The trend of rising overhead costs comes at a time when the government is counting on big savings by revamping its internal services to "transform" how it operates, manages its people and serves Canadians. The government already has several internal services projects under way, including Shared Services Canada, but overhead costs continue to climb.
The increase was flagged in a report by the Office of the Parliamentary Budget Officer, which examined departments' predicted spending in the Main Estimates for 2012-13. The estimates don't include the cuts in the Conservatives' deficit-reduction plan, which will be announced in the budget.
Overall, departments already are planning to spend less on direct program spending except for internal services, which are rising at an accelerated rate. They are seeking an additional $800 million to cover overhead, which includes communications, human resources, information technology and financial management. That's an eight-per-cent increase over last year, which jumped three per cent from the year before that.
This is a worrisome trend because the promised efficiency savings generated by modernizing internal services are aimed at freeing up money for front-line services and programs for Canadians.
The Conservatives have launched a sweeping spending review into $80 billion in direct program spending. Departments were asked to deliver plans for five-per-cent and 10-per-cent reductions to save up to $8 billion annually.
It's unclear why the government's overhead costs are increasing when departments are under the gun to save money.
The government is counting on savings from the much-touted creation of Shared Services Canada a year ago to centralize and manage the government's information technology services. The Conservatives also created two new centres in New Brunswick to modernize the handling of pay and pensions for federal workers.
The government spends about $5 billion a year on IT. Shared Services Canada is the first step toward managing the government as a single enterprise rather than 120 independent departments running their own networks, data centres and email systems. Similar governmentwide approaches are expected for human resources and finance.
Shared Services plans to invest $375 million — out of savings — over eight years to roll 100 email systems into one, 300 data centres into 20 and consolidate 3,000 networks across departments. The PBO has asked for its projected savings, but they have not been provided.
The administrative services review the Conservatives announced in the 2010 budget to find ways to save money and improve service focused on services to Canadians and reducing the costs of internal services. Its work is also feeding into the upcoming budget.
The signs are that the government is pinning high expectations on using technology to "transform" the public service while reducing operating costs. Privy Council Clerk Wayne Wouters has made public service "renewal" by modernizing the workplace a top priority.
Last week, the prime minister's advisory report on the public service called Shared Services the kind of "transformative" project the government must pursue.
David Emerson, who co-chairs the influential advisory committee, said internal services such as networks, email and data centres should be run centrally like "utilities" to reduce operating costs, which can then be invested in new technology to improve services and efficiency.
With those expectations, the increase in overhead costs highlights the major challenge the government faces in recouping savings from technology.
The big question is how much of the government's savings in the budget will come from "efficiency" savings and "transformation." Parliamentary Budget Officer Kevin Page warned Treasury Board President Tony Clement in a September 2011 letter that efficiency savings can be elusive.
They are riskier and take more time than eliminating programs. Many require significant upfront investment in technology, at a time when departments' budgets and staff are being cut, with no savings until years down the road. Page will be reviewing the risk of such projections and how quickly they are booked in the fiscal framework.
Page pointed to an audit of Britain's spending review in 2010 that found the government won't hit its savings targets and only 38 per cent of those achieved so far are "sustainable."
"These are not short-term turnarounds seeking immediate efficiencies but involve long-term fundamental transformations that are inherently more difficult to implement," Page wrote to Clement.
Canada's federal government also has a dismal track record on technology-driven projects that are supposed to transform the way the public service works and save millions.
The Government of Canada Marketplace, a much-ballyhooed online catalogue that was designed to automate and simplify purchasing, was quietly shelved after the government spent nearly $50 million. Secure Channel, which was to be the online backbone to securely move data for all programs and services, cost nearly $1 billion and never worked as expected. It is being wound down.
The Liberals launched a similar Expenditure Review in 2004 and its projection of $2.5-billion in savings from revamping procurement was so overstated that most of it had to be written off.
"There is a history of centralization of IT and the economics of it and, if done well, it can give savings in the long run, but it also requires extra spending and making investments before making the savings and sometimes it's a black hole for wasted money," said Liberal MP John McCallum.
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Autor(en)/Author(s): Kathryn May
Quelle/Source: The StarPhoenix, 12.03.2012
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