they won't have an interest in remote communities, and people in Rankin Inlet will have to pay $15 to FedEx a letter. That is just one example of the problem.

You have a common theme here, which is government employees getting paid too much, which is a problem.

However, the solution is not to hand it over to private enterprise, the solution, is to break these unions, and get these workers more in line with private sector wages for the jobs that they do. I don't mind a 10-25% boost over the private sector, but sometimes we are seeing double what the private sector would make for a job with that skillset.

Never, never, never give control of a vital monopoly to the private sector.

It never benefits anyone but the shareholders of that corporation and the politician who gets a massive kickback for arranging the deal.

Edited December 16, 2009 by KeyStone

Shwa · December 16, 2009

However, the solution is not to hand it over to private enterprise, the solution, is to break these unions, and get these workers more in line with private sector wages for the jobs that they do. I don't mind a 10-25% boost over the private sector, but sometimes we are seeing double what the private sector would make for a job with that skillset.

Do you have examples?

I mean, I don't think there are any government executives that make millions like most large enterprise executives do. Certainly there are bonuses for government executives, but nothing near the bonuses for some companies.

Machjo · December 16, 2009

Why would they have to subsidize anything? Let the residents pay the appropriate rates and be done with it. For the record, If we are going to sell canada post, we should do it quick, snail mail is a dying business.

Now this I can agree with. If the local community is so worth preserving from an economic standpoint, then certainly its profits and local salaries will reflect that, being higher than the average in Canada and therefore worth the extra cost in stamps. If not, then let's let that town diminish and retain the locals for jobs in other towns. Why should urbanites subsidize the rural riverside views of isolated homes. You choose to live there, you pay for it.

Machjo · December 16, 2009

And as for selling off government enterprises, while the TTC is debatable ( though I'm leaning towards either government-run or converted to a consumers' co-op owing to its monopolistic aspect, and would not think putting up a natural monopoly on the stock market to be a bright idea), I do agree with selling off the LCBO. Regardless of the profits involved, it's not up to government to be selling harmful substances to the people whose welfare it's supposed to look out for. At the very least, privatize it.

Machjo · December 16, 2009

Canada Post is another problematic one. If privatized, would it become a monopoly? If so then like the TTC, it ought to either remain government-owned or become a consumers' co-op. If it's not likely to become amonopoly and could face natural competition, then sure I'd be in favour of privatizing it. However, either way, I'd say stop subsidizing it and allow the market price to prevail, which might mean more expensive for more isolated areas. If you choose to live there, you pay the price.

Michael Hardner · December 16, 2009

Mr. Canada, you really haven't thought this through.

First of all, the LCBO and the Beer Store, fall under provincial jurisdiction, not federal.

And as I pointed out already on this thread: The Beer Store is already privately owned.

Jerry J. Fortin · December 16, 2009

Most people probably don't want to hear this but....

Look what the impact of privatization and deregulation really meant to Albertans. Before folks jump on the right wing band wagon look into the realities for yourselves. In Alberta we had the cheapest utilities in Canada, that changed. Beer stores and vehicle registries are only a corner of the equation folks. Look at the loss of public assets and the added costs to the citizens before making any decision.

M.Dancer · December 16, 2009

And as I pointed out already on this thread: The Beer Store is already privately owned.

I know, lets nationalize the Beer Store....then privatize it.

segnosaur · December 16, 2009

Most people probably don't want to hear this but....

Look what the impact of privatization and deregulation really meant to Albertans. Before folks jump on the right wing band wagon look into the realities for yourselves. In Alberta we had the cheapest utilities in Canada, that changed.

Admittedly, I'm not from Albreta, but I'm going to go out on a limb here and suggest that there may have been other factors at work here.

- When the utilities were publically owned, were they turning a profit or were they subsidized? Were they maintaining the required infrastructure? (Its easy to have "low cost" utilities when half the cost is subsidized through the government, and you're not doing anything to upgrade or maintain a decaying infrastructure.)

- How much of that price increase was related to increases in energy prices? (Alberta generates much of its electricity from fossil fuels. The last spike in oil prices may have had more to do with rising energy prices than any privatization.)

Mr.Canada · December 16, 2009

I'm well aware of that. If you read my post, it's a trickle down effect. Feds have to give money to the Provinces, the provinces to the cities. I want all levels of government out of the business dept and let everything be privatized.

Everything from Municipal services to the LCBO to Canada Post, everything gone private. No more need to pay inflated union wages to garbage men, no need to pay Liquor store attendents $30/hr and no need to pay mailmen $40-50/hr. See how much money it would save. Not to mention the selling off of all the land and vehicles. No need for all those land taxes, insurance on property of autos. This would save a ton of money.

It would also cut down on the need for all those bureaucracies surrounding many things.

Government should be involved in Policing and corrections, The military, Healthcare, Education and a limited amount of social services. That's about it. Everything else private. Tons of services cut or will be provided privately or by non profits without government funding. Our taxes would drop by a massive amount.

If a program is so great it should have no problem raising its own funds from the private sector. If the private sector won't invest in it why the hell should our government.

Edited December 16, 2009 by Mr.Canada

segnosaur · December 16, 2009

However, the solution is not to hand it over to private enterprise, the solution, is to break these unions, and get these workers more in line with private sector wages for the jobs that they do. I don't mind a 10-25% boost over the private sector, but sometimes we are seeing double what the private sector would make for a job with that skillset.

Do you have examples?

I mean, I don't think there are any government executives that make millions like most large enterprise executives do.

It certainly is true that top executives in private industry earn a lot more than executives in the public sector. However, those earning "top pay" make up only a small number of the total employees. 100 unionized/overpaid (compared to the private sector) file clerks working for the federal government could end up costing more than a single overpaid executive.

M.Dancer · December 16, 2009

no need to pay Liquor store attendents $30/hr

LCBO clerks make on average $18-22 an hour. The starting wage is less than $14.

and no need to pay mailmen $40-50/hr.

Carriers make less than $30 an hour.

See how much money it would save.

Only if we accepted your nonsense at face value. You're arguments fail cause you are lazy and make stuff up. If you can't research your posts, don't bother.

segnosaur · December 16, 2009

LCBO clerks make on average $18-22 an hour. The starting wage is less than $14.

On the other hand, the clerk at my local corner store earns $10/hour.

The question is, does the clerk at the LCBO have a job that requires twice the effort or skill that the clerk at the corner store requires? Or did the LCBO clerk just "get lucky" by falling in to a postion where he gets over-inflated wages?

By the way, it is true that Mr.Canada is an idiot... however, there is at least some truth to a few of the issues he's raised. Even if he's wrong about the exact wages paid to LCBO clerks (and others), they still often earn more than people doing nearly-identical work in non-unionized/private sector jobs.

Machjo · December 16, 2009

I maintain the issue is one of revenue shortfalls not spending. The government needs more revenues.

Perhaps. Ieadlly though, we'd like revenue increases and spending reductions to go hand in hand. One solution I see is to go to a more user-pay tax base, such as a resource tax. A gas-tax is well-known example of such a tax. It could increase government revenue (or not, depending of course on how much income taxes and value added taxes etc are reduced to compensate), but the increased cost of gas would likely reduce road use, thus reducing government costs on highway construction and maintenance. This way, revenue increases and spending reductions could go hand in hand. Now of course if car use suddenly plummets, it might cause a drop in government revenue, but then again, costs go down on infrastructure costs too. That's the beauty of a user-pay system. Costs and revenue go more or less hand in hand.

Shwa · December 16, 2009

It certainly is true that top executives in private industry earn a lot more than executives in the public sector. However, those earning "top pay" make up only a small number of the total employees. 100 unionized/overpaid (compared to the private sector) file clerks working for the federal government could end up costing more than a single overpaid executive.

Hmmmm. I am not so certain that it is that simple.

For one, executive salaries aren't measured by numbers of executives, but in percentage of salary/bonus cost. For two, determining the differences between executive payouts means you are only comparing the differences between the salaries for employees in a like occupation in a like industry. (i.e. clerks in the insurance or pension industry)

Even with your 100 employee example, (i.e. $43k X 100 = $4.3 M) the average CEO earnings in Canda is currently (as of this Jan 09 Sun article) is $10.4 M. That's a lot of clerks!

segnosaur · December 16, 2009

It certainly is true that top executives in private industry earn a lot more than executives in the public sector. However, those earning "top pay" make up only a small number of the total employees.

Hmmmm. I am not so certain that it is that simple.

For one, executive salaries aren't measured by numbers of executives, but in percentage of salary/bonus cost.

I agree. But that doesn't necessarily change my point... that the cost of pay and benefits may only make up a small portion of the total cost of all employees and worrying about "executive" salary would have less effect than dealing with the pay of the many other employees who get paid less than the execs, but are still over paid compared to similar jobs in the private sector.

For two, determining the differences between executive payouts means you are only comparing the differences between the salaries for employees in a like occupation in a like industry. (i.e. clerks in the insurance or pension industry)

Again, I agree.. we need to compare employees with similar skill sets. But that still doesn't change my argument.

Even with your 100 employee example, (i.e. $43k X 100 = $4.3 M) the average CEO earnings in Canda is currently (as of this Jan 09 Sun article) is $10.4 M. That's a lot of clerks!

Well, keep in mind that my "100 employee example" was only a rough statement in order to illustrate my point.

If you want something a little more concrete: consider the biggest company (by revenue) in Canada is the Royal Bank of Canada. It has roughly 80 thousand employees.

Lets assume that they have a group of executives (CEO, CFO, VPs, etc.) earning roughly the average. That might mean that total compensation for their top guys is around 100million. On the other hand, the salary for a bank teller is around 30k a year. (I'm being conservative here...there are a lot of jobs that are a lot higher paid.) If every employee (other than the top executives) earned that much it would mean they pay rougly 2.4 billion. So, by my admittedly very rough calculations, executive pay makes up less than 5% of the pay structure.

Now, lets say each of those bank employees demanded (and received) a $10,000 raise (because they became government/got unionized) that would increase costs by roughly 800 million. That increase in pay is still greater than total executive compensation. Again, these are only rough back-of-an-envelope type calculations. I'm sure the total executive compensation is not exactly $100 million at RBC, and there's no guarantee that unionizing employees would result in exactly a $10,000 pay increase. But there would be at least some increase in labor costs (after all, supposedly the point of a union is to improve wages/benefits for the members), and when you consider the total number of employees in a "big" company (or government department) any pay increase could outstrip the cost of the "expensive" executives.

Edited December 16, 2009 by segnosaur

Topaz · December 17, 2009

Since this is about spending cuts I thought this topic belongs here. It about the DND and its ordering of military equipment that won't be ready until after the 2011 deadline of pulling out.(I don't believe it but ok)This just shows how careless the Tory are with someone elses money. http://www.ottawacitizen.com/news/vehicle+purchase+hits+speed+bump/2349852/story.html

Machjo · December 17, 2009

Since this is about spending cuts I thought this topic belongs here. It about the DND and its ordering of military equipment that won't be ready until after the 2011 deadline of pulling out.(I don't believe it but ok)This just shows how careless the Tory are with someone elses money. http://www.ottawacitizen.com/news/vehicle+purchase+hits+speed+bump/2349852/story.html

Why is it that we always have to take puck shots at this or that party? And no, I'm not defending the Tories here since I'm not a Tory myself and I criticize the left just as much. Could we not focus on the issue at hand which in this case has to do with wasteful government spending without necessarily having to take a puck shot at this or that party?

That's why things never move ahead in Canadian politics. Party X is always right, and Party Y is always wrong unless Party X agrees with it. Such a mentality is excessively simplistic. We need to move away from partisan politics and apprach the issues from a more non-partisan standpoint if we want to ever come to any kind of agreement on anything and actually be able to move ahead.