Canada says won't break union deals to cut spending

Fri Jun 24, 2011 5:27pm EDT
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By Randall Palmer

OTTAWA (Reuters) - Canada should be able to make the spending cuts needed to balance its budget and finance tax cuts without having to break contracts with public sector unions, the minister in charge of the cuts said on Friday.

"We made I think an important promise to the people of Canada, and that was to accelerate our plans to get back to a balanced budget by 2014," Tony Clement, president of the Treasury Board, said in an interview.

"I think it's doable in the context of the recovery of the Canadian economy. But there's going to be some difficult choices. I don't want to sugarcoat anything."

The recently reelected Conservative government has assigned Clement the job of finding C$4 billion ($4 billion) a year in savings by 2014-15 from an envelope of C$80 billion, or about 5 percent.

In the process, tens of thousands of federal jobs are expected to be lost -- some estimates say 30,000 to 40,000 out of a federal public service that's 285,000 strong. Clement said 11,000 retire or move on each year, so the job cuts would come primarily through attrition.

He said he would not go into existing labor union contracts to try to find savings. "We will operate within the realm of the collective agreements that have been signed," he said. "We're not changing those."

Parliament is currently debating government legislation to end a work stoppage at government-owned Canada Post that has shut down mail delivery across the country. Opposition parties have accused the government of kicking unions in the teeth by including in the bill annual pay raises for postal workers that are lower than Canada Post management had offered in failed negotiations for a new contract.

If the future unfolds as this year's federal budget forecasts, the government will not need the full C$4 billion a year in savings just to balance the budget by 2014-15. Currently only a C$300 million budget deficit is forecast for that year, down from the C$32.3 billion expected in the current fiscal year.   Continued...