Canada mismanaged

by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East With a world on fire and our politicians, fiddling no wonder that a rich country like Canada is on the brink of a serious economic crisis. Instead of looking after the people at home, the government of Canada, supported by all political parties represented in the House of Commons, has generously dedicated billions of dollars for other purposes. They are particularly prone to sending our taxpayers’ money outside of the country, without any accountability for the money spent. A tragic situation leaves many Canadians struggling and the poverty in this country increasing at an alarming rate. Probably destined to be ignored by our political elite, the parliamentary budget officer (PBO) predicts that higher interest rates will lead the economy to stagnate in the second half of the year, with a new report suggesting the federal deficit will rise significantly this fiscal year. The PBO released its economic and fiscal outlook last week, providing updated projections for the economy and federal finances as high interest rates weigh on growth. The budget officer also says it expects consumer spending to remain weak in the second half of 2023 and throughout the first half of 2024. Faced with slower growth in government revenues and higher expenses, the federal deficit is projected to rise to $46.5 billion in 2023-24, up from an estimated $38.7 billion for 2022-23. Assuming that no new measures are introduced, and temporary measures expire, the deficit is expected to track downward, falling to $8.2 billion in 2028-29. The PBO also projects the debt-to-GDP ratio to jump this fiscal year to 42.6 per cent. That ratio is expected to fall to 37.8 per cent in 2028-29 assuming no new measures. This is above the pre-pandemic level of 31.2 per cent of GDP in 2019-20. Higher interest rates are raising the cost of debt for the federal government. The PBO says it expects the debt servicing ratio, which refers to public debt charges relative to tax revenues, will peak at 12.0 per cent this fiscal year before gradually falling back to 11.0 per cent in 2028-29. As the Bank of Canada gears up for a rate decision this month, the PBO's projection assumes no further rate hikes. Instead, it projects the central bank will hold its key interest rate at five per cent and begin cutting rates in April 2024. Its inflation forecast anticipates a return to two per cent inflation by the end of next year. The Bank of Canada is set to make its next interest rate decision on Oct. 25. The economy has softened this year, shrinking in the second quarter as consumer spending slows. The labour market is no longer as hot as it was last year: job vacancies have fallen and the unemployment rate has inched higher. While this downward momentum is expected to continue, inflation has proven to be sticky. Canada's inflation rate fell to 2.8 per cent in June but climbed back up to 4.0 per cent in August as underlying price pressures remain high. With this sombre prediction, we need to take another look at how badly our taxpayers money is managed. Government ministers recently were home in their ridings, offering thanks over turkey, disclaiming any responsibility for the Department of Public Services and Procurement Canada (PSPC), indulging in true Pontius Pilatus syndrome. Judging by the Canadian International Trade Tribunal (CITT), that is just as well, or even disinterested Canadians would be marching on Ottawa with torches and pitchforks. The judgment in the case of Quebec shipyard Chantier Davie and its partner, the Canadian arm of Finnish engine maker Wärtsilä, is a damning indictment of a department that appears to be defined by incompetence, arrogance and ministerial indifference. The CITT found in favour of Davie/Wärtsilä in a case centred on the replacement of the propulsion system of the Canadian Coast Guard heavy icebreaker Terry Fox, which was recently involved in assisting the recovery of the Titan submersible that killed five people when it imploded. The PSPC did not follow the rules, the CITT judgment found. Davie believed it submitted the lowest bid, yet the contract was awarded to Heddle Marine Services, which has plans to complete the $135-million project at its dry dock in St. Catharines, Ont. The CITT said PSPC engaged in a sole-sourced process “under the guise of a competitive procurement.” The tribunal has the power to order bids to be re-evaluated, to award the contract to the complainant or to assign compensation. However, PSPC lifted a “stop work” order in March that meant Heddle started executing the contract. The state of advancement is now such that it would be irresponsible for the tribunal to recommend the cancellation and re-tender as remedy at this stage. It would inflict unacceptable cost to the taxpayer and create a situation that might jeopardize an important mission of the Canadian Coast Guard, and endanger Canadian lives. Still this PSPC decision has forced the tribunal’s hand to rule that the complainants are due monetary compensation for lost opportunity to profit. Previous cases have seen valid complaints awarded around 10 per cent of the contract value, which in this case would amount to $13 million. The conclusion is that the taxpayer is on the hook for millions of dollars due to either bureaucratic ineptitude or hubris (or both) and the Coast Guard will get back a ship that will not meet the requirements that were laid out in the invitation to tender. In its conclusion, the tribunal used unequivocal language, saying it considered the whole situation “unfortunate” because it “puts the system into disrepute.” It is not the first time and it will not be the last. The procurement system is in dire need of reform. The only constant is that the minister responsible is as elusive as a bat in the daylight. Is this acceptable? Wake up Canadians!