Budget impact to Ottawa area less than expected

Cuts to the public service in the National Capital Region announced in the 2012 federal budget were less severe than many observers expected.

The federal budget calls for 12,000 positions to be cut across the country and another 7,200 positions to be eliminated through voluntary retirement and other forms of attrition.

For Ottawa-Gatineau, where about a third of federal civil servants work, this translates to about 4,000 workers getting pink slips. About 130,000 federal public servants work in the region.

Mayor Jim Watson said while the job losses will have a ripple effect on the economy, the cuts are not as deep as some feared.

'Austerity light' budget

"I heard someone describe it as 'austerity light' and I think that's probably a good way to describe it," said Watson.

Watson said the impact on the city is uncertain, however, because it's not known how cuts of $5.2 billion in departmental spending across the country will affect thousands of term or contract employees, many of whom work in the capital region.

"We quite frankly don't know what the impact will be," said Watson.

Ottawa Chamber of Commerce president Erin Kelly offered a more positive spin, saying the modest budget was good news for the local economy.

"The worries about public sector layoffs are gone for Ottawa, this budget really put that to rest," said Kelly.

"The 12,000 in cuts, most happening the third year, is obviously designed to take advantage of attrition and it's very obvious the impact is not what people were anticipating."

PSAC say cuts will be deeper

Larry Rousseau, the local vice president of the Public Service Alliance of Canada, was not happy with the budget, and said he expects the level of cuts to be deeper than the government is suggesting.

Rousseau said the government is being overly optimistic about attrition rates within the public service.

"This is an austerity budget," said Rousseau. "I'm sceptical about the 7,000 figure. I don't think the government can count on planned attrition."

Rousseau said those cuts will have to be reviewed and will likely result in more people getting layoff notices.

$5.2B cut as part of government review

The cuts come as part of a government review of its departments and agencies that will see departments reduce spending by $5.2 billion, or 6.9 per cent of a total of $75.3 billion up for review.

The planned reductions in spending will be between five and 12 per cent for most departments and agencies. The Ministry of Finance is cutting the deepest, with a planned cut of 16.8 per cent, while Veterans Affairs and Aboriginal Affairs and Northern Development have relatively modest cuts of 1.1 per cent and 2.7 per cent respectively.

In dollar terms, the biggest cuts are to the Department of National Defence, at $1.1 billion over three years, and Public Safety, to trim $688 million over three years.

The cuts to departments are such that about 40 per cent of the cuts occur in 2014-15.