Fredericton is going to have to bite the bullet and diversify its economy as the government gets ready to downsize the civil service, two experts say. “The fact that the civil service is growing smaller is an opportunity for Fredericton to grow its private sector,” said Charles Cirtwill, executive vice-president of the Atlantic Institute for Market Studies, on Tuesday. “It is going to be fascinating because what is going to happen, both in New Brunswick and Nova Scotia and across the country, is that capital cities … are going to find their comfortable cushion a little less comfortable.” A lot of communities without many civil service jobs are going to enjoy the discomfort of cities such as Fredericton, he said. “You constantly see the finger pointing and the calls almost on an annual basis to share that joy and move government departments around the countryside,” said Cirtwill. In the past week, the Liberal government has announced a $100-million income tax reduction, a deficit that could reach $500 million next year, $17 million in fee increases and dropped hints cuts to the civil service are coming. “Premier Graham has done a good job of aiming the (political) machine gun all over the place and hoping a bullet will hit the right place,” said Kevin Gaudet, federal director of the Canadian Taxpayers Federation. He said the government should have concentrated on balancing the budget. “We get concerned when we see governments sneaking in backdoor tax hikes with fees and services,” said Gaudet. Finance Minister Victor Boudreau said the fees are going up to recover the cost of offering the services. Fees should recover costs but governments are terrible at disclosing what a service’s real cost is, Gaudet said. “Saying it doesn’t make it so,” he said. “Too often fees end up being tax grabs.” Government should prove it’s recovering costs by issuing a business case in a transparent manner that provides disclosure and people can believe in, said Gaudet. For example, does a horse veterinarian really cost $300 an hour, he said. “I know some Bay Street lawyers that don’t charge $300 an hour,” he said. Government is good at nickel and diming money out of the public’s pocket, he said. Gaudet had little sympathy for Fredericton’s civil service. Research shows that the civil service in Canada enjoys better pay, benefits, pensions and job security than in the private sector, he said. “Working for the government should not be a ticket to the good life,” he said. It’s estimated that up to 25 per cent of the civil service could reach retirement age in the next five years. The government has said it’s an opportunity to downsize government. Cirtwill agreed. “The simple, painful reality is that is going to happen anyway,” he said. “There aren’t going to be bodies to take those jobs. “They are absolutely right. Now is the time to make this transition and minimize the pain to individuals.” Cirtwill said government doesn’t generate economic activity and it’s a drag on the economy. “The private sector is a positive net contributor,” he said. “The bigger the private sector is, the more money there is to pass around.” Growing the private sector isn’t easy during a recession, Cirtwill said, and diversification won’t happen overnight. The recession will likely be on the upswing when the civil servants start retiring in big numbers, he said. Within the remaining civil service morale will go down if government expects the same amount of work from fewer people, he said. As for tax cuts and fee hikes, Cirtwill said it’s all a convenient falsehood. He said some governments are going to use the economic downturn as an excuse to shift the burden, spend a lot of money and hide the fact they were going into deficit anyway. “In particular, New Brunswick and Nova Scotia in this region are ripe for the picking in terms of an example of that kind of exercise,” he said. Newfoundland, Quebec and Ontario have also done it, he said.
