by Klaus Rohrich
February 17, 2005
I know exactly how we can get a tax cut and still run a surplus, while paying off the national debt. Unrealistic as this assertion may sound, putting the government's books in order is not rocket science. anyone, who has ever conducted any business with a government agency, knows that those in charge of the purse strings are spendaholics. It's not because of some pathology; it's because of the method in which government agencies are funded.
all government departments are run on an annual budget. The director of each department submits a proposed budget to that department's funding source and after the budget has been examined, amended or changed the funds are then allocated. Needless to say that each and every government agency submits a bloated budget and overly generous cost estimates to ensure that when the budget is finally approved, a maximum of cash will flow.
Now, the sticky part comes when government agencies near their year-end. Many will have a surplus of cash that must be spent on or before the year-end date. The reason that all funds must be spent is that if there is a surplus of cash remaining at year-end, then the agency's funding for the ensuing year will be reduced.
In my business, I do not actively pursue government contracts. Occasionally some government agency will retain my services for a special project and the directions to me are always to backdate my invoice to the previous month or to bill before beginning the project. Once I was paid for a project in advance and when the project was completed and I attempted to deliver it, the person who assigned it to me told me that it had been cancelled.
When I first entered the adult workforce, I had a contract position with a government agency. Even then, the drive to spend all the money in the budget was relentless, as the head of the department attempted to find creative new ways to spend the balance of his budget prior to year-end.
It seems to me that this is the wrong way to go about funding government projects. If department heads are encouraged to squander their budgets to ensure that subsequent budgets are approved with an increase, then no wonder we're running headlong into debt.
If the government were really serious about being fiscally responsible, they would encourage all government agencies and departments to initiate cost cutting measures. Perhaps pay a bonus to those managers that turn money back in to the treasury at the end of a fiscal year. If department heads' compensation were indexed in part to how much money they save the taxpayers, then we would never again hear about hammers costing the government $168 or toilet seats that cost over $300.
Scandals like the one currently being dissected by Mr. Justice Gomery just wouldn't happen, because those responsible for distributing largesse would be reluctant to do so, as at the end of the year it would affect their income.
as a nation we haven't taken our political leaders to task for wasting our hard-earned money. I often think back to the time when our taxes were a mere fraction of what they are today, yet the quality and quantity of government services were outstanding. While our property taxes are ever increasing, the number of municipal services being reduced, disappearing or available only for a fee is multiplying exponentially. The same holds true for most county services.
Provincially, we're paying more than ever, yet receiving less in return. Consider all the new taxes that have been imposed in Ontario during the past year, such as the so-called "health premium", to name one. Then think about all the increases in user fees for items such as outdoor cards, hunting and fishing licenses, birth certificates, etc. Then think about the services that have been taken away, notably the delisting of numerous health-related services, layoff of nursing staff as well services in education.
With the federal government the story isn't much different, as the Liberals are showing a surplus year after year and squirrel it away in "trust funds" to be used at a later date to buy our vote. Yet over 30 percent of all government spending is being used just to cover the interest on the national debt.
Unless this trend is reversed at some point, we will be paying the government over half of our salaries to do absolutely nothing for us in return.