Jim Flaherty's cost-cutter stalks government halls

The picture postcard days of summer in Ottawa - where red-serged Mounties parade on Parliament Hill and boats dot the Rideau Canal - almost make you forget the nasty fact that senior bureaucrats are quietly wandering the hallways of power with big pairs of scissors, looking for ways to slash Canada's deficit.

Preparations are now underway for the 2011 austerity budget, a fiscal plan that will see Finance Minister Jim Flaherty forced to cut billions of dollars in spending as he plots a course out of red ink. The year after the stimulus spending is ended, 2011-12, is still forecast to leave Ottawa $27.6-billion in deficit.

One of the lesser known exercises - but one that deserves more scrutiny - is the Administrative Services Review.

It's a boring name for a cost-cutting initiative being run out of the all-powerful Privy Council Office by staffer Daniel Jean. He's been given the hefty rank of deputy minister - and a salary of up to $246,900 - to do the job.

Mr. Jean's task, simply put, is to chop back-office spending - and he's pulled together an impressive array of senior management from across government to focus on the task. They will be asked to find savings in overhead costs that departments across government can make use of in the years to come.

Might this include privatizing parts of government or contracting out the delivery of services? Or just measures like consolidating mail delivery and new computer systems?

The Privy Council Office isn't saying exactly what is under consideration. But it's important enough that Mr. Jean's exercise is reporting regularly to a steering committee of senior ministers.

Department budgets are being frozen across the board for two years at 2010-2011 levels, which means any new costs for new priorities will have to be funded by savings from elsewhere.

Why does this matter? The more savings Mr. Jean can find, the less the Tories have to slash elsewhere.

The PCO has pulled together an impressive array of senior management from across government as part of a 25-member team. Most have been loaned to the project from their home departments. Mr. Jean's executive director is Coleen Volk, who previously served as associate assistant deputy minister at Industry Canada.